Smt. Roopal S.Sheth, Ahmedabad V. The ACIT.,Circle-6, Ahmedabad

ITA 799/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1270 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 10-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Fair market value; Valuation report
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 799AHD/2012 (ASSESSMENT YEAR: 2007-08) SMT. ROOPAL S. SHETH, RUSHIKESH HARIHARASHRAY BUNGLOWS, 100 FT. RING ROAD, THALTEJ, 380059, AHMEDABAD V/S THE ACIT, CIRCLE-6, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ANIPS0391R APPELLANT BY : SHRI TUSHAR HEMANI, AR RESPONDENT BY : SHRI KAMLESH MAKWANA, SR. D. R. ( )/ ORDER DATE OF HEARING : 08 -06-20 16 DATE OF PRONOUNCEMENT : 14-06-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-XI, AHMEDABAD DATED 06.02.2 012 PERTAINING TO A.Y. 2007-08. ITA NO. 799/ AHD/2012 . A.Y. 2007-08 2 2. THE ASSESSEE HAS CHALLENGED THE COMPUTATION OF CAPI TAL GAINS BASED ON DEPARTMENTAL VALUERS REPORT. 3. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. F OUND THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN ON SALE O F BUNGALOW AT RS. 64,03,638/-. THE ASSESSEE EXPLAINED THAT THE SAID B UNGALOW WAS ACQUIRED BY INHERITANCE DUE TO THE DEATH OF HER HUS BAND ON 28.03.2001. IT WAS FURTHER EXPLAINED THAT THE LAND WAS ACQUIRED BY HER HUSBAND JOINTLY WITH 13 PERSONS ON 15.04.1980 I.E. PRIOR TO 01.04.1981 AND THEREAFTER A BUNGALOW WAS CONSTRUCTE D DURING THE PERIOD 1988 TO 1993. IN SUPPORT OF HER CONTENTION, THE ASSESSEE FILED VALUATION REPORT DATED 01.05.2007 BY A REGISTERED V ALUER. 4. THE A.O. WAS OF THE OPINION THAT THE VALUATION OF T HE LAND AND THE CONSTRUCTED AREA IS NOT ACCEPTABLE AND ACCORDINGLY REFERRED THE MATTER TO THE DVO. AFTER RECEIVING THE DVOS REPORT, THE A .O. RE-COMPUTED THE CAPITAL GAINS AT RS. 1,72,36,269/-. THE A.O. DI D NOT GIVE ANY BENEFIT OF INDEXED COST OF IMPROVEMENT AND COMPLETE D THE ASSESSMENT. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND VEHEMENTLY CHALLENGED THE REFERENCE TO THE DVO MADE BY THE A.O . THE ASSESSEE CLAIMED THAT U/S. 55A OF THE ACT; NO REFERENCE COUL D BE MADE FOR THE VALUATION OF PROPERTY AS ON 01.04.1981 FOR THE YEAR UNDER CONSIDERATION. 6. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND THE RELEVANT PROVISIONS OF THE ACT, THE LD. CIT(A) OBSERVED AS U NDER:- ITA NO. 799/ AHD/2012 . A.Y. 2007-08 3 I HOLD THAT IN THESE CIRCUMSTANCES, THE A.O CANNO T MAKE REFERENCE TO THE DVO FOR ASCERTAINING THE FAIR MARKET VALUE OF A CAP ITAL ASSET. THIS WAY, THE REFERENCE MADE TO VALUATION OFFICER IS INVALID. THE VALUATION REPORT DATED 13.10.2009 SUBMITTED BY THE VALUATION OFFICER IS NOT VALID EVIDENCE. 7. HOWEVER, THE LD. CIT(A) WAS OF THE OPINION THAT THE ASSESSEE HAS CONSIDERED THE CONSTRUCTED AREA WHICH DOES NOT MATCH WITH THE CONSTRUCTED AREA SHOWN IN THE DEED OF CONVEYANCE AN D ACCORDINGLY RECOMPUTED THE CAPITAL GAINS BY TAKING THE CONSTRUC TED AREA AT 298.78 SQ. YARDS INSTEAD OF 628 SQ. YARDS TAKEN BY THE ASS ESSEE. FURTHER, THE LD. CIT(A) ALSO DENIED THE CLAIM OF DEDUCTION U/S. 54 OF THE ACT ON A PAYMENT OF RS. 91,500/- TO M/S. HARIRAJ ASSOCIATES AND RS. 46,000/- TO H. DESAI & CO. 8. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE U S. 9. IN SO FAR AS THE DIFFERENCE IN THE CONSTRU CTED AREA IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE STRAIGHTWAY DREW O UR ATTENTION TO THE DEED OF RECTIFICATION DATED 15.03.2007 AND POINTED OUT THAT IN THE ORIGINAL CONVEYANCE DEED THE AREA WAS WRONGLY MENTI ONED AND, THEREFORE, IT WAS CORRECTED BY THIS SUPPLEMENTARY D EED WHICH HAS BEEN IGNORED BY THE REVENUE AUTHORITIES. THE LD. D.R. CO ULD NOT BRING ANY DISTINGUISHING FACT IN FAVOUR OF THE REVENUE. 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FAC TS IN ISSUES BEFORE US. WE HAVE ALSO CONSIDERED THE RELEVANT DOC UMENTARY EVIDENCES BROUGHT ON RECORD BEFORE US. THERE IS NO DISPUTE IN SO FAR AS THE PROVISION OF SECTION 55A IS CONCERNED QUA THE F ACTS IN ISSUES BEFORE US. THE FIRST APPELLATE AUTHORITY HAS RIGHTLY HELD THAT THE REFERENCE TO THE DVO WAS INVALID. IN OUR CONSIDERED OPINION, ONC E THE REFERENCE ITA NO. 799/ AHD/2012 . A.Y. 2007-08 4 HAS BEEN HELD TO BE INVALID IT IS INVALID AB INITIO WHICH MEANS THAT THE DVOS REPORT CANNOT BE USED FOR MAKING THE ASSESSME NT. IN SO FAR AS THE DIFFERENCE IN THE CONSTRUCTED AREA IS CONCERNED , WE FIND THAT IN THE RECTIFICATION DEED, THE DIFFERENCE IN THE AREA HAS BEEN DULY EXPLAINED. THE RELEVANT PART OF THE SUPPLEMENTARY CONVEYANCE D EED READ AS UNDER:- 3. SUBSEQUENTLY IT HAS COME TO THE NOTICE OF THE VE NDOR THAT THE AREA OF CONSTRUCTION UNDER THE SAID DEED OF CONVEYANCE HAS BEEN MENTIONED LESS THAN THE ACTUAL AREA. THE AGGREGATE AREA OF CO NSTRUCTION, UNDER THE SAID DEED OF CONVEYANCE HAS BEEN MENTIONED 249.82 S Q.MTS. HOWEVER, THE ACTUAL CONSTRUCTION AREA, AT SIZE WAS 525 SQ. M TS. THE VENDOR WITH A VIEW TO RECTIFY SUCH MISTAKE AND TO BRING THE FACTS ON THE PAPER HAS REQUESTED THE PURCHASER TO EXECUTE A DEED OF RECTIF ICATION WHICH THE PURCHASER HAS AGREED. 11. AS THE IMPUGNED DIFFERENCE STANDS EXPLAINED, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO A CCEPT THE COMPUTATION OF CAPITAL GAINS AS MADE BY THE ASSESSEE. THIS GRIE VANCE IS ACCORDINGLY ALLOWED. 12. THE NEXT RELATES TO THE NON ALLOWABILITY OF DEDUCTI ON OF RS. 1,37,500/-. 13. A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW SH OW THAT THE ASSESSEE HAS PAID LEGAL SERVICES CHARGES TO H. DESA I & CO. BY CHEQUE AMOUNTING TO RS. 46,000/-. IN OUR CONSIDERED OPINIO N IN SUCH SALE TRANSACTIONS LEGAL OPINION ARE TAKEN FOR WHICH LEGA L FEES ARE PAID. THE REVENUE AUTHORITIES HAVE DISALLOWED THIS CLAIM ON T HE PREMISE THAT THE ASSESSEE HAS FAILED TO PROVE THE FACTUM OF SERVICES RENDERED BY H. DESAI & CO. AS MENTIONED ELSEWHERE, IN SUCH SALE T RANSACTIONS LEGAL ITA NO. 799/ AHD/2012 . A.Y. 2007-08 5 ADVICE IS SOUGHT INVARIABLY. MOREOVER, THE PAYMENT HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE, THE NAME OF THE SERVICE PROVI DER WAS WITH THE LOWER AUTHORITIES, THE CLAIM OF DEDUCTION CANNOT BE DENIED WITHOUT BRINGING ANY COGENT MATERIAL EVIDENCE ON RECORD. WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO ALLOW THE CLAIM OF DEDUCTION OF RS. 46,000/-. THE OTHER DISPU TE RELATES TO THE CLAIM OF DEDUCTION OF RS. 91,500/- PAID TO HARIRAJ ASSOCIATES AGAINST SERVANT ROOM. THE FIRST APPELLATE AUTHORITY HAS GIV EN A CATEGORICAL FINDING THAT THIS PAYMENT IS NOT REFLECTED IN THE L EDGER ACCOUNT OF HARIRAJ ASSOCIATES NOR IT IS REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. EVEN, THE MODE OF PAYMENT IS NOT KNOWN. O N SUCH FACTUAL FINDINGS OF THE FIRST APPELLATE AUTHORITY, WE DECLI NE TO INTERFERE. THE DENIAL OF DEDUCTION OF RS. 91,500/- IS ACCORDINGLY CONFIRMED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 14 - 06 - 201 6. SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD