Shri Sangramsingh Raje bhonsale, Nagpur V. Joint Commissioner of Income Tax Rang-6, Nagpur

ITA 51/NAG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93417 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 07-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C W AWGOLKAR
• Assessee Lawyers: S C THAKAR; C J THAKAR
• Keywords: Sale consideration of property below Jantri Value; Question of law; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3); 50C; 54

Judgement Text

1 ITA NO. 51/NAG/ 2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO.51/NAG/2013 ASSESSMENT YEAR : 2006 - 07. SHRI SANGRAMSINGH RAJE BHONSALE, JT. COMMISSIONER OF INCOME - TAX, JR. BHONSALA PALACE, MAHAL, V/S. RANGE - 6, NAGPUR. NAGPUR. PIN AFFPB 3668C APPELLANT. RESPONDENT. APPELLANT BY : SHRI C.J. THAKAR & SHRI S.C. THAKAR. RESPONDENT BY : SHRI C.W. AWGOLKAR. DATE OF HE ARING - 27 - 04 - 2015 DATE OF PRONOUNCEMENT 26 TH JUNE, 2015. O R D E R PER SHRI MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS) - 19, MUMBAI (CAMP OFFICE NAGPUR) DATED 09 - 11 - 2012. THE GROU NDS RAISED ARE AS UNDER : 1. LEARNED CIT(A) ERRED IN DIRECTING THE A.O. TO RE - COMPUTE CAPITAL GAIN AMOUNTING TO ` .22.64,780/ - . 2 ITA NO. 51/NAG/ 2013 2. LEARNED A.O. ERRED IN COMPUTING TAXABLE CAPITAL GAIN AT ` .26,38,250/ - AS AGAINST NIL CAPITAL GAIN COMPUTED BY ASSESSEE. 3. THE COMPUTATION OF CAPITAL GAIN AS MADE BY A.O. & REDUCE BY CIT(A) ARE ALL ILLEGAL AND NOT EXPECTED BY APPELLANT. 4. LEARNED CIT(A) ERRED IN NOT CONSIDER ASSESSEES VARIOUS SUBMISSION AND CASE LAW PROPERLY AND SHE HAD ALSO NOT CONSIDER ASSESSEES VAL UATION REPORT FILED BEFORE HER. 2. DURING THE COURSE OF PROCEEDINGS ADDITIONAL GROUNDS HAVE BEEN RAISED AS UNDER : 1. WHEN THE STAMP DUTY VALUATION ITSELF WAS UNDER CHALLENGE AS NOT REPRESENTING FAIR MARKET VALUE OF PROPERTY, THE D.V.O. COULD NOT BASE H IS VALUATION ON STAMP DUTY VALUATION ITSELF. THIS HAS VITIATED THE VALUATION OF D.V.O. WHICH IS LIABLE TO BE REJECTED. 2. VALUATION REPORT OF REGISTERED VALUER FILED BY THE ASSESSEE REPRESENTED CORRECT MARKET VALUE OF THE PROPERTY AND THE C.I.T.(A) HA VING FOUND NO DEFECT THEREIN SHOULD HAVE ACCEPTED THE SAID VALUATION. 3. THE PROPERTY IN QUESTION HAD NEITHER ANY DATE OF ACQUISITION BEING ANCESTRAL AND AGES OLD BEING WON BY ANCESTOR KIND BHONSALE AND HAVING NO COST OF ACQUISITION THE SAME IS NOT AME NABLE TO CAPITAL GAINS TAX (COMM. OF I.T. V/S. MANOHARSINGHJI JADEGA (2006) 281 I.T.R. P. 19 GUJARAT H.C.) 4. IN RESPECT OF OTHER CO - OWNERS THE CONSIDERATION AS PER SALEDEED HAVING ACCEPTED THERE WAS NO BASIS FOR NOT ACCEPTING THE SAME VALUATION IN THE CASE OF THIS ASSESSEE - COOWNER. 2.1 ON THE ADMISSION OF ADDITIONAL GROUNDS, THE MAIN EMPHASIS OF LEARNED A.R. WAS THAT A LEGAL ISSUE HAS BEEN RAISED EMERGING FROM THE FACTS OF THE CASE, THEREFORE, THE SAME DESERVES TO BE ADMITTED FOR ADJUDICATION. CONSIDE RING THE NATURE OF THE ISSUES RAISED IN THE ADDITIONAL GROUNDS, WE ARE OF THE VIEW THAT IN 3 ITA NO. 51/NAG/ 2013 THE LIGHT OF N ATIONAL THERMAL POWER CO. LTD. 229 ITR 3 8 3 (SC) A LEGAL GROUND WHICH IS EMERG ING FROM THE EXISTING FACTS OF THE CASE CAN BE RAISED AT THE APPELLATE STAGE. THE HONBLE COURT HAS HELD THAT THE TRIBUNAL HAS JURISDICTION TO EXAMINE A QUESTION OF LAW WHICH ARISES FROM THE FACTS HAVING A BEARING ON THE TAX LIABILITY OF THE ASSESSEE. FOLLOWING THIS DECISION, WE HEREBY ADMIT THE ADDITIONAL GROUNDS TO BE DEC IDED AS FOLLOWS. 3. IN SHORT, FACTS OF THE CASE AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 31 - 12 - 2008 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY HAS SHOWN A LONG TERM CAPITAL GAIN OF ` .3,67,250/ - ON SALE OF PLO TS. THE ASSESSEE HAS CLAIMED THAT THE CAPITAL GAIN WAS EXEMPT UNDER SECTION 54EC OF I.T. ACT. THE ASSESSEE HAD MADE AN INVESTMENT OF ` .5 LAKHS IN BONDS OF NATIONAL HOUSING BANK STATED TO BE 50 IN NUMBER HAVING FACE VALUE OF ` . 10,000/ - EACH. THE DESCRIPT ION OF THE PROPERTY WAS THAT THE PLOT OF LAND WAS ADMEASURING 3566.58 SITUATED IN TULSIBAGH, MAHAL, NAGPUR . THE SALE CONSIDERATION AS PER THE SALE DEED WAS AT ` .7,50,000/ - . HOWEVER, AS PER THE ASSESSING OFFICER, THE MARKET VALUE WAS MENTIONED ON SALE DEED ON WHICH THE STAMP DUTY WAS PAID WAS ` .35,11,000/ - . THE ASSESSING OFFICER HAS, THEREFORE, RAISED A QUERY THAT WHY THE PROVISION OF SECTION 50C SHOULD NOT BE INVOKED AND THE SALE CONSIDERATION OF ` .35,11,000/ - SHOULD NOT BE ADOPTED FOR COMPUTING THE LONG T ERM CAPITAL GAIN. THE OBJECTION OF THE ASSESSEE WAS THAT THE SALE CONSIDERATION WAS THE REAL VALUE OF THE PROPERTY. HOWEVER, THE MARKET VALUE OF THE PLOT WAS VERY EXCESSIVE AS DETERMINED BY THE STAMP REVENUE AUTHORITIES, ONLY TO COLLECT MORE STAMP DUTY. 4 ITA NO. 51/NAG/ 2013 4. THE ASSESSING OFFICER HAS REFERRED THE MATTER TO THE DVO, BHOPAL. IT WAS MENTIONED BY THE ASSESSING OFFICER THAT TILL THE FINALIZATION OF THE ASSESSMENT THE VALUATION REPORT WAS PENDING. THE ASSESSING OFFICER HAS THEN MENTIONED THAT THE ASSESSMENT WAS T O BE COMPLETED ON THE BASIS OF THE MARKET VALUE BUT WITH AN UNDERSTANDING THAT THE COMPUTATION COULD BE AMENDED ON RECEIVING THE VALUATION REPORT. THE LONG TERM CAPITAL GAIN WAS COMPUTED AS UNDER : SALE CONSIDERATION FOR PURPOSE OF STAMP DUTY ` .35,1 1,000/ - LESS : INDEXED COST OF ACQUISITION AS PER RETURN OF INCOME: ` . 3,72,750/ - LONG TERM CAPITAL GAIN ` .31,38,250/ - LESS: EXEMPT U/S 54 ` . 5,00,000/ - TAXABLE LONG TERM CAPITAL GAIN ` .26,38,250/ - ============= 5. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(APPEALS) HAS EXAMINED THE FACTS OF THE CASE AND THEREUPON GRANTED PART RELI EF AS UNDER : I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE SUBMISSIONS SOF THE APPELLANT, ASSESSMENT ORDER, REPORT OF THE DVO. THE DISTRICT VALUATION OFFICER IS A TECHNICAL PERSON ENTRUSTED WITH THE TASK OF VALUING THE PROPERTY WHERE THE AS SESSEE HAS OBJECTED TO TH3 VALUE OF THE PROPERTY ADOPTED BY THE ASSESSING OFFICER. THE DVO HAS VALUED THE SAID PROPERTY AFTER CONSIDERING THE ASSESSEES OBJECTION AT ` .22,64,780/ - . IN VIEW OF THIS, I DIRECT THE AO TO ADOPT THE SALE CONSIDERATION OF PR OPERTY AT ` .22,64,780/ - AND RE - COMPUTE THE LONG TERM CAPITAL GAIN. GROUND IS PARTLY ALLOWED. 5 ITA NO. 51/NAG/ 2013 6. NOW BEFORE US THE LEARNED A.R. MR. C.J. THAKAR HAS PLEADED THAT THERE WAS NO COST OF ACQUISITION BECAUSE THE PROPERTY WAS AN ANCESTRAL LAND, THEREFORE, THERE SHOULD NOT BE ANY QUESTION OF LEVY OF LONG TERM CAPITAL GAIN. THE LEARNED A.R. HAS PLACED BEFORE US A FAMILY P EDIGREE OF THE ASSESSEE. IN SUPPORT OF THE CLAIM, RELIANCE WAS PLACED ON THE CASE VIZ. HUF OF H.H.LATE SIR J.M. SCINDIA MAHARAJA JYOTIRADITYA M. SCINDIA V/S. ACIT 118 ITD 190 (MUM.). 6.1 IN ADDITIONAL GROUND THERE WAS ONE MORE ISSUE THAT THE AUTHORITIES BELOW HAVE NOT CONSIDERED THE VALUATION REPORT OF THE ASSESSEE PREPARED BY A REGISTERED VALUER. SINCE NO DEFECT WAS FOUND IN THE VALUATION REPORT OF THE ASSESSEE, THEREFORE, THE SAME SHOULD HAVE BEEN ACCEPTED BY THE LEARNED CIT(APPEALS). R ELIANCE HAS ALSO BEEN PLACED ON COMM. OF IT. V/S. MANOHARSINGHJI JADEGA (2006) 281 ITR 19 (GUJ.). 7. FROM THE SIDE OF THE R EVENUE, LEARNED D.R., MR. P.R. MANE APPEARED AND PLEADED THAT ALTHOUGH THE ADDITIONAL GROUND HAS BEEN ACCEPTED BUT THE CIT(APPEALS) H AS NOT ADJUDICATED THE ISSUES NOW RAISED IN THESE GROUNDS. HENCE THE LEARNED D.RS SUGGESTION IS THAT THE MATTER NOW SHOULD GO BACK TO THE FILE OF LEARNED CIT(APPEALS) TO BE DECIDED AFRESH AS PER LAW. LEARNED D.R. HAS ALSO PLEADED THAT IN VIEW OF THE PROVI SIONS OF SECTION 55(2)(A)(II) EVEN IF THERE WAS NIL COST OF ACQUISITION, THE CAPITAL GAIN HAS TO BE COMPUTED UNDER SECTION 48 OF I.T. ACT. 8. WE HAVE HEARD BOTH THE SIDES IN THE LIGHT OF THE CASE LAW CITED AND THE PAPER BOOK SUBMITTED BEFORE US. ALTHOUGH T HE ADDITIONAL GROUND HAS BEEN ADMITTED BY US BUT THE FACTUAL POSITION WAS THAT THE GROUNDS SO RAISED HAVE NOT BEEN ADDRESSED BY THE LEARNED CIT(APPEALS). IN RESPECT OF THE FAMILY PEDIGREE 6 ITA NO. 51/NAG/ 2013 NOW FILED BEFORE US, IT IS REQUIRED TO INVESTIGATE THE CORRECTNESS OF THE CLAIM THAT THE PROPERTY IN QUESTION WAS INHERITED BY THE ASSESSEE, THEREFORE, THE COST OF ACQUISITION COULD BE TAKEN AT NIL AS CONTENDED . THIS IS A MATTER OF INVESTIGATION FROM THE REC ORDS OF THE CASE. BASED UPON THE EVIDENCE S , THE CONSEQUENCE A S NARRATED BY LEARNED A.R. COULD BE THAT THERE WAS NIL COST OF ACQUISITION AS HELD IN THE CASE OF HUF OF H.H.LATE SIR J.M. SCINDIA MAHARAJA JYOTIRADIT YA M. SCINDIA V/S. ACIT (SUPRA), HOWEVER, THE CORRECT LEGAL POSITION SHALL ALSO THEN BE EXAMINED BY THE LEARNED CIT(APPEALS). 8.1 THE ASSESSEE HAS ALSO PLACED RELIANCE ON A VALUATION REPORT DATED 14 - 12 - 2009 MADE BY THE REGISTERED VALUER, E.D. NIMGADE. THIS REPORT HAS ALSO NOT BEEN CONSIDERED BY THE LEARNED CIT(APPEALS). RATHER LEARNED CIT(APPEALS) HAS CONF INED HIS JUDGMENT ON THE DVOS REPORT. IN OUR OPINION, IT WAS EXPECTED TO CONSIDER BOTH THE V ALUATION R EPORTS SO AS TO ARRIVE AT THE CORRECT CONCLUSION. 9. UNDER THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE REVENUE DEPAR TMENT SHOULD GET AN OPPORTUNITY TO INVESTIGATE THE FRESH MATERIAL AS PLACED BEFORE US AND TO DECIDE THE SAME AS PER THE LEGAL ISSUE RAISED IN THE GROUNDS OF APPEAL. IT SHALL BE FAIR AND R EASONABLE TO BOTH THE PARTIES TO RESTORE THIS ISSUE BACK TO THE FILE OF LEARNED CIT(APPEALS) TO BE DECIDED AS PER LAW. RESULTANTLY, THE GROUNDS BEING SENT BACK FOR READJUDICATION, MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES ONLY. THE ASSESSEE IS DIRECTED TO FULLY COOPERATE WITH THE REVENUE AUTHORITIES TO GET THI S APPEAL DECIDED AT AN EARLY DATE. WE ORDER ACCORDINGLY. 7 ITA NO. 51/NAG/ 2013 10. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF JUNE, 2015. SD/ - SD/ - ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER. NAGPUR, DATED: 26 TH JUNE, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE