TITUS JOHN D'MELLO, MUMBAI V. ITO 23(1)(4), MUMBAI

ITA 3979/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83574 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 29-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SAMI
• Assessee Lawyers: KARTIK S IYER
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Valuation report

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI , ! '# $ $ $ $ , % && , , '# ' BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUICIAL MEMBER ./ I.T.A. NO.3979/MUM/2012 ( ( ( ( ( / ASSESSMENT YEAR : 2008-09 SHRI TITUS JOHN DMELLO, 1, DMELLO HOUSE, KANJURMARG VILLAGE, KANJURMARG (E), MUMBAI / VS. THE ITO 23(1)(4), MUMBAI #) ! ./ %* ./ PAN/GIR NO. : AKFPD 2914B ( )+ / APPELLANT ) .. ( ,-)+ / RESPONDENT ) )+ . / APPELLANT BY: SHRI KARTIK S. IYER ,-)+ / . / RESPONDENT BY: SHRI VIJAY KUMAR SAMI / 01! / DATE OF HEARING :13.08.2014 23( / 01! / DATE OF PRONOUNCEMENT :20.08.2014 '4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-33, MUMBAI DT. 30.3.2012 PERTAINING TO A.Y. 2008-09. 2. THE ASSESSMENT HAS BEEN DONE ON THE BASIS OF AIR REPORT GENERATED FROM THE SYSTEM WHEREIN THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAS SOLD LAND. THE STAMP DUTY OF THE LAND SOLD WAS AT RS. 8,69,90,000/-. THE AO NOTICED THAT THE ASSESSEE HAS NOT REFLECTED THIS SALE CONSIDERATION ITA NO. 3979/M/2012 2 IN HIS RETURN OF INCOME. THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME. VIDE LETTER DT. 16.11.2010, THE ASSESSEE FILED A DE TAILED REPLY STATING THAT THE PROPERTY WAS INHERITED BY HIM. IT WAS EXPLAINE D THAT THE ASSESSEE DID NOT OFFER CAPITAL GAINS BECAUSE THE PROPERTY WAS A SLUM DECLARED PROPERTY WHICH WAS OCCUPIED BY 750 TENANTS WHICH WAS TRANSFE RRED ON AS IS WHERE IS BASIS WITH THE CONDITION THAT THE REQUIRE MENTS OF THE TENANTS WILL BE LOOKED UPON BY THE BUILDER. IT WAS EXPLAIN ED THAT THE VALUE OF THE PROPERTY AS PER GOVERNMENT VALUATION MAY BE AT RS. 8.69 CRORES BUT THE SAME HAS BEEN SOLD FOR RS. 2 CRORES WITH ALL ITS EN CUMBRANCES AND SINCE THERE WAS A LOSS ON COMPUTATION OF LONG TERM CAPITA L GAINS, THE SAME WAS NOT REFLECTED IN THE RETURN OF INCOME. THE CON TENTIONS OF THE ASSESSEE DID NOT FIND FAVOUR FROM THE AO WHO PROCEEDED BY CO MPUTING THE CAPITAL GAINS BY TAKING THE STAMP DUTY VALUATION AS THE FUL L VALUE OF SALE CONSIDERATION AND AFTER DEDUCTING THE INDEXED COST OF ACQUISITION INCOME FROM CAPITAL GAIN WAS ADDED BY RS. 7,99,69,114/-. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND REITERATED HIS SUBMISSION. THE LD. CIT(A) DIRECTED THE AO TO REFER THE MATTER TO THE DVO. THE AO IN HIS REMAND REPORT STA TED THAT THE REFERENCE HAS BEEN MADE TO THE DVO BUT THE ASSESSEE HAS NOT A PPEARED BEFORE THE DVO ON THE APPOINTED DATE. THE LD. CIT(A) CONFIRME D THE FINDINGS OF THE AO SUBJECT TO THE REPORT OF DVO AND DIRECTED TH E AO TO RECOMPUTE THE CAPITAL GAIN ACCORDINGLY. 4. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. COUNSEL THAT ACCEPTING THE STAMP DUTY VALUE AS THE FULL VAL UE OF CONSIDERATION IS ERRONEOUS INASMUCH AS THE IMPUGNED PROPERTY IS FULL OF ENCUMBRANCES ITA NO. 3979/M/2012 3 AND THEREFORE THE PROPER COURSE SHOULD BE TO VALUE THE PROPERTY CONSIDERING THE ENCUMBRANCES. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E FINDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. THE UNDISPUTED FACT IS THAT THE PROPERTY WAS INHERI TED BY THE ASSESSEE THEREFORE THE RATIO OF THE DECISION IN THE CASE OF DCIT VS MANJULA J SHAH 318 ITR (A.T.) 0417 WOULD SQUARELY APPLY ON THE FAC TS OF THE CASE. THE CLAIM OF THE ASSESSEE THAT THE PROPERTY IS FULL OF ENCUMBRANCES HAVING 750 TENANTS CANNOT BE BRUSHED ASIDE LIGHTLY. AS THE MA TTER OF VALUATION IS PENDING BEFORE THE DVO, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND RESTORE TH IS ISSUE BACK TO THE FILE OF THE AO. THE AO IS DIRECTED TO GET THE VALUATION REPORT FROM THE DVO WITHIN 6 MONTHS FROM THE DATE OF RECEIPT OF THIS OR DER. THE AO IS FURTHER DIRECTED TO SEE THAT THE ENCUMBRANCES ARE BROUGHT T O THE NOTICE OF THE DVO SO THAT A FAIR AND REASONABLE MARKET VALUE IS D ETERMINED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. THE AO IS ACCORDINGLY DIRECTED TO DECIDE THE ISSUE AFRESH AFTER RECEIVING THE REPO RT OF THE DVO AS PER THE PROVISIONS OF LAW. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH AUGUST, 2014 SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) '# / JUDICIAL MEMBER ! '# / ACCOUNTANT MEMBER MUMBAI; 5' DATED : 20 TH AUGUST, 2014 . . ./ RJ , SR. PS ITA NO. 3979/M/2012 4 '4 '4 '4 '4 / // / ,0 ,0 ,0 ,0 6(0 6(0 6(0 6(0 / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 8& ,0 , , / DR, ITAT, MUMBAI 6. &9 : / GUARD FILE. '4 '4 '4 '4 / BY ORDER, -0 ,0 //TRUE COPY// ; ;; ; / < < < < % % % % (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI