SARVE RATAN VARMA, MUMBAI V. ITO WD 21(2)(4), MUMBAI

ITA 7261/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8394 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 12-11-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 25-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Valuation report
• Section: 50C; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, M UMBAI BEFORE HONBLE S/SHRI VIJAY PAL RAO (JM) , AND B.R.BASKARAN (AM) , . . , ./I.T.A. NO.7261/MUM/2011 ( / ASSESSMENT YEAR : 200304) MRS.SARVE RATAN VARMA, 1 / 2 GROUND FLOOR, VIBHUTI BUILDING, GANDHI GRAM ROAD, JUHU, MUMBAI400049. / VS. INCOME TAX OFFICER, 21(2)(4), ROOM NO.503, 5 TH FLOOR, C10, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI400051. ( / APPELLANT) .. ( / RESPONDENT) ./ ./ PAN/GIRNO.:AANPV8325L ! / APPELLANT BY : SHRI JAYANT BHATT ' ! /RESPONDENT BY SHRI NEIL PHILIP # ' $% / DATE OF HEARING : 12.11.2014 &' ' $% /DATE OF PRONOUNCEMENT : 21.11.2014. / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 30- 09-2011 PASSED BY LD CIT(A)-32, MUMBAI AND IT RELAT ES TO THE ASSESSMENT YEAR 2003-04. 2. THOUGH THE ASSESSEE HAS RAISED MANY GROUNDS, THE LD A.R RESTRICTED HIS ARGUMENTS ON THE FOLLOWING TWO ISSUES ONLY:- (A) DETERMINATION OF COST AS ON 1.4.1981 IN RESPE CT OF PROPERTY TRANSFERRED BY THE ASSESSEE. (B) QUANTUM OF DEDUCTION ALLOWABLE U/S 54 OF THE ACT. ACCORDINGLY, ALL OTHER GROUNDS ARE DISMISSED AS NOT PRESSED. ITA NO.7261/M/2011 2 3. THE FACTS RELATING TO THE ABOVE SAID TWO ISSUES ARE STATED IN BRIEF. THE ASSESSEE INHERITED A PROPERTY IN JVPD SCHEME AT JUH -VILLE PARLE (WEST), MUMBAI. ON THE SAID LAND THE FSI AVAILABLE AS PER BMC RULES WAS 9018 SQ.FT. OUT OF WHICH FSI OF 3750 SQ. FT. WAS CONSUMED IN CO NSTRUCTION OF BUNGALOW FOR THE PURPOSE OF RESIDENCE OF ASSESSEE. THE CONSTRUC TION TOOK PLACE IN 1972. IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED A PROPOSAL FOR REDEVELOPMENT, BY WHICH TIME, THE ELIGIBLE FSI HAS BEEN INCREASED TO 18,036 SQ.FT. AS PER THE DEVELOPMENT AGREEMENT, THE ASSES SEE WAS TO RECEIVE 6 FLATS ON VARIOUS FLOORS VALUED AT RS.90,18,000/- AND CASH CO MPENSATION OF RS.1,20,00,000/- BOTH AGGREGATING TO RS.2,10,18,000 /-. THE ASSESSEES CLAIM THAT THE TRANSFER OF FSI WILL NOT BE TAXABLE, SINCE IT DOES NOT HAVE COST OF ACQUISITION WAS REJECTED BY THE TAX AUTHORITIES. HE NCE, THE LD CIT(A) WENT ON TO COMPUTE THE LONG TERM CAPITAL GAIN AS UNDER:- (A) THE LD CIT(A) NOTICED THAT THE VALUE DETERMINE D BY THE STAMP AUTHORITY FOR THE PURPOSE OF STAMP DUTY WAS RS.2,92 ,03,500/-. HENCE, THE LD CIT(A) ADOPTED THE ABOVE SAID VALUE AS SALE CONS IDERATION IN TERMS OF SEC. 50C OF THE ACT IN THE PLACE OF RS.2,10,18,000 /- RECEIVED BY THE ASSESSEE. (B) THE ASSESSEE HAS CLAIMED THE COST OF ACQUISITI ON OF PROPERTY AS ON 1.4.1981 AT RS.45,28,545/- AS PER THE VALUATION REP ORT OBTAINED FROM A REGISTERED VALUER. HOWEVER, THE LD CIT(A) PROCEEDE D TO DETERMINE THE COST AS ON 1.4.1981 ON ITS OWN BY REFERRING TO READ Y RECKONER OF GOVERNMENT AND ACCORDINGLY DETERMINED THE SAME AT R S.33,65,040/-. (C) THE LD CIT(A) ALLOWED DEDUCTION U/S 54 OF THE ACT IN RESPECT OF VALUE OF ONE OF THE FLATS ALLOTTED TO THE ASSESSEE. 4. THE CONTENTION OF THE LD A.R WAS THAT THE COS T OF ACQUISITION AS ON 1.4.1981 ADOPTED BY THE ASSESSEE HAS BACKING OF REG ISTERED VALUERS REPORT, WHERE AS THE VALUE DETERMINED BY THE LD CIT(A) IS N OT SUPPORTED BY ANY MATERIAL. THE LD A.R SUBMITTED THAT THE FIRST APPE LLATE AUTHORITY IS NOT A TECHNICAL EXPERT IN THE MATTER RELATING TO VALUATION OF LAND AND BUILDING AND HE HAS ALSO NOT REFERRED THE MATTER OF VALUATION TO THE DEPARTMENTA L VALUATION OFFICER. ACCORDINGLY, HE CONTENDED THAT THE REGISTERED VALUE RS REPORT SHOULD BE PREFERRED OVER HIS ESTIMATION. WITH REGARD TO THE DEDUCTION ALLOWED U/S 54 OF THE ACT, THE LD A.R SUBMITTED THAT THE LD CIT(A) HAS GI VEN DEDUCTION FOR A SMALLER FLAT, WHERE AS THE ASSESSEE SEEKS DEDUCTION IN RESP ECT OF A DUPLEX FLAT, WHEREIN TWO FLATS HAVE BEEN JOINED TOGETHER AND THE SAME IS HAVING A COMMON KITCHEN. ITA NO.7261/M/2011 3 5. ON THE CONTRARY, THE LD D.R STRONGLY SUPPORTED THE ORDER OF LD CIT(A) IN RESPECT OF THE ABOVE SAID TWO ISSUES. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE RECORD. THE FIRST DISPUTE IS RELATED TO THE DETERMINATION OF COST AS ON 1.4.1 981, WHICH IS REQUIRED TO BE ADOPTED FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. THE VALUE DISCLOSED BY THE ASSESSEE IS SUPPORTED BY A VALUATION REPORT GIVEN B Y A REGISTERED VALUER. HOWEVER, THE LD CIT(A) PREFERRED TO DETERMINE THE C OST ON HIS OWN WAY BY MAKING REFERENCE TO READY RECKONER OF THE GOVERNMEN T. IT IS A WELL SETTLED PROPOSITION THAT THE MARKET VALUE IS A PRICE AGREED TO BETWEEN A WILLING SELLIER AND WILLING PURCHASER. WHILE DETERMINING THE MARKE T VALUE, VARIOUS FACTORS NEED TO BE CONSIDERED AND HENCE THE GOVERNMENT READY REC KONER, VALUERS REPORT ETC. CAN BE CONSIDERED AS GUIDING FACTORS ONLY AND THEY CANNOT BE CONSIDERED AS CONCLUSIVE EVIDENCE. IN THE INSTANT CASE, THE VAL UE DETERMINED BY LD CIT(A) IS NOT SUPPORTED BY ANY TECHNICAL EXPERTS REPORT. HO WEVER, THE VALUE DISCLOSED BY THE ASSESSEE IS SUPPORTED BY REGISTERED VALUERS RE PORT. FROM THE ORDER OF LD CIT(A), WE NOTICE THAT THE LD CIT(A) HAS NOT POINTE D OUT ANY DEFECT IN THAT REPORT GIVEN BY THE REGISTERED VALUER. THE LD CIT(A) HAS ALSO FAILED TO REFER THE MATTER OF VALUATION TO THE DEPARTMENTAL VALUATION OFFICER. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE MARKET VALUE AS ON 1.4.198 1 DETERMINED BY THE REGISTERED VALUER MAY BE ADOPTED FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ADOPT THE MARKET VALUE AS ON 1.4.1981 DETERMINED BY THE REGISTERED VALUER FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. 7. THE NEXT ISSUE RELATES TO THE DEDUCTION ALLOWA BLE U/S 54 OF THE ACT. THE LD CIT(A) HAS ALLOWED DEDUCTION IN RESPECT OF VALUE OF ONE FLAT. HOWEVER, THE ASSESSEE SUBMITS THAT HE HAS CONVERTED TWO FLATS LO CATED IN THE TOP FLOOR AND THE FLOOR BELOW IT INTO A DUPLEX FLAT AND HENCE THE BOT H THE FLATS ARE TO BE TREATED AS A SINGLE FLAT AND THE VALUE OF THE SAME SHOULD BE ALL OWED AS DEDUCTION U/S 54 OF THE ACT. IT IS WELL SETTLED THAT THE CONTIGUOUS FL ATS JOINED TOGETHER AND HAVING A COMMON KITCHEN IS TREATED AS SINGLE FLAT FOR THE PU RPOSE OF DEDUCTION U/S 54 OF THE ACT. EVEN OTHERWISE, IN OUR VIEW, IT IS THE PR EROGATIVE OF THE ASSESSEE TO CHOOSE THE RESIDENTIAL PROPERTY ON WHICH HE WOULD L IKE TO AVAIL DEDUCTION U/S 54 ITA NO.7261/M/2011 4 OF THE ACT. ACCORDINGLY, WE FIND MERIT IN THE ABOV E SAID CONTENTION OF THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF L D CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 54 OF THE ACT IN RESPECT OF THE VALUE OF DUPLEX FLAT CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER, IT HE FEELS IT NECESSARY, MAY CARRY OUT NECESSARY VERIFICATION TO VERIFY THE CLAIM OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPE N COURT ON 21 ST NOV, 2014 . &' # () * + 21ST NOV , 2014 ' ' , - SD SD ( / VIJAY PAL RAO ) ( . . ,/ B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( # MUMBAI: 21ST NOV,2014. . . ./ SRL , SR. PS !'# $#%! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. # .$ ( ) / THE CIT(A)- CONCERNED 4. # .$ / CIT CONCERNED 5. 6. /, $ 0 , % 0 , ( # / DR, ITAT, MUMBAI CONCERNED ,1 2 / GUARD FILE. 3 # / BY ORDER, TRUE COPY 4 (ASSTT. REGISTRAR) % 0 , ( # /ITAT, MUMBAI