SMT. SOBHNA CHOPRA, Ujjain V. THE ITO-2(1), Ujjain

ITA 703/IND/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5807 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 19-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S N AGRAWAL; PANKAJ MOGRA CAS
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 143(3); 50C; 54F; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER SMT. SOBHNA CHOPDA, 115, DUSSHEHRA MAIDAN, UJJAIN. PAN: ABAPC5015C VS. ITO, 2(1), UJJAIN APPELLANT RESPONDENT APPELLANT BY SHRI S.N.AGRAWAL AND SHRI PANKAJ MOGRA, CAS RESPONDENT BY SHRI MOHD. JAVED, SR. DR DATE OF HEARING 22.08.2016 DATE OF PRONOUNCEMENT 22.08.2016 O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. APPEAL NO. 702/IND/2015 AND 703/IND/2015 ARE FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDER OF LD. COMM ISSIONER OF INCOME-TAX (APPEALS), UJJAIN, [HEREINAFTER REFERRED TO AS THE CIT(A)] BOTH DATED 03-07.2015 AS AGAINST APPEALS DE CIDED IN ASSESSMENT ORDERS DATED 27.03.2014/24.11.2010 OF IT O WARD 2(1), UJJAIN [HEREINAFTER REFERRED TO AS THE AO]. I.T.A. NO. 702 & 703/IND/2015 ASSESSMENT YEAR: 2008-09 SMT. SOBHNA CHOPRA, UJJAIN VS. ITO, 2(10, UJJAIN V S. ITO, 2(1), UJJAIN I.T.A.NOS. 702 & 703/IND/2015 A.Y. 2008-09 P AGE 2 OF 10 2. FIRST, WE WILL DECIDE THE APPEAL IN I.T.A.NO. 703/IND/2015 A.Y. 2008-09. I.T.A.NO. 703/IND/2015 : 3. GROUND NO.1 RELATES TO ADDITION OF RS. 6,21,000/- B Y APPLYING THE PROVISIONS OF SEC 50-C OF THE INCOME-T AX ACT, 1961, AND GROUND NO. 2 RELATES TO MAINTAINING THE DISALLOWANCE OF RS. 50,000/- MADE BY THE ASSESSING O FFICER ON ACCOUNT OF DALALI PAID BY THE ASSESSEE IN RESPECT O F THE PROPERTY SOLD BY HIM. 4. SUCCINCTLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE HAS SOLD PROPERTY FOR A CONSIDERATION OF RS. 29,00, 000/-, WHICH WAS VALUED BY STAMP DUTY OFFICER AT RS. 35,21,0 00/-. THEREFORE, THE AO ASKED TO EXPLAIN AS TO WHY SALE CONSIDERATION SHOULD NOT BE CONSIDERED AT RS. 35,21 ,000/- AS AGAINST SALE CONSIDERATION OF RS. 29,00,000/-, SHOWN BY THE ASSESSEE AS PER THE PROVISIONS OF SEC 50C OF THE AC T, IN RESPONSE TO WHICH THE ASSESSEE FILED REVISED COMPUTA TION SHOWING SALE VALUE AT RS. 35,21,000/- FOR WORKING OUT CAPITAL GAINS. HOWEVER, THE ASSESSEE HAS CLAIMED COST OF IM PROVEMENT SMT. SOBHNA CHOPRA, UJJAIN VS. ITO, 2(10, UJJAIN V S. ITO, 2(1), UJJAIN I.T.A.NOS. 702 & 703/IND/2015 A.Y. 2008-09 P AGE 3 OF 10 IN THE YEAR 2003-04 AT RS. 5,80,000/-, COST OF DALA LI AT RS. 1 LAKH AND AGAIN AMOUNT OF RS. 11,50,000/- WAS INVESTE D IN CONSTRUCTION. HOWEVER, THE AO DID NOT ALLOW THE COST OF IMPROVEMENT OF RS. 5 LAKHS AND ALSO CLAIM OF DALALI OF RS. 50,000/- ON THE GROUND THAT THE BROKERAGE IS PAID B Y SELLING PARTY AS WELL AS PURCHASING PARTY. THEREFORE, ONE RE CEIPTS OF DALALI OF RS. 50,000/- EACH PRODUCED BY THE ASSESSE E ONE WAS CONSIDERED AS PAID BY THE PURCHASER. ACCORDINGLY, THE AO ENHANCED THE LONG TERM CAPITAL GAIN AT RS. 6,71,000 /-. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A). 6. THE LD. CIT(A) NOTED THAT THE ASSESSEE WHILE FILING THE RETURN OF INCOME CALCULATED LONG TERM CAPITAL GAINS TAKING THE SALE VALUE OF THE PROPERTY AT RS. 29 LAKHS. THE AO HAS RECEIVED AIR INFORMATION ACCORDING TO WHICH THE ASSESSEE HAS SOLD THE PROPERTY AT RS. 35.21 LAKHS. THEREFORE, THE AO HAS CORRECTLY APPLIED THE PROVISIONS OF SEC 50-C OF THE ACT. THE LD. CIT(A) ALSO SUPPORTED BY THE DECISION BY RELYING IN THE CA SE OF K. R. PALANISAMY VS. UNION OF INDIA, (2009) 180 TAXMAN 25 3 (MAD), WHEREIN THE PROVISIONS OF SECTION 50-C WERE HELD TO BE CONSTITUTIONALLY VALID. THE LD. CIT(A) FURTHER NOTE D THAT THE SMT. SOBHNA CHOPRA, UJJAIN VS. ITO, 2(10, UJJAIN V S. ITO, 2(1), UJJAIN I.T.A.NOS. 702 & 703/IND/2015 A.Y. 2008-09 P AGE 4 OF 10 ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN REGARD T O COST OF IMPROVEMENT AT RS. 5,80,000/- AND COST OF DALALI OF RS. 1 LAKH. THEREFORE, SUCH EXPENSES ARE CLAIMED AS AFTER THOUGHT AND THAT IS AFTER FILING REVISED COMPUTATION OF INC OME. ACCORDINGLY, THE ADDITION OF RS. 6,71,000/- WAS CON FIRMED. 7. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS OBJECTED T HE VALUATION AS ADOPTED BY THE SUB REGISTRAR AND ALSO REQUESTED TO REFER THE SAME TO THE DVO, BUT THE SAME WAS NOT R EFERRED AND SIMILAR ARGUMENTS WERE TAKEN AS BEFORE THE CIT( A). THEREFORE, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE REQUESTED THAT THE AO MAY BE DIRECTED TO ADOPT THE SALE CONSIDERATION AS DECLARED BY THE ASSESSEE OR DIRECT THE AO TO REFER THE MATTER TO THE DVO TO DETERMINE THE CORREC T VALUE OF THE HOUSE AS SOLD BY THE ASSESSEE. IT WAS FURTHER SU BMITTED THAT THE BROKERAGE OF RS. 50,000/- WAS PAID TO SHRI MANOJ SURANA AND RS. 50,000/- WAS PAID TO SHRI MAKHAN PAT IDAR. THE PERCENTAGE OF BROKERAGE CALCULATED ON RS. 29 LA KHS COMES AROUND 33%. THE ASSESSEE HAS PROVIDED COMPLETE DETA ILS, BUT SMT. SOBHNA CHOPRA, UJJAIN VS. ITO, 2(10, UJJAIN V S. ITO, 2(1), UJJAIN I.T.A.NOS. 702 & 703/IND/2015 A.Y. 2008-09 P AGE 5 OF 10 THE AO HAS RESTRICTED THE SAME TO RS. 50,000/- ONLY IN PLACE OF RS. 1 LAKH. 8. WE HAVE CONSIDERED THE FACTS AND PERUSED THE MATERI AL ON RECORD. WE FIND THAT THE ASSESSEE HAS DISPUTED T HE VALUATION CONSIDERED BY THE STAMP DUTY AUTHORITIES AND, THEREFORE, REQUESTED THE AO AS WELL AS CIT(A) TO R EFER THE MATTER TO DVO FOR VALUATION. THEREFORE, AS PER THE PROVISIONS OF SEC 50C(2) OF THE ACT, THE AO SHOULD HAVE MADE T HE REFERENCE TO THE VALUATION OFFICER WHEN THE ASSESSEE HAS MADE SPECIFIC REQUEST IN THIS REGARD. IN THE LIGHT OF TH E ABOVE, WE SET- ASIDE THIS MATTER TO THE FILE OF THE AO FOR MAKING REFERENCE TO THE DVO TO ARRIVE AT THE FAIR MARKET VALUE OF THE P ROPERTY. SIMILARLY, THE ISSUE OF BROKERAGE IS ALSO REFERRED TO THE FILE OF AO TO EXAMINE BROKERS BEFORE MAKING ANY DISALLOWANCE . 9. IN THE RESULT, THE APPEAL IN I.T.A.NO. 703/IND/2015 IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A.NO. 702/IND/2015 : 10. FOLLOWING GROUNDS ARE TAKEN :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE SMT. SOBHNA CHOPRA, UJJAIN VS. ITO, 2(10, UJJAIN V S. ITO, 2(1), UJJAIN I.T.A.NOS. 702 & 703/IND/2015 A.Y. 2008-09 P AGE 6 OF 10 WITHDRAWAL OF THE EXEMPTION AS CLAIMED BY THE ASSESSEE U/S 54F OF THE ACT OF RS. 11,50,000/- WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTIO N OF LD. AO BY NOT ALLOWING THE DEDUCTION OF RS. 5,80,000/- AS CLAIMED BY THE ASSESSEE ON ACCOUNT OF COST OF IMPROVEMENT IN RESPECT OF PROPERTY SOLD BY HER WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM. 11. FACTS APROPOS OF THE ABOVE GROUNDS ARE THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 7.2.2009 DECLARING TOTAL INCOME OF RS. 2,46,680/- DECLARING TOTAL INCO ME OF RS. 2,46,680/-, WHICH WAS ASSESSED U/S 143(3) ON 24.11.20 10 AT RS. 9,16,680/- BY MAKING ADDITION OF RS. 6,21,000/- DUE TO APPLICATION OF PROVISIONS OF SECTION 50-C AND RS. 5 0,000/- DISALLOWANCE OUT OF BROKERAGE PAID ON SALE OF PROPER TY. THEREFORE, THE LD. CIT VIDE HIS ORDER DATED 15.03.2 013 U/S 263 SMT. SOBHNA CHOPRA, UJJAIN VS. ITO, 2(10, UJJAIN V S. ITO, 2(1), UJJAIN I.T.A.NOS. 702 & 703/IND/2015 A.Y. 2008-09 P AGE 7 OF 10 OF THE ACT HAS SET-ASIDE THE ISSUE TO THE FILE OF T HE AO REGARDING THE CLAIM OF DEDUCTION U/S 54F WITH THE DI RECTION TO EXAMINE THE ISSUE AND MAKE NECESSARY ENQUIRY AND INVESTIGATION. THEREAFTER, THE AO MADE FRESH ASSESS MENT U/S 143(3) READ WITH SECTION 263 DATED 24.11.2010 BY MAK ING DISALLOWANCE OF EXEMPTION U/S 54F AT RS. 11.50 LAKHS AND MADE DISALLOWANCE ON ACCOUNT OF COST OF IMPROVEMENT AT RS. 5.80 LAKHS. 12. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). TH E LD. CIT(A) VIDE HIS ORDER DATED 3.07.2015 HELD THAT THE CLAIM OF EXEMPTION U/S 54F CANNOT BE ALLOWED AS THE SALE CONSIDERATION HAS NOT BEEN INVESTED IN PURCHASES/CONSTRUCTION OF RESIDENTIAL HOUSE BUT HAS BEEN USED TO MODIFY THE EXISTING HOUSE. THE EXTENSION TO AN EXISTING HOUSE CAN BE CONSIDERED FOR DEDUCTION U/S 54F ONLY IF IT RESULTS IN TO EXISTENCE IN AN INDEPENDENT HABITABLE RESIDENTIAL UNIT. THE ASSESSEE HAS NOT CONSTRUCTED THE INDEPEND ENT HABITABLE UNIT IN ORDER TO CLAIM THE DEDUCTION U/S 54F OF THE ACT. SMT. SOBHNA CHOPRA, UJJAIN VS. ITO, 2(10, UJJAIN V S. ITO, 2(1), UJJAIN I.T.A.NOS. 702 & 703/IND/2015 A.Y. 2008-09 P AGE 8 OF 10 13. AS REGARDS COST OF IMPROVEMENT AMOUNTING TO RS. 5.8 0 LAKHS, THE LD. CIT(A) HELD THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROC EEDINGS HAS NOT FURNISHED THE DETAILS IN THIS RESPECT. THER EFORE, DISALLOWANCE SO MADE WAS CONFIRMED. 14. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS CONSTRUCTED SECOND FLOOR ON 26.04.2007. THE CONSTRUCTION EXPENSES WERE DEBITED IN A CAPITAL ACCOUNT AT RS. 11.50 LAKHS. THE COPY OF CER TIFICATE ISSUED BY A.N. ASSOCIATES ARE FILED AT PAPER BOOK P AGE NOS. 25- 26 OF THE COMPILATION. 15. IT WAS CONTENDED THAT THE CONSTRUCTION OF SECOND FLO OR IS ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT. FOR T HIS PROPOSITION, THE LD. AUTHORIZED REPRESENTATIVE OF T HE ASSESSEE PLACED RELIANCE IN THE CASE OF P. V. NARSIMHAN, 47 TAXMANN 89 (MAD) AND ACIT VS. SHRI GURMEET SINGH, I.T.A.NO. 1018/CHD/2010. AS REGARDS DISALLOWANCE OF COST OF CONSTRUCTION EXPENSES THE LD. AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE SUBMITTED THAT THERE WAS NO REFERENCE FOR DISALLOWANCE OF DEDUCTION U/S 263 OF THE INCOME-TAX ACT, SMT. SOBHNA CHOPRA, UJJAIN VS. ITO, 2(10, UJJAIN V S. ITO, 2(1), UJJAIN I.T.A.NOS. 702 & 703/IND/2015 A.Y. 2008-09 P AGE 9 OF 10 1961. HENCE, THE AO WAS NOT JUSTIFIED IN DISALLOWING THE SAME. FOR THIS PROPOSITION, THE LD. AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE RELIED ON THE DECISION OF CIT VS. D.N. DOS ANI, 280 ITR 275 (GUJ) AND SHOBHA GOVIL VS. ADDL. CIT, 35 TAXMAN N.COM 438 (ALLD). THE ASSESSEE INCURRED COST OF CONSTRUCT ION IN ASSESSMENT YEAR 2004-05 DEDUCTION OF THE SAME WAS CL AIMED AND ORIGINALLY ALLOWED, BUT THE SAME WAS DENIED U/S 263 PROCEEDINGS BY STATING THAT REQUISITE DETAILS WERE NOT PROVIDED. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE ASSESSEE HAS FAILED TO SUBMIT THE DETAILS OF COST O F CONSTRUCTION OF SECOND FLOOR OF THE HOUSE EXCEPT CE RTIFICATE FROM A.N. ASSOCIATES AND ALSO FAILED TO SUBMIT THE REQUISITE DETAILS FOR COST OF IMPROVEMENT FOR THE ASSESSMENT YEAR 2004- 05. SINCE THESE ASPECTS HAVE NOT PROPERLY EXAMINED BY THE AO, THEREFORE, THE SAME ARE REQUIRED TO BE RE-EXAMINED IN PROPER MANNER AFTER AFFORDING THE REASONABLE OPPORTUNITY O F BEING HERD. THE ASSESSEE IS DIRECTED TO COOPERATE WITH THE PROCEEDINGS AND PRODUCE THE CONCERNED CONTRACTOR FO R EXAMINATION OF THE AO. IT MAY ALSO BE PERTINENT TO NOTE THAT SMT. SOBHNA CHOPRA, UJJAIN VS. ITO, 2(10, UJJAIN V S. ITO, 2(1), UJJAIN I.T.A.NOS. 702 & 703/IND/2015 A.Y. 2008-09 P AGE 10 OF 10 VALUATION ADOPTED U/S 50C HAS BEEN SET-ASIDE FOR MA KING REFERENCE TO THE DVO. THEREFORE, WITH A VIEW TO FAIR PLAY AND CONSIDER THE FAIR MARKET VALUE OF THE PROPERTY AND CONSEQUENTLY DEDUCTION ON ACCOUNT OF EXEMPTION AND COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE ARE ALSO REQUIR ED TO BE REEXAMINED AND RE-ADJUDICATED AT THE LEVEL OF THE A O. THEREFORE, THE ENTIRE ASSESSMENT IS SET-ASIDE TO TH E FILE OF AO. 17. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. 18. CONSEQUENTLY, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 22ND AUGUST, 2016. (D.T.GARASIA) JUDICIAL MEMBER (O.P.MEENA) ACCOUNTANT MEMBER DATED :22 ND AUGUST, 2016. CPU*