KAPIL ASHOK BAJAJ, MUMBAI V. ACIT 20(1), MUMBAI

ITA 3565/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7717 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Assessee Lawyers: KIRAN S MEHTA
• Keywords: Opportunity of being heard; Fair market value; Valuation report
• Section: 143(3); 54F; 234B; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 3565/MUM/2014 ASSESSMENT YEAR: 2009-10 SHRI KAPIL ASHOK BAJAJ VS. ACIT 20(1) FLAT NO. 9, SEVEN BUNGLOWS MUMBAI J.P. RD. |ANDHERI (W) MUMBAI 400061 PAN NO. AFBPB7764A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KIRAN S. MEHTA, AR REVENUE BY: SHRI M.V. RAJGURU, DR DATE OF HEARING : 05/0 1/2017 DATE OF PRONOUNCEMENT: 29/03/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 31, MUMBAI AND ARISES OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER:- I. THE LEARNED CIT(A) ERRED IN CONFIRMING THE COMPUTATI ON OF LONG TERM CAPITAL GAINS MADE BY THE LEARNED AO FROM SALE OF FLAT NO. 1/ 17 IN OM VISHAL NAGAR AT RS. 60,48,953/- AS AGAINST THE TAXABLE LONG TERM CAPITAL GAINS OF RS. 29,59,774/- DECLARED BY THE APPELLANT AND THEREBY CONF IRMING THE ADDITIONS OF RS. 29,59,774/- MADE TO THE LONG TERM CAPITAL GAI NS BY THE LEARNED AO. II. THE LEARNED CIT(A) ERRED IN CONFIRMING THE RESTRICTI NG THE DEDUCTION CLAIMED U/S 54 TO 50% OF THE AMOUNT OF LONG TERM CAP ITAL GAIN INVESTED BY ITA NO. 3565/MUM/2014 2 THE APPELLANT IN THE NEW RESIDENTIAL PROPERTY AND THE REBY CONFIRMING THE ADDITION OF RS. 24,28,699/- MADE TO THE INCOME FROM L ONG TERM CAPITAL GAINS BY THE LEARNED AO. III. THE LEARNED CIT(A) ERRED IN CONFIRMING THE AFORESAID A DDITION OF RS. 24,28,699/- BY RELYING ON THE DECISION OF HON'BLE BO MBAY HIGH COURT IN THE CASE OF PRAKASH VS. ITO 173 TAXMANN 311 WITHOUT GIV ING THE APPELLANT AN OPPORTUNITY TO DEAL WITH AND DISTINGUISH THE SAID DECISI ON. IT IS RESPECTFULLY SUBMITTED THAT THE SAID DECISION RENDERED IN THE CONTEX T OF SECTION 54F IS DISTINGUISHABLE AND IS NOT APPLICABLE TO THE CASE OF THE APPELLANT .THE LEARNED CIT(A) ALSO ERRED IN NOT CONSIDERING AND DEALING WITH THE DECISIONS OF HON'BLE DELHI AND KARNATAKA HIGH COURTS IN FAVOUR OF THE APPELLANT AND COPIES WHEREOF WERE FILED IN APPEAL PROCEEDINGS. IV. THE LEARNED CIT(A) ERRED IN CONFIRMING THE FAIR MARK ET VALUE OF THE SAID FLAT AS AT 01/04/1981 AT RS. 86,688/- AS AGAINST RS. 177 ,938/- CLAIMED BY THE APPELLANT AND THEREBY CONFIRMING THE INDEXED COST OF THE SAID FLAT AT RS. 594,524/- AGAINST THE INDEXED COST OF RS. 10,25,017/- CLAIMED BY THE APPELLANT WHICH RESULTED INTO ADDITION OF RS. 440,493/ -. V. THE LEARNED CIT(A) ERRED IN CONFIRMING THE INTEREST LEVIED U/S 234A / 234B AND 234C. 3. IN A NUTSHELL, THE FACTS ARE THAT THE ASSESSEE I S A DEVELOPER OF HIS PROPRIETARY CONCERN M/S. BAJAJ CONSTRUCTION. THE ASSESSING OFFICER (AO) NOTICED DURING THE COURSE OF ASSESSMENT PROCEE DINGS THAT THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAINS OF RS. 3 0,89,179/- ON SALE OF PROPERTY [ FLAT NO. A/17, 4 TH FLOOR OF BUILDING KNOW AS OM VISHAL NAGAR, BUILDING A, PLOT NO. 7, S.V. ROAD, BORIVAL I (W), MUMBAI -92] WHICH WAS RECEIVED BY HIM BY WAY OF INHERITANCE FRO M HIS FATHER SHRI ASHOK BAJAJ, WHO DIED INTESTATE ON 10.05.2007. THE ASSESSEE HAD FURNISHED BEFORE THE AO AN UNREGISTERED AGREEMENT O F THE SAID PROPERTY DATED 04.09.1980 EXECUTED BETWEEN SHRI ASH OK BAJAJ AND SHRI MAGANLAL CHAGANLAL SHAH, AS PER WHICH, THE ASS ESSEES FATHER HAD PURCHASED THE SAID PROPERTY FOR AN AMOUNT OF RS. 45 ,251/-. THE ASSESSEE HAD FILED BEFORE THE AO THE VALUATION REPO RT OF M/S. ANMOL SEKRI CONSULTANT PVT. LTD. DATED 07.09.2009 AS PER WHICH THE SAID PROPERTY WAS VALUED AT RS. 1,77,938/- AS ON 01.04.1 981. THE AO WAS ITA NO. 3565/MUM/2014 3 NOT SATISFIED WITH THE SAID VALUATION REPORT SUBMIT TED BY THE ASSESSEE. THEREFORE, HE INVOKED THE PROVISIONS OF SECTION 55A AND REFERRED THE MATTER TO THE DVO, WHO ESTIMATED THE VALUE AT RS. 8 6,688/- AS ON 01.04.1981. THE AO FURTHER OBSERVED THAT THE ASSESS EE HAD MADE INVESTMENTS OF THE SALE PROCEEDS IN RESPECT OF THE FLAT AND CLAIMED DEDUCTION U/S 54 ON THE FULL AMOUNT INVESTED. BUT A S PER THE SALE AGREEMENT THE ASSESSEE OWNED ONLY 50% OF THE PROPER TY. IN VIEW OF THE ABOVE, THE AO HELD THAT DEDUCTION U/S 54 AVAILA BLE TO THE ASSESSEE WAS ALLOWABLE ONLY TO THE EXTENT OF 50% OF THE TOTA L COST OF THE NEW PROPERTY. ACCORDINGLY, HE WORKED OUT THE LONG TERM CAPITAL GAINS AT RS. 60,48,953/- AS AGAINST 30,89,179/- SHOWN BY THE ASSESSEE. 4. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ORD ER OF THE AO BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) AGREE D WITH THE VALUATION GIVEN BY DVO AS THE VALUATION ADOPTED BY THE ASSESSEES VALUER IS BASED ON RATES MENTIONED IN INDIAN VALUER S DICTIONARY, WHICH IS NOT A GOVERNMENT AUTHORISED DOCUMENT. THER EFORE, HE UPHELD THE DETERMINATION OF FMV AT RS. 86,688/-. TH EREAFTER, THE LEARNED CIT(A) FOUND THAT THE PROPERTY WAS PURCHASE D IN JOINT NAME OF THE ASSESSEE, HIS AUNT AND UNCLE, THUS GIVING RI GHT OVER THE SAID PROPERTY TO ALL THREE PERSONS, WITH THE ASSESSEE HA VING 50% OF SHARE. RELYING ON THE DECISION IN THE CASE OF PRAKASH VS. ITO (2008) 173 TAXMANN 311 (BOM), THE LEARNED CIT(A) HELD THAT THE AO CORRECTLY RESTRICTED THE ASSESSEES CLAIM OF DEDUCTION U/S 54 TO 50% 5. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE S UBMITS (I) COPY OF WRITTEN SUBMISSION FILED BEFORE LEARNED CIT(A), (II) COPY OF VALUATION REPORT OF ANMOL SEKRI CONSULTANTS PVT. LT D., (III) COPY OF VALUATION REPORT OF ASSISTANT VALUATION OFFICER, (I V) COPY OF AGREEMENT FOR SALE IN REFERENCE, (V) COPY OF LEDGER ACCOUNT S HOWING PAYMENTS FOR ITA NO. 3565/MUM/2014 4 FLAT PURCHASE, (VI) COPY OF DECISION OF HON'BLE KAR NATAKE HIGH COURT IN THE CASE OF DI (IT) VS. MRS. JENNIFER BHIDE, (VII) COPY OF DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAM AL WAHAL, (VIII) COPY OF BANK PASS BOOK OF APPELLANT REFLECTING PAYM ENTS FOR THE FLAT IN REFERENCE (IX) COPY OF AFFIDAVIT OF SHRI RANJIT MUK HI AND MRS. LATA MUKHI, (X) COPY OF DEED OF RECTIFICATION AND (XI) C OPY OF UNDERTAKING OF APPELLANT. 6. ON THE OTHER HAND, THE LEARNED DR SUPPORTS THE O RDER PASSED BY THE LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE BEGIN WITH THE 4 TH GROUND OF APPEAL. WE FIND THAT THE VALUATION REPORT GIVEN BY THE ASSISTANT VA LUATION OFFICER I, MUMBAI IS BASED ON THE REASONS THAT (I) THE VALUATI ON REPORT BY ANMOL SEKRI CONSULTANTS PVT. LTD. ADOPTED A VERY HI GH RATE OF RS. 390 SQ.FT. WITHOUT ANY JUSTIFICATION, ALSO THE VALUER, HAS NOT GIVEN ANY SALE INSTANCE TO SUPPORT HIS RATE, (II) THE INDIAN VALU ERS DIRECTORY BY SANTOSH KUMAR & SUNIT GUPTA IS NOT A GOVERNMENT APP ROVED DOCUMENT TO ADOPT THE RATE, AND THE RATE ADOPTED IN THIS PARTICULAR CASE IS VERY HIGH AS COMPARED TO THE SALE INSTANCES IN NEARBY AREA IN THE YEAR 1981. AS THE VALUATION REPORT BY THE ASSIS TANT VALUATION OFFICER I, MUMBAI IS BASED ON RATES DERIVED FROM COMPARABLE SALE INSTANCES AROUND THE PROPERTY IN NEARBY LOCALITY AF TER TAKING INTO ACCOUNT THE RELEVANT PROS AND CONS AND OTHER FACTOR S SUCH AS PHYSICAL, SOCIAL, ECONOMICAL, LEGAL, STATUS AND TIME GAP, WE CONSIDER THE RATE OF RS. 190 PER SQ.FT. AS ON 01.04.1981 AS FAIR AND REA SONABLE. THUS THE ABOVE GROUND OF APPEAL IS DISMISSED. 7.1 NOW WE TURN TO 1 ST , 2 ND AND 3RD GROUND OF APPEAL. WE FIND THAT THE LEARNED COUNSEL OF THE ASSESSEE HAS RIGHTLY MEN TIONED THAT THE ITA NO. 3565/MUM/2014 5 LEARNED CIT(A) HAS RELIED ON THE JUDGEMENT OF THE H ON'BLE BOMBAY HIGH COURT IN PRAKASH (SUPRA) WITHOUT GIVING HIM AN OPPORTUNITY TO DEAL WITH AND DISTINGUISH THE SAID DECISION. THIS I S EVIDENT FROM THE APPELLATE ORDER PASSED BY THE LEARNED CIT(A). IN VI EW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) IN RES PECT OF THE ABOVE GROUNDS OF APPEAL AND RESTORE THE MATTER TO HIM TO PASS AN ORDER AS PER THE PROVISIONS OF THE ACT AFTER GIVING REASONAB LE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE INCLUDING HIS EXPLANATI ON IN THE CASE OF PRAKASH (SUPRA) . THE ASSESSEE IS ALSO DIRECTED TO FILE THE RELEVAN T DETAILS BEFORE THE LEARNED CIT(A). THUS, THE 1 ST , 2 ND AND 3 RD GROUNDS OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/03/2017 SD/- SD/- (MAHAVIR SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI: DATED: 29/03/2017 BISWAJIT, SR. P.S. 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