HOMI R. SURTI, MUMBAI V. ACIT 14(1), MUMBAI

ITA 6491/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75301 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 21-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report; Revised return
• Section: 143(3); 50C; 234B

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI .. , ; BEFORE SHRI P.M. JAGTAP, AM AND SHRI VIVEK VARMA, J M ./ I.T.A. NO.6491 /MUM/2011 ( / ASSESSMENT YEAR :2008-09 MR. HOMI R. SURTI, G-7, IST FLOOR, MUNSHIF BLDG., CAPTAIN COLONY, OPP. CROSS ROADS, HAJI ALO, TARDEO, MUMBAI 400 034. / VS. ASSTT. COMMR. OF INCOME TAX 14(1), EARNESH HOUSE, NARIMAN POINT, MUMBAI 400 021. . / PAN : AEAPS4568M ( # / APPELLANT ) .. ( $%# / RESPONDENT ) APPELLANT BY SHRI PHEROZE A. DHANBHOORA RESPONDENT B Y : SHRI SONIA KUMAR ) * / DATE OF HEARING : 21-1-2014 ) * / DATE OF PRONOUNCEMENT : 24-01-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DTD. 5-8- 2011 PASSED BY THE LD. CIT(A) 29, MUMBAI. 2. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 28-7-2008 DECLARING, INTER ALIA, INCOME FROM LONG T ERM CAPITAL GAIN OF RS. 20,00,051/-. THE SAID CAPITAL GAIN HAD ARISEN FROM THE SALE OF FLAT OF THE ASSESSEE AT APARTMENT 102, IST FLOOR, JER MANTION, 19 TH GAZDER STREET, CHIRA BAZAR, MUMBAI- 400 002 ON 21-5-2007 FOR A TOTAL CON SIDERATION OF RS. 45 ITA 6491/M/11 2 LACS. THE ASSESSEE HAD ACQUIRED THE SAID FLAT ON 21 -5-1957 FOR A CONSIDERATION OF RS. 7900/- AND ADOPTING THE SAID COST AS THE BAS E COST ON 1-4-1981, THE INDEXED COST OF ACQUISITION WAS WORKED OUT BY THE A SSESSEE AT RS. 43,529/-. AFTER DEDUCTING THE SAID INDEXED COST OF ACQUISITIO N OF RS. 43,529/- AND THE VALUE OF NEW FLAT PURCHASED FOR RS. 24,56,420/- FRO M THE SALE CONSIDERATION OF RS. 45 LACS, THE LONG TERM CAPITAL GAIN OF RS. 20,0 0,051/- WAS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE A.O. THAT THE MA RKET VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY OF THE FLAT SOLD BY THE A SSESSEE WAS RS. 87,11,675/- AS AGAINST THE SALE CONSIDERATION OF RS . 45 LACS SHOWN BY THE ASSESSEE. HE, THEREFORE, REQUIRED THE ASSESSEE TO E XPLAIN AS TO WHY THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PU RPOSE OF PAYMENT OF STAMP DUTY SHOULD NOT BE TAKEN AS THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF COMPUTING THE LONG TERM CAPITAL GAIN. I N REPLY, VARIOUS OBJECTIONS WERE RAISED BY THE ASSESSEE TO SHOW THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY EXCEEDED THE FAIR MARKET VALUE OF HIS FLAT AS ON THE DATE OF TRANSFER. KEEPING IN VIEW THESE OBJECTIONS RAISED B Y THE ASSESSEE, REFERENCE WAS MADE BY THE A.O. TO THE DVO FOR MAKING THE VALU ATION OF THE FLAT OF THE ASSESSEE AS ON THE DATE OF TRANSFER. IN THE VALUATI ON REPORT DATED 25-11-2010 PREPARED BY THE DVO, THE VALUE OF THE FLAT OF THE A SSESSEE ON THE DATE OF SALE WAS ESTIMATED AT RS. 57,12,039/-. AT THIS JUNCTURE, IT WAS BROUGHT TO THE NOTICE OF THE A.O. BY THE ASSESSEE THAT THE INDEXED COST OF ACQUISITION OF HIS FLAT WAS WRONGLY WORKED OUT BY TAKING THE PURCHASE VALUE OF FLAT AS ON 21-05- 1957 AS THE BASE PRICE AS ON 1-4-1981 INSTEAD OF AD OPTING THE FAIR MARKET VALUE OF THE FLAT AS ON 1-4-1981 AS THE BASE VALUE FOR COMPUTING THE INDEXED COST OF ACQUISITION. SINCE THIS CLAIM MADE BY THE A SSESSEE FOR THE DEDUCTION ON ACCOUNT OF INCREASED INDEXED COST OF ACQUISITION BASED ON THE FAIR MARKET VALUE OF THE FLAT AS ON 1-4-1981 WAS NOT MADE BY FI LING REVISED RETURN AND THE TIME FOR FILING THE REVISED RETURN HAD ALREADY EXPI RED, THE A.O. DECLINED