Asstt.C.I.T., Cir.3(1), Gwalior V. M/s Bhargava Regrigeration Industries, Gwalior

ITA 448/AGR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50480 (ITAT-AGRA)
• Duration Of Justice: 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-10-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 03-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: B B BHARGAVA DIRECTOR OF COM
• Keywords: Opportunity of being heard; Cost of acquisition; Valuation report
• Section: 131; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.448/AGR/2010 ASSESSMENT YEAR: 1998-99 ASSTT. COMMISSIONER OF INCOME TAX, VS. M/S BHARGAV A REFRIGERATION CIRCLE 3(1), GWALIOR. INDUSTRIES PVT. LTD., BRAF KHANA, TANSEN ROAD, GWALIOR. (PAN: NOT MENTIONED). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. SHARMA, JR. D.R. RESPONDENT BY : SHRI B.B. BHARGAVA, DIRECTOR OF THE COMPANY DATE OF HEARING : 17.11.2011 DATE OF PRONOUNCEMENT : 21.11.2011 ORDER PER BENCH : THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF LD. CIT(A), GWALIOR DATED 14.09.2010 FOR THE ASSESSMENT YEAR 1998-99. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL :- ITA NO.448/AGR/2010 A.Y. 1998-99 2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT (APPEALS) HAS ERRED IN HOLDING THAT THE CUT OFF DATE IS 01.04.81 AND COMMERCIAL RATES OF JHEEL KHURENJA ARE AS A MENTIONED IN NOTIFICATION DATED 21.10.81 INSTEAD OF GOVT. NOT IFICATION DATED 21 ST JUNE, 1979 WHICH WAS EFFECTIVE FROM 01.04.1979. 3. THE BRIEF FACTS OF THE CASE ARE THAT BUSINESS LO SS OF RS.1,84,927/- HAS BEEN CLAIMED AND ALLOWED AS PER THE ASSESSMENT ORDER. V IDE ORDER DATED 29.11.2000, INCOME HAS BEEN ASSESSED AT RS.20,87,649/- BY COMPU TING LONG TERM CAPITAL GAINS OF RS.22,72,576/-. THIS WAS DONE BY TAKING THE COS T OF LAND ON THE CUT OFF DATE AS ON 01.04.1981 AT RS.6,34,680/- IN PLACE OF RS.14,90 ,000/- TAKEN BY THE ASSESSEE ON THE BASIS OF VALUATION REPORT OF A REGISTERED VALUE R. THE THEN CIT(A) ALLOWED THE ASSESSEES APPEAL AND DIRECTED THE A.O. VIDE HIS OR DER DATED 09.01.2002 IN APPEAL NO.302/IT/2000-01/GWL TO COMPUTE LONG TERM CAPITAL GAINS ON THE RATES DECLARED BY THE ASSESSEE. SUBSEQUENTLY, CIT, GWALIOR PASSED ORDER U/S 263 ON 26.03.2003 SETTING ASIDE THE ASSESSMENT ORDER PASSED ON 29.11. 2000 ON THE GROUND THAT FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS, COST OF PL OT SHOWN AT RS.1,58,670/- AS ON 01.12.1983 SHOULD BE TAKEN AND THE A.O. TO GIVE THE INDEXATION BENEFIT ONLY ON THIS AMOUNT BY TAKING THE CUT OFF DATE AS 01.12.1983. A CCORDINGLY, ASSESSMENT ORDER HAS BEEN PASSED ON 27.02.2004 AND TAXABLE CAPITAL G AINS OF RS.26,50,864/- HAVE BEEN ASSESSED BY THE A.O. VIDE APPEAL ORDER DATED 28.09.2004, THE THEN CIT(A), GWALIOR HAS AGAIN DIRECTED THE A.O. TO ACCEPT THE R ATES OF VALUATION AS SHOWN BY ITA NO.448/AGR/2010 A.Y. 1998-99 3 THE ASSESSEE BY TAKING THE CUT OFF DATE AS ON 01.04 .1981 FOR THE REASONS MENTIONED IN THE EARLIER APPEAL ORDER PASSED ON 09.01.2002. ORDER UNDER SECTION 263 HAS ALSO BEEN SET ASIDE BY THE ITAT, AGRA ON 20.01.2005 ON T HE GROUND OF VALIDITY OF JURISDICTION ASSUMED BY THE CIT, GWALIOR AS THE PRO VISIONAL POWERS DO NOT EXTEND TO MATTERS ON WHICH THE APPELLATE AUTHORITY HAS ALR EADY GIVEN A DECISION. IN THE MEANTIME ON THE APPEAL OF THE DEPARTMENT AGAINST TH E CIT(A)S ORDER DATED 09.01.2002, THE ITAT, AGRA VIDE ORDER DATED 15.09.2 006 HAS RESTORED THE MATTER BACK TO THE A.O. BY MAKING FOLLOWING OBSERVATIONS : - IT IS SEEN THAT IN THE IMPUGNED ORDER NO DISCUSSIO N IN REFERENCE TO RELEVANT FACTS AND SUBMISSIONS FOR ARR IVING AT THE CONCLUSION HAS TAKEN PLACE. THERE IS NO ATTEMPT TO DISCUSS HOW THE INCREASE IN RATE CITED FOR JAHEEL KHURENJA SITUATED IN DELHI CAN BE APPLIED TO NOIDA (U.P.). ACCORDINGLY, ON A CAREFUL PERUSAL OF THE SAME, WE ARE OF THE VIEW THAT ON THE PECULIAR FACTS AND CIRCUMSTANCES, IT WOULD BE APPROPRIATE TO RESTORE THE ISSUE BACK T O THE FILE OF THE A.O. WITH THE DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH LAW BY WAY OF A SPEAKING ORDER. NEEDLESS TO SAY THAT THE ASSE SSEE WILL BE AFFORDED AN OPPORTUNITY OF BEING HEARD. 4. ACCORDINGLY, ASSESSMENT ORDER DATED 20.12.2007 H AS BEEN PASSED BY THE A.O. BY COMPUTING TAXABLE LTCG AT RS.20,87,649/- BY TAKING THE CUT OFF DATE AS ON 01.04.1981, WHICH IS THE SAME AS TAKEN IN THE OR IGINAL ASSESSMENT ORDER DATED 29.11.2000. ITA NO.448/AGR/2010 A.Y. 1998-99 4 5(I) THE ASSESSEE HAS SUBMITTED BEFORE THE LD. CIT( A) THAT DURING THE RESTORED PROCEEDING BEFORE THE ACIT, THE ASSESSEE SUBMITTED THE GOVERNMENT OF INDIA NOTIFICATIONS, WHICH IS BORDER WITH NOIDA WITH JHEE L KHURENJA (DELHI) DATE OF NOTIFICATION EFFECTIVE PERIOD RESIDENTIAL COMMERCIAL PAGE 20.10.1981 01.04.1981 TO 31.03.1983 RS.800/- RS .1600/- 19 21.06.1979 01.04.1979 TO 31.03.1981 RS.200/- RS .400/- 16 07.05.1974 14.04.1974 TO 31.03.1979 RS.50/- RS. 200/- 12 5(II) THE LAND OF NOIDA, DISTANCE BETWEEN THE NOIDA LAND AND JHEEL KHURENJA AREA (DELHI) IS HARDLY ONE KM FROM NOIDA LAND (U.P.) RAT HER LESS. THIS IS ESTABLISHED WITH THE HELP OF PHOTOGRAPHS, MAP WHICH INTER ALIA SHOWS THE TOPOGRAPHY OF LAND AROUND THE ASSESSEES PLOT OF LAND. HOWEVER, A.O. DID NOT DISCUSS IT AND HER ORDER IS TOTALLY SILENT ON THE ISSUE ON THIS SIDE OF THE ROAD CONNECTIVITY THROUGH 4 LANE ROAD (DDA SPORT COMPLEX, DELHI) 5(III) THE COMMERCIAL RATES WERE CLAIMED BY THE ASS ESSEE, AS PER THE NOTIFICATIONS, PRESCRIBED SAME RATES OF COMMERCIAL AND INDUSTRIAL LAND. GOVERNMENT OF INDIA HAS TAKEN THE PROCEDURE OF TAKING THE COMMERCIAL AND IN DUSTRIAL LAND UNDER ITA NO.448/AGR/2010 A.Y. 1998-99 5 COMMERCIAL HEAD SINCE 1940 AND IS OBVIOUS FROM THE RATES MENTIONED IN THE NOTIFICATIONS PRODUCED. 5(IV) HOWEVER, THE A.O. HAS APPLIED THE LAND AT RES IDENTIAL AREA RATES OF RS.164/- PER SQ. METER AS ON 01.04.1981 INSTEAD OF CALCULATI NG THE SAME WITH REFERENCE TO THE COMMERCIAL MARKET RATE OF RS.1600/- PER SQ. METER. THE MULTIPLIER SHOULD HAVE BEEN 17.50 TIMES (THE MARKET VALUE IS NOT DETERMINE D BY THEORETICAL CONSIDERATION, WHAT HAS TO BE SEEN IS THE VALUE IN THE MARKET AND NOT THE VALUE CALCULATED IN ABSTRACT FORM. A COPY OF THE PAGES FROM LAW OF LEX ICON IS ALSO ENCLOSED FOR READY REFERENCE). IT IS ALSO GIVING THE MEANING OF COMME RCIAL IN MODERN LIBRARY DICTIONARY. WE SHALL SHOW THE DICTIONARY AT THE TI ME OF THE ARGUMENTS. 5(V) IT IS TO BE NOTED THAT A PAGE 61 LAST PARA, TH E A.O. HERSELF ACCEPTED, TAKING RESIDENTIAL AREA PRICE, THAT : RATE OF ASSESSEES PLOT BOUGHT AT THE RATE OF RS.4 1/- PER SQ. METER ON 03.02.1979 COMES TO RS.656/- PER SQ. METER ONLY AS ON 01.04.1981 AS PER JHEEL KHURENJA GOVERNMENT NOTIFICATION RATES. (VI) HOWEVER, WITHOUT DISCUSSING THE SUBMISSIONS UR GED AND WITHOUT CONSIDERING MATERIAL AS PER LETTER DATED 20.12.2007 PLACED ON R ECORD, THE A.O. JUST ON ITA NO.448/AGR/2010 A.Y. 1998-99 6 PRESUMPTIONS AND ASSUMPTION HAS ADOPTED THE FAIR MA RKET VALUE OF THE PLOT ON 01.04.1981 AT RS.164/- PER SQ. METER ON 01.04.1981 WHICH IS ILLEGAL AND CONTRADICTORY TO HER OWN FINDING ON PAGE 6. (THE C ONVERSION OF SQ. YARDS TO SQ. METER SHALL BE NECESSARY). THIS SHALL SHOW THAT FR OM 03.02.1979 TO 01.04.1981 THE INCREASE IN PRICES ARE 17.50 TIMES MORE. 5(VII) THE A.O. HAS FURTHER NOT DISCUSSED AND FULL Y IGNORED THE AFFIDAVIT OF SHRI Y.P. BHANOT, A REAL ESTATE DEALER WHO HAD OFFE RED A RATE OF RS.390/- PER SQ. METER (ON THE BASIS OF THE NOTIFICATION DATED 21.06 .1979) VIDE HIS LETTER DATED 10.02.1981 SAYING THAT JAHEEL KHURENJA RATES AS WER E, RATHER LESS THAN THE NOIDA PLOT. HE ALSO REFERRED TO GOVERNMENT OF INDIA NOTI FICATION OF 21.10.1981 (APPLICABLE FROM 01.04.1981 IN HIS AFFIDAVIT WHERE FOR COMMERCIAL/INDUSTRIAL PLOT RATE OF JHEEL KHURENJA WERE RS.1600/- PER SQ. METER (A) DATED 20.10.1981, VALUE FROM 01.04.1981 TO 31.03.1983 (B) DATED 21.06.1979, VALUE FROM 01.04.1979 TO 31.03.1981 AND (C) DATED 07.05.1974 VALUE FROM 14.0 4.1974 TO 31.03.1979. THESE NOTIFICATIONS ARE OF GOVERNMENT OF INDIA ON WHICH T HE RATES ARE BASED. 5(VIII) SHRI Y.P. BHANOT WAS PRODUCED BEFORE THE A .O. IN RESPONSE TO NOTICE U/S 131 OF THE I.T. ACT AND NO ADVERSE MATERIAL WAS FOUND BY THE A.O. THE A.O. ITA NO.448/AGR/2010 A.Y. 1998-99 7 ORDER IS AGAIN SILENT AND DOES NOT DISCUSS THIS PIE CE OF EVIDENCE. THE AFFIDAVIT IS BINDING ON THE A.O. IN VIEW OF SUPREME COURT DECISI ON IN MEHTA PAREKH & CO. VS. CIT (1956) 30 ITR 181 AND ALLAHABAD HIGH COURT DECI SION IN LALA SOHAN LAL GUPTA VS. CIT, 33 ITR PAGE 786. 6. THE LD. CIT(A) AFTER CONSIDERING THE FACTS OF TH E CASE OBSERVED VIDE PAGE NOS. 6 & 7 AS UNDER :- THUS, THE PREVAILING RATE OF PLOT ON THE CUT OF DA TE OF 01.04.1981 WAS RS.1600/- PER SQ. METER WHICH THE AP PELLANT, FOLLOWING IS REGISTERED VALUERS REPORT, HAS TAKEN TO BE RS.385/- PER SQ. METER. THE SAME HAS BEEN SUBSTITUTED BY THE A. O. FOR RS.164/- PER SQ. METER ON THE BASIS OF PRESUMPTION OF 400% INCRE ASE FROM THE RATE OF COST OF ACQUISITION OF RS.41/- PER SQ. METER AS ON 03.02.1979. NO REASON HAS BEEN GIVEN BY THE A.O. FOR REJECTING THE RATE GIVEN BY THE APPELLANT, THOUGH THE APPLICABILITY OF RATES PREVAI LING IN JHEEL KHURENJA AREA HAS BEEN ACCEPTED BY THE A.O. ON THE BASIS OF EVIDENCE GIVEN BY THE APPELLANT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS. WHILE ISSUING THE NOTIFICATIONS GIVING THE SCHEDULE OF MARKET RATES OF LAND IN DIFFERENT AREAS, IT IS SPECIFICALLY MENTION ED THAT THE LAND RATES AS SHOWN IN THE SCHEDULE ANNEXED TO THE LETTER SHAL L BE ADOPTED OR ALL PURPOSES EXCEPT FOR HOTELS AND CINEMAS. FOR THE AR EAS NOT SPECIFICALLY MENTIONED IN SCHEDULE, THE RATES RELATING TO THE AD JACENT AREAS WILL BE ADOPTED. THUS, THE NOTIFICATIONS GIVE NO SCOPE FOR MAKING PRESUMPTIONS AND ASSUMPTIONS REGARDING THE RATES AN D THEIR APPLICABILITY FOR SPECIFIED PERIODS AS MENTIONED TH EREIN. THE A.O. HAS ACCEPTED THE NOTIFICATIONS AND APPLICABILITY OF JHE EL KHURENJA AREAS RATES, BUT IN MY VIEW HAS NOT BEEN CORRECT IN FOLLO WING THE RESIDENTIAL RATES IN RESPECT OF COMMERCIAL AND INDUSTRIAL PLOT AND TAKING THE RATES ITA NO.448/AGR/2010 A.Y. 1998-99 8 AS PER DIFFERENT NOTIFICATION WHICH IS NOT APPLICAB LE IN THE CASE OF THE APPELLANT. ACCORDINGLY, A.O. IS DIRECTED TO ACCEPT THE RATES O F VALUATION AS SHOWN BY THE APPELLANT AND MODIFY THE ASSESSMENT OR DER ACCORDINGLY ON THE SETTLED ISSUE THAT CUT OFF DATE IS 01.04.198 1 AND COMMERCIAL RATES OF JHEEL KHURENJA AREAS AS MENTIONED IN NOTIF ICATION DATED 21.10.1981 EFFECTIVE FROM 01.04.1981 TO 31.03.1983 ARE APPLICABLE IN CASE OF THE APPELLANTS PLOT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) WHICH ORDER APPEARS TO BE REASONED ONE THAT BEING THE RATE AS AT 01.04.1981 WAS RS.1,600/- PER SQUARE METER WHICH THE ASSESSEE FOLLOWING ITS REGISTERED VALUERS REPORT H AS TAKEN TO BE RS.385/- PER SQ. METER WHICH HAS BEEN SUBSTITUTED BY THE A.O. FOR RS .164/- PER SQ. METER BUT, NO REASON HAS BEEN GIVEN BY THE A.O. FOR REJECTING THE RATE GIVEN BY THE ASSESSEE. THOUGH THE A.O. HAS ACCEPTED THE NOTIFICATIONS AND APPLICABILITY OF JHEEL KHURENJA AREAS RATES, BUT THE RATES FOR RESIDENTIAL AREA CAN NOT BE TAKEN FOR COMMERCIAL AND INDUSTRIAL PLOTS AND TAKING THE RATES AS PER DIFFER ENT NOTIFICATION WHICH IS NOT APPLICABLE IN ASSESSEES CASE. THEREFORE, THE LD. CIT(A) HAS RIGHTLY HELD THAT THE CUT OFF DATE IS 01.04.1981 AND COMMERCIAL RATE OF J HEEL KHURENJA AREA AS MENTIONED IN THE NOTIFICATION DATED 21.10.1981 EFFE CTIVE FROM 01.04.1981 TO 31.03.1983 ARE APPLICABLE IN THE CASE OF ASSESSEES PLOT. WE FIND NO ERROR IN THE ORDER OF THE LD. CIT(A). THUS, SOLE GROUND OF THE REVENUE IS DISMISSED. ITA NO.448/AGR/2010 A.Y. 1998-99 9 8. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.4 48/AGR/2010 IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 21.11.2011) SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 21 ST NOVEMBER, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R., ITAT, AGRA BENCH, AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY