Leela Tandon, New Delhi V. DCIT, New Delhi

ITA 657/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4208 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 06-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 04-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SRUJANI MOHANTY
• Assessee Lawyers: H K CHAUDHARY
• Keywords: Cost of acquisition; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL I.T.A. NO. 657(DEL)/2011 ASSESSMENT YEAR: 2007-08 MS. LEEELA TANDON, DEPUTY COMMISSIONER OF 1, JAGRITI ENCLAVE, VS. INCOME-TAX, CIRCLE 35(1), VIKAS, MARG, NEW DELHI. N EW DELHI. PAN-AABPT5391A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.K. CHAUDHARY, C.A . RESPONDENT BY : SMT. SRU JANI MOHANTY, SR. DR ORDER PER K.G. BANSAL : AM THE ONLY GROUND TAKEN BY THE ASSESSEE IN THIS A PPEAL IS THAT THE LD. CIT(APPEALS) ERRED IN ADOPTING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 AT RS. 535/- PER SQ. FT. AGAINST T HE DECLARED VALUE OF RS. 1132/- PER SQ. FT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HER RETURN ON 19.7.2007 DECLARING TOTAL INCOME OF RS. 9,97,340 /-. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS INTER-ALIA FOUND TH AT THE ASSESSEE SHOWED LONG-TERM CAPITAL GAINS OF RS. 1,62,818/- ON SA LE OF IMMOVABLE PROPERTY ITA NO. 657(DEL)/2011 2 SITUATED AT 28, BARAKHAMBA ROAD, NEW DELHI, AFTE R CLAIMING THE DEDUCTION OF RS. 50.00 LAKH U/S 54EC OF THE ACT. IT W AS SUBMITTED THAT AS PER THE COPY OF AGREEMENT OF SALE BETWEEN M/S GOPAL DA S ESTATES & HOUSING PVT. LTD. WITH A BUYER, THE AGREED PRICE WAS RS. 700/- PER SQ. FT., WHICH WAS ENHANCED TO RS. 900/- PER SQ. FT. THIS AMOU NT DID NOT INCLUDE L&DO CHARGES, FIRE FIGHTING CHARGES, SPECIAL FINISHING CHARGES AND ELECTRIC SUB- STATION CHARGES FIXED AT RS. 57/-, RS. 40/-, RS. 3 5/- AND RS. 100/- PER SQ. FT. THEREFORE, THE FAIR MARKET VALUE OF THE PROPERTY WAS RS. 1,132/- PER SQ. FT. THE AO DID NOT ACCEPT THIS CASE. IT IS M ENTIONED THAT M/S GOPAL DAS ESTATES & HOUSING PVT. LTD. HAD BOOKED COMMERCIAL FLAT IN THE SAME PREMISES IN AUGUST, 1981 @ RS. 700/- PER SQ. FT. THE POSSESSION OF THE PROPERTY WAS GIVEN IN PURSUANCE OF SUCH AGREEMENT IN THE YEAR 1985. THUS, THE RATE OF RS. 700/- PER SQ. FT. WAS INCL USIVE OF PROFIT TO BE RECEIVED BY THIS COMPANY. ON THIS BASIS, THE FAIR MARKET VA LUE WAS TAKEN AT RS. 535.50 PER SQ. FT. THE CAPITAL GAINS WAS WORKED OUT ACCORDINGLY. 3. THE MATTER WAS AGITATED IN APPEAL. THE LD. CI T(A) UPHELD THE FINDING THAT THE COMMERCIAL SPACE WAS AGREED TO BE SOLD @ RS. 700/- PER SQ. FT., WHICH INCLUDED THE PROFIT. ACCORDINGLY, T HE APPEAL OF THE ASSESSEE ITA NO. 657(DEL)/2011 3 WAS DISMISSED ON THIS GROUND. FOR THE SAKE OF REA DY REFERENCE, HIS FINDINGS ARE REPRODUCED BELOW:- 6. I HAVE CAREFULLY GONE THROUGH THE SUBMISSI ONS MADE BY THE APPELLANT AS WELL AS THE FINDINGS OF THE A SSESSING OFFICER. THE ONLY DISPUTE RELATES TO THE METHOD O F CALCULATION OF MARKET VALUE OF SPACE SOLD. THE ASSESSING OFF ICER WHILE ARRIVING AT THE FAIR MARKET VALUE OF THE ASSET HAS GONE BY THE VALUE AS ON 1.4.1981 BY TAKING THE SAID RATE AS T HE COST OF ACQUISITION. 6.1 IN DOING SO, THE ASSESSING OFFICER HAS REL IED UPON THE FLAT BUYERS AGREEMENT. THE CLAUSE XI OF THE AGRE EMENT MENTIONS OF THE ORIGINAL BOOKING HAVING BEEN MADE AT RS. 700/- PER SQ. FT. 6.2 THE ASSESSING OFFICER BASED ON THE DETAILED FINDING NARRATED IN THE ASSESSMENT ORDER HAS ARRIVED A T THE FIGURE OF RS. 535.50 PER SQ. FT. I AM IN AGREEMENT WITH T HE DETAILED REASONING GIVEN BY THE ASSESSING OFFICER IN PARA 2.4.1. AND PARA 2.5 OF THE ASSESSMENT ORDER. THE APPELLANT ARGUMENTS DO NOT CARRY ANY MERIT IN THE LIGHT OF THE DETAI LED FINDINGS ARRIVED AT BY THE ASSESSING OFFICER. I, THEREFOR E, CONFIRM THE MANNER OF CALCULATION OF THE INCOME FROM LONG-TERM CAPITAL GAINS MADE BY THE ASSESSING OFFICER. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE R EFERRED TO THE INFORMATION SUPPLIED BY GOPAL DAS ESTATES & H OUSING PVT. LTD. TO THE AO VIDE ITS LETTER DATED 10.11.2009, WHICH HAS BEARING ON THE DETERMINATION OF THE ISSUE. IT WAS INTER-ALIA SU BMITTED THAT THE SPACE WAS ALLOTTED IN THE PROPOSED BUILDING IN 1981 @ RS. 90 0/- PER SQ. FT. TO THIS AMOUNT, MAINTENANCE CHARGES, REPLACEMENT FUND, SECURITY FUND AND OTHER ITA NO. 657(DEL)/2011 4 CHARGES WERE ADDED AT ABOUT RS. 100/- PER SQ. FT. SPACE WAS ALSO GIVEN IN THIS VERY BUILDING IN THE YEAR 1986 TO S HRI VISHWA NATH BHARGAVA @ RS. 1,100/- PER SQ. FT. THE INFORMATION SUPPLIE D BY THIS COMPANY IS REPRODUCED IN FULL AS UNDER:- IN REPLY TO YOUR ABOVE SUMMONS WE BEG TO SUBM IT AS UNDER:- 1. A COPY OF THE AGREEMENT WITH M/S GOPALDAS & SO NS, A PARTNERSHIP FIRM FOR CONSTRUCTION OF A MULTI-STORE YED COMMERCIAL BUILDING ON PROPERTY NO. 28, BARAKHAMB A ROAD, NEW DELHI IS ENCLOSED AS ANNEXURE-I. 2. THERE WAS NO OCCASION FOR US TO VALUE THE INTE REST OF VARIOUS CO-OWNERS IN THE PROPERTY IN 1981 OR 19 86. WE HAD ONLY AGREED TO ALLOT TO THEM THE SPECIFIED PORT ION OF THE CONSTRUCTED SPACE IN THE PROPOSED BUILDING TO BE CONSTRUCTED ON PROPERTY NO. 28, BARAKHAMBA ROAD, NEW DELHI. 3. THE PARTNERSHIP FIRM M/S GOPALDAS & SONS WAS DISSOLVED ON 18.9.1986 AND SEPARATE AGREEMENTS WERE EXECUTED BY US WITH THE CO-OWNERS FOR THE CONSTRU CTION OF A MULTI-STOREYED BUILDING AND THE CONSTRUCTED SP ACE TO BE ALLOTTED TO THEM AGAINST THEIR PROPRIETARY RIGHTS IN THE LAND. A COPY OF THE AGREEMENT DATED 20.9.1986, EXECUTED WITH SHRI NIRANJAN LAL VARMA IS ENCLOSED AS ANNEXURE-II. 4. IN 1981 WE HAD MADE ALLOTMENT OF THE CONSTRUC TED SPACE TO VARIOUS PERSONS IN THE PROPOSED BUILDIN G @ RS. 900/- PER SQ. FT. SUPER AREA PLUS MAINTENANCE CHARGES , REPLACEMENT FUND, SECURITY FUND AND OTHER CHARGES WHICH WERE ABOUT RS. 100/- PER SQ. FT. SUPER AREA. IT WOULD MEAN THAT APPROXIMATE VALUE OF THE CONSTRUCTED SPACE, WHICH WE HAD AG REED TO SELL, WAS ABOUT RS. 1,000/- PER SQ. FT. SUPER AREA. A PHOTOCOPY OF THE APPLICATION FOR ALLOTMENT OF SPACE ALONG WITH PHOTOCOPY OF ITA NO. 657(DEL)/2011 5 THE FLAT BUYERS AGREEMENT IN FAVOUR OF ONE CU STOMER IS ENCLOSED AS ANNEXURE-III. IN 1986 ALSO, WE HAD ENTERED INTO A FLAT BUYERS AGREEMENT WITH ONE SHRI VISHWA NAT H BHARGAVA @ RS. 1,100/- PER SQ. FT. SUPER AREA A ND A COPY OF THE FLAT BUYERS AGREEMENT IS ENCLOSED AS ANNEXU RE-IV. WE HOPE THAT YOU WILL PLACE FIND THE DETAILS A ND DOCUMENTS IN ORDER. 4.1 THE LD. COUNSEL ALSO REFERRED TO THE SUBMISSI ONS MADE BEFORE THE LD. CIT(APPEALS) THAT THE BASIC VALUE WAS RS. 900/- PER SQ. FT., WHICH WAS ENHANCED BY AN AMOUNT OF RS. 232/- PER SQ. FT. FOR L&DO CHARGES, FIRE FIGHTING CHARGES, SPECIAL FINISHING AND ELECTRIC S UB-STATION CHARGES, THEREFORE, THE FAIR MARKET VALUE AS ON 01.04.19 81 SHOULD HAVE BEEN TAKEN AT RS. 1,132/- PER SQ. FT. ON THE OTHER HAND, T HE AO AND THE LD. CIT(APPEALS) WORKED OUT THE COST OF CONSTRUCTION OF THE AFORESAID PROPERTY AND WRONGLY TOOK IT AS THE FAIR MARKET VALUE AS ON 01.04.1981, WHICH WAS WORKED OUT AT RS. 535/- PER SQ. FT. 4.2 IN REPLY, THE LD. DR REFERRED TO VARIOUS FIN DINGS OF THE AO AND THE LD. CIT(APPEALS) AND HEAVILY RELIED ON THEM FO R OPPOSING THE APPEAL OF THE ASSESSEE. IN THE ALTERNATIVE, IT WAS SUBMI TTED THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO SO THAT HE MAY RE FER THE MATTER TO THE VALUATION CELL FOR FINDING OUT THE FAIR MARKET V ALUE AS ON 01.04.1981. ITA NO. 657(DEL)/2011 6 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. WE FIND THAT SINCE RELEVANT FACTS ARE THERE ON THE RECORD, IT IS NOT NECESSARY TO RESTORE THE MATTER TO THE FILE OF THE AO FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981. THE INDEPENDENT EVIDENCE FROM GOPAL DAS ESTATES & HOUSING PVT. LT D. WAS THERE ON THE RECORD OF THE AO. ACCORDING TO THIS EVIDENCE, SP ACE WAS ALLOTTED TO VARIOUS PERSONS IN THE YEAR 1981 @ RS. 900/- PE R SQ. FT. THIS VALUE WAS LOADED WITH MAINTENANCE CHARGES, REPLACEMENT FUN D CHARGES, SECURITY FUND CHARGES AND OTHER CHARGES OF ABOUT RS. 100/- PER SQ. FT. IT WILL BE SEEN THAT THE MAINTENANCE CHARGES, REPLACEMENT FUND CHARGES AND SECURITY CHARGES WERE IN RESPECT OF FUTURE MAINTENANCE AND UP-KEEP OF THE PROPERTY. SUCH CHARGES DO NOT ENHANCE THE FAIR MARKET VALUE A S ON 01.04.1981. THE EVIDENCE ALSO SPEAKS OF OTHER CHARGES, WHICH H AVE NOT BEEN MENTIONED THEREIN AND, THEREFORE, IT APPEARS THAT THESE ARE MINOR IN NATURE. IN THESE CIRCUMSTANCES, THE COMPUTATION MADE BY THE LOWER AUTHORITIES AT RS. 535.50 PER SQ. FT. DOES NOT BEAR SCRUTINY. FURT HER, THIS EVIDENCE ALSO SHOWS THAT LOADING OF THE BASIC CHARGE OF RS.9 00/- PER SQ. FT. BY A FURTHER AMOUNT OF RS. 232/- PER SQ. FT., AS SUBMI TTED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS), DOES NOT STAND SUBSTANTIA TED. THUS, IT WOULD BE ITA NO. 657(DEL)/2011 7 APPROPRIATE TO DETERMINE THE FAIR MARKET VALUE AT RS. 925/- (RUPEES NINE HUNDRED TWENTY FIVE ) PER SQ. FT. IT IS ORDERED ACCORDINGLY. THE AO IS DIRECTED TO REVISE THE COMPUTATION OF CAPITAL G AINS ACCORDINGLY. 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21 APRIL, 2011. SD/- SD/- (R.P. TOLANI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21ST APRIL, 2011. SP SATIA COPY OF THE ORDER FORWARDED TO: MS. LEELA TANDON, NEW DELHI. DCIT, CIRCLE 35(1), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.