LATE SMT. KISHORIBEN U. MEHTA, MUMBAI V. ITO 12(1)(3), MUMBAI

ITA 5819/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70861 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-03-2013
• Assessment Year: 1993-1994
• Appeal Filed On: 17-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS BHAVNA YASHROY
• Keywords: Deduction for capital gain; Gift; Valuation report
• Section: 143(3); 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , . ! , '# ' $ BEFORE SHRI I.P. BANSAL, JM AND SHRI SANJAY ARO RA, AM ./ I.T.A. NO. 5819/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR: 1993-94 LATE. SMT. KISHORIBEN U. MEHTA, C/O.SUNIL U. MEHTA, 301, SAI DARSHAN MHADA ROAD, NEXT TO VERSOVA TEL. EXCHANGE, ANDHERI(E), MUMBAI 400 058 % % % % / VS. THE ITO 12(1)(3), MUMBAI. ' '# ./ ( ./ PAN/GIR NO. : AGLPM 0868K ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) ') , ' / APPELLANT BY: NONE *+') - , ' / RESPONDENT BY : MRS. BHAVNA YASHROY % - .# / DATE OF HEARING : 26/08/2013 / & - .# / DATE OF PRONOUNCEMENT : 26/08/2013 '0 / O R D E R PER I.P.BANSAL,J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST ORDER PASSED BY LD. CIT(A)-23, MUMBAI DATED 31/05/2011 FOR ASSES SMENT YEAR 1993-94. THE GROUNDS OF APPEAL READ AS UNDER: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED A.O. ERRED IN ADOPTING F.M.V. AT RS. 2,34,842/- AS ON 1/4/81, AS AGAINST RS4.44,200 AS PER REPORT OF THE REGISTERED VALUER, IN RESPECT OF CAPI TAL GAIN ON SALE OF FLAT BY REFERRING THE MATTER OF VALUATION TO THE D.V.O. & THEREBY NOT FOLLOWING THE JUDGEMENT OF BENCH OF MUMBAI, ITAT IN THE CASE OF R.M. KAZERANI. WITHOUT PREJUDICE TO THE ABOVE, ./ I.T.A. NO. 5819/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR: 1993-94 2 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED A.O. ERRED IN ADOPTING F.M.V. AT RS. 2,34,842/- AS ON 1/4/81 IN R ESPECT OF CAPITAL GAIN ON SALE OF FLAT EVEN THOUGH THE SAME IS BASED ON PRELIMINAR Y REPORT OF D.V.O. , WHICH HAS NOT BECOME FINAL AS AGAINST RS. 4,44,200/- AS PER T HE VALUATION REPORT OF THE REGISTERED VALUERS REPORT FILED BY THE APPELLANT 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED A.O. ERRED IN ADOPTING F.M.V. AT RS. 2,34,842/- AS ON 1/4/81 IN R ESPECT OF CAPITAL GAIN ON SALE OF FLAT EVEN THOUGH THE VALUE OF FLAT WAS ADOPTED A T RS. 5,92,000/- AS ON 3/3/1980 FOR THE PURPOSE OF ASSESSMENT OF THE GIFT OF THE SA ME FLAT IN THE SAME BUILDING. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX (A) ALSO ERRED IN CONFIRMING THE ADDI TIONS MADE BY THE ASSESSING OFFICER AS WELL AS REFERENCE TO THE D.V.O. 2. THE IMPUGNED ASSESSMENT ORDER IS DATED 20/3/2006 PASSED UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 (THE ACT). THE MATTER WAS SET ASIDE BY THE TRIBUNAL VIDE ITS ORDER DATED 25/6/200 4 FOR VALUATION OF THE FLAT AS ON 1/4/1981 FOR THE PURPOSE OF INDEXATION BENEFIT. THE SAID FLAT WAS SOLD BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION FOR A SUM OF RS.39.00 LACS. INITIALLY THE ASSESSEE HAD ADOPTED VALUE AS ON 1/4/ 1981 AT RS.4,44,200/- WHICH WAS ADOPTED BY THE AO AT RS.3,77,000/-. IN THE SE T ASIDE PROCEEDINGS THE AO HAS REFERRED THE MATTER TO THE DVO WHO VIDE PRELIM INARY REPORT DETERMINED THE VALUE OF THE SAID FLAT AT RS. 2,34,842/-. ACCORDIN GLY, CAPITAL GAIN HAS BEEN RECOMPUTED BY THE AO AT RS.31,74,303/- AS AGAINST O RIGINAL COMPUTATION OF RS.28,57,290/-. OUT OF AFOREMENTIONED DETERMINED CAPITAL GAIN EXEMPTION UNDER SECTION 54 HAS BEEN GRANTED TO THE EXTENT OF RS.10,25,000/-. IT MAY BE MENTIONED HERE THAT WHILE ADOPTING THE VALUE AS ON 1/4/1981 AT RS.3,77,000/- IN PLACE OF RS.4,44,200/- TAKEN BY THE ASSESSEE, TH E RELEVANT OBSERVATION OF THE AO IN THE ORIGINAL ASSESSMENT ORDER ARE AS UNDER: THE FACTS REGARDING THE 3 FLATS ARE SUMMARIZED BELO W: FLOOR YEAR OF CONSTN. AREA SQ.FT. VALUATION 1.4.81 DATE OF SALE SALE VALUE GR.FLOOR (EXECUTORS) 1942 2450 377,000 24.8.92 43,00,000 1 ST FLORR (K.U.MEHTA) 1942 2340 444,200 31.5.92 39,00,000 2 ND FLOOR (N.J.MEHTA) 1972 2340 552,507 31.5.92 39,00,000 ./ I.T.A. NO. 5819/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR: 1993-94 3 4. AS CAN BE SEEN THE PROBLEM THAT ARISES IS THAT THE GROUND FLOOR FLAT HAS THE LOWER VALUE AS ON 1.4.1981 I.E. 3.77 LAKHS. TH IS FLAT HOWEVER, HAS BEEN SOLD FOR THE HIGHER PRICE OF RS.43 LAKH IN 1992. THE OTHER TWO FLATS WHICH HAVE BEEN SOLD FOR LOWER AMOUNT IN 1992 HAVE BEEN VALUED AT MUCH HIGHER AMOUNT AS ON 1.4.81. THIS OBVIOUSLY RAISES QUESTIONS ABOUT THE VALIDITY OF THE VALUATION DONE TO FIX VALUE AS ON 1.4.81. 5. WHILE THERE MAY BE A SUBJECTIVE ELEMENT IN VALUA TION, A SITUATION WHERE WIDELY DIFFERENT VALUES ARE TAKEN FOR 2 FLATS IN TH E SAME BUILDING CAN HARDLY BE ACCEPTED. THE ASSESSEES CONTENTIONS IN THIS REGAR D ARE AS FOLLOWS. THE GR. FLOOR FLAT HAD CERTAIN UNBUILT OPEN AREAS. THE KITCHEN W AS DELINKED FROM THE MAIN HOUSE. IT WAS NOT PROPERLY MAINTAINED FROM THE MAIN HOUSE. IT WAS NOT PROPERLY MAINTAINED. THE FIRST FLOOR WAS BETTER MAINTAINED. THE DIFFERENCE IS BECAUSE OF THE SUBJECTIVITY FACTOR. 6. I DO NOT FIND THE ASSESSEES CONTENTIONS ACCEPTA BLE. AS CAN BE SEEN THE GROUND FLOOR WAS LARGER IN AREA BY 110 SQ.FT. IT W AS ACTUALLY SOLD FOR A MUCH HIGHER PRICE. AS ACCEPTED BY THE ASSESSEE HIMSELF THE GRO UND FLAT HAS ADVANTAGES AS IT CAN BE USED FOR COMMERCIAL PURPOSE. FURTHER THE AS SESSEES CONTENTIONS REGARDING SEPARATE KITCHEN IN THE GROUND FLOOR AND POOR MAINT ENANCE ARE NOT BORNE OUT BY THE VALUATION REPORT FURNISHED. . 9. WHEN FLATS IN THE SAME BUILDING SOLD THE DEPARTM ENT CAN NOT POSSIBLY ACCEPT WIDELY DIFFERENCING VALUES AS ON 1.4.81. IN THE AB SENCE OF ANY SUPPORTING MATERIAL WILL THEREFORE ADOPT THE SAME VALUE OF RS.3.77 LAKH S TAKEN FOR GROUND FLOOR FOR THE OTHER TWO FLATS ALSO. 2.1 IT MAY ALSO BE MENTIONED HERE THAT THE ASSESSE E HAD FILED REPLY BEFORE DVO IN THE SET ASIDE PROCEEDINGS VIDE A LETTER DAT ED 28/12/2008 IN WHICH THE ASSESSEE HAD OBJECTED TO THE VALUE DETERMINED IN PR ELIMINARY VALUATION REPORT DATED 14/3/2006. FOLLOWING SUBMISSIONS OF THE ASSE SSEE WILL BE RELEVANT. MEANWHILE WE ARE SUBMITTING HEREWITH THE VALUATION REPORT DATED 11-11-1982 OF VALUATION OFFICER, UNIT VIII, BOMBAY, FOR THE SAME FLAT ON FIRST FLOOR OF VAIKUNTH ANDHERI CO-OP. HSG. SOC. LTD., LALLUBHAI PARK, ANDH ERI (WEST), MUMBAI -400 058, WHERE THE LATE SMT. MADHURIKA J MEHTA HAD GIFTED TH E FIRST FLOOR FLAT TO SMT. KISHORI U MEHTA ON 03/03/1980 AND THE VALUE DETERMINED BY T HE D.V.O AT RS. 5.92 LACS AND THE SAME VALUE IS ALSO ACCEPTED BY THE I.T.A.T. BOMBAY BENCH A BY ITS ORDER DATED 30TH SEPTEMBER 1986. SINCE THE VALUATION REPORT DATED 11/11/1982 OF VALU ATION OFFICER, UNIT VIII BOMBAY IS FOR THE SAME FLAT FOR WHICH THE MATTER IS REFERRED TO YOU AND IS VERY NEAR TO THE DATE WHEN THE ACTUAL TRANSACTION TOOK PLACE ON 03/03/1980 AND IS THEREFORE MORE RELIABLE. WE REQUEST YOU TO KINDLY CONSIDER TH E ABOVE VALUATION REPORT BEFORE FINALISING THE FINAL VALUATION REPORT AND ALSO REQU EST YOU TO GIVE US AN OPPORTUNITY TO EXPLAIN OUR OBJECTIONS AND OBLIGE 2.2 IN THE LIGHT OF THE AFOREMENTIONED FACTS IT IS THE CASE OF THE ASSESSEE THAT THE AO HAS WRONGLY RELIED UPON THE PRELIMINARY VALU ATION REPORT OF THE DVO. ./ I.T.A. NO. 5819/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR: 1993-94 4 EARLIER VALUATION OF THE SAME FLAT WAS MADE IN RESP ECT OF GIFT TAX PROCEEDINGS AND VALUE WAS DETERMINED BY DVO AS ON 3/3/1980 AT R S.5,92,000/-. IN THE PAPER BOOK THE ASSESSEE HAS ALSO ENCLOSED GIFT TAX ASSESSMENT ORDER OF MRS. MEHTA MADHURIKA JYOTENDRA WHICH IS AN ORDER DATED 12/4/1985 FOR ASSESSMENT YEAR 1980-81 BY THE 7 TH GIFT TAX OFFICER,BSD(W), BOMBAY, WHEREIN VALUE OF THE FLAT HAS BEEN DETERMINED AT RS.5,92,000/-, COPY OF ASSESSMENT ORDER IS FILED AT PAGES 42 AND 43 OF THE PAPER BOOK. 3. BEFORE LD. CIT(A) ALSO SUCH SUBMISSION WAS MADE . HOWEVER, LD. CIT(A) REJECTED SUCH SUBMISSION AND RELYING UPON THE ASSE SSMENT ORDER AND VALUE DETERMINED BY DVO HE HAS UPHELD THE ACTION OF AO ON THE BASIS THAT VALUATION WAS OBTAINED BY AO AS PER ORDERS OF ITAT. 4. NOTICE OF HEARING WAS SENT TO THE ASSESSEE. HOW EVER, ON THE FIXED DATE OF HEARING NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. AS THIS IS A SMALL APPEAL AND ALL THE FACTS ARE AVAILABLE ON RECORD WE PROCE ED TO DECIDE THE PRESENT APPEAL EX-PARTE QUA THE ASSESSEE. 5. LD. DR AFTER RELYING UPON THE ASSESSMENT ORDER A ND ORDER PASSED BY LD. CIT(A) SUBMITTED THAT ADDITION HAS RIGHTLY BEEN SUS TAINED BY LD. CIT(A). 6. WE HAVE HEARD LD. DR AND WE HAVE CAREFULLY GONE THROUGH THE EARLIER ASSESSMENT ORDER, IMPUGNED ASSESSMENT ORDER, ORDER PASSED BY LD. CIT(A) AND DOCUMENTS SUBMITTED IN THE PAPER BOOK, WHICH PART OF THE APPEAL FILE AND CONTAINS 47 PAGES. WE FIND THAT THERE IS A FORCE IN THE CLAIM OF THE ASSESSEE THAT SAME FLAT ACCORDING TO EARLIER VALUATION REPORT WAS VALUED FOR THE PURPOSE OF GIFT TAX AND IT WAS VALUED BY THE VALUATION CELL OF THE DEPARTMENT AT RS.5,92,000/- AS ON 3/3/1980 AND ON THE BASIS OF THAT REPORT ONL Y GIFT OF THE SAID FLAT WHICH WAS RETURNED BY THE SAID ASSESSEE AT RS.1,46,000/- WAS ENHANCED TO RS.5,92,000/- BY THE DEPARTMENT. THE SAID ASSESSME NT ORDER IS AN IMPORTANT EVIDENCE WHICH CANNOT BE IGNORED AND CAN BE TAKEN A S COMPARABLE CASE. IF THE SAME IS TAKEN INTO CONSIDERATION THEN WE SEE NO REA SON TO DISPUTE THE VALUE TAKEN BY ./ I.T.A. NO. 5819/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR: 1993-94 5 THE ASSESSEE AS ON 1/4/1981 AT RS.4,44,200/-, WHIC H IS BELOW THE AMOUNT OF RS.5,92,000/-. THEREFORE, THE AO IS DIRECTED TO C ONSIDER AN AMOUNT OF RS.4,44,200/- AS ON 1/4/1981 FOR THE PURPOSE OF IND EXATION BENEFIT. WE MAY MENTION HERE THAT THOUGH THE VALUATION WAS GOT DONE AS PER EARLIER ORDER OF ITAT BUT THE FACT OF SIMILAR VALUATION MADE BY THE DEPAR TMENT IN RESPECT OF GIFT TAX PROCEEDINGS WAS NOT BROUGHT TO THE NOTICE OF ITAT A S THE SAME WAS A VALID EVIDENCE TO DETERMINE THE VALUE AS ON 1/4/1981. IN VIEW OF ABOVE DISCUSSIONS, WE ALLOW THE APPEAL FILED BY THE ASSESSEE IN THE MA NNER AFORESAID. 6.1 SO FAR AS IT RELATES TO LEVY OF INTEREST THE A O WILL RECALCULATE THE SAME AFTER GIVING EFFECT TO THIS ORDER. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 26/08/2013 . '0 - & #' 1 2%3 26/08/2013 - 4 SD/- SD/- ( SANJAY ARORA) (I.P.BANSAL) /ACCOUNTANT MEMBER '# /JUDICIAL MEMBER MUMBAI; 2% DATED 26/08/2013 '0 '0 '0 '0 - -- - *.56 *.56 *.56 *.56 7' 7' 7' 7'6&. 6&.6&. 6&. / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 694 *.% , , / DR, ITAT, MUMBAI 6. 4: ; / GUARD FILE. '0% '0% '0% '0% / BY ORDER, +6. *. //TRUE COPY// < << < / = = = = (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . % . .VM , SR. PS