Sri M. Kasi Visweswara Rao, Vizianagaram V. ITO, Ward-1, Vizianagaram

ITA 448/VIZ/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8738 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 28-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BANGARI
• Keywords: Cost of acquisition; Fair market value
• Section: 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 448 /VIZ/ 201 7 ( / ASSESSMENT YEAR: 20 0 9 - 10 ) SRI M.KASI VISWESWARA RAO D.NO.6 - 7 - 25, CHINNA VEEDHI VIZIANAGARAM [PAN :A ACHM0158H ] VS. INCOME TAX OFFICER WARD - 1 VIZIANAGARAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI Y.A.RAO, AR / RESPONDENT BY : SHRI M.R.BANGARI, DR / DATE OF HEARING : 2 6 . 02 .201 8 / DATE OF PRONOUNCEMENT : 28 . 0 2 .201 8 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) [CIT(A)] - 1 , VI SAKHAPATNAM VIDE ITA NO. 3 49 / 201 1 - 1 2 DATED 2 7 . 0 4 .201 7 FOR THE ASSESSMENT YEAR 20 0 9 - 10 . 2 ITA NO . 448 /VIZ/201 7 SRI M. KASI VISWESWARA RAO, VIZIANAGARAM 2. THE ASSESSEE FILED RETURN OF INCOME ON 30.10.2006, DECLARING TOTAL INCOME OF RS. 11,85,317/ - INCLUDING CAPITAL GAINS INCOME . THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) FOUND THAT ASSESSEE ALONG WITH FOUR OTHERS SOL D THE VACANT LAND IN DOOR NO.8 - 1 - 105, SANTHAPETA, VIZIANAGARAM ADMEASURING 716.97 SQ.YDS. THE ASSESSEE CLAI MED THE COST OF LAND AS WELL AS BUILDING AS ON 1.4.1981, ALONG WITH THE INCREASED COST OF ACQUISITION FOR THE PURPOSE OF INDEXATION FOR THE YEAR UNDER CONSIDERATION. THE SALE CONSIDERATION OF PROPERTY WAS RS.88,98,000/ - , CL AIMED THE DEDUCTION FOR COST OF LAND AND BUILDING ALONG WITH INDEXATION @ RS.9,80,466/ - AND T HE INDEXED COST OF INDEXATION WORKED OUT TO RS.57,06,312/ - , ADMITTED CAPITAL GAINS AT RS.31,91,688/ - AND THE ASSESSEES 1/4 TH SHARE WAS RS.7,97,922/ - WHICH WAS OFFERED TO TAX. THE AO EXAMINED THE SALE DEEDS AND FOUND THAT AS PER THE SALE DEED, THE ASSESSEE HAD TRANSFERRED THE VACANT LAND BUT NOT THE BUILDING, HENCE REJECTED THE ASSESSEES CLAIM FOR COST OF INDEXATION FOR THE BUILDING. IN THE ASSESSMENT, THE AO ALLOWED INDEXED COST OF ACQUISITION OF LAND AS PER THE FAIR MARKET VALUE AS ON 1.4.1981 AT RS.12,51,840/ - AND ASSESSED THE LONG TERM CAPITAL GAINS AT RS.76,46,160/ - , OUT OF WHICH 1/4 TH SHARE OF THE ASSESSEE WAS RS.19,11,540/ - WHICH IS BROUGHT TO TAX. 3 ITA NO . 448 /VIZ/201 7 SRI M. KASI VISWESWARA RAO, VIZIANAGARAM 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE ASSESSEE HAS CONSTRUCTED THE BUILDING WHICH WAS DEMOLISHED AFTER ENTERING IN TO THE AGREEMENT OF SALE AND LATER ON TRANSFER RED THE PROPERTY, HENCE THE EXISTENCE OF THE BUILDING WAS SUPPORTED BY THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE BUYERS ON 11.09.2008. THEREFORE , REQUESTED TO ALLOW THE VALUE OF THE LAND ALONG WITH COST OF THE BUILDING FOR COMPUTING THE CAPITAL GAINS. THE LD.AR ALSO SUBMITTED THAT THE CIT(A) DECIDED THE ISSUE U/S 54, BUT NOT WITH REGARD TO THE IND EXATION OF THE CAPITAL GAINS. 5. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE AO AND ARGUED THAT AS PER THE PAPER BOOK FURNISHED BY THE ASSESSEE, THE LD.AR PLACED THE COPY OF AGREEMENT DAT ED 11.09.2008 WHICH WAS UNREGISTERED AND THE SAME SHO UL D NOT BE TAKEN IN TO CO GNI ZA N CE SI NCE IT IS MANDATORY FOR REGISTERING THE DOCUMENT FOR IMMOVABLE PROPERTY AS PER THE STAMPS AND REGISTRATION ACT. LD.DR FURTHER SUBMITTED THAT A S PER PAGE NO.7 OF THE 4 ITA NO . 448 /VIZ/201 7 SRI M. KASI VISWESWARA RAO, VIZIANAGARAM PAPER BOOK FILED BY THE ASSESSEE, THE STAMP PAPER FOR AGREEMENT WAS PURCHASED ON 4.7.2005 AND USED FOR THE PURPOSE OF WRITING THE AGREEMENT ON 11.09.2008 I.E AFTER 3 YEARS 2 MONTHS OF THE PURCHAS E OF THE STAMP PAPER WHICH INDICATES THAT THE AGREEMENT IS A N AFTER THOUGHT TO CLAIM THE EXEMPTION. THE LD.D R ARGUED THAT THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE TO ESTABLISH THAT THERE WAS A STRUCTURE EXISTING IN THE SAID LAND. THEREFORE ARGUED THAT THE AO HAS RIGHTLY ASSESSED THE CAPITAL GAINS WHICH WAS CONFIRMED BY THE LD.CIT(A). WITH RESPECT TO ASSESSE ES ARGUMENT THAT THE LD.CIT(A) DECIDED THE ISSUE U/S 54 OF I.T.ACT, THE LD.DR ARGUED THAT THE PLAIN READING OF THE LD.CIT(A)S ORDER ESTABLISH ED THAT THE LD.CIT(A) AGREED WITH THE FINDINGS OF THE AO. THE LD.CIT(A) HAS TAKEN ONLY THE CASE LAW IN RESPECT O F SECTION 54 TO FORTIFY HIS DECISION . THEREFORE, THE LD.DR ARGUED THAT THERE IS NO AMBIGUITY OR MISTAKE IN THE ORDER OF THE LD.CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. DURING THE ASSESSMENT YEAR, THE ASSESSEE AL ONG WITH FOUR OTHERS JOINTLY SOLD THE IMMOVABLE PROPERTY OF 716.97 SQ.YDS. FOR A CONSIDERATION OF RS.88,98,000/ - ON 6.11.2008. WHILE COMPUTING THE CAPITAL GAINS, THE ASSESSEE HAD CLAIMED THE DEDUCTION OF RS.57,06,312/ - , THE INDEXATION OF COST OF ACQUIRING THE PROPERTY INCLUSIVE OF BUILDING . DURING THE ASSESSMENT 5 ITA NO . 448 /VIZ/201 7 SRI M. KASI VISWESWARA RAO, VIZIANAGARAM PROCEEDINGS, THE AO NOTED FROM THE SALE DEED THAT THE ASSES S EE HAD NOT TRANSFERRED THE LAND AND BUILDING, BUT ONLY THE VACANT LAND WAS TRANSFERRED AND THE SALE CONSIDERATION ALSO WAS IN RESPECT OF THE LAND, BUT NOT THE BUILDING. THE ASSESSEE PLACED THE SALE AGREEMENT, BUT THE SALE AGREEMENT WAS UNREGISTERED, AND THE RATE OF AGREEMENT WAS DIFFERENT. SINC E THE AGREEMENT IS UNREGISTERED AND THE SALE PROCEEDS RECEIVED BY THE ASSESSEE WERE ONLY IN RES PECT OF THE VACANT LAND AND THE ASSESSEE FAILED TO ESTABLISH THE EXISTENCE OF BUILDING IN THE SAID LAND WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE WITH REGARD TO THE SALE OF LAND. ON GOING THROUGH THE SALE DEEDS, WE FIND THAT AS PER THE SALE D EED, THE ASSESSEE TRANSFERRED ONLY THE VACANT LAND, BUT NOT THE BUILDING . THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO ESTABLISH THAT THERE WAS A BUILDING WHICH WAS SOLD BY THE ASSESSEE . THE VACANT SITE WAS SOLD IN SIX SALE DEEDS DATED 6.11.2008 DO NOT WHISPER REGARDING THE BUILDING, THUS IN THE ABSENCE OF ANY EVIDENCE TO ESTABLISH THAT THE ASSESSEE HAD SOLD THE VA CANT LAND ALONG WITH BUILDING, W E ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD.AR THAT THERE IS BUILDING WHICH WAS SOLD ALONG WITH VACAN T LAND AND ACCORDINGLY THE ASSESSEES APPEAL ON THIS GROUND IS DISMISSED. 6.1. THE ASSESSEES ARGUMENT WITH REGARD TO THE ORDER OF THE LD.CIT(A) IN RELATION TO SECTION 54 , WE FIND THAT THE CIT(A) UPHELD THE CAPITAL GAINS 6 ITA NO . 448 /VIZ/201 7 SRI M. KASI VISWESWARA RAO, VIZIANAGARAM COMPUTED BY THE AO AND AGREED WITH THE FIN DINGS OF THE AO, HENCE THERE IS NO AMBIGUITY IN THE ORDER OF THE LD.CIT(A). IN VIEW OF THE ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT(A) AND THE SAME IS UPHELD. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28 TH FEB 20 1 8 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 28 .02.2018 L.RAMA, SPS 7 ITA NO . 448 /VIZ/201 7 SRI M. KASI VISWESWARA RAO, VIZIANAGARAM / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT - SRI M.KASI VISWESWARA RAO, D.NO.6 - 7 - 25, CHINNA VEEDHI, VIZIANAGARAM 2 . / THE RESPONDENT THE INCOME TAX OFFICER, WARD - 1, VIZIANAGARAM 3 . THE PR. COMMISSIONER OF INCOME TAX - 1 , VI SAKHAPATNAM 4.THE COMMISSIONER OF INCOME TAX(APPEALS) - 2, GUNTUR , CAMP, VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM