SANDRA NADAR, MUMBAI V. ITO 19(1)(4), MUMBAI

ITA 3260/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3777 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 05-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A DHYANI
• Keywords: Deemed owner of house property; Opportunity of being heard; Assessment record

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER / I .T A NO. 3260/MUM/2013 ( / ASSESSMENT YEAR : 20 0 9 - 10 MS. SANDRA NADAR, B - 3, SHINING STAR, DAULAT NAGAR, RELIEF ROAD, SANATACRUZ (W), MUMBAI - 400 054 / VS. THE ITO 19(1)(4), PIRAMAL CHAMBERS, PAREL, MUMBAI ./ ./ PAN/GIR NO. ABUPN 657K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI ANANT N. PAI / RESPONDENT BY: SHRI R.A. DHYANI / DATE OF HEARING :03 . 0 2 . 201 6 / DATE OF PRONOUNCEMENT : 24 . 0 2 .201 6 / O R D E R PER C.N. PRASAD, JM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 30 , MUMBAI DATED 11.2.2013 PERTAINING TO ASSESSMENT YEAR 200 9 - 1 0. 2. THE FIRST ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE CONSTRUCTION COST AT RS. 6,06,000/ - INSTEAD OF RS. 22,92,41/ - AS TAKEN BY THE APPELLANT WHILE CALCULATING CAPITAL GAIN ON SALE OF BUILDING. ITA NO. 3260/M/2013 2 3. THE ASSESSEE RAISED ADD ITIONAL GROUND ON 2 7 .7.2015 CONTENDED THAT LOWER AUTHORITIES ERRED IN PREMATURELY TERMINATING THE IR PROCEEDINGS WITHOUT CONDUCTING PROPER ENQUIRIES IN FULL AND WITHOUT CONSIDERING MATERIAL MORE PARTICULARLY AVAILABLE ON PAST ASSESSMENT RECORDS THEREBY DENY ING YOUR APPELLANT AN ADEQUATE OPPORTUNITY OF BEING HEARD . 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS GROUND OF APPEAL IS NOT PRESSED. THUS, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 5. COMING TO GROUND NO. 1 OF REGULAR GROUNDS, BRIEF FACTS ARE THAT THE ASSESSEE DURING THIS ASSESSMENT YEAR SOLD PROPERTY KNOWN AS KENNYS HOUSING COMPLEX AT TIRUNELVELI. IN THE RETURN OF INCOME, THE ASSESSEE OFFERED LONG TERM CAPITAL GAIN OF RS. 22,39,858/ - AFTER CLAIMING INDEX ATION FOR THE COST OF PURCHASE OF LAND AND CONSTRUCTION THEREON. THE AO REQUIRED THE ASSESSEE TO FILE SUPPORTING DOCUMENTS FOR THE CLAIM FOR INDEXATION FOR PLOT PURCHASED AND CONSTRUCTED BUILDING THEREON. THE ASSESSEE FILED LETTER DATED 27.12.2011 STATI NG THAT ASSESSEE IS A SECOND WIFE OF HER LATE HUSBAND MR. NADAR WHO IS THE RESIDENT OF THE PLACE TIRUNELVELI VILLAGE, TAMILNADU . A S THE REASON OF ENMITY BETWEEN BOTH THE WIVES AFTER THE DEATH OF THEIR HUSBAND , T HE FIRST WIFE ALONGWITH HER FOUR SONS DO NO T ALLOW THE SECOND WIFE TO ENTER THEIR PLACE. IT WAS THE SUBMISSION OF THE ASSESSEE THAT THE RECORDS OF HER LATE HUSBAND WHO BUILT THE BUILDING I N HIS LIFETIME ARE WITH THE FIRST WIFE AND IT IS NOT POSSIBLE TO GET ANY CO - OPERATION WITH THEM AND THEREFOR E NOT POSSIBLE TO PRODUCE THE RECORDS OF BUILDING BEING BUILT IN LIFETIME OF HER LATE HUSBAND. IT WAS THE SUBMISSION THAT THE LAND WAS PURCHASED ON 17.9.1993 FOR A SUM ITA NO. 3260/M/2013 3 OF RS. 1,99,500/ - AND THIS DOCUMENT WHICH WAS AVAILABLE WITH THE ASSESSEE WAS ALREADY S UBMITTED. 5.1. IT WAS FURTHER SUBMITTED THAT THE BUILDING HAS BEEN BUILT IS ALSO A FACT AS THE SALE DOCUMENTS WERE FURNISHED BEFORE THE AO AND ALSO RECORDS SHOW THAT COST OF BUILDING WAS REFLECTED. A S SUCH IT WAS REQUESTED THAT THE ESTIMATE D VALUE OF THE SAME FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN COULD BE TAKEN. HOWEVER, THE AO HAS TAKEN COST OF BUILDING OF THE ASSESSEE AT RS. 6,06,000/ - AS DECLARED BY KENNYS HOUSING COMPLEX UNDER VDIS SCHEME 1 997 , S INCE , IT WAS DESCRIBED IN THE V DIS THAT THIS AMOUNT WAS SPENT ON CONSTRUCTION OF HOUSING COMPLEX AT TIRUNALVELI, TAMIL NADU FOR THE ASSESSMENT YEAR S 1994 - 95 AND 1995 - 96. THUS, THE AO COMPUTED THE LONG TERM CAPITAL GAIN OF RS. 6,06,000/ - INSTEAD OF RS. 22,92, 4 41/ - ADOPTED BY THE ASSESSE E FOR COMPUTING LONG TERM CAPITAL GAIN. 6. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). THERE WAS NO REPRESENTATION BEFORE THE LD. CIT(A) THAT NOTICES WERE ISSUED TO THE ASSESSEE ON SIX OCCASIONS, THE ASSESSEE APPEARS TO BE REQUESTED TIME FOR FOUR OCCASIONS AND NOBODY APPEARED ON TWO OCCASIONS. THUS, THE LD. CIT(A) DECIDED ON MERIT AFFIRMING THE ORDER OF THE AO. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER ADOPTED THE BUILDING COST AT RS. 6,06,000/ - BASED ON THE V DIS CERTIFICATE ISSUED ON 11.2.1998. THE LD. COUNSEL REFERRING TO PAGE - 36 WHICH IS THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2005 - 06 , SUBMITS THAT RENTAL INCOME WAS SHOWN FROM THE BUILDING AND ASSESSING OFFICER HAS TAKEN NOTE OF THE FACT THAT THIS BUILDING WAS JOINTLY HELD WITH HER HUSBAND IN PARTNERSHIP FIRM M/S. KENNYS HOUSING COMPLEX ITA NO. 3260/M/2013 4 AND AFTER THE DEATH OF HER HUSBAND ON 26.2.2004, SHE BECAME THE OWNER OF THE PROPERTY AND FIRM WAS DISSOLVED. THEREFORE, THE LD. COUNSEL SUBMITS THAT THERE IS NO JUSTIFICA TION IN TAKING ONLY THE VALUE DECLARED BY THE ASSESSEE IN THE VDIS CERTIFICATE. 8. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSEE HAS NOT GIVEN ANY DETAILS IN RESPECT OF THE COST OF CONSTRUCTION O F THE BUILDING AND THE ONLY EVIDENCE WHICH IS ON RECORD IS THAT THE VDIS DECLARATION MADE BY THE KENNYS HOUSING COMPLEX TO SUGGEST THAT THE COST OF CONSTRUCTION OF THE HOUSING COMPLEX IS RS. 6,06,000/ - ONLY . THEREFORE, HE SUBMITS THAT THE AO JUSTIFIED IN ADOPTING THE COST OF CONSTRUCTION OF RS. 6,06,000/ - INSTEAD OF RS. 22,92,441/ - ADOPTED BY THE ASSESSEE. 9. WE HAVE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES, EVIDENCES PRODUCED BEFORE US. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAD INCURRED RS. 22,92,441/ - FOR THE CONSTRUCTION OF THE BUILDING AS AGAINST RS. 6,06,000/ - ADOPTED BY THE AO . THE CONTENTION OF THE ASSESSEE IS THAT THE AO HIMSELF ADMITS THAT THE ASSESSEE HAS SHOWN RENTAL INCOME OF RS. 7,68,900/ - IN THE ASSESSMENT YE AR 2005 - 06 AND THE PROPERTY WHICH WAS HELD JOINTLY WITH HER HUSBAND IN PARTNERSHIP BECAME THE PROPERTY OF THE ASSESSEE ON THE DEATH OF HER HUSBAND ON 26.2.2004 ON DISSOLUTION OF THE FIRM. THEREFORE, IT IS THE CONTENTION OF THE LD. COUNSEL THAT THE ASSES SEE HAS SPENT RS. 22,92,41/ - AS COST OF CONSTRUCTION, IT SHOULD BE TAKEN FOR THE PURPOSE OF INDEXATION IN COMPUTING LONG TERM CAPITAL GAIN. HOWEVER, THE AO ADOPTED THE VALUE DECLARED BY THE FIRM KENNYS HOUSING COMPLEX IN THE VDIS SCHEME AT RS. 6,06,000/ - THOUGH THE ASSESSEE CONTENDS THAT COST OF CONSTRUCTION WAS AT RS. 22,92,441/ - . ITA NO. 3260/M/2013 5 9.1. FROM THE PAPER BOOK PAGES 25,28 AND 35, THE BALANCE SHEETS OF KENNY HOUSING COMPLEX FOR THE YEAR S 2008, 2007 AND 2005 MARCH 31 ST RESPECTIVELY CLEARLY SHOW THAT THE BUILDING COST WAS REFLECTED AT RS. 24,91,941/ - . THIS WAS ACCEPTED BY THE ASSES S ING OF F ICER FOR THESE YEARS. HAVING ACCEPTED THAT THE ASSESSEE INCURRED COST OF CONSTRUCTION AT RS. 24,91,941/ - ON THE BUILDING IN TAMILNAD U, WE DO NOT SEE A VALID REASON FOR REJECTING THE ASSES S EES CONTENTION THAT THE COST OF CONSTRUCTION IS NOT RS. 6,06,000/ - BUT IS RS. 22,92, 4 41/ - . THUS WE DIRECT THE AO TO CONSIDER THE COST OF CONSTRUCTION OF BUILDING AT RS. 22,92, 4 41/ - AS TAKEN BY THE ASSESSEE FOR COMPUTING CAPITAL GAINS AND INDEXATION. 10. THE NEXT ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 2,57,888/ - ON ACCOUNT OF ESTIMATED DEEMED LET OUT VALUE OF THE SECOND PROPERTY OWNED BY THE APPELLANT. 11. BRIEF FACTS ARE THAT THE AO WHILE COMPLETING THE ASSESSMENT NOTICED THAT THE ASSESSEE HAS NOT OFFERED ANY INCOME IN RESPECT OF THE TWO FLATS OWNED BY HER ONE AT SANTACRUZ AND ONE AT BANDRA WHICH WERE VACANT THROUGHOUT THE YEAR. THE AO HAS TAKEN 7% OF THE FLAT VALUE OF BANDRA FLAT AS ALV AND AFTER DEDUCTING 30% U/S. 24, THE BALANCE OF RS. 2,57,888/ - WAS SUBJECTED TO TAX UNDER INCOME FROM HOUSE PROPERTY . 1 2. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) BUT THE LD. CIT(A) IN T HE ABSENCE OF ANY REPRESENTATION AFFIRMED THE ORDER OF THE AO. ITA NO. 3260/M/2013 6 13. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE AO HAS TAKEN ONE OF THE PROPERTIES I.E. FLAT AT SANATACRUZ AS SELF OCCUPIED PROPERTY AND COMPUTED THE ALV OF THE FLAT AT BANDRA. THE LD. COUNSEL SUBMITS THAT INSTEAD OF TAKING SANTACRUZ AS SELF OCCUPIED PROPERTY, THE AO SHOULD HAVE TAKEN BANDRA FLAT AS SELF OCCUPIED PROPERTY AND COMPUTED THE ALV FOR THE SANTACRUZ FLAT. HE SUBMITS THAT THE ASSESSEE HAD OPTION TO CHOOSE WHICH SHOULD BE TAK EN AS SELF OCCUPIED PROPERTY AS PER SUB - SECTION 4 OF SEC. 24. THEREFORE, HE REQUESTED THAT THE AO BE DIRECTED TO CONSIDER BANDRA FLAT AS SELF OCCUPIED PROPERTY INSTEAD OF SANTACRUZ PROPERTY. 14. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDERS OF THE LOWER AUTHORITIES. 15. ON HEARING BOTH THE SIDES, WE ARE INCLINED TO SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR RE - EXAMINING THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW. THUS, WE RESTORE THIS ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICAT ION IN ACCORDANCE WITH LAW. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY , 201 6 . SD/ - SD/ - ( RAJESH KUMAR ) ( C.N. PRASAD ) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI ; DATED : 24 TH FEBRUARY , 201 6 . . ./ RJ , SR. PS ITA NO. 3260/M/2013 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI