M/s. Kamala Sugar Mills Ltd., CHENNAI V. ACIT, Coimbatore

ITA 750/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51857 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 25-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E SANKAR
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 750/MDS/2011 ASSESSMENT YEAR : 2007-08 M/S. KAMALA SUGAR MILLS LTD., 1338, AVINASHI ROAD, PEELAMEDU, COIMBATORE-641 004. (PAN : AAACK9148C) V. THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY WARD-IV(1), COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE RESPONDENT BY : SHRI E. SANKAR, CIT-DR DATE OF HEARING : 15-09-2 011 DATE OF PRONOUNCEMENT : 23-09-2011 O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED CIT(APPEALS)-I, COIMBATORE IN APPEAL NO. 213/09-10 DATED 15-03-2011 FOR THE ASSESSMENT YEAR 2007-08. 2. SHRI S. SRIDHAR, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI E. SANKAR, LEARNED CIT-DR REPRESENTED ON BEHALF OF THE REVENUE. I.T.A. NO. 750/MDS/2011 2 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT IN THE ASSESSEES APPEAL THE ONLY ISSUE WAS IN REGARD TO T HE DETERMINATION OF THE FAIR MARKET VALUE AS ON 01-04-1981. IT WAS THE SUBMISSI ON THAT THE ASSESSEE IS A COMPANY AND IT HAD SOLD CERTAIN LAND AND BUILDINGS HELD BY IT IN 2007-08. THE ASSESSEE COMPANY WAS THE OWNER OF THE LAND RIGHT FR OM THE YEARS 1935 AND 1944. FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS, TH E ASSESSEE HAD TAKEN THE FAIR MARKET VALUE OF THE LAND SOLD AT ` 2500/- PER CENT. IT WAS THE SUBMISSION THAT THIS VALUE WAS ADOPTED ON THE BASIS OF ITS OWN SALE DOCUMENTS DURING THE ASSESSMENT YEARS 1988-89 AND 1989-90 WHEREIN THE VA LUE OF THE PROPERTY WAS FIXED AT ` 5005/- AND ` 5515/- RESPECTIVELY FOR THE ASSESSMENT YEARS 1988- 89 AND 1989-90. FROM THE SAID VALUE THE ASSESSEE HAD CONS ERVATIVELY CALCULATED THE VALUE AT ` 2500/- PER CENT AS THE MARKET VALUE AS ON 1.4.1981 . IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER ON THE BASIS OF THE COPY OF A SALE DEED OF THE PROPERTY SOLD DURING THE ASSESSMENT YEAR 1987-8 8 WHEREIN THE ASSESSEE HAD TAKEN THE COST INDEX FOR THE ASSESSMENT YEAR 1987-8 8 AT ` 150/- AND FOR THE YEAR 1981-82 AT ` 100/- ADOPTED THE FAIR MARKET VALUE AS ON 1.4.1981 AT ` 100/- PER CENT. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A ) TAKING INTO CONSIDERATION THE SALE VALUE DURING THE ASSESSMENT YEARS 1988-89 AND 1989-90 ADOPTED THE FAIR MARKET VALUE OF THE LAND SITUATED AT S.F. NO. 87B, 94A AND 94B AT ` 1000/- PER CENT AND FOR THE LAND AT S.F. NO. 94B AT ` 500/- PER CENT. IT WAS THE SUBMISSION THAT THE FAIR MARKET VALUE OF THE LAND AS ON 1.4.19 81 ADOPTED BY THE ASSESSING I.T.A. NO. 750/MDS/2011 3 OFFICER AND THE LEARNED CIT(A) WERE LOW AND THE SAM E WAS LIABLE TO BE FIXED AT ` 500/- PER CENT. 4. IN REPLY, THE LEARNED DR VEHEMENTLY SUPPORTED TH E ORDERS OF THE ASSESSING OFFICER AND THE LEARNED CIT(A). IT WAS THE SUBMIS SION THAT THE ASSESSING OFFICER HAD ADOPTED THE FAIR MARKET VALUE OF THE LAND ON TH E BASIS OF THE GUIDELINE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS ON 1.4. 1981. IT WAS THE SUBMISSION THAT ONCE THE GUIDELINE VALUE WAS AVAILABLE, THE LE ARNED CIT(A) COULD NOT HAVE INCREASED THE SAME WITHOUT ANY COGENT REASON. IT W AS THE SUBMISSION THAT THE FAIR MARKET VALUE AS DETERMINED BY THE LEARNED CIT( A) ITSELF WAS HIGH AND NEEDED NO FURTHER INCREASE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FAIR MARKET VALUE HAS BEEN DEFINED IN SECTION 2(22B) OF THE INCOME TAX ACT, 19 61. IT MENTIONS THAT THE SAME TO BE THE PRICE THAT THE CAPITAL ASSET WOULD ORDIN ARILY FETCH ON SALE IN THE OPEN MARKET ON THE RELEVANT DATE. A PERUSAL OF THE ORD ER OF THE LEARNED ASSESSING OFFICER SHOWS THAT THE ASSESSING OFFICER HAS ADOPTE D THE FAIR MARKET VALUE OF THE PROPERTY BY ADOPTING THE GUIDELINE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY. A PERUSAL OF THE CLAIM OF THE ASSESSEE SHOWS THAT THE ASSESSEE HAS TAKEN THE GUIDELINE VALUE IN THE YEARS 1987-88 AND 1988-89 AND HAS WORKED OUT BACKWARDS TO GET THE FAIR MARKET VALUE FOR THE YEAR 1981-82. A PERUSAL OF THE ORDER OF THE LEARNED CIT(A) SHOWS THAT HE HAS ADOPT ED AN AD HOC FIGURE TO ARRIVE AT THE FAIR MARKET VALUE. THE ACT SPECIFICALLY PRO VIDES HOW THE FAIR MARKET VALUE IS I.T.A. NO. 750/MDS/2011 4 TO BE COMPUTED. ONCE THIS IS AVAILABLE, THEN IT IS THAT METHOD THAT IS TO BE APPLIED. IT IS NOTICED THAT NONE OF THE AUTHORITIE S HAS ADOPTED THE METHOD PROVIDED UNDER THE ACT. IN THE CIRCUMSTANCES, WE A RE OF THE VIEW THAT THE ISSUE IN THIS APPEAL SHOULD BE RESTORED TO THE FILE OF TH E ASSESSING OFFICER FOR RE- ADJUDICATION AND WE DO SO. THE ASSESSING OFFICER S HALL OBTAIN COPIES OF THE SALE INSTANCES IN OR AROUND THE SAME AREA AS THE PROPERT Y SOLD AND THE MARKET VALUE THEREIN SHALL BE TAKEN INTO CONSIDERATION ALONG WIT H THE GUIDELINE VALUE FOR THE SAID PROPERTY AS FIXED BY THE STAMP VALUATION AUTHO RITY AND WHICHEVER IS FOUND TO BE HIGHER SHALL BE ADOPTED AS THE FAIR MARKET VALUE OF THE LAND AS ON 1.4.1981. THE ASSESSING OFFICER MAY ALSO TAKE INTO CONSIDERAT ION THE FAIR MARKET VALUE ADOPTED BY THE ASSESSEE FOR THE PURPOSE OF COMPUTAT ION OF CAPITAL GAINS WHEN THE ASSESSEE HAD SOLD PART OF THE PROPERTY DURING THE A SSESSMENT YEARS 1987-88 AND 1988-89. THE ASSESSING OFFICER SHALL GRANT THE ASS ESSEE ADEQUATE OPPORTUNITY TO SUBSTANTIATE ITS CLAIM. IN THE CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 23/09/ 2011. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 23 RD SEPTEMBER, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE