Mohammed Farook Majeed, CHENNAI V. ITO International Taxation Ward 1(2), CHENNAI

ITA 728/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9335 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 20-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Fair market value

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . , . , BEFORE SHRI DUVVURU R.L. REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.728/CHNY/2019 ! ! /ASSESSMENT YEAR: 2015-16 SHRI MOHAMMED FAROOK MAJEED, C/O. M/S.PASS ASSOCIATES,UNIT NO.208, 2 ND FLOOR, BETA WING, RAHEJA TOWERS, NO.113-114, ANNA SALAI, CHENNAI-600 002. VS. THE INCOME TAX OFFICER, INTERNATIONAL TAXATION WARD- 1(2), CHENNAI. [PAN: AAPPM 0334 E] ( $ /APPELLANT) ( %&$ /RESPONDENT) $ ' / APPELLANT BY : MR.D.ANAND, ADV. %&$ ' /RESPONDENT BY : MR.GURUBASHYAM, JCIT ' /DATE OF HEARING : 25.06.2019 ' /DATE OF PRONOUNCEMENT : 27.06.2019 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-16, CHENNAI, IN ITA NO.52/CIT( A)-16/2017-18 DATED 23.01.2019 THE AY 2015-16. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IN THE CASE OF SHRI MOHAMMED FAROOK MAJEED, THE ASSESSEE, A NON-RESIDEN T, THE AO NOTICED, ITA NO.728/CHNY/2019 :- 2 -: INTER ALIA, THAT THE ASSESSEE PURCHASED A PROPERTY ON 23.06.2014 FOR RS.1,79,27,000/- WHILE THE GUIDELINE VALUE OF THE P ROPERTY WAS RS.2,04,88,000/-. AFTER CONSIDERING THE ASSESSEES EXPLANATION, ETC., THE AO ADDED THE DIFFERENCE OF RS.25,61,000/- U/S.56(2)(VI I)(B). AGGRIEVED AGAINST THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT( A), THE LD.CIT(A) DISMISSED THE APPEAL. 3. THE LD.AR INVITED OUR ATTENTION TO PARA NO.4 OF THE LD.CIT(A) AND SUBMITTED THAT THE PROPERTY PURCHASED IS A VACANT P LOT LAND WHICH COULD NOT BE PUT TO ITS ORIGINAL USE AS IT WAS UNAPPROVED. THER EFORE, IT WAS QUOTED AT A PRICE LOWER THAN THE ADJOINED PROPERTIES. THE ASSESSEE AF TER BUYING THE PROPERTY HAS APPLIED FOR THE REGULARIZATION OF UNAPPROVED PLOT F ROM GOVERNMENT OF TAMIL NADU BY PAYING SUBSTANTIAL DEVELOPMENT AND REGULARI ZATION CHARGES. THEREFORE, THE FAIR MARKET VALUE IS LESS THAN THE G UIDELINE VALUE. FURTHER, HE SUBMITTED THAT AS PER THE SCHEDULE OF THE PROPERTY, IT COMES UNDER COASTAL REGULATION ZONE. THEREFORE, THE PRICE WAS LOWER TH AN THE GUIDELINE VALUE. THE PLOT OF THE LAND IS ALSO LOCATED IN A DEAD END AND ABUTS ONLY 23 FT. ROAD AND HENCE NOT EASILY ACCESSIBLE. IT IS THE 2 ND LAST PROPERTY ON THE DEAD END STREET AND HENCE THE COST OF THE PROPERTY AT GUIDEL INE VALUE IS NOT JUSTIFIABLE AND HENCE THE PROPERTY WAS BOUGHT AT A PRICE LOWER THAN THE GUIDELINE VALUE. THE GUIDELINE VALUE FIXED BY THE GOVERNMENT DOES NO T TAKE INTO ACCOUNT THE PROS AND CONS OF EACH AND EVERY PLOT BUT TAKES THE AREA RATE AND HENCE, THE ASSESSEE OBJECTED TO THE ADOPTION OF GUIDELINE VALU E BEFORE THE LD.CIT(A). HE ITA NO.728/CHNY/2019 :- 3 -: INVITED OUR ATTENTION TO ASSESSMENT ORDER, WHEREIN, IT WAS PLEADED THAT FOR THE SELLER ALSO, IT WAS A DISTRESS SALE AS THE PROPERTY WAS HELD BY THE FINANCIER WHO HELD THE POWER OF ATTORNEY OF THE PROPERTY. SIN CE THE SELLER WAS UNDER SEVERE STRESS AND PRESSURE, THE ASSESSEE OFFERED TO DELIVER THE CONSIDERATION, IMMEDIATELY AND NEGOTIATED FOR THE BETTER PRICE. L ASTLY, THE LD.AR SUBMITTED THAT THOUGH THE ASSESSEE OBJECTED FOR ADOPTION OF T HE GUIDELINE VALUE, THE AO HAS NOT REFERRED TO THE MATTER TO DVO FOR FINDING T HE FAIR MARKET VALUE. FURTHER, HE SPECIFICALLY INVITED OUR ATTENTION TO T HE PRICE DIFFERENCE BETWEEN GUIDELINE VALUE AND THE PURCHASED PRICE AND SUBMITT ED THAT THE VARIATION IS WITHIN 13%, AS PER SECTION 56(2)(VII), EVEN A REFER ENCE TO THE VALUATION OFFICER IS ALSO NOT REQUIRED IN VIEW OF VARIOUS DECIDED CAS ES. THE VALUE DISCLOSED BY THE ASSESSEE MAY BE ACCEPTED AS PER THIS TRIBUNAL D ECISION IN THE CASE OF SHRI S.D.VIMALCHAND JAIN VS. ITO IN ITA NO.357/CHNY/201 8 DATED 04.10.2018. FURTHER, THE LD.AR SUBMITTED THAT THE GOVERNMENT OF TAMIL NADU REDUCED THE GUIDELINE VALUE W.E.F. 09.06.2017 VIDE ITEM NO.105 OF THE PAPER BOOK, WHICH WAS TAKEN COGNIZANCE BY THIS TRIBUNAL IN ITA NOS.29 25/CHNY/2018 DATED 07.02.2019. THEREFORE, THE LD.AR PLEADED THAT THE ADDITION MADE MAY BE DIRECTED TO BE DELETED AND THE APPEAL FILED BY THE ASSESSEE MAY BE ALLOWED. 4. PER CONTRA, THE LD.DR SUPPORTED THE ORDERS OF TH E LOWER AUTHORITIES. 5. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH RELEVANT MATERIAL. IT IS CLEAR FROM THE ABOVE THAT THE ASSESSEE HAS OBJEC TED, ADOPTION OF THE GUIDELINE VALUE FOR DETERMINING THE FAIR MARKET VAL UE ON VARIOUS GROUNDS, ITA NO.728/CHNY/2019 :- 4 -: SUPRA. HOWEVER, THE AO HAS NOT REFERRED THE CASE TO THE VALUATION OFFICER. CONSIDERING THEM AND THE FACT THAT THE DIFFERENCE B ETWEEN THE GUIDELINE VALUE AND THE PRICE PAID FOR ACQUIRING THE PROPERTY BEING IN THE RANGE OF 12.5%, WE ARE OF THE VIEW THAT FOR THE REASONS MENTIONED BY T HE ASSESSEE, SUPRA, THE PRICE PAID BY THE ASSESSEE COULD BE TREATED AS THE FAIR MARKET VALUE OF THE PROPERTY AND HENCE, WE DIRECT THE AO TO DELETE THE ADDITION MADE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JUNE, 2019, IN CHENNAI. SD/- SD/- ( . / . . 0 ) (DUVVURU R.L. REDDY) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: 27 TH JUNE, 2019. TLN ' % 34 54 /COPY TO: 1. $ /APPELLANT 4. 6 /CIT 2. %&$ /RESPONDENT 5. 4 % /DR 3. 6 ( )/CIT(A) 6. ! /GF