RUKMANI DEVI GANWANI, Jaipur V. ITO, Jaipur

ITA 498/JPR/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2907 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI SINGH
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Valuation report
• Section: 50C; 234B; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 498/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 SMT. RUKMANI DEVI GANWANI, PROP. ASHOKA ELECTRICALS, 1948, UDAI SINGH KI HAVELI, TRIPOLIYA BAZAR, JAIPUR. CUKE VS. THE ITO, WARD 1(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAPPG 1904 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 450/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 SHRI ASHOK KUMAR GANWANI, 2 CHA 11, SECTOR NO. 2, JAWAHAR NAGAR, JAIPUR. CUKE VS. THE ITO, WARD 1(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACNPG 5289 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI JAI SINGH (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 26/02/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 28/02/2019 VKNS'K@ ORDER ITA NO. 498/JP/2016 & 450/JP/2018 SMT. RUKMANI DEVI GANWANI & OTHERS VS. ITO 2 PER: VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE TWO ASSESSEES (HUSBAND AN D WIFE) ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT (A) , JAIPUR DATED 03.02.2016 & 29.01.2018 FOR THE ASSESSMENT YEAR 200 8-09 RESPECTIVELY. 2. BRIEF FACTS LEADING TO THE CONTROVERSY ARE THAT THE ASSESSEES WERE JOINT OWNER OF A PROPERTY BEARING SHOP NO. 261, CHA NDPOLE BAZAR, JAIPUR. DURING THE YEAR UNDER CONSIDERATION THE ASS ESSEES HAVE SOLD THE SAID IMMOVABLE PROPERTY FOR A TOTAL CONSIDERATION O F RS. 26,00,000/- AND RS. 13,00,000/- FOR EACH SHARE OF THE ASSESSE E. THE AO REFERRED THE VALUATION OF THE PROPERTY TO THE DVO AND AFTER RECEIVING THE VALUATION FROM THE DVO HAS ADOPTED FULL VALUE CONSI DERATION U/S 50C OF THE ACT AT RS. 15,14,934/- OF EACH SHARE AS AGAIN ST RS. 13,00,000/- DECLARED BY THE ASSESSEE. APART FROM ADOPTING THE F ULL VALUE CONSIDERATION THE AO HAS ALSO DISALLOWED THE CLAIM OF COST OF RENOVATION, LEGAL FEES AND EXPENSES INCURRED TOWARD S PAYMENT OF BROKERAGE. THE ASSESSEE CHALLENGED THE ACTION OF TH E AO BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 3. COMMON GROUNDS HAVE BEEN RAISED BY THE ASSESSEE S IN THESE APPEALS THE GROUND RAISED IN ITA NO. 450/JP/2018 RE PRODUCED AS UNDER:- ITA NO. 498/JP/2016 & 450/JP/2018 SMT. RUKMANI DEVI GANWANI & OTHERS VS. ITO 3 1. THE IMPUGNED ORDER U/S 147/143(3) DATED 10.02.2 016 IS BAD IN LAW AND ON FACTS OF THE CASE FOR WANT OF JURISDI CTION AND VARIOUS OTHER REASONS AND HENCE THE SAME KINDLY BE QUASHED. 2.1 RS. 4,17,652/-: THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION MADE B Y THE AO ON ACCOUNT OF LTCG AT RS. 4,17,652/- (LTCG RS. 5,81,05 0/- ASSESSED RS. 1,63,398/- DECLARED) ARISING FROM THE SALE OF O NE HALF PORTION OF THE SHOP BY ADAPTING THE SALE CONSIDERATION AT R S. 15,14,934/- BEING THE VALUATION ADOPTED FOR STAMP DUTY PURPOSES U/S 50C AS AGAINST THE DECLARED SALE CONSIDERATION OF RS. 13,0 0,000/-. THE IMPUGNED ADDITION IN THE DECLARED CAPITAL GAIN OF R S. 4,17,652/- BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, KINDLY BE DELETED IN FULL. 2.2 THE LD. CIT(A) FURTHER ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF THE CLAI MS MADE BY THE ASSESSEE OF RS. 81,000/- PAID ON ACCOUNT OF BROKERA GE ON THE SALE OF THE SHOP AND ALSO RS. 1,06,500/- CLAIMED ON ACCOUNT OF RENOVATION, WHITE WASH, FLOORING & PAINT. THE CLAIM SO DENIED BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, KINDLY BE ALLOWED IN FULL. 3. THE LD. AO ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CHARGING INTEREST U/S 234B & 324C. THE APPELLANT TO TALLY DENIES IT LIABILITY OF CHARGING OF ANY SUCH INTEREST. THE INT EREST, SO CHARGED, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, KINDLY BE DELETED IN FULL. 4. THE APPELLANT PRAYS YOUR HONOUR INDULGENCES TO A DD, AMEND OR ALTER OF OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. 4. GROUND NO. 1 IS REGARDING THE VALIDITY OF REASSE SSMENT. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESS EES HAVE STATED AT BAR THAT THE ASSESSEES DOES NOT PRESS GROUND NO. 1 AND THE SAME MAY ITA NO. 498/JP/2016 & 450/JP/2018 SMT. RUKMANI DEVI GANWANI & OTHERS VS. ITO 4 BE DISMISSED AS NOT PRESSED. THE LD. DR HAS RAISED NO OBJECTION IF GROUND NO. 1 OF THE ASSESSEES APPEALS ARE DISMISSE D AS NOT PRESSED. ACCORDINGLY THE GROUND NO. 1 OF BOTH THE APPEALS OF THE ASSESSEES IS DISMISSED BEING NOT PRESSED. 5. GROUND NO. 2.1 IS REGARDING ADOPTION OF FULL VAL UE CONSIDERATION AS PER THE STAMP DUTY VALUATION U/S 50C OF THE ACT. THE ASSESSEES HAVE DECLARED SALE CONSIDERATION OF RS. 13,00,000/- FOR EACH SHARE HOWEVER, THE ASSESSING OFFICER HAS REFERRED TO THE VALUE TO THE DVO WHO IS HAD DETERMINED THE FAIR MARKET VALUE AT RS. 15,33,800/- OF EACH SHARE. SINCE, THE FAIR MARKET VALUE DETERMINED BY THE DVO IS MORE THAN THE STAMP DUTY VALUATION THEREFORE, THE AO ADO PTED THE FULL VALUE CONSIDERATION AT RS. 15,14,934/- FOR EACH SHARE. THE ASSESSEE CHALLENGED THE ADOPTION OF FULL VALUE CONSIDERATION U/S 50C OF THE ACT AND SUBMITTED THAT THE SALE CONSIDERATION DECLARED BY THE ASSESSEE IS CORRECT MARKET VALUE PROPERTY IN QUESTION. IN SUPPO RT OF HIS CONTENTIONS THEY HAVE FILED VALUATION REPORT OF REGISTERED VALU ER WHO HAS DETERMINED THE VALUE OF THE PROPERTY AT RS. 13,22,2 27/- FOR EACH SHARE OF THE ASSESSEES. THE LD. CIT(A) HAS NOT ACCE PTED THE CONTENTION OF THE ASSESSEES AND CONFIRMED THE ACTION OF THE AO IN ADOPTING THE FULL VALUE CONSIDERATION AS PER SECTION 50C OF THE ACT. ITA NO. 498/JP/2016 & 450/JP/2018 SMT. RUKMANI DEVI GANWANI & OTHERS VS. ITO 5 6. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT THE REGISTERED VALUER HAS GIVEN THE SPECIFIC REASONS FO R TAKING THE FAIR MARKET VALUE AT LOWER RATE DUE TO VARIOUS FACTORS A FFECTING THE VALUE OF THE PROPERTY. HE HAS POINTED OUT THAT PARTICULAR PR OPERTY VALUATION IS FACTORED MAINLY ON THE ECONOMIC OBSOLENCE CATEGOR IZED AS LESSER WIDTH & GREATER DEPTH IMPROPER PLACE TO MOVE WITH IN THE SHOP PART AREA, NON PHYSICAL PARTITION/DEVIDATION WITH NEXT HALF PART, & FINALLY THE RESTRICTION TO USE THE PREMISES. THE REGISTERE D VALUER HAS ALSO GIVEN VARIOUS PECULIAR FACTORS AFFECTING THE VALUAT ION AND ACCORDINGLY HE TOOK A FACTOR OF 15% EACH AND APPLIED AS 60% VALUAT ION IN COMPARISON TO A NORMAL PROPERTY. THEREFORE, HE HAS SUBMITTED T HAT THE VALUATION DETERMINED BY THE REGISTERED VALUER IS NEAR ABOUT T HE VALUE ADOPTED BY THE ASSESSEE THEREFORE, NO ADDITION IS JUSTIFIED IN THIS RESPECT. THE DIFFERENCE IN THE VALUE ADOPTED BY THE ASSESSEE AND FULL VALUE CONSIDERATION ADOPTED BY THE AO IS LESS THAN 15% WH ICH IS WITHIN TOLERANCE RANGE UP TO 15% AS CONSIDERED BY VARIOUS COURTS. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. NILOFAR I. SINGH 309 ITR 2 33. 7. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT THE AO DULY COMPLIED WITH THE PROVISIONS OF SECTION 50C OF THE ACT AS THE ISSUE OF ITA NO. 498/JP/2016 & 450/JP/2018 SMT. RUKMANI DEVI GANWANI & OTHERS VS. ITO 6 VALUE WAS REFERRED TO THE DVO AND AFTER CONSIDERING THE REPORT OF THE DVO THE AO HAS ADOPTED LESSER VALUE AS PER THE PROV ISIONS OF SECTION 50C OF THE ACT. HE HAS RELIED UPON THE ORDERS OF TH E AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEES HAVE DECLARED THE SALE CONSIDERATION OF RS. 13,00,000/- FOR EACH SHARE THOUGH THE STAM P DUTY VALUATION OF THE PROPERTY IS RS. 15,14,934/-. THE ASSESSING OFFI CER AFTER GETTING THE FAIR MARKET VALUE DETERMINED BY THE DVO HAD ADOPTED THE FULL VALUE CONSIDERATION AS PER THE STAMP DUTY VALUATION. THE ASSESSEE HAS OBJECTED TO THE ADOPTION OF FULL VALUE CONSIDERATIO N U/S 50C OF THE ACT AND SUBMITTED THAT THE REGISTERED VALUER HAS GIVEN THE SPECIFIC REASONS FOR LESSER VALUE OF THE PROPERTY IN QUESTION. WE FI ND THAT THE DVO HAS DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY AT RS. 15,33,800/- WHEREAS THE REGISTERED VALUER HAS DETERMINED THE FA IR MARKET VALUE OF THE PROPERTY AT RS. 13,22,227/- FOR EACH SHARE OF THE ASSESSEES. THUS, IT IS CLEAR THAT THE DETERMINATION OF FAIR MA RKET VALUE IS SUBJECTIVE TO THE INDIVIDUAL DECISION AND THEREFORE, TO ADOPT A FAIR AND PROPER VALUE AVERAGE OF TWO FAIR MARKET VALUE DETERMINED ONE BY THE DVO AND ANOTHER BY THE REGISTERED VALUER CAN BE ADOPTED AS FAIR MARKET VALUE U/S 50C OF THE I.T. ACT WHICH COMES TO RS. 14,28,01 3/-. ACCORDINGLY, ITA NO. 498/JP/2016 & 450/JP/2018 SMT. RUKMANI DEVI GANWANI & OTHERS VS. ITO 7 THE AO DIRECTED TO ADOPT FAIR MARKET VALUE OF THE EACH SHARE OF THE PROPERTY AT 14,28,013/-. 9. GROUND NO. 2.2 IS REGARDING DISALLOWANCE OF COST OF RENOVATION AND BROKERAGE CHARGES. 10. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. EACH OF THE JOINT OWNE R HAS CLAIMED RENOVATION EXPENSES OF RS. 1,06,500/-. ON PERUSAL O F THE RELEVANT RECORD, WE FIND THAT THE ASSESSEE HAS CLAIMED EXPEN DITURE TOWARDS THE RENOVATION WORK CARRIED OUT IN THE YEAR 2002. THUS, IT IS CLEAR THAT THIS EXPENDITURE WAS INCURRED BY THE ASSESSEE JUST AFTER PURCHASING THE SHOP IN QUESTION AND THEREAFTER THE ASSESSEES HAVE USED THIS SHOP FOR THEIR OWN BUSINESS PURPOSE. ACCORDINGLY, ONCE THE S HOP WAS USED AFTER THE RENOVATION FOR BUSINESS PURPOSE AND THE NATURE OF EXPENDITURE IS NOT ANY ADDITION TO THE SHOP BUT IT IS AN ORDINARY AND REPAIR WORK THEREFORE, THE CURRENT REPAIR CHARGES CANNOT BE ALL OWED AS COST OF ACQUISITION. AS REGARDS THE BROKERAGE CHARGES OF RS . 81,000/- WE FIND THAT THE ASSESSEE HAS PRODUCED A RECEIPT FROM THE B ROKER HOWEVER, THE CHARGES OF RS. 81,000/- EACH ARE VERY HIGH IN COMPA RISON TO THE PREVAILING RATE OF BROKERAGE IN THE REAL ESTATE TRA NSACTION. ACCORDINGLY, HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE ALLOW 2% ITA NO. 498/JP/2016 & 450/JP/2018 SMT. RUKMANI DEVI GANWANI & OTHERS VS. ITO 8 OF THE SALE CONSIDERATION DECLARED IN THE SALE DEED AS BROKERAGE CHARGES WHICH COMES TO RS. 26,000/- EACH FOR BOTH THE ASSES SEESS. ACCORDINGLY, THE BROKERAGE CHARGES ARE ALLOWED PARTIALLY TO THE EXTENT OF 2% OF THE SALE CONSIDERATION DECLARED BY THE ASSESSEE. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES A RE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/02/2019. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28/02/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-A- SMT. RUKMANI DEVI GANWANI, JAIPUR. B- SHRI ASHOK KUMAR GANWANI, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD 1(3),/ WARD-1(2), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO.498/JP/2016 & 450/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR