GILBERT BERTRAM, MUMBAI V. ITO 19(3)(1), MUMBAI

ITA 6298/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56095 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 23-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: GILBERT BERTRAM IN PERSON
• Keywords: Sale consideration of property below Jantri Value; Business expenditure; Valuation report
• Section: 50C; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 6298/MUM/2010 ASSESSMENT YEAR : 2005-06. SHRI GILBERT BERTRAM, THE INCOME-TAX OFFICER, BLOCK NO.-B/18, 1 ST FLOOR, VS. 19(3)(1), MUMBAI. NOOTAN NAGAR, OPP.S TALAO, GURUNANAK ROAD, BANDRA (W), MUMBAI 400050. PAN AIIPP 5129M APPELLANT. RESPONDENT APPELLANT BY : SHRI GILBERT BERTRAM. (IN PERSON). RESPONDENT BY: SHRI A.K. NAYAK. . DATE OF HEARING : 29-11-2011. DATE OF PRONO UNCEMENT : 09-12-2011. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED CIT(APPEALS)-30, MUMBAI DATED 15-06-2010. 2. GROUND NO. 1 TO 5 OF THIS APPEAL INVOLVE A COMMO N ISSUE RELATING TO THE ADDITION OF RS.2,23,350/- MADE BY THE AO AND CONFIR MED BY THE LEARNED CIT(APPEALS) TO LONG TERM CAPITAL GAIN. 3. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS CARRYING ON A RETAIL BUSINESS IN THE NAME AND STYLE OF HIS PROPRIETARY C ONCERN M/S WARREN AGENCY. THE 2 ITA NO.6298/MUM/2010 ASSESSMENT YEAR:2005-06. RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY HIM ON 24-08-2006 DECLARING TOTAL INCOME OF RS.1,81,609/-. IN THE SAI D RETURN, A LONG TERM CAPITAL GAIN ARISING FROM SALE OF FLAT WAS DECLARED BY THE ASSES SEE AND THE SAME WAS CLAIMED TO BE EXEMPT U/S 54F ON ACCOUNT OF INVESTMENT MADE IN NEW RESIDENTIAL HOUSE. FROM A PERUSAL OF THE RELEVANT SALE AGREEMENT, THE AO NOTI CED THAT THE SALE CONSIDERATION SHOWN BY THE ASSESSEE WAS RS.46 LAKHS AS AGAINST TH E MARKET VALUE OF RS.49,17,990/- ADOPTED BY THE STAMP VALUATION AUTHO RITY FOR THE PURPOSE OF STAMP DUTY. 4. WHEN EXPLANATION WAS SOUGHT BY THE AO REGARDING THIS DIFFERENCE, THE ASSESSEE SUBMITTED THAT HE WAS NOT AWARE OF THE FAC T THAT STAMP DUTY VALUATION WAS ACTUALLY MORE THAN THE SALE CONSIDERATION. THE AO A DOPTED THE STAMP DUTY VALUATION AS SALE CONSIDERATION BY INVOKING THE PRO VISIONS OF SECTION 50C AND COMPUTED THE CAPITAL GAIN CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE AFTER ALLOWING EXEMPTION U/S 54F AT RS.2,23,350/-. BEFORE THE LEARNED CIT(APPEALS), THE ASSESSEE RAISED VARIOUS OBJECTIONS DISPUTING THE MA RKET VALUE OF THE FLAT SOLD BY HIM AS TAKEN BY THE STAMP DUTY AUTHORITY AND ADOPTE D BY THE AO U/S 50C. HE ALSO EXPLAINED VARIOUS REASONS FOR LOWER VALUATION OF HI S PROPERTY AS COMPARED TO STAMP DUTY VALUATION. HE ALSO POINTED OUT THAT THE SALE C ONSIDERATION OF RS.46 LAKHS SHOWN IN THE AGREEMENT WAS SUPPORTED BY THE VALUATI ON REPORT OF REGISTERED VALUER. THESE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND AC CEPTABLE BY THE LEARNED CIT(APPEALS). ACCORDING TO HIM, THERE WAS NO REQUES T MADE BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE AO FOR REFERRING THE VALUATION OF HIS PROPERTY TO THE DVO. HE HELD THAT IN THE ABSENCE OF SUCH REQUEST MADE BY THE ASSESSEE, THE ACTION OF THE AO COMPUTING THE LONG T ERM CAPITAL GAIN BY ADOPTING THE STAMP DUTY VALUATION AS SALE CONSIDERATION WAS IN ACCORDANCE WITH THE 3 ITA NO.6298/MUM/2010 ASSESSMENT YEAR:2005-06. PROVISIONS OF SECTION 50C. ACCORDINGLY THE ADDITION MADE BY THE AO TO THE LONG TERM CAPITAL GAIN WAS CONFIRMED BY THE LEARNED CIT( APPEALS). 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE ASSESSEE WH O ARGUED HIS CASE IN PERSON, THERE WAS NO SPECIFIC OPPORTUNITY AFFORDED BY THE A O TO RAISE THE OBJECTION REGARDING STAMP DUTY VALUATION BEFORE ADOPTING THE SAME AS SALE CONSIDERATION AS PER THE PROVISIONS OF SECTION 50C. THE ASSESSEE GOT THIS OPPORTUNITY FIRST TIME BEFORE THE LEARNED CIT(APPEALS) AND AVAILING THE SA ME, HE RAISED HIS OBJECTIONS IN RESPECT OF STAMP DUTY VALUATION. HE ALSO SUPPORTED AND JUSTIFIED THE SALE CONSIDERATION SHOWN BY HIM ON THE BASIS OF VALUATIO N REPORT OF THE APPROVED VALUER. THE LEARNED CIT(APPEALS), HOWEVER, DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE AO TO THE LONG TERM CAPITAL GAIN ON THE GROUND THAT THERE WAS NO REQUEST SPECIFICALL Y MADE BY THE ASSESSEE BEFORE THE AO FOR REFERRING THE VALUATION MATTER TO THE DV O. WE ARE UNABLE TO UPHOLD THE DECISION OF THE LEARNED CIT(APPEALS) ON THIS ISSUE. WHEN THE ASSESSEE HAD NO OPPORTUNITY TO RAISE THE OBJECTIONS SPECIFICALLY RE GARDING STAMP DUTY VALUATION BEFORE THE AO AND SUCH OBJECTIONS WERE RAISED BY TH E ASSESSEE BEFORE HIM DULY SUPPORTED BY THE VALUATION REPORT OF THE APPROVED V ALUER, WE ARE OF THE VIEW THAT THE LEARNED CIT(APPEALS) OUGHT TO HAVE REMITTED THE MATTER TO THE AO FOR REFERRING THE MATTER OF VALUATION OF PROPERTY TO THE DVO AS R EQUIRED BY THE PROVISIONS OF SECTION 50C. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF THE AO FOR DECIDING THE SAME AFRESH AFTER REFERRING THE MATTER OF VALUA TION OF ASSESSEES PROPERTY TO THE DVO. GROUND NOS. 1 TO 5 OF THE ASSESSEES APPEAL AR E ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 4 ITA NO.6298/MUM/2010 ASSESSMENT YEAR:2005-06. 6. AS REGARDS THE ISSUE RAISED IN GROUND NO. 6 RELA TING TO DISALLOWANCE OF RS.4549/- AND RS.4460/- MADE BY THE AO AND CONFIRME D BY THE LEARNED CIT(APPEALS) OUT OF TELEPHONE EXPENSES AND CONVEYAN CE EXPENSES RESPECTIVELY, IT IS OBSERVED THAT THE DISALLOWANCE ON THESE ISSUES W AS MADE TO THE EXTENT OF 20% OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE UNDER TH E RESPECTIVE HEADS FOR PERSONAL USE OF TELEPHONE AND VEHICLE BY THE ASSESSEE. IN TH E ABSENCE OF ANY RECORD MAINTAINED BY THE ASSESSEE TO SHOW THAT TELEPHONE A ND CONVEYANCE EXPENSES CLAIMED AS BUSINESS EXPENSES WERE WHOLLY AND EXCLUS IVELY INCURRED FOR THE PURPOSE OF BUSINESS, WE ARE OF THE VIEW THAT THE DISALLOWAN CE OUT OF TELEPHONE EXPENSES AND CONVEYANCE EXPENSES FOR PERSONAL USE WAS FULLY JUST IFIED. HOWEVER, KEEPING IN VIEW ALL THE FACTS OF THE CASE INCLUDING THE QUANTU M OF EXPENSES CLAIMED BY THE ASSESSEE UNDER THESE TWO HEADS, WE FIND THAT THE DI SALLOWANCE OF 20% MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) IS SLI GHTLY EXCESSIVE AND IT WOULD BE FAIR AND REASONABLE TO RESTRICT THE SAME TO 15%. WE, THEREFORE, MODIFY THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND DIRECT THE AO TO RECOMPUTE THE DISALLOWANCE MADE OUT OF TELEPHONE A ND CONVEYANCE EXPENSES. GROUND NO. 6 OF THE ASSESSEES APPEAL IS THUS PARTL Y ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF DEC.,2011. SD/- SD/- (V. DURGA RAO) (P.M. J AGTAP) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED : 9 TH DEC., 2011. 5 ITA NO.6298/MUM/2010 ASSESSMENT YEAR:2005-06. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, G-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI. WAKODE