Shri Dinesh Bhailalbhai Patel, Anand V. The Dy.CIT, Intl. Taxn., Vadodara

ITA 3650/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7909 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 29-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Cost of acquisition; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO. 3650/AHD/2015 (ASSESSMENT YEAR: 2012-13) SHRI DINESH BHAILALBHAI PATEL HARIDAS NI KHADKI, MOTU ADADH ANAND 388011 GUJARAT APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, VADODARA RESPONDENT PAN: ADOPP8844N & ITA NO. 3651/AHD/2015 (ASSESSMENT YEAR: 2012-13) SHRI KAMLESH BHAILALBHAI PATEL HARIDAS NI KHADKI, MOTU ADADH ANAND 388011 GUJARAT APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, VADODARA RESPONDENT PAN: BLQPP5766A & ITA NO. 3652/AHD/2015 (ASSESSMENT YEAR: 2012-13) SHRI JITENDRA BHAILALBHAI PATEL HARIDAS NI KHADKI, MOTU ADADH ANAND 388011 GUJARAT APPELLANT ITA NOS. 3650 TO 3652/AHD/2015 (DINESH B. PATEL & 2 OTHERS) - 2 - VS. THE DY. COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, VADODARA RESPONDENT PAN: ADUPP3148D /BY ASSESSEE : SHRI MUKUND BAKSHI, A.R. /BY REVENUE : SHRI PRASOON KABRA, SR. D.R. /DATE OF HEARING : 28.11.2017 /DATE OF PRONOUNCEMENT : 22.12.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THESE THREE ASSESSEES APPEALS FOR ASSESSMENT YEAR 2012-13 ARISE AGAINST THE CIT(A)-13, AHMEDABADS COMMON ORDER DATED 26.10.201 5 IN CASE NOS. CIT(A)- 13/AHD/INT. TAXN./106/2014-15, CIT(A)-13/AHD/INT.TA XN./107/2014-15 & CIT(A)- 13/AHD/INT. TAXN./108/2014-15 UPHOLDING ASSESSING O FFICERS IDENTICAL ACTION INTER ALIA DISALLOWING SECTION 54EC DEDUCTION CLAIM(S) OF RS.42LACS EACH AS WELL AS DETERMINING INDEXED COST OF THE CAPITAL ASSET IN QU ESTION BY APPLYING ITS MARKET RATE AS ON 01.04.1981 TO BE MEASURING 2996SQ.MTRS. INSTE AD OF TOTAL AREA OF 3946 SQ.MTRS.; RESPECTIVELY, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WE COME TO THE FORMER ISSUE OF SECTION 54EC DEDU CTION DISALLOWANCE OF RS.42LACS EACH IN ALL THESE CASES. THERE IS NO DIS PUTE THAT THREE ASSESSEES CO-OWNED THE CAPITAL ASSET IN QUESTION IN THE NATURE OF NON- AGRICULTURAL LAND IN REVENUE SURVEY NO.549/1 TP SCHEME NO.7, FINAL PLOT NO.187 A T ANAND. THEY ENTERED INTO A DEVELOPMENT AGREEMENT WITH DIRECTORS OF M/S. DEVE RAJ INFRASPACE PVT. LTD. ON 07.02.2012 FOR CONSIDERATION AMOUNT OF RS.4,28,42,8 00/- INCLUDING ADVANCE MONEY OF RS.1,70,00,000/-. THESE ASSESSEES HANDED OVER POSSESSION OF THE PROPERTY AS ITA NOS. 3650 TO 3652/AHD/2015 (DINESH B. PATEL & 2 OTHERS) - 3 - WELL TO THE SAID DEVELOPER. THE VENDEE IN QUESTION THEREAFTER PAID THE REMAINING CONSIDERATION AMOUNT AS WELL WHOSE LAST INSTALLMENT CAME ON 28.03.2013 AS PER THE REGISTERED SALE DEED EXECUTED ON 25.07.2013. THESE ASSESSEES THEREFORE RAISED THEIR 54EC DEDUCTION CLAIM TO THE TUNE OF RS.34LACS AS ON 31.03.2012. THERE IS NO DISPUTE THAT BOTH THE LOWER AUTHORITIES ACCEPTED TH E SAME TO BE CORRECT. THE ISSUE HOWEVER AROSE BETWEEN THE PARTIES QUA THE REMAINING RE-INVESTMENT OF CAPITAL GAINS AMOUNTING TO RS.42LACS EACH IN THESE THREE CASES. BOTH THE LOWER AUTHORITIES ARE OF THE OPINION THAT THE SAID DEDUCTION CLAIM HAPPENED TO BE MADE WELL BEYOND SIX MONTHS FROM THE DATE OF TRANSFER OF THE CAPITAL AS SET IN QUESTION COMING TO BE THE DATE OF AGREEMENT ITSELF I.E. 07.02.2012 AS THE ASS ESSEES HAD VERY WELL HANDED OVER THE CAPITAL ASSET TO THE VENDEE(S) IN QUESTION. TH EY THEREFORE DECLINED THE IMPUGNED DEDUCTION IN ASSESSMENT AS WELL AS THE LOW ER APPELLATE PROCEEDINGS. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. COMMON CASE RECORDS COMPRISING OF DEVELOPMENT AGREEMENT DA TED 07.02.2012, SALE DEED DATED 25.07.2013, SECTION 17(1A) OF REGISTRATION AC T, 1908, JUDICIAL PRECEDENTS C. S. ATWAL VS. CIT 378 ITR 244 (P&H), ACIT VS. JAWAHA RLAL L. AGICHA 75 TAXMANN.COM 121 (MUM-TRIB), LEMES E. DSOUZA VS. IT O ITA NO.5802/MUM/2013 DATED 10.04.2017 AND CIT VS. SUBHASH VINAYAK SUPNEK AR (2017) 77 TAXMANN.COM 226 (BOMBAY) ALONGWITH BOARDS CBDT CIRCULAR NOS. 3 59, 762, 794 DATED 10.05.1983, 18.02.1998 & 09.08.2000 STAND PERUSED. BOTH THE LEARNED REPRESENTATIVES REITERATE THEIR RESPECTIVE PLEADING S QUA THE ISSUE IN QUESTION AS TO WHETHER IT IS THE AGREEMENT DATED 07.02.2012 OR THE LAST DATE OF RECEIVING THE SALE CONSIDERATION IN QUESTION WHICH FORMS THE RELEVANT TRANSFER FOR THE PURPOSE OF COMPUTING SIX MONTHS TIME PERIOD FOR THE PURPOSE OF REINVESTMENT OF THE IMPUGNED CAPITAL GAINS. WE FIND THAT A CO-ORDINATE BENCHS DECISION HEREINABOVE IN LEMES E. DSOUZA CASE HAS ALREADY SETTLED THIS ISSUE IN ASSE SSEES FAVOUR IN ALLOWING THE VERY DEDUCTION CLAIM U/S.54EC OF THE ACT MADE WITHIN SIX MONTHS OF RECEIVING LAST INSTALLMENTS OF THE SALE CONSIDERATION IN QUESTION. THIS IS NOT THE REVENUES CASE THAT THERE HAS BEEN ANY INORDINATE DELAY ON ASSESSE ES PART IN REINVESTING THE IMPUGNED CAPITAL GAINS IN REC BONDS IN QUESTION. W E THEREFORE RELY ON ABOVE CO- ORDINATE BENCHS DECISION TO ADOPT A LIBERAL INTERP RETATION OF THE IMPUGNED ITA NOS. 3650 TO 3652/AHD/2015 (DINESH B. PATEL & 2 OTHERS) - 4 - DEDUCTION PROVISION IN PECULIAR FACTS HEREIN. THE IMPUGNED DISALLOWANCE OF RS.42LACS EACH IN ALL THREE CASES IS DIRECTED TO BE DELETED. THIS RENDERS ASSESSEES ADDITIONAL GROUNDS RAISED IN ALL THESE THREE APPEAL S IN ASSAILING CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION IN TREATING THE ABOVE AGREEMENT DATED 07.02.2012 AS TRANSFER U/S. 2(47) OF THE ACT AS INFRUCTUOUS. THE FIRST IDENTICAL SUBSTANTIVE GROUND IN ALL THESE APPEALS IS ACCEPTED. 4. WE NOW ADVERT TO THE LATTER COMMON ISSUE OF AREA OF THE CAPITAL ASSET IN QUESTION I.E. WHETHER IT IS 2996 SQ.MTRS. OR 3946SQ .MTRS. AS ON 01.04.1981. THE CIT(A) DISCUSSES THE INSTANT ISSUE AS FOLLOWS: 8. WITH RESPECT TO GROUND NO. 3, THE APPELLANT HAS RAISED THE GROUND AS TINDER:- '3. THE LD. DCIT WHILE DETERMINING THE INDEXED COST OF LAND TRANSFERRED HAS ERRED IN APPLYING THE MARKET RATE OF LAND AS AT 1.4.1981 TO ONLY 2996 SQUARE METERS AND NOT ON THE TOTAL LAND OF 3946 WHI CH EXISTED ON 1.4.1981. THE LD. DCIT WHILE ADOPTING THE RATE AS PER, THE VA LUATION REPORT HAS CONVENIENTLY DISREGARDED THE FACT STATED IN THE VAL UATION REPORT THAT THE ORIGINAL LAND AS IT EXISTED ON THE VALUATION DATE W AS 3946 METERS WHICH GOT REDUCED TO 2996 METERS ON ACCOUNT OF DEDUCTIONS DUE TO IMPLEMENTATION OF TOWN PLANNING SCHEME. THE ADDITION OF RS. 1,78,157 MADE ON THIS ACCOUNT DESERVES TO BE DELETED.' 9. WITH RESPECT OF GROUND NO. 3, THE A.O. HAS MADE CERTAIN FACTUAL OBSERVATIONS IN PARA-4.1, 4.2 AND 4.3. FOR THE SAK E OF READY REFERENCE, THE PARAS ARE REPRODUCED HEREIN AS UNDER:- 4.1 IT WAS NOTICED FROM THE SUBMISSION OF THE ASSE SSEE THAT THE ASSESSEE'S SHARE IN THE PROPERTY SOLD WAS 20% . THE TOTAL SALE CONSIDERATION, RECEIVED WAS RS.4,28,42,800/-. THE TOTAL AREA OF THE PROPERTY SOLD WAS 2996 SQ. MTRS. IN ORDER, TO ASCE RTAIN THE COST OF ACQUISITION, THE ASSESSEE HAS RELIED ON A VALUATION REPORT PREPARED BY A GOVT. REGISTERED VALUER. AS PER THE VALUATION REP ORT, THE TOTAL ARE OF THE SKID PROPERTY HAS BEEN QUOTED AS 3946 SQ. MTRS. IT IS NOTED THAT AS PER THE VALUATION REPORT, THE VALUE PER SQ. RN.TR. OF THE S AID PROPERTY HAS BEEN ASCERTAINED AS RS.119 PER SQ. MTR. THE TOTAL AREA HAS BEEN TAKEN AS 3946 SQ. MTRS. HENCE, THE TOTAL VALUE O THE PROPERTY AT 1982 PRICES HAS BEEN ASCERTAINED AS 3946 X 119 = RS.4,69,574/-. APPLYI NG THE COST INFLATION INDEX, INDEXED COST OF ACQUISITION HAS BEEN WORKED OUT AT RS.33,48,500/- (1/5 TH OF WHICH IS RS.7,37,900/-). THUS, THERE ARE TWO PROBLEMS WITH THE INDEXED COST OF ACQUISITION USED BY THE ASSESSEE. I) FIRST, IT IS AT VARIANCE WITH THE VALUATION, WOR KED OUT BY THE VALUATION OFFICER. ITA NOS. 3650 TO 3652/AHD/2015 (DINESH B. PATEL & 2 OTHERS) - 5 - II) SECONDLY, THE VALUATION OF RS.4,69,574/- WOR KED OUT BY THE VALUATION OFFICER PERTAINS TO AN AREA OF 3946 S Q. MTRS. OF THE SAID PROPERTY AS AGAINST 2996 SQ. MTRS. OF THE LAND ACTUALLY SOLD BY THE ASSESSEE. 4.2 IN RELATION TO THE FIRST ISSUE, IT IS NOTICED T HAT THE VALUATION OFFICERS HAS INCORRECTLY TAKEN THE CII AS 713 INSTEAD OF 785 FOR F.Y. 2011-12. ONCE THE CORRECT CII IS SUBSTITUTED, THE VALUE OBTAINED TALLIES WITH THE VALUE USED BY THE ASSESSEE. 4.3 HOWEVER, ON THE SECOND ISSUE, IT IS SEEN THAT T HE LAND SOLD BY THE ASSESSEE IS LESS THAN THE LAND PLOT FOR WHICH THE V ALUATION HAS BEEN DONE. APPLYING THE RATE OF RS.L 19 PER SQ. MTR. TO THE AR EA OF 2996 SQ. MTR OF LAND SOLD, THE VALUE WORKS OUT TO RS.3,56,524/-. APPLYIN G THE CII FOR F.Y. 2011- 12 AS 785, THE INDEXED COST OF ACQUISITION WORKS OU T TO RS.27,98,713/-. I/5TH OF THIS AMOUNT WORKS OUT TO RS. 5,59,743/-. T HUS, TOTAL LONG TERM CAPITAL GAINS OF THE ASSESSEE IS WORKED OUT AS FOLL OWS: TOTAL SALE CONSIDERATION RS.42842800/- TOTAL INDEXED COST OF ACQUISITION RS. 2 798713/- TOTAL LONG TERM CAPITAL GAINS RS.40044087/- SHARE OF ASSESSEE RS. 8008817/- 20. THE APPELLANTS WITH RESPECT TO THIS GROUND HAS SUBMITTED AS UNDER:- [2] INDEXED COST WORKING: THE ASSESSEE CLAIMED IND EXED COST OF ACQUISITION OF LAND ON THE BASIS OF 3946 SQUARE ME TERS OF LAND AS IT EXISTED ON 01.04.1981 AS PER THE REVENUE RECORDS. DUE TO TOWN PLANNING SCHEME THE LAND AREA WHICH WAS ORIGINALLY 3946 SQ METERS G OT REDUCED TO 2996 SQUARE METERS AS A RESULT OF DEDUCTIONS TO THE LAND . THE LD. DCIT WHILE DETERMINING THE INDEXED COST OF LAND APPLIED THE MA RKET RATE OF LAND AS AT 1.4.1981 TO ONLY 2996 SQUARE METERS AND NOT ON THE TOTAL LAND OF 3946 WHICH EXISTED ON 1.4.1981. THE LD. DCIT WHILE ADOP TING THE AREA OF 2996 SQ METERS ON THE BASIS OF THE VALUATION REPORT .HAS NOT CONSIDERED THE FACT THAT THE COST TO THE ASSESSEE HAS TO BE ALLOWED FOR THE ENTIRE AREA OF LAND BEFORE THE TOWN PLANNING SCHEME DEDUCTIONS. THE VAL UATION REPORT ALSO CLEARLY STATES THAT THE ORIGINAL LAND AS IT EXISTED ON 01.04.1981 AS PER THE REVENUE RECORDS WAS 3946 METERS WHICH GOT REDUCED T O 2996 METERS ON ACCOUNT OF DEDUCTIONS DUE TO IMPLEMENTATION OF TOWN PLANNING SCHEME. THE LD DCIT SHOULD HAVE CONSIDERED THIS FACT WHICH IS CLEARLY MENTIONED IN THE VALUATION REPORT. IN VIEW OF THE ABOVE IT IS SUBMITTED THAT THE DISAL LOWANCE OF DEDUCTION U/S 54EC CLAIMED FOR RS.44,30,660/- AND DISALLOWANCE OF INDEXED COST OF ACQUISITION OF LAND RS. 1,78,157 BE DELETED.' FINDING:- 21. I HAVE PERUSED THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSIONS MADE IN THIS REGARD. I AM OF THE VIEW THAT THE AC TION OF THE A.O. HAS BROUGHT OUT THE CORRECT FACTUAL POSITION WITH RESPECT TO THE AR EA OF THE PROPERTY AS EVIDENT FROM ITA NOS. 3650 TO 3652/AHD/2015 (DINESH B. PATEL & 2 OTHERS) - 6 - THE VALUATION REPORT AND WITH RESPECT TO SALE DEED COMPREHENSIVELY. THE VARIATION OF VALUATION AS WORKED OUT BY THE VALUATION OFFICER AND WHAT IS ADOPTED BY THE APPELLANT IS QUITE EVIDENT. THE VALUATION OFFICER H AS TAKEN AN AREA OF 3946 SQ. MTRS. AGAINST THE AREA OF 2996 ADOPTED BY THE APPEL LANT. I FIND THAT THE CONTENTION OF THE APPELLANT IN THIS REGARD, WITHOUT ANY BASIS OR EVIDENCES, WHICH CAN CONTRAVENE THE OBSERVATIONS MADE BY THE A.O. THE A CTION OF THE A.O. ON THE BASIS OF FACTUAL OBSERVATIONS IN MAKING AN ADDITION OF RS .1,78,157/- IS SUSTAINABLE. THE SAME IS, THEREFORE CONFIRMED. 5. LEARNED COUNSEL REPRESENTING ASSESSEE FAILS TO R EBUT CORRECTNESS OF THE ABOVE EXTRACTED CLINCHING CONCLUSION THAT THE VALUATION O FFICER HAD RIGHTLY ADOPTED THE AREA IN QUESTION TO BE 3946SQ.MTRS. AS ON 01.04.198 1 WITH THE HELP OF ANY RELEVANT EVIDENCE IN THE PAPER BOOK. WE THEREFORE DECLINE T HIS LATTER SUBSTANTIVE GROUND IN ALL THREE CASES. 6. THESE THREE ASSESSEES APPEALS ARE PARTLY ALLOWE D. [PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF DECEMBER , 2017.] SD/- SD/- ( AMARJIT SINGH ) (S. S. GODARA ) ACCOUNTANT MEMBER JUDIC IAL MEMBER AHMEDABAD: DATED 22/12/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE . ! / CONCERNED CIT 4. !- / CIT (A) (. )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1. +23 45 / GUARD FILE. BY ORDER / . // . /0