YASMITA USHAKANT MALJI, MUMBAI V. JCIT - 24(2) NOW JCIT 30(2), MUMBAI

ITA 6067/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3311 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 13-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUNKUMAR
• Assessee Lawyers: AKSHAY P SHAH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report
• Section: 50C; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI PAWAN SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 6067/MUM/2016 ASSESSMENT YEAR: 2011 - 12 SMT. YASMITA USHAKANT MALJI 1 - B, SAGARVIHAR CHS LTD., 45, K.M. MUNSHI MARG, CHOWPATI, MUMBAI - 400007 VS. THE JCIT - 30 (2) MUMBAI. PAN NO. AANPM8126C APPELLANT RESPONDENT ASSESSEE BY : MR. AKSHAY P. SHAH, AR REVENUE BY : MR. CHAUDHARY ARUNKUMAR, DR DATE OF HEARING : 26/11/2018 DATE OF PRONOUNCEMENT: 18/02/2019 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2011 - 12. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX - 41, MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3)OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. THE LD. CIT APPEALS ERRED IN FACTS AND IN LAW IN NOT APPRECIATING THE FAC T THAT THE AO HAD NO AUTHORITY TO REFER THE MATTER TO THE SUB REGISTRAR TOWN PLANNER (VALUATION). 2. THE LD. CIT APPEALS ERRED IN FACTS AND IN LAW IN ACCEPTING THE FAIR MARKET VALUE AS ON 01.04.1981 AS FAIR AND ACCURATE, WHICH WAS SMT. YASMITA ITA NO. 6067/MUM/2016 2 DETERMINED BY THE AO BASED O N THE PRESUMPTION AND ESTIMATION MADE BY THE SUB REGISTRAR TOWN PLANNER (VALUATION). 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2011 - 12 ON 27.03.2012 SHOWING TOTAL INCOME OF RS.59,16,980/ - . D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) NOTICED THAT THE ASSESSEE ALONG WITH OTHER FAMILY MEMBERS HAD SOLD AN ANCESTRAL PROPERTY AT MALABAR HILL, MUMBAI. THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY FOR THE PURPOSE OF STAMP DUTY IS RS.54,51,78,000/ - AND THE AGREEMENT VALUE IS RS.54,00,00,000/ - . THE AO NOTICED THAT FOR THE COMPUTATION OF LONG TERM CAPITAL GAINS (LTCG), THE ASSESSEE HAS ADOPTED THE AGREEMENT VALUE (I.E. RS.54,00,00,000/ - ) AS SALE CONSIDERATION INSTEAD OF THE VA LUE ADOPTED BY THE STAMP DUTY AUTHORITY (I.E. RS.54,51,78,000/ - ). IN VIEW OF SECTION 50C THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE STAMP DUTY VALUE OF RS.54,51,00,000/ - SHOULD NOT BE ADOPTED AS CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CA PITAL GAINS. IN RESPONSE TO IT, THE ASSESSEE FILED A REPLY DATED 27.12.2013 WHICH IS PRODUCED AS UNDER: SALE CONSIDERATION FOR THE PROPERTY FOR THE YEAR UNDER REFERENCE WAS RS.54,00,00,000/ - . THE ASSESSEE WORKED OUT CAPITAL GAINS BY TAKING 1/72TH SHARE OF RS.54,00,00,000/ - I.E. RS.75,00,000/ - AS SALE CONSIDERATION. NET LONG TERM CAPITAL GAINS OFFERED TO TAX WAS RS.34,71,359/ - AND NET TAXABLE INCOME OF THE ASSESSEE WAS RS.59,16,981/ - FOR THE YEAR UNDER REFERENCE. STAMP DUTY VALUE OF THE SAID PROPERTY IS RS.54,51,78,000/ - AS AGAINST THE AGREEMENT VALUE OF RS.54,00,00,000/ - . ON REPLACING THE VALUE OF SALE CONSIDERATION AT RS.54,51,78,000/ - U/S 50C, REVISED SALE CONSIDERATION WILL BE RS.75,71,917/ - AND REVISED CAPITAL GAIN WILL BE RS.35,43,276/ - . REVISED SMT. YASMITA ITA NO. 6067/MUM/2016 3 TAXABLE INCOME OF THE ASSESSEE FOR THE YEAR UNDER REFERENCE WILL BE RS.59,88,898/ - AS PER THE REVISED STATEMENT OF INCOME ENCLOSED HEREWITH. THEREAFTER, THE AO ISSUED ANOTHER SHOW CAUSE TO THE ASSESSEE VIDE LETTER DA TED 07.01.2014 STATING THAT THE STAMP DUTY VALUE BE REPLACED AS AGAINST THE AGREEMENT VALUE WHILE CALCULATING THE LTCG. IN RESPONSE TO IT, THE ASSESSEE FILED A REPLY DATED 28.01.2014 WHICH IS REPRODUCED AS UNDER: THE PROPERTY UNDER CONSIDERATION IS SOLD F OR RS.54,00,00,000/ - AS AGAINST THE STAMP DUTY VALUATION OF RS.54,51,78,000/ - . IN THIS REGARD, THE ASSESSEE SUBMITS THAT THE VALUE STATED IN THE AGREEMENT IS THE FAIR MARKET VALUE OF THE PROPERTY AND IS ALSO THE VALUE WHICH IS RECEIVED BY THE CO OWNERS ON SALE OF THE SAID PROPERTY. THE ASSESSEE SUBMITS THAT THE STAMP DUTY VALUE FIXED FOR THE SAID PROPERTY IS HIGHER THAN THE FAIR MARKET VALUE ON THE DATE OF TRANSFER. AS SUCH, THE ASSESSEE REQUESTS YOUR HONOUR TO KINDLY INVOKE SECTION 50C(2) AND REFER THE MAT TER TO THE VALUATION OFFICER TO DETERMINE THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER. FURTHER, THE ASSESSEE FILED BEFORE THE AO A COPY OF THE VALUATION REPORT DATED 21.12.2010 OF SHRI S.S. RAHALKAR, APPROVED VALUER FOR A FAIR MARK ET VALUE OF RS.3,31,80,000/ - AS ON 01.04.1981. ON VERIFICATION OF IT, THE AO NOTICED THAT HE HAS RELIED ON THE READY RECKONER FOR 1981 FOR OBTAINING THE FAIR MARKET VALUE. AS PER THE REPORT, THE VALUER HAS TAKEN THE AVERAGE RATE OF RS.800/ - PER SQ. FT. FOR THE DEVELOPED PLOT FOR FSI - 1 AND WORKED OUT THE RATE AS RS.1,064/ - FOR FSI 1.33. HE HAS FURTHER ADDED RS.136 BY GIVING WEIGHTAGE ON ACCOUNT OF UNIQUE LOCATION AND CONFIGURATION OF THE PROPERTY AND ARRIVED AT THE FAIR MARKET RATE OF RS.1200/ - PER SQ. FT. IN ORDER TO VERIFY THE ACTUAL RATE, THE AO ISSUED A NOTICE U/S 133(6) DATED 16.01.2014 TO THE DEPUTY DIRECTOR, TOWN PLANNER (VALUATION), OLD CUSTOM HOUSE, MUMBAI FOR THE VALUATION OF SMT. YASMITA ITA NO. 6067/MUM/2016 4 THE PROPERTY AS ON 01.04.1981. AS PER THE REPLY RECEIVED FROM THE SAID AU THORITY, THE LAND RATE OF THE PROPERTY WAS RS.720/ - PER SQ. FT. FOR FSI - 1. ACCORDINGLY, THE AO ISSUED A SHOW CAUSE NOTICE DATED 28.01.2014 TO THE ASSESSEE TO EXPLAIN AS TO WHY THE LAND RATE SHOULD NOT BE ADOPTED AT RS.720/ - FOR FSI - 1 WHICH WORKS OUT TO RS. 957/ - FOR FSI - 1.33. THE ASSESSEE FILED A REPLY DATED 03.02.2014 WHICH HAS BEEN EXTRACTED BY THE AO AT P AGE 4 - 7 OF THE ASSESSMENT ORDER. THE AO WAS NOT CONVINCED WITH THE SAID REPLY OF THE ASSESSEE FOR THE REASON THAT IN THE INSTANT CASE, THE ISSUE IS NOT THE FAIR MARKET VALUE OF SALE CONSIDERATION, BUT THE FAIR MARKET VALUE OF COST OF ACQUISITION WHERE THE ASSESSEE IS CLAIMING FAIR MARKET VALUE MORE THAN THE VALUE ASSESSED BY THE SUB - REGISTRAR, TOWN PLANNER (VALUATION), MUMBAI. THEREFORE, THE AO OBSERVED THAT THE ISSUED IS NOT COVERED BY SECTION 55A AND IT IS NOT REQUIRED TO REFER THE SAME FOR VALUATION. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS RELIED ON THE READY RECKONER OF 2014, HOWEVER, HE HAS DISPUTED THE SAME OF 1990 TO JUSTIFY THE FAIR MARKET VALUE OF THE PROPERTY IN PARA 5.3 (B) OF HIS REPLY. AFTER RELYING THE RATES OF READY RECKONER OF 2014, THE AO OBSERVED THAT THE ASSESSEE IS CLAIMING THAT THE RATE OF LAND AT MALABAR HILLS AND CUMBALLA HILL ARE VERY HIGH WHEN COMPARED TO THE RATES OF GIRGA ON AND TARDEO. HOWEVER, THE AO NOTED THAT THE ISSUE RELATED TO THE FAIR MARKET VALUE OF LAND IN 1981 AND NOT IN 2014. IN VIEW OF THE ABOVE REASONS, THE AO REWORKED THE CAPITAL GAINS AND BROUGHT TO TAX THE DIFFERENCE IN LTCG OF RS.7,25,093/ - . 4. IN APPEA L, THE LD. CIT(A) OBSERVED THAT THE REGISTERED VALUER OF THE ASSESSEE HAS TAKEN THE AVERAGE RATE OF RS.800/ - PER SQ. FT. FOR FSI - 1. SMT. YASMITA ITA NO. 6067/MUM/2016 5 IT WAS CLAIMED BY THE ASSESSEE THAT THE ABOVE RATE IS BASED ON READY RECKONER OF 1981 PUBLISHED BY THE ARCHITECT PUBLISHING CORPORATION OF INDIA, MALAD (EAST), MUMBAI. AS PER THE LD. CIT(A) THE AUTHENTICITY AND RELIABILITY OF THE READY RECKONER OF 1981 PUBLISHED BY THE ABOVE CONCERN IS NOT KNOWN. ON THE OTHER HAND, THE LD. CIT(A) WAS CONVINCED WITH THE RATE ASCERTAINED BY A GOVERNMENT AUTHORITY, WHICH HAS BEEN RELIED ON BY THE AO. THEREFORE, THE LD. CIT(A) AGREED WITH THE RATES ASCERTAINED BY THE SUB - REGISTRAR, TOWN PLANNER, (VALUATION) AND CONFIRMED THE DIFFERENCE OF LTCG OF RS.7,25,093/ - BROUGHT T O TAX BY THE AO. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILES A PAPER BOOK (P/B) CONTAINING (I) COMPUTATION OF INCOME FOR AY 2011 - 12, (II) COPY OF WRITTEN SUBMISSION BEFORE THE CIT(A), (III) LETTER OF AUTHORITY IN FAVOUR OF AKSHAY P. SHAH & CO., (I V) DECISION IN (A) CIT V. PUJA PRINTS 360 ITR 697 ( BOM .) , (B) DEVIDAYAL ROLLING & REFINERIES V. ASSESSEE [ITA NO. 3390/MUM/2013] ITAT MUMBAI D BENCH, ( C ) ITO V. SUREKHA TANAJI BHILARE, [ITA NO. 1612/PN/2012] - ITAT PUNE BENCH, ( D ) SMT. KRISHNABAI TING ARE V. ITO [101 ITD 317 (PUNE) AND 103 TTJ PUNE 216] PUNE ITAT BENCH, ( E ) CIT V. DAULAL MOHTA (HUF) (BOM) [I.T. APPEAL NO.1031 OF 2008, 360 ITR 680] - BOMBAY HIGH COURT AND ( F ) SHUBHA VICHARE MUMBAI V. ASSESSEE ITA NO. 1124/MUM/2013 - ITAT MUMBAI - E BENCH. 6. ON THE OTHER HAND, THE LD. DR RELIES ON THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. IT IS THE CONTENTION OF THE ASSESSEE THAT VIDE LETTER SMT. YASMITA ITA NO. 6067/MUM/2016 6 DATED 28.01.2014, IN RESPONSE TO SHOW CAUSE NOTICE DATED 07.01.2014, THE AO WAS REQUESTED TO INVOKE SECTION 50C(2) AND REFER THE MATTER TO THE VALUATION OFFICER TO DETERMINE THE FMV AS ON THE DATE OF TRANSFER. WE FIND THE AO HAS MENTIONED IT AT PAGE 3 OF HIS ORDER DATED 26.02.2014. WE MAY REFER HERE TO THE ABOVE SECTION AND EXAMINE ITS APPLICABILITY. SUB - SECTION (2) OF SECTION 50C INSERTED W.E.F. 01.04.2003 ENACTS PROVISIONS WITHOUT PREJUDICE TO THE PROVISIONS OF SECTION 50C(1) AND TAKES CARE OF A SITUATION WHERE - (A) THE ASSESSEE CL AIMS BEFORE THE AO THAT THE VALUE ADOPTED OR ASSESSED [(W.E.F. 01.10.2009) OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY U/S 50C(1) EXCEEDS THE FMV OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED [(W.E.F. 01.10.2009) OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY U/S 50C(1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT. IN SUCH A SITUATION, THE AO MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER. FOR THE PURPOSE OF SECTION 50C, AS PER EXPLANATION 2 TO SECTION 50C(2), NEWLY INSERTED (W.E.F. 01.10.2009), ASSESSABLE MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY. IN THE CASE OF GOULI MAHADEVAPPA V. ITO (2013) 356 ITR 90 (KARN.), THE HONBLE HIGH COURT HE LD THAT THE PROVISIONS OF SECTION SMT. YASMITA ITA NO. 6067/MUM/2016 7 50C(2) PERMITS THE ASSESSEE TO CONTEST BEFORE THE ASSESSING AUTHORITY THAT THE REGISTRATION VALUE FIXED BY THE STATE UNDER THE STAMP ACT IS EXCESSIVE AND DOES NOT CORRESPOND WITH THE FAIR MARKET VALUE OF THE PROPERTY AS O N THE DATE OF THE TRANSFER AND THAT THE ASSESSEE SHOULD NOT HAVE CHALLENGED THE LEVY OF STAMP DUTY UNDER THE STAMP ACT AS BEING EXCESSIVE AND DISPROPORTIONATE TO THE FAIR MARKET VALUE OF THE PROPERTY BEFORE THE AUTHORITY UNDER THE STAMP ACT OR FILE APPEAL, REVISION OR REFERENCE TO ANY COURT OR HIGH COURT AGAINST SUCH ORDER. IN THE CASE OF CIT V. DR. INDRA SWAROOP BHATNAGAR (2012) 349 ITR 210 (ALL), THE HONBLE HIGH COURT HELD SECTION 50C MANDATES THAT WHERE THE CONSIDERATION DECLARED TO BE RECEIVED OR AC CRUING AS A RESULT OF THE TRANSFER OF LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION, AND CAPITAL GAINS SHALL BE COMPUTED ACCORDINGLY U/S 48. IT IS FURTHER ORDAINED THAT WHERE THE ASSESSEE CLAIMS THAT THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE RELEVANT ASSET TO A VALUATION OFFICER IN ACCORDANCE WITH THE PROVISIONS OF SECTION 55A. IN THE CASE OF APPADURAI VIJAYRAGHAVAN V. JT. CIT (OSD) (2014) 369 ITR 486 (MAD), THE HONBLE HIGH COURT HELD THAT WHERE THE ASSESSEE OBJECTED TO VALUE ADOPTED BY STAMP VALUATION AUTHORITY, AS THE SALE WAS DISTRESS SALE, BUT THE AO INSTEAD OF REFERRING VALUATION TO VALUATION OFFIC ER ESTIMATED CAPITAL GAINS; I T WAS HELD, WHEN TH E ASSESSEE HAS MADE SPECIFIC CLAIM THAT AO SHOULD HAVE REFERRED THE SMT. YASMITA ITA NO. 6067/MUM/2016 8 MATTER TO THE VALUATION OFFICER FOR VALUATION OF CAPITAL ASSET IN TERMS OF SECTION 50C(2). MERE ASSERTION BY ASSESSEE SUFFICE FOR ATTRACTION OF SECTION 50C(2). IN THE CASE OF SUNIL KUMA R AGARWAL V. CIT (2014) 47 TAXMANN.COM 158 (CAL), THE HONBLE HIGH COURT HELD THAT THE VALUATION BY THE DVO IS REQUIRED TO AVOID MISCARRIAGE OF JUSTICE. THE LEGISLATURE DID NOT INTEND THAT THE CAPITAL GAIN SHOULD BE FIXED MERELY ON THE BASIS OF THE VALUAT ION TO BE MADE BY THE DISTRICT SUB - REGISTRAR FOR THE PURPOSE OF STAMP DUTY. THE LEGISLATURE HAS TAKEN CARE TO PROVIDE ADEQUATE MACHINERY TO GIVE A FAIR TREATMENT TO THE CITIZEN/TAXPAYER. THERE IS NO REASON WHY THE MACHINERY PROVIDED BY THE LEGISLATURE SHOU LD NOT BE USED AND THE BENEFIT THEREOF SHOULD BE REFUSED. EVEN IN A CASE WHERE NO SUCH PRAYER WAS MADE, THE AO DISCHARGING A QUASI - JUDICIAL FUNCTION, HAS THE BOUNDEN DUTY TO ACT FAIRLY AND TO GIVE A FAIR TREATMENT BY GIVING HIM AN OPTION TO FOLLOW THE COUR SE PROVIDED BY LAW. THUS, IF THE STAMP DUTY VALUATION IS HIGHER THAN THE CONSIDERATION RECEIVED, THE AO MUST REFER THE VALUATION TO THE DVO EVEN IF THERE IS NO REQUEST BY THE ASSESSEE. 7.1 IN VIEW OF THE POSITION OF LAW DELINEATED IN THE ABOVE PARA, WE DIRECT THE AO TO REFER THE VALUATION OF THE PROPERTY TO THE DVO AS PER PROVISIONS OF SECTION 50C(2) OF THE ACT. THE AO WOULD PASS AN ORDER AFRESH AFTER GIVING A COPY OF THE VALUATION REPORT RE CEIVED FROM THE DVO AND AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. SMT. YASMITA ITA NO. 6067/MUM/2016 9 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18/02/2019. SD/ - SD/ - (PAWAN SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 18/02/2019 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI