Kohinoor Impex P.Ltd, New Delhi V. ACIT, Central circle-14(2), New Delhi

ITA 8042/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2600 (ITAT-DELHI)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-09-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 03-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 50C; 64; 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘C’: NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.8042/DEL/2019 [Assessment Year: 2015-16] Kohinoor Impex Ltd. 1/125, Asaf Ali Raod, Central Delhi, New Delhi-110002 Vs The Assistant Commissioner of Income Tax, Circle-14(2), Room No.323, 3 rd Floor, Central Revenue Building, I.P. Estate, New Delhi-110002 PAN-AAACK0348N Assessee Revenue Assessee by Sh. Ajay Wadhwa, Adv. & Ms. Ragini Handa, CA Revenue by Sh. Anuj Garg, Sr. DR Date of Hearing 08.09.2022 Date of Pronouncement 04.10.2022 ORDER PER SHAMIM YAHYA, AM, This appeal by the assessee is directed against the order of the Ld. CIT(A)-5, New Delhi, dated 27.08.2019 pertaining to Assessment Year 2015-16. 2. Grounds of appeal reads as under 1. That on the facts and circumstances of the case and in law, the order dated 27.08.2019 passed by the Ld. Commissioner of Income-tax (Appeals) ("CIT(A)”) is erroneous and bad in law. 2. The Ld. CIT(A) has erred in law and on facts in sustaining the addition upto Rs. 26,86,000/- out of the addition of Rs. 27,00,500 made by the Ld. Assessing Officer 2 ITA No.8042/DEL/2019 Kohinoor Impex Pvt. Ltd. ("AO”) under Section 50C of the Income-tax Act, 1961 ("the Act”). 3. Brief facts of the case are that the assessee has filed its return of income declaring income at Rs.96,18,570/- on 28.09.2015, which was processed u/s 143(1). Thereafter, the case was selected for limited scrutiny. In the assessment order, the Assessing Officer noted that the assessee has sold a flat in Arcadia building Mumbai for a consideration of Rs.1,51,00,000/-. From the sale deed, the Assessing Officer found that circle rate of the property was at Rs.1,78,00,500/-. The Assessing Officer invoked the provisions of section 50C of the Act. In reply of the show cause notice, the assessee furnished a copy of valuation done by Anmol Sekhri Consultants Pvt. Ltd. in respect of property sold during the year. The Assessing Officer noted that as per the valuation report, fair market value was less than the circle rate. The Assessing Officer sent the matter to the DVO. Since, the matter was getting time barred, without waiting for the DVO’s order, he added the difference between the sale value and circle rate i.e. an amount of Rs.27,00,500/- and added u/s 50C of the Act. 4. DVO’s report came when the matter was before the Ld. CIT(A). The Ld. CIT(A) examined the assessee’s valuation report as well as DVO’s report. In the DVO’s report, the value was shown at Rs.1,77,86,000/-. The assessee objected to the same before the Ld. CIT(A), however, the Ld. CIT(A) rejected the contention and upheld the value done by the DVO. 5. Against this order, the assessee is in appeal before us. 3 ITA No.8042/DEL/2019 Kohinoor Impex Pvt. Ltd. 6. We have heard both the parties and perused the records. The Ld. counsel for the assessee pointed out that as it is evident from the order of the Ld. CIT(A), the assessee has given a comparative valuation chart as under:- S. No. Market Value of the Property Sale Consideration Received Area(In Sq. Ft.) Rate (Per Sq. Ft) (Sale Consideration/ Area) Page Number of Paper Book Date of Sale 1 Rs. 10,78,29,000/- Rs. 8,55,50,000/- 4107.97 (381.64 Sq. Mtr.) Rs. 20,825/- 82 04.12.2014 2 Rs. 2,26,32,847/- Rs. 1,89,64,000/- 1034.74 (96.13 Sq. Mtr.) Rs. 18,323/- 83 01.11.2013 3 Rs. 1,52,01,500/- Rs. 1,35,60,000/- 666.18 (61.89 Sq. Mtr.) Rs. 20,355/- 84 05.04.2013 Rate Per Sa. Ft. of the Impugned Property S. No. Market Value of the Property Sale Consideration Received Area (In Sq. Ft.) Rate (Per Sq. Ft.) (Sale Consideration/ Area) Page Number of Paper Book Date of Sale 1 Rs. 1,78,00,500/- Rs. 1,51,00,000/- 645.84 (60 Sq. Mtr.) Rs. 23,380/- 45 17.06.2014 7. Referring to the above, the ld. counsel for the assessee contended that sale instances of the property located in the same building were filed by the assessee before the ld. CIT(A), which the Ld. CIT(A) has not considered. All the three properties were located in the same building and the sale rate per sq. ft. was less than the impugned property. In this regard, the ld. counsel for the assessee relied upon several decisions as under:- i. MS. Madhu Sharma vs ITO (2004) 91 TTJ Del 894 (Del.) 4 ITA No.8042/DEL/2019 Kohinoor Impex Pvt. Ltd. ii. CIT vs Berry Plastics (P.) Ltd. [2013] 35 taxmann.com 296 (Guj.) iii. CIT vs Hanuman Prasad Ganeriwala [2014] 43 taxmann.com 133 (Del.) iv. CIT vs Khoobsurat Resorts (P.) Ltd. [2013] 256 CTR 371 (Del.) v. Ravi Kant vs ITO [2007] 110 TTJ 297 (Del.) vi. ADIT vs Rakesh Narang [2015] 64 taxmann.com 332 (Del. Trib.) vii. ITO vs Prem Chand Mittal [2015] 56 taxmann.com 52 (Del. Trib.) viii. Waqf Alal Aulad vs Addl. CIT [2010] 37 SOT 58 (Del. Trib.) ix. Jagannathan Sailaja Chitta vs ITO 417 ITR 61 (Madras) x. Mahendra Singh vs CIT [2014] 42 taxmann.com 149 (All.) xi. ADIT vs Ranjay Gulati [2011] 14 taxmann.com 161 [Del. Trib.] xii. CIT vs Chandra Narainchaudhri [2014] 271 CTR 80 (All.) 8. We note that Hon’ble Delhi High Court in the case of Ms. Madhu Sharma vs ITO (2004) 91 TTJ Del 894 (Del.), has held that the assessee’s valuer’s report who had valued the property on the basis of sale instances of the same locality had to be taken into account and the valuation report of the DVO who valued the FMV of the property on the basis of certain instances of sales of plots in a different locality was not to be considered. This clearly lays down that comparison should be done among instances which are relatively near. In the present case, the DVO despite noting the instances himself has not followed the valuation done for the same property but had preferred to take into account adjacent building without any reason. We find considerable cogency in the 5 ITA No.8042/DEL/2019 Kohinoor Impex Pvt. Ltd. assessee’s submissions that DVO’s approach is not correct. We note that DVO has done the valuation of the following basis. Property: “Unit No.3,8 th Floor, “Arcadia” building, Arcadia Premises Co-operative Society Ltd., Nariman Point, Mumbai-400021 Sl. No. Date Address Seller/ Purchaser Built up Area in Sqm. Considerati on in Rs. Rate/ sqm Regd No. 1 17.04.2014 Office No.801, Floor No.8, Arcadia, Block No.195, Nariman Point, Mumbai- 400021 Mr. Babubhai Patel/ Mr. Viren Shantikumar Merchant 109.29 27651000 253006 4066/ 2014 2 15.04.14 Office No.124, Floor No.12, Mittal Tower A Wing, Block No.210, Nariman Point, BBR Road, Mumbai-400021 M/s State Bank of India/Mr. Vivek Kamalchand Kothari 61.06 18650000 305437 3144/ 2014 3 10.04.14 Office No.506, Floor No.05, Tulsiani Chamber Nariman Point, Mumbai-400021 M/s Suvida Commodities ECOM Pvt. Ltd. M/s Gokal K. Gournani’s 40.41 12506250 309484 3038/ 2014 4 04.04.14 Office No.611, Floor No.06, Raheja Center, Nariman Point, Road No. Bakay Reclamation Mumbai-400021 M/s Donat Joaquim Pimenta/Mr. Niranjan Balubhai Pandya 54.46 16200000 297466 2818/ 2014 After considering various pros and cons and various factors such as time lag, floor rise, size, location which influences the fair market value of the property, the proposed BUA rate for Fair Market Rate of the subject unit as on 17.06.2014 is Rs.296430/- per Sqm. 6 ITA No.8042/DEL/2019 Kohinoor Impex Pvt. Ltd. 9. From the above, it is abundantly clear that the DVO has done the valuation in a very arbitrary manner. He has preferred rates of nearby plots despite noting himself an instance of lower rate in the same building. When this was pointed out to Ld. CIT(A) by the assessee, the Ld. CIT(A) rejected the same by holding valuation adopted by assessee’s valuer also has no value. However, we do not find ourselves in agreement with the view of ld. CIT(A). The assessee’s valuer has duly mentioned and taken into account these instances of the same building. This as per the ratio emanating from the decision of Hon’ble Delhi High Court in the case of Madhu Sharma vs ITO (2004) 91 TTJ Del 894 (Del.), is the correct method. Moreover, this view is also supported by the newspaper articles referred by the valuer that the actual prevailing transaction rate in the area were much lower than the circle rate . These aspects have not been rebutted by the revenue authorities. Hence, in our considered opinion, the order of the Ld. CIT(A) deserves to be set-aside. Accordingly, we set- aside the order of the revenue authorities and decide the issue in favour of the assessee. 10. In the result, the assessee’s appeal is allowed. Order pronounced in the open court on 04 th October, 2022. Sd/- Sd/- [ANUBHAV SHARMA] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi; Dated:04.10.2022. f{x~{tÜ f{x~{tÜf{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Appellant 7 ITA No.8042/DEL/2019 Kohinoor Impex Pvt. Ltd. 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi