Ramaraj Naidu, CHENNAI V. ITO Non Corporate Ward 10(5), CHENNAI

ITA 935/CHNY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4761 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 19-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR BALINA SURESH KUMAR JCITD R
• Assessee Lawyers: K N SETHUFCA
• Keywords: Sale consideration of property below Jantri Value; Fair market value

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH : CHENNAI , . , [BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] ./ I.T.A. NO.935/CHNY/2018 $ $ / ASSESSMENT YEAR : 2013-14 SHRI RAMRAJ NAIDU , BBC HALLAM GARDEN APARTMENTS, FLAT NO.6,SECOND FLOOR, DOOR NO.51/12A,NEW AVADI ROAD, KILPAUK,CHENNAI-10. VS. INCOME TAX OFFICER, NON CORPORATE WARD 10(5), CHENNAI. [PAN AAJPR 7021 D] ( / APPELLANT) ( /RESPONDENT) ( ) / APPELLANT BY : MR.K N SETHU,FCA, +,( ) /RESPONDENT BY : DR.BALINA SURESH KUMAR, JCIT,D.R ) /DATE OF HEARING : 16-07-2019 ) /DATE OF PRONOUNCEMENT : 08-08-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-12, CHENN AI DATED 19.12.2017 FOR ASSESSMENT YEAR 2013-14. ITA NO. 935/CHNY/2018 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS. 1. AS A MATTER OF FACT, THE PROPERTY SOLD WAS SUBJE CT TO PROCEEDINGS OF CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY FOR U NAUTHORIZED CONSTRUCTION. AS PER THE DEMOLITION NOTICE GIVEN BY CMDA THE BUILDING HAD AN APPROVED PLAN FOR GROUND FLOOR + ME ZZANINE FLOOR + 3 FLOORS WHEREAS THE BUILDING CONSISTS OF GROUND FLOOR + 6 FLOORS HENCE 4TH FLOOR TO 6TH FLOOR WAS CONSIDERED UNAUTHO RIZED AND THE PROPERTY OF THE ASSESSEE LAID ON THE 5TH FLOOR WHIC H FORMED PART OF THE UNAPPROVED CONSTRUCTION. THE SAME WAS NOT MENTI ONED IN THE VALUATION OFFICER'S REPORT. 2. MORE OVER THE MADRAS HIGH COURT HAS QUASHED TWO TAMILNADU G.O.S OF OCTOBER 2012 THAT ALLOWED REGULARIZATION O F ILLEGAL CONSTRUCTIONS UP TO JULY 1 2007 IN THE YEAR 2014. D UE TO THE SAME THE BUILDING IS UNAUTHORIZED TILL DATE. 3. THE GOVERNMENT IN JUNE 2016 HAS REDUCED THE GUID E LINE VALUE OF THE LAND BY 33% WHICH INDICATES THAT THE GUIDELINE VALUE IS INFLATED. THIS CLEARLY INDICATES THAT THE VALUE OF THE LAND AS PER EXISTING GUIDELINE VALUE IS MORE THAN THE MARKET VA LUE. 4. THE ASSESSEE IS IN SEVERE CASH CRUNCH IN ORDER T O MEET HIS DAY TO DAY EXPENSES SINCE HIS BUSINESS IS NOT DOING WELL. ALSO THE ASSESSEE IS IN URGENCY TO SELL THE PROPERTY IN ORDE R TO HIS DAUGHTER MARRIAGE. 5. THEREFORE THE ASSESSEE FACED GENUINE HARDSHIP IN FINDING THE BUYER OF SUCH UNAUTHORIZED PROPERTY AND THUS SOLD T HE PROPERTY AT A PREVAILING 'MARKET RATE FOR THE UNAPPROVED BUILDI NG' WHICH WAS MUCH LESSER THAN THE STAMP DUTY GUIDELINE VALUE FOR THE PROPERTY OF RS. 1.10 CRORE HAD IT BEEN AN APPROVED PROPERTY. ITA NO. 935/CHNY/2018 :- 3 -: 6. THE LEARNED ASSESSING OFFICER HAS ERRED IN CONSI DERING THE VALUE ADOPTED BY STAMP VALUATION AUTHORITY AS THE COMPARI SON OF VALUE CAN BE DONE ONLY FOR AN EQUIVALENT BASE. HENCE IT IS FUNDAMENTALLY WRONG TO COMPARE THE STAMP DUTY VALUE OF APPROVED PROPERTY WITH THE SALE VALUE OF UNAPPROVED PROPERTY. 7. MORE OVER THE MOTIVE BEHIND IMPLEMENTING SEC.50C OF INCOME TAX ACT 1961 IS TO CURB THE UNDERVALUATION OF IMMOVEABL E PROPERTIES AND NOT TO BURDEN THE GENUINE ASSESSEES FRANTICALLY . IT IS CLEARLY EVIDENT FROM THE FACTS THAT THE PROPERTY CANNOT FET CH AN AMOUNT CLOSE TO THE VALUE DETERMINED BY STAMP DUTY AUTHORI TY AND HENCE THE ASSESSEE SOLD IT AT A LESSER VALUE WITHOUT ANY INTENTION TO UNDERVALUE THE PROPERTY. THUS THE ASSESSEE PLEADS T O RECONSIDER THE DECISION TAKEN BY THE ITO AND THE CIT(APPEALS) IN THIS REGARD BY CONSIDERING THE HARDSHIP OF PAYING TAX FOR THE A MOUNT NOT RECEIVED BY THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF CAR HIRE. THE RE TURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 WAS FILED ON 09.05.2014 DECLARING TOTAL INCOME OF RS.2,31,240/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE INCOME TAX OFFICER, NON CORPORATION WARD 10(5), CHENNAI, (HEREINAFTER REFER RED AS AO') VIDE ORDER DATED 30.11.2016 PASSED U/S.143(3) R.W.S.153 (4)(IV) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT TOT AL INCOME OF RS.38,30,348/-. WHILE DOING SO, THE ASSESSING OFF ICER MADE ADDITION WHILE COMPUTING THE CAPITAL GAINS ARISING OUT OF SA LE OF PROPERTY ITA NO. 935/CHNY/2018 :- 4 -: SITUATED AT DOOR NO.58,5 TH FLOOR, WEST WING, BROOKYLIN BUSINESS CENTRE, NOS.103-105/12 PONAMALLEE HIGH ROAD, PURASAWALKAM,CHENNAI, COMPRISED OLD SURVEY NO.798/1 , NEW SURVEY NO.798/34,798/50,798/51, EGMORE VILLAGE, EGMORE NUN GAMBAKKAM, CHENNAI MEASURING AN EXTENT OF 626.81 SFT UNDIVIDED SHARE OF LAND AND BUILDING 1372 SFT BY ADOPTING THE DEEM SALE CONSIDE RATION OF RS.1,10,00,000/- BEING THE VALUE FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEN THE ASSESSEE OBJECTED THE ADOPTION VALUE FOR THE STAMP DUTY PURPOSE AS FAIR MARKET VALUE IS MUCH LOWER THAN THE GUIDELINES VALUE, AS THE BUILDING SOLD WAS UNAPPROVED AND ALSO REQUESTED THE ASSESSING OFFICER TO REFER THE MATTER TO DVO IN TERMS OF PROVISIONS O F SECTION 50C(2) OF THE ACT. IT IS STATED THAT DVO HAD NOT CONSIDERED T HE OBJECTION FILED BEFORE HIM IN HIS REPORT. BEING AGGRIEVED, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO VIDE IMPUGNED ORDE R CONFIRMED THE ACTION OF THE ASSESSING OFFICER. BEING AGGRIEVED W ITH THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS BEFORE US IN THE PRESEN T APPEAL. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSIN G THE MATERIAL ON RECORD, THE OBJECTION RAISED BY THE ASSESSEE BEFORE THE DVO WAS NOT CONSIDERED IN PROPER PERSPECTIVE. HENCE, WE REMIT T HIS MATTER BACK TO THE FILE OF ASSESSING OFFICER TO COMPLETE ASSESSMEN T AFTER REFERRING THE ITA NO. 935/CHNY/2018 :- 5 -: MATTER AGAIN TO DVO TO CONSIDER OBJECTIONS OF THE A SSESSEE IN A PROPER PERSPECTIVE AND COMPLETE ASSESSMENT IN ACCORDANCE W ITH LAW. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PROOUNCED ON 08 TH AUGUST, 2019, AT CHENNAI. SD/- SD/- ( . ) (DUVVURU RL REDDY) ' $ /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER / CHENNAI 2 / DATED: 08 TH AUGUST, 2019. K S SUNDARAM ) +45 65 / COPY TO: 1 . ( / APPELLANT 3. 7 () / CIT(A) 5. 5 +< / DR 2. +,( / RESPONDENT 4. 7 / CIT 6. $ / GF