NARENDRA R MERCHANT, MUMBAI V. ITO 17(2)(4), MUMBAI

ITA 4763/MUM/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1759 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 06-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMITA VERMA
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC , MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI M ANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER ITA NO. 4763/MUM/2018 ASSESSMENT Y EAR: 2008 - 09 SHRI NARENDRA R. MERCHANT, FLAT NO. 1, SUDHA KUNJ , 3 - A, TARDEO ROAD, MUMBAI - 400034 PAN: AAACP6073B VS. INCOME TAX OFFICER 17 (2)(4), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RONAK DOSHI (A R) REVENUE BY : MS. SMITA VERMA (DR) DATE OF HEARING: 1 6/03 /20 21 DATE OF PRONOUNCEMENT: 07 / 06 /202 1 O R D E R PER SAKTIJIT DEY , JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 01.06.2018 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 28, MUMBAI FOR THE AS SESSMENT YEAR 2008 - 09. 2. AT THE OUTSET, ON INSTRUCTIONS OF ASSESSEE, SHRI RONAK DOSHI, LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND N O. I. ACCORDINGLY, THIS GROUND IS DISMISSED AS NOT PRESSED. IN GROUND NO. II, THE ASSESSEE HAS RAISED THE ISSUE OF ALLOWING INDEXATION BENEFIT ON THE BASIS OF VALUE DETERMINED BY THE REGISTERED VALUER. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL . F OR THE ASSESSMENT YEAR UNDER DISPUTE ASSESSEE FILED HIS RETURN OF INCOME ON 22.09.2008 DECLARING TOTAL IN COME OF RS. 3,49,661/ - . IN COURSE OF ASSESSMENT PROCEEDINGS, THE 2 ITA NO. 4763 / MUM/2018 ASSESSMENT YEAR: 20 08 - 09 ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE HA S SOLD IMMOVABLE PROPERTY DURING THE YEAR. HE FURTHER FOUND THAT THE STAMP DUTY A UTHORITY (SDA) HAS VALUED THE PR OPERTY AT RS. 44,69,000/ - FRO M STAMP DUTY PURPOSE . NOTICING THIS , THE AO CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE VALUE DETERM INED BY THE SDA SHOULD NOT BE ADOPTED AS T HE DEEMED SALE CONSIDERATION UNDER SECTION 50C OF THE ACT FOR COMPUTING CAPITAL GAIN. THOUGH , THE ASSESSEE R AISED OBJECTION AGAINST THE PROPOSED ADDITION, HOWEVER , THE AO REJECTING THE OBJECTION OF THE ASSESSEE ADOPTED THE VALUE DETERMINED BY THE S DA AS THE DEEMED SALE CONSIDERATION AND AFTER ALLOWING CERTAIN DEDUCTIONS, HE ADDED BACK THE NET LONG TERM CAPITAL G AIN OF RS. 42,41,476/ - . A GAINST THE ASSESSMENT ORDER SO PASSE D THE ASSESSEE PREFERRED APPEAL BEFORE LEARNED COMM ISSIONER (APPEALS) AND THEREAFTER BEFORE THE TRIBUNAL. THE TRIBUNAL WHILE DECIDING THE APPEAL OF THE ASSESSEE RESTORED BACK THE ISSUE TO THE AO FOR DECIDING AFRESH. IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL , THE AO PASSED A FRESH ASSESSMENT ORDER ON 28.07.2016 AGAIN HOLDING THAT LONG TERM CAPITAL GAIN OF RS. 42,41,476/ - DID ARIS E AT THE HANDS OF THE ASSESSEE. THOUGH, AGAINST THE ASSESSMENT OR DER SO P ASSED THE ASSESSEE PREFERRED APPEAL BEFOR E THE FIRST APPELLATE AUTHORITY, H OWEVER, HE WAS UNSUCCESSFUL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , IN COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS COMPUTED LONG TERM CAPITAL GAIN BY CLA IMING INDEXATION BENEFIT ON THE COST OF ACQUISITION OF THE PROPERTY , AS ON 01.04.1981, AS VALUED BY GOVT. APPROVED VALUER. HE SUBMITTED , THE VALUATION REPORT FURNISHED BY THE ASSESSEE WAS REJECTED BY THE AO MECHANICALLY WITHOUT REFERRING TO THE DEPARTMENTA L VALUATION OFFICER (DVO). HE SUBMITTED , THE GOVT. APPROVED VALUER IS AN EXPERT , HENCE, HIS VALUATION REPORT CARRIES EVIDENTIARY VALUE. THEREFORE, IT CANNOT BE REJECTED WITHOUT GETTING THE VALUATION DONE THROUGH THE DVO. THUS, HE SUBMITTED , A DIRECTION MAY BE GIVEN TO THE AO TO GRANT INDEXATION BENEFIT ON THE VALUATION MADE BY THE REGISTERED VALUER AS ON 01.04.1981 . I N S UPPORT OF HIS CONTENTION , THE LEARNED COUNSEL RELIED UPON THE FOLLOWING DECISIONS: 3 ITA NO. 4763 / MUM/2018 ASSESSMENT YEAR: 20 08 - 09 (1) PCIT VS. SMT. VIDHI AGARWAL ( 88 TAXMAN.COM 306 (ALLAHA BAD HC) (2) DCIT VS. AJANTA TUBES LTD., ITA NO. 4432/DEL/2014 (DEL TRIB) DATED 05.09.2019. (3) ITO VS. NITIN JAYANTILAL SHAH ITA NO. 1988/AHD/2009 DATED 06.05.2011 (4) SHRI RAJENDRA H. SETH, PROP. VS. ACIT ITA NO. 1495/AHD/2007 DATED 11.11.2011. 5. STRONGLY RELYING UP ON THE OBSERVATIONS OF THE AO AND LEARNED COMMISSIONER (APPEALS), THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THE AO HAS POINTED OUT VARIOUS INCONSISTENCIES IN THE VALUATION REPORT. THUS, HE SUBMITTED , INDEXATION BENEFIT CANNOT BE ALLOWED TO THE ASS ESSEE BASED ON THE VALUATION MADE BY THE REGISTERED VALUER . 6 . WE HAVE CONSIDERED RIVAL SUBMISSIONS IN THE LIGHT OF THE DECISION RELIED UPON AND PERUSED THE MATERIALS ON RECORD. ADMITTEDLY , THIS IS THE SECOND VISIT OF THE ASSESSEE TO THE TRIBUNAL. IN THE EARLIER ROUND, THE TRIBUNAL VIDE ORDER DATED 18.03.2015 IN ITA NO. 5994/MUM/2011 HAS RESTORED THE ISSUE RELATING TO THE ADDITION MADE BECAUSE OF LONG TERM CAPITAL GAIN TO THE AO FOR CONSIDERING AFRESH. READING OF THE AFORESAID DECISION OF THE TRIBUNAL MAKE S IT CLEAR THAT THE TRIBU NAL WHILE CONSIDERING THE GROUNDS RAISED BY THE ASSESSEE RELATING TO ADDITION MADE ON ACCOUNT OF LONG TERM CA PITAL GAIN INCLUDING GROUND RELATING TO CLAIM OF I NDEXATION BENEFIT AS PER THE VALUATION RE PORT OF THE REGISTERED VALUER, HAS RESTORED THE MATTER BACK TO THE A O, S INCE, THE TRIBUNAL WAS OF THE VIEW TH AT VARIOUS CONTENTIONS OF THE ASSESSEE WERE NOT PROPERTY CONSIDERED. THUS, FROM THE AFORESAID F ACT, IT IS VERY MUCH CLEAR THAT THE TRIBUNAL HAS NOT GIVEN ANY SPECIFIC DIRECTION B UT HAS RESTORED THE ENTIRE ISSUE RELATING TO ADDITION OF LONG TERM CAPITAL GAIN. WHEREAS, ON PERU SAL OF THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS) IT BECOMES CLEAR THAT HE HAS NOT DECIDED THE GROUND RAISED BY THE ASSESSEE ON INDEXATION BENEFIT BA SED UPON THE VALUATION REPORT ON THE REASONING THAT THE ISSUE CANNOT BE RAISED IN THE SECOND ROUND, S INCE, NO SUCH DIRECTION TO CONSIDER THE ISSUE WAS GIVEN BY 4 ITA NO. 4763 / MUM/2018 ASSESSMENT YEAR: 20 08 - 09 THE TRIBUNAL WHILE RESTORING THE MATTER BACK TO THE AO. IN OUR VIEW, THE AFORESAID CONCLUSION OF LEARNED COMMISSIONER (APPEALS) IS ERRONEOUS. 7. AS DISCUSSED EARLIER , THE TRIBUNAL WHILE RESTORING THE MATTER HAS NOT ISSUED ANY SPECIFIC DIRECTION TO THE AO BUT HAS DIRECTED FOR AFRESH ASSESSMENT AFTER CONSIDERING THE CONTENTIONS OF THE ASSESSEE AGAINST THE ADDIT ION OF LONG TERM CAPITAL GAIN. NEVERTHELESS , IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE H A S F URNISHED VALUATION REPORT OF A REGISTERED VALUER DETERMINING THE VALUE OF THE PROPERTY AS ON 01.04. 1981 . O N THE VALUE SO DETERMINED , THE ASSESSEE HAS CLAIMED INDEXATION BENEFIT. ON PERUSAL OF THE ASSESSMENT ORDER, IT IS OBSERVED THAT THE AO HAS NOT ACCEPTED THE VALUATION REPORT FURNISHED BY THE ASSESSEE AND HAS GRANTED INDEXATION BENEFIT BY HIMSELF DETERMINING THE VALUE OF THE PROPERTY AS ON 01.04.1 981. IN OUR VIEW, THE AFORESAID ACTION ON THE PART OF THE AO IS UNSUSTAINABLE. A VALUATION REPORT OBTAINED FROM A REGISTERED VALUER IS AN EXPERT OPINION AND CERTAINLY CARRIES EVIDENTIARY VALUE . THIS IS THE LEGAL POSITION EMERGING FROM THE DECISIONS CITED B EFORE US. MOREOVER, THE REGISTERED VALUER H AS THE EXPERTISE TO DETERMINE THE VALUE OF THE PROPERTY. WHEREAS, THE AO CERTAINLY DOES NOT HAVE SUCH EXPERTISE IN THE MATTER OF VALUATION OF IM MOVABLE PROPERTY. IF, THE AO HAD ANY DOUBT REGARDING THE VALUE DETERM INED BY THE REGISTERED VALUER, HE SHOULD HAVE REFERRED THE VALUATION TO THE DVO INSTEAD OF HIMSELF ASSUMING THE ROLE OF A VALUER. IN VIEW OF THE AFORESAID, WE DIRECT THE AO TO COMPUTE LONG TERM CAPITAL GAIN AFTER GRANTING THE INDEXATION BENEFIT ON THE BASI S OF VALUE OF THE ASSET DETERMINED BY THE REGISTERED VALUER AS ON 01.04.1981. THIS GROUNDS IS ALLOWED. 8. GROUND NO. III BEING A GENERAL GROUND IS DISMISSED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JUNE , 2021 . SD/ - SD/ - ( MANOJ KUMAR AGGARWAL ) ACCOUNTANT MEMBER ( SAKTIJIT DEY ) JUDICIAL MEMBER MUMBAI ; DATED: 07 / 06 /2021 ALINDRA, PS 5 ITA NO. 4763 / MUM/2018 ASSESSMENT YEAR: 20 08 - 09 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI