VICTOR ZACHRIAS PINTO, MUMBAI V. ITO WD 4(4), THANE

ITA 6433/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78888 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 22-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBODH L RATNAPARKHI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report
• Section: 80C; 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI . . , , . . !' # , $ BEFORE SHRII P BANSAL, JUDICIAL MEMBER & SHRI N K B ILLAIYA, AM ./ ITA NO.6433/MUM/2012 % &% / ASSESSMENT YEAR 2009-10 VICTOR ZACHRIAS PINTO, A-3/7 JOHN CHS, BEACH COMPLEX, DSP NAGAR, NAIGAON (W), VASAI 401207 PAN: AEYPP2477G VS. THE ITO WD 4(4), THANE ( '( /APPELLANT) ( )*'( /RESPONDENT) APPELLANTS BY : SHRI SUBODH L RATNAPARKHI RESPONDENT BY : SHRI RAVI PRAKASH + ,-# / DATE OF HEARING :13.05.2014. ./& + ,-# / DATE OF PRONOUNCEMENT : 16.05.2014 0 0 0 0 / O R D E R PER N K BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-2, THANE DATED 09.07.12 PERTAINING TO A.Y. 2009-10. THE GRI EVANCE OF THE ASSESSEE READS AS UNDER: 1A. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION O F THE LD. A.O. IN DETERMINING LONG TERM CAPITAL GAINS ON SALE OF PROP ERTY AT RS.12,53,161/- BY RELYING UPON THE PROVISIONS OF SE C.50C OF THE I.T.ACT 1961. ITA NO.6433/MUM/2012 2 1B. THE LD. CIT(A) ERRED IN NOT APPRECIATING THE CL AIM OF THE APPELLANT THAT IN THE COURSE OF ASSESSMENT PROCEEDI NGS, HE HAD CLAIMED BEFORE THE LD. A.O. THAT THE VALUE OF PROPE RTY ADOPTED BY THE STAMP VALUATION AUTHORITY FAR EXCEEDING THE FAIR MA RKET VALUE OF THE PROPERTY AND THEREFORE THE SAME WAS REQUIRED TO BE VALUED AS PROVIDED BY SECTION 50C(2) OF THE I.T.ACT, 1961. 1C. THE LD. CIT(A) ERRED IN NOT APPRECIATING THE RE ASONS PUT FORTH BY THE APPELLANT FOR THE FAIR MARKET VALUE OF THE P ROPERTY TO BE LOWER THAN THE VALUE AS PER STAMP VALUATION AUTHORITY, PA RTICULARLY ON ACCOUNT F THE SAID PROPERTY BEING POSSESSION OF TEN ANTS. 1D THE LD. CIT(A) ERRED IN HOLDING THAT THE AR OF T HE APPELLANT HAD AGREED TO THE CORRECT VALUATION OF THE PROPERTY AS ON THE DATE OF SALE TO BE RS.50,77,108/- WHICH IS NOT FACTUALLY CORRECT . 2. THE LD. CIT(A) ERRED IN DISMISSING THE CLAIM OF THE APPELLANT THAT THE COST OF ACQUISITION TO BE ADOPTED FOR WORK ING OUT THE LONG TERM CAPITAL GAINS SHOULD BE THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 AS PROVIDED IN SECTION 55(2)(B)(I) OF THE I.T.ACT, 1961 AND NOT THE ACTUAL COST OF THE SAID PROPERTY ACQUIR ED PRIOR TO 01.04.1981. 3. THE LD. CIT(A) ERRED IN DISMISSING THE CLAIM OF THE APPELLANT FOR DEDUCTION U/S. 80C AMOUNTING TO RS.45,000 PAID AS T UITION FEES FOR THE EDUCATION OF HIS DAUGHTER. 2. THE ASSESSEE IS A SALARIED EMPLOYEE. THE RETURN FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 30.07.2009 DECLARING TOT AL INCOME AT RS.1,46,080/-. THE RETURN WAS SELECTED FOR SCRUTINY UNDER CASS. STATU TORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. THE AO NOTICED THAT THE ASSESSEE HAD SOLD IMMOVABLE PROPERTY OF RS.50,77,108/-. THE SALE TRANSACTION W AS REGISTERED BEFORE THE JT. SUB REGISTRAR, ANDHERI-2 ON 12.05.2008. THE AO FURTHER NOTICED THAT THE ASSESSEE WAS JOINT OWNER OF THE SAID PROPERTY ALONG WITH THREE O THERS. THE TOTAL SALE CONSIDERATION WAS SHOWN AT RS.14 LACS. THE SHARE R ECEIVED BY EACH CO-OWNER WAS RS.3,50,000/- AS PER THE INFORMATION RECEIVED FROM THE JT. SUB REGISTRAR ANDHERI-2, THE STAMP DUTY PAID ON THE SAID PROPERTY WAS AT A S ALE VALUE OF RS.50,77,108. THE AO INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT FOR TAKING THE STAMP DUTY VALUE OF THE PROPERTY AS THE FULL VALUE OF THE CONSIDERAT ION RECEIVED AS A RESULT OF SUCH TRANSFER. OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE ASSESSEE. THE ASSESSEE RESPONDED TO THE NOTICE OF THE AO AND FILED A VALUA TION OPINION OF A GOVERNMENT APPROVED VALUER CLAIMING THAT THE VALUE OF THE TRAN SFERRED PROPERTY IS MUCH LESS ITA NO.6433/MUM/2012 3 THAN THE STAMP DUTY VALUE ADOPTED BY THE SUB-REGIST RAR. THE SUBMISSIONS/CLAIM OF THE ASSESSEE WAS REJECTED BY THE AO, WHO WENT ON TO COMPUTE THE LONG TERM CAPITAL GAIN BY ADOPTING THE STAMP DUTY OF THE SALE CONSIDE RATION AND COMPUTED THE SHARE OF THE ASSESSEE AT RS.12,53,161/-. THE ASSESSEE CA RRIED THE MATTER BEFORE THE CIT(A). THE ASSESSEE REITERATED ITS CLAIM THAT THE FAIR MARKET VALUE OF THE PROPERTY WAS MUCH LESS THAN THE VALUE ADOPTED BY THE STAMP D UTY VALUATION AUTHORITY. IT WAS STRONGLY CONTENDED BEFORE THE CIT(A) THAT THE A O OUGHT TO HAVE REFERRED THE CASE FOR INDEPENDENT VALUATION BY THE VALUATION OFF ICER OF THE DEPARTMENT. IT WAS FURTHER CLAIMED THAT THE AO HAS NOT CONSIDERED THE VALUE OF THE SAID PROPERTY AS ON 01.04.1981 AS THE SAID PROPERTY WAS PURCHASED BY TH E ORIGINAL OWNER ON 08.11.1963. THE SUBMISSIONS OF THE ASSESSEE DID NO T FIND FAVOUR FROM THE CIT(A) THE CIT(A) WAS CONVINCED THAT THE AO HAS RIGHTLY AP PLIED THE PROVISIONS OF SECTION 50C OF THE ACT. AGGRIEVED BY THIS THE ASSESSEE IS BEFORE US. 3. THE COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE COUNSEL TH AT ONCE THE ASSESSEE HAS OBJECTED THE STAMP DUTY VALUE BY BRINGING COGENT MATERIAL EV IDENCE ON RECORD IN THE FORM OF VALUATION REPORT OF A GOVERNMENT APPROVED VALUER, T HE AO OUGHT TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICER, FAILING WHICH THE FINDINGS OF THE AO ARE ERRONEOUS AND THE CIT(A) ERRED IN UPHOLDING THE SAI D FINDINGS OF THE AO. THE DR STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORIT IES. 4. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS FILED A VALUATION REP ORT IN SUPPORT OF HIS CLAIM THAT THE VALUE ADOPTED BY THE STAMP DUTY VALUATION AUTHORITY IS ON THE HIGHER SIDE. A PERUSAL OF SECTION 50C CLAUSE 2 CLEARLY SHOW THAT T HE ASSESSEE CAN OBJECT TO THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AND IF THIS IS DONE, THE AO MAY REFER THE VALUATION TO THE VALUATION OFFICER. IN THE INS TANT CASE, WE FIND THAT THE AO HAS NOT FOLLOWED THIS PROCEDURE. WHEN THIS ISSUE WAS R AISED BEFORE THE CIT(A), THE CIT(A) ALSO DID NOT DIRECT THE AO TO REFER THE MATT ER TO THE VALUATION OFFICER. 5. IN OUR UNDERSTANDING OF LAW, WHENEVER OBJECTION IS TAKEN OR CLAIM IS MADE BEFORE THE AO THAT THE VALUE ADOPTED BY THE STAMP V ALUATION AUTHORITY UNDER SUB ITA NO.6433/MUM/2012 4 SECTION (1) OF SECTION 50C EXCEEDS FAIR MARKET VALU E OF THE PROPERTY ON THE DATE OF TRANSFER, THE AO HAS TO APPLY HIS MIND ON THE VALID ITY OF THE OBJECTION OF THE ASSESSEE. IF THE ASSESSEE HAS FILED A REPORT OF TH E APPROVED VALUER, THE AO MAY EITHER ACCEPT THE VALUATION OF THE PROPERTY ON THE BASIS OF THIS REPORT OR REFER THE QUESTION OF VALUATION TO THE DEPARTMENT VALUATION O FFICER IN ACCORDANCE WITH SECTION 55A OF THE ACT. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A). THE MATER IS RESTORED TO THE FILES OF THE AO. THE AO IS DIRECTE D TO REFER THE MATTER TO THE DVO AND THEN DECIDE THE ISSUE AFRESH AS PER THE PROVISI ONS OF LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDI NGLY, GROUND NOS.1A, 1B, 1C AND 1D ARE ALLOWED FOR STATISTICAL PURPOSES. 6. GROUND 2 RELATES TO THE DISMISSAL OF THE CLAIM O F THE ASSESSEE RELATING TO THE COST OF ACQUISITION TO BE FAIR MARKET VALUE AS ON 0 1.04.1981. AS PER THE PROVISIONS OF SECTION 55(2)(B)(I), WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BEFORE THE 1ST DAY OF APRIL,1981, THE COST OF ACQUISITION MEANS THE COST OF ACQUISITION OF THE A SSET TO THE ASSESSEE OR THE FAIR MARKET VALUE OF THE ASSET ON 01.04.1981, AT THE OPT ION OF THE ASSESSEE SHALL BE THE COST OF ACQUISITION. THIS MEANS THAT AN OPTION IS GIVEN TO THE ASSESSEE TO SUBSTITUTE FAIR MARKET VALUE AS ON 01.04.1981 IF THE PROPERTY BECAME THE PROPERTY OF THE ASSESSEE BEFORE 01.04.1981. IN THE CASE BEFORE US THE ASSESSEE HAS CLAIMED THAT THE PROPERTY WAS ACQUIRED IN 1963 THEREFORE, THE CO ST OF ACQUISITION SHOULD BE THE FAIR MARKET VALUE AS ON 01.04.1981. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE AO TO VERIFY THE CLAIM OF THE ASSESSEE AS PER T HE PROVISIONS OF LAW. IF THE AO IS SATISFIED THAT THE PROPERTY IS PRIOR TO 01.04.1981 THEN THE AO IS DIRECTED TO ADOPT THE FAIR MARKET VALUE AS ON 01.04.1981 AS THE COST OF ACQUISITION FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAINS. GROUND NO.2 IS SET ASIDE AND ACCORDING ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND NO.3 RELATES TO THE DENIAL OF THE CLAIM O F DEDUCTION U/S. 80C OF THE ACT AMOUNTING TO RS.45,000 PAID AS TUITION FEES. W E FIND THAT AT PARA 3 OF THE ASSESSMENT ORDER THE AO HAS REFERRED TO THE CLAIM O F DEDUCTION U/S. 80C AT RS.83,519/- RELATING TO THE PAYMENT OF HOUSING LOAN . HOWEVER, IN THE ASSESSMENT ITA NO.6433/MUM/2012 5 ORDER WHILE COMPUTING THE ASSESSED INCOME, NO DEDUC TION U/S. 80C IN RESPECT OF TUITION FEES HAS BEEN ALLOWED BY THE AO. THE AO IS THEREFORE DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 80C OF THE ACT IN RELATION TO THE PAYMENT OF HOUSING LOAN AMOUNTING TO RS.83,519/- ALONG WITH TH E CLAIM OF PAYMENT OF TUITION FEES OF RS.45,000. THE ASSESSEE IS DIRECTED TO SUB MIT NECESSARY DETAILS IN RELATION TO THIS CLAIM. GROUND NO.3 IS ALLOWED FOR STATISTI CAL PURPOSE. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF MAY, 2014. SD/- SD/- (I P BANSAL) (N K BILLAIYA) /JUDICIAL MEMBER # # # # / ACCOUNTANT MEMBER MUMBAI; 1 DATED : 16 TH MAY, 2014. SA 0 0 0 0 + ++ + ), ), ), ), 2 &, 2 &, 2 &, 2 &, / COPY OF THE ORDER FORWARDED TO : 1. '( /THE APPELLANTS. 2. )*'( / THE RESPONDENT. 3. 3 ( ) / THE CIT(A), MUMBAI. 4. 3 / CIT 5. 45 ), , , / DR, F BENCH, ITAT, MUMBAI 0 / BY ORDER, * , ), //TRUE COPY// / 6 7 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI