J.L. Morison (India) Ltd., Kolkata V. DCIT, Central Circle - VII, Kolkata, Kolkata

ITA 911/KOL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78371 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 20-06-2011
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: S JHAJHARIA
• Keywords: Depreciation; Rectification of order; Fair market value; Valuation report; Assessment record
• Section: 143(3); 154

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.911/KOL/2011 #$ %&/ ASSESSMENT YEAR: 2003-04 J. L. MORISON (INDIA) LTD. VS. DEPUTY COMMISSIO NER OF INCOME-TAX, (PAN: AAACJ0248C) CENTRAL CIRCLE-VII, KOLKATA (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 17.06.2014 DATE OF PRONOUNCEMENT: 30.06.2014 FOR THE APPELLANT: SHRI S. JHAJHARIA, ADVOCATE FOR THE RESPONDENT: SHRI RAVI JAIN, CIT, DR / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), CENTRAL-1, KOLKATA IN APPEAL NO. 42/CC-VIICIT(A),C-1/10-11DATED 23.05.2011. ASS ESSMENT WAS FRAMED BY DCIT, CEN. CIR-VII, KOLKATA U/S. 154/251/143(3) OF THE INCOME- TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2003-04 VIDE HIS ORD ER DATED 31.03.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN RECTIFYING THE VALUE OF LAND AND BU ILDING TAKEN BY ASSESSEE ON THE BASIS OF REGISTERED VALUERS REPORT AS ON 01.04.1981 AND ASS ESSED BY AO U/S. 143(3) OF THE ACT AND ASSESSING THE CAPITAL GAINS DESPITE THE FACT THAT T HE JURISDICTION ENVISAGED U/S. 154 OF THE ACT IS ONLY MISTAKE APPARENT FROM RECORD. FOR THIS, ASSES SEE HAS RAISED FOLLOWING GROUND NO.1: AGAINST INVOCATION OF PROVISIONS U/S. 154: A) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED IN AFFIRMING THAT ACCEPTING RS.30490000/- AS FAIR MARK ET VALUE (FMV) AS ON 01.04.1981 OF KANDIVILLI FACTORY LAND SOLD, IN ASSE SSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961, WAS A MISTAKE APPARENT FROM RECORD ENVISAGED U/S. 154 OF THE SAID ACT. B) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) AND LD. A/O ERRED IN MISINTERPRETING THE REPORT OF APPROVED VALUER IN RESPECT OF FMV AS ON 01.04.1981 OF THE BUILT UP PORTION OF THE SUBJECT L AND. 3 . BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT DUR ING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY SOLD ITS LAND, ADMEASURING ABOUT 1 2,625 SFT. WITH EXISTING STRUCTURE AT 2 ITA NO.911/K/2011 J.L. MORISON (INDIA) LTD.. AY 2003-04 KANDIVILLI FOR A CONSIDERATION OF RS.15 CR. THIS C ONSIDERATION WAS APPORTIONED TOWARDS LAND AND BUILDING ON THE BASIS OF REVALUED FIGURES OF AS SETS SOLD AS ON DATE OF SALE AS UNDER: REVALUED BOOK FIGURES (RS.) SALE VALUE PROPORTIONE D (RS.) LAND BUILDING 135895500 9664110 140041080 9958920 (REDUCED FROM THE W.D.V. FOR DEPRECIATION) 145559610 150000000 ADMITTEDLY, THIS LAND WAS ACQUIRED ON OR BEFORE 01. 04.1981 SO THE ASSESSEE COMPANY COMPUTED FAIR MARKET VALUE OF THE LAND AS ON 01.04.1981 AS C OST OF ACQUISITION FOR COMPUTATION OF LONG TERM CAPITAL GAINS. THE ASSESSEE FILED A VALUATION REPORT FROM REGISTERED VALUER SHRI VUBIDRAU V, JAOADUA ESTIMATING THE FMV OF THE LAND AS ON 01.04. 1981 VIDE HIS VALUATION REPORT DATED 17.12.2002 AT RS.3,04,90,000/-. THE ASSESSEE COMPU TED THE CAPITAL GAINS ON SALE OF LAND AND DECLARED CAPITAL GAIN DURING THE COURSE OF ASSESSME NT PROCEEDINGS AS UNDER: SALE VALUE OF LAND AT KANDIVILLI (SOLD ON 31.10.0 2) 140041080 INDEX COST 447X30490000 (FMV AS ON 01.04.81) 100 136290300 CAPITAL GAIN 3750780 LESS: EXEMPTION U/S. 54EC: TOTAL INVESTMENT IN BONDS OF NATIONAL HOUSING BAN K MADE ON 30.04.2003 RS.15000000/- 3750780 NIL THIS COMPUTATION OF LONG TERM CAPITAL GAIN WAS FILE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON 20.03.2006. THE ASSESSEE ALSO FILED COPY OF VALUATION REPORT DATED 17.2.2002 VALUING THE FAIR MARKET VALUE AS ON 01.04 .1981 OF LAND AT RS.3,04,90,00/-. THIS COMPUTATION OF LONG TERM CAPITAL GAIN FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS ACCEPTED BY THE AO WHILE FRAMING ASSESSMENT U/S . 143(3) OF THE ACT DATED 29.03.2006. SUBSEQUENTLY, A NOTICE U/S. 154 OF THE ACT WAS ISSUED STATING THAT THERE IS MISTAKE IN COMPUTATION OF LTCG AND FIXING THE CASE FOR 24.03.2010. THE AO INITIALLY NOTED THAT THE AO DURING THE COURSE OF ASSESSMENT P ROCEEDINGS ACCEPTED THE FAIR MARKET VALUE COMPUTED BY A REGISTERED VALUER AS ON 01.04.1 981 OF THE ASSESSEES PROPERTY I.E. SALE OF LAND INCLUDING BUILDING WHICH IS A DEPRECI ABLE ASSET. HE NOTED THAT IT IS CLEAR FROM THE COMPUTATION THAT THE ASSESSEE DEDUCTED IND EXED COST OF BUILDING ALSO ALONG WITH THE INDEXED COST OF LAND ON THE VALUE TAKEN AS ON 0 1.04.1981 AS PER VALUATION REPORT OF REGISTERED VALUER MR. VINOD RAI B KAPADIA, DT. 17.1 2.2002. THE BUILDING PORTION HAS BEEN CONSIDERED U/S. 50, SINCE IT IS DEPRECIABLE AS SET. THEREFORE, THERE IS A MISTAKE 3 ITA NO.911/K/2011 J.L. MORISON (INDIA) LTD.. AY 2003-04 APPARENT FROM RECORD IN THE COMPUTATION OF LONG TER M CAPITAL GAIN. ACCORDINGLY, HE RECTIFIED THE MISTAKE AND RECOMPUTED THE CAPITAL GA INS BY REVISING THE SAME AS UNDER: PROPORTIONATE SALE CONSIDERATION OF LAND RS.14 ,00,41,080/- LESS: INDEXED COST RS.1,15,79,850/- X 447/100 R S. 5,17,61,929/- (VALUE OF LAND AS ON 01.04.1981 AS PER VALUATION REPORT) RS. 8,82,79,151/- LESS: EXEMPT U/S. 54EC RS. 1,50,00,000/- LTCG RS. 7,32,79,151/- AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US REFERRED TO VALUATION REPORT ESTIMATING FAIR MARKET VALUE AT RS.3,04,90,000/-. LD. COUNSEL FOR THE ASS ESSEE REFERRED TO PARTICULAR VALUATION STATEMENT DATED 17.12.2002 WHEREIN AT POINT 3 THE T OTAL MARKET VALUE OF EXISTING BUILT UP AREA OF THE STRUCTURE IS ESTIMATED AS UNDER: 3. TOTAL MARKET VALUE OF EXISTING BUILT-UP AREA O F RS.1,89,10,080/- ALL THE STRUCTURES SITUATED ON PLOT. S. NO. 128/3(P), AT VILLAGE:KANDIVALI & S. NO. 94/1B (P), AT VILLAGE: POISAR 39396 SQ. FT. X @ RS.480 PER SQ. FT. LD. COUNSEL FOR THE ASSESSEE FURTHER DREW OUR ATTEN TION TO POINT NOS. 7 AND 8, WHICH ARE AS UNDER: 7. TOTAL VALUE OF BALANCE FSI OF LAND AS ON 181 RS.1,5,79,880/- 96499 SQ. FT. X @ RS.120/- PER SQ. FT. 8. TOTAL MARKET VALUE OF EXISTING BUILT-UP AREA O F RS.3,04,89,960/- ALL THE STRUCTURES SITUATED ON PLOT + TOTAL VALU E OF BALANCE FSI OF LAND AS ON 1.4.1981. LD. COUNSEL FOR THE ASSESSEE BEFORE US STATED THAT THE TOTAL MARKET VALUE OF EXISTING BUILT UP AREA INCLUDES LAND WHICH IS AT 39396 SFT. LD. COUNSEL F OR THE FIRST OF ALL COMPUTED THE TOTAL LAND AREA, WHICH IS 1,35,895 SFT, WHICH INCLUDES THE REMAINING UNUTILIZED FSI OVER THE EXISTING PLOT WHICH IS APPROXIMATELY 96499 SFT. SECONDLY, THE TOTAL M ARKET VALUE OF EXISTING BUILT UP AREA INCLUDING LAND AND THAT LAND IS AT ABOUT 39396 SFT., IT COMES TO 135895 SFT. IF WE TAKE THE FSI OF 39396 SFT WHAT WILL BE THE FSI AND WHAT WILL BE THE FAIR MARK ET VALUE, IT IS A TOTALLY DEBATABLE ISSUE. THE LD. COUNSEL FOR THE ASSESSEE IN TERM OF THE ABOVE S TATED THAT THIS BEING A HIGHLY DEBATABLE ISSUE AND IT INVOLVES TWO CONCEIVABLE DIFFERENT POSSIBLE VIEW AND ONCE THIS IS THE POSITION, THE RECTIFICATION U/S. 154 OF THE ACT IS NOT PERMISSIBL E UNDER LAW. ON THE OTHER HAND, THE LD. CIT DR RELIED ON THE RECTIFICATION ORDER PASSED BY AO A ND THE ORDER OF CIT(A). IT IS AN ADMITTED 4 ITA NO.911/K/2011 J.L. MORISON (INDIA) LTD.. AY 2003-04 FACT THAT THE TOTAL AREA OF PROPERTY IS 135895 SFT, WHICH CONSISTS OF LAND AND ON THIS THE SUPER- STRUCTURE CONSTRUCTION IS ABOUT39396 SFT. FURTHER THERE IS AN AMBIGUITY AS GIVEN IN THE VALUATION REPORT IS THAT THE TOTAL PROPERTY IS ADMEASURING 12 625 SQ. METRES THAT COMES TO 135895 SFT OF THE LAND. FURTHER, THERE SHOULD HAVE BEEN THE REMAININ G WDV OF THE BUILDING AND WHAT IS THE VALUE OF THE BUILDING THAT NOBODY HAS CONSIDERED. IT MEA NS THAT THERE IS A LOT OF DEBATE INVOLVED IN IT AND CONCEIVABLY TWO OPINIONS WILL BE THERE. A MIST AKE APPARENT FROM RECORD IS, ONE TO POINT OUT, WHICH NO ELABORATE ARGUMENT IS REQUIRED. IT M UST BE GLARING, OBVIOUS OR SELF EVIDENT MISTAKE. IF IT IS A MISTAKE WHICH REQUIRES TO BE E STABLISHED BY COMPLICATED PROCESS OF INVESTIGATION, ARGUMENT OR PROOF, IT CANNOT BE REGA RDED AS A MISTAKE APPARENT FROM RECORD. IT SHOULD BE ONE WHICH COULD BE DISCERNED WITH SAME PR OPOSITION AFTER A JUDICIAL PROBE INTO THE ASSESSMENT RECORDS WITHOUT LONG DRAWN PROCESS OF RE ASONING AND ALWAYS NO TWO REASONABLE CONTRARY OPINIONS ARE CONCEIVABLE. HONBLE CALCUTT A HIGH COURT IN THE CASE OF CIT VS. CALCUTTA STEEL CO. LTD. (1985) 153 ITR 488 (CAL) HA S CATEGORICALLY HELD THAT A MISTAKE APPARENT FROM RECORD MUST BE AN OBVIOUS MISTAKE AND PATENT M ISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. HERE IN THE PRESENT CASE BEFORE US AL SO THAT IS THE VALUE OF THE PROPERTY I.E. THE LAND IN QUESTION, AS ACCEPTED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT, IS NOT ACCEPTED BY THE AO WHILE CARRYING OUT RECTIFICATION U/S. 154 OF THE ACT FOR THE REASON THAT THE VALUER HAS COMPUTED THE BUI LDING PORTION WHILE COMPUTING FAIR MARKET VALUE OF THIS PROPERTY BUT HE FAILED TO UNDERSTAND THAT THE BUILDING PORTION ALSO INCLUDES A PORTION OF LAND ADMEASURING ABOUT 39396 SFT AND EVE N OTHERWISE THE VALUATION IS A HIGHLY DEBATABLE ISSUE. HENCE, THE RECTIFICATION CARRIED OUT BY AO ON THE BASIS OF VALUATION REPORT CONSISTS OF TWO OPINIONS AND ASSUMPTION OF JURISDIC TION BY INVOKING SECTION 154 OF THE ACT IS WITHOUT LEGAL SANCTION. ACCORDINGLY, WE QUASH THE ORDERS OF THE LOWER AUTHORITIES AND THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 6. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30.06.2 014. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30TH JUNE, 2014 -. #/0 1 JD.(SR.P.S.) 5 ITA NO.911/K/2011 J.L. MORISON (INDIA) LTD.. AY 2003-04 2 *3 4 3%5- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT J.L. MORISON (INDIA) LTD., 20, SIR R. N . MUKHERJEE ROAD, KOLKATA-700 001. 2 *+() / RESPONDENT DCIT, CENTRAL CIRCLE-VII, KOLKATA. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 3:; *# / DR, KOLKATA BENCHES, KOLKATA +3 */ TRUE COPY, #