ITO, CHENNAI V. Jayadev Mohan, CHENNAI

ITA 976/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7582 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 15-04-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: B RAMAKRISHNAN FCA
• Keywords: Capital asset; Gift; Cost of acquisition; Reasonable cause; Fair market value; Valuation report; Competent authority
• Section: 143(3); 142(1); 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , ' # BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 976/MDS/2016 & C.O. NO. 90/MDS/2016 / ASSESSMENT YEAR : 2011-12 INCOME TAX OFFICER, NON-CORPORATE WARD 15(2), CHENNAI - 600 034. VS. SHRI JAYADEV MOHAN, 141B, KAPALEESWARAR NAGAR, NEELANGARAI, CHENNAI - 600 041. [PAN: ANOPJ 9979N] (APPELLANT) (RESPONDENT/ CROSS O BJECTOR) $% & / APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT )*$% & / RESPONDENT BY : SHRI B. RAMAKRISHNAN, FCA & + /DATE OF HEARING : 05.12.2016 & + /DATE OF PRONOUNCEMENT : 03.03.2017 /O R D E R PER BENCH: THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTI ON BY THE ASSESSEE ARE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 15, IN ITA NO. 177/CIT(A)-15/14-15 DATED 05.01.2016 PASSED U/S. 143(3) AND 250 OF THE INCOME TAX ACT. AT THE TIME OF HEARING THE LD. AR SUBMITTED THAT :-2-: I.T.A. NO. 976/MDS/2016 C.O. NO. 90/MDS/2016 THERE IS A DELAY OF 26 DAYS IN FILING THE CROSS OBJ ECTION. THE LD. AR FILED CONDONATION PETITION AND EXPLAINED THE CIRCUMSTANCE S FOR DELAY WHICH ARE NOT DELIBERATE. FURTHER, LD. DR OF THE ASSESSEE HAS NO SERIOUS OBJECTIONS FOR CONDONATION OF DELAY. AFTER HEARING THE SUBMISSION S, WE ARE SATISFIED WITH THE REASONABLE CAUSE EXPLAINED IN AFFIDAVIT FOR FILING THE APPEAL BELATEDLY AND THE DELAY IS CONDONED AND APPEAL IS ADMITTED. 2. WE TAKE UP THE ITA NO. 976/MDS/2016, WHERE THE R EVENUE HAS RAISED THE FOLLOWING GROUNDS: 2.1 THE LD CIT(A) ERRED TO DIRECT THE AO TO ADOPT T HE VALUE GIVEN BY GOVERNMENT REGISTERED VALUER AS ON 01.04.1981 AT R S. 60,000/- PER CENT FOR 29,287 CENTS AND RS. 45 PER SQ.FT. FOR 1. 713 CENTS AS ON 01.04.1982. 2.2 THE LD. CIT(A) ERRED TO DIRECT THE AO TO ADOPT THE VALUE GIVEN BY GOVERNMENT REGISTERED VALUER, EVEN THOUGH THE DIST RICT REGISTRAR/SUB REGISTRAR (STAMP VALUATION AUTHORITY ) IS THE COMPETENT AUTHORITY TO GIVE VALUATION OF LAND 2.3 THE LD. CIT(A) ERRED TO DIRECT THE AO TO ADOPT THE VALUE GIVEN BY GOVERNMENT REGISTERED VALUER, EVEN THOUGH THE VALU ER HAS ALSO NOT RELIED UPON ONLY CONTEMPORANEOUS AND CORROBORATIVE EVIDENCE TO ASCERTAIN THE VALUE OF THE LAND AS ON 01.04.1981, BUT HAS ONLY :-3-: I.T.A. NO. 976/MDS/2016 C.O. NO. 90/MDS/2016 EXPRESSED HIS OPINION, WHICH CANNOT BE THE BASIS F OR ACCEPTANCE OF SUCH PROPOSED VALUE. 2.4 THE LD. CIT(A) ERRED TO DIRECT THE AO TO ADOPT THE VALUE GIVEN BY GOVERNMENT REGISTERED, EVEN THOUGH THE VALUER HAS CERTIFIED THAT THE PREVAILING MARKET VALUE OF THE GIVEN PROPERTY MAY BE RS. 60,000/- TO RS. 80,000/- PER CENT OF LAND IN 1981. THUS IT MAY BE ASSESSEE SEEN THAT THE VALUER HAS ESTIMATED THE VA LUE OF THE LAND. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME ELECTRONICALLY FOR THE A SSESSMENT YEAR 2011-12 ON 30.07.2011 WITH TOTAL INCOME OF RS. 3,57,088/-. TH E RETURN OF INCOME WAS PROCESSED U/S. 143(1) ON 26.11.2011. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) AND 142(1) OF T HE ACT WAS ISSUED ALONG WITH THE QUESTIONNAIRE. IN COMPLIANCE TO THE NOTIC E, THE LD. AR APPEARED FROM TIME TO TIME AND FILED THE DETAILS. DURING TH E FINANCIAL YEAR 2010-11 THE ASSESSEE HAS SOLD THE PROPERTY AT NAGERCOIL FOR RS. 4,27,80,000/- AND THE ASSESSEE HAS ADOPTED COST OF ACQUISITION AS ON 01.0 4.1981 AT RS. 1,00,000/- PER CENT OF LAND AND FOR THE YEAR 1992 AT RS. 2,00, 000/- PER CENT OF LAND AND CLAIMED EXEMPTION ON INVESTMENT OF RS. 2,54,06,200/ - ON PURCHASE OF PROPERTY IN CHENNAI. WHEREAS, THE LD. AO CALCULATE D THE CAPITAL GAINS BASED ON THE INFORMATION AND CONSIDERED THE FACTS ON CLAI M OF EXEMPTION U/S. 54 OF THE ACT AT PAGE 2 AND 3 OF THE ORDER AND HAS NOT DI SPUTED THE SALE :-4-: I.T.A. NO. 976/MDS/2016 C.O. NO. 90/MDS/2016 CONSIDERATION BUT THE COST OF ACQUISITION AS THE AC TUAL VALUE AS ON 01.04.1981 WAS RS. 5,000 PER CENT AND ON 01.04.1992 WAS ONLY R S. 85.80 PER SQ.FT. THE ASSESSEE EXPLAINED THE REASONS THROUGH LETTER DATED 21.01.2014 OBJECTING TO ADOPTION OF THE GUIDELINE OF THE PROPERTY AND PRODU CED SUPPORTING THE EVIDENCE OF VALUE AS ON 01.04.1981 & 01.04.1992. BU T THE LD. AO OVERLOOKED THE VALUE OF ASSESSEE AND ADOPTED THE GUIDELINE VAL UE AS DISCUSSED AND WORKED OUT TAXABLE CAPITAL GAINS OF RS. 1,36,17,486 /- AND ADDED THE RETURNED INCOME AND PASSED ORDER U/S. 143(3) OF THE ACT DATE D 22.03.2014. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN AP PEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD. AR A RGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE IN THE ASSESSMENT P ROCEEDINGS. THE LD. CIT(A) CONSIDERED THE GROUNDS AND FINDINGS OF THE A SSESSING OFFICER AND JURISDICTIONAL HIGH COURT DECISION THULASIMANI AMMA I VS COMMISSIONER OF INCOME TAX & ANR. ((2000) 158 CTR 5 (MAD) AND CO-OR DINATE BENCH DECISION OF SMT USHA RAMESH IN ITA NO. 916/MDS/10 DATED 23.0 9.2011 AND HELD AT PARA 5.3.2 WHICH READ AS UNDER: ' THE APPELLANT HAD PLACED VALUATION REPORT BY K. S IVAGURUNATHAN, CHARTERED ENGINEER DATED 17.02.2014 BEFORE THE AO. HE IS A GOVT. REGISTERED VALUER. HE HAS VALUED THE PROPERTY BETW EEN RS. 60,000/- PER CENT TO RS. 80,000/- PER CENT FOR THE AFORESAID PROPERTY IN 1981 AND RS. 45 PER SQ.FT. IN 1992. THE GUIDELINES VALUE GI VEN BY THE SUB- REGISTRAR ARE COMMON TO ALL THE PROPERTIES IN A PAR TICULAR AREA. THEY :-5-: I.T.A. NO. 976/MDS/2016 C.O. NO. 90/MDS/2016 HAVE EVIDENTIARY VALUE BUT NOT CONCLUSIVE VALUE. W HEREAS AS GOVT. REGISTERED VALUER IS A TECHNICAL PERSON WHO HAS GIV EN THE VALUE AS ON 1981 ON THE BASIS OF THE OTHER RELEVANT FACTORS ALS O. THE AO IS DIRECTED TO ADOPT THE VALUE AS ON 01.04.1981 AT RS. 60,000/- PER CENT FOR 29.287 CENTS AND RS. 45 PER SQ.FT. FOR 1.713 CENTS AS ON 0 1.04.1992. THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED.' THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO AD OPT VALUE AS ON 01.04.1981 AT RS. 60,000 PER CENT OF LAND AND RS. 45 PER SQ.FT . FOR 1.713 CENT AS ON 01.04.1992 AND PARTLY ALLOWED THE APPEAL. 5. AGGRIEVED BY THE CIT(A) ORDER, REVENUE HAS FILED AN APPEAL WITH THE TRIBUNAL. BEFORE US, THE LD. DR SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ADOPT THE VALUE OF RS. 60,000/- AS ON 01.04.1981 AND RS. 45 PER SQ.FT. AS ON 01.04.1992 AND ALSO ERRED IN DI RECTING THE ADOPTION OF VALUATION REPORT VALUE EVEN THOUGH SUB-REGISTRAR/DI STRICT REGISTRAR ARE COMPETENT AUTHORITIES TO GIVE VALUATION OF LAND AND THE CIT(A) OVERLOOKED THE OBSERVATION OF THE ASSESSING OFFICER AND EXPRESSED THE OPINION AND ALLOWED THE APPEAL OF THE ASSESSEE AND PRAYED FOR SET ASIDE THE ORDER OF CIT(A). CONTRA, THE LD. AR RELIED ON THE ORDERS OF THE CIT( A) AND JUDICIAL DECISIONS. 6. WE HAVE HEARD THE RIVAL PARTIES, AND PERUSED TH E MATERIAL ON RECORD. 6.1 THE DISPUTE BEFORE US THUS IS THE PROPER AND CO RRECT ESTIMATION OF THE FAIR MARKET VALUE OF THE LONG TERM CAPITAL ASSET, B EING 29.287 CENTS OF LAND :-6-: I.T.A. NO. 976/MDS/2016 C.O. NO. 90/MDS/2016 AT NAGERKOIL TRANSFERRED BY THE ASSESSEE DURING THE YEAR, AS ON 01.04.1981, I.E., FOR COMPUTING THE LONG TERM CAPITAL GAIN (LTC G) ON THE SAID TRANSFER. THIS IS AS THE SAME WAS ACQUIRED BY THE ASSESSEE TH ROUGH WILL OF HIS LATE MOTHER, SMT. SAROJINI AMMAL, WHO PASSED BY ON 16.03 .2006. THE REVENUE INSISTS ON THE SAID VALUE AS PER THE GUIDELINE VALU E DETERMINED BY THE STAMP VALUATION AUTHORITY UNDER THE STAMP ACT IN-AS-MUCH AS THE SAME ALSO PURPORTS TO ASSESSS THE FAIR MARKET VALUE OF THE SU BJECT PROPERTY, I.E., AT RS. 5,000/- PER CENT. THE ASSESSEE, ON THE OTHER HAND, DISCARDING HIS OWN RETURNED RATE OF RS. 1,00,000/- PER CENT, URGES THE ADOPTION OF THE RATE OF RS. 60,000/- PER CENT BASED ON THE VALUATION REPORT DAT ED 17/2/2014 BY A REGISTERED VALUER (COPY ON RECORD), WHICH STATES OF THE FAIR MARKET VALUE AS RANGING BETWEEN RS. 60,000/- TO RS. 80,000/- PER CE NT. THE LD. CIT(A) HAS PREFERRED THE RATE OF RS. 60,000/- PER CENT FOR THE REASON THAT THE MARKET VALUE AS PER THE STAMP VALUATION AUTHORITIES IS FOR THE ENTIRE LAND COVERED BY THE SURVEY, COMMON FOR ALL THE PROPERTIES IN A PART ICULAR ARES, WHILE THE REGISTERED VALUER IS A TECHNICAL PERSON, WHO HAS PL ACED DUE WEIGHTAGE ON THE LOCATIONAL ADVANTAGE OF THE ASSESSEES PLOT. 6.2 IN OUR VIEW, THE FAIR MARKET VALUE OF LAND IS G OVERNED AND DETERMINED BY A VARIETY OF FACTORS, WHICH GET CAPTURED IN THE MAR KET VALUE, SIGNIFYING AN EQUILIBRIUM OF THE SUPPLY AND DEMAND FORCES, EUPHEM ISTICALLY CALLED MARKET FORCES, IMPACTING THE MARKET RATE OBTAINING FOR A P ARTICULAR PROPERTY AT A PARTICULAR TIME. THE NATURE OF LAND; ITS INTENDED USE, VIZ., RESIDENTIAL, :-7-: I.T.A. NO. 976/MDS/2016 C.O. NO. 90/MDS/2016 INDUSTRIAL, COMMERCIAL, AGRICULTURAL ETC.; THE LOCA L ADVANTAGE, WITH REFERENCE TO THE INTENDED USE, ETC. ARE SAME SUCH PERTINENT FACT ORS. THESE COULD GET SUPPLEMENTED BY THE FACTORS AS WHERE THE SALE IS NO T UNDER NORMAL CIRCUMSTANCES, AS IN CASE OF A DISTRESS SALE, OR WH ERE THE PURCHASER HAS AN INTEREST IN THE PROPERTY, ETC. THESE, HOWEVER, WOUL D THOUGH INFLUENCE THE PURCHASE COST (OF THE CAPITAL ASSET TRANSFERRED), W OULD NOT IMPACT THE FAIR MARKET VALUE, PARTICULARLY YEARS LATER; THE PREVIOU S OWNER IN THE PRESENT CASE HAVING ACQUIRED THE CAPITAL ASSET MUCH EARLIER IN 1 964. WHAT WE WISH TO EMPHASIZE IS THAT THE FAIR MARKET VALUE IS NOT AMEN ABLE TO ANY STRICT RULES OR TECHNICAL FORMULAE. THE ALLUDING TO THE REGISTERED VALUER AS A TECHNICAL PERSON BY THE LD. CIT(A) IS THEREFORE OF LITTLE CONSEQUENC E. THE STAMP VALUATION, ON THE OTHER HAND, AS AFORE-STATED, SEEKS TO DETERMINE THE FAIR MARKET VALUE OF THE LAND ONLY, AND IS ACCORDINGLY, I.E., IN THE ABS ENCE OF ANY CONTROVERTING FACTORS AND BASIS, ADOPTED BY THE REVENUE. THE SAME THEREFORE IS A VALID BASIS, BEING OSTENSIBLY BASED ON THE PURCHASE AND S ALE TRANSACTIONS OF THE LAND IN THAT PARTICULAR AREA AT THE RELEVANT TIME. THE ONLY MANNER THEREFORE IN OUR VIEW BY WHICH THE ASSESSEE CAN VALIDLY DISPUTE THE ADOPTION OF THE SAID RATE IS BY FURNISHING COMPARABLE CASES, I.E., OF PU RCHASE/SALE TRANSACTIONS OF LAND IN VICINITY OF ITS LAND AND FOR AROUND SAME PE RIOD. THE MATTER ACCORDINGLY, SO AS TO ALLOW THE ASSESSEE AN OPPORTUNITY TO PRESE NT ITS CASE IN THE MATTER, IS RESTORED BACK TO THE FILE OF THE AO, WHO SHALL DECI DE THE SAME AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW, :-8-: I.T.A. NO. 976/MDS/2016 C.O. NO. 90/MDS/2016 ISSUING DEFINITE FINDINGS OF FACT. THE BALANCE 1.71 3 CENTS OF THE TOTAL 31.015 CENTS OF LAND SOLD BY THE ASSESSEE STANDS ALSO ACQU IRED BY HIM FROM HIS MOTHER, ALBEIT BY WAY OF A GIFT IN THE YEAR 1992. T HE LD. CIT(A) HAS DIRECTED FOR ADOPTION OF THE FAIR MARKET VALUE AS ON 01.04.1 992, STATED TO BE RS. 45 PER SQ. FT., AS ITS COST OF ACQUISITION. THE VALID ITY OF THE RATE APART, WE FIND NO BASIS FOR SUCH DIRECTION. THIS IS AS GIFT AS ALSO O NE OF THE SPECIFIED MODES OF ACQUISITION STATED IN SECTION 49 (S.49(1)(II)). THE REFORE, WHERE IT IS ACQUIRED BY THE PREVIOUS OWNER, I.E., THE DONOR (THE ASSESSEE'S MOTHER), COST OF ACQUISITION IN HER HANDS WOULD BE TAKEN INTO ACCOUN T. HOWEVER, BEING PRIOR TO 01.04.1981 IN THE PRESENT CASE, ITS FAIR MARKET VAL UE AS ON THAT DATE SHALL, AT THE ASSESSEES OPTION, SHALL APPLY. WE DECIDE ACCO RDINGLY. 7. IN THE RESULT, THE REVENUE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES AND THE ASSESSEES CO IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 03RD DAY OF MARCH, 2017 AT CHENNAI. SD/ - ( ) (SANJAY ARORA) / ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER /CHENNAI, . /DATED: 03RD MARCH, 2017 JPV & )'+01 21-+ /COPY TO: 1. $% / APPELLANT 2. )*$% /RESPONDENT 3. 3+ ( )/CIT(A) 4. 3+ /CIT 5. 145 )'+' /DR 6. 57 /GF