C. CHHABILDAS & CO., THANE V. ITO WD 2(2), THANE

ITA 9082/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4121 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 28-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITENDRA YADAV MR VIJAY MEHTA
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Valuation report

Judgement Text

ITA NO. 9082/MUM/201 0 M/S C. CHABBILDAS & CO. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SANJAY GARG JUDICIAL MEMBER ITA NO. 9082/MUM/2010 ASSESSMENT YEAR 2006-07 DATE OF HEARING: 23/7/2013 DATE OF PRONOUNCEMENT: 31/7/2013 O R D E R PER RAJENDRA SINGH, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.8.2010 OF CIT (A) FOR THE ASSESSMENT YEAR 2006-0 7. THE ASSESSEE IN THIS APPEAL HAS RAISED DISPUTES ON TWO DIFFERENT GROUNDS WHICH RELATE TO LEGAL VALIDITY OF REOPENING OF THE ASSESSMENT AND VALUATI ON OF PROPERTY AS ON 1.4.1981 FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. 2. FACTS IN BRIEF ARE THAT THE AO DURING THE ASSESS MENT PROCEEDINGS NOTED THAT THE ASSESSEE VIDE AGREEMENT DATED 7.4.2005 HAD SOLD THE PROPERTY AT 14(5), GULZARE KAZAMI ESTATE, 89 G MAZGAON ROAD, MU MBAI 10, IN RESPECT OF WHICH LONG TERM CAPITAL GAIN OF RS. 219783/- HAD BE EN DECLARED ADOPTING THE STAMP DUTY VALUE OF THE PROPERTY AS THE MARKET VALU E AT RS. 1,15,32,000/-. SINCE THE PROPERTY HAD BEEN ACQUIRED PRIOR TO 1.4.1 981 THE ASSESSEE HAD TAKEN M/S C. CHABBILDAS & CO. 37, STATION ROAD, OPP. DENA BANK BHAYANDER (WEST), THANE ITO, WARD-2 (2) THANE. APPELLANT RESPONDENT DEPARTMENT BY. SHRI JITENDRA YADAV. ASSESSEE BY: MR. VIJAY MEHTA ITA NO. 9082/MUM/201 0 M/S C. CHABBILDAS & CO. PAGE 2 OF 6 THE COST OF ACQUISITION AT MARKET VALUE AS ON 1.4.1 981 WHICH WAS RS. 22,76,100/- AS PER THE REGISTERED VALUER REPORT. TH E AO NOTED THAT THE REGISTERED VALUER IN COLUMN 3 OF THE REPORT HAD MEN TIONED THE RATE OF RS. 375/- PER SQ. FT. BUT IN THE COLUMN NO. 5 RATE ADOPTED FO R THE PURPOSE OF VALUATION WAS RS. 450 PER SQ. FT. SINCE THERE WERE DISCREPANC IES IN THE VALUATION REPORT, AO REFERRED THE MATTER TO THE DISTRICT VALUATION OF FICER (DVO) WHO VIDE REPORT DATED 24.12.2008 DETERMINED THE VALUE AS ON 1.4.198 1 AT THE RATE OF RS. 1125 PER SQ. MTR. WHICH GAVE THE VALUE OF RS. 5,28,518/ -. AO, THEREFORE, COMPUTED THE LONG TERM CAPITAL GAIN AT RS. 89,04,550/-. 3. THE ASSESSEE DISPUTED THE DECISION OF AO AND SUB MITTED BEFORE CIT(A) THAT SINCE THE VALUE AS PER REGISTERED VALUER WAS H IGHER THAN THE MARKET VALUE TAKEN BY AO NO REFERENCE COULD BE MADE TO THE DVO U /S 55A OF THE INCOME TAX ACT. IT WAS ALSO SUBMITTED THAT ON MERIT, THE ASSES SEE HAD RAISED SEVERAL OBJECTIONS BEFORE DVO WHICH HAD NOT BEEN CONSIDERED PROPERLY. IT WAS POINTED OUT THAT DVO HAD DETERMINED THE VALUE OF ONLY THE V ACANT LAND AND HAD NOT INCLUDED THE FULL FLEDGED STRUCTURE RAISED ON THE LAND ADMEASURING ABOUT 325.75 SQ. MTRS WHICH WAS BEING REGULARLY USED FOR STORING ITEMS LIKE PULSES, BETEL NUTS, AYURVEDIC MEDICINES ETC. THESE FACTS WE RE DULY MENTIONED IN THE DEVELOPMENT AGREEMENT WITH M/S VALIA DEVELOPERS AND THE ORIGINAL PURCHASE AGREEMENT DATED 8.5.1969 ALSO CLEARLY STATED THAT T HE PROPERTY COMPRISED OF LAND AND PREMISES ALONG WITH THREE BHATTIS. IT WAS FURTHER SUBMITTED THAT AS PER FSI OF 1.33 AVAILABLE IN 1981, 6726 SQ. FT. FLOOR A REA COULD BE BUILT UP ON THE PLOT AND THE OWNER COULD ADD EXTRA FLOOR TO CONSUME THE BALANCE FSI. FURTHER THE PROPERTY WAS FREE FROM ANY EXISTING TENANT AND, THE REFORE, THERE WAS NO ENCUMBRANCES ATTACHED TO IT. THE ASSESSEE ALSO POIN TED OUT THAT THE DVO HAD CITED TWO SALE INSTANCES WHICH WERE FOR THE YEAR 19 77 AND 1979 WHEREAS THE RELEVANT DATE OF VALUATION WAS 1.4.1981. THE DVO HA D ALSO NOT GIVEN THE DETAILS OF THE PROPERTY. THE DATE OF REGISTRATION OF PROPE RTY HAD ALSO NOT BEEN GIVEN FROM WHICH THE ASSESSEE COULD OBTAIN DETAILS. THE A SSESSEE POINTED OUT THAT IT ITA NO. 9082/MUM/201 0 M/S C. CHABBILDAS & CO. PAGE 3 OF 6 WAS POSSIBLE THAT THE PROPERTIES IN THE SALE INSTAN CES WERE OCCUPIED BY THE TENANTS. IT WAS POINTED OUT THAT BOTH THE SALE INST ANCES HAD AREA IN EXCESS OF 500 SQ. MTRS. AND IN THE RELEVANT PERIOD URBAN LAND CEILING ACT WAS INFORCE AS PER WHICH SALE OF OPEN PLOTS IN EXCESS OF 500 WAS N OT PERMITTED. THEREFORE, OBVIOUSLY THE PROPERTIES MUST HAVE BEEN STRUCTURES DULY TENANTED OTHER WISE THOSE COULD NOT HAVE BEEN SOLD. THE DVO HAD ALSO NO T GIVEN THE DETAILS OF FSI OF THE PLOT OF THE SALE INSTANCE. CIT(A) HOWEVER DID N OT ACCEPT THE CONTENTIONS RAISED. IT WAS OBSERVED BY HIM THAT REFERENCE TO DV O WAS POSSIBLE U/S 55A (B) (II) EVEN IN CASES WHERE THE REGISTERED VALUER REPO RT HAD BEEN FILED. AS REGARDS THE MERIT CIT(A) OBSERVED THAT THE OBJECTIONS RAISE D BY THE ASSESSEE HAD BEEN DULY CONSIDERED BY THE DVO AND, THEREFORE, HE CONFI RMED THE ORDER OF AO, AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE TRIBUNAL. 4. BEFORE US LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE OBJECTIONS RAISED BY THE ASSESSEE BEFORE THE DVO/AO HAVE NOT B EEN PROPERLY CONSIDERED. THE DVO HAD MADE THE VALUATION ON THE BASIS OF COMP ARATIVE SALE INSTANCES WHICH WERE OF THE YEAR 1997 AND 1979 AND THE DETAIL S OF THE PROPERTIES HAD NOT BEEN GIVEN TO THE ASSESSEE TO POINT OUT ANY DIFFERE NCES. THE DVO HAD NOT EVEN GIVEN THE REGISTRATION NO. OF THE PROPERTY FROM WH ICH THE ASSESSEE ITSELF COULD GATHER DETAILS. IN THE ABSENCE OF LOCATION DETAILS AND THE NAME OF THE ROAD IT WAS NOT POSSIBLE TO OFFER ANY REMARKS AS TO WHETHER THESE CASES WERE COMPARABLE. THE DVO HAD SIMPLY REPLIED THAT THE PR OPERTIES WERE IN THE SAME LOCALITY FREE FROM ANY ENCUMBRANCES WITHOUT ANY BA SIS FOR THE SAME AND WHICH WAS NOT VERIFIABLE IN THE ABSENCE OF DETAILS OF PRO PERTIES. THE ASSESSEE IN THE OBJECTION NO. 8, A COPY OF WHICH WAS PLACED AT PAGE 20 OF THE PAPERBOOK HAS ALSO RAISED OBJECTIONS THAT DVO HAD NOT STATED CLEA RLY AS TO IN WHICH RESPECTS THE SALE INSTANCES WERE SUPERIOR TO THAT OF THE ASS ESSEE. THE DVO HAD GIVEN A GENERAL REPLY THAT THE RATES WERE DULY ADJUSTED TAK ING INTO ACCOUNT ALL FACTORS. DVO HAD ALSO NOT TAKEN INTO ACCOUNT THE FULL FLEDGE D STRUCTURES ON THE LAND ABOUT WHICH ALSO THE ASSESSEE HAD RAISED OBJECTIONS BEING THE OBJECTION NO. 3, ITA NO. 9082/MUM/201 0 M/S C. CHABBILDAS & CO. PAGE 4 OF 6 DETAILS OF WHICH HAVE BEEN GIVEN AT PAGE 16 AND 17 OF THE PAPERBOOK. THE DVO HAD MENTIONED THAT STRUCTURES WERE TWENTY YEARS OLD AND HAD CONSIDERABLY DEPRECIATED AND EVEN THE REGISTERED VALUER HAD NOT ADOPTED ANY VALUE. IT WAS POINTED OUT IF THE STRUCTURE WAS OLD, IT COULD NOT BE SAID THAT IT HAD NO VALUE WHEN IT WAS BEING USED FOR WARE HOUSING PURPOSES AN D MERELY BECAUSE THE REGISTERED VALUER HAD NOT TAKEN THE VALUE WAS NO GR OUND FOR REJECTING THE CLAIM OF THE ASSESSEE. LEARNED AR ACCORDINGLY ARGUED THAT MATTER REQUIRED FRESH EXAMINATION AT LOWER LEVELS AND IN CASE THE ISSUE W AS RESTORED BACK HE WOULD NOT BE PRESSING THE GROUND NO. 1 RELATING TO REOPEN ING OF THE ASSESSMENT. THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING VALUATION OF TH E PROPERTY AS ON 1.4.1981 FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAI N. THE ASSESSEE HAD ADOPTED THE VALUE OF RS. 2276100/- AS PER THE REGIS TERED VALUER REPORT WHEREAS THE AO HAD ADOPTED THE VALUE AS PER THE DVO WHO HAD VALUED THE PROPERTY AS ON 1.4.1981 AT RS. 5,28,518/-. THE DVO HAD VALUED T HE PROPERTY ON THE BASIS OF TWO COMPARABLE SALE INSTANCES. HOWEVER IT APPEARS F ROM PERUSAL OF RECORD THAT THE ASSESSEE HAD SPECIFICALLY ASKED FOR DETAILS OF COMPARABLE SALE INSTANCES SO AS TO FILE REPLY IN THE MATTER. HOWEVER, FULL DETAI LS OF PROPERTY GIVING THE NAME OF THE ROAD AND REGISTRATION NO ETC HAD NOT BEEN GI VEN. IN OUR VIEW ONCE THE DVO/AO IS RELYING ON COMPARABLE CASES THE DETAIL OF PROPERTIES IS REQUIRED TO BE GIVEN TO THE ASSESSEE SO THAT IT COULD FILE PROP ER REPLY. WE ALSO NOTE THAT ON THE LAND/ PROPERTY THERE WAS FULL FLEDGED STRUCTURE WHICH WAS USED FOR WARE HOUSING PURPOSES, VALUE OF WHICH HAD BEEN TAKEN AT NIL. THE MATTER REGARDING THE VALUATION OF STRUCTURES ALSO REQUIRES FRESH CON SIDERATION AS EVEN THE STRUCTURE WAS OLD IT COULD NOT BE SAID THAT THE VA LUE WAS NIL. THE MATTER IN OUR VIEW REQUIRES FRESH EXAMINATION AT THE LEVEL OF CIT (A) IF NECESSARY BY REMANDING THE MATTER TO THE AO. CIT(A) MAY ALSO EXAMINE THE D VO IF REQUIRED. WE, ITA NO. 9082/MUM/201 0 M/S C. CHABBILDAS & CO. PAGE 5 OF 6 THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND RESTOR E THE MATTER BACK TO HIM FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION I N THE LIGHT OF OBSERVATIONS MADE IN THIS ORDER AND AFTER ALLOWING OPPORTUNITY O F HEARING TO THE ASSESSEE. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 31-7-2013 SD/- SD/- (SANJAY GARG) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER SK SR. P.S, MUMBAI DATED 31 .7.2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI ITA NO. 9082/MUM/201 0 M/S C. CHABBILDAS & CO. PAGE 6 OF 6 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 26/7/2013 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 26/7/2013 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER