SHAILESH N SHAH, MUMBAI V. ITO 16(3)(4), MUMBAI

ITA 956/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5615 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 26-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU LD
• Assessee Lawyers: VIMAL PUNMIYA LD
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Valuation report
• Section: 143(3); 50C

Judgement Text

ITA.NO.956/MUM/2016 SHAILESH N. SHAH ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.956/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) SHAILESH N . SHAH 105,MUKUND MANSION V.P.ROAD, C.P.TANK MUMBAI-400 004 / VS. INCOME TAX OFFICER - 16(3)(4) MUMBAI ./ ./PAN/GIR NO. AWQPS-1957-C ( ! /APPELLANT ) : ( '#! / RESPONDENT ) A SSESSEE BY : VIMAL PUNMIYA, LD.AR RE VENUE BY : M.V.RAJGURU, LD. DR / DATE OF HEARING : 09/05/2018 / DATE OF PRONOUNCEMENT : 04/07/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-30 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-30/19(3)(3)/83/2014-15 DATED 09/12/2015. THE ASSESSMENT FOR IMPUGNED AY WAS FRAM ED BY LD. ITA.NO.956/MUM/2016 SHAILESH N. SHAH ASSESSMENT YEAR-2011-12 2 INCOME TAX OFFICER-16(3)(4), MUMBAI [AO] U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 10/03/2014 WHEREIN THE INCOME OF THE ASSESSEE H AS BEEN ASSESSED AT RS.103.29 LACS AFTER CERTAIN ADDITIONS AS AGAINST RETURNED INCOME OF RS.8 LACS FILED BY THE ASSESSEE ON 08/11/2011. THE EFFECTIVE GROUNDS RAISED IN THE APPEAL READS AS HEREUNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF CASE AND LAW, THE LD. CIT(A) ERRED IN CONFIRMING VALUE OF RS.69,16,667/- AS DEEMED FULL V ALUE OF CONSIDERATION INSTEAD OF ACTUAL CONSIDERATION OF RS.38,33,000/- F OR PROPERTY BEARING CTS 3929 TO 3949. 2. ON THE FACTS AND CIRCUMSTANCES OF CASE AND LAW, THE LD. CIT(A)) ERRED IN CONFIRMING VALUE OF RS.45,03,333/- AS DEEMED FULL V ALUE OF CONSIDERATION INSTEAD OF ACTUAL CONSIDERATION OF RS.33,33,500/- F OR PROPERTY BEARING CTS 3836 TO 3866. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL REFLECTED CAPITAL GAINS FROM TWO PROPERTIES SOLD DURING THE IMPUGNED AY. THE TWO PROPERTIES UNDER CONSIDERATION WERE STATED TO BE ACQUIRED BY THE ASSESSEES GRANDFATHER IN THE YEAR 1948 WITH VE RY OLD STRUCTURE OF VARIOUS ROOMS. THESE PROPERTIES WERE INHERITED BY T HE ASSESSEE ALONG WITH TWO OTHER GRANDSONS, EACH HAVING 1/3 RD SHARE IN THE PROPERTY. DURING THE IMPUGNED AY, THE ASSESSEE AND THE OTHER CO-OWNER NAMELY MUKUNDLAL V.SHAH SOLD THEIR RESPECTIVE SHARES AGGREGATING TO 2/3 RD SHARE OF WHOLE PROPERTY. THE ONLY DISPUTE UNDER APP EAL IS REGARDING THE DEEMED SALE CONSIDERATION OF THESE PROPERTIES IN TE RMS OF SECTION 50C OF THE INCOME TAX ACT, 1961 SINCE IT WAS NOTED THAT THE STAMP DUTY VALUATION OF THE PROPERTY WAS MUCH HIGHER THAN THE REFLECTED TRANSACTION VALUE. THE SAME COULD BE APPRECIATED IN THE FOLLOWI NG MANNER:- ITA.NO.956/MUM/2016 SHAILESH N. SHAH ASSESSMENT YEAR-2011-12 3 NO. DESCRIPTION ASSESSEE S SHARE IN TOTAL CONSIDERATION TOTAL SALE CONSIDERATION OF THE PROPERTY AS REFLECTED IN THE AGREEMENT STAMP DUTY VALUATION OF THE PROPERTY DIFFERENCE 1. CTS NO. 3929 & CHOKSI BUILDING NO. 123 & NO. 378/1 (PART), CTS NO. 3929 TO 3949, MAUJE KOELKALYAN ONE HALF 76,66,000/- 2,08,90,500/- 1,32,24,500/- 2. AREA 1263, 3M & NO. 378/1 (PART) CTS NO. 3836 TO 3866, MAUJE KOELKALYAN ONE HALF 66,67,000/- 1,25,02,000/- 58,35,000/- TOTAL 1,90,59 , 500/ - THE LD. AO, APPLYING THE DEEMING PROVISIONS OF SECT ION 50C, PROPOSED ADDITION OF THE DIFFERENTIAL AMOUNT OF RS.95.29 LAC S TOWARDS ASSESSEES ONE-HALF SHARE. THE ASSESSEE WHILE CONTESTING THE S AME, REQUESTED FOR VALUATION THEREOF BY DISTRICT VALUATION OFFICER [DVO] IN TERMS OF SECTION 55A FOR DETERMINATION OF CORRECT MARKET VALUE. PEND ING RECEIPT OF DVOS VALUATION REPORT, THE ASSESSMENT WAS COMPLETED ON 1 0/03/2014 MAKING AN ADDITION OF RS.95.29 LACS IN THE HANDS OF THE AS SESSEE, BEING ASSESSEES 50% SHARES IN TOTAL DIFFERENTIAL AMOUNT OF RS.190.59 LACS AS TABULATED ABOVE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME BEFOR E LD. CIT(A) VIDE IMPUGNED ORDER DATED 09/12/2015 WHEREIN THE MA TTER WAS REMITTED BACK TO THE FILE OF LD. AO TO RE-COMPUTE THE CAPITA L GAINS IN TERMS OF VALUATION ARRIVED AT BY LD. DVO BY MAKING FOLLOWING OBSERVATIONS:- 7.4 PERUSED THE MATERIAL AVAILABLE ON RECORD AND TH E SUBMISSIONS OF THE APPELLANT AND THE PROVISIONS OF SECTION 55A OF THE ACT. AS PER SECTION 55A OF THE ACT, THE AO MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER TO ASCERTAIN THE FAIR MARKET VALUE, IN A CASE WHERE TH E VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MAD E BY A REGISTERED VALUER AND THE AO IS OF THE OPINION THAT THE VALUE SO CLAIMED IS AT VARIANCE WITH ITS FAIR MARKET VALUE. IN THE OTHER CASE, IF THE AO IS OF THE OPINI ON THAT THE FMV OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS CLAIMED BY THE AS SESSEE BY MORE THAN CERTAIN PERCENTAGE/ AMOUNT AND ALSO HAVING REGARD TO THE NA TURE OF THE ASSET AND OTHER ITA.NO.956/MUM/2016 SHAILESH N. SHAH ASSESSMENT YEAR-2011-12 4 RELEVANT CIRCUMSTANCES, IT IS NECESSARY TO DO SO, A O REFERS THE MATTER TO DVO. IN THE PRESENT CASE, WHEN QUESTIONED IN THE ASSESSMENT PRO CEEDINGS ABOUT THE VARIANCE IN THE VALUATION AS PER THE STAMP DUTY AUTHORITIES AND APPLY THE PROVISIONS OF SECTION 50C OF THE ACT, THE APPELLANT FILED HIS OBJECTIONS FOR SUCH ADAPTATION OF THE PROVISIONS AND REQUESTED TO REFER THE MATTER TO THE VALUATION OFFICER FOR VALUATION. SINCE THE REFERENCE TO THE VALUATION OFFICER IS DON E AT THE REQUEST OF THE APPELLANT HIMSELF AND THE VALUATION OFFICER AFTER TAKING INTO ACCOUNT ALL ASPECTS AND OBJECTIONS AND ALSO QUOTING SOME SALE INSTANCES OF PROPERTIES NEARER TO THE PROPERTY, ARRIVED AT THE VALUE OF SUCH PROPERTIES THE AO ADOPTED THE STA MP DUTY VALUE IN THE ASSESSMENT ORDER IN THE ABSENCE OF THE REPORT ON TH E STAMP DUTY VALUE IN THE ASSESSMENT ORDER IN THE ABSENCE OF THE REPORT ON TH E DATE OF FINALIZING THE ASSESSMENT. SINCE, THE REPORT IS RECEIVED NOW, VIDE NO. VO-II/MUM/CGT/778/2015- 16 DATED 29-07-2015, A COPY OF WHICH IS SUBMITTED I N THE PRESENT PROCEEDINGS BY THE APPELLANT, THE AO IS DIRECTED TO CHECK THE CORR ECTNESS OF THE SAME AND ADOPT THE FINAL VALUATION ARRIVED AT BY THE DVO, AS AVAILABLE IN PARA 9 OF THE VALUATION REPORT FOR EACH OF THE PROPERTY AS THE FAIR MARKET VALUE F OR COMPUTING THE LTCG. AO IS DIRECTED TO CHECK AND ADOPT THE VALUES MENTIONED IN THE REPORT OF THE DVO, FOR EACH OF THE TWO PROPERTIES AS THE FAIR MARKET VALUE, WHI LE CALCULATING THE CAPITAL GAINS ON THE PROPERTIES. WITH THESE DIRECTIONS, ISSUES RAISE D IN GROUND NO.2 ARE DISPOSED OFF ACCORDINGLY. AGGRIEVED AS AFORESAID, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUHTORIZED REPRESENTATIVE FOR ASSESSEE [ AR], SH. VIMAL PUNMIYA, CONTESTED THE VALUATION AS ARRIVED AT BY LD. DVO AND PLACED RELIANCE ON THE VALUATION AS DONE BY THE ASSESSEES REGISTERED VALUER. IT WAS SUBMITTED THAT THE PROPERTIES UNDER DISPUTE WER E OCCUPIED BY VARIOUS TENANTS AND THEREFORE, THE ACTUAL SALE CONS IDERATION AS REFLECTED BY THE ASSESSEE MAY BE ACCEPTED. THE SAME HAS BEEN CONTROVERTED BY LD. DEPARTMENTAL REPRESENTATIVE [DR], SH. M.V.RAJGURU BY SUBMITTING THAT LD. AO HAD NO OPTION BUT TO ACCEPT THE VALUATI ON OF DVO. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLACED BEFOR E US. UPON DUE CONSIDERATION, WE FIND THAT SHORT DISPUTE BEFORE US IS THE DEEMED SALE CONSIDERATION OF THE TWO PROPERTIES WHICH HAVE BEEN SOLD BY THE ASSESSEE DURING THE IMPUGNED AY. THE DISPUTE IS IN A NARROW COMPASS ITA.NO.956/MUM/2016 SHAILESH N. SHAH ASSESSMENT YEAR-2011-12 5 AND IS RELATED WITH ESTIMATION OF VALUE OF THE PROP ERTIES U/S 50C WHICH COULD BE TABULATED IN THE FOLLOWING MANNER:- NO. DESCRIPTION ASSESSEES SHARE IN SALE CONSIDERATION VALUATION AS PER DVOS REPORT DIFFERENCE 1. CTS NO. 3929 TO 3949 38,33,000/- 69,16,667/- 30, 83,667/- 2. CTS NO. 3836 TO 3866 33,33,500/- 45,03,333/- 11, 69,833/- AMOUNT I N DISPUTE 42,53,500/ - 6. IT IS NOTED THAT THE ASSESSEES REGISTERED VALUER HAS ADOPTED RENT CAPITALIZATION METHOD WHILE ARRIVING AT THE VALUE OF THE BUILDING WHEREAS LD. DVO HAS ARRIVED AT FAIR MARKET VALUE OF THE PROPERTY B Y PHYSICAL DEVELOPMENT METHOD OF VALUATION BASED ON SALE INSTANCES AND AFTER TAKING INTO ACCOUNT VARIOUS FACTORS AFFECTING VALUA TION OF THE PROPERTY. THE APPROACH OF LD. DVO , IN OUR VIEW, WAS MORE SCIENTIFIC KEEPING IN VIEW THE FACT THAT THE PROPERTY HAD POTENTIAL OF FU RTHER DEVELOPMENT / EXPLOITATION AND WAS SOLD BY THE ASSESSEE TO A BUIL DER. THEREFORE, WE ARE NOT INCLINED TO ACCEPT THE VALUATION AS ARRIVED AT BY THE ASSESSEES REGISTERED VALUER. 7. PROCEEDING FURTHER, SO FAR AS THE VALUATION AS A RRIVED AT BY LD. DVO IS CONCERNED, WE FIND THAT THE PROPERTIES IN QUESTI ON WERE TENANTED PROPERTIES WHICH IS EVIDENT FROM LIST OF TENANTS WHICH HAS ALREADY BEEN ATTACHED WITH DEED OF ASSIGNMENT AS PLACED BEFORE US. THE PERUSAL OF THE SAME REVEALS THAT THE PROPERTIES IN QUESTION WE RE INHABITED BY NUMEROUS TENANTS AND THIS VERY FACT DESERVES TO BE FACTORIZED WHILE ARRIVING AT THE VALUATION OF THE PROPERTIES. THIS I S MORE IMPORTANT IN VIEW OF THE FACT THAT THERE ARE NO ALLEGATIONS AGAINST THE ASSESSEE THAT IT HAD RECEIVED ANY SALE CONSIDERATION OVER AND ABOVE THE TRANSACTION VALUE AS SHOWN IN THE AGREEMENTS. AT THE SAME TIME, THE PROV ISIONS OF SECTION ITA.NO.956/MUM/2016 SHAILESH N. SHAH ASSESSMENT YEAR-2011-12 6 50C, BEING DEEMING IN NATURE, ARE TO BE CONSTRUED S TRICTLY AND ARE TO BE APPLIED IRRESPECTIVE OF FACTUAL MATRIX. THEREFORE, KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES, WE SUSTAIN AGG REGATE ADDITION TO THE EXTENT OF RS.25 LACS IN THE HANDS OF THE ASSESSEE A GAINST BOTH THE ABOVE STATED PROPERTIES. CONVERSELY, THE BALANCE AD DITIONS OF RS.17.53 LACS STANDS DELETED. 8. THE ASSESSEES APPEAL STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH J ULY, 2018. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.07.2018. SR.PS:-THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. , '&- , - , / DR, ITAT, MUMBAI 6. ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI