DCIT 17(1), MUMBAI V. PARMINDER K. OBERAI, MUMBAI

ITA 4639/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87974 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Keywords: Cost of acquisition; Fair market value
• Section: 54; 154; 54F

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.4639/MUM/2011 ( / ASSESSMENT YEAR :2007-08) COMMISSIONER OF INCOME TAX 17(1), 1 ST FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012 / VS. SHRI PARMINDER K OBERAI, OBEROI SHIP REPAIRING PVT. LTD., 323, NASIR PLACE, MAZGAON, OPP.DOCKYARD ROAD RAILWAY STATION, MUMBAI-400010 ( / APPELLANT) .. ( ! / RESPONDENT) ./ #$ ./ PAN/GIRNO.:AABPO4910G % / APPELLANT BY : SHRI PREMANAND J ! & % / RESPONDENT BY NONE ' ( & ) * / DATE OF HEARING : 1.1.2015 +, & ) * /DATE OF PRONOUNCEMENT : 16.01.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 14.3.2011 PASSED BY LD CIT(A)-29, MUMBAI AND IT REL ATES TO THE ASSESSMENT YEAR 2007-08. NONE APPEARED ON BEHALF O F THE ASSESSEE AND HENCE, WE PROCEED TO DISPOSE OF THIS APPEAL, EX-PAR TE WITHOUT THE PRESENCE OF ASSESSEE. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN RESPECT OF THE FOLLOWING FOUR ISSUES : A) FAIR MARKET VALUE AS ON 1.4.1981/-; B) INDEXATION OF COST OF ACQUISITION; C) DEDUCTION UNDER SECTION 54 OF THE INCOME TAX AC T, 1961 (THE ACT)-; ITA NO4639 /MUM/2011 2 D) DEDUCTION U/S 54F OF THE ACT. 3. WE HAVE HEARD THE LD. DR AND PERUSED THE RECORD. ALL THE DISPUTES LISTED ABOVE RELATE TO THE COMPUTATION OF LONG TER M CAPITAL GAINS (LTCG) IN THE HANDS OF THE ASSESSEE. DURING THE Y EAR UNDER CONSIDERATION, THE ASSESSEE SOLD A PROPERTY FOR A T OTAL CONSIDERATION OF RS.1.56 CRORES AND WORKED OUT CAPITAL GAIN AT RS.87 ,78,125/-. THE ASSESSEE HAD DEPOSITED A SUM OF RS.1,00,00,000/- UN DER THE CAPITAL GAIN ACCOUNT SCHEME. THE AO HOWEVER COMPUTED THE LTCG AT RS.1.48 CRORES BY REJECTING THE COMPUTATION MADE BY THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE LD. CIT(A). THE FIRST APPELLATE AUTHORITY DETERMINED FA IR MARKET VALUE (FMV) AS ON 1.4.1981 AT RS.5200/- PER SQUARE YARD. THE LD . CIT(A) ALSO HELD THAT THE ASSESSEE IS ENTITLED FOR INDEXATION FROM 1.4.19 81 ONWARDS. THE LD. CIT(A) ALSO HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 54F OF THE ACT. AGGRIEVED BY THE DECISION OF THE LD. CIT(A), THE REVENUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 5. THE FIRST ISSUE RELATES TO DETERMINATION OF FMV AS ON 1.4.1981. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT A REPORT GIVEN BY A GOVERNMENT APPROVED VALUER, WHO HAD DETERMINED FMV AS ON 1.4.1981 AT RS.5750/- PER SQ.YARD. THE AO REJECTED THE VALUATI ON REPORT AND ESTIMATED FMV AS ON 1.4.1981 AT RS.4000/- PER SQ.YA RD. HOWEVER, THE LD. CIT(A) DETERMINED THE FMV AS ON 1.4.1981 AT RS.52 00/- PER SQ.YARD WITH THE FOLLOWING OBSERVATIONS : 17 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT AND THE ASSESSMENT ORDER ON THIS ISSUE. THE APPELLANT HAS S TATED THAT VALUATION OFFICER HAS NOT FILED ANY VALUATION BEFOR E THE COMPLETION OF ASSESSMENT. THE REGISTERED VALUER OF THE APPELLANT HAS ALREADY TAKEN THE VALUE AS PER GOVERNMENT RATE AS ON 1.4.19 81. IT HAS BEEN ITA NO4639 /MUM/2011 3 STATED THAT THE APPELLANT HAD A FREEHOLD LAND. THE VALUE OF THE FREEHOLD LAND WOULD BE AT LEAST 50% HIGHER AGAINST A LEASEHOLD LAND. THE VALUER HAD SHOWN LEASEHOLD LAND SOLD AT RS.3120 IN OPEN AUCTION. SECONDLY, IT HAS BEEN ARGUED THAT THE PLOT OF LAND WAS OPEN FROM TWO SIDES BEING THE CORNER PLOT AND FACING THE PARK. ACCORDINGLY IT COULD HAVE FETCHED MUCH HIGHER PRICE THAN THE SO- CALLED GOVERNMENT RATE OF RS.3120 PER SQ. YARD FOR LEASEHOLD LAND. IT IS ALSO ARGUED THAT THE PLOT OF THE APPELLANT IS A FREEHOLD LAND WHEREAS THE INSTANCES CITED ARE THAT LEASEHOLD LAND OF THE GOVERNMENT. OBVIOUSLY A FREEHOLD LAND WILL COST HIG HER THAN THAT OF LEASEHOLD, I FIND THAT AFTER POINTING OUT A PRICE R ANGE OF RS.4000- 6000 PER SQ. YARD, THE VALUER HAS ADOPTED THE HIGHE R VALUE BEING RS.5750 PER SQ YARD. IT HAS BEEN RIGHTLY POINTED OU T BY THE APPELLANT THAT THE GOVERNMENT RATE WAS FOR LEASEHOLD LAND. CO NSIDERING THAT THE APPELLANT HAD FREEHOLD LAND AND IT WAS A CORNER PLOT FACING THE PARK IT WILL BE REASONABLE TO ADOPT RS.5200 PER SQU ARE YARD FOR THE COST OF LAND AS ON 1-4-1981. THE ASSESSING OFFICER IS DIRECTED TO ADOPT RS.5200 PER SQUARE YARD AS RATE AS ON 1.4.198 1. HOWEVER AS AND WHEN THE REPORT FROM DVO IS RECEIVED THE ASSESS ING OFFICER WILL BE AT LIBERTY TO SUBSTITUTE THIS VALUE AND RECTIFY THE ORDER ACCORDINGLY UNDER SECTION 154 ADOPTING THE VALUE ARRIVED AT BY THE DVO. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT( A). HOWEVER, WE FIND THAT THE LD. CIT(A) HAS CONSIDERED THE ADVANTAGES R ELATING TO THE PLOT; REPORT SUBMITTED BY THE APPROVED VALUER AND ALL OTH ER CHARACTERISTICS ATTACHED TO THE PLOT. ACCORDINGLY, HE DETERMINED T HE FMV AS ON 1.4.1981 AT RS.5200/- PER SQ. YARD. WE FURTHER NOTICE THAT T HE LD. CIT(A) HAS ALSO GIVEN LIBERTY TO AO TO SUBSTITUTE THE VALUE DETERMI NED BY THE DVO AS AND WHEN THE REPORT RECEIVED FROM DVO. UNDER THESE S ET OF FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 6. THE NEXT ISSUE RELATES TO THE INDEXATION FOR COM PUTING THE INDEXED COST OF ACQUISITION. THE ASSESSEE CLAIMED INDEXATIO N FROM 1.4.1981 ONWARDS. HOWEVER, THE AO HELD THAT THE INDEXATION B ENEFIT SHALL BE AVAILABLE ONLY FROM THE YEAR, IN WHICH THE ASSESSEE HAS RECEIVED THE PROPERTY. IN THE APPELLATE PROCEEDINGS, THE LD. C IT(A) FOLLOWED THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL REN DERED IN THE CASE OF CIT ITA NO4639 /MUM/2011 4 V MANJULA J. SHAH (2009) 318 ITR (AT) 417 (MUMBAI)(SB) AND ACCORDINGLY HELD THAT INDEXATION BENEFIT AVAILABLE TO THE ASSE SSEE FROM 1.4.1981 ONWARDS. SINCE, THE LD. CIT(A) HAS FOLLOWED THE DE CISION RENDERED BY THE SPECIAL BENCH OF TRIBUNAL REFERRED SUPRA, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY HIM ON THIS ISSUE. 7. THE NEXT ISSUE RELATES TO THE DEDUCTION CLAIMED U/S 54 OF THE ACT. THE ASSESSEE CLAIMED THAT THE PROPERTY SOLD BY HIM CONSISTED OF PLOT AND A BUILDING THEREON AND ACCORDINGLY CLAIMED DEDUCTION U/S 54 OF THE ACT. HOWEVER, THE AO HELD THAT THE ASSESSEE HAS SOLD ONL Y THE PLOT, SINCE THE POSSESSION LETTER GIVEN BY THE ASSESSEE TO THE PURC HASER MENTIONED THAT THE ASSESSEE HAS HANDED OVER PHYSICAL AND VACANT PO SSESSION OF FREEHOLD RESIDENTIAL PLOT. IT IS PERTINENT TO NOTE THAT THE SAID DEDUCTION U/S 54 IS AVAILABLE ONLY IN RESPECT OF CAPITAL GAINS ARISING FROM THE SALE OF A RESIDENTIAL HOUSE. ACCORDINGLY, THE AO REJECTED THE CLAIM OF THE ASSESSEE MADE UNDER SECTION 54 OF THE ACT. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) EXAMINED THE FAMILY SETTLEMENT DEED DATED 2. 6.2006 AND HELD THAT THE AVERMENTS MADE IN THE FAMILY SETTLEMENT PROVE S THE EXISTENCE OF A HOUSE PROPERTY ON THE SAID PLOT OF LAND. HE FURTHE R NOTICED THAT THE REGISTERED VALUER HAD ALSO VALUED THE STRUCTURE OF THE BUILDING AT RS.6,50,000/-. HE FURTHER NOTICED THAT THE CONVEYAN CE DEED ALSO MENTIONED THE WORD PREMISES AT SEVERAL PLACES. A CCORDINGLY THE LD CIT(A) HELD THAT THE ASSESSEE HAS SOLD PLOT AND BUI LDING. ACCORDINGLY, HE DIRECTED THE AO TO INCLUDE THE VALUE OF BUILDING AL SO IN THE COST OF PROPERTY WHILE COMPUTING THE CAPITAL GAINS AND FURTHER DIREC TED THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTION U/S 54 OF THE ACT. 8. WE NOTICE THAT THE LD. CIT(A) HAS GIVEN A FINDIN G IN THIS REGARD AFTER CONSIDERING THE VARIOUS DOCUMENTS. AT THE TIME OF HEARING, THE DEPARTMENT COULD NOT FURNISH ANY MATERIAL TO CONTRA DICT THE FINDINGS GIVEN ITA NO4639 /MUM/2011 5 BY THE LD. CIT(A). UNDER THESE CIRCUMSTANCES, WE AR E INCLINED TO AGREE WITH THE DECISION OF THE LD. CIT(A) THAT THE ASSESS EE HAS SOLD THE LAND AND RESIDENTIAL BUILDING AND HENCE HE IS ENTITLED FOR D EDUCTION U/S 54 OF THE ACT. 9. THE NEXT ISSUE RELATES TO DEDUCTION U/S 54F OF T HE ACT WHICH WAS CLAIMED BY THE ASSESSEE AS AN ALTERNATIVE PLEA, IN CASE HIS CLAIM FOR DEDUCTION U/S 54 IS REJECTED. THE AO REJECTED THE SAID ALTERNATIVE CLAIM ALSO ON THE GROUND THAT THE ASSESSEE IS OWNING TWO RESIDENTIAL PROPERTIES VIZ., ONE AT HIRANANDANI, MUMBAI AND SECOND ONE AT DELHI, THUS VIOLATING THE CONDITIONS FOR ALLOWING DEDUCTION U/S 54F OF TH E ACT. IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) NOTICED THAT THE ASSESEE HAS POSSESSED ONLY ONE RESIDENTIAL PROPERTY AT HIRANANDANI, MUMBAI AND OTHER PROPERTIES HAVE BEEN LET OUT FOR COMMERCIAL PURPOSES. ACCORDINGLY, HE HELD THAT THE ASSESSEE IS ALSO ENTITLED FOR DEDUCTION U/S 54F OF THE ACT. 10. WE DO NOT FIND IT NECESSARY TO ADJUDICATE THIS GROUND, SINCE WE HAVE ALREADY UPHELD THE DECISION OF LD. CIT(A) IN RESPEC T OF THE DEDUCTION CLAIMED U/S 54 OF THE ACT, I.E., THE ASSESSEE IS EN TITLED FOR DEDUCTION U/S 54 OF THE ACT. HENCE THE QUESTION OF CONSIDERING ALTE RNATIVE PLEA PUT FORTH BY THE ASSESSEE DOES NOT ARISE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16 TH JAN,2015. +, ' - ./ 0 116 TH JAN 2015 , & 4( 5 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER ITA NO4639 /MUM/2011 6 . ' ( MUMBAI: 16TH JAN, 2015. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' 9 ) ( ) / THE CIT(A)- CONCERNED 4. ' :) / CIT CONCERNED 5. 6. ;< 4 )= , * = , . ' ( / DR, ITAT, MUMBAI CONCERNED 4 > ? ( / GUARD FILE. @ ' / BY ORDER, TRUE COPY A # (ASSTT. REGISTRAR) * = , . ' ( /ITAT, MUMBAI