PARAMJIT SINGH, MUMBAI V. ITO 12(3)(4), MUMBAI

ITA 5721/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93122 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 24-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Keywords: Period of limitation; Fair market value; Time period of passing order

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.5721/M/2012 ASSESSMENT YEAR: 2007-08 MR. PARAMJIT SINGH, C/O. HINDUSTSAN STEEL & METAL WORKS, 19, ORIENTAL INSURANCE BUILDING, 31 DR. V.B. GANDHI MARG, FORT, MUMBAI 400 023 PAN: AMEPS 2763A VS. INCOME TAX OFFICER-12(3)(4), AAYAKAR BHAVAN, M.K. MARG, CHURCHGATE, MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SANJAY PARIKH, A.R. REVENUE BY : SHRI JEETENDRA KUMAR, D.R. DATE OF HEARING : 08.04.2015 DATE OF PRONOUNCEMENT : 30.06.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREIN AFTER REFERRED TO AS THE CIT(A)] DATED 17.05.2012 RELEVANT TO ASSESSMENT YEA R 2007-08. 2. THE SOLE ISSUE TAKEN IN THIS APPEAL IS RELATING TO THE DETERMINATION OF FAIR MARKET VALUE AS ON 01.04.1981, OF THE PROPERTY SOLD BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, FOR THE PURPOSE OF COMPUT ING THE TAXABLE CAPITAL GAINS RELATING TO THE SHARE OF THE ASSESSEE. 3. THE ASSESSEE DURING THE YEAR, BEING A CO-OWNER, SOLD A RESIDENTIAL PROPERTY (LAND + BUILDING) FOR A TOTAL CONSIDERAT ION OF RS. 1.80 CRORES. THE ITA NO.5721/M/2012 MR. PARAMJIT SINGH 2 ASSESSEE, ON THE BASIS OF REPORT OF REGD. VALUER M/ S ANMOL SEKHRI & ASSOCIATES, TOOK THE FAIR MARKET VALUE OF THE PROPE RTY AS ON 01.04.81 AT RS.31.73 LAKHS AND CALCULATED THE INDEXED COST OF A CQUISITION AT RS.1.65CRORES AND COMPUTED THE LONG TERM CAPITAL GAINS AT RS.15. 53 LAKHS AND RETURNED THE CAPITAL GAINS IN RELATION TO 11.11% SHARE OF THE AS SESSEE AT RS. 170335/- THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE A O), HOWEVER, WAS OF THE VIEW THAT THE VALUE ADOPTED BY THE ASSESSEE AT RS.3 1.73 LAKHS WAS ON HIGHER SIDE. HE THEREFORE REFERRED THE MATTER TO THE DEPA RTMENTAL VALUATION OFFICER. HOWEVER THE REPORT OF THE DVO WAS NOT RECEIVED. AS THE LIMITATION PERIOD FOR COMPLETION OF THE ASSESSMENT WAS APPROACHING, THE A O, THEREFORE, HIMSELF PROCEEDED TO ESTIMATE THE VALUE OF THE PROPERTY AS ON 1.4.1981. HE RELIED IN THIS RESPECT ON THE INDIAN VALUERS DIRECTORY AND REFERAN CE BOOK INCORPORATING MARKET VALUE OF THE PROPERTY IN MUMBAI AS ON 1.4.19 81, AUTHORED BY SHRI SANTOSH KUMAR AND SHRI SUMIT GUPTA. THE AO OBSERVED THAT AS PER THE BOOK, THE RATES OF THE VACANT DEVELOPED LAND IN THE CONCE RNED AREA RANGED FROM RS. 52/- TO RS.100/- PER SQ. FEET. HE ADOPTED THE AVERA GE RATE OF RS.80/- PER SQ. FEET FOR THE LAND. HE APPLIED THE SAID RATE TO THE TOTAL LAND AREA OF 21060 SQ. FEET. AS REGARDS CONSTRUCTION, THE AO NOTED THAT THE AVERAGE RATE OF COST OF CONSTRUCTION DURING THE PERIOD WAS AROUND RS.170 PER SQ.FEET. HO WEVER, SINCE THE STRUCTURE HAD BEEN CONSTRUCTED PRIOR TO THE YEAR 1967, HE ADO PTED THE VALUE OF THE CONSTRUCTION @ 50% AT RS. 85/- PER SQ. FOR 4000 SQ. FEET AND, ACCORDINGLY, ESTIMATED THE VALUE OF THE PROPERTY AS ON 1.4.1981 AT RS. 20,24,800/- AS AGAINST OF RS. 31,72,820 ESTIMATED BY THE REGISTERED VALUER . 4. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASSE SSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 5. DURING THE COURSE OF THE APPELLANT PROCEEDINGS B EFORE THE LD. CIT(A), THE REPORT OF DVO WAS RECEIVED. THE ASSESSEE ALSO S UBMITTED A REPORT OF ITA NO.5721/M/2012 MR. PARAMJIT SINGH 3 ANOTHER REGD. VALUER SHRI SANTOSH KUMAR. THE ASSE SSEE ALSO SUBMITTED THAT THE TOTAL AREA OF THE LAND SOLD WAS 22,662 SQ.FEET AS AGAINST 21060 SQ. FEET ADOPTED BY THE AO. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DIRECTED THE AO TO CONSIDER THE COST VALUE OF ENTIRE LAND OF 22,662 SQ.FEET. THE DEPARTMENT HAS NOT FILED ANY APPEAL IN THIS RESPECT, HENCE THIS DIRECTION OF THE CIT(A) IN THIS RESPECT HAS ATTAINE D FINALITY. SO FAR AS THE COST VALUE OF THE PROPERTY WAS CONCE RNED, THE LD. CIT(A) AFTER CONSIDERING ALL THE FOUR REPORTS/OPINIONS VIZ TWO OF THE REGISTERED VALUERS SUBMITTED BY THE ASSESSEE, ONE OF THE DEPARTMENTAL VALUATION OFFICER AND THE FOURTH OF THE OPINION OF THE AO BASED ON INDIAN VALUERS DIRECTORY AND REFERANCE BOOK HELD THAT THE VALUE ADOPTED BY THE AO ON THE BASIS OF INDIAN VALUERS DIRECTORY AND REFERANCE BOOK SEEMED TO BE COMPARATIVELY ACCURATE AND UPHELD THE ACTION OF THE AO IN ADOPTING AVERAGE ESTIMATED VALUE OF THE PROPERTY ON THE BASIS OF THE ABOVE STATED BOOK. AG GRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS COME IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS. THE LD. CIT (A) , CONSIDERING THE VARIOUS ASPECTS OF THE REPORTS OF THE REGD. VALUERS AS WELL THAT OF THE DVO HAS GIVEN A CATEGORICAL FINDING THAT NEITHER THE RE PORTS OF THE REGISTERED VALUERS NOT THAT OF THE DVO INSPIRES CONFIDENCE. AS OBSERVE D ABOVE, THE LD. CIT(A) HAS REJECTED THE REPORT OF THE DEPARTMENTAL VALUATI ON OFFICER FOR THE DETAILED REASONS AS MENTIONED IN THE IMPUGNED ORDER AND THE DEPARTMENT HAS NOT CHALLENGED THE SAID FINDING OF THE LD. CIT(A) BY WA Y OF APPEAL OR CROSS OBJECTIONS. SO FAR AS THE TWO REPORTS OF THE REGIST ERED VALUERS SUBMITTED BY THE ASSESSEE VIS--VIS THE VALUATION ADOPTED BY THE AO ARE CONCERNED, WE FIND THAT THE FIRST REGISTERED VALUER OF THE ASSESSEE HAS ADO PTED THE VALUE OF THE BUILT UP AREA (LAND +BUILDING) @ RS.280/SQ.FEET FOR 4000 SQ. FEET AND FOR THE COST OF REMAINING UNCONSTRUCTED LAND/FSI OF 18662 SQ.FEET @ RS.110 PER SQ. FEET. AND ITA NO.5721/M/2012 MR. PARAMJIT SINGH 4 THE SECOND VALUER HAS ESTIMATED AT RS. 160/- PER SQ .FEET FOR 22,662SQ. FEET LAND ONLY, WHEREAS THE AO HAS ESTIMATED THE COST OF LAND OF 21060 SQ. FEET AT RS.80/- PER SQ.FEET AND THE BUILDING OF 4000/0 SQ. FEET AT RS. 85/- PER SQ. FEET. WE MAY OBSERVE THAT THE WORK OF DETERMINING THE FAI R MARKET VALUE OF THE PROPERTY AS ON 01.04.81 IS BASED PURELY ON ESTIMATI ON BASIS. SO FAR AS THE RATES MENTIONED IN THE BOOK ARE CONC ERNED, THE LD. CIT(A) HAS OBSERVED THAT THE RATES MENTIONED IN THE BOOK SEEME D TO MORE RELIABLE AND ACCURATE AS COMPARED THE REPORTS OF VALUERS AND THA T OF THE DVO. WE FIND MERIT IN THE FINDINGS OF THE CIT(A) IN THIS RESPECT . 7. HOWEVER, THE LD. AR OF THE ASSESSEE HAS INVITED OUR ATTENTION TO THE RELEVANT PAGE COPIED FROM THE ABOVE MENTIONED BOOK TO SHOW THAT THE RATE OF THE LAND IN THE CONCERNED AND NEARBY AREAS RANGED F ROM RS. 52/- TO 112/- AND THAT THE AVERAGE OF THE RATES OF THE LANDS MENTION ED IN CONCERNED /RELATED 11 AREAS COMES OUT AT RS. 90.50 PER SQ. FEET AS AGAINS T OF RS.80/- ADOPTED BY THE AO. FURTHER THE RATES OF THE RESIDENTIAL BUILDING/C ONSTRUCTION AS ON 1.4.1981 AS MENTIONED IN THE BOOK RELIED UPON BY THE AO RANGED BETWEEN 180/- TO 320/- , AVERAGE OF WHICH COMES OUT AT RS. 290/- PER SQ. FEE T AS AGAINST OF RS.170/ MENTIONED BY THE AO, WHICH HAD BEEN FURTHER REDUCED BY THE AO TO THE EXTENT OF 50% AT RS.85/- PER SQ. FEET. 8. TAKING INTO CONSIDERATION THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO THE FACT THAT THE DETERMINATION OF THE VAL UE OF THE PROPERTY AS ON 1.4.1981 IS PURELY AN ESTIMATE WORK, WE ARE OF THE VIEW THAT THE INTEREST OF JUSTICE WILL BE WELL SERVED, IF THE AO IS DIRECTED TO ADOPT THE VALUE SOMEWHERE BETWEEN THE VALUE ESTIMATED BY THE ASSESSEE/ REGIST ERED VALUER ON THE ONE HAND AND THE AO ON THE OTHER HAND ESPECIALLY UNDER THE CIRCUMSTANCES THAT THE AO HAS ALSO NOT TAKEN THE CORRECT AVERAGE VALUE OF THE PROPERTY EVEN AS PER THE BOOK RELIED UPON BY HIM. WE, THEREFORE DIRECT THE AO TO ADOPT THE COST OF ITA NO.5721/M/2012 MR. PARAMJIT SINGH 5 VALUE OF THE LAND AS ON 1.4.1981 @ RS.100/- PER SQ. FEET FOR 22,662 SQ.FEET AND ALSO THAT OF THE BUILDING AT RS. 100/- PER SQ. FEE T FOR 4000 SQ. FEET AND COMPUTE THE CAPITAL GAINS AFTER ALLOWING INDEXATION ETC. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2015. SD/- SD/- (SANJAY ARORA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.06.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.