TO ENTERTAIN THE SAID CLAIM OF THE ASSESSEE AND PROCEE DED TO WORK OUT THE LONG ITA 6491/M/11 3 TERM CAPITAL GAIN AT RS. 32,12,090/- VIDE HIS ASSES SMENT ORDER DATED 22-12- 2010 PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 AS UNDER:- WORKING OF LONG TERM CAPITAL GAIN: SALE ON 21.05.2007 OF FLAT AT JEN MANSION, GUZDAR STREET, CHIRA BAZAR, MUMBAI -02 (AS DISCUSSED IN PARA 4.8 ABOVE) :RS. 57,12,039 /- LESS: INDEXED COST(FLAT PURCHASED ON 21.5.1937) 7900 X 551/100(AS PER STATEMENT) :RS. 43,529 /- . :RS. 56,68,510/- LESS: COST OF PURCHASED OF FLAT ON 11.3.2008 (AS PER STATEMENT OF INCOME) :RS. 24,56,420/- LONG TERM CAPITAL GAIN :RS. 32,12,090 .. 3. AGAINST THE ORDER OF THE A.O. COMPUTING THE LONG TERM CAPITAL GAIN OF RS. 32,12,090/-, THE ASSESSEE PREFERRED AN APPEAL B EFORE THE LD. CIT(A) CHALLENGING THE COMPUTATION OF LONG TERM CAPITAL GA IN MADE BY THE A.O. ON THE GROUND THAT THE SALE CONSIDERATION WAS WRONGLY ADOPTED BY THE A.O. AT RS. 57,12,039/- ON THE BASIS OF DVOS REPORT INSTEAD OF RS. 45 LACS AS PER THE SAID AGREEMENT AND THAT THE BENEFIT OF INDEXED COST OF ACQUISITION BASED ON THE FAIR MARKET VALUE AS ON 1-4-1981 WAS WRONGLY DE NIED. THE LD. CIT(A) DID NOT ACCEPT THE FIRST GROUND OF THE ASSESSEE ON MERI T AND UPHELD THE ACTION OF THE A.O. IN ADOPTING THE MARKET VALUE OF THE PROPER TY AS DETERMINED BY THE DVO ON THE DATE OF TRANSFER AS SALE CONSIDERATION R ELYING ON THE PROVISIONS OF SECTION 50-C OF THE ACT WHICH, ACCORDING TO THE LD. CIT(A), WERE MANDATORY. AS REGARDS THE SECOND ISSUE RAISED BY THE ASSESSEE CLAIMING DEDUCTION ON ACCOUNT OF INDEXED COST OF ACQUISITION BY TAKING VA LUE OF THE PROPERTY AS ON 1- 4-1981 AS BASE VALUE, THE LD. CIT(A) RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT, 2 29 ITR 383 TO HOLD THAT THE CLAIM OF THE ASSESSEE ON THIS ISSUE WAS RIGHTLY NOT ENTERTAINED BY THE A.O. AS THE SAME WAS NOT MADE BY FILING A REVISED RETURN. A GGRIEVED BY THE ORDER OF ITA 6491/M/11 4 THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APP EAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS:- 1. THE CIT(A) ERRED IN CONFIRMING THE A,O.S ACTIO N OF NOT ACCEPTING THE FULL VALUE OF THE SALE CONSIDERATION AT RS.45,0 0,000/- FOR THE SALE OF THE RESIDENTIAL FLAT, AS RECEIVED BY THE APPELLANT IN TERMS OF THE SALE AGREEMENT DATED 21.05.2007 AND IN WRONGLY ADOPTING A HIGHER VALUATION ON THE BASIS OF THE PRELIMINARY VALUATION REPORT DATED 25.11.2010 BY THE DEPARTMENTAL VALUATION OFFICER. 2. THE CIT(A) ERRED IN CONFIRMING THE ACS ACTION I N ADOPTING RS.5712,039/- AS THE FULL VALUE OF CONSIDERATION U/ S 50C BY WRONGLY RELYING ON THE DEPARTMENTAL VALUATION OFFICERS PRE LIMINARY REPORT DATED 25.11.2010. 3. THE CIT(A) ERRED IN CONFIRMING THE ACS ACTION O F DISCARDING THE APPELLANTS CLAIM TO SUBSTITUTE THE COST OF ACQUISI TION OF THE RESIDENTIAL FLAT SOLD BY THE APPELLANT THAT THE FAIR MARKET VAL UE OF THE SAID FLAT AS ON 1.4.1981, AS DETERMINED BY THE GOVERNMENT APPROV ED VALUER. 4. THE CIT(A) ERRED IN CONFIRMING THE A.O.S ACTION OF NOT FOLLOWING THE CIRCULAR DATED 11.04.1955 BEARING SERIAL NO.14( XL-35) AND CIRCULAR DATED 18.05.1965 BEARING SERIAL NO.F.81/27165-IT(B) AND THEREBY UNLAWFULLY DENYING THE APPELLANT HIS RIGHT TO SUBST ITUTE THE COST OF ACQUISITION OF THE CAPITAL SOLD BY HIM THAT THE FAI R MARKET VALUE AS ON 1.4.1981. 5. THE CIT(A) ERRED IN CONFIRMING THE A.O.S ACTION OF NOT FOLLOWING THE DECISION OF THE HONBLE ITAT, MUMBAI BENCH IN T HE CASE OF CHICAGO PNEUMATIC INDIA LTD. V/S. DEPUTY COMMISSIONER OF IN COME TAX [20071 15 SOT 252 (MUM.). 6. THE CIT(A) ERRED IN CONFIRMING THE A.O.S ACTION OF COLLECTING TAX ON AN AMOUNT WHICH WOULD OTHERWISE HAVE NOT BEEN BROUG HT TO TAX, HAD THE RELEVANT BENEFICIAL PROVISIONS AVAILABLE TO THE APPELLANT BEEN APPLIED, AND THEREBY ACTED IN VIOLATION OF ARTICLE 265 OF THE CONSTITUTION OF INDIA. 7. THE APPELLANT DENIES ITS LIABILITY TO BE CHARGED INTEREST UNDER SECTION 2348 OF THE ACT. THE AC. ERRED IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT. 8. THE APPELLANT DENIES ITS LIABILITY TO BE CHARGED INTEREST UNDER SECTION 234C OF THE ACT. THE AC. ERRED IN LEVYING INTEREST UNDER SECTION 234C OF THE ACT. ITA 6491/M/11 5 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED GROUND NO. 1 & 2 R AISED IN THE APPEAL OF THE ASSESSEE. THE SAME ARE ACCORDINGLY DISMISSED AS NO T PRESSED. 5. AS REGARDS GROUND NO. 3 TO 6, THE LD. COUNSEL FO R THE ASSESSEE HAS SUBMITTED THAT THE ISSUE RAISED THEREIN RELATING TO THE ASSESSEES CLAIM FOR DEDUCTION ON ACCOUNT OF INDEXED COST OF ACQUISITION TAKING FAIR MARKET VALUE OF THE PROPERTY AS ON 1-4-1981 AS THE BASE VALUE WA S NOT ENTERTAINED EITHER BY THE A.O. OR BY THE LD. CIT(A) RELYING ON THE DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) AS THE SAME WAS NOT RAISED BY WAY OF FILING A REVISED RETURN. IN THIS REGARD, HE HAS RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PR UTHVI BROKERS AND SHAREHOLDERS P. LTD. (2012) 349 ITR 336 (BOM.) WHER EIN IT WAS HELD THAT THE APPELLATE AUTHORITIES HAVE JURISDICTION TO CONSIDER THE ADDITIONAL CLAIM MADE FOR THE FIRST TIME BEFORE THEM AND THE JURISDICTION OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH CLAIM HAS NOT BEEN NEGATED BY THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. IT WAS HELD BY THE HONBLE SUPREME COURT IN THE SAID JUDGMENT IN FACT HAS MADE IT CLEAR THAT TH E ISSUE IN THAT CASE WAS LIMITED TO THE POWER OF ASSESSING AUTHORITY AND IT DOES NOT IMPINGE ON THE POWERS OF THE TRIBUNAL U/S 254 OF THE ACT. 6. THE LD. D.R., ON THE OTHER HAND, HAS NOT RAISED ANY CONTENTION IN THIS REGARD TO DISPUTE THE PROPOSITION CLEARLY PROPOUNDE D BY THE HONBLE BOMBAY HIGH COURT. HE, HOWEVER, HAS CONTENDED THAT IF THE CLAIM OF THE ASSESSEE ON THIS ISSUE IS TO BE ENTERTAINED BY THE TRIBUNAL, AN OPPORTUNITY MAY BE GIVEN TO THE A.O. TO VERIFY THE SAME AS NEITHER THE A.O. NOR THE LD. CIT(A) HAS EXAMINED THIS ISSUE ON MERIT. SINCE THE LD COUNSEL FOR THE ASSESSEE ALSO HAS NO OBJECTION IN THIS REGARD, WE ENTERTAIN THE CLAIM OF THE ASSESSEE REGARDING DEDUCTION ON ACCOUNT OF INDEXED COST OF ACQUISITION ADOPTING THE FAIR MARKET VALUE AS ON 1-4-1981 AS BASE AND RESTORE THIS MATTE R TO THE FILE OF THE A.O. ITA 6491/M/11 6 WITH A DIRECTION TO DECIDE THE SAME ON MERIT AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. GROUND NO. 3 TO 6 OF T HE ASSESSEES APPEAL ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSE. 7. THE ISSUES RAISED IN GROUND NO. 7 & 8 RELATING T O LEVY OF INTEREST U/S 234B & 234C OF THE ACT ARE CONSEQUENTIAL IN NATURE AND ACCORDINGLY THE A.O. IS DIRECTED TO ALLOW CONSEQUENTIAL RELIEF TO THE AS SESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2014. . ) 0 1 24-01-2014 ) SD/- SD/- (VIVEK VARMA) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 DATED 24-01-2014 [ .../ RK , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. 4 () / THE CIT(A)25, MUMBAI. 4. 4 / CIT 14, MUMBAI 5. $8 , * 8 , / DR, ITAT, MUMBAI H BENCH 6. / GUARD FILE. / BY ORDER, % $ //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI