Shinde Brothers, Sec'bad, Hyderabad V. ACIT, Clrcle-13(1), Hyd, Hyderabad

ITA 518/HYD/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6330 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-06-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: S K PISSAY; RAJNISH PISSAY
• Keywords: Cost of acquisition; Fair market value
• Section: 143(3)

Judgement Text

ITA NO 518 OF 2016 SHINDE BROTHERS SECUNDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P.MADHAVI DEVI, JUDICIAL MEMBER ITA NO.518/HYD/2016 (ASSESSMENT YEAR: 2002-03) M/S. SHINDE BROTHERS 1-11-119/2 SD ROAD SECUNDERABAD PAN: AANFS 4752 Q VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 13(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S.K. PISSAY & RAJNISH PISSAY FOR REVENUE : SHRI K.J. R A O, DR DATE OF HEARING : 29.06.2006 DATE OF PRONOUNCEMENT : 29 .07.2006 O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2002-03. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF T HE CIT (A) IN CONFIRMING THE ADDITION OF RS.31,77,00 BY DEBITING THE COST OF APPRECIATION AS ON 1.4.1981 AT RS.525/- PER SQ. YAR D. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE ACTIVITY OF EXHIBITION OF FILMS. IT FILED ITS RETURN OF INCOME FOR THE A.Y 2002-03 ON 30.10.2002 DECLARING TOTAL INCOME OF RS.5,95,690. DURING THE ASSESSMENT PROCEEDINGS U /S 143(3) OF THE I.T. ACT, THE AO OBSERVED THAT THE ASSESSEE HAS DECLARED INCOME UNDER THE HEAD CAPITAL GAINS. WHILE EXAMIN ING THE CORRECTNESS OF THE SAME, AO WENT INTO THE DETAILS A ND OBSERVED THAT THE ASSESSEE HAD ACQUIRED THE LAND ADMEASURING 4533 AND 2266 SQ. YARDS SITUATED AT JAIL ROAD, GULBARGA FOR A ITA NO 518 OF 2016 SHINDE BROTHERS SECUNDERABAD PAGE 2 OF 5 CONSIDERATION OF RS.66,000 AND RS.26,500 IN THE YEA R 1967 THROUGH AUCTION AND THAT THE POSSESSION WAS GIVEN O N 06.10.1969 AND GOT THEM REGISTERED ON 02.05.1977. H E OBSERVED THAT DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSE E REPRESENTED BY ITS PARTNERS, ENTERED INTO A PARTNERSHIP WITH AN OTHER FIRM M/S. JAWALI BUILDERS AND DEVELOPERS AND CONTRIBUTED PART OF THE LAND I.E 2000 SQ. YARDS FORMING PART OF SITE NO.1 & 2, SITUATED AT JAIL ROAD, GULBARGA AS THEIR CAPITAL CONTRIBUTION A ND THE LAND WAS VALUED AT RS.76,50,000 AND ACCORDINGLY THE ASSE SSEE WORKED OUT THE VALUE AS ON 1.4.1981 AT RS.1000 PER SQ. YAR D BY RELYING UPON THE TRANSACTION WHICH HAS TAKEN PLACE RELATING TO PLOT NO.81 ADMEASURING 133.33 SQ. YARDS SITUATED IN THE SUPER MARKET AREA, JAIL ROAD WHICH WAS PURCHASED BY SMT. VANAMALA IN AN OPEN AUCTION HELD ON 28.08.1978 FOR RS.1,80,0 00 WHICH WORKS OUT TO RS.885/- PER SQ. YARD. THE AO OBSERVED THAT THE ASSESSEE HAS STATED THAT THE SAID PLOT WAS IN THE I NTERIOR AREA WHILE THE PLOT NOS.1 & 2 BELONGING TO THE ASSESSEE ARE ON THE MAIN ROAD AND ACCORDINGLY THE FAIR MARKET VALUE AS ON 1.4.1981 WAS ADOPTED BY THE ASSESSEE AND INCOME FROM CAPITAL GAIN WAS WORKED OUT ON THE INDEXED VALUE OF THE COST SO ESTI MATED. IN ORDER TO VERIFY THE CLAIM OF THE ASSESSEE, AO CALLE D FOR INFORMATION FROM THE SUB REGISTRAR, GULBARGA, AS TO THE REGISTERED VALUE OF THE SAID PROPERTY IN THE YEAR 1 980-81 AND 1981-82. THE SRO FURNISHED THE INFORMATION WITH REG ARD TO FOUR SALE INSTANCES THE AVERAGE OF WHICH WORKED OUT TO R S.550/- PER SQ. YARD. THE AO, THEREFORE, ISSUED A SHOW CAUSE NO TICE AS TO WHY THE COST OF ACQUISITION SHOULD NOT BE ADOPTED A T RS.525 PER SQ. YARD. THE ASSESSEE FILED ITS DETAILED REPLY JUS TIFYING ITS COMPUTATION. THE AO HOWEVER, ADOPTED RS.525/- PER S Q. YARD AS ITA NO 518 OF 2016 SHINDE BROTHERS SECUNDERABAD PAGE 3 OF 5 THE COST OF ACQUISITION FOR COMPUTATION OF THE CAPI TAL GAIN AGAINST WHICH THE ASSESSEE PREFERRED AN APPEAL BEFORE THE C IT (A), WHO CONFIRMED THE ASSESSMENT ORDER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THIS TRIBUNAL. 3. THE LEARNED COUNSEL FOR THE ASSESSEE, REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE HAS RELIED ON 4 SALE INSTANCES FO R ESTIMATION OF THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.198 1. ACCORDING TO HIM, DURING THE REQUISITE PERIOD I.E. 1981, THE AVERAGE VALUE OF LAND IN SIMILAR LOCATION WAS RS.1755/SQ. YARD. HE S UBMITTED THAT IT WAS ON THE BASIS OF THESE SALE INSTANCES WHICH A RE ALSO GOVT. AUCTIONS, THE ASSESSEE HAS ADOPTED RS.1000 PER SQ. YARD WHICH IS REASONABLE AND JUSTIFIED. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AS WE LL AS THE CERTIFICATE GIVEN BY THE SUB REGISTRAR, GULBARGA WI TH REGARD TO THE VALUATION OF THE PROPERTY. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL PLACED ON RECORD, WE FIND THAT THE PROPERTY, IN QUE STION, WAS PURCHASED IN THE YEAR 1967 AND THEREFORE, FOR ARRIV ING AT THE COST OF ACQUISITION, THE FAIR MARKET VALUE OF THE PROPER TY AS ON 1.4.1981 WAS NECESSARY TO BE ARRIVED AT. THE ASSESS EE AS WELL AS THE REVENUE HAVE RELIED UPON THE SALE INSTANCES IN THE YEAR 1981 AND ALSO OF PLOTS IN THE SAME AREA ALSO SOLD BY WAY OF GOVT. AUCTIONS. THE DETAILS ARE AS UNDER: ITA NO 518 OF 2016 SHINDE BROTHERS SECUNDERABAD PAGE 4 OF 5 FROM THE CERTIFIED COPIES OBTAINED, THE FOLLOWING D ETAILS ARE OBTAINED: S.NO PLOT NO MODE OF SALE/DATE DOCUMENT NO./DATE OF REGD. AREA IN SQ.YARDS PRICE FIXED IN AUCTION/ PRIVATE SALE (RS.) VALUE TAKEN FOR REGD. PURPOSE (RS.) VALUE PER SQ. YARD 1 82 GOVT. AUCTION 28-8-1978 516/81-82 12.05.1981 133.33 70,000 70,000 525 2 72 GOVT. AUCTION 15.03.1978 1250/80-81 11.07.1980 133.33 49,500 49,500 371 3 77 GOVT. AUCTION 15.03.1978 1404/80-81 28.07.1980 133.33 53,500 53,500 401 4 12 PRIVATE SALE 2481/80 - 81 26.11.1980 133.33 1,20,000 1,20,000 909 5 62 GOVT. AUCTION 15.03.1978 777/82-81 28.06.1982 133.33 1,41,000 1,41,000 1,058 6 80 GOVT. AUCTION 15.03.1978 2476/82-83 10.02.1983 133.33 88,000 88,000 660 7 98 GOVT. AUCTION 24.04.1981 2548/82-83 22.02.1983 88.89 1,56,000 1,56,000 1,755 8 103 GOVT. AUCTION 22.04.1981 2649/82-83 07.03.1983 88.89 1,61,000 1,61,000 1,811 9 102 GOVT. AUCTION 24.04.1981 2648/82 - 83 07.03.1983 88.89 1,61,000 1,61,000 1,811 5. FROM THE DETAILS OF THE SALE INSTANCE OF PLOTS I N THE SAME AREA DURING THE SAME PERIOD I.E. MARCH, 1978 TO 20. 04.1981, IT IS NOTICED THAT THE MARKET VALUE HAS VARIED BETWEEN RS .371 PER SQ. YARD TO RS.1811 PER SQ.YARD. WIDE DIFFERENCE CAN BE ATTRIBUTED TO A NUMBER OF FACTORS SUCH AS LOCATION, EXTENT OF LAN D AND THE TASTE OF BIDDERS. THE AREA OF PLOTS CONSIDERED FOR COMPAR ISON IS VERY LESS COMPARED TO THE AREA OF THE PLOT CONTRIBUTED A S CAPITAL BY THE ASSESSEE. AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE THE AREA IS ALMOST FOUR TIMES AND THER EFORE, THE DATA RELIED UPON BY THE AO CANNOT BE RELIED UPON IN TOTO , MORE PARTICULARLY, SINCE THE SALE INSTANCES AT SL. NO.1 TO 6 ARE OF THE FINANCIAL YEAR 1978-79, THE AVERAGE OF WHICH IS LES S THAN ITA NO 518 OF 2016 SHINDE BROTHERS SECUNDERABAD PAGE 5 OF 5 RS.1000/- PER SQ. YARD WHILE THE AVERAGE OF THE SAL E INSTANCES IN 1981 IS AROUND RS.1780 PER SQ. YARD. SINCE, THE FMV OF THE LAND AS ON 1.4.1981 IS TO BE ADOPTED AND THE VALUE ADOPT ED BY THE ASSESSEE @ RS.1000 PER SQ. YARD IS MUCH LESS THAN T HIS AVERAGE, I AM CONVINCED THAT THE VALUE ADOPTED BY THE ASSESS EE IS FAIR, REASONABLE AND BASED ON THE RELEVANT DATA. IN VIEW OF THE SAME, I DIRECT THE AO TO ADOPT THE SAME FOR ARRIVING AT THE COST OF ACQUISITION NECESSARY FOR ARRIVING AT THE CAPITAL G AIN. IN VIEW OF THE SAME, THE ASSESSMENT ORDER IS SET ASIDE. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY, 2016. S D/ - (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 29 TH JULY, 2016. VNODAN/SPS COPY TO: 1. M/S SHINDRE BROTHERS, C/O PISSAY & CO. FLAT NO.701, 7 TH FLOOR, 5-9-30/5, PAIGAH PLAZA, BASHEERBAGH, HYDERAB AD 500063 2. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 13(1) HYD ERABAD 3. CIT(A) - 9 HYDERABAD 4. PR. CIT 6 HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER