AVAN J MISTRI, MUMBAI V. ITO 15(1)(1), MUMBAI

ITA 7460/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8569 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UDAY BHASKAR JAKKA
• Assessee Lawyers: J D MISTRI
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.7460/M/2013 ( / ASSESSMENT YEAR: 2008-09) SHRI AVAN J. MISTRI, MEHERWAN MANSION, 59, NAPEASEA ROAD, MUMBAI - 400006 PAN: AKJPM1572C / VS. ITO 15(1)(1), ROOM NO.119, 1 ST FLOOR, MATRU MANDIR, OPP. BHATIA HOSPITAL, TARDEO, MUMBAI 400007 / APPELLANT) ( /RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI J.D. MISTRI, A.R. REVENUE BY : SHRI UDAY BHASKAR JAKKA, D.R. / DATE OF HEARING : 23.01.2017 / DATE OF PRONOUNCEMENT : 03.02.2017 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 13.09.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2008-09. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS): 1. ERRED IN UPHOLDING THE CHARGE OF LONG TERM CAPIT AL GAIN OF RS.5,28,214/-. 2. WITHOUT PREJUDICE AND ASSUMING THAT A LONG TERM CAPITAL GAIN AROSE, FAILED TO APPRECIATE THAT THE FULL VALUE OF THE CON SIDERATION RECEIVED BY THE APPELLANT WAS ONLY RS.5,50,000/- AND ANY CAP ITAL COULD ONLY BE COMPUTED ACCORDINGLY 3. WITHOUT PREJUDICE AND ASSUMING THAT A LONG TERM CAPITAL GAIN AROSE, ITA NO.7460/M/2013 SHRI AVAN J. MISTRI 2 FAILED TO APPRECIATE THAT THE FULL VALUE OF THE CON SIDERATION COULD NOT BE TAKEN AS RS 7 , 85 , 636 AND ANY CAPITAL GAIN COMPUTED ACCORDINGLY 4. FAILED TO APPRECIATE THAT THE PROVISIONS OF S 50C OF THE ACT HAD NO APPLICATION AND/OR COULD NOT BE INVOKED TO COMPUTE CAPITAL GAINS BASED ON CONSIDERATION OF RS.7,85,636/- 5. ERRED IN UPHOLDING THE COMPUTATION OF LONG TERM CAPITAL GAIN 6. ERRED IN CONSIDERING THE LAND AS UNDER DEVELOPED & HENCE TAKING THE VALUATION AT RS.12/- PER SQ. MTR. INSTEAD OF RS.60/ - PER SQ METER, COST OF DEVELOPED LAND SINCE THE LAND IS SITUATED WITHIN TH E LIMIT OF THE GREATER MUMBAI. 7. FAILED TO APPRECIATE THAT THERE IS LONG CAPITAL LOSS ON SALE OF LAND INSTEAD OF LONG TERM CAPITAL GAIN. 8. ERRED IN ENHANCING THE ALLEGED CAPITAL GAIN AS C OMPUTED BY THE AO THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER, DELETE ABOVE ALL OR ANY OF THE GROUND OF APPEAL. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT THE ISSUES RAISED VIDE ABOVE GROUNDS OF APPEAL ARE RELATING TO TAXABILITY OF LONG TERM CAPITAL GAINS. HE HAS STRESSED THAT GROUND NO.6 IS THE MOST RELEVANT AND IT MAY BE DECIDED FIRST AND THAT IF THE GROUND NO.6 IS ULT IMATELY DECIDED IN FAVOUR OF THE ASSESSEE, THEN THERE WILL NOT BE ANY NEED TO AD JUDICATE UPON THE REMAINING GROUNDS OF APPEAL. 4. THE LD. D.R. HAS ALSO NOT OBJECTED TO THE HEARIN G AND ADJUDICATION ON GROUND NO.6 FIRST. 5. WE, THEREFORE, HAVE HEARD THE PARTIES ON GROUND NO.6. THE BRIEF FACTS RELEVANT TO THE ISSUE RAISED VIDE GROUND NO.6 OF THE APPEAL ARE THAT THE FATHER OF THE ASSESSEE OWNED A PLOT OF LAN D. HE DIED INTESTATE. THE PROPERTY DEVOLVED UPON ASSESSEE ALONG WITH THREE OT HER HEIRS. THUS, THE ASSESSEE GOT ENTITLED TO 1/4 TH SHARE OF THE PROPERTY. THEREFORE THE PROPERTY WAS TRANSFERRED TO SAME PERSON AS PER AGREEMENT DATED 0 1.11.2007. THE ASSESSEE GOT A SUM OF RS.7,85,636/- AS SALE CONSIDERATION OF HER SHARE IN THE PROPERTY. THE PROPERTY IN QUESTION WAS ORIGINALLY PURCHASED B Y THE DECEASED FATHER OF THE ASSESSEE IN THE YEAR 1961, THEREFORE THE ASSESS EE CLAIMED THAT THE COST OF ITA NO.7460/M/2013 SHRI AVAN J. MISTRI 3 INDEXATION SHOULD BE ALLOWED TO HER FROM 01.04.1981 IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF MRS. MANJULA SHAH 249 CTR 270. IT WAS FURTHER PLEADED THAT THE LAND IN QUESTION WAS SITUATED WITHIN THE CITY LIMIT OF MUMBAI AND WOULD FALL IN T HE DEVELOPED ZONE. AS PER THE READY RECKONOR THE VALUE OF LAND AS ON 01.04.19 81 SHOULD BE TAKEN AT RS.60/- PER SQ. MTR. FOR THE PURPOSE OF DEDUCTION O F COST OF ACQUISITION. THE LD. CIT(A), AFTER CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE, HELD THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF COST OF INDEXATION FROM 01.04.1981. HOWEVER, THE LD. CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE THAT THE PROPERTY WAS SITUATED IN DEVELOPED ZONE AND OBSERVE D THAT THE PROPERTY WAS SITUATED IN NO DEVELOPMENT ZONE AND AS PER THE CRZ RULES NO DEVELOPMENT CAN BE CARRIED OUT IN THE ZONE WHERE THE PROPERTY WAS S ITUATED. THEREFORE, THE READY RECKONOR VALUE OF THE PROPERTY WHICH WAS APPL ICABLE FOR UNDEVELOPED PROPERTIES WAS TO BE TAKEN. BEING AGGRIEVED BY THE ABOVE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS COME IN APPEAL BEFORE US O N THIS ISSUE. 6. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS BROUGHT OUR ATTENTION TO PAGE 20 OF THE PAPER BOOK WHICH IS A COPY OF READY RECKONOR SHOWING MARKET VALUE OF IMMOVABLE PROPERTY IN MUMBAI AS ON 01.04.1 981. THE LD. A.R. HAS FURTHER SUBMITTED THAT THE PROPERTY IN QUESTION IS SITUATED IN THE AREA MENTIONED AT SL. NO.2. A PERUSAL OF THE ABOVE DOCUMENT SHOWS THAT THE MARKET RATE OF UNDEVELOPED VACANT LAND AS ON 01.04.1981 IS MENTION ED AS RS.12/- PER SQ. MTR. WHEREAS THE RATE OF DEVELOPED VACANT LAND HAS BEEN MENTIONED AS RS.60/- PER SQ. MTR. THE RATE OF LAND + BUILDING HAVE ALSO BEE N MENTIONED AT RS.200/- PER SQ. MTR. FOR RESIDENTIAL UNIT WITHOUT LIFT, RS.400/ - FOR INDUSTRIAL/OFFICE AND RS.480/- FOR SHOP/COMMERCIAL BUILDING. A PERUSAL O F THE ABOVE DOCUMENT REVEALS THAT DIFFERENT RATES HAVE BEEN MENTIONED FO R UNDEVELOPED AND DEVELOPED VACANT LAND. THE LD. A.R. HAS FURTHER IN VITED OUR ATTENTION TO THE COPY OF DEED OF CONVEYANCE WHEREIN IT HAS BEEN MENT IONED THAT THE PROPERTY WAS TRANSFERRED ALONG WITH STRUCTURE STANDING THERE UPON. HE HAS FURTHER INVITED OUR ATTENTION TO SHOW THAT A STRUCTURE CONSISTING O F CEMENT SHEETS WAS BUILT ITA NO.7460/M/2013 SHRI AVAN J. MISTRI 4 UPON THE PROPERTY AND THAT THE COVERED AREA OF THE PROPERTY WAS 1000 SQ. FEET. HE, THEREFORE, HAS STATED THAT THOUGH THE PROPERTY IN QUESTION CANNOT BE CONSIDERED AS LAND + BUILDING BUT THE ABOVE RECITAL S IN THE SALE DEED WOULD SHOW THAT THE LAND IN QUESTION WOULD FALL WITHIN TH E PURVIEW AND SCOPE OF DEVELOPMENT LAND AND NOT UNDEVELOPED LAND. THE R EADY RECKONOR RATE FOR THE DEVELOPED VACANT LAND AS MENTIONED IS RS.60/- PER S Q. MTR. AFTER HEARING THE LD. REPRESENTATIVES OF THE PARTIES WE ARE QUITE CON VINCED THAT THOUGH THE STRUCTURE MADE ON THE PROPERTY MAY NOT FALL WITHIN THE DEFINITION OF BUILDING FOR WHICH SEPARATE RATES HAVE BEEN MENTIONED IN THE READY RECKONOR, HOWEVER, THE PROPERTY CAN BE SAID TO FALL WITHIN THE SCOPE O F DEVELOPED VACANT LAND. WE ACCORDINGLY ALLOW THIS ISSUE IN FAVOUR OF THE ASSES SEE AND DIRECT THE ASSESSING OFFICER TO TAKE THE MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 AS PER THE READY RECKONOR VALUE FOR DEVELOPED VACANT LAND AND COMPUTE THE CAPITAL GAINS TAX ACCORDINGLY. THE LD. A.R. HAS STATED THAT IF T HE MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 IS TAKEN AS APPLICABLE FO R DEVELOPED VACANT LAND AS PER READY RECKONOR THEN ULTIMATELY HE WILL NOT BE L IABLE TO PAY ANY TAX AS THE RESULTANT CAPITAL GAINS WILL BE NEGATIVE AFTER AVAI LING THE BENEFIT OF INDEXATION. HE, THEREFORE, HAS PLEADED THAT HE DOES NOT PRESS T HE REMAINING GROUNDS AT THIS STAGE. THE REMAINING GROUNDS OF THE APPEAL OF THE ASSESSEE THEREFORE ARE DISMISSED AS NOT PRESSED. HOWEVER, THE ASSESSEE WI LL BE AT LIBERTY TO RAISE THE SAME, IF NEED BE, IN FUTURE AND IF HE SO FOUND ENTI TLED TO DO SO AS PER LAW. 7. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE A SSESSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.02.2017. .02.2017 SD/- SD/- ( / RAJENDRA) ( / SANJAY GARG) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; / DATED 03. 03. 03. 03. 02.2017 * KISHORE ITA NO.7460/M/2013 SHRI AVAN J. MISTRI 5 /COPY OF THE ORDER F COPY OF THE ORDER F COPY OF THE ORDER F COPY OF THE ORDER FORWARDED ORWARDED ORWARDED ORWARDED TO TOTO TO : :: : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - 4. / CIT 5. / THE DR CONCERNED BENCH , 6. / GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI / ITAT, MUMBAI / ITAT, MUMBAI / ITAT, MUMBAI