ITO 15(2)(2), MUMBAI V. PRAMOD KUMAR JOSHI, INDORE

ITA 5881/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8713 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 23-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO.5881/M/2011 ASSESSMENT YEAR: 2007-2008 INCOME TAX OFFICER, 15(2)(2), MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007. VS. SHRI PRAMOD KUMAR JOSHI, C/O, RAM GILDA, ADVOCATE, 47/5, I.D.A. COMPLEX, AGARWAL NAGAR, MAIN ROAD, INDORE. PAN: AGFPJ3219H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI OM PRAKASH, DR RESPONDENT BY : NONE DATE OF HEARING: 10.10.2012 DATE OF ORDER : 12.10.2012 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 23.8.2011 IS DI RECTED AGAINST THE ORDER OF CIT (A)-26, MUMBAI DATED 10.06.2011 IN RELATION TO ASSESSMENT YEAR 2007-2008. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 4,05, 975/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF RENOVATION EXPENSES CLAIMED BY THE ASSESSEE IN CALCULATING CAPITAL GAINS FROM SALE OF PROPERTY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO REFER THE MATTER OF VALUATION OF PROPERTY TO VALUATION CELL APPRECIATING THE FACT THE ASSESSEE HAD NOT CLAIMED BEFORE THE ASSESSING OFFICER THAT T HE VALUE ADOPTED BY STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE O F THE PROPERTY AS ON THE DATE OF TRANSFER. 3. BRIEFLY STATED THE RELEVANT FACTS OF THE CASE AR E THAT THE ASSESSEE IS A SALARIED EMPLOYEE AND OWNS AN FLAT. HE SOLD THE FLAT FOR A S ALE CONSIDERATION OF RS. 20.50 LAKHS 2 SHRI PRAMOD KUMAR JOSHI WHILE THE MARKET PRICE AS PER THE STAMP DUTY AUTHOR ITIES IS RS. 30,75,744/-. DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER INVOKED T HE PROVISIONS OF SECTION 50C OF THE ACT AND COMPUTED THE SHORT TERM CAPITAL GAINS AT RS . 11,44,044/- ADOPTING THE SUM OF RS. 30,75,744/-. THE PROPERTY WAS NOT REFERRED TO T HE VALUATION CELL DESPITE THE DEMAND OF THE ASSESSEE. FURTTHER, THE ASSESSEE CLAI MED TO HAVE INCURRED A SUM OF RS. 4,05,975/- ON RENOVATION AND REPAIR CHARGES. FOR WA NT OF PROOF OF PAYMENT, QUOTATION AND SOME CORRESPONDENCE IN SUPPORT OF THE RENOVATIO N AND REPAIRS, THE AO DISALLOWED THE CLAIM RELATING TO RENOVATION AND REPAIRS. 4. AGGRIEVED WITH THE DISALLOWANCE MADE BY THE AO, ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) ON BOTH THE ISSUES. REGARDING T HE ISSUE OF INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT, THE CIT (A) ALLOWED THE GRI EVANCE OF THE ASSESSEE STATING THAT THE ASSESSING OFFICER SHOULD HAVE REFERRED THE MATT ER TO THE VALUATION CELL BEFORE ADOPTING THE FAIR MARKET VALUE AS PER THE STAMP DUT Y AUTHORITIES. IN THIS REGARD, CIT (A) RELIED ON THE DECISION OF ITAT IN THE CASE OF M /S. AJMAL FRAGRANCES & FASHION (P) LTD. VS. ACIT (2009) 34 SOT 57 MUMBAI AND HELD THAT AS PER THE PROVISIONS OF SECTION 50C(2) OF THE ACT, AO SHOULD HAVE REFERRED THE MATT ER TO THE VALUATION CELL. REGARDING ISSUE RELATING TO RENOVATION AND REPAIR E XPENSES, THE CIT (A) HELD THAT WHEN THE GENUINE EXPENDITURE IS NOT DOUBTED AND WHEN THE ASSESSEE FILED THE RELEVANT BILLS FROM THE CONTRACTOR, THE THIRD PARTY CONFIRMING THE EXPENDITURE ON THE RENOVATION AND REPAIRS, THE AO SHOULD NOT HAVE DISALLOWED. THE CLA IM OF THE ASSESSEE MERELY FOR WANT OF QUOTATION AND OTHER CORRESPONDENCE, SHOULD NOT B E DENIED. THAT IS HOW BOTH THE GROUNDS OF THE ASSESSEE WERE ALLOWED BY THE CIT(A). THEREFORE, THE REVENUE IS AGGRIEVED AGAINST THE DECISION OF THE CIT (A) AND H ENCE, THE REVENUE IS IN APPEAL BEFORE US. 5. DURING THE COURSE OF PROCEEDINGS BEFORE US, NONE APPEARED TO REPRESENT THE ASSESSEE. LD DR RELIED ON THE ORDERS OF THE REVENU E AUTHORITIES AND READ OUT THE RELEVANT FACTS AND PORTIONS FROM THE SAME. 3 SHRI PRAMOD KUMAR JOSHI 6. WE HAVE HEARD THE LD DR AND GONE THROUGH THE PAP ERS AVAILABLE BEFORE US. SO FAR AS THE ISSUE RELATING TO INVOKING OF THE PROVIS IONS OF SECTION 50C AND AOS FAILURE TO MAKE A REFERENCE TO VALUATION CELL FOR VALUATION OF THE PROPERTY, WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TH E ORDER OF THIS TRIBUNAL IN THE CASE OF M/S. AJMAL FRAGRANCES & FASHION (P) LTD. VS. ACIT ( SUPRA) AND PARA 4.5 OF THE ORDER OF CIT (A) IS RELEVANT AND THE SAME IS REPRODUCED AS U NDER: 4.5. AS PER SECTION 50C, NO HARM WOULD GO TO THE RE VENUE, IF MATTER IS REFERRED TO VALUATION CELL FOR IN THE CASES RELIED UPON BY THE LD. AR, MUMBAI ITAT IN THE CASE OF M/S. AJMAL FRAGRANCES PVT. LTD (SUPRA) HAS HELD THAT ONCE THE ASSESSEE RAISES OBJECTION AS REGARDS THE VALUATION ADOPTED PROPER VALUATION OF THE PROPERTY. THEREFORE, RESPECTFULLY FOLLOWING TH E DECISION OF THE JURISDICTIONAL ITAT, THE AO IS DIRECTED TO REFER THIS MATTER TO TH E VALUATION CELL AND THE VALUE WORKED OUT BY THE VALUATION OFFICER MAY BE TAKEN AS THE SALE CONSIDERATION FOR WORKING OUT CAPITAL GAINS. 6.1. THEREFORE, THE ORDER OF CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. 7. REGARDING SECOND ISSUE RELATING TO ALLOWABILITY OF THE CLAIM TO THE RENOVATION AND REPAIR EXPENSES, WE FIND THAT THE ASSESSEE HAS SUCC ESSFULLY SUBMITTED THE RELEVANT BILLS IN SUPPORT OF THE INCURRING OF EXPENSES ON RENOVATI ON AND REPAIRS. ON THE CONTRARY, AO DOES NOT HAVE ANY INCRIMINATING MATERIAL TO SUSPECT THE CLAIM OF THE ASSESSEE. MERELY ON THE BASIS OF ASSESSEES FAILURE TO FURNISH A COP Y OF THE QUOTATION AND OTHER CORRESPONDENCE WITH THE CONTRACTOR, THE EXPENDITURE CLAIMED BY THE ASSESSEE CANNOT BECOME INCORRECT. IN THIS REGARD, WE HAVE PERUSED PARA 4.6 OF THE CIT (A) ORDER AND THE SAME IS REPRODUCED AS UNDER: 4.6. REGARDING THE REJECTION OF CLAIM OF THE APPELL ANT FOR RENOVATION AND REPAIR EXPENSES, IT IS NOTED THAT THE AO HAS REJECTED THE CLAIM ON FLIMSY GROUNDS THAT QUOTATIONS AND CORRESPONDENCE REGARDING REPAID AND RENOVATION WERE NOT FILED BY THE ASSESSEE. IT IS A NORMAL PRACTICE THAT IN R ENOVATION AND REPAIR OF PERSONAL FLATS, QUOTATIONS AND CORRESPONDENCE ARE NOT MADE I N WRITING AS IS DONE IN GOVERNMENT DEPARTMENTS. THE APPELLANT HAS SUBMITTE D PROPER BILL OF THE PARTY, THROUGH WHOM RENOVATION WORK WAS EXECUTED. HE HAS ALSO TAKEN GPF ADVANCE FROM HIS EMPLOYER FOR THIS PURPOSE. IF THE AO HAD ANY DOUBT REGARDING THE GENUINENESS OF RENOVATION WORK, HE COULD HAVE CROSS EXAMINED THE SAID 4 SHRI PRAMOD KUMAR JOSHI CONTRACTOR OR MAKE ON THE SPOT VERIFICATION OF THE ACTUAL WORK WITHOUT DOING SO, THE AO HAS SUMMARILY REJECTED THE CLAIM OF THE APPE LLANT. THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES , THE AOS ACTION IN SUMMARILY REJECTING THE RENOVATION EXPENSES CANNOT BE JUSTIFI ED. ACCORDINGLY, THE ADDITION MADE BY HIM TO THIS EXTENT (RS. 4,05,975/-) IS DELE TED. 8. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE FURNISHED THE PROPER BILL FROM THE CONTRACTOR THROUGH WHOM THE RENOVATION WORK WAS EXE CUTED. IT APPEARS THAT ASSESSEE HAD ALSO TAKEN THE GPF ADVANCE FROM HIS EMPLOYER FO R THE PURPOSE OF RENOVATION AND REPAIRS. IT IS NOT THE CASE OF THE AO THAT CONTRAC TOR HAS NOT DONE ANY RENOVATION AND REPAIR WORK FOR THE ASSESSEE AND HAS NOT DISCLOSED THE RECEIPTS RECEIVED BY THE CONTRACTOR. IN OUR OPINION, THE RELIEF GIVEN BY TH E CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE R EVENUE ARE DISMISSED . 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF OCTOBER, 2012. SD/- SD/- (D.K. AGARWAL) (D. KARUNAKA RA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE :12.10.2012 AT :MUMBAI OKK COPY TO : 1. SHRI PRAMOD KUMAR JOSHI, INDORE. 2. ITO 15(2)(2), MUMBAI. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR C BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBA.