Jainag Vallbhaneni, CHENNAI V. ITO, CHENNAI

ITA 5/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4922 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 02-01-2017
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: D ANAND
• Keywords: Fair market value

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC B BENCH, CHENNAI . , ! BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.5/MDS/2017 ( / ASSESSMENT YEAR: 2008-09) SHRI JAINAG VALLABHANENI, NO.5/1165 APT. 7C, AMARA PRAKASH OMR, PERUNGUDI, CHENNAI 96. VS THE INCOME TAX OFFICER, BUSINESS WARD 1(2), CHENNAI PAN: AAZPV1275H ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI D. ANAND, ADVOCATE /RESPONDENT BY : SHRI SUPRIYO PAL, JCIT /DATE OF HEARING : 29.03.2017 ! /DATE OF PRONOUNCEMENT : 05.04.2017 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-2, CHENNAI DATED 29.09.2016 IN IT NO.249/CIT(A)-2/2013 -14 FOR THE ASSESSMENT YEAR 2008-09 PASSED U/S.250(6) R.W.S.143 (3) OF THE ACT. 2. THE ONLY ISSUE WHICH ARISES FOR OUR CONSIDERATIO N IN THIS APPEAL IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ORDE R OF THE LD.AO WHO HAD DETERMINED THE FAIR MARKET VALUE (FMV) OF T HE LAND SOLD BY 2 ITA NO.5/MDS/2017 THE ASSESSEE AT RS.300/- PER SQ.YARD AS ON 01.04.19 81 FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GAIN. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 30.07.2008 ADMITTING TOTAL INCOME OF RS.3,87,810/-. THEREAFTER THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE AC T. SUBSEQUENTLY SURVEY U/S.133A OF THE ACT WAS CONDUCT ED IN THE CASE OF M/S. VIJAYA TALKIES (PARTNERSHIP FIRM), ELURU RO AD, VIJAYAWADA ON 03.02.2010, WHEREIN THE ASSESSEE IS ONE AMONGST THE 17 PARTNERS. IN THE SURVEY PROCEEDINGS, IT WAS REVEALED THAT DUR ING THE RELEVANT PREVIOUS YEAR, ALL THE PARTNERS OF THE FIRM HAD JOI NTLY SOLD 2327 SQ.YARDS OF UNDIVIDED SHARE OF LAND SITUATED AT ELU RU ROAD, VIJAYAWADA FOR RS.2,52,00,000/- VIDE DOCUMENT NO.22 99/2007 DATED 18.05.2007. THE ABOVE SAID LAND WAS PURCHASED BETW EEN THE PERIODS 1968 TO 1971 BY THE ANCESTORS OF THE PARTNE RS. IT WAS FURTHER REVEALED THAT FOR THE PURPOSE OF COMPUTING CAPITAL GAIN THEY HAD ADOPTED FMV AS ON 01.04.1981 ACCORDING TO THEIR CON VENIENCE AT RS.5,87,81,000/- TAKING ADVANTAGE OF THE FACT ABOUT THE NON- AVAILABILITY OF THE RECORDS WITH THE SUB-REGISTRAR OFFICE (SRO) DUE TO DESTRUCTION OF THE SAME BECAUSE OF THE RIOTS WHICH TOOK PLACE ON THE 3 ITA NO.5/MDS/2017 ASSASSINATION OF THE LOCAL MLA. THEREFORE, THE LD.A O AFTER EXAMINING THE PARTICULARS OF THE LAND SOLD BY THE A SSESSEE AND AFTER OBTAINING CERTAIN EVIDENCE FROM THE SROS OFFICE DE TERMINED THE FMV OF THE PROPERTY AS RS.300/- PER SQ.YARD AS ON 0 1.04.1981. THEREAFTER THE LD.AO COMPLETED THE ASSESSMENT BY AD OPTING RS.300/- PER SQ.YARD AS THE FAIR MARKET VALUE AS ON 01.04.1981 AND COMPUTED THE LONG TERM CAPITAL GAIN AT RS.28,45,298 /-. 4. ON APPEAL, THE LD. CIT(A) UPHELD THE ORDER OF TH E LD.AO BY OBSERVING AS UNDER: 4. IN THE COURSE OF HEARING CONDUCTED ON 9.2.2016, THE APPELLANT HAS FILED A COPY OF THE ORDER OF CIT(A), VIJAYAWADA DT. 23.4.2013 IN THE CASE OF SHRI VALLABHANENI RAJE SH, FOR AY 2008-09. SHRI VALLABHANENI RAJESH, IS ANOTHER PARTN ER OF THE FIRM M/S VIJAYA TALKIES. IN THE CASE OF SHRI RAJESH ALSO, AS IN THE CASE OF THE APPELLANT, THE ASSESSING OFFICER I. E. THE ITO, WARD 2(4), VIJAYAWADA HAS ADOPTED THE FMV OF THE PR OPERTY I.E. THE LAND AT RS. 300/- PER SQ. YARD, WHILE COMP LETING THE ASSESSMENT. THE CIT(A), VIJAYAWADA, VIDE THE SAID ORDER, HAS DI RECTED THE ASSESSING OFFICER TO ADOPT THE FMV AS ON 1.4.19 81 AT RS. 2000/- PER SQ. YARD. THE CONCLUDING PORTION OF THE ORDER IS REPRODUCED BELOW (RELEVANT PORTIONS ARE HIGHLIGHTED IN BOLD FONT): '5. I HAVE SEEN THE SUBMISSIONS MADE BY THE APPELLA NT, GONE THROUGH THE ASSESSMENT ORDER BESIDES PERUSING ALL O THER MATERIAL AVAILABLE ON RECORD. THE ONLY ISSUE IS DIS PUTE IN FIXING FAIR MARKET VALUE AS ON 01.04.1981 FOR COMPU TATION OF LONG TERM CAPITAL GAINS. IT IS SEEN THAT THE MAIN T HRUST OF REPRESENTATION IS THAT FAIR MARKET VALUE CANNOT BE SUB REGISTRAR VALUE AS IT IS FIXED FOR DIFFERENT PURPOS ES AS WELL AS 4 ITA NO.5/MDS/2017 IT WAS MADE UNDER DIFFERENT LEGISLATIONS MADE FROM TIME TO TIME. VARIOUS JUDICIAL PRONOUNCEMENTS ALSO REFERRED BY APPELLANT HAVE UNDERLINED THE IMPORTANCE OF CONSIDE RING LOCATION SIGNIFICANCE AND COMMERCIAL VALUE OF THE P ROPERTY IN ARRIVING AT FAIR MARKET VALUE AS ON 01.04.1981. THE ARGUMENTS PUT FORTH LIKE NOTIFICATION OF UP GRADATI ON OF VIJAYAWADA MUNICIPALITY INTO CORPORATION STATUS IN 1981 AND DEVELOPMENTS MADE TO VIJAYAWADA CITY DURING KRISHNA PUSHKARAMS ARE FACTS IN PUBLIC DOMAIN AND SHOULD HA VE BEEN CONSIDERED BY THE ASSESSING OFFICER IN ARRIVING AT FAIR MARKET VALUE OF THE PROPERTY. LOCATION SKETCH PROVIDED BY THE APPELLANT ALSO HIGHLIGHTS THE COMMERCIAL VALUE OF T HE SUBJECT PROPERTY BEYOND DOUBT. AT THE SAME TIME, THE VALUE PUT FORWARD BY THE APPELLANT @ RS. 4000 PER SQUARE YARD IS NOT CONVINCING AND APPEAR TO BE VERY HIGH WHEN THE SAME OBTAINED BY THE ASSESSING OFFICER AT RS.300 FROM TH E SRO IS VERY LOW. IN ANY CASE, IT IS SEEN THAT THE SUBJECT PROPERTY IS LOCATED AT PROMINENT LOCATION ON ELURU ROAD KNOWN A S VIJAYA TALKIES CENTRE AND IS A DEVELOPED COMMERCIAL AREA. THUS, THERE ARE MANY OCCASIONS, WHERE THE VALUE AS PER OFFICE OF THE SRO IS MUCH MORE THAN ACTUAL MARKET R ATE AND VICE VERSA ALSO. THUS, LOOKING AT THE DEVELOPME NTS THAT TOOK IN THE LOCATION OF THE IMPUGNED PROPERTY AND A LSO TAKING TOTALITY OF FACTS AND CIRCUMSTANCES INTO ACC OUNT. I AM OF THE CONSIDERED OPINION THAT ENDS OF JUSTICE A RE MET, IF THE FMV AS ON 01.04.1981 IS TAKEN AT RS.2,000 AND T HE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. ALL OTHE R GROUNDS ARE NOT PRESSED AND HENCE, TREATED AS DISMISSED. 6. IN THE RESULT, THE APPEAL PARTLY ALLOWED. TAKING THE CONTENTIONS OF THE APPELLANT SHRI RAJESH INTO ACCOUNT, AND KEEPING IN VIEW THE FACTORS SUCH AS NO TIFICATION OF UPGRADATION OF VIJAYAWADA MUNICIPALITY INTO CORPORA TION STATUS IN 1981, DEVELOPMENTS MADE TO VIJAYAWADA C ITY DURING KRISHNA PUSHKARAMS AND THE COMMERCIAL VALUE OF THE SUBJECT PROPERTY, WHILE AT THE SAME TIME, HIGHLIGHTING THE FACT THAT THE VALUE PUT FORWARD BY THE APPELLANT I.E. RS. 4000/- PER SQ. YARD IS NOT CONVINCING AND APPEARS TO BE VERY HIGH, THE CIT(A), VIJAYAWADA WAS OF THE VIEW THAT IT WOULD BE FAIR TO FIX THE FMV AT RS. 2000/- PER SQ. YARD. THE LEARNED CIT(A), VIJAYAWADA STATES THAT THE VALU E OBTAINED BY THE ASSESSING OFFICER AT RS.300/- FROM THE SRO IS 5 ITA NO.5/MDS/2017 'VERY LOW'. HOWEVER, IT MUST BE KEPT IN MIND THAT T HE APPELLANT GETS THE BENEFIT OF COST INFLATION INDEX (CLL) VIS- A-VIS THE BASIC COST/FMV OF THE PROPERTY AS ON 1.4.1981, WHICH WOUL D TAKE CARE OF THE INFLATION FACTOR. BESIDES, IT IS SEEN T HAT THE UPGRADATION OF VIJAYAWADA MUNICIPALITY INTO CORPORA TION STATUS HAS TAKEN PLACE DURING 1981. THE PROPERTY HA S DEVOLVED ON THE APPELLANT AS EARLY AS 1968 TO 1971 AND IT IS FOR THIS REASON THAT THE APPELLANT IS GIVEN THE BENEFIT OF ' COST AS ON 1.4.1981'. IT HAS TO BE BORNE IN MIND THAT THE INFORMATION REC EIVED FROM THE SUB-REGISTRAR'S OFFICE IS BASED ON AUTHENT IC RECORDS. NOTWITHSTANDING THE APPELLANT'S SUBMISSIONS THAT TH E PAGE CONTAINING THE GUIDELINE VALUE OF THE PROPERTY BEAR S STRIKINGS, THE FACT REMAINS THAT THE GUIDELINE VALUE OF THE LA ND LOCATED AT ELURU ROAD, SPECIFICALLY VIJAYA TALKIES, IS CLEARLY MENTIONED THEREIN AS RS. 300/- PER SQ. YARD AS ON 1.4.1981. T HIS INFORMATION, CONTAINED IN PAGE NO. 33 OF THE REGIST ER OF FAIR MARKET VALUE BEING MAINTAINED IN THE SRO OFFICE, VI JAYAWADA HAS OFFICIALLY COME INTO THE POSSESSION OF THE LT. DEPARTMENT AND HAS BEEN DULY FORWARDED TO THE ASSESSING OFFICE R ASSESSING THE CASE OF THE APPELLANT AS WELL AS THE ASSESSING OFFICERS OF THE 16 OTHER PARTNERS. ON THE OTHER HAND, AS HELD B Y THE CIT(A), VIJAYAWADA, THE BASIS OF THE VALUATION OF R S. 4000/- PER SQ. YARD ADOPTED BY THE APPELLANT IS NOT CLEAR AND HENCE THE SAID VALUE IS NOT CONVINCING AND ALSO APPEARS T O BE VERY HIGH. AT THE SAME TIME, THE VALUE DETERMINED BY THE LEARNED CIT(A), VIJAYAWADA ALSO DOES NOT SEEM TO BE BASED O N ANY SPECIFIC DOCUMENT/ RECORD SUCH AS GOVERNMENT RECORD S ETC. HENCE, IT IS HELD THAT, THE GUIDELINE VALUE AS PER INFORMATION FROM THE SRO, BASED AS IT IS ON AUTHENTIC GOVERNMEN T RECORDS, HAS BEEN RIGHTLY ADOPTED BY THE ASSESSING OFFICER. THUS IN MY CONSIDERED VIEW, THE ASSESSING OFFICER W AS JUSTIFIED IN ADOPTING RS.300J- PER SQ. YARD AS THE FMV OF THE LAND AT VIJAYAWADA, SOLD BY THE APPELLANT DURING TH E RELEVANT PREVIOUS YEAR. THE ADDITION MADE BY ADOPTING THIS V ALUE, IS HENCE CONFIRMED. 6 ITA NO.5/MDS/2017 5. AT THE OUTSET, THE LD.AR SUBMITTED BEFORE US THA T IN THE CASE OF SRI VALLABHANENI RAJESH, WHO IS ONE AMONGST THE 17 CO-OWNERS OF THE PROPERTY, THE LD.CIT(A) IN HIS ORDER DATED 23.0 4.2013, APPEAL NO.433/CIT(A)/VJA/10-11 ADOPTED THE FMV OF THE LAND SOLD BY THE ASSESSEES AS ON 01.04.1981 AT RS.2000 PER SQ.YARD. THE LD.AR FURTHER SUBMITTED THAT THE REVENUE DID NOT PREFER A NY APPEAL AGAINST THE ORDER OF THE LD.CIT(A). HE THEREFORE REQUESTED THAT THE SAME FMV MAY BE ADOPTED IN THE CASE OF THE ASSESSEE ALSO , BECAUSE THE FMV DETERMINED BY THE LD.CIT(A) ON THE VERY SAME PR OPERTY IS ACCEPTED BY THE REVENUE IN THE CASE OF THE JOINT OW NER OF THE PROPERTY. THE LD.DR COULD NOT SUCCESSFULLY CONTROV ERT TO THE SUBMISSIONS MADE BY THE LD.AR. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. AS ARGUED BY THE LD .AR, IT IS EVIDENT THAT THE LD.CIT(A) VIDE ORDER DATED 23.04.2013 IN T HE CASE OF THE JOINT OWNER OF THE PROPERTY HAS DETERMINED THE FMV OF THE PROPERTY AS ON 01.04.1981 AT RS.2000/- PER SQ.YARD. THE REL EVANT PORTION OF THE ORDER IS REPRODUCED HEREIN BELOW FOR REFERENCE: I HAVE SEEN THE SUBMISSIONS MADE BY THE APPELLANT, GONE THROUGH THE ASSESSMENT ORDER BESIDES PERUSING ALL OTHER MAT ERIAL AVAILABLE ON RECORD. THE ONLY ISSUE IS DISPUTE IN FIXING FAI R MARKET VALUE AS 7 ITA NO.5/MDS/2017 ON 01.04.1981 FOR COMPUTATION OF LONG TERM CAPITAL GAINS. IT IS SEEN THAT THE MAIN THRUST OF REPRESENTATION IS THAT FAIR MARKET VALUE CANNOT BE SUB REGISTRAR VALUE AS IT IS FIXED FOR DI FFERENT PURPOSES AS WELL AS IT WAS MADE UNDER DIFFERENT LEGISLATIONS MA DE FROM TIME TO TIME. VARIOUS JUDICIAL PRONOUNCEMENTS ALSO REFERRE D BY APPELLANT HAVE UNDERLINED THE IMPORTANCE OF CONSIDERING LOCAT ION, SIGNIFICANCE AND COMMERCIAL VALUE OF THE PROPERTY I N ARRIVING AT FAIR MARKET VALUE AS ON 01.04.1981. THE ARGUMENTS PUT FORTH LIKE NOTIFICATION OF UP GRADATION OF VIJAYAWADA MUNICIPA LITY INTO CORPORATION STATUS IN 1981 AND DEVELOPMENTS MADE T O VIJAYAWADA CITY DURING KRISHNA PUSHKARAMS ARE FACTS IN PUBLIC DOMAIN AND SHOULD HAVE BEEN CONSIDERED BY THE ASSESSING OFFICE R IN ARRIVING AT FAIR MARKET VALUE OF THE PROPERTY. LOCATION SKETCH PROVIDED BY THE APPELLANT ALSO HIGHLIGHTS THE COMMERCIAL VALUE OF T HE SUBJECT PROPERTY BEYOND DOUBT. AT THE SAME TIME, THE VALUE PUT FORWARD BY THE APPELLANT @ RS.4000 PER SQUARE YARD IS NOT CONV INCING AND APPEAR TO BE VERY HIGH WHEN THE SAME OBTAINED BY TH E ASSESSING OFFICER AT RS.300 FROM THE SRO IS VERY LOW. IN ANY CASE, IT IS SEEN THAT THE SUBJECT PROPERTY IS LOCATED AT PROMINENT L OCATION ON ELURU ROAD KNOWN AS VIJAYA TALKIES CENTRE AND IS A DEVELO PED COMMERCIAL AREA. THUS, THERE ARE MANY OCCASIONS, WHERE THE VA LUE AS PER OFFICE OF THE SRO IS MUCH MORE THAN ACTUAL MARKET VALUE AN D VICE VERSA ALSO. THUS, LOOKING AT THE DEVELOPMENTS THAT TOOK IN THE LOCATION OF THE IMPUGNED PROPERTY AND ALSO TAKING TOTALITY OF F ACTS AND CIRCUMSTANCES INTO ACCOUNT, I AM OF THE CONSIDERED OPINION THAT ENDS OF JUSTICE ARE MET, IF THE FMV AS ON 01.04.198 1 IS TAKEN AT RS.2,000/- AND THE ASSESSING OFFICER IS DIRECTED AC CORDINGLY. ALL OTHER GROUNDS ARE NOT PRESSED AND HENCE, TREATED AS DISMISSED. SINCE THE LD.CIT(A) ON THE EARLIER OCCASION HAD DE TERMINED THE VALUE OF THE LAND SOLD WHICH IS ACCEPTED BY THE REV ENUE SINCE THEY HAVE NOT CARRIED THE MATTER ON APPEAL AS CLARIFIED BY THE LD.D.R, I AM OF THE CONSIDERED VIEW THAT THE SAME VALUE SHOUL D BE ADOPTED IN 8 ITA NO.5/MDS/2017 THE CASE OF THE ASSESSEE ALSO. THEREFORE, I HEREBY DIRECT THE LD.AO TO COMPUTE THE CAPITAL GAIN IN THE CASE OF THE ASSE SSEE BY ADOPTING THE FMV OF THE PROPERTY AT RS.2000/- PER SQ.YARDS A S HELD IN THE CASE OF THE CO-OWNER OF THE SAME PROPERTY BY THE LD .CIT(A) VIDE THE ORDER DATED 23.04.2013 SUPRA. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED ON THE 5 TH APRIL, 2017. SD/- ( . ) (A. MOHAN ALANKAMONY ) / ACCOUNTANT MEMBER '# /CHENNAI, $% /DATED 5 TH APRIL, 2017 JR % '( )( /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. , ( )/CIT(A) 4. , /CIT 5. (-. / /DR 6. .0 /GF