MADAN GOPAL GUPTA HUF, Kota V. ITO, Jaipur

ITA 645/JPR/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2162 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 09-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY MALIK CIT DHK
• Keywords: Cost of acquisition; Fair market value
• Section: 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SIN GH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 645/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08. MADAN GOP AL GUPTA HUF, A-13, SEN COLONY, POWER HOUSE ROAD NEAR RAILWAY STATION, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD-3(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAHHM 6962 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI AJAY MALIK (ADDL CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23.01.2018. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 29/01/2018. VKNS'K@ ORDER PER: VIJAY PAL RAO, JM THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-I, JAIPUR DATED 14/03/2016 PERTAINING TO THE ASSESSMEN T YEAR 2007-08. THE ASSESSEE HAS RAISED THE SOLITARY GROUND OF THIS APPEAL WHICH READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A)-I, JAIPUR HAS ERRED IN COMPUTING LTCG BY TAK ING FMV OF LAND AS ON 01/04/1981 AT RS. 20,000/- PER BIGHA BUT AS PER CERTIFICATE OF DISTRICT ABHILEKHAGAR, COLLECTORATE, DAUSA, THE DLC RATE FOR F.Y. 1991- 92 IS STATED IS RS. 1,00,000/- PER BIGHA. 2. THE APPELLANT RESERVES THE RIGHT TO ADD OR ALTER GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF APPELLATE PROCEEDING S. 2 ITA NO. 645/JP/2016. MADAN GOPAL GUPTA HUF, JAIPUR. 2. THE ASSESSEE IS AN HUF AND SOLD THE AGRICULTURAL LAND FOR THE CONSIDERATION OF RS. 14,50,000/- ON 3 RD JULY 2006. THE AGRICULTURAL LAND SOLD BY THE ASSE SSEE WAS ANCESTRAL PROPERTY AND RECEIVED INHERITANCE FROM GR ANDPARENTS PRIOR TO 1981. FOR COMPUTATION OF CAPITAL GAIN THE ASSESSEE ADOPTED TH E FAIR MARKET VALUE OF THE LAND AS ON 1.4.1991 AT RS. 1 LACS BASED ON THE CERTIFICA TE OF D.L.C. FROM OFFICER IN CHARGE, COLLECTORATE, DAUSA. THE ASSESSEE AFTER APPLYING T HE INDEXATION TO FINANCIAL YEAR 2006-07 HAS ARRIVED THE INDEXED COST OF LAND MEASUR ING 3 BIGHA AT RS. 7,82,412/-. THE AO DID NOT ACCEPT THE FAIR MARKET VALUE AND IND EXED COST APPLIED BY THE ASSESSEE AND OBTAINED THE D.L.C. RATES FOR VILLAGE KANAKPURA, JAIPUR AS ON 19/12/1991 AT RS. 39,000/- PER BIGHA AS AGAINST THE RATE ADOPTED BY THE ASSESSEE AT RS. 1 LACS PER BIGHA. ACCORDINGLY, THE AO APPLIED REVERSE INDEXATION METHOD OF D.L.C. RATE OF RS. 39,000/- PER BIGHA AND WORKED OU T THE FAIR MARKET VALUE AS ON 01/04/1981 AT RS. 20,000/- IN ROUND FIGURE. THE AO ACCORDINGLY COMPUTED THE CAPITAL GAIN AND MADE AN ADDITION OF RS. 17,40,000/ -. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A), BUT COULD N OT SUCCEED. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT THE AO HAS APPLIED D.L.C. RATE AS ON 19/12/1991 FOR THE VILLAGE KANAKP URA, JAIPUR WHICH IS UNDISPUTEDLY NOT A COMPARABLE LAND AS THE AGRICULTURAL LAND IN Q UESTION IS SITUATED IN DISTRICT DAUSA. THEREFORE, WE FIND THAT THE D.L.C. RATE APP LIED BY THE AO AS ON 19/12/1991 CANNOT BE ADOPTED AS A FAIR MARKET VALUE OF THE AGR ICULTURAL LAND IN QUESTION SITUATED IN DISTRICT DAUSA. AT THE SAME TIME, THE D.L.C. RA TE APPLIED BY THE ASSESSEE DOES NOT PERTAIN TO LAND IN QUESTION OR VICINITY OF THE LAND IN QUESTION. THESE RATES AS POINTED OUT BY THE AUTHORITIES BELOW RELATES TO COM MERCIAL AND RESIDENTIAL RATES FOR DAUSA. HOWEVER, THE CERTIFICATE MENTIONS THE RATE FOR AGRICULTURAL LAND ALSO. EVEN 3 ITA NO. 645/JP/2016. MADAN GOPAL GUPTA HUF, JAIPUR. OTHERWISE IN CASE WHEN THE LAND IS ACQUIRED PRIOR T O 1.4.1981 AND COST OF ACQUISITION IS NOT KNOWN OR NIL THEN THE FAIR MARKET VALUE AS O N 1.4.1981 HAS TO BE ADOPTED FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN IN TERMS OF SECTION 49 OF THE INCOME TAX ACT READ WITH EXPLANATION OF SECTION 48 OF THE INCO ME TAX ACT. IN THE CASE IN HAND, BOTH ASSESSEE AS WELL AS AO HAVE ACCEPTED THE FACT THAT THE FAIR MARKET VALUE AS ON 1.4.1981 CANNOT BE DETERMINED, AS NO RECORD IS AVAI LABLE IN RESPECT OF THE LAND IN QUESTION OR A COMPARABLE INSTANCE IN THE AREA. ACC ORDINGLY, THE ASSESSEE APPLIED THE D.L.C. RATES AS PER THE CERTIFICATE ISSUED BY T HE OFFICE OF COLLECTORATE, DAUSA, WHEREAS THE AO APPLIED THE DLC RATE OF VILLAGE KANA KPURA, JAIPUR FOR THE YEAR 1991. SINCE THE RATES ADOPTED BY THE ASSESSEE AS WELL AS THE AO DO NOT DIRECTLY PERTAIN TO THE LAND IN QUESTION THEREFORE, IN THE INTEREST OF JUSTICE AND TO BRING THE CONTROVERSY AN TO END, WE FIND IT JUST AND PROPER TO APPLY THE AVERAGE OF BOTH THE RATES I.E. RS. 39,000/- APPLIED BY THE AO AND RS. 1 LACS PER BIGHA APPLIED BY THE ASSESSEE WHICH COMES TO RS. 70,000/-. ACCORDINGLY, THE FAIR MARKET VALUE AS ON IN THE YEAR 1991 IS ADOPTED AT RS. 70,000/- PER BIGHA AND THE INDEXED C OST HAS TO BE CALCULATED FROM 1991 TO TILL DATE OF SALE INSTEAD OF BACKWARD INDEX ATION FOR DETERMINED. 4. IT IS PERTINENT TO NOTE THAT THE D.L.C. RATES AR E NOT REPRESENTING THE INDEXED COST OVER THE YEARS AND THEREFORE WHEN THE RATES AR E REVISED BY THE GOVERNMENT ON THE BASIS OF THE PREVAILING FAIR MARKET VALUE OF TH E LAND THEN THERE IS NO POINT IN APPLYING THE REVERSE INDEXATION. HENCE, WE DIRECT THE AO TO COMPUTE THE INDEXED COST BY APPLYING FORWARD INDEXATION FROM 1991 TO TI LL THE DATE OF SALE ON THE FAIR MARKET VALUE OF RS. 70,000/- AND THEN COMPUTE THE C APITAL GAIN. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. 4 ITA NO. 645/JP/2016. MADAN GOPAL GUPTA HUF, JAIPUR. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2018. SD/- SD/- ( FOE FLAG ;KNO ( JH FOT; IKY JKO] ) (VIKRAM SINGH YADAV) ( VIJAY PAL RAO) YS[KK LNL; /ACCOUNTANT MEMBER U;KF;D LNL; / JUDICIAL MEMBER JAIPUR DATED:- 29/01/2018. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI MADAN GOPAL GUPTA HUF, JAIPU R. 2. THE RESPONDENT THE ITO, WARD- 3(2), JAIPUR. 3. THE CIT. 4. THE CIT (4), 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 645/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR