The Income Tax Officer, Ward-2(2), , Vijayawada V. Ivaturi Mahalakshmi, , Vijayawada

ITA 509/VIZ/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0296 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 30-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital Gains
• Section: 147; 143(3); 50C; 142(1); 250; 143(2); 48

Judgement Text

आयकर अपीऱीयअधिकरण, विशाखापटणम पीठ, विशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्ि ू रु आर एऱ रेड्डी, न्याययक सदस्य एिं श्री एस बाऱाक ृ ष्णन, ऱेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अऩीऱ सं./ I.T.A. No.509/Viz/2018 (ननधधारण वषा / Assessment Year : 2006-07) Income Tax Officer, Ward-2(2), Vijayawada. Vs. Sri Ivaturi Mallikharjuan Rao, L/R and son of Late Smt. Ivaturi Mahalakshmamma, Vijayawada. PAN: AATPI 0474 P (अऩीऱधथी/ Appellant) (प्रत्यथी/ Respondent) CO. No.18/Viz/2019 (In आयकर अऩीऱ सं./ I.T.A. No.509/Viz/2018) (ननधधारण वषा / AY : 2006-07) Sri Ivaturi Mallikharjuan Rao, L/R and son of Late Smt. Ivaturi Mahalakshmamma, Vijayawada. PAN: AATPI 0474 P Vs. Income Tax Officer, Ward-2(2), Vijayawada. (अऩीऱधथी/ Appellant) (प्रत्यथी/ Respondent) अऩीऱधथी की ओर से/ Assessee by : Sri C. Subrahmanyam, CA प्रत्यधथी की ओर से / Revenue by : Sri SPG Mudaliar, Sr. AR स ु नवधई की तधरीख / Date of Hearing : 07/06/2022 घोषणध की तधरीख/Date of Pronouncement : 08/07/2022 O R D E R 2 PER S. BALAKRISHNAN, Accountant Member : This appeal filed by the Revenue against the order of the Ld. CIT(A), Vijayawada in appeal ITA No. 429/CIT(A)/VJA/10-11, dated 03/07/2018 passed U/s. 143(3) r.w.s 147 and U/s. 250(6) of the Act for the AY 2006-07. Cross Objections filed by the assessee. 2. Briefly stated, the facts of the case are that the assessee received a residential house in Vijayawada from her husband Late Sri Ivaturi Sivaprasad as per Regd Will dt 17/11/1977. The assessee filed her return of income for the AY 2006-07 on 6/2/2008 declaring a total income of Rs. 11,93,700/-. The assessment was subsequently reopened U/s. 147 of the Act and statutory notices U/s. 143(2) and 142(1) were issued and served on the assessee. The assessee through her Authorized Representative (AR) filed written submissions before the AO. Considering the submissions made by the assessee’s AR, the Assessing Officer assessed the total income at Rs. 63,92,929/-. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the CIT(A), Vijayawada. The Ld. CIT(A), Vijayawada vide order in appeal No. 429/CIT(A)/VJA/10-11, dated 4/9/2013 allowed the appeal. Aggrieved by the order of the Ld. CIT(A), 3 Vijayawada, the Revenue preferred an appeal before the ITAT. The Hon’ble ITAT, Visakhapatnam Bench vide its order in ITA No.716/Viz/2013, dated 9/9/2016 allowed the appeal filed by the revenue for statistical purposes and directed the CIT(A) to examine and decide de novo in accordance with law. Consequently the Ld.CIT(A) took the appeal for fresh adjudication and issued notice u/s 250 of the Act. In response to the notice U/s. 250 of the Act, the Assessee’s Representative filed the written submissions. These submissions were forwarded to the AO calling for remand report after necessary verification by the AO. The AO vide letter dated 18/5/2017 submitted the remand report requesting the Ld. CIT(A) to reject the year of chargeability of capital gains. However this issue is not before us. The copy of the remand report was given to the assessee for objections, if any. The assessee filed her rejoinder on 27/09/2017. Considering the submissions made by the assessee’s representative, the Ld. CIT(A) partly allowed the appeal. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us. The Revenue has raised the revised grounds of appeal as below: “1. The Ld. CIT(A) is erroneous in law as well as in f acts of the case. 4 2. The Ld. CIT(A) erred in directing to exclude the cost of land while calculating the sale consideration ignoring the provisions of section 48 of the IT act, as per which the f ull value of consideration received on transf er of capital asset (undivided proportionate area of land, constructed area of the f lat and common area of the building are also transf erred by the assessee as mentioned in the registered sale deed) is to be taken into account f or computing the capital gains. 3. The Ld. CIT(A) erred in directing to adopt the rate of constructed area @ Rs. 300 per sq f t without appreciating the f act that the AO has adopted the value as per SRO records, applying the provisions of section 50C of the IT Act, which is mandatory when the value adopted by SRO is higher than the actual consideration received by the assessee. 4. The Ld. CIT(A) ought to have considered the specif ic SRO rates given vide certif icate dated 11/11/2009 in respect of the assessee’s premises at D.No. 38-8-7, MG Road, Vijayawada. 5. Taking cognizance of the f act that the reassessment proceedings were initiated and concluded in consequence to the RAP’s objection, the case is covered exceptions stipulated in Board’s Circular No.3/2018 dated 11/7/2018 vide para 10(c) thereof and hence, it is humbly submitted that the appeal is maintainable irrespective of the monetary limit prescribed therein.” 3. The Ld. AR argued that the assessee has given her property for development and entered into a sale-cum-development agreement with M/s. Datta Constructions on 29/01/2001. The Ld. AR further submitted that the assessee has relinquished 50% of the land in consideration for the receipt of constructed area of 7924 sft and common area of 780 sft aggregating to 8074 sft. The Ld. AR argued that the assessee has received the constructed building for relinquishing 50% of the land in favour of the builder 5 and therefore, the Ld. AR pleaded that the Assessing Officer has erred in adding the value of land already owned by the assessee to the cost of construction in the computation of consideration deemed to have been received by the assessee as per the development agreement. The Ld. AR further argued that the building was not completed fully, the fact which was not disputed by the Revenue, and hence adopting the rate of Rs. 400 per sft towards computation of value of construction is not a correct proposition. The Ld. AR also argued that as per the SRO value of Rs. 400 per sft towards cost of construction in accordance with the provisions of section 50C of the Act is for the completed building and not for the incomplete building. The Ld. AR therefore prayed that the order of the Ld.CIT(A) on this ground shall be sustained. The Ld. AR further submitted that the land cost included in the computation of capital gains at Rs. 533 per sft shall be deleted. The Ld. DR forcibly argued that the AO has rightly concluded the computation of cost of construction at Rs. 400 per sft as per the letter No. Nil, dated 11/11/2009 addressed to the Revenue Audit Party by the Registration and Stamps Department. The Ld. DR also pleaded that the cost of land has to be included 6 in the deemed value of consideration received by the assessee. The Ld. DR prayed that the order of the AO be upheld. 4. We have considered the rival submissions and the material available on record and the order of the Authorities below. Admitted facts are that the assessee has entered into a sale-cum- development agreement with M/s. Datta Constructions on 29/01/2001 and the plan approval of the construction of the building was obtained from the VUDA on 31/1/2004. The matter in dispute in this case raised by the Revenue is with respect to inclusion of the cost of land relinquished by the assessee in the deemed sale consideration received by the assessee. Further, it is also disputed by the Revenue with respect to the cost of construction @ Rs. 400 per sft in the computation of consideration deemed to be received by the assessee for parting of 50% of the land to M/s. Datta Constructions. We note from the material available on record that the assessee has relinquished her right over 50% of the land to M/s. Datta Constructions and has received a constructed area of 8704 sft including the common areas from M/s. Datta Constructions as per the sale- cum-development agreement. The deemed consideration for relinquishing of the land flows from the cost of construction of 7 the building admeasuring 8704 sft, given by M/s. Datta Constructions to the assessee and hence, the cost of land owned and relinquished by the assessee shall not be included in the deemed consideration. Further, it is noted that M/s. Datta Constructions has delivered an incomplete building which was not disputed by the Revenue. Since the building was semi finished with only RCC roof and walls, the cost of construction could not be considered at the value of Rs.400 per sft as given by the Registration and Stamps Department. We are of the considered view that the rate of Rs. 400 per sft is for the completed building and not for the semi-finished building. In view of the discussion above, we find no infirmity in the order of the Ld. CIT(A) wherein he has rightly considered the cost of construction @ Rs. 300 per sft which works out to 75% of the SRO value and hence no interference is required. 5. Since the Cross Objection raised by the assessee is in supportive nature it is allowed in favour of the assessee. 6. In the result, appeal of the Revenue is dismissed and the assesee’s Cross Objection is allowed. 8 Pronounced in the open Court on the 08 th July, 2022. Sd/- Sd/- (द ु व्ि ू रु आर.एऱ रेड्डी) (एस बाऱाक ृ ष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याययकसदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Dated : 08.07.2022 OKK - SPS आदेश की प्रतिलिपि अग्रेपिि/Copy of the order forwarded to:- 1. ननधधाररती/ The Assessee – Sri Ivaturi Mallikharjuna Rao, L/R and Son of Late Smt. Ivaturi Mahalakshmamma, D.No.38-5-1, 1 st Lane, Purnnamathota, Opp. AIR Cross Road, Vijayawada, Andhra Pradesh – 520010. 2. रधजस्व/The Revenue – Income Tax Officer, Ward-2(2), Central Revenue Building, MG Road, Vijayawada, Andhra Pradesh – 520002. 3. The Principal Commissioner of Income Tax, Vijayawada. 4. आयकर आय ु क्त (अऩीऱ)/ The Commissioner of Income Tax (Appeals), Vijayawada. 5. ववभधगीय प्रनतननधध, आयकर अऩीऱीय अधधकरण, ववशधखधऩटणम/ DR, ITAT, Visakhapatnam 6. गधर्ा फ़धईऱ / Guard file आदेशधन ु सधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam