THINGNA & CONTRACTOR, MUMBAI V. ASST CIT RG 11(3), MUMBAI

ITA 5618/MUM/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0795 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 27-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: ANJALA PRAVEEN
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C

Judgement Text

, E , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANJUNATHA G, AM ITA NO.5618/MUM/2012 : ASST.YEAR 2007-2008 M/S.THINGNA & CONTRACTOR G-3, T.V.INDUSTRIAL ESTATE 248-A, S.K.AHIRE MARG, WORLI MUMBAI 400 030. PAN : AAAFT1050D. VS. THE ASST.COMMISSIONER OF INCOME-TAX RANGE 11(3) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : MS.ANJALA PRAVEEN /RESPONDENT BY : SHRI V.JUSTIN, DR / DATE OF HEARING : 18.01.2018 / DATE OF PRONOUNCEMENT : 24.01.2018. / O R D E R PER SAKTIJIT DEY (JM) : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DA TED 25.06.2012 OF THE LEARNED COMMISSIONER OF INCOME-TA X (APPEALS) 2, MUMBAI FOR THE ASSESSMENT YEAR 2007-2008. 2. GROUND NO.1 IS NOT PRESSED, HENCE DISMISSED. 3. THE ISSUE ARISING FOR OUR CONSIDERATION IN GROUN DS NO.2 TO 5 ARE IN RELATION TO EXCESS ADDITION OF RS.2,99,380 MADE AS SHORT TERM CAPITAL GAIN ARISING FROM SALE OF OFFICE PREMISES. ITA NO.5618/MUM/2012 M/S.THINGNA & CONTRACTOR. 2 4. BRIEFLY THE FACTS ARE THE ASSESSEE, A FIRM OF CH ARTERED ACCOUNTANTS, FILED ITS RETURN OF INCOME FOR THE IMP UGNED ASSESSMENT YEAR ON 19.01.2009 DECLARING TOTAL INCOME OF RS.39, 98,706. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FROM THE MATERIAL ON RECORD FOUND THAT IN THE RELEVANT PREVIOUS YEAR, TH E ASSESSEE HAD SOLD AN OFFICE PREMISES AT WORLI, MUMBAI FOR A SALE CONS IDERATION OF RS.45,00,000. HOWEVER, WHILE COMPUTING SHORT TERM C APITAL GAIN, THE ASSESSEE HAD REDUCED AN AMOUNT OF RS.8,00,000 TOWAR DS COST OF IMPROVEMENT FROM THE GROSS SALE CONSIDERATION OF RS .45 LAKH AND ARRIVED AT NET SALES CONSIDERATION OF RS.37,00,000, WHEREFROM THE ASSESSEE REDUCED WRITTEN DOWN VALUE OF THE BLOCK AM OUNTING TO RS.29,34,253 AND OFFERED SHORT TERM CAPITAL GAIN OF RS.7,65,747. THE ASSESSING OFFICER, AFTER CALLING UPON THE ASSESSEE TO FURNISH COPY OF SALE DEED, PROOF OF ACQUISITION, ORIGINAL COST, WRI TTEN DOWN VALUE AND COST OF IMPROVEMENT AND EXAMINING THEM FOUND THAT A S PER THE REGISTERED SALE DEED, STAMP VALUATION AUTHORITY HAS VALUED THE FAIR MARKET VALUE OF THE PROPERTY AT RS.42,60,984. HE TH EREFORE WAS OF THE VIEW THAT AS PER SECTION 50C OF THE ACT, THE VALUE DETERMINED BY STAMP VALUATION AUTHORITY SHOULD BE CONSIDERED AS DEEMED SALE CONSIDERATION. THEREFORE, HE CALLED UPON THE ASSESSEE TO EXPLAIN W HY THE DIFFERENCE OF RS.8 LAKH CLAIMED TOWARDS COST OF IMPROVEMENT SHOUL D NOT BE DISALLOWED. IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED ITS REPLY VIDE LETTER DATED 30.1 0.2009 OBJECTING TO ADOPTION OF VALUATION MADE BY THE STAMP DUTY AUTHOR ITY. ON THE BASIS OF THE OBJECTION MADE BY THE ASSESSEE, THE ASSESSING O FFICER MADE ITA NO.5618/MUM/2012 M/S.THINGNA & CONTRACTOR. 3 REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER (DV O) FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY, WHO DETERMIN ED THE FAIR MARKET VALUE OF THE PROPERTY AT RS.39,99,380. THE ASSESSIN G OFFICER ADOPTING THE VALUE DETERMINED BY THE DVO, REDUCED THEREFROM WDV OF THE BLOCK OF ASSET AS PER BOOKS AMOUNTING TO RS.29,34,253 AND DETERMINED THE SHORT TERM CAPITAL GAIN AT RS.10,65,127. THE ASSESS EE HAVING SHOWN SHORT TERM CAPITAL GAIN OF RS.7,65,747, THE DIFFERE NCE OF RS.2,99,380 WAS ADDED BACK TO THE INCOME OF THE ASSESSEE. THE A SSESSEE CHALLENGED THE ADDITION BEFORE THE FIRST APPELLATE AUTHORITY ON VARIOUS GROUNDS. HOWEVER, THE LEARNED FIRST APPELLATE AUTHO RITY SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER DISMISSING T HE GROUNDS RAISED BY THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS ON RECORD. ON A PERUSAL OF THE REGISTERED SALE AGREEMENT DATED 5 TH MAY, 2006, A COPY OF WHICH IS AT PAGE 49 OF THE PA PER BOOK, IT IS NOTICED THAT AS PER THE TERMS OF THIS SALE AGREE MENT, THE SALE CONSIDERATION IS RS.45 LAKH. IT IS A FACT ON RECORD THAT THE STAMP DUTY AUTHORITY HAS DETERMINED THE VALUE OF THE SUBJECT P ROPERTY AT RS.42,60,984, WHICH IS LESS THAN THE SALE CONSIDERA TION OF RS.45 LAKH. THUS, PRIMA FACIE, THE PROVISIONS OF SECTION 50C AR E NOT APPLICABLE. THEREFORE, THE ASSESSING OFFICER FELL IN ERROR IN A PPLYING THE PROVISIONS OF SECTION 50C OF THE ACT AND ADOPTING THE FAIR MARKET VALUE DETERMINED BY THE DVO. NO DOUBT, THE ISSUE IN DISPUTE BETWEEN THE PARTIES IS THE CLAIM OF COST OF IMPROVEMENT AMOUNTING TO RS.8 LAKH. IT I S EVIDENT THAT THE ITA NO.5618/MUM/2012 M/S.THINGNA & CONTRACTOR. 4 ASSESSEE HAS COMPUTED SHORT TERM CAPITAL GAIN ON NE T SALE CONSIDERATION OF RS.37 LAKH AFTER REDUCING AN AMOUN T OF RS.8 LAKH FROM THE AGREED SALE CONSIDERATION OF RS.45 LAKH. WHEREA S, THE ASSESSING OFFICER HAS COMPUTED SHORT TERM CAPITAL GAIN ON THE FMV OF RS.39,99,380 DETERMINED BY THE DVO. THUS, IN A WAY THE ASSESSING OFFICER HAS ALLOWED PART OF THE COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE. MOREOVER, THE ASSESSEE HAVING ITSELF SHOW N THE VALUE OF THE PROPERTY AT RS.45 LAKH, WHICH IS MORE THAN FMV DETE RMINED BY THE STAMP VALUATION AUTHORITY AS WELL AS DVO, NO ADDITI ON CAN BE MADE MERELY ON THE BASIS OF DETERMINATION OF FMV BY THE DVO. ACCORDINGLY, WE DELETE THE ADDITION OF RS.2,99,380 MADE TO THE S HORT TERM CAPITAL GAIN COMPUTED BY THE ASSESSEE. GROUNDS ARE ALLOWED TO THE EXTENT INDICATED ABOVE. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED ON THIS 24 TH DAY OF JANUARY, 2018. !'#$ SD/- SD/- (MANJUNATHA G) (SAKTIJIT DEY) / ACCOUNTANT MEMBER ! / JUDICIAL MEMBER ! MUMBAI; ! DATED : 24 TH JANUARY, 2018. DEVDAS* '!#$%&%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ' ( ) / THE CIT, MUMBAI. ITA NO.5618/MUM/2012 M/S.THINGNA & CONTRACTOR. 5 / BY ORDER, *+ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ! / ITAT, MUMBAI 4. ' / CIT(A) - 2, MUMBAI 5. *,#++-. , -. , ! / DR, ITAT, MUMBAI 6. #012 / GUARD FILE.