DCIT, Jaipur V. SHRI VINOD MEHTA, Jaipur

ITA 825/JPR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1551 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: H M SINGHVI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Valuation report; Revised return
• Section: 50C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI B.R. MITTAL AND SHRI B.R. JAIN) ITA NO. 825/JP/2012 ASSESSMENT YEAR : 2009-10 PAN: ACSPM 8014 A THE DCIT VS. SHRI VINOD MEHTA CIRCLE- 3 A-96, NEMI NAGAR JAIPUR NEAR VAISHALAI NAGAR, JAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI D.C. SHARMA ASSESSEE BY : SHRI H.M. SINGHVI DATE OF HEARING: 22-01-2013 DATE OF PRONOUNCEMENT: 23-01-2013 ORDER PER B.R. MITTAL, JM:- THE DEPARTMENT HAS FILED THIS APPEAL FOR THE ASS ESSMENT YEAR 2009-10 AGAINST THE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 17-08-2012 ON FOLLOWING GROUND. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADD ITION OF RS. 33,84,915/- ON ACCOUNT OF LONG TERM CAPITAL GAIN BY TAKING THE TOTAL COST OF ACQUISITION AS DETERMINED BY THE TOTAL COST OF ACQU ISITION AS DETERMINED BY THE REGISTERED VALUER. 2.1 THE RELEVANT FACTS ARE THAT THE ASSESSEE DURING ASSESSMENT YEAR UNDER CONSIDERATION HAS DERIVED INCOME FROM LONG TERM CAP ITAL GAIN FOR SALE OF HOUSE PROPERTY SITUATED AT PLOT NO. 5A, SAHELI MARG, FATEHPURA, UD IAPUR ON 09-05-2008 FOR RS. 2.71 CRORES. THE SAID PROPERTY WAS PURCHASED BY THE DECE ASED FATHER AND MOTHER ON 23-11- 1972 AND CONSTRUCTION OF HOUSE WAS COMPLETED IN THE YEAR 1973. IN L.B.T., ASSESSMENT DATED 5-02-1977, THE VALUE OF LAND AND BUILDING WAS TAKEN AT RS. 91,375/- AS ON 01-04- 2 1974. THE ASSESSEE'S FATHER EXPIRED ON 26-05-2000 A ND MOTHER EXPIRED ON 23-06-2001. THE ASSESSEE BEING ONLY LEGAL HEIR INHERITED THIS P ROPERTY IN THE YEAR 2001. 2.2 IN THE RETURN FILED, THE ASSESSEE ADOPTED THE C OST OF ACQUISITION OF RS. 43,39,165/ ON THE BASIS OF SALE VALUE OF ADJOINING PLOT IN THE YEAR 1991 FOR RS. 12.00 LACS, LAND WAS VALUED FOR RS. 6,95,340/- BY REVERTING THE SALE PRI CE OF 1991 TO 1981 AND THE INDEXATION COST WAS WORKED OUT U/S 48 OF THE ACT AT RS. 43,59, 165/- AS UNDER:- LAND (6,59,340*582/100 = 38,37,359/- HOUSE CONSTRUCTION (60,134*582/100 = 3,49,980 /- INDEX COST OF IMPROVEMENT (42000*582/161 = 1,5 1,826/- 2.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSEE FILED REGISTERED VALUER REPORT REGARDING FAIR MARKET VALUE OF THE PROPERTY AS ON 01-04-1981 AT RS. 6.73 LACS . THE AO TOOK THE COST OF ACQUISITION AT RS. 6,83,774/- I NSTEAD OF RS. 43,39,165/- TAKEN BY THE ASSESSEE, ON THE BASIS OF LBT ASSESSMENT MADE ON 05 -02-1977 AND ACCORDINGLY COMPUTED THE CAPITAL GAIN AT RS. 1,94,04,788/- AGAINST CAPIT AL GAIN OF RS. 1,57,49,897/- SHOWN BY THE ASSESSEE. THUS THERE WAS AN ADDITION OF RS. 36, 55,391/-. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORIT Y. 2.4 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND THE PROVISION OF SECTION 44 OF THE I.T. ACT HAS HELD TH AT FAIR MARKET VALUE OF THE PROPERTY ESTIMATED BY REGISTERED VALUER VALUED AS ON 01-04-1 9081 AT RS. 6.73 LACS HAS A BASIS SUPPORTED BY EVIDENCE UNLIKE THE ASSESSMENT DONE BY THE LBT DEPARTMENT AND THE SAME IS TO BE ACCEPTED FOR CALCULATION OF CAPITAL GAIN. THE LD. CIT(A) HAS FURTHER STATED THERE APPEARS TO BE NO DISPUTE REGARDING THE COST OF IMPR OVEMENT, THE INDEXED COST OF WHICH WAS TAKEN AT RS. 1,51,826/- BOTH BY THE AO AND ASSE SSEE. THE LD. CIT(A) HAS ACCORDINGLY STATED THAT ASSESSEE HAS OPTION AS PER SECTION 55(2 )(B)(II) OF THE ACT WHO RECEIVED THE 3 PROPERTY THOUGH INHERENCE IN 2001 TO EITHER ADOPT T HE COST OF CAPITAL ASSET TO THE PREVIOUS OWNER OR FAIR MARKET VALUE OF THE ASSET AS ON 01-04 -1981. ACCORDINGLY, THE LD. CIT(A) HAS DIRECTED THE AO THAT THE INDEXED COST AS PER FAIR M ARKET VALUE DETERMINED BY THE REGISTERED VALUER AS ON 01-04-1981 COMES TO RS. 39, 16,860/- AND ALSO CONSIDERING COST OF IMPROVEMENT OF RS. 1,51,826/- WHICH IS TO BE ADDED THERETO AND DETERMINE LONG TERM CAPITAL GAINS, TAX LIABILITY ACCORDINGLY. HENCE, TH IS APPEAL BY THE DEPARTMENT. 2.5 DURING THE COURSE OF HEARING, THE LD. DR SUPPOR TED THE ORDER OF THE AO. 2.6 ON THE OTHER HAND, THE LD. AR SUPPORTED THE ORD ER OF THE LD. CIT(A) AND FURTHER SUBMITTED THAT THE ASSESSEE HAS OPTION UNDER THE AC T TO ASCERTAIN THE COST OF ACQUISITION IN RELATION TO CAPITAL ASSETS ACQUIRED PRIOR TO 01-04- 1981 ON THE BASIS OF COST OF ACQUISITION OR THE FAIR MARKET VALUE AND HE REFERRED THE DECISI ON OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. DUNCAN BROTHERS AND CO. LTD., 2 09 ITR 44. HE FURTHER RELIED ON THE DECISION OF ITAT JAIPUR BENCH IN THE CASE OF ITO VS . LATE MAHENDRA KUMAR AGARWAL IN ITA NO. 1251/JP/2008 DATED 19-06-2009 WHERE THE DAT E OF SUCCESSION OF THE PROPERTY IS IRRELEVANT AND THE COST OF ACQUISITION FOR THE PURP OSE OF COMPUTATION OF LONG TERM CAPITAL GAIN IN THE HANDS OF THE SUCCESSOR BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY ACQUIRED IT AND ACCORDINGLY FAIR MA RKET VALUE AS ON 01-04-1981 HAS RIGHTLY BEEN CONSIDERED BY THE LD. CIT(A). 2.7 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE BEFORE US IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT MUMBAI BEN CH IN THE CASE OF MRS. GOPI S. SHIVANI VS. ITO, 133 ITR 172. WE STATE FROM HEAD NO TE THE FACTS AND RELEVANT FINDINGS WHICH ARE AS UNDER:- 4 DURING THE RELEVANT ASSESSMENT PERIOD THE ASSESSE E HAD SOLD OFFICE PREMISES FOR A CONSIDERATION OF RS.21 L AKHS. THE ASSESSEE, WHILE FILING THE RETURN OF INCOME HAD TA KEN ITS COST OF ACQUISITION AS ON 1-9-1978. THEREUPON, AFTER MAKING VALUATION AS ON 1-4-1981 THE ASSESSEE ARRIVED ON THE INDEXED COS T OF ACQUISITION AT RS.2.93 LAKHS. DURING THE ASSESSMENT PROCEEDINGS ASSESSEE FILED A VALUATION REPORT STATING THE VALUE AS ON 1-4-1981 AT RS.3.80 LAKHS AND THE INDEXED COST OF ACQUISITION WAS ARRIVED AT RS.18.24 LAKHS. THE A.O. DID NOT ACCEPT SAID CLAIM AS THE ASSESSEE HAD NOT FILED ANY REVISED RETURN. THE ASSESSING OFFICER ALSO DID NOT ACCEPT THE SALE CONSIDERATION AT RS.21 LAKHS AND ON NOTICING T HAT THE STAMP VALUE FOR THE PURPOSE OF REGISTRATION WAS AT RS.42. 27 LAKHS ADOPTED THE STAMP VALUE FOR THE PURPOSE OF REGISTRATION WAS AT RS.42.27 LAKHS ADOPTED THE STAMP VALUE PENDING VALUATION BY THE DVO UNDER THE PROVISIONS OF SECTION 50C WITH A REMARK T HAT THE ASSESSMENT WOULD BE RECTIFIED AFTER THE RECEIPT OF VALUATION REPORT. ON APPEAL, THE ASSESSEE CONTENDED THAT THE ASSESSEE WAS ENTITLED TO ADOPT THE MARKET VALUE AS ON 1-4-1981 AND FURTHER T HE ASSESSEE WAS ENTITLED FOR OBJECTION ON DVOS REPORT AS PER PROVI SIONS OF SECTION 50C. THE COMMISSIONER (APPEALS), DID NOT ACCEPT THE CONTENTION OF SUBSTITUTING THE COST OF ACQUISITION WITH VALUAT ION AS ON 1.4.1981 AS THE ASSESSEE ITSELF HAD OFFERED THE PURCHASE COS T AT RS.61,200 EARLIER. WITH REFERENCE TO THE ISSUE OF ADOPTION OF SALE CONSIDERATION UNDER SECTION 50C, WITHOUT CONSIDERIN G THE OBJECTIONS RAISED BY THE ASSESSEE, THE COMMISSIONER (APPEALS) DIRECTED THE ASSESSING OFFICER TO ADOPT THE AMOUNT OF RS.30.08 LAKHS ADOPTED BY THE DVO. ON FURTHER APPEAL BEFORE THE TRIBUNAL, IT WAS HELD THAT: AS SEEN FROM THE FACTS OF THE CASE THE ASSESSEE H AD PURCHASED THE PROPERTY ON 1-9-1978 WHICH WAS SOLD T HE DURING THE RELEVANT YEAR. THE ACT PERMITS THE ASSESSEE TO ADOP T THE FAIR MARKET VALUE AS ON 1-4-1981 OR THE ACTUAL COST IF IT WAS A CQUIRED PRIOR TO 1- 04-1981 THE PROVISION OF SECTION 55(2)(B) PERMITS THE ASSES SEE TO ADOPT EITHER THE ACTUAL COST OF ACQUISITION OR THE FAIR MARKET VALUE OF THE ASSET AS ON 1-4-1981.THE ASSESSEE CHOSE TO F ILE THE VALUATION REPORT TAKING THE VALUE AS ON 1-4-1981. IN THE COUR SE OF ASSESSMENT PROCEEDINGS WHEN THE ASSESSING OFFICER CHOSE TO MOD IFY THE SALE VALUE AS PER SECTION 50C, THE ASSESSEE WAS WELL WIT HIN HER RIGHTS TO CHOOSE THE VALUE AS PER THE PROVISIONS OF THE ACT. THE ASSESSING OFFICER SHOULD HAVE ENTERTAINED ASSESSEES CLAIM W HEN SHE CHOSE TO MODIFY THE CAPITAL GAINS WORKING BY ADOPTING DIF FERENT SALE VALUE AS PER SECTION 50C. THE OBJECTION OF COMMISSI ONER (A) ALSO 5 IN REJECTING THE CLAIM BY STATING THAT ANY CLAIM HA D TO BE MADE BY FOLLOWING TRUE PROCEDURE OF LAW AND ONE VALUE COULD NOT BE SUBSTITUTED BY ANY OTHER DURING THE ASSESSMENT PROC EEDINGS EXCEPT UNDER THE PROCEDURE GIVEN UNDER THE ACT, COULD NOT BE ACCEPTED IN VIEW OF THE ABOVE THE ASSESSING OFFICER WAS T O BE DIRECTED TO ADOPT THE FAIR MARKET VALUE OF THE ASSE T ON 1.4.1981. SINCE THE REGISTERED VALUERS REPORT WAS FILED IN T HE COURSE OF ASSESSMENT ITSELF BUT ASSESSING OFFICER HAD NOT RE JECTED THE SAME ON MERITS, THE ASSESSING OFFICER WAS TO BE DIRECTE D TO ACCEPT THE VALUE RS. 3,80,000 AS ON 1.4.1981 FOR THE PURPO SE OF WORKING OUT THE CAPITAL GAINS AFTER DUE EXAMINATION.. 2.8 IN VIEW OF THE ABOVE DECISION OF COORDINATE BEN CH WHOSE FACTS ARE IDENTICAL TO THE FACTS BEFORE US, WE HOLD THAT THE LD. CIT(A) HAS RI GHTLY DIRECTED THE AO TO CONSIDER FAIR MARKET VALUE AS ON 01-04-1981 ON THE BASIS OF REPOR T OF REGISTERED VALUER AND ALSO TO TAKE INTO ACCOUNT THE INDEXED COST OF IMPROVEMENT AND TH EREAFTER COMPUTE LONG TERM CAPITAL GAIN AND TAX LIABILITY. ACCORDINGLY, WE UPHOLD HER ORDER AND REJECT THE GROUND OF APPEAL TAKEN BY THE DEPARTMENT. 3. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23-01 -2013. SD/- SD/- (B.R. JAIN) (B.R. MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 23 RD JAN 2013 *MISHRA COPY FORWARDED TO:- BY ORDER 1. THE DCIT , CIRCLE- 3, JAIPUR 2. SHRI VINOD MEHTA, JAIPUR 3.THE LD. CIT 4.THE LD. CIT(A) 5.THE LD. DR 6.THE GUARD FILE (ITA NO.825/JP/12) A.R. ITAT: J AIPUR 6 7