Manjulaben Parshottamdas Patel, Ahmedabad V. Income Tax Officer, Ahmedabad

ITA 782/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8130 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 06-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Assessee Lawyers: T P HEMANI
• Keywords: Fair market value; Valuation report

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA.NO.782/AHD/2015 / ASSTT. YEAR: 2011-2012 MANJULABEN PARSHOTTAMDAS PATEL 36, HARIVILLA BUNGALOWS GOTA ROAD,CHANDLODIYA AHMEDABAD. PAN : BFCPP 7278 H VS ITO, WARD-6(5) AHMEDABAD. ./ ITA.NO.783/AHD/2015 / ASSTT. YEAR: 2011-2012 RITABEN PARSHOTTAMDAS PATEL 36, HARIVILLA BUNGALOWS GOTA ROAD,CHANDLODIYA AHMEDABAD. PAN : BCFPP 6978 L VS ITO, WARD-6(5) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI T.P. HEMANI, AR REVENUE BY : SHRI SAURABH SINGH, SR.DR / DATE OF HEARING : 31/05/2018 / DATE OF PRONOUNCEMENT: 04 /06/2018 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : THESE TWO APPEALS BY ASSESSEES AGAINST ORDERS OF THE LD.CIT(A)-4, AHMEDA BAD OF EVEN DATED I.E. 5.2.2015 PASSED FOR THE ASSESSMENT YEAR 2011-12. S INCE ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICALLY WORDED EXCEPT QUAN TUM, WE DEEM IT ITA NO.782 AND 783/AHD/2015 2 APPROPRIATE TO DISPOSE OF BOTH APPEALS BY WAY OF A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST COMMON ISSUE RAISED IN BOTH THE APPEALS RE LATES TO CONFIRMATION OF ADDITION IN RESPECT OF LONG TERM CAPITAL GAIN OF RS .13,97,290/- IN THE CASE OF EACH ASSESSEE FOR THE ASSESSMENT YEAR 2011-12. FOR ADJUDICATION OF COMMON ISSUE, WE TAKE FACTS AS NOTICED FROM THE CASE OF SM T.MANJULABEN PARSHOTTAMDAS PATEL IN ITA NO.782/AHD/2015. 3. BRIEF FACTS ARE THAT ASSESSEE IS AN INDIVIDUAL. SHE EARNS INCOME FROM CAPITAL GAIN AND FROM OTHER SOURCES. ASSESSEE FILE D HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 29.6.2011 DECLARING TOTAL INCOME AT RS.1,81,514/-. THIS RETURN WAS PROCESSED UNDER SEC TION 143(1). THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT BY ISSUING NOTICES UNDER SECTION 143(2) OF THE ACT. DURING TH E ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS SOLD PROPERTY FOR RS.5,10,00,000/- WITH CO-OWNERS. SHE HAS 1/16 TH SHARES IN THE SAID PROPERTY. THE VALUATION REPORT SUBMITTED BY THE ASSESSEE FROM THE REGISTERED VALUE R SHOWED VALUE OF THE PROPERTY AT RS.67,98,400/- AS ON 1.4.1981, WHEREAS THE VALUE OF DVO WAS AT RS.36,54,000/-. DUE TO DIFFERENCE IN TWO VALUATION REPORT, THE LD.AO ISSUED SHOW CAUSED NOTICE TO THE ASSESSEE AS TO WHY VALUAT ION AS PER THE DVOS REPORT BE NOT ADOPTED FOR CALCULATION OF CAPITAL GA IN. THE ASSESSEE IN HER REPLY DATED 17.7.2013 SUBMITTED THAT THE DVO WHILE CONSID ERING THE VALUE OF THE PROPERTY HAS NOT TAKEN INTO ACCOUNT ECONOMIC AND DE VELOPMENTAL GROWTH OF THE AREA WHERE THE PROPERTY OF THE ASSESSEE SITUATE D. THE DVO HAS TAKEN THE SCENARIO OF 1.4.1981 AS AGAINST THE PRESENT ONE. I T WAS FURTHER SUBMITTED THAT THE LD.AO FAILED TO CONSIDER THAT EVEN SALE DEEDS/D OCUMENTS ARE EXECUTED ON THE BASIS OF JANTRI RATE PRESCRIBED BY THE GOVERNMENT, WHICH WAS MUCH HIGHER ITA NO.782 AND 783/AHD/2015 3 THAN THE VALUATION DETERMINED BY THE DVO. THE LD.AO DID NOT SATISFY WITH THE SUBMISSIONS OF THE ASSESSEE, AND ENHANCED THE LONG TERM CAPITAL GAIN AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN APPE AL BEFORE THE LD.CIT(A), THE ASSESSEE COULD NOT SUCCEED. HENCE, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE AT TH E OUTSET SUBMITTED THAT IN THE CASE OF OTHER CO-OWNERS, VIZ. LATE, SHANTABEN P ATEL, BABUBHAI RAMANLAL PATEL AND ILABEN K. PATEL FOR THE ASSESSMENT YEAR 2 011-12 SIMILAR ISSUE WENT UPTO THE TRIBUNAL, AND IN THE TRIBUNAL IN ITA NO.78 1/AHD/2011 AND OTHERS DATED 2.4.2018 CONSIDERED THE ISSUE IN DETAIL AND F OLLOWING THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF GAURANGIBE N S. SHODHAN DELETED ADDITIONS MADE UNDER THE HEAD LONG TERM CAPITAL GA IN. THEREFORE, THIS ISSUE BEING SIMILARLY SITUATED BE ALLOWED IN FAVOUR OF THE ASSESSEE. THE LD.COUNSEL HAS FILED COPY OF THE TRIBUNAL ORDER DAT ED 2.4.2018 ON RECORD. 5. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ERS OF THE LD.REVENUE AUTHORITIES. HE FURTHER CONTENDED THAT IN VIEW OF THE AMENDMENT TO SECTION 55A(A) IN 2012 BY WHICH THE EXPRESSION ' IS LESS THAN THE FAIR MARKET VALUE' IS SUBSTITUTED BY THE EXPRESSION 'IS AT VARI ANCE WITH ITS FAIR MARKET VALUE' IS CLARIFICATORY AND SHOULD BE GIVEN RETROSP ECTIVE EFFECT. THEREFORE, THE LD.AO HAS RIGHTLY APPLIED THE PROVISIONS OF SECTION 55A(A) OF THE ACT IN THE PRESENT CASE BY MAKING REFERENCE TO THE DVO. THE LD.DR HAS FURTHER RELIED UPON THE ORDER OF THE ITAT IN THE CASE OF ITO VS. D HARMISHTHABEN J. PATEL, ITA NO.2622/AHD/2014 WHEREIN THE TRIBUNAL SOMEWHAT ON SIMILAR SITUATION PARTLY ALLOWED THE APPEAL OF THE REVENUE. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD. THE ISSUE BEFORE US IS WHETHER THE REVENUE AUTHORIT Y WAS JUSTIFIED IN MAKING A REFERENCE TO THE DVO UNDER SECTION 55A OF THE ACT TO DETERMINE FAIR MARKET ITA NO.782 AND 783/AHD/2015 4 VALUE OF THE PROPERTY BY DOUBTING VALUATION OF THE PROPERTY OBTAINED BY THE ASSESSEE FROM REGISTERED VALUER. WE FIND THAT SIM ILAR ISSUE HAS COME UP BEFORE THE TRIBUNAL IN THE CASES OF OTHER CO-OWNERS ALSO VIZ. LATE SHANTABEN P. PATEL VS. ITO AND OTHERS (SUPRA) (JUDICIAL MEMBE R HEREIN IS A PARTY). IN THAT CASE THE ITAT HAS EXAMINED TWO ISSUES VIZ. LEG ALITY OF REFERENCE TO DVO WHERE VALE OF THE PROPERTY AS ON 1.4.1981 DECLARED BY THE ASSESSEE WAS NOT LESS THAN THE FAIR MARKET VALUE, AND SECOND, RETROS PECTIVE APPLICATION OF PROVISIONS SECTION 55A. THE ITAT HAS ANSWERED BOTH THE ISSUES IN FAVOUR OF ASSESSEE BY FOLLOWING THE JUDGMENT OF THE HONBLE J URISDICTIONAL HIGH COURT IN THE CASE OF GAURANGINIBEN S. SHODHAN. IT IS IMP ERATIVE UPON US TO TAKE OF THE FINDING OF THE TRIBUNAL, WHICH READS AS UNDER: 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH RECORD CAREFULLY. THE DISPUTE BEFORE ME IS, WHETHER ASSESS ING OFFICER MAKE A REFERENCE TO THE DVO FOR DETERMINING THE FAIR MARKE T VALUE OF THE ASSETS AS ON 1.4.1981. ACCORDING TO THE LD. COUNSEL FOR THE A SSESSEE A REFERENCE UNDER SUB-CLAUSE A OF SECTION 55A COULD BE MADE, IF VALUE SHOWN BY THE ASSESSEE AS ON 01.04.1981 IS LESS THAN THE FAIR MARKET VALUE. I N OTHER WORDS ASSESSEE HAS SHOWN THE VALUE AT RS.67,98,400/- WHICH IS HIGHER T HAN THE MARKET VALUE OTHERWISE DETERMINED/ THE DVO AFTER THE REFERENCE. HE ADOPTED VALUE AT RS.36,44,000/- HON'BLE GUJARAT HIGH COURT HAS CONS IDERED THIS ASPECT IN THE CASE OF GAURANGINIBEN S. SHODHAN AND HELD THAT THE ASSESSING OFFICER HAS NO POWER TO MAKE A REFERENCE IF THE VALUE SHOWN BY ASSESSEE IS NOT LESS THAN FAIR MARKET VALUE. THE DISCUSSION MADE BY THE HON'BLE HIGH COURT IN PARAGRAPH 15 TO 17 READ AS UNDER:- 15. COMING TO THE QUESTION OF REFERENCE TO DVO FOR ASCERTAINING THE FAIR MARKET VALUE AS ON 1.4.1981 ALSO, WE FIND THAT SUCH REFERENCE WAS NOT COMPETENT. WE HAVE NOTICED THAT PRIOR TO THE AMENDM ENT IN SECTION 55A WITH EFFECT FROM 1.7.2012 IN A CASE, THE VALUE OF THE AS SET CLAIMED BY THE ASSESSEE ; IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE RE GISTERED VALUER, IF THE ASSESSING OFFICER WAS OF THE OPINION THAT THE VALUE SO CLAIMED WAS LESS THAN ITS FAIR MARKET VALUE AS ON 1.4.1981. IT WOULD NOT BE THE CASE OF THE ASSESSING OFFICER THAT THE VALUE OF THE ASSET SHOWN AS ON 1.4 .1981 WAS LESS THAN THE FAIR MARKET VALUE. SUCH CLAUSE, 'THEREFORE, AS IT STOOD AT THE RELEVANT LIME, HAD NO APPLICATION TO THE VALUATION AS ON 1.4.1981. WE ARE CONSCIOUS THAT WITH EFFECT FROM 1.7.2012, THE EXPRESSION NOW USED IN CLAUSE (A ) OF SECTION 55A IS 'IS AT VARIANCE WITH ITS FAIR MARKET VALUE'. THE SITUATION MAY, THEREFORE, BE ITA NO.782 AND 783/AHD/2015 5 DIFFERENT AFTER 1.7.2012. WE ARE, HOWEVER, CONCERNE D WITH THE PERIOD PRIOR THERETO. CLAUSE (B) OF SECTION 55A IS IN TWO PARTS AND PERMITS A REFERENCE TO DVO IF THE ASSESSING OFFICER IS OF THE OPINION THAT (I) THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET SO CLAI MED BY THE ASSESSEE BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET SO C LAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER REL EVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO. SUB-CLAUSE (I) OF CLAUSE (B) AL SO FOR THE SAME REASONS RECORDED ABOVE, WOULD HAVE NO BEARING ON THE FAIR M ARKET VALUE AS ON 1.4.1981. THE ASSESSING OFFICER HAD NOT RESORTED T O SUB CLAUSE(II). OF CLAUSE (B). IN ANY CASE, CLAUSE (B) WOULD APPLY WHERE CLAU SE (A)DOES NOT APPLY SINCE IT STARTS WITH THE EXPRESSION 'IN ANY OTHER CASE'. IN OTHER WORDS IF ASSESSEE HAS RELIED UPON A REGISTERED VALUER'S REPORT, AS SESSING OFFICER CAN PROCEED ONLY UNDER CLAUSE (A) AND CLAUSE (B) WOULD NOT BE APPLICABLE. 16. IN THE PRESENT CASE, ADMITTEDLY THE ASSESSEE HA D RELIED ON THE ESTIMATE - MADE BY THE REGISTERED VALUER FOR THE PURPOSE OF SU PPORTING ITS VALUE OF THE ASSET. ANY SUCH SITUATION WOULD BE GOVERNED BY CLAU SE (A) OF SECTION 55A OF THE ACT AND THE ASSESSING OFFICER COULD NOT HAVE RE SORTED TO CLAUSE (B) THEREOF AS HELD BY THE DIVISION BENCH OF THIS COURT IN THE CASE OF HIABEN JAYANLILAL SHAH V. ITO [2009] 310 ITR 31/181 TAXMAN N 191 (GUJ). IN THE SAID DECISION IT WAS HELD AND OBSERVED AS UNDER: '10. UNDER CLAUSE(A) OF SEC. 55A OF THE ACT UNDER T HE ASSESSING OFFICER IS ENTITLED TO MAKE THE REFERENCE TO THE VA LUATION OFFICER IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE ASSESSING OFFICER IS OF THE OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. IN ANY OTHER CASE, AS P ROVIDED UNDER CLAUSE (H) OF SEC. 55A OF THE ACT, THE ASSESSING OF FICER HAS TO RECORD AN OPINION THAT (I) THE FAIR MARKET VALUE OF THE AS SET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED HY THE ASSESSEE BY MORE THA N SUCH PERCENTAGE OR BY MORE THAN SUCH AN AMOUNT AS MAY BE PRESCRIBED ; OR (II) HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVAN T CIRCUMSTANCES, IT IS NECESSARY TO MAKE SUCH A REFERENCE.' 17. IN THE RESULT, WE SEE NO REASON TO INTERFERE. H OWEVER, WE HAVE GIVEN OUR INDEPENDENT REASONS AND SHOULD NOT BE SEEN TO HAVE CONFIRMED THE REASONING ADOPTED BY THE TRIBUNAL IN THE IMPUGNED JUDGMENT. T AX APPEAL IS DISMISSED. 8. IN LIGHT OF THE ABOVE, IF FACTS OF THE PRES ENT APPEALS ARE EXAMINED THEN IT WOULD REVEAL VALUE SHOWN BY THE APPELLANTS OF THE P ROPERTY A ON 1.4.1981 IS CONSIDERED THEN IT WAS NOT LESS THAN FAIR MARKET VA LUE AND REFERENCE CANNOT BE MADE. AS FAR AS THE AMENDMENT CARRIED OUT IN SEC TION 55A IS CONCERNED, IT ITA NO.782 AND 783/AHD/2015 6 IS WITH EFFECT FROM IT IS WITH EFFECT FROM 01.07.20 12 I.E. BY FINANCE 2012 THE TRANSACTION TAKEN PLACE IN F.Y. 2010-11 RE LEVANT TO ASSESSMENT YEAR 2011-12 AND THE AMENDED PROVISION WOULD NOT BE APPL ICABLE ON THIS TRANSACTION. 9. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE G UJARAT HIGH COURT, I ALLOW THESE GROUNDS OF APPEAL IN THE CASE OF ALL TH E THREE APPELLANTS DELETE THE ADDITIONS MADE UNDER THE HEAD LONG TERM CAPITAL GAIN. 7. SO FAR AS RELIANCE OF THE LD.DR ON THE ORDER OF THE TRIBUNAL IN THE CASE OF DHARMISHTHABEN J. PATEL (SUPRA) IS CONCERNED, WE FIND THAT FACTS ARE DISTINGUISHABLE INASMUCH AS LEARNED COUNSEL FOR THE ASSESSEE CONCEDED THEREIN THAT THE OBSERVATION OF THE APPROVED VALUER BEING I MPROPER, AVERAGE RATES OF THE PROPERTY MAY BE TAKEN AS THE FMV AS ON 1.4.1981 . IN VIEW OF THIS, THE TRIBUNAL WHILE ESTIMATING FMV AS ON 1.4.1981 AT RS. 605/- PER SQ.METER HAS HELD THAT THIS BEING PECULIAR FACTS, NO PRECEDENCE CAN BE TAKEN IN OTHER CASES. 8. LOOKING TO THE SIMILARITY OF FACTS AND CIRCUMSTA NCES OF ASSESSEEES CASE WITH CO-OWNERS CITED (SUPRA), WE DO NOT FIND ANY RE ASON TO DEVIATE, AND ACCORDINGLY WE DELETE BOTH THE ADDITIONS QUA LONG T ERM CAPITAL GAIN ARISING OUT OF SALE OF THE PROPERTY AND ALLOW BOTH THE APPEALS OF THE ASSESSEES. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 4 TH JUNE, 2018 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 04/06/2018