Sh. Jai Prakash S/o Sh. Girdhari Lal, Meerut V. ITO, Meerut

ITA 5456/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6963 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 09-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEODAN SINGH BHADDORIA
• Assessee Lawyers: V K GOEL
• Keywords: Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 54B

Judgement Text

1 | P A GE IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES, NEW DELHI (CIRCUIT BENCH AT MEERUT) BEFORE : SHRII.C. SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 5456 /DEL./2014 ( ASSTT. YEAR: 2009 - 10) JAI PRAKASH S/O. SH. GIRDHARI LAL, C/O. SH. V.K. GOEL, ADVOCATE, 282, BOUNDARY ROAD, CIVIL LINES, MEERUT PAN:CBWPP2425D VS. ITO WARD - 1(3), MEERUT (APPELLANT) (RESPONDENT) DATE OF HEARING 15 / 12 /201 5 DATE OF PRONOUNCEMENT 1 9 /02/2016 ASSESSEE BY: SH. V.K. GOEL, ADV REVENUE BY : SH. SHEODAN SINGH BHADDORIA, SR. DR O R D E R PER PRASHANT MAHARISHI, A. M. 01 . THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), MEERUT DATED 05.09.2014 FOR THE ASSESSMENT YEAR 2009 - 10 ON THE FOLLOWING GROUNDS : 1. THAT LD. A.O. AS WELL AS CIT(A) IS IN ERROR IN TAKING AND CONFIRMING COST OF ACQUISITION AS ON 01 - 04 - 1981 @ 70/ - PERSQ. YD. OF THE ASSESSEE'S AGRICULTURE LAND SITUATED AT VILLAGE NAGLA TASHI. IN VILLAGE NAGLA TASHI CIRCLE RATE WAS RS. 100/ - TO 150/ - PERSQ . YD, AND OTHER RATE QUOTED BY THE A.O. ARE NOT RELEVANT, BECAUSE ALL THE AREA QUOTED BY THE A.O. IS MORE THAN 15 KM AWAY FROM THE ASSESSEE'S LAND. HENCE, THE ASSESSEE'S CLAIM 125/ - P ERSQ. YD. IS QUITE JUSTIFIED. 2. THAT LD. A.O. AS WELL AS LD. CIT(A) IS IN ERROR THAT REBATE U/S 54B IS NOT AVAILABLE TO THE ASSESSEE, WHEN ASSESSEE PURCHASED AGRICULTURE LAND IN THE NAME OF HIS WIFE AND PAYMENT WAS MADE BY THE ASSESSEE'S BANK ACCOUNT 2 | P A GE AND LD. CIT(A) IGNORED THE BANK ACCOUNT AND SALE DEED ALREADY FILED BEFOR E THE CIT(A) IN PAPER - BOOK.. 02 . GROUND NO 1 OF THE APPEAL IS AGAINST ADOPTION OF FAIR MARKET VALUE AS AT 1 - 4 - 1981 OF THE PROPERTY SOLD BY THE ASSESSEE. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ALONG WITH OTHER CO - OWNERS SOLD A PI ECE OF LAND WHICH WAS ACQUIRED PRIOR TO 1 - 4 - 1981. THEREFORE FOR WORKING OUT THE CAPITAL GAIN LIABILITY OF THE ASSESSEE FAIR MARKET VALUE AS AT 1 - 4 - 1981 WAS REQUIRED TO BE DETERMINED . THE ASSESSEE NEITHER FURNISHED ANY VALUATION REPORT OF AUTHORIZED VALU ER DETERMINING THE MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 NOR SUBMITTED ANY COMPARATIVE PREVAILING SALE RATE WHICH CAN BE HELPFUL IN DETERMINING THE COST OF ACQUISITION . THEREFORE AO OBTAINED CIRCLE RATE FIXED BY DISTRICT MAGISTRATE MEERUT AS ON 01.02.1984 AND BASED ON THAT DETERMINED THE RATES AS AT 1 - 4 - 1981 @ RS 70/ - PER SQUARE YARD. AO WAS CONSTRAINED TO ADOPT THAT RATE BECAUSE NO RATE WAS FIXED IN THE VILLAGE TO WHICH THE LAND WAS SITUATED IN AND AO COULD NOT OBTAIN RATES AS AT 1 - 4 - 1981 . THE ASSESSEE WAS AGGRIEVED WITH THE ADOPTION OF THIS RATE BY AO PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) WHO IN TURN DISMISSED THE APPEAL BY HOLDING THAT THE AO HAS DETERMIN E D THE FAIR MARKET VALUE OF THE PROPERTY BASED ON THE CIRCLE RATE AVAILABLE AS ON 01.02.1984 IN ABSENCE OF ANY INFORMATION FROM THE ASSESSEE . THE ASSESSEE BEING AGGRIEVED BY THIS HAS PREFERRED OF APPEAL BEFORE US. 3 | P A GE 3. THE LD DR SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN TAKING THE VALUATION RATE OF RS. 70/ SQ MTR. FOR THIS HE SUBMITTED VALUATION REPORT OF ONE SMT SARALA KUMARI AND OTHERS DATED 22.03.2011, WHEREIN THE RATE OF RS. 150/ - PER SQ YARD IS TAKEN BY AUTHORIZED VALUER. HE ALSO SUBMITTED THAT THE AO DOES NOT HAVE ANY POWER TO ESTIMATE THE FAIR MARKET VALUE AS AT 01.04.1981 THEREFORE HE REQUESTED THAT THE AO MAY BE DIRECT ED TO TAKE FAIR MARKET VALUE BY ADOPTING RATE OF RS 150 / - PER SQUARE YARD AS CLAIMED BY THE ASSESSEE. 03 . IN RESPONSE TO THIS T HE LD DR RELIED ON THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). 04 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION. FOR THE PURPOSE OF WORKING OUT CAPITAL GAINS ON SALE OF CAPITAL ASSETS, ASSESSEE IS GRANTED DEDUCTION OF COST OF ACQUISIT ION OF THAT CAPITAL ASSETS FROM THE SALE CONSIDERATION. ACCORDING TO SECTION 55 OF THE INCOME TAX ACT COST OF ACQUISITION WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BEFORE THE 1ST DAY OF APRIL,1981, MEANS THE COST OF ACQUISITION OF THE A SSET TO THE ASSESSEE OR THE FAIR MARKET VALUE OF THE ASSET ON THE 1ST DAY OF APRIL, 1981 AT THE OPTION OF THE ASSESSEE. THE FAIR MARKET VALUE OF THE ASSETS CAN BE DETERMINED U/S 55A OF THE INCOME TAX ACT ACCORDING TO THE OPTION OF AO. THEREFORE ASSES SEE HAS BEEN GIVEN AN OPTION TO GET DEDUCTION OF THE COST OF ACQUISITION OF THE ASSETS OR THE FAIR MARKET VALUE OF THE PROPERTY AS AT 1 - 4 - 4 | P A GE 1981 IN THE CASE ASSETS IS ACQUIRED BEFORE 1 - 4 - 1981. IN THIS CASE ASSESSEE HA S NOT EXERCISED OPTION TO ADOPT THE FAIR MARKET VALUE OF THE PROPERTY AS AT 1 - 4 - 1981 BY SUBSTANTIATING THE VALUE AS ON THAT DATE BY THE REPORT OF AUTHORIZED VALUER. ASSESSEE IS ALSO ADOPTING HYPOTHETICAL RATES AND CLAIMING DEDUCTION OF THAT VALUE AS THE COST OF ACQUIS ITION OF THE PROPERTY WHICH IS NOT PERMISSIBLE. RATES ADOPTED BY AO CANNOT BE ACCEPTED IN VIEW OF ANY SANCTITY ATTACHED TO THEM. V ALUATION REPORT OBTAINED IN SOME OTHER CASE CANNOT BE RELIED UP ON BY THE ASSESSEE FOR THIS PURPOSE. FURTHERMORE AO IS AL SO NOT EMPOWERED TO MAKE VALUATION HIMSELF AS IT IS THE JOB OF A PERSON POSSESSING REQUISITE QUALIFICATION . THEREFORE THE RATES ADOPTED BY THE AO BY OBTAINING THE SAME FROM THE OFFICE OF DISTRICT MAGISTRATE FOR 1984 CANNOT BE APPLIED FOR DETERMINING FAIR MARKET VALUE OF PROPERTY AS AT 1 - 4 - 1981. THEREFORE WE ARE ALSO NOT APPROVING THE RATES ADOPTED BY THE AO AS WELL AS BY ASSESSEE. THEREFORE ACCORDING TO THE LAW IT IS FOR THE ASSESSEE TO SUBSTANTIATE FAIR MARKET VALUE OF THE PROPERTY BY SUBMITT ING THE VALUATION REPORT OBTAINED FROM AUTHORIZED VALUER. IF THE ASSESSEE D OES NOT EXERCISE THIS OPTION THAN AO DOES NOT HAVE ANY OPTION BUT TO ADOPT THE COST OF ACQUISITION FOR THE PURPOSES OF DETERMINING THE CAPITAL GAIN IN THE HANDS OF THE ASSESSE E. A S ADMITTEDLY ASSESSEE HAS NOT EXERCISED THIS OPTION, IN THE INTEREST OF JUSTICE ONE MORE OPPORTUNITY IS GIVEN TO ASSESSEE TO SUBMIT BEFORE AO THE FAIR 5 | P A GE MARKET VALUE OF THE ASSETS AS AT 1 - 4 - 1981 BY SUBMITTING THE VALUATION REPORT OF THE PROPERTY FROM AUTHORIZED VALUER NOT LATER THAN FOUR MONTHS FROM THE DATE OF RECEIPT OF THIS ORDER. AFTER THAT AO MAY ACT ACCORDING TO THE PROVISION OF SECTION 55A OF THE INCOME TAX ACT AND DECIDE THE ISSUE ON MERITS. IN VIEW OF THIS GROUND NO 1 OF THE APPEAL IS SE T ASIDE TO THE FILE OF AO WITH ABOVE DIRECTION TO CONSIDER THE VALUATION REPORT , IF ANY, SUBMITTED BY THE ASSESSEE IN ABOVE TIME FRAME. NEEDLESS TO SAY THAT THE AO WAS REQUIRED TO GIVE PROPER OPPORTUNITY OF HEARING AND THE ASSESSEE IS ALSO FREE TO AD DUCE THE VALUE CLAIM ED BY IT SUPPORTED BY PROPER VALUATION REPORT IN ACCORDANCE WITH LAW. IN VIEW OF THIS GROUND NO.1 IS ALLOWED WITH ABOVE DIRECTION. 05 . GROUND NO.2 IS AGAINST THE ADDITION OF DEDUCTION U/S 54B TO THE ASSESSEE WHETHER THE ASSESSEE HAS PURCHA SE D AGRICULTURAL LAND IN THE NAME OF HIS WIFE AND THE PAYMENT WAS MADE BY THE ASSESSEE FROM HIS OWN SOURCE THROUGH BANKING CHANNEL. THE ASSESSEE HAS PURCHASED THIS AGRICULTURAL LAND BY INVESTMENT OF RS.10 LAC ON 12.10.2010 WHICH IS BEYOND TWO YEARS FROM TH E DATE OF SALE I.E. 05.05.2008 AND THEREFORE THE AO HAS DISALLOWED THE CLAIM. REGARDING THE OTHER AGRICULTURAL LAND THE ASSESSEE HAS PURCHASED SAME IN THE NAME OF HIS WIFE SMT. KUNTA AND NOT IN THE NAME OF THE ASSESSEE. DUE TO THIS AO DISALLOWED THE DEDUC TION OF RS. 6 LACS U/S 54B OF THE ACT CLAIMED BY THE ASSESSEE. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE LEARNED 6 | P A GE COMMISSIONER OF INCOME - TAX (APPEALS), WHO CONFIRMED THE ORDER OF THE AO BY HOLDING THAT APPELLANT HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE THAT THE FUNDS FOR PURCHASE OF THE AGRICULTURAL LAND W AS GIVEN BY ASSESSEE. 06 . THE LD AR SUBMITTED BEFORE US THAT TH E ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAMAL WAHAL 30 TAXMANN.COM 34 (DELHI) . R EGARDING THE ISSUE OF INVESTMENTS OF FUNDS BY THE ASSESSEE HE SUBMITTED THE COPY OF THE BANK STATEMENT OF THE ASSESSEE W ITH PUNJAB NATIONAL BANK. HE SUBMITTED THAT CHEQUE NO STATED IN THE BANK ACCOUNT OF THE ASSESSEE ARE SAME AS MENTIONED IN THE PURCHASE DEED OF THE LAND, HENCE THE SOURCES OF THE FUNDS FOR PURCHASE OF AGRICULTURAL LAND IN THE NAME OF THE WIFE OF THE ASSE SSEE HAS COME FROM THE BANK ACCOUNT OF THE ASSESSEE. HENCE HE SUBMITTED THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION. 07 . THE LD DR RELIED ON THE ORDER OF LOWER AUTHORITIES. 08 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND FOUND THAT THERE IS NO DOUBT THAT THE PROPERTY HAS BEEN PURCHASE D BY THE ASSESSEE IN THE NAME OF THE WIFE OF THE ASSESSEE AND ACCORDING TO THE DECISION RELIED UP ON BY THE LD AR, ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 545B OF THE ACT PROVIDED THE FUNDS FROM WHICH THIS ASSET IS ACQUIRED ARE INVESTED BY THE ASSESSEE. BY PRODUCING THE BANK ACCOUNT OF THE ASSESSEE IT IS APPARENT THE CHEQUE NOS MENTIONED IN THE SALE DEED AND THE BANK ACCOUNT ARE SAME AND SAME HAS NOT BE DISPUTED 7 | P A GE BY THE LD DR. HENCE ASSESSEE IS ENTITLED FOR THE BENEFIT OF DEDUCTION U/S 54B OF THE ACT. IN THE RESULT GROUND NO 2 OF THE APPEAL IS ALLOWED. 09 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED WITH DIRECTION MENTIONED WITH RESPECT TO THE GROUNDS DECIDED. . ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 .02.2016 . - S D / - - S D / - ( I.C. SUDHIR ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 9 .02.2016 * AJAY KUMAR KEOT COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT (A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI