Dr.P.M.Mathew, Pathanamthitta V. The ITO, Thiruvalla

ITA 72/COCH/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8661 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 12-02-2016
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Assessee Lawyers: SOUMYA PRAKASH
• Keywords: Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI GEORGE GEORGE, K. JUDICIAL MEMBER AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER ITA NO.72(COCH)/2016 (ASSESSMENT YEAR : 2008-09) DR. P.M. MATHEW, KALLUMKATHARA, KOZHENCHERY EAST, PATHANAMTHITTA, PAN NO.AGPPM9069G APPELLANT VS THE INCOME TAX OFFICER, WARD-2, THIURUVALLA RESPONDENT ASSESSEE BY : MS. SOUMYA PRAKASH, ADVOCATE REVENUE BY : SHRI K.P.GOPAKUMAR, SR. DR DATE OF HEARING : 21-04-2016 DATE OF PRONOUNCEMENT : 22-04-2016 O R D E R PER SHRI GEORGE GEORGE, K. JM; THIS APPEAL, AT THE INSTANCE OF ASSESSEE, IS DIRECT ED AGAINST THE CIT(A)S ORDER DATED 08-12-2015. THE RELEVANT ASSESSMENT YE AR : 2008-09. 2. THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDER ATION IS WHAT IS THE FAIR MARKET VALUE AS ON 01-04-1981, WHETHER IT IS RS.40, 000/- PER CENT, AS CONTENDED BY THE ASSESSEE OR RS.5,000/- PER CENT AS DETERMINED BY THE AO. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS FO LLOWS; 2 ITA NO.72(B)/15 THE ASSESSEE IS A PROPRIETOR OF M/S KALLUNKATHARA MEDICAL CENTRE IN AYROOR. THE RETURN OF INCOME FOR THE RELEVANT ASSE SSMENT YEAR WAS FILED ON 01- 01-2009 DECLARING TOTAL INCOME OF RS.1,85,710/-. DU RING THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAD SOLD 55.2048 CENTS OF LAND AND BUILDING IN SY.NO.145/37 OF PATHANAMTHITTA VILLAGE, VIDE DEED N O.817/08 FOR A TOTAL SUM OF RS.1.00,00,000/-. OUT OF THIS ASSESSEES SHARE I S RS.93,00,000/- AND HIS WIFES ALICE SHARE IS RS.7,00,000/-. THE ASSESSE E RETURNED LONG TERM CAPITAL LOSS TO THE TUNE OF RS.36,60,578/- FROM THE SALE OF PROPERTY. TO ARRIVE AT THE SAID FIGURE, THE ASSESSEE COMPUTED THE COST OF ACQU ISITION OF 55.2048 CENTS OF LAND AS ON 01-04-1981 AT RS.40,000/- PER CENT. TH E AO RELIED ON REPORT FROM THE SUB-REGISTRAR, PATHANAMTHITTA AND ADOPTED THE F IGURE OF RS.5,000/- PER CENT AS ON 01-04-1981 FOR THE PURPOSE OF COMPUTATIO N OF CAPITAL GAINS. 4. ON FIRST APPEAL, THE CIT(A) HAD CONFIRMED THE F INDING OF THE AO AND DISMISSED THE CONTENTIONS RAISED BY THE ASSESSEE. THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS; 5. REGARDING THE SECOND ISSUE OF COST OF ACQUIS ITION OF THE PROPERTY, THE ASSESSEE ADOPTED THE MARKET VALUE OF THE PROPERTY AS ON 01-04-1981 ATRS.40,000/- PER CENT WH ICH I AM UNABLE TO ACCEPT BECAUSE THE LAND VALUE ASCERTAINED BY THE AO FROM THE SUB-REGISTRAR, PATHANAMTHITTA IN RESPE CT OF SALE OF SIMILARLY SITUATED PROPERTY SOLD ON 26-08-1982 3 ITA NO.72(B)/15 (SY.NO.145/10, DOCUMENT NO.1627/1982) WAS FOR A CONSIDERATION OF RS.8,000/-(RS. EIGHT THOUSAND ONLY ) AND THE LD. ARS ARGUMENT IS THAT IN THIRUVALLA, IN MANY AC QUISITION CASES, THE HONBLE HIGH COURT FIXED THE VALUE AT R S.40,000/- PER CENT IN 1981. THE LD. AR FAILED TO APPRECIATE THAT THIRUVALLA IS THE BUSINESS HUB OF PATHANAMTHITTA DI STRICT WHEREAS THE PROPERTY IN QUESTION IS SITUATED IN A V ILLAGE. MOREOVER, THE ASSESSEE HAS NOT PRODUCED ANY EVIDENC E OR ANY DOCUMENT IN SUPPORT OF HIS CONTENTION OF FIXING OF LAND PRICE AT THIRUVALLA OR PATHANAMTHITTA BY THE HONBLE HIGH CO URT. HENCE, THE VALUE ADOPTED BY THE AO AT RS.5,000/- PE R CENT IS HEREBY UPHELD. 5. AGGRIEVED BY THE AFORESAID ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR REITERATED THE SUBMIS SIONS MADE BEFORE THE AUTHORITIES BELOW. THE LD. DR ON THE OTHER HAND, SU PPORTED THE FINDINGS/CONCLUSIONS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE FOR OUR CONSIDERATION IS WH ETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE AOS ACTION IN LIMITING, THE FAIR MARKET VALUE AS ON 01-04- 1981 AT RS.5,000/- PER CENT, INSTEAD OF RS.40,000/- PER CENT, AS CLAIMED BY THE ASSESSEE. THE ASSESSEE HAD ARRIVED AT A LONG TE RM CAPITAL LOSS AT 4 ITA NO.72(B)/15 RS.36,60,578/- BY ADOPTING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01-04- 1981 AT RS.40,000/- PER CENT. THE ASSESSEE WAS DIRE CTED BY THE AO (LETTER DATED 07-03-2010) TO EXPLAIN THE BASIS ON WHICH HE HAD ARRIVED AT FAIR MARKET VALUE AS ON 01-04-1981 AT RS.40,000/-. THE ASSESSE E VIDE HIS LETTER DATED 15- 09-2010 STATED THE VALUE ADOPTED AT RS.40,000/- PER CENT AS ON 01-04-1981 WAS ONLY ON ESTIMATE BASIS. IN THE MEANWHILE, THE AO CONDUCTED ENQUIRIES WITH THE SUB-REGISTRARS OFFICE AT PATHANAMTHITTA. THE AO WAS INFORMED IN RESPECT OF SIMILARLY SITUATED PROPERTY SOLD ON 26-0 8-1982 (SY.NO.145/10, DOCUMENT NO.1627/1982) THE CONSIDERATION PER CENT W AS RS.8,000/-. THEREFORE, THE AO ADOPTED RS.5,000/- PER CENT WHILE COMPUTING THE CAPITAL GAINS OF THE IMPUGNED PROPERTY. ADMITTEDLY, IN THIS CASE, NO VALUATION REPORT WAS SUBMITTED BY THE ASSESSEE AND FAIR MARKET VALUE AS ON 01-04-1981, ADOPTED BY THE ASSESSEE IS WITHOUT ANY BASIS AND SU PPORTING MATERIAL. ON THE OTHER HAND, THE FAIR MARKET VALUE ADOPTED BY TH E AO IS BASED ON THE INFORMATION RECEIVED FROM THE SUB-REGISTRARS OFFIC E OF PATHANAMTHITTA. THEREFORE, WE ARE OF THE VIEW, THAT THE VALUATION A DOPTED BY THE AO WHICH IS BASED ON THE SALE DEED DATED 26-08-1982 OF A SIMILA RLY SITUATED PROPERTY HAS TO BE TAKEN FOR CONSIDERATION FOR FIXING THE FAIR M ARKET VALUE AS ON 01-04-1981. THE FAIR MARKET VALUE, AS PER THE SALE DEED RELIED ON BY THE AO IS AT 5 ITA NO.72(B)/15 RS.8,000/- PER CENT AND WE ADOPT THE SAME FAIR MARK ET VALUE AS ON 01-04- 1981 IN THE INTEREST OF JUSTICE AND EQUITY. 6.1 BEFORE CONCLUDING, IT IS TO BE MENTIONED THAT THE ASSESSEE HAD RELIED ON TWO TRIBUNAL ORDERS IN THE CASE OF KURIAN JOSEPH VS DCIT IN ITA NO.137(COCH)/2014 AND K.THOMAS JOY VS ITO IN ITA NO.189(COCH/2014, FOR THE PROPOSITION THAT THE FAIR MARKET VALUE AS ON 01 -04-1981 SHOULD BE ADOPTED AT THE RATE OF 10% OF THE SALE CONSIDERATION BY WOR KING OUT FAIR MARKET VALUE BACKWARDS. THE TWO ORDERS OF THE TRIBUNAL RELIED O N BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS, SINCE IN THOSE CASES, THE ASSESSEE HAD SUBMITTED VALUATION REPORT ESTIMATING THE FAIR MARKET VALUE A S ON 01-04-1981. THE TRIBUNAL WAS OF THE VIEW THAT THE AO HAVING NOT REF ERRED THE MATTER TO THE VALUATION CELL, CANNOT TOTALLY BRUSHED ASIDE THE VA LUATION REPORT SUBMITTED BY THE ASSESSEE. IT IS IN THIS CONTEXT, THE TRIBUNAL HAS DIRECTED TO ADOPT THE VALUATION REPORT SUBMITTED BY THE ASSESSEE WHICH HA S INCORPORATED THE FAIR MARKET VALUE AS ON 01-04-1981 AT 10% OF THE SALE CO NSIDERATION. AS MENTIONED EARLIER, IN THE INTEREST OF JUSTICE, WE H AVE ALREADY ENHANCED THE FAIR MARKET VALUE AS ON 01-04-1981 FROM RS.5,000/- ADOPT ED BY THE INCOME-TAX AUTHORITIES TO RS.8,000/- PER CENT. THE ENHANCEMEN T IS BASED ON SALE DEED DULY TAKEN COGNIZANCE OF BY THE AO. THEREFORE, WE DIRECT THAT THE LONG TERM 6 ITA NO.72(B)/15 CAPITAL GAINS SHALL BE COMPUTED BY ADOPTING THE FAI R MARKET VALUE AS ON 01-04- 1981 AT THE RATE OF RS.8,000/- INSTEAD OF RS.5,000/ -. IT IS ORDERED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 22-04-2016 SD/- SD/- (B.R.BASKARAN) (GEORGE GEORGE, K.) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : COCHIN D A T E D : 22-04-2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3. CIT(A), KOTTAYAM 4. CIT, KOTAYAM 5. DR, ITAT, COCHIN 6. GUARD FILE (ASST. REGISTRAR) I.T.A.T, COCHIN 1. DATE OF DICTATION- 21-04-2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.04.2016 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. - 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 22-04-2016 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. : 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ON . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR 8. SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER