MADHU C. GANWANI, MUMBAI V. ITO 19(1)(1), MUMBAI

ITA 8891/MUM/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8364 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 20-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence; Cost of acquisition; Fair market value
• Section: 54F

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , , , , BEFORE SHRI RAJENDRA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.8891/MUM/2010 ( !' #' / ASSESSMENT YEAR: 2006-07) SMT. MADHU C. GANWANI 101 PALLONJI APARTMENTS, LINKING ROAD, PLOT NO.389 KHAR (WEST) MUMBAI - 400052 / VS. INCOME TAX OFFICER 19(1)1 MUMBAI ./ ./PAN/GIR NO. : AANPG4048D ( /APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 30.11.2016 /DATE OF PRONOUNCEMENT: 23.02.2017 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 15.09.2010 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 30, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2006-07 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- REVISED GROUND NO.1 ASSESSEE BY : SHRI YOGESH THAR REVENUE BY: SHRI SAURABH KR. RAI ITA NO.8891/M/2010 A.Y. 20 06-07 2 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN SUBSTITUTING COST OF ACQUISITION, IN RESPECT OF A P ROPERTY SOLD DURING THE YEAR, FOR THE FAIR MARKET VALUE AS ON 01 .04.1981 FOR THE PURPOSE OF INDEXED COST OF ACQUISITION WHILE CO MPUTING LONG TERM CAPITAL GAIN ON THE SAID SALE ON THE ALLEGED G ROUND THAT THE CONSTRUCTION OF THE BUILDING WAS NOT COMPLETED ON OR BEFORE MARCH 1981. 1.2 THE APPELLANT PRAYS THAT THE FAIR MARKET VALUE OF T HE AFORESAID PROPERTY AS ON 01.04.1981 BE CONSIDERED AS COST OF ACQUISITION, INSTEAD OF THE ACTUAL COST OF ACQUISITION WHILE CAL CULATING INDEXED COST OF ACQUISITION FOR THE PURPOSE OF COMP UTING LONG TERM CAPITAL GAIN. REVISED GROUND NO.2 2.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN RESTRICTING THE CLAIM OF THE APPELLANT U/S.54F OF T HE ACT TO THE EXTENT OF ONE FLAT, WITHOUT APPRECIATING THE FACT T HAT THE TWO FLATS ARE ADJOINING AND HAVE A COMMON KITCHEN, THEREFORE CONSTRUES ONE HOUSE FOR THE PURPOSE OF SECTION 54F OF THE ACT . 2.2 THE APPELLANT PRAYS THAT THE CLAIM OF THE APPEL LANT U/S.54F OF THE ACT BE ALLOWED ON BOTH THE FLATS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED THE RETURN OF INCOME FOR THE A.Y.2006-07 ON 28.03.2007 DECLARING TOTAL INCOME TO THE TUNE OF RS.81,246/-. THE RETURN WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) ACCEPTING THE I NCOME RETURNED. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY WITH THE APPROVAL OF CCIT, MUMBAI AND ACCORDINGLY NOTICE U/S.143(2) OF THE ACT DATED 29.10.2007 WAS ISSUED WHICH WAS DULY SERVED UPON THE ASSESSEE ON 3 1.10.2007. UNDER THE RELEVANT YEAR OF THE ASSESSMENT THE ASSESSEE DERIVE D THE INCOME FROM HOUSE PROPERTY AND OTHER SOURCES. THE ASSESSEE RECEIVED THE CAPITAL GAIN ON ACCOUNT OF HIS PROPERTY BUT FAILED TO ADDUCED THE E VIDENCE WITH REGARD TO ITA NO.8891/M/2010 A.Y. 20 06-07 3 THE COMPLETION OF CONSTRUCTION ON OR BEFORE 01.04.1 981, THEREFORE, THE INDEXED COST OF THE PROPERTY IS TAKEN INTO CONSIDER ATION ON THE BASIS OF FAIR MARKET VALUE (FMV) OF THE PROPERTY AS ON 01.04.198 1 AS CLAIMED BY THE ASSESSEE IS DECLINED. FURTHER, THE ASSESSEE PURCHA SE TWO FLATS AND CLAIMED DEDUCTION U/S.54 OF THE ACT ONLY TO THE EXTENT OF O NE FLAT WHICH WAS ALLOWED AND ACCORDINGLY TAXABLE CAPITAL GAIN WAS ASSESSED T O THE TUNE OF RS.87,30,138/-. THE ASSESSEE WAS NOT SATISFIED, TH EREFORE, FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE AS SESSING OFFICER, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEA L BEFORE US. ISSUE NO.1:- 4. UNDER THIS ISSUE, THE ASSESSEE HAS ASSAILED THE CONFIRMATION OF THE ORDER OF THE ASSESSING OFFICER IN WHICH THE INDEXED VALUE OF THE PROPERTY WAS TAKEN IN TO CONSIDERATION THE FMV AS ON 01.04.1 981. TO ASSESSED THE LONG TERM CAPITAL GAIN. THE LEARNED DEPARTMENTAL R EPRESENTATIVE HAS ARGUED THAT THE ASSESSEE ALONGWITH SHRI CHIMANLAL T HAKURDA GANWANI, SMT. CHANDRA NARAINDAS GANWANI AND SHRI KUSHI NARAINDAS GANWANI WERE OWNERS OF THE PROPERTY IN QUESTION BY VIRTUE OF CON VEYANCE DEED DATED 21.03.1978 BEARING PLOT NO.369 OF THE KHAR SCHEME, KHAR WEST ADMEASURING 645.48 SQ. YARDS. THE ASSESSEE WAS HAV ING THE 25% SHARE OF THE MENTIONED PROPERTY. IT WAS ARGUED THAT THE ASS ESSEE DEMOLISHED THE OLD STRUCTURE AND RAISED THE NEW CONSTRUCTION IN 1979-8 0 AND ALSO CONSTRUCTION ON 01.04.1981 BUT THE ASSESSING OFFICER HAS WRONGLY TAKEN INTO CONSIDERATION THE INDEXED COST OF THE PROPERTY. HO WEVER, THE FMV OF THE PROPERTY AS ON 01.04.1981 WAS REQUIRED TO BE TAKEN INTO THE CONSIDERATION, THEREFORE THE ORDER PASSED BY THE CIT(A) IS WRONG A GAINST LAW AND FACTS. IT ITA NO.8891/M/2010 A.Y. 20 06-07 4 IS SPECIFICALLY ARGUED THAT THE LAND AS WELL AT THE CONSTRUCTION CANNOT BE SEPARATELY TO BE ASSESSED FOR THE PURPOSE OF DISALL OWING THE LONG TERM / SHORT TERM CAPITAL GAIN IN VIEW OF THE LAW SETTLED IN CIT VS. HINDUSTAN HOTELS LTD. 335 ITR 60 HONBLE BOMBAY HIGH COURT AN D CIT VS. SMT. LAKSHMI B. MENON 264 ITR 76 HONBLE KERELA HIGH COU RT AND CIT VS. C.R.SUBRAMANIAN 242 ITR 342 HONBLE KARNATAKA HIGH COURT AND CIT VS. VIMAL CHAND GOLECHA 201 ITR 442 HONBLE RAJASTAN HI GH COURT WHICH HAS NOT BEEN CONSIDERED BY THE ASSESSING OFFICER, T HEREFORE THE ORDER PASSED BY THE CIT(A) CONFIRMING THE ORDER OF THE AS SESSING OFFICER IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. HOWEVER, ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. ON APP RAISAL OF THE ORDER PASSED BY THE CIT(A) IN QUESTION IT CAME INTO THE N OTICE THAT THE PLEA IN CONNECTION WITH THE OWNERSHIP OF THE ASSESSEE UPON THE PROPERTY IN QUESTION BY VIRTUE OF CONVEYANCE DEED DATED 31.03.1 978 HAS NOT BEEN DISCUSSED AT ALL. IN VIEW OF THE ABOVE MENTIONED L AW IT IS QUITE CLEAR THAT THE LAND AND SUPERSTRUCTURE CAN BE ASSESSED SEPARAT ELY. THE ASSESSEE MOVED AN APPLICATION UNDER RULE 9 OF THE ACT TO ALLOW HER TO PRODUCE THE DOCUMENTS WHICH ARE NECESSARY TO ADJUDICATE THE MAT TER OF CONTROVERSY. THE ASSESSEE ALSO TOOK THE PLEA THAT SHE FAILED TO PRODUCE THESE DOCUMENTS BEFORE THE LOWER AUTHORITIES. ON APPRAISAL OF THE APPLICATION U/S.29 OF THE ACT, IT CAME INTO THE NOTICE THAT THE ASSESSEE WANT ED TO ADDUCED THE COPY OF AGREEMENT DATED 08.09.1977, COPY OF AGREEMENT DATED 05.02.1978, COPY OF AGREEMENT DATED 05.01.1979, COPY OF CONVEYANCE DEED DATED 21.02.2006, COPY OF CONFIRMATION LETTER FROM THE SOCIETY DATED 07.01.2014, COPY OF ELECTRICITY BILL FOR THE MONTH OF JANUARY 2011 AND DECEMBER 2013 AND ITA NO.8891/M/2010 A.Y. 20 06-07 5 PHOTOGRAPHS OF BOTH THE FLATS EVIDENCING THEIR USE AS ONE UNIT. THIS PIECE OF EVIDENCE NOWHERE PRODUCED BEFORE THE LOWER AUTHORIT Y AND NOWHERE DISCUSSED IN THE ORDER IN QUESTION. HOWEVER, THESE DOCUMENTS WERE NECESSARY TO ADJUDICATE THE MATTER OF CONTROVERSY I N THE INTEREST OF JUSTICE. FURTHER, IT ALSO CAME INTO THE NOTICE THAT IN THE C ASE OF KHUSHI GANWANI THE DISTRICT VALUATION OFFICER-II(DVO) HAS ASSESSED THE FMV OF THE PROPERTY WHILE IN THE INSTANT CASE THE VALUE OF THE PROPERTY WAS ASSESSED ON THE BASIS OF THE COST OF ACQUISITION. IN VIEW OF THE ABOVE M ENTIONED LAW THE LAND AND SUPERSTRUCTURE CAN BE ASSESSED SEPARATELY AND IN TH IS REGARD THE ADDITIONAL EVIDENCE MENTIONED ABOVE SEEMS NECESSARY TO ADJUDIC ATE THE MATTER OF CONTROVERSY. THEREFORE, WE ARE OF THE VIEW THAT TH E ADDITIONAL EVIDENCE IS LIABLE TO BE ALLOWABLE, THEREFORE, WE ALLOWED THE S AME AND DIRECT THE ASSESSING OFFICER TO RE-ASSESS THE MATTER OF CONTRO VERSY IN THE LIGHT OF THE ABOVE SAID EVIDENCE IN ACCORDANCE WITH LAW. ACCORD INGLY, IN VIEW OF THE ABOVE SAID OBSERVATION WE REMAND THE ISSUE ON THE F ILE OF THE ASSESSING OFFICER TO DECIDE THE MATTER AFRESH BY GIVING AN OP PORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGL Y, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.2:- 5. UNDER THIS ISSUE THE CLAIM OF THE ASSESSEE IS TH AT THE ASSESSEE CLAIMED THE DEDUCTION U/S.54F OF THE ACT IN RESPECT OF THE TWO ADJOINING FLATS WHICH WAS CONFINED TO THE ONLY ONE FLAT. THE ASSESSEE DI D NOT ADDUCED THE EVIDENCE IN THIS REGARD, HOWEVER, IN VIEW OF THE AP PLICATION FOR ADDITIONAL EVIDENCE HE WANT TO ADDUCE THE ADDITIONAL EVIDENCE IN RESPECT OF HIS CLAIM IN CONNECTION WITH THE TWO UNITS WHICH HAS BEEN CON VERTED INTO THE ONE UNIT ITA NO.8891/M/2010 A.Y. 20 06-07 6 THIS IS EXEMPTION U/S.54 OF THE ACT UNDER THE DIFFE RENT LAW SETTLED IN CIT VS. DEVDAS NAIK 366 ITR 12 HONBLE BOMBAY HIGH COUR T AND JOSEPH J. MUDALIAR VS. ACIT 65 SOT 87 HONBLE INCOME TAX APPE LLATE TRIBUNAL, MUMBAI AND DCIT VS. JAI TRIKANAND RAO 149 ITD 112 HONBLE INCOME TAX APPELLATE TRIBUNAL, MUMBAI AND CIT VS. RAMAN KU MAR SURI 212 TAXMAN 411 HONBLE BOMBAY HIGH COURT. HOWEVER, ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS STRONGLY RE LIED UPON THE ORDER PASSED BY THE CIT(A) IN THIS QUESTION BUT ON APPRAI SAL OF THE ENTIRE RECORD OF THE FILE IT CAME INTO THE NOTICE THAT NO PROPER EVIDENCE WAS GIVEN BY THE ASSESSEE IN SUPPORT OF HER CLAIM. NOW SHE WANTED T O ADDUCED THE ADDITIONAL EVIDENCE IN SUPPORT OF HER CLAIM AND IN WHICH SOME DOCUMENTS ARE RELATED TO THIS ISSUE ALSO. THEREFORE, IN VIEW OF THE SAID CIRCUMSTANCES WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DECIDE THE MATTER AFRESH IN THE LIGHT OF THE EVIDEN CE ADDUCED BY THE ASSESSEE IN ACCORDANCE WITH LAW BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREFORE, IN THE SAID CIRCUMSTANCES, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD FEBRUARY, 2017 . SD/- SD/- (RAJENDRA) (AMARJIT SINGH) !' / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 23 RD , 2017 MP ITA NO.8891/M/2010 A.Y. 20 06-07 7 & '# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. , , , , / DR, ITAT, MUMBAI 6. + -. / GUARD FILE. / BY ORDER, % % //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI