Aruna Kommuri, Hyd, Hyderabad V. Addl. CIT, Range-4, Hyd, Hyderabad

ITA 553/HYD/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6345 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 29-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 21-04-2016
• Court: TRIBUNAL
• Department Lawyers: K E SUNIL BABU
• Assessee Lawyers: G KALYAN DAS
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 553/HYD/2016 ASSESSMENT YEAR: 2007-08 SMT. ARUNA KOMMURI, HYDERABAD [PAN: ACVPK3291Q] VS ADDL. COMMISSIONER OF INCOME TAX, RANGE-4, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI G. KALYANDAS, AR FOR REVENUE : SHRI K.E. SUNIL BABU, DR DATE OF HEARING : 29-06-2016 DATE OF PRONOUNCEMENT : 15-07-2016 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, HYDERABAD, DATED 27-01-2016. ASSESSEE HAS RAISED FIVE GROUNDS, OUT OF WHICH, GROUND NO.1 & 5 ARE GENERAL IN NATURE. 2. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL RECEIVI NG INCOME FROM RENT, LONG TERM CAPITAL GAIN AND HIRE CHA RGES. SHE FILED RETURN OF INCOME ADMITTING LOSS OF RS. 25,80,164 /-. ASSESSING OFFICER (AO) DETERMINED THE TOTAL INCOME AT RS. 35,63,1 94/- AND RAISED DEMAND MAKING VARIOUS ADDITIONS TO THE RETURNE D INCOME. ASSESSEE IS CONTESTING THE FOLLOWING THREE ISSUES: GROUND : 2.1. AUTHORITIES BELOW ERRED IN ASSESSING SALE CONS IDERATION RS. 37.8 LAKHS U/S. 50C OF THE ACT AGAINST ACTUAL AMOUNT REC EIVED RS. 36.83 LAKHS. 2.2. APPELLANT CONTENDS SRO SALE VALUE IS NOT A FAI R MARKET VALUE APPROVED OF LAW. I.T.A. NO. 553/HYD/2016 SMT. ARUNA KOMMURI :- 2 -: 2.3. AUTHORITIES BELOW OUGHT TO HAVE NOTED DIFFEREN CE BETWEEN SRO VALUE AND ACTUAL SALE VALUE WORKS OUT TO 2.67% ONLY WHICH IS PERMITTED UNDER LAW. 3. THE ISSUE IN THIS GROUND IS WITH REFERENCE TO INV OKING OF SECTION 50C OF THE INCOME TAX ACT [ACT]. AO HAS NOTICED THAT SUB- REGISTRAR, VALUATION MENTION IN THE SALE DEED ON THE PR OPERTY SOLD BY ASSESSEE ON WHICH CAPITAL GAIN WAS OFFERED WAS AT RS. 67,40,000/-, WHEREAS ASSESSEE HAS OFFERED THE VALUE AT RS. 66,41,600/-. THE DIFFERENCE AMOUNT IS BROUGHT TO TAX INVOKING THE PROVISIONS OF SECTION 50C BY ADOPTING THE SRO VALUE AS SALE CONSIDERATION. ASSESSEE IS OBJECTING TO THE SAME STATING THAT THE SHARE OF ASSESSEE IN THE VALUATION IS ONLY RS. 98,200 /- WHICH IS LESS THAN 2% OF THE VALUE AND SHE RELIED ON THE DECI SION OF THE SUPREME COURT IN THE CASE OF C.B. GAUTAM VS. UNION OF INDIA & ORS. [199 ITR 530]. LD. CIT(A) REJECTED THE CONTENTIO NS STATING THAT THE JUDGMENT WAS ISSUED IN THE CONTEXT OF COMPULSORY AC QUISITION CONSEQUENTLY, DOES NOT HAVING ANY APPLICATION TO THE FA CTS OF THE CASE. 3.1. EVEN THOUGH LD. COUNSEL REITERATED THE SUBMISSI ONS AND RELIED ON THE ABOVE CASE LAW, I AM OF THE OPINION THAT AO IS CORRECT IN INVOKING THE PROVISIONS OF SECTION 50C. AS SESSEE EITHER SHOULD HAVE OBJECTED TO THE VALUATION BEFORE THE SRO O R SHOULD HAVE OBJECTED THE VALUATION BEFORE THE AO WHO IN TURN COULD HAVE REFERRED IT TO THE VALUATION OFFICER. SINCE NEITHER OF THE ACTIONS WAS UNDERTAKEN BY ASSESSEE, THE PROVISIONS OF SECTION 50C ARE TO BE APPLIED AS SUCH. EVENTHOUGH THE AMOUNT OF DIFFERE NCE IS SMALL; THERE IS NO OPTION TO THE APPELLATE AUTHORITIES NOT TO IG NORE THE PROVISIONS OF THE STATUTE. ASSESSEE SHOULD HAVE OBJECTE D TO THE VALUATION BEING ADOPTED U/S. 50C(2). HAVING NOT DONE, IT IS NOT I.T.A. NO. 553/HYD/2016 SMT. ARUNA KOMMURI :- 3 -: POSSIBLE TO SUBSTITUTE ANY VALUE OTHER THAN THE SRO VALUE UNDER SECTION 50C. I FIND NO MERIT IN ASSESSEES CONTENTIONS. ACCORDINGLY, THE GROUND IS REJECTED. GROUND : 3.1. AUTHORITIES BELOW ERRED IN DISALLOWING EXPENDI TURE OF RS. 7.53 LAKHS FOR CONSTRUCTION OF PARTITION WALLS AND TOILETS FOR SALE OF THE OFFICE PREMISES IN 3 PORTIONS. 3.2. AUTHORITIES OUGHT TO HAVE NOTED THAT APPELLANT HAD PURCHASED 9000 SQ FEET OF OFFICE AREA WITHOUT INTERNAL PARTITION W ALLS AND SINCE LARGE AREA COULD NOT BE SOLD, APPELLANT DIVIDED THE AREA AND S OLD THEM UNDER 3 SALE DEEDS. 3.3. AUTHORITIES BELOW ERRED IN HOLDING THAT NO EVI DENCE FOR BANK WITHDRAWALS AND CONSTRUCTION OF PARTITION WALLS WAS FURNISHED. 4. GROUND NO. 3 IS ON THE ISSUE OF NOT ALLOWING EXPENDITURE OF RS. 7.53 LAKHS INCURRED BY ASSESSEE F OR CONSTRUCTION OF PARTITION WALLS AND TOILETS. ASSESSEE WH ILE OFFERING THE CAPITAL GAIN, CLAIMED AN AMOUNT OF RS. 7.53 LAKHS TOWARDS IMPROVEMENTS MADE TO THE PROPERTY. ON BEING ENQUIRED, ASSESSEE COULD NOT FURNISH ANY EVIDENCE IN SUPPORT OF THE EXPEN DITURE CLAIMED AND IN THE LAST MINUTE, STATED TO HAVE BEEN FURNI SHED EVIDENCE OF WITHDRAWALS FROM BANK A/C AS SOURCE OF I NCURRENCE OF SUCH EXPENDITURE. SINCE THE SAME COULD NOT BE VERIFIE D AS NO FURTHER DETAILS WERE FURNISHED AS REQUIRED BY THE AO, IN THE COMPUTATION OF CAPITAL GAINS THE COST OF IMPROVEMENT WAS RESTRICTED TO THE EVIDENCE FURNISHED TO THE AO, THEREBY AMOUNT OF RS. 7,52,550/- STATED TO HAVE BEEN INCURRED IN FINAN CIAL YEAR 2002-03 FOR ADDITIONAL WORKS WAS DISALLOWED. 4.1. IT WAS CONTENDED BY THE LD. COUNSEL THAT ASSESSEE ALONG WITH HER HUSBAND HAS ACQUIRED 500 SQ. YDS., O F LAND AT HIMAYATHNAGAR, HYDERABAD IN JUNE, 2000, WHICH WAS G IVEN IN I.T.A. NO. 553/HYD/2016 SMT. ARUNA KOMMURI :- 4 -: DEVELOPMENT TO M/S. SAI PRAGATHI ESTATES & CONSTRUCTIONS PVT. LTD., ALONG WITH OTHERS. ASSESSEE WAS TO GET AN AMOUN T OF 9,000 SQ. FT., OF CONSTRUCTED AREA AND AS PER THE AGREEMENT, ONLY BARE- STRUCTURE WITHOUT ANY PARTITIONS OR FACILITIES ARE TO BE DEVELOPED. LD. COUNSEL REFERRING TO THE AGREEMENT AND SUBSEQUENT S ALE DOCUMENTS STATES THAT ASSESSEE GOT IN POSSESSION OF BARE -STRUCTURE AND PARTITIONS AND PROVISION OF TOILETS WERE MADE BY A SSESSEE WAY BACK IN FINANCIAL YEAR 2002-03. SINCE PROPERTY COUL D NOT BE LEASED OUT OR DEVELOPED THE SAME WERE SOLD IN PART DURING THE YEAR UNDER CONSIDERATION. SINCE THE EXPENDITURE WAS INCURRED LON G BACK, ASSESSEE IS NOT IN A POSITION TO FURNISH ANY EVIDENCE TO THE SATISFACTION OF THE AO, HOWEVER, IT WAS SUBMITTED THAT AS SESSEES HUSBAND BEING A CIVIL CONTRACTOR HAS DEVELOPED THE PA RTITIONS AND TOILETS WHICH CAN BE EVIDENCED FROM THE SALE DEEDS AND THIS EXPENDITURE WAS NOT SPENT BY THE DEVELOPER AS THE ASSESS EE WAS TO GET ONLY THE BARE-STRUCTURE IN THE FIRST FLOOR. LD. COU NSEL SUBMITTED THAT THE SALE DEEDS EVIDENCES THE COST OF IMPROV EMENT AND ACCORDINGLY, AO/CIT(A) SHOULD HAVE ALLOWED THE E XPENDITURE. 4.2. LD. DR, HOWEVER, RELIED ON THE ORDERS OF THE AU THORITIES TO SUBMIT THAT NO EVIDENCE WAS FURNISHED IN SUPPORT OF TH E COST OF IMPROVEMENT. 4.3. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND EXAM INED THE DOCUMENTS ON RECORD. AS FAR AS DEVELOPMENT AGREEM ENT IS CONCERNED, IT IS TRUE THAT ASSESSEE WAS TO GET CONSTRUCTED FIRST FLOOR ADMEASURING 9,000 SQ. FT., WITHOUT ANY INTERNAL PARTITI ON WALLS. ASSESSEE ALONG WITH HER HUSBAND HAS SOLD 6,185 SQ. F T., IN THE FIRST FLOOR ALONG WITH UNDIVIDED SHARE OF LAND AND TH E SALE DOCUMENTS DO INDICATE THAT THERE WERE PARTITION WALLS AND TOILETS. I.T.A. NO. 553/HYD/2016 SMT. ARUNA KOMMURI :- 5 -: OBVIOUSLY, THESE COULD HAVE BEEN INCURRED BY ASSESS EE. EVEN THOUGH, NO DETAILS COULD BE FURNISHED TO THE SATISFACTIO N OF AO/CIT(A), THE FACT CANNOT BE DENIED THAT ASSESSEE HAD TO INCUR SOME EXPENDITURE ON THE PARTITION WALLS AND THE TOILETS, BEING PROVIDED ON THE SOLD PROPERTY. CONSIDERING THE ABO VE, I AM OF THE VIEW THAT AN AMOUNT OF RS. 3 LAKHS CAN BE ALLOWED TO A SSESSEE TOWARDS POSSIBLE EXPENDITURE ON DEVELOPMENT OF THE PROP ERTY. ACCORDINGLY, THE GROUNDS ARE PARTIALLY ALLOWED. AO I S DIRECTED TO RE-WORK OUT THE CAPITAL GAINS ACCORDINGLY. GROUND : 4.1. AUTHORITIES BELOW ERRED IN ASSESSING RENTAL IN COME FROM RELIANCE RETAIL LTD AT RS. 5,97,400/- AGAINST RS. 2,97,700/- . 4.2 AUTHORITIES BELOW OUGHT TO HAVE NOTED THAT ALON G WITH HER SON APPELLANT ARE JOINT OWNER OF SHARE IN THE PROPERT Y AND TENANT SINCE PAID TDS RS. 1,00,542/- IN RESPECT OF SHARE AND LD AO HAVING ASSESSED SHARE INCOME BE DIRECTED TO ALLOW TDS CREDIT. 5. GROUND NO. 4 PERTAINS TO THE ADDITION OF ENTIRE RE NTAL INCOME IN THE HANDS OF ASSESSEE. AS CAN BE SEEN FRO M THE GROUND RAISED ABOVE, ASSESSEE IS NOT FULL OWNER OF THE PROPE RTY AND ASSESSEE WITH HER SON HOLD 1/4 TH SHARE EACH. AO WHILE COMPLETING THE ASSESSMENT NOTES DOWN THAT THERE IS NO EVIDENCE WIT H REGARD TO HER CLAIM. ACCORDINGLY, ENTIRE RENT OF RS. 5,97,400/ - WAS BROUGHT TO TAX, EVEN THOUGH, HE STATED THAT ASSESSEE WILL BE ALLOW ED CREDIT FOR THE ENTIRE TDS. IT WAS THE CONTENTION THAT THE TDS CRED IT WAS NOT ALLOWED. LD. CIT(A) CONFIRMED THE SAME WITHOUT AN Y EXAMINATION OF THE ISSUES. 5.1. AFTER CONSIDERING THE RIVAL CONTENTIONS, I AM OF THE OPINION THAT THIS ISSUE REQUIRES EXAMINATION BY THE AO . FIRST OF ALL, IT HAS TO BE SEEN WHETHER ASSESSEE AND HER SON O WNS ONLY 50% OF THE SHARE OF THE PROPERTY? IF SO, WHETHER ASSESSEE S HUSBAND I.T.A. NO. 553/HYD/2016 SMT. ARUNA KOMMURI :- 6 -: ALSO OWNS ANY PROPERTY AS THE SUBMISSIONS MADE BEFOR E THE AO VIDE LETTER DT. 11-12-2015 DO INDICATE THAT SHRI K. PRA TAP REDDY OWNS 1/4 TH SHARE ONLY. IT IS ALSO STATED THAT THE SAME WAS ACCEPTED IN AN ASSESSMENT U/S. 143(3) DT. 31-12-2009. THUS, THE SUBMISSIONS BY ASSESSEE INDICATES THAT SHRI K. PRATAP R EDDY HOLDS 1/4 TH SHARE WHILE ASSESSEE OWNS 1/4 TH SHARE AND HER TWO SONS OWNS THE BALANCE SHARE AT 1/4 TH EACH. CONSEQUENTLY, THERE ARE FOUR PERSONS IN WHOSE HANDS THE INCOME SHOULD HAVE B EEN OFFERED. NO DETAILS OF THE COMPLETE OWNERSHIP AND OFFERING OF INCOMES WERE PLACED ON RECORD. AO HIMSELF CONSIDERS ONLY 1/4 TH SHARE OF ASSESSEE AND ANOTHER 1/4 TH SHARE OF ONE SON IN ASSESSEES HAND. WHETHER THE OTHER SON IS A MAJOR OR A MINOR AND INCOME S ARE OFFERED SEPARATELY COULD NOT BE VERIFIED. IN VIEW OF THAT, I DIRECT THE AO TO EXAMINE THE OWNERSHIP OF THE PROPERTY AND ASSES S ONLY THAT PART OF THE RENTAL INCOME WHICH IS TO BE ASSESSED IN AS SESSEES HANDS. AO IS ALSO DIRECTED TO GIVE CREDIT ACCORDINGL Y IN THE RESPECTIVE HANDS. WITH THESE DIRECTIONS, THE ISSUE IN GROUND NO. 4 IS RESTORED TO THE FILE OF THE AO TO EXAMINE THE FACTS A ND DECIDE AFRESH. NEEDLESS TO SAY THAT ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY. GROUNDS ARE CONSIDERED ALLOWED FOR STATI STICAL PURPOSES. 6. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2016 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 15 TH JULY, 2016 TNMM I.T.A. NO. 553/HYD/2016 SMT. ARUNA KOMMURI :- 7 -: COPY TO : 1. SMT. ARUNA KOMMURI, HYDERABAD. C/O. M/S. KALYAND AS & CO., CHARTERED ACCOUNTANTS, 15, VENKATESHWARA COL ONY, NARAYANGUDA, HYDERABAD. 2. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-4, WARANGAL. 3. COMMISSIONER OF INCOME TAX(APPEALS)-1, HYDERABAD , 4. THE PR. COMMISSIONER OF INCOME TAX-1, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.