SATISH YOGESH ACHARYA , MUMBAI V. INCOME TAX OFFICE-3(3), MUMBAI , MUMBAI

ITA 6187/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9748 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 30-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Rectification of order; Cost of acquisition; Fair market value; Valuation report
• Section: 50C; 48; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. 6187 /MUM/2019 ASSESSMENT Y EAR: 2011 - 12 SATISH YOGESH ACHARYA, SAI LAXMI BUNGLOW, SHANKAR SHETH ROA D, NEAR CORPORATION BANK, DOMBIVALI (E), MUMBAI - 421201 PAN: AAYPA2580R VS. ITO 3(3), RANI MANSION, MURBAD ROAD, KALYAN (WEST) - 421301 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY SINGH (A R) REVENUE BY : SHRI VIJAY KUMAR MENON (DR) DATE OF HEARING: 28 /06 /20 21 DATE OF PRONOUNCEMENT: 20 / 07 /202 1 O R D E R PER SAKTIJIT DEY , JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 08.07.2019 OF THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) 2, NASHIK FOR THE ASSESSMENT YEAR 2011 - 12 . 2. THE DISPUTE IN THE PRESENT APPEAL IS PRIMARILY RELATED TO DENIAL OF INDEXATION BENEFIT ON THE COST OF ACQUISITION WHILE COMPUTING LONG TERM CAPITAL GAIN. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE FILED ITS RETURN OF INCOME ON 31.07.2011 DECLARING TOTAL INCOME OF RS. 7,72,800/ - . IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER (AO) NOTICED THAT AS PER INFORMATION AVAILABLE ON R ECORD , IN THE YEAR UNDER CONSIDERATION, T HE ASSESSEE HAD SOLD A LAND FOR A DECLARED SALE CONSIDERATION OF RS. 66 LACS VIDE SALE - CUM - DEVELOPMENT AGREEMENT DATED 2 ITA NO. 6187 / MUM/2019 ASSESSMENT YEAR: 20 11 - 1 2 02.08.2010. HOWEVER, IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSE E HAD NOT OFFERED CAPITAL GAIN ARISING FROM SUCH TRANSACTION. HE FURTHER NOTICED THAT THE MARK ET VALUE OF THE PROPERLY SOLD IS RS. 2,35,32,550/ - . T HEREFORE , CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY LONG TERM CAPITAL GAIN SHOULD NOT BE COMPUTED BY APPL YING THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT , 1961 . IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE AO, ASSESSEE FURNISHED A DETAILED REPLY CONTESTING THE DETERMINATION OF MARKET VALUE OF THE PROPERTY AT RS. 2,35,32,550/ - AND APPLICABILITY O F SECTION 50C OF THE ACT. IT WAS SUBMITTED BY THE ASSESSEE THAT THE DECLARED SALE CONSIDERATION OF RS. 66 LACS IS THE ACTUAL VALUE OF THE PROPERTY, AS , THE ASSESSEE HAD TO DISPOSE OF THE PROPERTY AS DISTRESS SALE . IN SUPPORT OF SUCH SUBMISSION , THE ASSESSE E ALSO FUR NISHED A VALUATION REPORT OF A GOVERNMENT APPROVED VALUER DETERMINING THE VALUE OF THE PROPERTY AT RS.. 65,95,000/ - . TAKING NOTE OF ASSESSEES OBJECTIONS IN RE SPECT OF THE MARKET VALUE ADOPTED BY THE AO, A REFERENCE WAS MADE TO THE DEPARTMENTAL V ALUATION OFFICER (DVO) TO DETERMINE THE FAIR MARKET V ALUE (FMV) OF THE PROPERTY AS ON 01.04.1981. AS OBSERVED BY THE AO , SINCE , THERE WAS DELAY IN RECEIVING THE VALUATION REPORT FROM THE DVO AND THE ASSESSMENT HAD TO BE COMPLETED BEFORE 31.03.2014, H E PROC EEDED TO COMPUTE LONG TERM CAPITAL GAI N BY ADOPTING THE MARKET VALUE AT RS. 2,35,32,250/ - AS DEEMED SALE CONSIDERATION UNDER SECTION 50C OF THE ACT. AFTER ALLOWING INDEXATION BENEFIT ON COST OF ACQUISITION, T HE AO ADDED BACK NET LONG TERM CAPITAL GAIN OF R S. 22,88,310/ - . AGAINST THE ASSESSMENT ORDER SO PASSED , ASSESSEE PREFERRED APPEAL BEFORE LEARNED COMMISSIONER (A PPEALS). IN COURSE OF PROCEEDING BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE RAISED VARIOUS OBJECTIONS AGAINST ADOPTION OF THE MARKET VAL UE OF THE PROPERTY AT RS. 2,35,32,550/ - . BASED ON SUBMI SSIONS MADE BY THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) CALLED FOR A REPORT FROM THE AO AND ALSO REQUESTED HIM TO FURNISH THE REPORT OF THE DVO , IF AVAILABLE. IN PURSUANCE TO THE DIRECTION S OF LEAR NED COMMISSIONER (APPEALS) , THE AO FURNISH ED REMAND REPORT ENCLOSING THE VALUATION R EPORT OF THE DVO. ON PERUSAL OF DVO S REPORT, LEARNED COMMISSIONER (APPEALS) FOUND THAT HE HAS DETERMINED THE FMV OF THE PROPERTY 3 ITA NO. 6187 / MUM/2019 ASSESSMENT YEAR: 20 11 - 1 2 AT RS. 30,48,000/ - AS ON 01.04.1981 AND RS . 9 0 ,78,000/ - AS ON 09.08.2010 , THE DATE OF SALE OF TH E PROPERTY. THUS, BASED ON THE VALUATION REPORT OF THE DVO, LEARNED COMMISSIONER (APPEALS) ADOPTED THE AMOUNT OF RS. 90,78,000/ - AS THE DEEMED SALE CONSIDERATION AND AFTER REDUCING THE AMOUNT OF RS. 30, 48,0 00/ - BEING THE FMV OF THE PROPERTY AS ON 01.04.1981 , AS DETERMINED BY THE DVO , COMPUTED THE NET LONG TERM CAPITAL GAIN AT RS. 60,30,000/ - . 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , WHILE COMPU TING LONG TERM CAPITAL GAIN, LEARNED COMMISSIONER (APPEALS) HAS NOT ALLOWED INDEXATION BENEFIT ON THE FMV OF THE PROPERTY DETERMINED BY THE DVO AS ON 01.04.1981. HE SUBMITTED , THOUGH , THE ASSES SEE HAD FILED AN APPLICATION UNDER SECTION 154 OF THE ACT SEEKING RECTIFICATION OF MISTAKE IN THE COMPUTAT ION OF LONG TERM CAPITAL GAIN, HOWEVER, LEARNED COMMISSIONER (APPEALS) HAS REJECTED IT BY SAYING THAT THE FMV DETERMINED BY THE DVO AS ON 01.04.1981 IS INCLUSIVE OF THE COST INFLATION INDEX. DRAW ING OUR ATTENTION TO THE DVOS R EPORT , A COPY OF WHICH IS AT PAGE 98 OF THE PAPER BOOK, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , THE FMV OF THE PROPERTY DETERMINED BY THE DVO AT RS. 30,48,000/ - , AS ON 01.04.1981 , DOES NOT INCLUDE INDEXATION BENEFIT. THUS, HE SUBMITTED , THE ASSESSEE SHOULD BE ALLOWED INDEXATION BENEFIT. 5. LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE OBSERVATION S OF LEARNED COMMISSIONER (APPEALS). 6 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECOR D. AS FAR AS THE FACTUAL ASPECT RELATING TO DISPUTED ISSUE IS CONCERN ED, IT IS A F ACT ON RECORD THAT THE DVO HAS DETERMINED THE FMV OF THE PROPERTY , BOTH , ON THE DATE OF SALE AND AS ON 01.04.1981. ON A PERUSAL OF DVOS REPORT PLACED IN THE PAPER BOOK, IT IS VERY MUCH CLEAR THAT HE HAS DETERMINED THE FMV OF THE PROPERTY AS O N 01.04.1981 AT RS. 30,48,000/ - AND AS ON DATE OF SALE AT RS. 90,78,000 / - . IN FACT, BOTH THE ASSESSEE AND REVENUE HAVE ACCEPTED THESE FIGURES . THE SPECIFIC GRIEVANCE OF THE ASSESSEE IS , WHILE COMPU TING LONG TERM CAPITAL GAIN LEARNED COMMISSIONER (APPEALS) HAS NOT PROVIDED INDEXATION BENEFIT ON THE COST OF ACQUISITION OF RS. 30,48,000/ - BEING THE FMV OF THE PROPERTY DETERMINED BY THE D VO AS ON 01.04.1981. A CAREFUL READING OF SECTION 4 ITA NO. 6187 / MUM/2019 ASSESSMENT YEAR: 20 11 - 1 2 48 OF THE ACT WOULD MAKE IT CLEAR THAT WHILE COMPUTING LONG TERM CAPITAL GA IN THE INDEX ED COST OF ACQUISITION AND INDEX ED COST OF ANY IMPROVEMENT HAVE TO BE REDUCED FROM FULL VALUE OF THE CONS IDERATION RECEIVED AS A RESULT OF TRANSFER OF A CAPITAL ASSET. THUS, AS PER THE AFORESAID STATUTORY PROVISION , THE INDEX ED COST OF ACQUISIT ION HAS TO BE REDUCED FROM THE DEEMED SALE CONSIDERATION. THEREFORE, GOING BY THE MAN DATE OF THE AFORESAID PROVISION THE ASSESSEE IS ELIGIBLE FOR INDEXATION BENEFIT ON THE FMV DETERMI NED BY DVO AS ON 01.04.1981. LEARNED COMMISSIONER (APPEALS) HAS NEGATED A SSESSEES CLAIM OF INDEXATION BENEFIT BY OBSERVING THAT THE FMV DETERMINED BY DVO AS ON 01.04.1981 IS INCLUSIVE OF INDEXATION BENEFIT. HOWEVER, ON PERUSAL OF DVOS REPORT, WE DO NOT FIND ANY OBSERVATION TO THAT EFFECT. IN FACT, THE DVO HAS VERY CLEARLY STA TED THAT FMV OF THE PROPERTY AS ON 01.04.1981 IS ESTIMATED AT RS. 30,48,000/ - . THERE IS NO MENTION OF ANY INDEXATION BENEFIT IN THE VALUE DETERMINED. THUS, WE ARE UNABLE TO ACCEPT THE REASONING OF LEARNED COMMISSIONER (APPEALS). THEREFORE, WE DIRECT THE AO TO COMPUTE LONG TERM CAPITAL GAIN BY ADOPTING THE AMOUNT OF RS. 90,78,000/ - AS DEEMED SALE CONSIDERATION AND AFTER ALLOWING INDEXATION BENEFIT ON THE COST OF ACQUISITION OF RS. 30,48,000/ - AS ON 01.04.1981 , DETERMINE THE NET LONG TERM CAPITAL GAIN. GROUND N O. 1 AND 2 ARE ALLOWED AS INDICATED ABOVE. ADDITIONAL GROUND S , BEING NOT PRESSED , ARE DISMISSED. 7 . IN THE RESULT, APPEAL IS ALLOWED TO THE EXTENT INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY , 2021 . SD/ - SD/ - ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( SAKTIJIT DEY ) JUDICIAL MEMBER MUMBAI ; DATED: 20 / 07 /202 1 ALINDRA, PS 5 ITA NO. 6187 / MUM/2019 ASSESSMENT YEAR: 20 11 - 1 2 / COPY OF THE ORDER FOR WARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI