Sh. Sahajiv Rattan, New Delhi V. ITO, Noida

ITA 6114/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9718 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 30-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Capital asset; Depreciation; Principle of natural justice; Cost of acquisition; Fair market value; Benefit of exemption; Capital Gains
• Section: 234B; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G , NEW DELHI BEFORE SH. AMIT SHUKLA , JUDICIAL MEMBER DR. B. R. R. KUMAR , ACCOUNTANT MEMBER ITA NO. 6114 /DEL/201 6 : ASSTT. YEAR : 2012 - 1 3 SAHAJIV RATTAN, C/O M/S RRA TAX INDIA, D - 28, SOUTH EXTENSION, PART - I, NEW DELHI - 110049 VS INCOME TAX OFFICER, WARD - 3(3 ), NOIDA (APPELLANT) (RESPONDENT) PAN NO. A CIPR8964N ASSESSEE BY : DR. RAKESH GUPTA, ADV. REVENUE BY : SH . N. K. BANSAL, SR. DR DATE OF HEAR ING: 20 . 08 .201 9 DATE OF PRONOUNCEMENT: 18 .09 .201 9 ORDER PER DR. B. R. R. KUMAR , A CCOUNTANT M EMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE L D. CIT(A) - I , NOIDA DATED 30.09.2016 . 2 . FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: 1. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. A.O. IN MAKING ADDITION OF RS.1,95,83,596/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN AND THAT TO WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 2. THAT IN ANY CASE AND IN ANY VIEW OF MATTER, ACTI ON OF LD. CIT (A) IN CONFIRMING THE ACTION OF LD. A.O. IN MAKING ADDITION OF RS.1,95,83,596/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO . 6114 /DEL /2016 SAHAJIV RATTAN 2 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. A.O. IN MAKING DISALLOWANCE OF RS.1,45,235/ - ON ACCOUNT OF EXPENSES INCURRED ON VEHICLE. 4. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE BENEFIT OF EXEMPTION U/S 54F. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. A.O. IN CHARGING INTEREST U/S 234A AND 234B OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AND HIS TWO BROTHERS NAMELY SHRI RAJIV RATTAN JAIN AND SHRI VIKRAM JAIN HAVE SOLD 840 7.22 SQM (ASSESSEE'S SHARE 2802. 41 SQM) OUT OF TOTAL 9733.83 SQM. OF LAND IN KHASR A NO. 540, 541 & 544 (NAGAR NIGAM NO. 19/6) IN MOH . KHATENA, LOHA MANDI, AGRA FOR RS. 6,40,30,380/ - BY WAY OF THREE SALE DEEDS DULY REGISTERED WITH SUB - REGISTRAR - II, AGRA ON 12.12. 2011 TO M/S SHREE RAM ASHIYANA PVT LTD., WHICH HAS STARTED CONSTRUCTION OF RE SIDENTIAL FLATS THEREON. ONE - THIRD ASSESSEE'S SHARE IN SALE PROCEEDS WO RKS OUT AT RS.2,13,43,460/ - . IN THE RETURN OF INCOME FILED ON 23.3.2014 , THE ASSESSEE HAS CLA IMED COST OF ACQUISITION AT RS. 2,26,79,297/ - I.E. AT THE RATE OF RS. 6000/ - PER SQM IN THE Y EAR 2008. IT WAS EXPLAINED THAT THE LAND WAS INHERITED BY THE ASSESSEE AND HIS TWO BROTHERS AFTER THE DEATH OF THEIR MOTHER SMT RAJ RAM JAIN ON 23.10.2008 . SHE ALSO ACQUIRED THE LAND FROM HER HUSBAND SHRI DHANENDER KUMAR JAIN (FATHER OF ASSESSEE) WHO EXPIR ED ON 28.02. 1991 . HE ALSO ACQUIRED THE LAND IN QUESTION FROM HIS FATHER S HRI RAM GOPAL WHO DIED ON 18.05. 1976 . VIDE ORDER SHEET ENTRY DATED 4.3. 2015 , THE ITA NO . 6114 /DEL /2016 SAHAJIV RATTAN 3 ASSESSEE WAS REQUIRED TO FURNISH COST OF ACQUI SITION OF PROPERTY SOLD AS ON 1.4. 1981, WHICH IS TO BE A DOPTED FOR CALCULATION OF CAPITAL GAINS AS PER PROVISIONS OF SECTION 49. THE ASSESSEE SUBMITTED THAT THE PROPERTY WAS ACQUIRED ACTUALLY IN 2008 AFTER THE DEATH OF ASSESSEE'S MOTHER, AND COMPUTATION OF GAINS HAS BEEN DONE IN THE ROI AFTER TAKING THE BASE YE AR AS 2008 . IN THE COMPUTATION OF TOTAL INCOME THE ASSESSE HAS TAKEN THE COST OF ACQUISITION IN 2008 @ RS. 6,000/ - PER SQM AND INDEXED COST OF ACQUISITION WAS WORKED OUT AS UNDER: INDEXED COST: RS. 6,000 X 2802.41 = RS 1,68,14,460/ - INDEX = 1,68,14,460 X 785/582 = RS 2,26,79,297/ - SALE CONSIDERATION RS 2,13,43,460/ - GAIN/LOSS ( - ) RS.13,35,837/ - 4. THE ASSESSEE SUBMITTED COPY OF CALCULATION FAIR MARKET VALUE OF LAND ASSESSED BY THE APPROVED VALUER AS UNDER: (I) CIRCLE RAT E IN THE YEAR 2014 IS 8500/ - PER SQM. (II) MARKET RATE IN THE YEAR 2014 IS CONSIDERED RS. 12000/ - PER SQM. IN MY OPINION. (III) BASED ON INDEX THE MARKET IS DERIVED AS UNDER: - THE INDEX IN THE YEAR IS 1024 HENCE THE RATE IN 1980 - 81 WHE N THE INDEX WAS 100 AS SUCH THE MARKET RATE WORKS OUT AS UNDER BASED ON INDEX - 12000X100/1024= RS.1171.87 PER SQM. SINCE , IT IS NOT THE APPROPRIATE AND AUTHENTIC METHOD FOR ARRIVING AT FAIR MARKET VALUE OF LAND AS ON 1 . 4.1981, NO COGNIZANCE COULD BE TAKEN THEREUPON. 5. NOT SATISFIED WITH THE VALUER S REPORT, THE ASSESSING OFFICER REFERRED THE MATTER TO THE DVO, AGRA UNDER SECTION 55A OF I.T. ACT, 1961 VIDE REFERENCE DATED 6.3.2015 TO ELUCIDATE THE FAIR ITA NO . 6114 /DEL /2016 SAHAJIV RATTAN 4 MARKET VALUE OF THE CAPITAL ASSET AS ON 1.4.1981. SI MULTANEOUSLY COMMISSION UNDER SECTION 131(1 )(D) OF I.T. ACT, 1961 WAS ALSO ISSUED TO THE ITO, WARD - 2(4), AGRA TO OBTAIN AND FURNISH COPIES OF THREE SALE DEEDS REGISTERED ON 14 1981 OR NEARBY DATES IN THE OFFICE OF THE SUB - REGISTRAR AGRA IN RESPECT OF VACA NT LAND V OF MOH . KHATENA, LOHA MANDI, AGRA OR ADJACENT AREA . THE ASSESSING OFFICER HELD THAT TH E DVO, HAS ASSE SSED THE VALUE OF PROPERTY @ RS. 654/ - PER SQM AS UNDER AS AGAINST PREV AILING CIRCLE RATES RANGING RS.80/ - TO RS. 300/ - PER SQM. FIXED BY THE STATE GOVT . FOR THE PURPOSE OF STAMP VALUATION AS ON 1.4.1981 . CALCULATION OF FAIR MARKET VALUE (F.M.V.) PROPERTY: LAND AT KHASARA NO. 540, 541, 544 NAGAR NIGAM NO. 19/6, MOH - KHATENA, LOHAMANDI, AGRA (ONE - THIRD SHARE) ASSESSEE: - SHRI SAHJEEV RATAN S/O SHRI D HANENDRA KUMAR DATE OF VALUATION: - 01.04.1981 AREA OF LAND OF SHARE OF ASSESSEE = 1/3X8407 = 2802.33 M 2 LOCATION AND MERITS OF LAND: - THE LAND IS SITUATED ON MAIN ROAD OF KHATENA/PRATAP NAGAR ADJOINING JAIPUR HOUSE COLONY AT DISTANCE OF 250 METER (AP PROX ) FROM LOHA MANDI POLICE STATION AND FROM ONE OF MAIN ROAD OF AGRA, LOHAMANDI - JAIPUR HOUSE - KOTHI MEENA BAZAAR - PANCHKUIYA ROAD. THE LAND IS SURROUNDED AT LEFT AND RIGHT SIDE AND ACROSS THE ROAD WITH COMMERCIAL/BUSINESS PREMISES, OFFICES, SHOPS, MARKET , POLICE STATION, INTER COLLEGES, JAIPUR HOUSE (POSH COLONY OF AGRA), OFFICE OF SALE TAX, OFFICE OF ADA AGRA, BANKS, DOCTORS, CLINIC, NURSING HOMES, CINEMA HALLS, ATM CHAMBER, CHEMIST SHOPS, HOTEL/RESTA URANTS , LOHAMANDI, CHAURAHA WITHIN 200 ITA NO . 6114 /DEL /2016 SAHAJIV RATTAN 5 METER TO 500 ME TER. THERE ARE MAIN MARKET/MALLS, RAILWAY STATION, DEGREE COLLEGES, BIG HOSPITAL/ NURSING HOMES, BIG MALLS, M.G. ROAD, OF AGRA WITHIN 500 METER TO 1 KM. BASIS AND DETERMINATION OF FAIR MARKET RATE OF LAND AS ON 1.4.1981 COMPARABLE SALE INSTANCES AS ON AND AROUND 01.04.1981 ARE NOT AVAILABLE. FAIR MARKET RATE IS DETERMINED ON THE BASIS OF CIRCLE RATE OF GOVT . , AND ENHANCEMENT OF CIRCLE RATES DUE TO VARIOUS MERITS OF LAND TO OBTAIN FAIR MARKET RATE OF LAND AS ON 01.04.1981: CIRCLE RATE OF THIS LAND BEING SIT UATED ON MORE THAN 40 - 0 WIDE ROAD AND IS SURROUNDED BY COMMERCIAL PREMISES AS ON 1979. =@ RS.300/ M 2 ...(A) ADD FOR VARIOUS MERITS OF LAND AS MENTIONED ABOVE TO OBTAIN FAIR MARKET RATE OF LAND AS ON 1979 @ 100% ON A - +@RS.30 0/ M 2 FAIR MARKET RATE OF LAND AS ON 1979 =@RS.600/ M 2 FAIR MARKET RATE OF LAND AS ON 01.04.81 =@RS. 600X1.16 M 2 (TAKING INCREASEMENT OF RATE @ 8% PER ANNUM) = @RS.696/ M 2 ...(B) DEDUCT ON ACCOUNT OF BIG SIZE OF PLOT @ 6% OF B ( - )@RS. 42/ M 2 @RS.654/ M 2 6. NOT SATISFIED WITH THE REPORT OF THE DVO, THE ASSESSING OFFICER BASED ON THE COMPARABLES CASES OF THREE SALARIES SALE DEEDS COLLECTED FROM THE SUB - REGISTRAR, AGRA HAS VALUED THE FMV @RS.80 PER SQM. AS ON 01.04.1981. 7. THE LD. CIT (A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 8. BEFORE US, DURING THE HEARING, THE LD. AR ARGUED THAT THE ASSESSMENT ORD ER HAS BEEN PASSED 30.03.2015 WHEREAS THE LETTER FROM THE ITO, WARD - 2(4) CONTAINI NG THE DATA COLLECTED FROM THE SUB - REGISTRAR OFFICE, AGRA WAS RECEIVED ONLY ON 27.03.2015 AND THE SAME HAS NOT BEEN CONFRONTED TO THE ITA NO . 6114 /DEL /2016 SAHAJIV RATTAN 6 ASSESSEE AND NO OPPORTUNITY WAS GIVEN TO REBUT THE FINDINGS OF THE ASSESSING OFFICER BEFORE MAKING THE ADDITION. IT WAS ARGUED THAT THE ASSESSMENT MADE BEHIND THE BACK OF THE ASSESSEE WITHOUT AFFORDING ANY OPPORTUNITY IS LIABLE TO BE QUASHED. 9. ON THE OTHER HAND, THE LD. DR STRONGLY RELIED ON T HE REPORT OF THE SUB - REGISTRAR, AGRA IN DETERMINING THE FMV. 10. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 11. IT IS A MATTER OF RECORD THAT NO SHOW - CAUSE HAS BEEN ISSUED TO THE ASSESSEE BEFORE MAKING THE ADDI TION AND THE REPORT OF THE SUB - REGISTRAR WAS RECEIVED ON 27.03.2015. HENCE, WE HEREBY HOLD THAT THE ASSESSEE HAS BEEN DISADVANTAGED AND DID NOT GET EVEN THE BASIC RIGHT OF REBUTTAL ON THE PROPOSED ADDITION. EVEN, THE LD. CIT (A) PASSED THE ORDER WITHOUT GI VING ANY PROPER OPPORTUNITY WHILE DECIDING THE MATTER. HENCE, IN FITNESS OF THINGS, WE REMAND THE MATTER BACK TO THE FILE OF THE LD. CIT (A) TO CONFRONT THE ASSESSEE WITH THE MATERIAL COLLECTED BY THE REVENUE FROM THE THIRD PARTY AGENCIES AND AFFORD AN OPP ORTUNITY TO THE ASSESSEE BEFORE COMING TO A FINAL CONCLUSION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. WE ALSO DIRECT THE ASSESSEE TO COMPLY WITH THE NOTICES ISSUED BY THE REVENUE AUTHORITIES FROM TIME TO TIME WITHOUT SEEKING UNNECESSARY ADJOURNMENTS. IN THE RESULT, THE APPEAL OF THE ASSESSEE ON THIS GROUND IS TREATED AS REMANDED BACK. GROUND NOS. 1, 2 DISPOSED OFF, GROUND NO. 3 TO BE DETERMINED BY THE LD. CIT (A) DENOVO AFTER DETERMI NI NG THE CAPITAL GAINS IN TH E REMAND PROCEEDINGS. GROUND NOS. 4 & 5 ARE CONSEQUENTIAL, HENCE, NOT REQUIRED TO THE ADJUDICATED AT THIS JUNCTURE . ITA NO . 6114 /DEL /2016 SAHAJIV RATTAN 7 12. GROUND N O. 3 - DURING THE YEAR THE ASSESSEE HAS PURCHASED VEHICLE NAMELY MAHINDRA XUV 500 WHICH WAS CLAIMED TO HAVE BEEN USED SOLELY FOR THE PURPOSE OF THE BUSINESS. THE ASSESSI NG OFFICER HELD THAT IN THE ABSENCE OF MAINTENANCE OF ANY LOCK BOOK, THE CLAIM OF EXCLUSIVE USE FOR BUSINESS PURPOSE CANNOT BE ACCEPTED AND HENCE 50% OF THE USES OF THE CAR ALONG WITH DEPRECIATION HAS BEEN DISALLOWED. DURING THE ARGUMENTS, THE LD. AR VEHEM ENTLY ARGUED THAT SUCH ACTION ON THE PART OF THE REVENUE CANNOT BE ACCEPTED BUT HOWEVER IN ORDER TO MINIMIZE THE LITIGATION CONCEDED FOR 20% DISALLOWANCE ON THE RUNNING EXPENSES OF THE CAR WHICH WE FAIRLY ACCEPT WITH THE CONSENT OF ALL THE PARTIES. 1 3 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . (ORDER PRO N OUNC ED IN THE OPEN COURT ON 18 /0 9 /2019). SD/ - SD/ - ( AMIT SHUKLA ) ( DR. B. R. R. KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 /0 9 /2019 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR