Appeal details
Counselvise Citation
[2017] 126 COUNSELVISE.COM (IT) 9967 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 8 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
01-09-2017
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
E
Next Hearing Date
28-02-2017
Assessment Year
2008-2009
Appeal Filed On
19-12-2014
Judgement Text
E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 7596/ MUM/2014 ( / ASSESSMENT YEAR : 2008-09) ELDRED PEREIRA, C/O S.M. LASRADO & CO., CHARTERED ACCOUNTANTS, SILVER SYMPHONY, 1ST FLOOR, 37, CHURCH AVENUE, SANTACRUZ (W), MUMBAI 400 054. / V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 19(3), 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. ./ PAN : AAPPP8882J ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI VISHWAS V. MEHENDALE REVENUE BY : SHRI RAVI TIWARI, SENIOR AR & SHRI SANJAY SINGH,DR / DATE OF HEARING : 27.07.2017 / DATE OF PRONOUNCEMENT : 01-09-2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 7596/MUM/2014, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 26.09.20 14 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 18, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2008-09, APPELLATE PR OCEEDINGS BEFORE LEARNED CIT(A) HAS ARISEN FROM THE ASSESSMENT ORDER DATED 2 7.12.2010 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) . ITA 7596/MUM/2014 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, HON. CIT-A ERRED IN CONFIRMING ADDITION OF STCG AMO UNTING TO RS. 81,85,476/-.' 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, HON. CIT-A ERRED IN MAKING ASSESSMENT OF LTCG AT RS.18,82,280/- AS AGAINST APPELLANT'S COMPUTATION O F RS.30,60,539/-. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, HON. CIT-A ERRED IN NOT ALLOWING DEDUCTION OF LEGAL FEES OF RS.42,079/- AGAINST LTCG AND RS.65,955/- AGAINST ST CG WHILE COMPUTING TAXABLE CAPITAL GAINS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, HON. CIT-A ERRED IN IGNORING THE VALUATION REPORT OF GOV T. APPROVED VALUER FOR DETERMINING THE FAIR MARKET VALUE AS ON 01-04-1981. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E AND ONE MR. RONALD STEPHEN PEREIRA HAD GAINED RIGHT, TITLE AND INTERES T IN A PROPERTY DESCRIBED AS THE PIECE AND PARCEL OF LAND AND GROUND BEARING C.T .S. NO. F/675 OF VILLAGE BANDRA , CORRESPONDING F.P. NO. 73 OF T.P.S. III OF 30 TH ROAD, BANDRA,MUMBAI BY VIRTUE OF BEING THE LEGAL HEIRS TO THE ERSTWHILE OWNER OF THE PROPERTY. THE SAID PROPERTY WAS CALLED AS ELRON AS IT EXISTED THE N CONSISTED OF PIECE AND PARCEL OF LAND AND A STRUCTURE THEREON ADMEASURING ABOUT 618.7 SQ. METERS. THE SAID PROPERTY ENJOYED AN FSI OF 1 AND WAS ELIG IBLE FOR LOADING OF ADDITIONAL TDR FSI OF 1. VIDE A DEVELOPMENT AGREEME NT DATED 21-02-2003, THE ASSESSEE ALONGWITH MR. RONALD STEPHEN PEREIRA, REFERRED TO AS 'OWNERS' ASSIGNED IN THE SAID DOCUMENT TO ORION PARTNERS, A PARTNERSHIP FIRM TO DEVELOP THE SAID PROPERTY BY BRINGING IN THE TRANSF ERABLE AND LOADABLE TDR AT THE COST OF THE DEVELOPERS. THE CONSIDERATION FOR C ONFERRING OR ASSIGNING THE ITA 7596/MUM/2014 3 RIGHT FOR THE DEVELOPMENT IS SHOWN TO BE CHEQUE OF RS. 40 LAKHS TO BE PAID IN THE MANNER AS DISCUSSED IN THE SAID DOCUMENT, AND T HE FULLY CONSTRUCTED AREA OF 763.03 SQ.MTRS., THE VALUE OF WHICH WAS SH OWN AT RS.78,82,100/- AND THE ASSESSEE'S SHARE IN THE SAID PROPERTY WAS 50%, THE CONSIDERATION IN THE ASSESSEE'S HANDS WAS ACCORDINGLY WORKED OUT AT RS.5 9,41,000/- . IT WAS OBSERVED BY THE AO THAT WHILE THE INCOME ARISING FR OM ASSIGNMENT OF DEVELOPMENT RIGHTS AS DISCUSSED ABOVE WAS DECLARED BY THE ASSESSEE AS CAPITAL GAINS FOR THE A.Y. 2005-06, AS UNDER - LONG TERM CAPITAL GAINS PARTICULARS QUANTITY COST COST INDEXED SALE SAL E INDEXED BOOK GAIN/ DATE VALUE/INDEX COST DATE VALUE GAIN/LOSS LOSS RESIDENCE AT BANDRA (50% SHARE) 1.4.81 165600 48 0/100 794880 28.3.05 5940000 5145120 5774400 165600 794880 5940000 5145120 5774400 1.RESIDENCE AT BANDRA(50% SHARE) LESS-EXPENSES INCURRED ON ASSETS AS LEGAL FEES PAID 170000 COMPENSATION PAID TO TENANT AS PER C 5 00000 670000 NET CAPITAL GAINS 4475120 LESS-AMOUNT EXEMPT UNDER THE SECTIONS 54 PROFIT ON SAKE OF PROPERTY USED FOR RESIDENCE PURCHASES/CONSTRUCTED/INVESTED 394000 0 NET CAPITAL GAIN 4475120 LEAST OF THE ABOVE TWO 3940000 TOTAL EXEMPTIONS 3940000 TOTAL CAPITAL GAINS 535120 A PERUSAL OF THE SAID DEVELOPMENT AGREEMENT HOWEVER SHOWED THE MARKET VALUE OF THE SAID PROPERTY AT RS.1,75,25,000/- AS A GAINST RS.30 LAKHS AS EARNEST MONEY AND RS.10 LAKHS TO BE SHOWN RECEIVABL E ON APPROVAL OF THE PLANS AND THE FOUR CONSTRUCTED RESIDENTIAL UNITS AD MEASURING 763.03 SQ.MTRS. THUS, THE A.O. OBSERVED THAT THE ASSESSEE HAD OFFER ED AN AMOUNT OF RS. 59,40,000/- AS HIS SHARE , AS AGAINST THE VALUE ADO PTED BY THE REGISTRAR ITA 7596/MUM/2014 4 WHICH WAS AT RS. 87,62,500/- I.E 50% OF RS. 1,75,25 ,000/-). THE A.O. ALSO OBSERVED THAT THE VALUERS REPORT FILED BY THE ASSE SSEE CLEARLY INDICATED THAT THE OWNERS ARE NOT SELLING OR TRANSFERRING ANY FSI OF THE PLOT. IT WAS ALSO OBSERVED BY THE AO THAT THEY ARE ALSO CONSUMING 17. 11 SQ. MTRS OF TDR FSI FOR THEMSELVES . THE A.O. OBSERVED THAT THE PLOT OF 618.7 SQ. MTRS ENJOYS A PERMISSIBLE FSI OF 1 , WHICH TRANSLATES TO 618.7 MT RS OF BUILT UP AREA, WHILE THE ASSESSEE AND SAID MR RONALD PERIERA WERE GIVEN 763 SQUARE METERS.. THUS , THE AO OBSERVED THAT THE ENTIRE FSI OF THE P LOT HAVE BEEN RETAINED BY THE ASSESSEE AND MR. RONALD PERIERA BUT THEY HAVE A LSO CONSUMED ADDITIONAL FSI FROM MARKETABLE TDR BROUGHT IN BY THE DEVELOPER . IT WAS OBSERVED BY THE AO THAT THE VALUER HAS CERTIFIED THAT THERE IS NO T RANSFER OF LAND OR FSI AND WHAT THE ASSESSEE HAS GAINED BY WAY OF DEVELOPMENT RIGHT IS ON ACCOUNT OF SUFFERANCE OF INCONVENIENCE BORNE BY HIM BY WAY OF DEVELOPMENT OR CONSTRUCTION AND ENABLING THE DEVELOPER TO BRING IN MARKETABLE TDR AND UTILIZE THE SAME FOR CONSTRUCTION AND SALE OF IT. I T WAS OBSERVED BY THE AO THAT THERE IS NO SALE, TRANSFER OR EXTINGUISHMENT OF RIG HT, TITLE AND INTEREST ON THE PROPERTY I.E. LAND AND ITS INHERENT FSI , THE VALUE OF MONETARY CONSIDERATION AND IN KIND. THUS, THE A.O. BROUGHT TO TAX CONSTRU CTED AREA OF 381.52 SQ. MTRS FOR WHICH THE VALUE WAS SHOWN AT RS. 39,41,050 /- UNDER THE HEAD INCOME FROM OTHER SOURCES. THE A.O. ALSO OBSERVED THAT VIDE DECLARATION DATED 04-07-2005 U/S 2 OF MAHARASHTRA APARTMENT OWNERSHIP ACT, 1970, THE ASSE SSEE ALONG WITH MR. RONALD STEPHEN PEREIRA AND THE DEVELOPERS ORION PAR TNERS HAVE CONVERTED THE PROPERTY COMPRISING OF THE LAND AND THE BUILDING WH ICH WAS UNDER CONSTRUCTION THEN INTO A CONDOMINIUM OF DETERMINATE FAMILY UNITS AS ENLISTED THEREIN AND THIS ACT OF CONVERSION OF A PROPERTY BE ING LAND AND STRUCTURE THEREON INTO A CONDOMINIUM IS IN FACT CONVERSION OF THE PROPERTY INTO A BUSINESS ASSET AS THIS ACT OF CONVERSION ENABLED TH E DEVELOPER TO TRANSFER HIS SHARE OF DEVELOPED AREA IN THE CONSTRUCTED STRUCTUR E TO HIS PROSPECTIVE ITA 7596/MUM/2014 5 BUYERS. THUS, THE A.O. HELD FOR THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR , THE ASSESSEE HAD SOLD AND TRANSFE RRED HIS RIGHT, TITLE AND INTEREST IN RESPECT OF THE FAMILY UNIT NO. 302 ADME ASURING AREA OF 72.86 SQ. MTRS FOR A CONSIDERATION OF RES. 1.10 CRORES. THUS, THE A.O. COMPUTED THE INCOME OF THE ASSESSEE AS UNDER:- A.Y. 2005-06 THE WORKING OF THE CAPITAL GAIN SHOWN IN THE ENCLOS URES TO THE RETURN OF INCOME AND IN THE ASSESSEE'S A.R. DATED 06-12-2010 SHOWS THE TOTAL CONSIDERATION IN RESPECT OF TRANSFER OF DEVELOPMENT RIGHTS. TOTAL RECEIPTS FOR REDEVELOPMENT RS.20,00,000 AND VALUE OF CONSTRUCTED AREA OF 381.52 SQ.MTRS. RS .39,41,000 (BEING ASSESSEE'S SHARE) THEREFORE THE COST OF CONSTRUCTION IN RESPECT OF TH E PROPOSED NEW BUILDING IS 3941000/381.52 = RS.10,330 PER SQ.MT. THEREFORE THE COST OF CONSTRUCTION OF 72.86 SQ.RNTR S. = RS.7 ,52,624/-[A] FROM THE ENCLOSURES TO THE RETURN OF INCOME FOR THE YEAR 2005-06, IT IS SEEN THAT THE VALUE OF ASSESSEE'S SHARE IN LAND IS TAKEN AT RS. 1,65,600/- AS ON 01.04.1981. VALUE OF LAND OF 381.52 SQ. MTRS. AS ON 1.4.1981= R S.1,65,600/-[B] THEREFORE THE VALUE OF LAND ADMEASURING 72.86 SQ. M TRS AS ON 1.4.1981 WORKS OUT TO 72.86/381.52 X 165600 = RS.31,5 10 (C) INDEXED VALUE OF 72.86 SQ.MTRS. RELEVANT TO F.Y. 0 7-08 = 5.51 X 31510 (COST INFLATION INDEX FOR F.Y. 07-08 IS 551) = RS.1 ,73,620/- --- [D] ITA 7596/MUM/2014 6 TOTAL CONSIDERATION RECEIVED FOR THE RESIDENTIAL UN IT NO.302 ADMEASURING 72.86 SQ.MTRS. IS RS.1,10,00,000/-. THEREFORE, THE TOTAL COST OF THE APPORTIONED LAND ( LAND ATTRIBUTABLE TO THE SOLD RESIDENTIAL UNIT OF 72.86 SQ.MTRS) AND THE COS T OF CONSTRUCTED AREA OF THE SAID FLAT WORKS OUT TO RS.173620 + RS. 752624 = RS. 9,26,244/-. THE RATIO OF THE SALE RECEIPTS OF RS. 1,10,00,000/- ATTRIBUTABLE TO THE LAND ELEMENT AND THE CONSTRUCTED COST IS AS COMPUTED HER E UNDER - 173620 / 926244 X 11000000 = RS.20,61,900/ - , WHIC H IS THE SALE PROCEEDS ATTRIBUTABLE TO LAND ELEMENT AND THE BALAN CE VIZ. 11000000 - 2061900 = RS.89,38,100/- IS THE SALE PROCEEDS ATTRI BUTABLE TO THE CONSTRUCTION COST. AS DISCUSSED IN THE PRECEDING PARAGRAPHS AND CONSEQ UENT THEREUPON, THE DIFFERENCE OF THE SALE PROCEEDS ATTRIBUTABLE TO THE LAND AND COST ELEMENT THEREON, WHICH IS RS.20,61,900 - RS.1,73,620 = RS.1 8,88,280/- IS THE LTCG. THE DIFFERENCE OF THE SALE PROCEEDS ATTRIBUTABLE TO THE CONSTRUCTION COST AND COST ELEMENT, WHICH IS RS.8938100 - RS.752624 = RS.81,85,476/- IS THE STCG. PENAL PROCEEDINGS U/S 271(1) (C) OF THE ACT ARE SEP ARATELY INITIATED FOR FURNISHING INADEQUATE PARTICULARS. SUBJECT TO THE ABOVE DISCUSSIONS, THE INCOME OF THE ASSESSEE IS RECOMPUTED AS UNDER- INCOME FROM HOUSE PROPERTY RS. RS. ITA 7596/MUM/2014 7 A) SELF OCCUPIED .. B) LET OUT 2,17,886 2,17,886 CAPITAL GAINS A) STCG ON PROPERTY 81,85,476 B) LTCG ON PROPERTY 18,88,280 1,00,73,756 INCOME FROM OTHER SOURCES INTEREST FROM BANKS 1,00,668 1,00,668 GROSS TOTAL INCOME 1,03,92,310 LESS: DEDUCTION UNDER CHAPTER VI A OF THE ACT U/S 80C PUBLIC PROVIDENT FUND 15,000 EQUITY LINKED SAVINGS SCHEMES 90,000 1,05,000 TOTAL (A) + (B) 1,05,000 TOTAL AMOUNT 1,05,000 BUT RESTRICTED TO 1,00,00 0 TOTAL DEDUCTIONS 1,00,000 TOTAL INCOME 1,02,92,310 ROUNDED OFF TO 1,02,92,300 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 27-12-20 10 PASSED BY THE A.O. U/S 143(3) OF THE 1961 ACT, THE ASSESSEE CARRIED TH E MATTER BY FILING FIRST APPEAL BEFORE THE LD. CIT(A) , WHEREIN THE ASSESSEE SUBMITTED AS UNDER BEFORE LEARNED CIT(A): THE ISSUES INVOLVED IN THIS APPEAL ARE BASICALLY R EGARDING THE DETERMINATION/APPORTIONMENT OF SALE PROCEEDS ON LAN D AND CONSTRUCTION COST. THEREFORE, IT IS NECESSARY TO L OOK INTO THE AOS DECISION FOR A.Y. 2005-06 AND CIT A DECISION AGAIN ST THE GROUNDS RAISED BY APPELLANT THE SAME. IN AY 2005-06, AO ASS ESSED CAPITAL GAINS ON THE BASIS OF THE TOTAL SALE CONSIDERATION OF RS. 87,62,500/- AS PER S. 50C OF THE ACT AND HAS MADE H ER OWN CALCULATION OF CAPITAL GAINS WHICH HAS BEEN REPRODU CED ON PAGES 5&6 OF THE ASSESSMENT ORDER OF AY 2008-09. AO APPE ARS TO HAVE FOLLOWED SOME OF THE CALCULATIONS OF THE APPELLANT FOR AY 2005-06 ITA 7596/MUM/2014 8 FOR DETERMINATION OF THE COST OF CONSTRUCTION OF TH E FLAT SOLD DURING THIS ASSESSMENT AND ALSO TAKEN THE INDEXED COST ON THE BASIS OF THE SAME MENTIONED IN AY 2005-06. HOWEVER, FOR APP ORTIONMENT OF SALE PROCEEDS ON LAND AND FLAT, SHE HAS FOLLOWED HE R OWN METHOD. AFTER THE RECEIPT OF THE CIT A, 30, MUMBAI ORDER D ATED 15.04.2014 APPELLANT HAS TO SUBMIT THAT THE AOS CALCULATION O N PAGES 5 &6 OF THE ASSESSMENT ORDER NEED TO BE RE-WORKED AS UNDER: - 1. AO HAS RELIED UPON THE COST OF CONSTRUCTION AS M ENTIONED BY APPELLANT IN THE RETURN OF INCOME FILED FOR AY 2005 -06. HOWEVER, THE SAME COULD BE FOLLOWED PROVIDED THE TOTAL SALE PROCEEDS OF THE ENTIRE PROPERTY WERE CONSIDERED AT RS. 59,41,000/- AS COMPUTED BY APPELLANT. NOW, AS PER CIT A ORDER FOR AY 2005 -06 , THE TOTAL CONSIDERATION IS ACCEPTED AT RS. 87,62,500/-. THER EFORE, THE VALUE OF CONSTRUCTION COULD BE TAKEN AT RS. 67,62,500/- A S AGAINST RS. 39,41,000/- AND THE PER SQ. MTR. COST AND THE COST OF CONSTRUCTION OF THE SOLD FLAT NEEDS REVISION. IT IS SUBMITTED THAT THE SAID COSTS ARE ENTIRELY NO TIONAL AS APPELLANT HAS NEITHER ACTUALLY RECEIVED NOR PAID ANYTHING FOR THE CONSTRUCTION COST. HE HAS ONLY RECEIVED CASH COMPONENT OF RS. 2 0,00,000/-. THEREFORE, THE BALANCE REMAINING OF RS. 67,62,500/- SHOULD BE TAKEN AS THE COST OF CONSTRUCTION FOR THE FOUR FLAT S. ACCORDINGLY, THE WORKING SHOULD BE AS GIVEN BELOW; TOTAL VALUE OF CONSTRUCTION AO APPELLANT TOTAL SEPARATE CONSIDERATION RECEIPTS FOR RE DEVELOPMENT VALUE OF CONSTRUCTION 2,000,000 3,941,000 2,000.000 6,762,500 TOTAL CONSIDERATION 5,941,000 8,762,500 AS A CONSEQUENCE OF THE ABOVE, THE COST OF CONSTRUCTION PER SQ.MTR. SHOULD BE = 67,62,500/- 381.52 (TOTAL AREA) 10329.734 10,330 17725.152 17,725 ACCORDINGLY, THE TOTAL COST OF CONSTRUCTION OF SOLD AREA 72.86 SQ. MTR SHOULD BE 752,644 1,291,444 ITA 7596/MUM/2014 9 2. REGARDING THE F.M.V. AS ON 1.4.1981, APPELLANT H AS TO SUBMIT THAT AO HAS TAKEN THE VALUE OF LAND AS A PRO PORTION OF RS. 1,65,600/- BY DIVIDING THE SOLD AREA (72.86 SQ. MT) BY TOTAL AREA (381.52 SQ. MT). THE VALUE OF RS. 1,65,600/- IS THE FMV AS PER APPELLANTS CALCULATION FOR AY 2005-06. HOWEVER, T HE SAME IS NOT SUPPORTED BY ANY VALUATION REPORT FROM REGD. VALUER . FOR AY 2008-09, APPELLANT HAD FILED THE VALUATION REPORT FOR DETERMINING FMV OF THE SOLD AREA. HOWEVER, AO HAS TOTALLY IGNO RED THE SAME WITHOUT GIVING ANY REASONS. AS PER THE VALUATION RE PORT , THE VALUE IS CERTIFIED AT RS. 2,14,500/-. AFTER CONSIDERING THE VALUATION AS PER THE SAID VALUATION REPORT, THE INDEXED COST SHO ULD BE AS UNDER:- F.M.V. OF LAND AS ON 01.04.1981 ACCORDINGLY FAIR MARKET VALUE AS ON 01.04.1981 31,625 214,500 THE INDEXED COST AS PER CALCULATION GIVEN ABOVE SHOULD BE 173,938 1,179,750 3. REGARDING THE APPORTIONMENT OF TOTAL SALE PROCEE DS OF RS. 1,10,00,000/- ON LAND AND FLAT, IT IS SUBMITTED THA T THE AO HAS DETERMINED THE PROPORTIONATE SALE PROCEEDS OF LAND AND FLAT IN THE SAME PROPORTION OF THE VALUES OF LAND AND COST OF CONSTRUCTION AS COMPUTED ABOVE BY HER. HOWEVER, THE SAME SHOULD HAVE BEEN AS PER THE VALUATION REPORT OF N.R. VARINDANI , GOV T. APPROVED VALUER AS THE SAME IS BASED ON THE PREVAILING MARKE T RATES. THUS, THE CALCULATION SHOULD BE AS UNDER:- SALE PROCEEDS OF LAND SHOULD BE 2,061,897 4,255,163 AND SALE PROCEEDS OF FLAT SHOULD BE 2,061,900 4,255,163 OR AS PER AOS METHOD OF CALCULATION IT SHOULD BE [I.E.1,10,00,000 *11,79,750/ (11,79,750 + 12,91,444] 5,251,409 ACCORDINGLY, THE SALE PROCEEDS OF FLAT SHOULD BE OR ALTERNATIVELY AS CALCULATED ABOVE 8,938,100 6,744,837 5,748,591 ITA 7596/MUM/2014 10 ACCORDINGLY LTCG ON SALE OF LAND SHOULD BE OR 1,888,280 3,075,413 4,071,659 STCG ON SALE PROCEEDS OF FLAT SHOULD BE OR 8,185,456 5,453,394 4,457,148 4. REGARDING THE DEDUCTION OF INCIDENTAL EXPENSES, IT IS SUBMITTED THAT , AO HAS FURTHER ERRED IN NOT GIVING DEDUCTION OF INCIDENTAL EXPENSES OF RS. 1,08,034/- AS CLAIMED IN THE RETURN OF INCOME. APPELLANT ALSO PROVIDED THE COPIES OF THE VOUCHERS/BILLS FOR THE SAME. AO HAS NOT GIVEN ANY REASONS FOR SUC H REJECTION. THE SAME BEING INCIDENTAL TO THE SALE AGREEMENT SHO ULD BE ALLOWED. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, REJECTED THE SAME BY HOLDING AS UNDER:- I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT , ORDER OF THE AO AND FACTS OF THE CASE CAREFULLY. IT IS NOTICED T HAT THE ISSUE INVOLVED IN THIS CASE IS RELATING TO THE COMPUTATIO N OF LONG TERM CAPITAL GAINS AND SHORT TERM CAPITAL GAINS AND ALSO THE CONSIDERATION OF REGISTERED VALURS REPORT SUBMITTE D BEFORE THE AO. THE ASSESSEE HAS ALSO RAISED GROUNDS RELATING TO NO T ALLOWIUNG DEDUCTION OF LEGAL FEE ON LONG TERM CAPITAL GAINS A ND SHORT TERM CAPITAL GAINS AND THE VALUE OF THE PROPERTY WAS WOR KED OUT AT RS. 1,75,25,000/- BY THE REGISTRATION AUTHORITIES. THE AO HAS ADOPTED THIS VALUATION AS PER THE PROVISIONS OF SECTION 50C OF THE IT ACT AND THE SHARE OF THER ASSESSEE WAS DETERMINED AT RS. 87 ,51,500/- IN PLACE OF RS, 59,40,000/- DECLARED ON THE BASIS OF A GREEMENT. SECONDLY THE AO HAS ADOPTED THE FIGURES OF TOTAL RE CEIPTS FOR DEVELOPMENT ON THE BASIS OF AGREEMENT FILED BY THE ASSESSEE FOR AY 2005-06. THE COST OF CONSTRUCTION AND THE VALUE OF LAND AS ON 1.4.1981 WAS DETERMINED ON THE BASIS OF THE FIGURES GIVEN BY THE ASSESSEE IN THE RETURN FILED FOR AY 2005-06. THE I NDEXED VALUE AND COST INFLATION INDEX WAS FOR AY 2007-08 WAS AL SO CONFIRMED BY THE AO ON THE BASIS OF THESE FIGURES. AFTER GIV ING THE DETAILED COMPUTATION IN PARA 12, PAGE 4,5 AND 6 OF THE ASSES SMENT ORDER. THE AO HAS COMPUTED THE LONG TERM CAPITAL GAINS AT RS. 18,88,280/- AND THE SHORT TERM CAPITAL GAINS AT RS. 81,85,476/-. ITA 7596/MUM/2014 11 ON THE OTHER HAND THE AR OF THE APPELLANT HAS SUBM ITTED THAT THE AO HAS COMPUTED THE LONG TERM CAPITAL GAIN S ON THE SALE OF PROPERTY BY ADOPTING THE VALUE AS PER THE REGISTRAT ION AUTHORITIES U/S 50C AND ALSO ADOPTING THE FIGURES AS GIVEN IN T HE RETURN FOR AY 2005-06. THE AR OF THE APPELLANT HAS RAISED OBJECT ION THAT DURING THE ASSESSMENT PROCEEDINGS THE REGISTERED VALUERS REPORT WAS FOILED WHICH WERE NOT CONSIDERED AND THE AO HAS REL IED ON THE DETAILS GIVEN IN THE A.Y.2005-06 AND HAS WRONGLY DE TERMINED THE LONG TERM CAPITAL GAINS AND SHORT TERM CAPITA' GAIN S ON THAT BASIS. THE A'O HAS COMPUTED THE TOTAL CONSIDERATION AT RS . 39,41,000/- WHILE THE APPELLANT HAS COMPUTED AT RS. 67,62,500/- . THE COST OF CONSTRUCTION WAS COMPUTED BY THE AO AT RS. 10,330/- PER SQ. METRE WHILE THE APPELLANT WORKED OUT AT RS.17,725/- . THUS IT WAS ARGUED THAT THE TOTAL COST OF SOLD AREA 72.86 SQ. M ETRE SHOULD BE RS. 12,91,444/- WHEN THE AO HAS COMPUTED IT AT RS. 7,52,644/-. THE FAIR MARKET VALUE OF LAND AS ON 1.4.1981 WAS TA KEN AT RS. 2,14,500/- IN PLACE OF RS. 13,625/- ADOPTED BY THE AO. THE INDEXED COST IS ADOPTED AT RS. 11,79,750/- IN PLACE OF RS. 1,73,938/- TAKEN BY THE AO. THUS, THE AR HAS ARGUE D THAT THE LONG TERM CAPITAL GAIN SHOULD BE COMPUTED AT RS. 40 ,71,659/- IN PLACE OF RS. 18,88,280/- TAKEN BY THE AO AND THE SH ORT TERM CAPITAL GAINS WAS COMPUTED AT RS. 54,53,394/- IN PL ACE OF RS. 81,85,456/- TAKEN BY THE AO. FROM THE PERUSAL OF THE SUBMISSIONS AND FACTS OF TH E CASE IT IS NOTICED THAT THE DISPUTE IS RELATING TO WHETHER THE AO SHOULD ADOPT THE FIGURES GIVEN BY THE APPELLANT ITSELF IN ITS RE TURN OF INCOME FOR AY 2005-06 OR SHOULD CONSIDER THE VALUATION REPORT PREPARED DURING THE ASSESSMENT PROCEEDINGS. THE AO HAS ADOP TED THE FIGURES AS GIVEN BY THE APPELLANT. IN THE AY 2005- 06 BECAUSE ON THAT BASIS OF THESE FIGURES THE ASSESSMENT AND THE APPELLATE ORDER HAS HAS BEEN PASSED BY THE CIT(A). THIS VALUATION REPORT WAS NEVER SUBMITTED BY THE ASSESSEE DURING THE ASSESSME NT PROCEEDINGS FOR AY 2005-06. SECONDLY THE SALE VALU E AS PER SECTION 50C OF THE I.T. ACT HAS TO BE ADOPTED ON T HE BASIS OF STAMP DUTY VALUATION WHICH THE AR OF THE APPELLANT HAS NO T OBJECTED. KEEPING IN VIEW THE FACTS 'AND CIRCUMSTANCES I AM O F THE VIEW THAT THE AO HAS MADE COMPUTATION SHORT TERM CAPITAL GAIN S AND LONG TERM CAPITAL GAINS BY ADOPTING THE FIGURES OF THE A SSESSEE SUBMITTED FOR AY 2005-06 AND TAKEN THE VALUE AS PER STAMP DUTY VALUATION WHICH IN MY VIEW IS CORRECTLY ADOPTED BEC AUSE THE ASSESSEE HAS NOT SUBMITTED ITS VALUATION REPORT FOR AY 2005-06. MOREOVER, THE CIT(A) HAS ALSO UPHELD THE ORDER OF T HE AO ON THIS ITA 7596/MUM/2014 12 ISSUE FOR AY 2005-06. REGARDING THE ALLOWABILITY O F LEGAL EXPENSES, IT IS NOTICED THAT THE AO HAS NOT MADE AN Y DISALLOWANCE IN THE ASSESSMENT ORDER WHICH MEANS THIS ISSUE HAS NOT BEEN ORIGINATED FROM THE ASSESSMENT ORDER HENCE CANNOT B E ENTERTAINED. IN TOTALITY OF FACTS AND CIRCUMSTANCES IT IS HELD T HAT THE A.O. HAS RIGHTLY COMPUTED THE LONG TERM CAPITAL GAINS AND SH ORT TERM CAPITAL GAINS BY ADOPTING THE FIGURES GIVEN BY THE ASSESSEE ITSELF FOR A.Y. 2005-06 AND ALSO ADOPTED THE VALUATION AS PER STAMP DUTY VALUATION U/S 50C THEREFORE, NO INTERFERENCE IS CAL LED FOR TO THE ORDER OF THE AO. THUS GROUND OF APPEAL IS DISMISSE D. 5. AGGRIEVED BY THE APPELLATE ORDER DATED 26-09-201 4 PASSED BY THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06 HAS DECIDED TH IS ISSUE IN FAVOUR OF THE ASSESSEE IN ITA NO. 4623/MUM/2014 FOR A.Y. 2005-06 VIDE ORDERS DATED 19.10.2016 AND DISMISSED THE APPEAL OF THE REVENUE , BY HOLDING AS UNDER:- CHALLENGING THE ORDER, DATED 15/04/2014 OF THE CIT (A)- 30,MUMBAI, THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL. ASSESSEE AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 30/08/2005, DECLARING TOTAL INCOME AT RS.72,430/-.THE AO COMPLE TED THE ASSESSMENT, U/S.143 (3) R.W.S. 147 OF THE ACT, ON 2 9/12/2011 DETERMINING HIS INCOME AT RS.73.67 LAKHS. 2.EFFECTIVE GROUND OF APPEAL IS ABOUT DEDUCTION U/S .54 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS IN THE AY.2008-09 , IN THE ASSESSEE'S OWN CASE, THE AO NOTICED THAT THE ASSESS EE ALONG WITH ONE OF THE CO-OWNERS HAD GAINED RIGHT TITLE AND INT EREST IN ONE PROPERTY AT BANDRA BY VIRTUE OF BEING THE LEGAL HEI R OF THE PROPERTY OWNER , THAT VIDE DEVELOPMENT AGREEMENT, DATED 21/0 2/2003, THE CO-OWNERS ENTERED INTO AN AGREEMENT WITH A PARTNERS HIP FIRM TO DEVELOP THE PROPERTY BY BRINGING IN THE TRANSFERABL E AND LOADABLE TDR AT THE COST OF THE DEVELOPERS, THAT THE CONSIDE RATION FOR CONFERRING THE RIGHT FOR DEVELOPMENT AGREED IT WAS FOR CHEQUE COMPONENT OF RS.40 LAKHS AND NON-MONETARY COMPONENT OF FULLY CONSTRUCTED AREA OF 763.03 SQ. MTRS., THAT THE VALU E OF THE BOTH THE COMPONENTS WAS DECLARED AT RS. 78.82 LAKHS. THE AO, HOWEVER, NOTICED THAT THE ACKNOWLEDGEMENT OF REGISTERED AND DELIVERED ITA 7596/MUM/2014 13 DOCUMENT FOR THE SAID DEVELOPMENT AGREEMENT SHOWED THE MARKET VALUE OF THE PROPERTY AT RS. 1.75 CRORES AS AGAINST 30 LAKHS AS EARNEST MONEY AND RS. 10 LAKHS BEING THE RECEIVABLE AMOUNT ON APPROVAL OF THE PLANS. ACCORDINGLY HE OBSERVED THAT THE ASSESSEE HAD OFFERED AN AMOUNT OF RS.59.41 LAKHS AS HIS SHAR E, THAT THE VALUE ADOPTED BY THE REGISTRAR OF THE PROPERTY WAS RS. 87.62 LAKHS (50% OF RS. 1.75 CRORES). CONSIDERING THE ABOVE FAC TS HE HELD THAT THERE WERE REASONS TO BELIEVE THAT INCOME OF THE AS SESSEE LIABLE FOR TAX HAD ESCAPED ASSESSMENT. THEREFORE HE ISSUED A N OTICE U/S.148 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS THE A SSESSEE OBJECTED TO THE VALUE ADOPTED BY THE REGISTRAR WHIC H ACCORDING TO HIM HAD BEEN ERRONEOUSLY TAKEN BECAUSE AS PER THE S TAMP DUTY READY RECKNOR AND THE VALUATION REPORT FROM THE REG ISTERED VALUER THE SHARE IN THE PROPERTY WAS AT RS.49.41 LAKHS ONL Y, THAT THERE WAS NO COST TO TDR AND THEREFORE NO QUESTION OF CAP ITAL GAINS IN THE HANDS OF THE ASSESSEE, THAT HE HAD PAID RS. FIV E LAKHS TO ONE OF THE OLD TENANTS OF THE BUILDING TO VACATE THE TE NANT, HE HAD INCURRED AN EXPENDITURE OF RS. 39.40 LAKHS FOR CONS TRUCTION OF RESIDENTIAL ACCOMMODATION CONSTRUCTED WERE BY THE D EVELOPERS, THAT THE DEVELOPER HAD CONSTRUCTED FLATS ON THE ARE A OF 763.03 SQ. MTRS. RETAINED BY THE ASSESSEE AS PER THE AGREEMENT THAT HIS SHARE WAS 50%, THAT HE HAD CLAIMED DEDUCTION OF 50% ON CO NSTRUCTED COST OF THAT AREA CALCULATED AT THE RATE OF RS.10,3 30 PER SQUARE MTRS. AT RS. 39.40 LAKHS U/S.54 OF THE ACT. IT WAS FURTHER STATED THAT TOTAL CONSTRUCTED AREA FOR HIM WAS 381.52 SQ.M TRS. WHICH IS 50% OF 763.03 SQ.MTRS. AND THE AREA OF THE TOTAL PL OT WAS 618.07 SQ.MTRS, THAT THE PLAN FOR RESIDENTIAL BUILDING COU LD NOT ACCOMMODATE THE ENTIRE 381.32 SQ.MTRS. ON ONE FLOOR , THAT HE WAS ALLOTTED THE SAID CONSTRUCTION AREAS BY WAY OF FOUR FLATS I.E. TWO ADJACENT FLATS ON THE SIXTH FLOOR ONE FLATS ON THE THIRD FLOOR AND THE OTHER ON THE SECOND FLOOR. THE ASSESSEE RELIED UPON VARIOUS CASE LAWS TO SUPPORT HIS ARGUMENT THAT ON SALE OF TDR CA PITAL GAINS WAS NOT CHARGEABLE. AFTER CONSIDERING THE SUBMISSIO N OF THE ASSESSEE, THE AO REJECTED THE CLAIM MADE BY THE ASS ESSEE U/S.54 OF THE ACT AT RS. 39.40 LAKHS IN RESPECT OF FOUR FL ATS DEVELOPED AGAINST THE MONETARY AS WELL AS NON-MONETARY CONSID ERATION RECEIVED BY THE ASSESSEE AND HELD THAT THE LONG-TER M CAPITAL GAIN WAS IN RESPECT OF THE LAND THAT WAS NOT A RESIDENTI AL HOUSE, THAT DEDUCTION U/S.54 OF THE ACT WAS NOT AVAILABLE, THAT DEDUCTION UNDER THE SAID SECTION WAS AVAILABLE ONLY WHEN AN A SSESSEE WOULD PURCHASE A NEW HOUSE PROPERTY, THAT FOUR FLAT S FORMED PART OF CONSIDERATION RECEIVED TOWARDS TRANSFER OF DEVEL OPMENT RIGHTS OF THE ORIGINAL HOUSE PROPERTY, THAT THE FLATS HAD NOT BEEN CONSIDERED CONSTRUCTED BY THE ASSESSEE, THAT THE REQUIREMENT O F SECTION 54 ITA 7596/MUM/2014 14 WAS NOT FULFILLED. ACCORDINGLY, THE AO CONSIDERED T HE AMOUNT OF RS.87.62 LAKHS AS SALE CONSIDERATION AND AFTER ALLO WING INDEXED COST OF ACQUISITION AT RS.7.94 LAKHS COMPUTED THE G ROSS CONSIDERATION AT RS.79.67 LAKHS. FROM THAT HE ALLOW ED LEGAL FEES PAID OF RS.1.70 LAKHS AND COMPENSATION PAID TO TENA NTS AT RS. 5 LAKHS. FINALLY, HE COMPUTED THE LONG-TERM CAPITAL G AIN AT RS.72.97 LAKHS. 3.AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM, THE ASSESSEE MADE ELABORATE SUBMISSIONS WITH REGARD TO THE REOPENING OF THE ASSESSMENT AS WELL AS ON THE MERITS OF THE C ASE. AFTER CONSIDERING THE ASSESSMENT ORDER AND THE SUBMISSION S OF THE ASSESSEE, THE FAA HELD THAT THE ISSUE IN QUESTION H AD BEEN DULY CONSIDERED BY THE TRIBUNAL IN THE CASE OF JAWAHAR N GHAIA (ORDER DATED 19/11/2013) AND HEMA SUNIL RANE (ITA/4665/MURN/2012). FINALLY, HE HELD THAT THE ENT IRE VALUE OF NON-MONETARY CONSIDERATION TAKEN BY THE AO OF 635.8 6 SQ.MTRS. OF CONSTRUCTED AREA WAS ELIGIBLE FOR DEDUCTION U/S.54 OF THE ACT. 4.DURING THE COURSE OF HEARING BEFORE US THE DEPART MENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE AO. A S STATED EARLIER, NO ONE APPEARED BEFORE US, ON BEHALF OF TH E ASSESSEE. 5. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD . WE FIND THAT THE AO HAD TAXED THE NON-MONETARY BENEFITS OF THE A SSESSEE AND HAD DENIED HIM THE BENEFIT OF SECTION 54 OF THE ACT , THAT THE FAA HAD ALLOWED THE APPEAL OF THE ASSESSEE. WE FIND THA T IN THE CASE OF HEMA SUNIL RANE (SUPRA) THE TRIBUNAL HAD DECIDED TH E ISSUE AS UNDER: '6.8. THE ABOVE ISSUE HAS BEEN DULY CONSIDERED BY T HE ITAT 'J' BENCH, MUMBAI IN A VERY RECENT ORDER DTD. 19.11 .20J3, IN THE CASE OF MLS. JAWAHAR N. GHIA & OTHERS (ADP), DR . RANE (MRS. HEMA SUNIL) IN A. Y. 2004-05 IN ITA NO.4665LM UMBAI 12012. THE RELEVANT PART OF THE DECISION IS REPRODU CED AS UNDER: ..... ON THE ISSUE OF ALLOWABILITY OF EXEMPTION U/S . 54/54 F, THE AO HAS DENIED THE EXEMPTION U/S 54/54F ON THE G ROUND THAT ASSESSEE HAS NOT PURCHASED NEW RESIDENTIAL PRO PERTYS FOR ABSORBING THIS LONG TERM CAPITAL GAIN ARISING O UT OF TRANSFER OF PROPERTY IN QUESTION. IT IS RELEVANT TO NOTE THAT THE DEVELOPMENT AGREEMENT ITSELF EMPHASIZES ON THE AREA WHICH ITA 7596/MUM/2014 15 SHALL BE ALLOWED TO THE BENEFICIARIES IN NEWLY CONS TRUCTED BUILDING AS AGAINST THEIR EXISTING AREAS. THE SAID DEVELOPMENT AGREEMENT CLEARLY INDICATES THE AFORESA ID STATISTICS IN RESPECT OF ALLOTMENT OF AREAS. THIS S UGGESTS THAT THE ALLOTMENT IN NEWLY CONSTRUCTED BUILDING UNDER T HE DEVELOPMENT AGREEMENT IS AN ADJUSTMENT OF DEBTS IN RESPECT OF TRANSFER OF PROPERTY WITHIN THE MEANING OF DEVEL OPMENT AGREEMENT DATED 9TH NOVEMBER 2003. CONSIDERING THIS FACT IN THE LIGHT OF THE PROVISIONS OF SECTION 54, THE W ORD PURCHASED IN SECTION 54 MUST BE INTERPRETED IN ITS ORDINARY MEANING AS BUYING FOR A PRICE OR EQUIVALENT OF A PR ICE BY PAYMENT IN KIND OR ADJUSTMENT TOWARDS OLD DEBTS OR FOR OTHER MONETARY CONSIDERATION. THE SAID PROPOSITION IS SUPPORTED IS BY THE DECISION OF THE HON'BLE APEX CO URT -IN THE CASE OF CIT VS V. T.N ARVINDA REDDY (120 ITR 46 SC) WHEREIN IT HAS BEEN HELD THAT THERE IS NO REASON TO DIVORCE THE ORDINARY MEANING OF THE WORD 'PURCHASE' AS BUYING F OR A PRICE OR EQUIVALENT OF PRICE BY PAYMENT IN KIND OR ADJUSTMENT TOWARDS AN OLD DEBT OR FOR OTHER MONETARY CONSIDERA TION FROM ITS LEGAL MEANING IN SECTION 54(1). UNDOUBTEDLY, EA CH RELEASE IN THE CASE IS A TRANSFER OF THE RELEASOR'S SHARE F OR CONSIDERATION TO THE RELEASE. IN VIEW OF THE MENTIO NED DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED FOR THE DEDUCTION U/S 54/54F AND HENCE WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH O RDER OF THE LEARNED CIT(A) ON THIS COUNT. RESULTANTLY, THE ISSU E OF ALLOWABILITY OF EXEMPTION U/S. 54/54F IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. RESPECTFULLY FOLLOWING THE ABOVE ORDER, SUCH WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER F ROM ANY LEGAL INFIRMITY. SO, CONFIRMING THE SAME WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO AND HOLD THAT ASSESSEE WAS ENTITLED TO DEDUCTION U/S.54 OF THE AC T. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. THE LD. COUNSEL SUBMITTED THAT THE TRIBUNAL IN ASSE SSEES OWN CASE FOR AY 2005-06 IN ITA NO. 4623/MUM/2014 VIDE ORDERS DATED 19-10-2016 HAS UPHELD THE ORDER OF LEARNED CIT(A) AND DISMISSED TH E APPEAL OF REVENUE WHEREIN LEARNED CIT(A) HAD HELD THAT THE ENTIRE VAL UE OF NON-MONETARY CONSIDERATION TAKEN BY THE AO OF 635.86 SQUARE METE RS OF CONSTRUCTED AREA ITA 7596/MUM/2014 16 WAS ELIGIBLE FOR DEDUCTION U/S 54 OF THE 1961 ACT . THE SAID ORDER OF THE TRIBUNAL IS PLACED IN PAPER BOOK/PAGE 29-32. SIMILA RLY, THE ASSESSEE HAS SUBMITTED THE VALUATION REPORT BY GOVERNMENT REGIST ERED VALUER BEFORE THE A.O. AND LD. CIT(A) , BUT BOTH THE AUTHORITIES HAVE NOT TAKEN COGNIZANCE OF THE SAID VALUATION REPORT AS SUBMITTED BY THE ASSES SEE. THE LEARNED COUNSEL SUBMITTED THAT SAID REPORT IS FILED BEFORE THE TRIB UNAL ALSO WHICH IS PLACED IN PAPER BOOK/PAGE 14-29. IT IS SUBMITTED THAT ASSESSE E HAS DISPUTED THE STAMP DUTY VALUATION ADOPTED BY STAMP DUTY VALUATION AUTH ORITIES WHICH WAS ADOPTED BY THE AO FOR COMPUTING CAPITAL GAINS, BUT THE AUTHORITIES BELOW DID NOT CALL FOR DVO REPORT AS IS MANDATED U/S 50C(2). THUS, IT IS SUBMITTED BEFORE THE TRIBUNAL THAT DIRECTIONS MAY BE ISSUED TO THE AUTHORITIES BELOW TO CONSIDER THE VALUATION REPORT SUBMITTED BY THE ASSE SSEE BEFORE DECIDING THE ISSUE ON MERITS AS WELL TO CONSIDER THE TRIBUNAL OR DER FOR AY 2005-06 , BOTH OF WHICH HAVE DIRECT BEARING ON THE ISSUES ARISING FRO M THIS APPEAL. 7. THE LD. DR HAS ALSO FAIRLY AGREED THAT THE TRIBU NAL ORDER FOR AY 2005-06 AS WELL AS THE VALUATION REPORT NEEDS TO BE CONSIDE RED BY THE AUTHORITIES BELOW BEFORE ADJUDICATION OF THIS APPEAL AND IF SO REQUIRED THE AO CAN CALL FOR DVO REPORT. THUS IT IS FAIRLY AGREED BY LEARNED DR THAT ISSUES MAY BE SET ASIDE TO THE FILE OF THE AO FOR DENOVO DETERMINATIO N OF ALL THE ISSUES ARISING IN THIS APPEAL. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND ALSO PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASSE SSEE AND ONE MR. RONALD STEPHEN PEREIRA GAINED RIGHT, TITLE AND INTEREST IN A PROPERTY DESCRIBED AS THE PIECE AND PARCEL OF LAND AND GROUND BEARING C.T.S. NO. F/675 OF VILLAGE BANDRA CORRESPONDING F.P. NO. 73 OF T.P.S. III OF 3 0 TH ROAD, BANDRA BY VIRTUE OF BEING THE LEGAL HEIRS TO THE ERSTWHILE OWNER OF THE PROPERTY. THE SAID PROPERTY CALLED AS ELRON AS IT EXISTED THEN CONSIST ED OF PIECE AND PARCEL OF LAND AND A STRUCTURE THEREON ADMEASURING ABOUT 618. 7 SQ. MTRS. THE SAID ITA 7596/MUM/2014 17 PROPERTY ENJOYS AN FSI OF 1 AND IS ELIGIBLE FOR LOA DING OF ADDITIONAL TDR -FSI OF 1.THE ASSESSEE HAS SUBMITTED THE VALUATION REPORT B Y GOVERNMENT REGISTERED VALUER BEFORE THE AUTHORITIES BELOW WHICH IS EMANAT ING FROM THE ORDERS OF AUTHORITIES BELOW . THE ASSESSEE HAS CHALLENGED TH E VALUATION ADOPTED BY THE AO OF THE SAID PROPERTY BEING VALUATION AS ADOPTED BY STAMP DUTY VALUATION AUTHORITIES AS IS REFERRED TO IN PROVISIONS OF SECT ION 50C OF THE ACT BY THE AO , WHICH VALUATION IS NOT ACCEPTED BY THE ASSESSEE . U NDER THESE CIRCUMSTANCES, WE ARE OF CONSIDERED VIEW THAT PROVISIONS OF SECTIO N 50C(2) WILL COME INTO PLAY AND THE AO IS REQUIRED TO REFER THE MATTER TO DVO F OR DETERMINING THE VALUE OF THE SAID PROPERTY , WHICH THE AO IN THE INSTANT APP EAL DID NOT DO SO. WE HAVE ALSO OBSERVED THAT THE TRIBUNAL HAS DECIDED TH E QUANTUM APPEAL IN ASSESSEES OWN CASE WITH RESPECT TO THE A.Y. 2005-0 6 AND THE DECISION OF THE TRIBUNAL FOR AY 2005-06 IN ITA NO.4623/MUM/2014 VID E ORDERS DATED 19-10- 2016 HAS A DIRECT BEARING ON ADJUDICATING THE ISSUE S IN THIS APPEAL. THE TRIBUNAL HAS DISMISSED THE APPEAL OF THE REVENUE IN AY 2005-06 AND CONFIRMED THE ORDER OF LEARNED CIT(A) WHEREIN LEARN ED CIT(A) HAS HELD THAT THE ENTIRE VALUE OF NON-MONETARY CONSIDERATION TAKEN BY THE AO OF 635.86 SQUARE METERS OF CONSTRUCTED AREA WAS ELIGIBLE FOR DEDUCTI ON U/S 54 OF THE 1961 ACT . BOTH THE PARTIES BEFORE US HAVE FAIRLY AGREED BASED ON PECULIAR FACTUAL MATRIX OF THE CASE THAT THE ISSUES IN THIS APPEAL NEED TO BE SET ASIDE AND RESTORED TO THE FILE OF THE AO FOR DE-NOVO ADJUDICATION ON MERI TS IN ACCORDANCE WITH LAW AFTER CONSIDERING THE TRIBUNAL ORDER IN ASSESSES O WN CASE FOR AY 2005-06 WHEREIN LEARNED CIT(A) HAS HELD THAT THE ENTIRE VAL UE OF NON-MONETARY CONSIDERATION TAKEN BY THE AO OF 635.86 SQUARE METE RS OF CONSTRUCTED AREA WAS ELIGIBLE FOR DEDUCTION U/S 54 OF THE 1961 ACT A S ALSO THE AO HAS TO CONSIDER THE VALUATION REPORT SUBMITTED BY THE ASSE SSEE FROM GOVERNMENT REGISTERED VALUER AND IF THE AO CONTEMPLATES ADOPT ING THE VALUE AS ADOPTED BY STAMP DUTY AUTHORITIES FOR STAMP DUTY PURPOSES B Y INVOKING PROVISIONS OF SECTION 50C AND THE ASSESSEE CHALLENGES THE SAID VA LUATION AS ADOPTED BY THE AO, THEN AO HAS TO REFER THE MATTER TO DVO FOR VALU ATION AS CONTEMPLATED ITA 7596/MUM/2014 18 U/S 50C(2) OF THE 1961 ACT. UNDER THESE CIRCUMSTANC ES KEEPING IN VIEW THE FACTUAL MATRIX OF THE CASE, WE ARE INCLINED TO SET ASIDE AND RESTORE ALL THE ISSUES IN THIS APPEAL BACK TO THE FILE OF THE A.O. FOR DE-NOVO DETERMINATION OF THE ISSUES ON MERITS IN ACCORDANCE WITH LAW AFTER CONSIDERING THE VALUATION REPORT SUBMITTED BY THE ASSESSEE AND THE AFORE-STAT ED ORDER OF THE TRIBUNAL FOR AY 2005-06. NEEDLESS TO SAY THAT PROPER AND ADE QUATE OPPORTUNITY OF BEING HEARD SHALL BE PROVIDED BY THE AO TO THE ASSE SSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LA W. THE AO SHALL ALLOW THE ASSESSEE TO FILE ALL NECESSARY EVIDENCES AND EXPLAN ATIONS IN ITS DEFENSE WHICH SHALL BE ADMITTED BY THE AO IN THE INTEREST OF JUST ICE. WE WOULD LIKE TO CLARIFY THAT WE HAVE NOT COMMENTED ON THE MERITS OF THE ISS UES INVOLVED IN THIS APPEAL AND THE AO SHALL DETERMINE THE ISSUES IN DEN OVO SET ASIDE PROCEEDINGS IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 7596/MUM/2014 FOR A.Y. 2008-09 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON IST SEPTEMBE R, 2017. # $% &' 01-09-2017 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 01-09-2017 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 7596/MUM/2014 19 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI E BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI
