ACIT 2(1), MUMBAI V. BOMBAY CHEMICALS P.LTD, MUMBAI

ITA 81/MUM/2013

• Counselvise Citation: 8119914 RSA 2013
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Keywords: Capital asset; Cost of acquisition; Fair market value; Valuation report

Judgement Text

1 , INCOME TAX APPELLATE TRIBUNAL,MUMBAI B BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SAKTIJIT DEY ,JUDICIAL MEMBER /. ITA NO. 8 1 /MUM/201 3 , / ASSESSMENT YEAR - 200 9 - 1 0 ACIT - 2(1) AAYAKAR BHAVAN , ROOM NO.561, 5 TH FLOOR, M.K. ROAD MUMBAI - 400 020. VS BOMBAY CHEMICALS PVT. LTD. 5 TH FLOOR, 129, M.G. ROAD MANEKI WADIA BLDG. NANIK MOTWANE LANE, FORT MUMBAI - 400 023. PAN: AAACB 0683 M ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY : NONE / REVENUE BY : SHRI M. RAJAN (DR) / DATE OF HEARING : 01 - 10 - 2015 / DATE OF PRONOUNCEMENT : 01 - 10 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT.18 . 1 0.201 2 OF CIT(A) - 4, MUMBAI THE ASSESSING OFFICER(AO), HAS FILED FOLLOWING GROUNDS OF APPEAL : N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING RELIED TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1.THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TAKING THE FAIR MARKET VALUE AS ON 01.04.1981 OF LAND AT THE RATE OF RS.880/ - SQ.FT. INSTEAD OF RS.280/ - ADOPTED BY THE AO AS PER INDIAN VALUERS DIRECTORY AND REFE RENCE BOOK WITHOUT APPRECIATING THE FACT THE TRANSACTION WAS REGARDING TRANSFER OF LAND AND THE FACTORY STRUCTURE HAD NO RELEVANCE TO THE NEW USER/DEVELOPER. 3. N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TAKIN G THE COST OF ACQUISITION OF LAND AT THE RATE OF RS.880/ - SQ.FT. INSTEAD OF RS.280/ - ADOPTED BY THE AO AS PER INDIAN DIRECTORY AND REFERENCE BOOK WITHOUT APPRECIATING THE FACT THAT LAND IN QUESTION WAS A LEASEHOLD LAND AND NOT A FREEHOLD LAND. 4.FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. ASSESSEE - COMPANY,ENGAGED IN THE BUSINESS OF MANUFACTURING OF HOUSE HOLD INSECT CONTROL PRODUCTS, FILED ITS RETURN OF INCOM E ON 27 .0 9 .200 9 ,DECLARING INCOME OF RS.6 6 , 345 / - .THE AO COMPLETED THE ASSESSMENT ON 31 .12.20 11,U/S.143(3) OF THE ACT,DETERMINING ITS INCOME AT RS. 4 . 0 3 CRORES . 2 .FIRST GROUND OF APPEAL IS ABOUT ADOPTING FAIR MARKET VALUE(FMV)AS ON 01.04.1981 AT RS.880/ - . D URING THE COURSE OF HEARING THE AO FOUND THAT THE A SSESSEE HAD SOLD ITS FACTORY PREMISES AT MAZAGAON VIDE AGREEMENT DT.30.11.2008 , THAT THE AREA SOLD WAS 12633 SQ.FT., THAT THE PROPERTY WAS ACQUIRED BY THE ASSESSEE VIDE AGREEMENT DT.8.4.65 FOR A TOTAL CONS IDERATION OF RS.50,000/ - , THAT THE CONSIDERATION RECEIVED ON SALE OF PROPERTY WAS RS. 6.92 CRORES, THAT THE ASSESSEE HAD 81/13,BOMBAY CHEMICALS,09 - 10 2 DECLARED LONG TERM CAPITAL GAIN (LTCG)OF RS. 85.27 LACS, THAT FOR CALCULATION OF LTCG IT HAD TAKEN THE VALUATION OF LAND AS ON 1.4.81 AT RS. 1.02 CRORES IN ACCORDANCE WITH THE VALUATION REPORT FILED BY THE ASSESSEE FROM VALUER GB BOHRA S URVEYORS PVT. LTD. DT.1.8.2009, THAT THE INDEXED COST OF THE LAND AS ON 1.4.81 WAS CLAIMED AT RS.5.93 CRORES. 3. AFTER CONSIDERING THE MATERIAL AVAILABLE WIT H HIM THE AO HELD THAT THE ASSESSEE HAD TAKEN THE INDEXED COST OF LAND AS ON 1.4.81 AT VERY EXCESSIVE VALUE.HE AD O PTED THE VALUE AS PER THE INDIAN VALUERS D IRECTORY AND R EFERENCE B OOK (IVDRB) @280/SQ.FT.ACCORDINGLY COST OF THE PROPERTY AS ON 1.4.81 WAS TA KEN AT RS.35.45 LACS. HE TOOK THE INDEXED COST AT RS. 2.06 CR ORES AND MADE AN ADDITION ON ACCOUNT OF CAPITAL GAINS OF R S.3.87 CR ORES . 4 . AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY( FAA ) .BEFORE HIM, I T WAS CONTENDED THAT AO HAD TAKEN THE RATE OF VACANT LAND WHILE COMPLETING THE ASSESSMENT, THAT THE ASSESSEE HAD SOLD FACTORY PREMISES, THAT IT INCLUDED VACANT LAND AS WELL AS CONSTRUCTED AREA OF 11821.7 SQ.FT., THAT THE AO HAD ADMITTED THE ABOVE FACT, THA T THE RATE FOR CALCULATING THE VALUE AS ON 1.4.81 SHOULD BE TAKEN AT RS.880 PER SQ.FT.AS PER THE IVDR B .IN SUPPORT OF ITS CLAIM THE A SSESSEE PRODUCED FOR VERIFICATION IVDRB BEFORE THE FAA. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT O RDER, THE FAA HELD THAT THE ASSESSEE HAD SOLD INDUSTRIAL LAND INCLUDING BUILDING PREMISES, THAT THE AO HAD TAKEN THE VALUE AT R S.280/ - AS PER COLUMN NO.4 OF THE READY RECKONER FOR CALCULATING THE LTCG, THAT COLUMN NO.4 REFERRED TO VACANT DEVELOPED LAND, TH AT THE ASSESSEES PROPERTY CONSISTED OF INDUSTRIAL LAND AND FACTORY BUILDING, THAT THE PROPER COLUMN WHICH PRESCRIBED THE RATE FOR SUCH PROPERTY WAS COLUMN NO.6 OF THE R EADY RECKONER, THAT COLUMN 6 DEALT WITH THE RATES OF LAND PLUS BUILDING - INDUSTRIAL/OFFI CE, THAT THE AO HAD WRONGLY APPLIED THE RATE MENTIONED IN THE WRONG CATEGORY OF PROPERTY, THAT THE RATE OF RS.880/ - WAS APPLICABLE TO THE FACTS UNDER CONSIDERATION.HE DIRECTED THE AO TO RECALCULATE LTCG BY TAKING RATE AS ON 1.4.81@RS.880 PER SQ.FT. H E FURTHER OBSERVED THAT IN CASE THE RATE AND VALUE AS ON 1.4.81 DECLARED BY THE ASSESSEE WAS LOWER THAN THE VALUE WHICH CAME AT RS.880/ - THAN THE VALUE DECLARED BY THE ASSESSEE AS PER VALUATION REPORT WAS TO BE ACCEPTED. 4 .BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE AO.NONE APPEARED ON BEHALF OF THE ASSESSEE,AS STATED EARLIER. 5. WE HAVE PERUSED THE MATERIAL ON RECORD.WE FIND THAT WHILE CALCULATING THE LTCG THE AO HAD REFERRED TO COLUMN NO.4 OF THE R EADY RECKONER, THAT COLUMN 4 DEALT WITH OPEN LAND ONLY , THA T THE ASSESSEE H A D SOLD OPEN LAND ALONWITH FACTORY BUILDING,THAT THE CORRECT RATE TO BE ADOPTED FOR FACTORY BUILDING AND FOR PLOT OF LAND IS MENTIONED IN COLUMN 6 OF THE READY RECKONER, THAT TH E FAA HAD CLEARLY BROUGHT OUT THE MISTAKE COMMITTED BY THE AO FOR CALCULATING THE CAPITAL GAINS.WE ARE OF THE OPINION THAT THE ORDER OF THE FAA TO ADOPT THE RATE AS PER COLUM 6 OF THE R EADY RECKONER I.E. R S.880 PER SQ.FT. DOES NOT SU F FER FROM ANY LEGAL OR FACTUAL INFIRMITY. THEREFORE, CONFIRMING HIS ORDER WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST OCTOBER ,2015. 01 , 2015 SD/ - SD/ - ( / SAKTIJIT DEY ) ( / RAJENDRA) 81/13,BOMBAY CHEMICALS,09 - 10 3 / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 01 . 1 0 . 2015 . . . JV . SR.PS. / COPY OF THE ORDER FOR WARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.