ALLO N DAVAR, MUMBAI V. ITO WD 16(2)1, MUMBAI

ITA 8377/MUM/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0581 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-04-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 09-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Fair market value; Valuation report
• Section: 54

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./I.T.A./8377/MUM/2011, / ASSESSMENT YEAR: 2001-02 LATE MRS. ALOO N. DAVAR (BY HER LEGAL HEIR MR. FALI N. DAVAR) H-1, PALACIMO, 8 TH FLOOR SILVER OAKS ESTATE, BHULABHAI ESTATE ROAD, MUMBAI-400 026. PAN:AAJPD 5990 P VS. INCOME TAX OFFICER WARD-16(2)(1), MATRU MANDIR TARDEO, MUMBAI-400 007. ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: SHRI RAJESH KUMAR YADAV-DR /ASSESSEE BY: SHRI P.B CHHAPGAR & N.A. PATADE-AR / DATE OF HEARING: 24/04/2017 / DATE OF PRONOUNCEMENT: 02/06/2017 PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 29/09/2011 OF THE CIT ( A)-28,MUMBAI, THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE,AN INDIVIDUAL,FILED A RETUR N OF INCOME ON 22/03/200, DECLARING TOTAL INCOME AT RS.6.2 LAKHS.THE ASSESSING OFFICER(AO)COM PLETED THE ASSESSMENT ON 26/03/ 2004, U/S.143 (3) OF THE ACT, DETERMINING HER INCOME AT R S. 36.10 LAKHS. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORISED REPRESENTATIVE (AR ) DID NOT PRESS GROUNDS 1.2, 1.3 AND 2. HENCE,SAME STAND DISMISSED AS NOT PRESSED. 2. BEFORE PROCEEDING FURTHER WE WOULD LIKE TO NARRATE THE BRIEF HISTORY OF THE CASE.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESS EE,HAVING ONE THIRD SHARE IN A PROPERTY,HAD SOLD IT FOR A TOTAL CONSIDERATION OF R S.7.41 CRORES,THAT AFTER CLAIMING THE EXPENSES OF RS. 2.74 LAKHS ON ACCOUNT OF TRANSFER THE NET CO NSIDERATION WAS TAKEN AT RS. 7.38 CRORES SHE ADOPTED THE COST OF PROPERTY AT VALUE AS ON 01/04/1 981 BASED ON THE VALUATION REPORT OF AN ARCHITECT AT RS. 28.11 LAKHS,THAT AFTER INDEXATION THE COST OF PURCHASE WAS TAKEN AT RS. 1.14 CRORES,THAT THE LONG-TERM CAPITAL GAIN (LTCG) WAS D ETERMINED AT RS. 6.24 CRORES, THAT SHE HAD CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT ON AC COUNT OF INVESTMENT IN A NEW FLAT FOR A TOTAL CONSIDERATION OF RS. 6.12 CRORES, THAT ACCORD INGLY SHE HAD SHOWN A TOTAL CAPITAL GAIN OF RS. 3.71 CRORES (ONE THIRD SHARE OF RS. 11.15 LAKHS ). THE MATTER TRAVELLED UP TO THE TRIBUNAL. VIDE ORDER DATED 02/11/2006, IT REFERRED BACK MATTE R TO THE FILE OF THE FIRST APPELLATE AUTHORITY (FAA). HE WAS DIRECTED TO EXAMINE AS TO W HETHER THE AO HAD GIVEN COGENT REASONS FOR REJECTING THE VALUATION REPORT SUBMITTED BY THE ASSESSEE AND TO VERIFY THE CORRECTNESS OF ESTIMATE OF MARKET VALUE MADE BY THE AO AS ON 01/04 /1981. HE WAS ALLOWED TO REFER TO THE 8377/M/11(01-02) MRS. ALOO N. DAVAR 2 READY RECKONER PUBLISHED BY THE ARCHITECTS PUBLISHI NG CORPORATION OF INDIA. THE ASSESSEE WAS ALSO DIRECTED TO PROVIDE CERTAIN DETAILS TO THE FAA. IN PURSUANCE OF THE DIRECTIONS OF THE TRIBUNAL THE FAA HEARD THE CASE AND CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE. HE HELD THAT THE REVIEWER HAD GIVEN BASIS OF ADOPTING PARTICULAR VALUE AND HAD DULY FOLLOWED THE PROCESS OF NATURAL JUSTICE, THAT HE HAD GIVEN OPPOR TUNITY TO THE APPROVED VALUER OF THE ASSESSEE TO RAISE THE OBJECTIONS AGAINST THE PROPOSED VALUAT ION, THAT HE HAD DEALT WITH THE OBJECTIONS AND HAD MADE IT CLEAR AS TO HOW HE HAD ARRIVED AT T HE VALUE. THE FAA REPRODUCED THE VARIOUS OBJECTIONS RAISED BY THE APPROVED VALUER OF THE ASS ESSEE AND THE REPLY OF THE DVO AND OBSERVED THAT THE DEPARTMENTAL VALUER HAD DETERMINE D THE VALUE OF SHARE OF THE ASSESSEE AT RS. 5.30 LAKHS, AS ON 01/04/1981. HE OBSERVED THAT THE DVO HAD TAKEN INTO ACCOUNT SEPARATE VALUE FOR LAND AND BUILDING, THAT WHILE VALUING THE LAND HE HAD CONSIDERED THE FSI AVAILABLE AND FSI UTILISED AS WELL AS THE UNUTILISED FSI AVAI LABLE, THAT HE HAD VALUED THE LAND AFTER CONSIDERING ALL THESE FACTORS, THAT THE AO HAD NOT CONSIDERED THE UN-UTILISED FSI AVAILABLE WITH THE ASSESSEE, THAT HE HAD VALUED THE PROPERTY (LAND AND BUILDING),THAT THE DVO HAD TAKEN INTO ACCOUNT THE SPECIAL FEATURES/EXCLUSIVENESS OF THE PROPERTY AND HAD GIVEN 5% ADDITIONAL WEIGHTAGE FOR IT WHILE VALUING THE IMPUGNED PROPERT Y, THAT HE HAD ALSO CONSIDERED THE APPRECIATED VALUE OF THE BUILDING TAKING INTO ACCOU NT THE FACT THAT BUILDING WAS CONSTRUCTED IN 1950, THAT THE TPO HAD ALSO TAKEN THE SEPARATE VALU E FOR STORE AND GARAGE, THAT HE HAD ALSO TAKEN INTO ACCOUNT OF PORTION OF THE BUILDING UNDER RENT SEPARATELY, THAT THE AO HAD ADOPTED WRONG AREA FOR WORKING OUT THE VALUE OF THE PROPERT Y,THAT THE VALUE ADOPTED BY HIM WAS NOT CORRECT, THAT THE REASONS GIVEN BY HIM TO REJECT TH E VALUATION GIVEN BY THE APPROVED VALUER WERE NOT COGENT, THAT THE BASIS FOR REJECTION OF RE PORT OF THE VALUER WAS NOT PROPERLY REASONED OUT. FINALLY, HE HELD THAT ESTIMATE GIVEN BY THE DV O IN RESPECT OF THE IMPUGNED PROPERTY WAS REASONABLE AND THAT SAME WAS BASED ON PROPER LOGIC AND REASONING, THAT VALUATION EVEN BY THE DVO WAS BETTER THAN THE VALUATION OF THE VALUER. WI TH REGARD TO COST OF THE PROPERTY OF OTHER TWO CO-OWNERS, HE MENTIONED THAT THEIR ASSESSMENTS WERE NOT SUBJECT TO SCRUTINY, THAT WHATEVER VALUE WAS ACCEPTED BY THE ASSESSEE WAS ACC EPTED BY THE DEPARTMENT. ACCORDINGLY, HE DIRECTED THE AO TO ADOPT THE VALUE GIVEN BY DVO FOR COMPETITION OF FAIR MARKET VALUE OF THE PROPERTY. 3. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE (AR) ARGUED THAT AMENDMENT TO SECTION 55A WAS EFFECTIVE FROM JULY,20 12, THAT THE VALUE ADOPTED IN CASES OF TWO OTHER CO-OWNERS SHOULD BE ADOPTED.HE RELIED UPO N THE CASES OF POOJA PRINTS (360ITR697) 8377/M/11(01-02) MRS. ALOO N. DAVAR 3 AND PRADIP VORA(154 ITD 118).THE DEPARTMENTAL REPRE SENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE ASSESSEE HAD SOLD ITS ONE THIRD SHARE OF THE PROPER TY DURING THE YEAR UNDER CONSIDERATION,THAT THE AO HAD MADE A REFERENCE TO THE DVO,THAT THE REP ORT WAS NOT RECEIVED BY THE AO BEFORE COMPLETION OF THE ASSESSMENT, THAT THE AO MADE CERT AIN ADDITIONS TO THE INCOME OF THE ASSESSEE,THAT MATTER WAS RESTORED BACK TO THE FILE OF THE FAA BY THE TRIBUNAL, THAT THE FAA AFTER CONSIDERING THE RELEVANT MATERIAL HELD THAT V ALUE ADOPTED BY THE REVIEWER WAS TO BE TAKEN AS FAIR MARKET VALUE. WE HAVE GONE THROUGH TH E CASES REFERRED TO BY THE ASSESSEE.IN THOSE CASES IT HAS BEEN HELD THAT A REFERENCE COULD BE MADE TO THE DVO ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THAN THE FAIR MARK ET VALUE AND NOT MORE THAN THE FMV. IN THE CASE UNDER CONSIDERATION THE AO HAD NOT BROUGHT ON RECORD AS TO WHETHER THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THAN FMV.THE AMEND MENT TO SECTION 55A IS APPLICABLE FROM JULY,2012, WHEREAS WE ARE DEALING WITH THE APP EAL FOR THE ASSESSMENT YEAR 2001- 02. THEREFORE,RESPECTFULLY FOLLOWING THE JUDGMENT/ORDER OF THE HONBLE BOMBAY HIGH COURT/TRIBUNAL,WE DECIDE THE EFFECTIVE GROUND OF AP PEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS AL LOWED. . ORDER PRONOUNCE D IN THE OPEN COURT ON 2 ND, JUNE, 2017. 2 , 2017 SD/- SD/- ( / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED :02.06.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED 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.