Vacha Fine Arts, CHENNAI V. ACIT Non Corporate Circle 9, CHENNAI

ITA 729/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0341 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 28-02-2018
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.729/CHNY/2018 & '& / ASSESSMENT YEAR : 2012-13 M/S VACHA FINE ARTS, # 14/11, ABDUL KAREEM CROSS STREET, (OFF. CNK ROAD), TRIPLICANE, CHENNAI - 600 005. PAN : AACFV 7002 K V. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 9, CHENNAI - 600 034. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI V.S. JAYAKUMAR, ADVOCATE +,)* - . / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT / - 0# / DATE OF HEARING : 14.08.2019 12' - 0# / DATE OF PRONOUNCEMENT : 03.09.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -10, CHENN AI, DATED 27.12.2017 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. SHRI V.S. JAYAKUMAR, THE LD.COUNSEL FOR THE ASSE SSEE, SUBMITTED THAT THE ASSESSEE SOLD A LAND ALONG WITH BUILDING FOR 2 I.T.A. NO.729/CHNY/18 7,00,00,000/-. THE LONG TERM CAPITAL GAINS ARISING OUT OF THE TRANSACTION TO THE EXTENT OF 3,02,52,400/- WAS OFFERED FOR TAXATION. HOWEVER, THE ASSESSING OFFICER FOUND THAT THE GAIN ARISING OUT OF THE SALE OF LAND WAS SHORT TERM CAPITAL GAIN AND THE BU ILDING WAS CONSTRUCTED WITHIN A PERIOD OF THREE YEARS. THEREF ORE, THE PROFIT ON SALE OF LAND HAS TO BE CONSIDERED AS SHORT TERM CAP ITAL GAIN. ACCORDINGLY, THE ASSESSING OFFICER COMPUTED THE SHO RT TERM CAPITAL GAIN AT 6,99,36,361/-. ACCORDING TO THE LD. COUNSEL, WHILE COMPUTING THE FAIR MARKET VALUE AS ON 01.04.1981, T HE ASSESSEE ADOPTED 125/- PER SQ.FT. HOWEVER, THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS) ADOPTED THE FAIR MARKET VALUE AT 2.35 PER SQ.FT. ACCORDING TO THE LD. COUNSEL, THE FAIR MARKET VALUE ADOPTED BY THE ASSESSING OFFICER AS WELL AS THE CIT(APPEALS) WAS O N THE BASIS OF THE GUIDELINE VALUE OBTAINED FROM SUB-REGISTRAR. 3. PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL I N ACIT V. BEST & CROMPTON ENGINEERING LIMITED IN I.T.A. NO. 803/MD S/2012 DATED 09.08.2012, THE LD.COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THIS TRIBUNAL DIRECTED THE ASSESSING OFFICER TO ADOPT MA RKET VALUE AT 50/- PER SQ.FT. ACCORDING TO THE LD. COUNSEL, THE SUBJECT MATTER OF THE LAND BEFORE THIS TRIBUNAL IN THE PRESENT APPEAL AND IN THE CASE OF 3 I.T.A. NO.729/CHNY/18 BEST & CROMPTON ENGINEERING LIMITED (SUPRA) WERE SI TUATED IN THE SAME LOCALITY, THEREFORE, THE FAIR MARKET VALUE AS ON 01.04.1981 HAS TO BE ADOPTED AT 50/- PER SQ.FT. AS AGAINST 2.35 PER SQ.FT. PLACING RELIANCE ON ANOTHER ORDER OF THIS TRIBUNAL IN DCIT V. SHRI VIKRAM JAIN IN I.T.A. NO.600/CHNY/2018 DATED 18.07.2019, T HE LD.COUNSEL SUBMITTED THAT FOR ESTIMATING THE FAIR MARKET VALUE , THE ASSESSING OFFICER WAS EXPECTED TO CONSIDER VARIOUS FACTORS SU CH AS LOCATION OF THE LAND, AREA OF THE LAND, INFRASTRUCTURE FACILITI ES AVAILABLE AROUND THE LAND, POTENTIAL FOR FUTURE DEVELOPMENT, GUIDELI NE VALUE / CIRCLE RATE AND OTHER FACTORS WHICH MAY INFLUENCE THE MARK ET RATE AT THAT LOCALITY. IN THIS CASE, ACCORDING TO THE LD. COUNS EL, THE CIT(APPEALS) HAS TAKEN ONLY GUIDELINE VALUE OF THE SUB-REGISTRAR . THE OTHER FACTORS WERE NOT TAKEN INTO CONSIDERATION. THEREFO RE, IN THE INTEREST OF JUSTICE, ACCORDING TO THE LD. COUNSEL, THE ASSES SING OFFICER MAY BE DIRECTED TO ADOPT THE FAIR MARKET VALUE AT 50/- PER SQ.FT. AS ON 01.04.1981, 4. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSEE SOLD THE LAND AND BUILDING AT AMBATTUR INDUSTRIAL ESTATE FOR A TOTAL CONSIDERATION OF 7 CRORES AS PER THE SALE DEED DATED 16.05.2011 4 I.T.A. NO.729/CHNY/18 TO M/S AUTOTECH INDUSTRIES (INDIA) PVT. LTD. ACCOR DING TO THE LD. D.R., THE ASSESSEE CLAIMED 125 PER SQ.FT. AS FAIR MARKET VALUE BEFORE THE ASSESSING OFFICER. HOWEVER, THE ASSESSI NG OFFICER CALLED FOR GUIDELINE VALUE OF THE SUB-REGISTRAR AS ON 01.04.1981 AND ADOPTED THE INFORMATION RECEIVED FROM SUB-REGISTRAR AT 2.35 PER SQ.FT. REFERRING TO PARA 4.3.39 OF THE ORDER OF TH E CIT(APPEALS), THE LD. D.R. SUBMITTED THAT IN THE CASE OF BEST & CROMP TON ENGINEERING LTD. (SUPRA), THE DECISION WAS RENDERED AFTER TAKIN G INTO CONSIDERATION OF THE REPORTS OF TWO INDEPENDENT VAL UERS, WHO ESTIMATED THE VALUE ON THE REVERSE WORKING BY APPLY ING COST INFLATION INDEX. THEREFORE, THE BENEFIT OF THE TRI BUNAL ORDER CANNOT BE MADE AVAILABLE TO THE ASSESSEE. HENCE, ACCORDIN G TO THE LD. D.R., THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE OR DER OF THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, FAIR MARKET VALUE HAS TO BE DETERMINED AFTER CONSIDERING VARIOUS FACTORS SUCH AS LOCATION OF THE LAND, AREA OF THE LAND, INFRASTRUCTURE FACIL ITIES AVAILABLE AROUND THE LAND, POTENTIAL FOR FUTURE DEVELOPMENT AND GUID ELINE VALUE OF THE 5 I.T.A. NO.729/CHNY/18 SUB-REGISTRAR. IT IS ALSO TO BE CONSIDERED WHEN TH E PROPERTY WAS SOLD. IN ADDITION TO THAT, THE COMPARATIVE SALE IN STANCE IN THE LOCALITY ALSO NEEDS TO BE TAKEN INTO CONSIDERATION. IN THIS CASE, THE ASSESSING OFFICER HAS NOT CONSIDERED ANY OF THE FAC TORS OTHER THAN THE GUIDELINE VALUE OF THE SUB-REGISTRAR. THIS TRI BUNAL IS OF THE CONSIDERED OPINION THAT THE GUIDELINE VALUE IS ONLY TO GUIDE THE SUB- REGISTRAR TO DETERMINE THE FAIR MARKET VALUE OF THE PROPERTY. THE GUIDELINE VALUE MAY NOT IN ALL THE CASES REFLECT TH E MARKET VALUE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MAR KET VALUE IS NOT A CONSTANT FIGURE. THE MARKET VALUE IS NOTHING BUT T HE PRICE THAT MAY BE AGREED BETWEEN THE WILLING PURCHASER AND WILLING SELLER. IT MAY ALSO FLUCTUATE DEPENDING UPON VARIOUS FACTORS REFER RED ABOVE. THEREFORE, THE ASSESSING OFFICER IS EXPECTED TO EXA MINE/CONSIDER ALL THE ABOVE FACTS. 6. NOW THE ASSESSEE CLAIMS THAT AS IN THE CASE OF B EST & CROMPTON ENGINEERING LIMITED (SUPRA), THE VALUE MAY BE ESTIMATED AT 50 PER SQ.FT. THE LAND SOLD BY THE ASSESSEE IS ALS O SITUATED AT AMBATTUR INDUSTRIAL ESTATE. THE ASSESSEE BEFORE TH E TRIBUNAL IN BEST & CROMPTON ENGINEERING LTD. (SUPRA) CLAIMED MA RKET VALUE OF THE LAND AT 108/- AS ON 01.04.1981. IN THE PRESENT CASE, THE 6 I.T.A. NO.729/CHNY/18 ASSESSEE CLAIMS 125/- PER SQ.FT. SINCE THE LAND IS LOCATED AT AMBATTUR INDUSTRIAL AREA, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THE VALUE ADOPTED BY THE TRIBUNAL IN THE CASE OF BEST & CROMPTION ENGINEERING LTD. (SUPRA) CAN VERY WELL BE ADOPTED IN THE CASE OF THE PRESENT ASSESSEE ALSO. ACCORDINGLY, OR DERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING O FFICER IS DIRECTED TO ADOPT FAIR MARKET VALUE AS ON 01.04.1981 AT 50/- PER SQ.FT. THE ASSESSING OFFICER THEREAFTER SHALL COMPUTE THE CAPI TAL GAIN. SINCE THE LEVY OF INTEREST UNDER SECTION 234B OF THE I.T. ACT IS MANDATORY AND CONSEQUENTIAL, THE ASSESSING OFFICER SHALL ALSO RECOMPUTE THE INTEREST LEVIED UNDER SECTION 234B OF THE ACT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 3 RD SEPTEMBER, 2019 AT CHENNAI. SD/- SD/- (. !) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 3 RD SEPTEMBER, 2019. KRI. 7 I.T.A. NO.729/CHNY/18 - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-10, CHENNAI-34 4. PRINCIPAL CIT- 7, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.