ROSY WLIES DIMELLO, THANE V. ACIT CIR 2, THANE, THANE

ITA 7076/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70646 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 19-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHAN VYAS
• Assessee Lawyers: HITESH M SHAH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Question of law; Cost of acquisition; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI . . , ! , ' # BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 7076 / / 2011 A.Y. 2006-07 ITA NO. : 7076/MUM/2011 (ASSESSMENT YEAR: 2006-07) MRS. ROSY ELIES DIMELLO, CROSS GARDEN ROAD, BAKUL STREET, BHAYANDER (W), DIST. THANE, .: PAN: AKCPD 4726 A VS ACIT, CIRCLE 2, QURESHI CHAMBERS, THANE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HITESH M. SHAH RESPONDENT BY : SHRI KISHAN VYAS ! /DATE OF HEARING : 01-08-2013 '# ! / DATE OF PRONOUNCEMENT : 07-08-2013 ' O R D E R ! , : PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) II, MUMBAI, DATED 29.07.2011, WHEREIN THE FOLLOWING GROUNDS HAVE BEEN TAKEN: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II [THE CIT(A)] ERRED IN CONFIRMING AN ADDITION OF RS. 29,54,102/- BY INVOKING THE PROVISIONS OF SE CTION 50C FOR THE AGREEMENT OF DEVELOPMENT ENTERED INTO ON 09/12/2005 AND ADOPTING RS. 1,68,85,645/- AS THE MARKET VALUE AS PER THE VA LUATION REPORT OF THE INCOME TAX DEPARTMENT (DVO) AGAINST THE AGREEME NT VALUE DECLARED BY THE APPELLANT AT RS. 90,34,200/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II [THE CIT(A)] ERRED IN CONFIRMING THE ACTION OF THE A.O. IN HAVING REFERRED VALUATION OF THE PROPER TY FOR VALUING THE COST OF ACQUISITION AT THE FAIR MARKET VALUE AS ON 1 ST APRIL, 1981 ALTHOUGH THE APPELLANT HAD ALREADY FURNISHED APPROVED VALUERS R EPORT IN RESPECT OF MRS. ROSY ELIES DI MELLO ITA NO. 7076/MUM/2011 2 SUCH VALUATION DONE AT RS. 16,91,025/- AS AGAINST T HE CERTIFIED FMV ADOPTED BY THE APPELLANT AT RS. 6,25,590/- THE APPELLANT THEREFORE BEING AGGRIEVED PRAYS THAT THE AFORESAID VALUATION OF FAIR MARKET VALUE AS ON 01.04.1981 AS OBTAINED BY THE APPELLANT BE ADOPTED FOR THE PURPOSE OF CALCULATION OF CAPITAL GAINS ON SALE OF THE PROPERTY. 2. GROUND NO. 1 IS NOT PRESSED, HENCE, THE SAME IS REJECTED. 3. GROUND NO. 2 PERTAINS TO THE VALUATION OF THE PROPERTY. 4. THE FACTS ARE THAT THE ASSESSEE WITH HER COOWNERS SOLD A PROPERTY AND FOR THE ARRIVAL AT THE FAIR MARKET VALUE SUB STITUTED THE COST OF ACQUISITION AS ON 01.04.1981 WITH ITS FAIR MARKET VAL UE ON THAT DATE AT RS. 16,91,025/-. ACCORDING TO THE AO, THE VALUE AD OPTED BY THE ASSESSEE WAS MUCH TOO HIGH AND REFERRED THE MATTER TO DVO TO ASCERTAIN FAIR MARKET VALUE AS ON 01.04.1981 AT RS. 5,21,9 13/-, AGAINST THE VALUE DETERMINED BY THE REGISTERED VALUER. 5. THE AR, DURING THE HEARING POINTED OUT THAT THE ISSUE CAME UP BEFORE THE COORDINATE BENCH IN THE CASE OF MR. BONY ELIES DIMELLO, IN ITA NO. 7870/MUM/2010, BEING ONE OF THE COOWNERS OF THE PROPERTY, WHEREIN, IT WAS HELD, 6. WE HAVE CONSIDERED THE ISSUE AND PERUSED THE R IVAL CONTENTIONS. AS SEEN FROM THE LETTER DATED 02.05.2009 ASSESSEE HAD OBJEC TED TO THE ADOPTION OF THE DISTRICT VALUATION OFFICERS REPORT FOR REVISIN G THE ASSESSMENT UNDER SECTION 155 OF THE INCOME TAX ACT BUT AGREED FOR AD OPTING THE REPORT ON SALE CONSIDERATION SUBJECT TO NON LEVY OF INTEREST OR PENALTY. THEREFORE, THE DRS OBJECTION ON ASSESSEE ACCEPTING THE VALUATION AS ON 01.04.1981 IS NOT CORRECT. ASSESSEE HAS RIGHTLY CONTESTED THE SAM E. AS SUBMITTED BY THE LEARNED COUNSEL, AO LACKS JURISDICTION FOR REFERRIN G THE FMV UNDER SECTION 55A WHEREIN THE VALUATION DETERMINED BY THE DVO IS LESS THAN THE FMV DECLARED BY ASSESSEE. THIS ISSUE WAS DISCUSSED ELAB ORATELY BY THE COORDINATE BENCH IN THE CASE OF SMT. SARLA N. SAKRA NEY V. ITO [2011] 130 ITD 167 WHEREIN IT WAS HELD: 12. WE HAVE HEARD THE RIVAL SUBMISSIONS. AS FAR A S GROUND NO. 1 IS CONCERNED, WE ARE OF THE VIEW THAT THE REFERENCE TO THE DVO WAS INVALID. ON THIS ISSUE, LEARNED DR RELIED ON THE OR DER OF LEARNED CIT(A). WHILE LEARNED COUNSEL FOR THE ASSESSEE RELI ED ON THE DECISIONS WHICH WERE CITED BEFORE LEARNED CIT(A) AN D FURTHER DREW OUR ATTENTION TO THE DECISION OF HONBLE BOMBA Y HIGH COURT IN THE CASE OF DAULAL MOHTA (SUPRA), WHEREIN, HONB LE BOMBAY HIGH COURT HAS APPROVED THE DECISION OF HONBLE ITA T MUMBAI, THIRD MEMBER DECISION IN THE CASE OF MS. RUBAB M. K AZERANI (SUPRA) AND THE HONBLE ITAT PUNE DECISION IN THE C ASE OF SMT. KRISHNABAI TINGRE (SUPRA). FURTHER REFERENCE WAS AL SO MADE TO THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF HIABEN MRS. ROSY ELIES DI MELLO ITA NO. 7076/MUM/2011 3 JAYANTILAL SHAH (SUPRA). IT HAS TO BE MENTIONED HER E THAT THERE IS A DECISION OF ITAT MUMBAI BENCH IN THE CASE OF VIJA YKUMAR M. SHAH V. DY. ADDL. CIT [2009] 29 SOT 338; WHEREIN A CONTRARY VIEW WAS TAKEN. IN THE SAID DECISION, MUMBAI BENCH OF THE TRIBUNAL HAD TAKEN A VIEW THAT THE ASSESSING OFFICE R IS EMPOWERED TO MAKE REFERENCE UNDER SUB-CLAUSE (II) O F SECTION 55A(B), EVEN IN CASES WHERE FMV CLAIMED BY THE ASSE SSEE IS HIGHER THAN ACTUAL FAIR MARKET VALUE AND THAT A REF ERENCE CAN BE MADE EVEN WHERE CONDITIONS SPECIFIED IN SUB-CLAUSE (II) RELATING TO 'HAVING REGARD TO ASSET AND OTHER RELEVANT CIRCU MSTANCES' IS MET. IT MAY MENTIONED HERE THAT THE AFORESAID DECIS ION DOES NOT CONSIDER DECISION OF HONBLE BOMBAY HIGH COURT AS W ELL AS DECISION OF HONBLE GUJARAT HIGH COURT AND TO THAT EXTENT, WE ARE OF THE VIEW THAT THE SAID DECISION IS NOT BINDI NG. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DAULAL MOHTA (HUF) (SUPRA) DEALT WITH FOLLOWING SUBSTANTIAL QUESTION OF LAW : 'B. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE HONBLE TRIBUNAL WAS RIGHT IN LAW TO OBSERVE TH AT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING A REF ERENCE UNDER SECTION 55A OF THE ACT TO THE DVO FOR DETERMI NATION OF THE FAIR MARKET VALUE OF THE PROPERTY?' IN PARA NOS. 4 & 5 OF ITS JUDGMENT OF HONBLE HIGH COURT HELD AS FOLLOWS:- '4.THE TRIBUNAL IN ITS ORDER DATED 23RD JULY, 2004 HAS CATEGORICALLY OBSERVED THUS: 'THE FIRST ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE REFERENCE MADE BY THE ASSESSING OFFICER TO THE DVO UNDER SECTION 55A IS BAD IN LAW UNDER THE FACTS AND CIRCU MSTANCES OF THE CASE. THIS ISSUE, IN OUR CONSIDERED OPINION IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY T HE JUDGMENT IN THE CASE OF RUBAB M. KAZERANI REPORTED IN 91 ITD 429 (MUM.)(TM). FURTHER THE ASSESSEE ALSO COVERED B Y THE THIRD MEMBER DECISION OF THE PUNE BENCH OF THE TRIBUNAL, THE CASE OF THE KRISHNABAI TINGRE V. ITO REPORTED IN 101 ITD 31 7 (PUNE)(TM) WHEREIN IT HAS BEEN HELD THAT REFERENCE TO DVO CAN ONLY BE MADE IN CASES WHERE THE VALUE OF CAPITAL ASSET SHOW N BY THE ASSESSEE IS LESS THAN ITS FAIR MARKET VALUE OF LAND AS ON 1ST APRIL, 1981 SHOWN BY THE ASSESSEE ON THE BASIS OF A PPROVED VALUERS REPORT BEING MORE THAN ITS FAIR MARKET VAL UE, REFERENCE UNDER SECTION 35A WAS NOT VALID. RESPECTFULLY FOLLO WING THE PROPOSITIONS LAID DOWN THESE TWO CASES BY THE COORD INATE BENCHES WE UPHOLD THE CONTENTION OF THE ASSESSEE AN D HOLD THAT THE REFERENCE MADE BY THE ASSESSING OFFICER TO THE DVO UNDER SECTION 55A IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE IS BAD IN LAW. THUS, ON THE SOLE GROUNDS OF APPEAL, OF THE ASSESSEE HAS TO BE ALLOWED. BEFORE PASSING, WE HAVE TO MENTION THAT THE ASSESSEE HAS SUBMITTED THE ARGUMENTS. AS O N THE BASIS OF THE LEGAL ASPECTS ITSELF WE HAVE DECIDED THE ISS UE IN FAVOUR OF THE ASSESSEE, WE REFRAIN FROM UNDERTAKING THIS ACAD EMIC EXERCISE OF DISPOSING THIS CASE ON MERITS.' 5. IN VIEW THEREFORE IS NO MERIT IN THE APPEAL. APP EAL STANDS DISMISSED.' 13. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF H IABEN JAYANTILAL SHAH (SUPRA) HAS HELD ON THIS ISSUE AS FOLLOWS : 'UNDER CLAUSE (A) OF SECTION 55A THE ASSESSING OFFI CER IS ENTITLED TO MAKE THE REFERENCE TO THE VALUATION OFFICER IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE I S IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF MRS. ROSY ELIES DI MELLO ITA NO. 7076/MUM/2011 4 THE ASSESSING OFFICER IS OF THE OPINION THAT THE VA LUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. IN ANY OTHER CA SE, AS PROVIDED UNDER CLAUSE (B) OF SECTION 55A, THE ASSESSING OFFI CER HAS TO RECORD AN OPINION THAT (I) THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE AS SESSEE BY MORE THAN SUCH PERCENTAGE OR BY MORE THAN SUCH AN A MOUNT AS MAY BE PRESCRIBED; OR (II) HAVING REGARD TO THE NAT URE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECES SARY TO MAKE SUCH A REFERENCE. AS CAN BE SEEN FROM THE COMMUNICA TION DATED NIL FROM DVO TO THE PETITIONER INSOFAR AS THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1ST APRIL, 1981 IS CONCERNED, TH E PETITIONER HAD CLAIMED THE SAME AT A SUM OF RS. 6,25,000 AS PE R REGISTERED VALUERS REPORT. THEREFORE, THE ASSESSIN G OFFICER WAS REQUIRED TO FORM AN OPINION THAT THE VALUE SO CLAIM ED IS LESS THAN THE FAIR MARKET VALUE. THE ESTIMATED VALUE PRO POSED BY THE DVO IS SHOWN AT RS. 3,97,000, WHICH IS LESS THAN TH E FAIR MARKET VALUE SHOWN BY THE ASSESSEE AS ON 1ST APRIL, 1981. THEREFORE, CLAUSE (A) OF SECTION 55A CANNOT BE MADE APPLICABLE. CLAUSE (B) OF SECTION 55A CAN BE INVOKED ONLY IN AN Y OTHER CASE, NAMELY WHEN THE VALUE OF THE ASSET CLAIMED BY THE A SSESSEE IS NOT SUPPORTED BY AN ESTIMATE MADE BY A REGISTERED V ALUER. IN THE FACTS OF THE PRESENT CASE, CLAUSE (B) OF SECTIO N 55A ALSO CANNOT BE INVOKED. THEREFORE THERE IS NO QUESTION O F HAVING RECOURSE TO SUB-CLAUSE (II) OF CLAUSE (B) OF SECTIO N 55A OF THE ACT.' 14. IN VIEW OF THE AFORESAID DECISIONS, WE ARE OF T HE VIEW THAT REFERENCE BY THE ASSESSING OFFICER TO THE DVO UNDER SECTION 5 5A FOR VALUATION OF FMV OF THE PROPERTY AS ON 1-4-1981 IS NOT VALID FOR THE REASONS THAT FMV DECLARED BY THE ASSESSEE AS PER GOVERNMENT REGISTERED VALUERS REPORT WAS MORE THAN THE FMV AS ESTIMATED BY THE DVO. SINCE DETERMINATION OF THE FMV AS ON 1-4-1981 WAS B ASED ON THE REPORT OF THE DVO, THE SAME IS HELD TO BE INVALID. CONSEQUENTLY, ESTIMATION OF THE FMV OF THE PROPERTY AS ON 1-4-198 1 AS MADE BY THE ASSESSEE IS DIRECTED TO BE ACCEPTED. GROUND NO. 1 OF THE ASSESSEES IS ALLOWED. 7. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THE G ROUND RAISED BY ASSESSEE AND DIRECT AO TO ADOPT THE FMV AT RS. 6,25,590 AS O N 01.04.1981 OFFERED BY ASSESSEE AND REWORK OUT THE CAPITAL GAIN ACCORDI NGLY ON THE SHARE OF ASSESSEE BY ALLOWING THE NECESSARY INDEXATION. GROU ND 3 IS ALLOWED. 6. THE AR PLEADED THAT SINCE THE ISSUE IS SQUARELY COVER ED ON IDENTICAL/SAME FACTS IN THE CASE OF COOWNER, THE SAME FINDIN GS SHOULD BE GIVEN IN THE INSTANT CASE. 7. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 8. WE HAVE GONE THROUGH THE FACTS AND THE CASE OF THE COOWNER, MR. BONY DIMELLO ( SUPRA ) AND FIND THAT THE ISSUE PERTAINS TO THE SAME PROPERTY AND SAME YEAR. TO KEEP THE CONSISTENCY, RESPECTFULLY FO LLOWING THE ORDER OF THE COORDINATE BENCH, WE SET ASIDE THE ORD ER OF THE CIT(A) MRS. ROSY ELIES DI MELLO ITA NO. 7076/MUM/2011 5 AND DIRECT THE AO TO ADOPT THE VALUATION, AS GIVEN AND R ELIED UPON BY THE ASSESSEE. 9. GROUND NO. 2 IS, THEREFORE, ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH AUGUST, 2013. SD/- SD/- ( . . ) ( ! ) (R.S. SYAL) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 7 TH AUGUST, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) ' '( ( ) - II THANE / THE CIT (A)-II, THANE. 4) ' '( I , THANE / THE CIT1, THANE, 5) *+, - , ' ! - , ./ / THE D.R. D BENCH, MUMBAI. 6) , 0 COPY TO GUARD FILE. '12 / BY ORDER / / TRUE COPY / / [ 3 / 4 5 ' ! - , ./ DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *784 . . * CHAVAN, SR. PS