Smt.Amarbai Dhanji Jadava, Bhuj-Kutch. V. Income Tax Officer(Inter.Taxa.), Gandhidham.

ITA 52/RJT/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0236 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 14-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Corroborative evidences; Set aside
• Section: 54F; 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , RAJKOT BENCH, RAJKOT BEFORE SHRI RAJPAL YADAV , HON BLE JUDICIAL MEMBER AND SHRI WASEEM AHMED HON BLE ACCOUNTANT MEMBER ITA NO. 52 / RJT /201 8 / ASSTT . YEAR: 201 2 - 1 3 SMT.AMARBHAI DHANJI JADAV C/O. SHRI NANJI KALYANJI VEKARIYA UPALO VAS, VILLAGE - BALDIYA TAL. BHUJ - KUTCH 370 001. VS . ITO, INTERNATIONAL TAXATION GANDHIDHAM. ITA NO. 5 3 / RJT /201 8 / ASSTT. YEAR: 2012 - 13 SHRI MAVJI DHANJI JADVA C/O. SHRI NANJI KALYANJI VEKARIYA UPALO VAS, VILLAGE - BALDIYA TAL. BHUJ - KUTCH 370 001. VS . ITO, INTERNATIONAL TAXATION GANDHIDHAM. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI M.J. RANPURA, AR REVENUE BY : SHRI ANIL KUMAR DAS, DR / DATE OF HEARING : 18 / 0 9 / 201 9 / DATE OF PRONOUNCEMENT: 20 / 0 9 /201 9 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEES ARE IN APPEAL S BEFORE THE TRIBUNAL AGAINST SEPARATE ORDERS OF THE LD.CIT(A) - 13, AHMEDABAD DATED 30.1.2017 PASSED ON THE RESPECTIVE APPEALS OF THE ASSESSEE S FOR ASSESSMENT YEARS 2012 - 13. 2. ASSESSEE S ARE MOTHER AND SON AND ISSUE INVOLVED IN BOTH APPEALS RELATES TO COMPUTATION OF LONG T ERM CAPITAL GAIN REQUIRED TO BE DETERMINED IN THE ITA NO.52 AND 53 /RJT/201 8 2 HANDS OF BOTH THE APPELLANTS ON SALE OF JOINT PROPERTY. THEREFORE, WE HEARD BOTH THE APPEALS TOGETHER AND DEEM IT APPROPRIATE TO DISPOSE OF THEM BY THIS COMMON ORDER. 3. SOLITARY GRIEVANCE OF BOTH THE APPE LLANTS IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.23,21,164/ - IN EACH HAND OF APPELLANTS INDEPEND ENT LY. 4. BRIEF FACTS OF THE CASE ARE THAT A PLOT BEARING NO.54/A SITUATED AT JADAVJI NAGAR, BHUJ - KUTCH WAS PURCHASED BY BOTH THE APPELLANTS IN EQUAL SHARES. ACCOR DING TO THE APPELLANTS, A CONSTRUCTION OF HOUSE WAS RAISED IN F.Y.2000 - 01 AFTER INCURRING A SUM OF RS. 23,21,164/ - . THE HOU S E WAS D A MAGED IN THE EARTHQUAKE OCCURRED ON 26 TH JANUARY, 2001, AND HENCE IT WAS GOT REPAIRED BY INCURRING A SU M OF RS.14,55,751/ - IN THE F.Y.2001 - 02. TH I S, THE HOU S E WAS STATED TO BE SOLD FOR A CONSIDERATION OF RS.50 LAKHS DURING THE ACCOUNTING YEAR RELEVANT TO THE ASSTT.YEAR 2012 - 13. THE LD.AO GOT INFORMATION THAT THE VALUE OF THE HOUSE FOR THE PURPOSE OF STAMP DUTY WAS DETERMINED BY THE STAMP DUTY VALUATION AUTHORITY AT RS.77,60,099/ - . THUS, SHARE OF THE EACH ASSESSEE COMES AT RS.38,80,050/ - . THE LONG TERM CAPITAL GAIN CALCULATED BY EACH ASSESSEE READS AS UNDER: SALES CONSIDERATION RS.38,80,050/ - LESS: INDEXED COST OF LAND RS.1,18,580/ - II) INDEXED COST OF CONSTRUCTION IN F.Y.2000 - 01 RS.23,21,164/ - III) INDEX COST OF CONSTRUCTION IN F.Y.2001 - 02 RS.14,55,751/ - RS.38,95,495/ - NET LONG TERM CAPITAL LOSS RS.15,446/ - ITA NO.52 AND 53 /RJT/201 8 3 5. THE LD.AO WAS NOT SATISFIED WITH THE CAL CULATION MADE BY THE APPELLANTS. HE REFERRED THE MATTER TO THE DVO FOR DETERMINING THE FAIR MARKET COST OF THE PROP E RTY IN F.Y.2001 - 02. THE DVO HAS REPORTED THE COST OF CONSTRUCTION IN F.Y.2001 - 02 AT RS.24,33,000/ - . THE LD.AO DID NOT ACCEPT THIS COST OF CONSTRUCTION ON THE GROUND THAT SINCE THE ASSESSEES THEMSELVES HA VE SHOWN COST OF CONSTRUCTION AT RS.14,55,751/ - THEREFORE THIS COST IS ACCEPTED AND HE ACCORDINGLY COMPUTED CAPITAL GAIN IN EACH HAND OF THE ASSESSEE AS UNDER: SALES CONSIDERATION RS.38,8 0,050/ - LESS: I) INDEXED COST OF LAND RS.1,18,580/ - II) INDEX COST OF CONSTRUCTION IN F.Y.2001 - 02 RS.14,55,751/ - 15,74,331/ - NET LONG TERM CAPITAL GAIN RS.23,05,719/ - 6. THIS EXERCISE LEAD TO AN ADDITION OF RS.23,05,719 / - IN THE RESPECTIVE HANDS OF THE APPELLANTS. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 7. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY THE STAND OF THE ASSESSEE I S THAT THEY HAVE APPLIED FOR PERMISSION TO COMMENCE CONSTRUCTION ON THE PLOT IN QUESTION FROM THE MUNICIPAL AUTHORITY, BHUJ. SUCH PERMISSION WAS GR ANTED TO THEM VIDE LETTER DATED 7.1.2000 AND COPY OF THE LETTER HAS BEEN PLACED ON RECORD AT PAGE NO.27 OF THE PAPER BOOK. WE DEEM I T APPROPRIATE TO TAKE NOTE O F THIS LET T ER, WHICH READS AS UNDER: NO.BMC/98/99 PERMISSION NO.________ OFFICE OF SHRI BHUJ MUNICIPALITY BHUJ MUNICIPALITY ITA NO.52 AND 53 /RJT/201 8 4 ENGINEERING BRANCH DT.07/01/2000 TO, SHRI AMARBHAI DHANJI JADVA & MAVJI DHANJI JADVA JADAVJI NAGAR BHUJ - KUTCHCHH WITH REFERENCE TO YOUR APPLICATION DT._____, I AM TO INFORM YOU THAT PERMISSION FOR CONSTRUCTION AS UNDER AT WARD NO.12, PLOT NO.54/A IS ACCORDED ON THE FOLLOWING CONDITIONS: CONSTRUCTION PERMISSION FOR CONSTRUCTION OF GROUND FLOOR AND FI RST FLOOR AS PER SANCTION PLAN IN THE PLOT OF YOUR OWNERSHIP IS GRANTED ON THE FOLLOWING CONDITIONS. SD/ - JUNIONR ENGINEER BHUJ - KUTCHCHH 8. THE CONSTRUCTION WAS COMPLETED, AND THEREAFTER A COMPLETION CERTIFICATE WAS ALSO ISSUED BY THE MUNICIPAL COMMITTEE . COPY OF THIS COMPLETION CERTIFICATE HAS BE EN PLACED ON PAGE NO.30 OF THE PAPER BOOK, WHICH READS AS UNDER: NO.BMC/98/99 PERMISSION NO.________ OFFICE OF SHRI BHUJ MUNICIPALITY BHUJ MUNICIPALITY ENGINEERING BRANCH DT.17/11/2000 TO, SHRI AMARBHAI DHANJI JADVA & MAVJI DHANJI JADVA JADAVJI NAGAR BHUJ - KUTCHCHH COMPLETION CERTIFICATE ITA NO.52 AND 53 /RJT/201 8 5 WITH REFERENCE TO YOUR APPLICATION DT._____, AS THE CONSTRUCTION ADMEASURING SQ.MT. 359.22 = SQ.FT. 3865.21 AT JADAVJI NAGAR, PLOT NO.54/A, HAS BEEN COMPLETED AS PER CO NSTRUCTION PERMISSION DT.07/01/2000, PERMISSION TO MAKE USE OF IT IS ACCORDED UNDER SECTION 157 OF THE GUJARAT MUNICIPAL ACT, 1963. SD/ - JUNIONR ENGINEER BHUJ - KUTCHCHH 9. THUS, A C COR DING TO THE APPE LLANTS , THEY HAVE CONSTRUCTED THE HOUSE WHOSE COMP LETION CERTIFICATE WAS ISSUED IN THE MONTH OF NOVEMBER, 2000. THIS HOUSE GOT DAMAGED IN THE EARTHQUAKE CAME ON 26 TH JAN., 2001 AND IT WAS GOT REPAIRED. THE LD.AO HAS DISBELIEVED THIS CLAIM OF THE ASSESSEE S ON THE G R OUND THAT THEY HAVE FAILED TO PRODUCE A NY SUPPORTING EVIDENCE IN THE SHAPE OF BILLS, VOUCHERS, SHOWING PURCHASE OF MATERIAL, PAYMENTS TO THE CONTRACTOR/LABOURERS ETC. ON APPEAL, WHILE APPRE CIATING THE MATERIAL ON RECORD, THE LD.CIT(A) MADE REFERENCE TO A CERTIFICATE OF REGISTERED VALUER, WHICH IS DATED 1.10.2000. ACCORDING TO THE LD.CIT(A) IF THIS CERTIFICATE SHOWING ESTIMATE FOR PROPOSED RESIDENTIAL BUNG A LOW WAS OCTOBER, 2000, THEN IT IS NOT POSSIBLE TO COMP LETE CONSTRUCTION UPTO NOVEMBER, 2000, AND THEREFORE, IT SUGGESTED THAT CONSTRUCTION W AS COMP LETED AFTER THIS ESTIMATION, AND THUS, IT WAS NOT COMP LETED BEFORE THE EARTHQUAKE OCCURRED ON 26 TH JAN., 2001. IT IS TO BE CONSTRUED THAT THERE WAS NO OLD CONSTRUCTION, RATHER IT WAS ER ECTED AFTER THE EARTHQUAKE AND COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AT R S .14,55,751/ - IS TO BE ADOPTED FOR THE PURPOSE OF INDEXATION. 10 . WE HAVE GONE THROUGH THE FINDING OF THE LD.REVENUE AUTHORITIES. IN OUR O PINION, BOTH THE REVENUE AUTHORITIES HA V E FAILED TO APPRECIATE THE TRUE NATURE OF THE CLAIM MADE BY THE ASSESSEE. ACCORDING TO THE APPELLANTS, THEY HAVE PURCHASED A PLOT; SOUGHT PERMISSION FROM THE MUNICIPAL AUTHORITIES FOR ITA NO.52 AND 53 /RJT/201 8 6 CONSTRUCTING A HOUSE . IT IS PERTINENT TO NOTE THAT IN EVERY MUNICI PAL AREA WHENEVER RESIDENTIAL HOUSE IS REQUIRED TO BE CONSTRUCTED THEN SITE PLAN WAS REQUIRED TO BE APPROVED FROM THE MUNICIPAL COMMITTEE AND PERMISSION WOULD BE REQUIRED FOR RAISING THE CONSTRUCTION. THE AUTHORITIES IN THEIR REGULAR COURSE OF BUSINESS HA VE TO ISSUE SUCH CERTIFICATE. SIMILARLY, ON COMPLETION OF THE CONSTRUCTION , A COMPLETION CERTIFICATE IS REQUIRED TO BE TAKEN SO THAT ELECTRICITY CONNECTION, WATER CONNECTION AND SEWERAGE CONNECTION CAN BE OBTAINED. NOW THIS CERTIFICATE HAS BEEN BRUISED A SIDE VERY LIGHTLY WITHOUT RAISING ANY REASON; MORE SO JUST PUTTING A RELIANCE ON THE CERTIFICATE A CHARTERED ENGINEER, WHICH IS RELEVANT FOR DEMONSTRATING THE COST OF CONSTRUCTION ESTIMATED BY HIM. CERTIFICATE MIGHT HAVE BEEN TAKEN AFTER COMPLETION OF CON STRUCTION FOR COLLATERAL PURPOSES. IT CANNOT BE A CONCLUDING FACTOR TO ASSUM E THAT THIS CERTIFICATE BE CONSTRUED IN A MANNER THAT RESIDENTIAL HOUSE MUST HAVE BEEN STARTED AFTER OBTAINING THIS ESTIMATE. IF THIS CERTIFICATE VIS - - VIS CERTIFICATE ISSUED BY THE MUNICIPAL AUTHORITIES IS COMPARED FOR THEIR EVIDENTIARY VALUE, THEN NO DOUBT S CALE WOULD TILT IN FAVOUR OF THE CERTIFICATE ISSUED BY THE AUTHORITIES WHO ARE MEANT FOR SUCH ACTIVITY. THE SECOND EVIDENCE WHICH HAS BEEN CONSIDERED BY THE LD.AO FOR REJ E CTING THE CLAIM OF THE ASSESSEE IS THAT THEY HAVE FAILED TO FURNISH BILLS, VOUCHERS, ETC. IT IS HIGHLY IMPROB AB LE THAT INDIVI DUAL WILL KE E P D E T AILS OF CONSTRUCTI O N COST FOR 12 YEARS UNDER THE EXPECTATION THAT WHEN THEY SELL THEIR HOU S E, THE ASSESSING OFFI CER W OULD RE QUIRE SUCH DETAILS. THE EXPENDITURE CANNOT BE INQUIRED INTO EVEN FOR THE PURPOSE OF INCOME TAX AFTER EXPIRY OF SIX YEARS FROM THE YEAR IN WHICH SUCH EXPENDITURE IS INCURRED. IT IS SUCH AN ASPECT WHICH CAN ONLY BE VISUALIZED KEEPING IN VIEW T HE ESTIMATED COST OF CONSTRUCTION OF SUCH A BUILDING. O N THE BASIS OF EXPERT S OPINION, THE LD.AO HAS NOT GIVEN ANY REASONS FOR EVEN IGNORING THE REPO R T OF THE DVO, WHO HAS DETERMINED THE COST OF CONSTRUCTION IN F.Y.2001 - 02 AT RS.24,33,000/ - . THIS OPINIO N OF THE DVO WOULD SUGGEST THAT COST OF CONSTRUCTION, ONE YEAR BACK MUST BE NEAR TO THAT ITA NO.52 AND 53 /RJT/201 8 7 WHICH HAS BEEN ADOPTED BY THE ASSESSEE AT RS.23,21,164/ - . THE HOUSE CONSTRUCTED AT THIS COST GOT DAMAGED DUE TO EARTHQUAKE, AND THEREAFTER IT REPAIRED AT RS.14,55,751 / - . NOBODY CAN DENY THE FACTUM OF EARTHQUAKE. IT IS A NATURAL CALAMITY AND EVERYBODY IS AWARE ABOUT IT. THE ACTION AT THE END OF THE AO IN IGNORING ALL THESE FACTS IS UNJUSTIFIABLE AND NOT SUSTAINABLE IN THE EYES OF LAW. THEREFORE, WE ALLOW BOTH THE AP PEALS AND SET ASIDE ORDERS OF THE REVENUE AUTHORITIES. WE DIREC T THE AO TO ACCEPT THE CALCULATION OF LONG TERM CAPITAL GAIN SHOWN BY BOTH THE ASSESSEES IN THEIR RETURNS OF INCOME. 11 . IT EMERGES OUT FROM THE RECORD THAT THE ASSESSEES HAVE RAISED ADDITI ONAL GROUNDS OF APPEAL WITH REGARD TO THEIR CLAIM UNDER SECT I ON 54F OF THE ACT. HOWEVER, AT THE TIME OF HEARING, THE LD.COUN SEL FOR THE ASSESSEES DID NOT PRESS THIS GROUND, HENCE IT IS REJECTED. 12 . IN THE RESULT, BOTH THE APPEALS OF THE APPELLANTS ARE ALLOWED PARTLY. ORDER PRONOUNCED IN THE COURT ON 2 0 T H SEPTEMBER, 201 9 AT RAJKOT . S D / - S D / - (WASEEM AHMED ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER