M/s Maddi Venkata Lakshmi Narasimha Rao (HUF), Khammam V. ITO, Ward-1, Khammam

ITA 556/HYD/2013

• Counselvise Citation: 55622514 RSA 2013
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 19-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M CHANDRAMOULESWARA RAO
• Keywords: Capital asset; Cost of acquisition; Fair market value
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO. 556/HYD/2013 ASSESSMENT YEAR 2006-2007 MR. MADDI VENKATA LAKSHMI NARASIMHA RAO (HUF), KHAMMAM, PAN AABHM 2188J VS. THE ITO, WARD 1 KHAMMAM (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. M. CHANDRAMOULESWARA RAO FOR REVENUE : MR. JEEVAN LAL LAVIDIYA DATE OF HEARING : 13.03.2014 DATE OF PRONOUNCEMENT : 26.03.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY ASSESSEE IS AGAINST THE ORDERS OF THE CIT(A), VIJAYAWADA DATED 08.02.2013. ASSESSEE I S A HUF AND HAS RAISED VARIOUS GROUNDS ON THE ISSUE OF DETE RMINING THE FAIR MARKET VALUE OF THE PROPERTY AT RS.40/- PE R SQ. YARD FOR THE PURPOSE OF CALCULATION OF CAPITAL GAINS. 2. THE FACTS OF THE CASE ARE THAT DURING THE COURS E OF PROCEEDINGS UNDER SECTION 263 OF THE ACT BEFORE THE CIT, IT WAS NOTICED BY HIM THAT ASSESSEE TRANSFERRE D 850 SQ. YARDS OF VACANT LAND TO M/S. SUNDER MULTIPLEX TOWAR DS CAPITAL CONTRIBUTION WHOSE VALUE WAS SHOWN AT RS. 17 LAKHS. AS THE ASSET IS A CAPITAL ASSET, THE GAIN ON SUCH TRANSFER WAS SUBJECTED TO TAX UNDER THE PROVISIONS OF THE INCOME TAX ACT. 2 ITA.NO.556/HYD/2013 MR. MADDI VENKATA LAKSHMI NARASIMHA RAO (HUF), KHAMMAM WHILE ARRIVING AT THE CAPITAL GAIN, ASSESSEE HAS SH OWN THE COST OF ACQUISITION OF THE LAND AS ON 01.04.1981 AT RS.3 ,61,250/- BY ADOPTING RS.425/- PER SQ. YARD. THE CIT HAS DIRECTE D THE A.O. THAT AS THE COST OF THE PREVIOUS OWNER IS NOT KNOWN AND CANNOT BE ASCERTAINED, THE MARKET VALUE ASCERTAINED AS ON 01.04.1981 HAS TO BE TAKEN AND THE A.O. WAS DIRECTED TO DETERM INE THE CAPITAL GAINS BY ADOPTING THE MARKET VALUE OF THE L AND @ RS.40/- PER SQ. YARD AS ASCERTAINED FROM THE SRO CO NCERNED. DURING THE COURSE OF CONSEQUENT ASSESSMENT PROCEEDI NGS, ASSESSEE ARGUED THAT THE PROPOSITION MADE FOR ADOPT ION OF SRO VALUE AS ON 01.04.1981 IS NOT AS PER THE PROVISIONS OF SECTION 55 OF THE ACT AND SUBMITTED THE VALUE OF RS.400/- P ER SQ. YARD HAS TO BE TAKEN INTO CONSIDERATION IN SUPPORT OF WH ICH, ASSESSEE FILED A CERTIFICATE OBTAINED FROM SRO WHER EIN THE MARKET VALUE OF THE PROPERTY DURING 01.04.1981 TO 3 1.03.1983 WAS MENTIONED AT RS.400/-. FURTHER, ASSESSEE SUBMIT TED A REPORT OBTAINED FROM DEPARTMENTAL VALUER IN ANOTHER CASE WHEREIN THE FAIR MARKET VALUE OF THAT AREA WAS TAKE N AT RS.450/- PER SQ. YARD. THE A.O. REJECTED ASSESSEES ARGUMENT. ACCORDINGLY, THE A.O. HAS MADE ADDITION TOWARDS CAP ITAL GAIN AMOUNTING TO RS.15,31,020/-. 3. THE LEARNED CIT(A) AFTER CONSIDERING ASSESSEES SUBMISSIONS AND OBJECTIONS, DISMISSED THE APPEAL BY STATING AS UNDER : 5. I HAVE SEEN THE SUBMISSIONS OF THE APPELLANT AN D THE MANNER IN WHICH THE ASSESSMENT HAS BEEN COMPLET ED BESIDES PERUSING ALL OTHER MATERIAL AVAILABLE ON RE CORD. THIS IS A CASE WHERE THE A.O. HAS MADE THE ASSESSMENT AS DIRECTED BY THE CIT IN AN ORDER UNDER SECTION 263. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT ORIGINALLY TH E ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) BY ACCEPTING THE RETURNED INCOME. SUBSEQUENTLY, THE CI T, VIJAYAWADA PASSED AN ORDER UNDER SECTION 263, IN TH E CASE 3 ITA.NO.556/HYD/2013 MR. MADDI VENKATA LAKSHMI NARASIMHA RAO (HUF), KHAMMAM OF THE FIRM M/S. SUNDER MULTIPLEX, KHAMMAM ON 13.12.2010, IN WHICH THE APPELLANT HUF IS A PARTNER . IN THE SAID ORDER UNDER SECTION 263, THE CIT HAS DIRECTED THE A.O. TO ADOPT MARKET VALUE OF SQ. YARD AT RS.40 INSTEAD OF RS.425 ADOPTED BY THE APPELLANT WHICH IS OBJECTED BY THE A .R. AND SOUGHT A DIRECTION TO THE A.O. TO VARY THE SAME. IT IS THE CONTENTION OF THE A.R. THAT THE CIT HAS NOT GIVEN A NY OPPORTUNITY TO THE APPELLANT BEFORE DIRECTING THE A .O. TO ADOPT SUCH A VALUE @ RS.40/- PER SQ. YARD ON WHICH I CANNOT MAKE ANY COMMENTS. TO A QUERY WHETHER THE ORDER OF THE CIT UNDER SECTION 263 WAS APPEALED, IT WAS REPLIED IN NEGATIVE. BUT, HOWEVER, IT IS SEEN FROM THE RECORDS THAT THE A.O. HAS FAITHFULLY CARRIED OUT THE DIRECTIONS OF T HE CIT FOR WHICH THE A.O. HAS TO BE APPRECIATED. IN THE CIRCUM STANCES, IT HAS TO BE HELD THAT THE A.O. HAS CORRECTLY CONDU CTED HIMSELF IN IMPLEMENTING THE DIRECTIONS OF THE CIT I N THE ORDER MADE BY HIM UNDER SECTION 143(3) R.W.S.263 AND ACCO RDINGLY THE SAME IS UPHELD. 4. LEARNED COUNSEL FOR ASSESSEE VEHEMENTLY ARGUED THAT LEARNED CIT(A) WAS NOT CORRECT IN DISMISSING T HE APPEAL WHEN ISSUE HAS TO BE CONSIDERED ON FACTS. 5. LEARNED D.R. SUBMITTED THAT THE A.O. HAS PASSED THE ORDER CONSEQUENT TO THE DIRECTIONS UNDER SECTIO N 263 ISSUED BY THE CIT TO ADOPT THE VALUE. THEREFORE, TH ERE IS NO MISTAKE IN THE ORDER OF THE A.O. 6. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RIVAL CONTENTIONS. AS FAR AS THE IMPUGNED ORDER UND ER APPEAL IS CONCERNED, THIS ORDER IS A CONSEQUENTIAL ORDER PASS ED AT THE DIRECTIONS OF THE CIT UNDER SECTION 263 OF THE I.T. ACT DATED 13.12.2010 WHEREIN LEARNED CIT DIRECTED THE A.O. TO RE- COMPUTE THE INCOME OFFERED FROM THE CAPITAL GAINS O UT OF TRANSFER OF 850 SQ. YARD VACANT LAND TO M/S. SUNDER MULTIPLEX BY ADOPTING THE MARKET VALUE AT RS.40/- PER SQ. YAR D AS COST OF ACQUISITION. WHETHER THIS DIRECTION OF THE CIT IS L EGALLY PERMISSIBLE OR NOT IS NOT THE ISSUE BEFORE US, AS A SSESSEE HAS NOT CHALLENGED THE ORDER UNDER SECTION 263, WHICH WAS ALSO 4 ITA.NO.556/HYD/2013 MR. MADDI VENKATA LAKSHMI NARASIMHA RAO (HUF), KHAMMAM NOTICED BY THE CIT(A) IN THE IMPUGNED ORDER. SINCE ASSESSEE HAS NOT CHALLENGED THE DIRECTION OF THE CIT WHEREIN HE SPECIFICALLY DETERMINED THE VALUE AT RS.40/- PER SQ . YARD ASSESSEES SUBMISSIONS ON SUCH VALUATION AND THE GR OUNDS RAISED CONSEQUENTLY ARE NOT MAINTAINABLE, AS THE A. O. HAS FOLLOWED THE DIRECTIONS OF THE CIT UNDER SECTION 26 3. LOWER AUTHORITY IS BOUND BY THE ORDER PASSED BY HIGHER AU THORITY. KEEPING IN VIEW THE PRINCIPLES OF JUDICIAL DISCIPLI NE, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RA LSON INDUSTRIES LTD. 288 ITR 322, THE CONSEQUENTIAL ORDE R OF AO IS ACCORDING TO THE DIRECTIONS ISSUED. SINCE THE HIGHE R AUTHORITYS ORDER UNDER SECTION 263 WAS ACCEPTED BY ASSESSEE WI THOUT CHALLENGING IT, THE CONSEQUENTIAL ORDER PASSED BY T HE A.O. COMPLYING WITH THE DIRECTIONS OF THE CIT CANNOT BE MODIFIED IN THESE PROCEEDINGS. THEREFORE, WE SEE NO REASON TO I NTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, GROUNDS OF ASSESSEE ARE DISMISSED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.03.2014. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 26 TH MARCH, 2014 VBP/- COPY TO : 1. MR. MADDI VENKATA LAKSHMI NARASIMHA RAO (HUF), C/O. SUNDAR MULTIPLEX, DOOR NO. 2020234, GANDHI CHOWK, KHAMMAM, 2. THE ITO, WARD-1, KHAMMAM. 3. CIT(A), VIJAYAWADA. 4. CIT, VIJAYAWADA 5. D.R. ITAT, B BENCH, HYDERABAD.