ITO, Ward-10(4), Hyderabad V. Doreen Adems, Secunderabad

MA 178/HYD/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1619 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 10-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S J T KOTTARAM
• Keywords: Opportunity of being heard; Cost of acquisition; Fair market value
• Section: 54; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMB E R. M.A.NO.178/HYD/2013 (IN ITA NO. 96 /HYD/ 13) (ASSESSMENT YEAR 2003 - 2004) INCOME TAX OFFICER WARD 10(4), HYDERABAD V/S. ? MS. DOREEN ADAMS, SECUNDERABAD. ( PAN/GIR - 10D - 845) (APPLICANT) (RESPONDENT) M.A.NO.179/HYD/2013 (IN ITA NO. 97 /HYD/ 13) (ASSESSMENT YEAR 2003 - 2004) INCOME TAX OFFICER WARD 10(4), HYDERABAD V/S. ? MS. IRENE ADAMS, SECUNDERABAD. ( PAN/GIR - 10D - 845) (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI S.J. T .KOTTARAM RESPONDENTS BY : NONE DATE OF HEARING 3 . 1 .201 4 DATE OF PRONOUNCEMENT 7.2.2014 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER : BY THESE APPLICATIONS UNDER S.254(2) OF THE ACT, REVENUE SEEKS RECTIFICATION/RECALL OF THE COMM ON ORDER OF THIS TRIBUNAL DATED 3RD AUGUST, 2012 FOR THE ASSESSMENT YEAR 2003 - 04, ON THE GROUND THAT CERTAIN MISTAKES APPARENT FROM RECORD HAVE CREPT INTO THE SAME. 2. AT THE TIME OF H E ARING ON TH E SE APPLICATIONS, NONE APPEAR E D ON BEHALF OF THE RESPONDEN T ASSESSEES . NOTICES OF HEARING SENT TO THE ASSESSEES BY REGISTERED POST WITH ACKNOWLEDGEMENT DUE, HAVE BEEN RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT CLAIMED. EVEN AT THE TIM E OF APPEAL HEARING, TH E RE WAS NO REPRESENTATION MA NOS. 178 AND 179/HYD/2013 (IN ITA NO. 96 & 9 7/ HYD/2013 ) MS. DOREEN ADAMS A ND ANR. SECUNDERA BAD 2 ON BE HALF OF THE ASSESSEES, AND THE APPEALS HAD BEEN DISPOSED OF EX - PARTE QUA THE ASSESSEES. IN THE CIRCUMSTANCES, WE PROCEED TO DISPOSE OF TH E SE APPLICATIONS ALSO EX - PARTE QUA THE ASSESSEES - ON THE BASIS OF MATERIAL ON RECORD. 3. REITERATING THE AVERMEN TS MADE IN THE PRESENT APPLICATION S AND NARRATING THE FACTUAL BACKGROUND OF THE CASE , LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT(A) HAS ACCEPTED THE ASSESSEES CONTENTION THAT AT THE TIME OF TRANSFER OF THE PROPERTY UNDER THE DEVELOPMENT AG REEMENT, A BUI L DIN G WAS STANDING OVER THE LAND, WITHOUT MAKING ANY ENQUIRY TO FIND OUT WHETHER IN REALITY A BUILDING WAS EXISTING ON THE LAND TRANSFERRED TO THE DEVELOPER UNDER THE DEVELOPMENT AGREEMENT. THE TRIBUNAL HELD THE VIEW THAT THE CIT(A) HAS SIMPL Y ACCEPTED THE VERSION OF THE ASSESSEE WITHOUT MAKING VERIFICATION, AND HENCE HELD IT PRO P ER TO SET ASIDE THE ORDER PASSED BY THE CIT(A) AND R E STORE THE MATTER BACK TO HIM FOR VERIFYING THE FACT AS TO WHETHER A B UILDIN G EXI S TED O V ER THE LAND WHEN IT WAS T RANSFERRED TO THE DEVELOPER UNDER THE DEVELOPMENT AGREEMENT. THE TRIBUNAL, ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE , HAS ALSO H E LD THAT THE CLAIM OF DEDUCTION UNDER S.54 OF THE ACT IS DEPENDENT UPON THE FACT AS TO WHETHER BOTH THE BUILDING AND LAND HAVE BEEN TRANSFER R ED OR NOT, AND HENCE THE SAME ASPECT OF THE MATTER IS ALSO REMITTED BACK TO THE FILE O F THE CIT(A) FOR ADJU DI CATING THE SAME AFRESH. 4. IT IS FURTHER SUBMI T T E D THAT IN RESPECT OF FMV AS ON 1.4.1981 ON THE LEASEHOLD RIGHT OF THE LAND, WHILE COMPUTING THE CAPITAL GAINS, IT WAS POINTED OUT THAT THE ASSESSEE CLAIMED THE COST OF ACQUISITION OF LAND AT RS.300 PER SQ. YARD BEING THE FMV OF THE LAND AS ON 1.4.1981. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED THAT AS ON 1.4.1 981 ASSESSEE HAD ONLY LEASEHOLD RIGHTS ON THE LAND WITH NO RIGHTS TO ALIENATE IT. TH E R E FORE, THE ASSESSING OFFICER TOOK THE YEAR OF ACQUISITION AS 1997 BEING THE YEAR IN WHICH THE ASSESSEE EXE C U T ED A CONVEYANCE DEED FOR CO NV ERSION MA NOS. 178 AND 179/HYD/2013 (IN ITA NO. 96 & 9 7/ HYD/2013 ) MS. DOREEN ADAMS A ND ANR. SECUNDERA BAD 3 OF THE LEASEHOLD LAND IN TO FRE E HOLD LAND BY PAYMENT OF FE E S. THE FEES SO PAID WAS TAKEN AT RS.90,00 0 WHICH WAS THE AMOUNT PAID IN RESPECT OF OTHER PLOTS IN THE LOCALITY FOR THE SAME PURPOSES. ACCORDINGLY, THE COST OF ACQUISITION WAS COMPUTED BY INDEXING RS.90,000 FROM THE YEAR 1 997 - 98. IN THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), IT WAS STA T ED THAT THE ASSESSEES FATHER WAS THE ORIGINAL OWNER OF LEASEHOLD RIGHTS IN THE P R O P ERTY SINCE 1933 AND THESE RIGHTS HAD A MARKET V ALUE AND IN FACT , OTHER OWNERS WITH SIMILAR RIGHTS , SOLD THEM FOR VALUABLE CON S I D ERATION. IT WAS STA T ED THAT THE SUBSEQUENT CONVERSION TO FREEHOLD LAND WAS ONLY IM P R OVEMENT OF THE TITLE AL RE ADY H E LD BY THE ASSESSEE . SIN C E THE P R OP E RTY HAD BEEN ACQUIRED MUCH BEFORE 1.4.1981, THE ASSESSEE CLAIMED THAT SHE SHOULD B E ALLOWED TO ADOPT THE FMV OF THE LAND AS ON THAT DATE. THE CIT(A) OBSERVED THAT THE LAND WAS GRANTED ON PERPETUAL LEA S E BY GOVT. OF AP AND THE ALLOTMENT L E TTERS DID NO T SPEAK OF ANY RESTRICTION ON ALIENATING THE PROPERTIES. THE LEASE HOL D E R S ENJOYED A LL THE RIGHTS THAT A N OWNER WOULD ENJOY , EXCEPT THAT THEY WERE REQUIRED TO O B TAIN PRIOR PERMISSION FROM ESTATE O FFICER (GOVT. ) . ACCOR D INGLY, THE CIT(A) OPINED THAT THE LEASE RIGHT HELD BY THE ASSESSEE AS ON 1.4.1981 H A D SOME MARKET VALUE AND THE ASSESSEE W AS ENTITLED TO GET DEDUCTION FOR THE SAME. SI N CE THE ASSESSEE HAD ONLY LEASEHOLD RIGHTS ON THAT DATE AND NO T FULL RIGHTS, THE CIT(A) DIRECTED THAT THE RATE SHOULD B E ADOPTED AT RS.100 SQ. YARD AS AGAINST THE NORMAL FMV OF RS .300 PER SQ. YD . CLAIMED BY THE ASSESSEE. 5. IN THE APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL, REITERATING THE CONTENTIONS MADE DURING THE APPEAL HEARING, IT WAS SUBMITTED THAT THE CIT(A) DID NO T AP P R EC IATE THE FACT THAT THE PROP E RTY WAS CONVERTED INTO FREE - HOL D PROPERTY IN 1997 AND AS SUCH FAIR MARKET VALUE CANNO T BE TAKEN INTO CON S I D ERATION AS ON 1.4.1981, WHEN T H E ASSESSEE WAS ONLY HAVING A LEASEHOLD RIGHTS, WHICH HAS ALSO BEEN MENTIONED AT P A RA 5 ON PAGE 4 OF THE ORDER OF THE TRIBUNAL DATED 3.8.201 2 . HOWEVER, THE TRIBUNAL , IT IS POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, HAS NOT ADDRESSED ON THIS ASPECT OF TH E ARGUM E NT O F THE REVENUE AND HAS NO T MA NOS. 178 AND 179/HYD/2013 (IN ITA NO. 96 & 9 7/ HYD/2013 ) MS. DOREEN ADAMS A ND ANR. SECUNDERA BAD 4 GIVEN ITS FINDING ON THIS ISSUE IN ITS ORDER DATED 3.8.2012. ACCOR D INGLY, IT I S PL E ADED , THE O R DER OF THE T RIBUNAL DATED 3. 8.2012 MAY BE RECTIFIED/R E CALLED. 6. WE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE, IN THE LIGHT OF THE AVERMENTS MADE IN THE PRESENT PETITIONS AND THE ORDER OF THE TR IBUNAL DATED 3.8.2012. WE FIND SOME FORCE IN THE ARGUMENT OF THE LEARNED DEPARTMEN TAL REPRESENTATIVE DURING THESE PROCEEDINGS UNDER S.254(2) OF THE ACT . T HOUGH THE TRIBUNAL TOOK NOTE OF THE CONTENTION OF THE REVENUE DURING THE APPEAL PROCEEDINGS BEFORE IT, IN PARA 5 O N PAGE 4 OF ITS ORDER DATED 3.8.201 2 , THAT THE CIT(A) DID NOT APPRECI ATE THE FACT THAT THE PROPERTY WAS CONVERTED INTO FREEHOLD PROPERTY IN 1997 AND AS SUCH, FAIR MARKET VALUE CANNOT BE TAKEN INTO CONSIDERATION AS ON 1.4.1981, WHEN THE ASSESSEE WAS HAVING ONLY LEASEHOLD RIGHTS, THE TRIBUNAL HAS NOT ADDRESSED ON THIS ASPECT OF THE ARGUMENT OF THE REVENUE AND HAS NOT GIVEN ITS FINDING ON THIS ISSUE IN ITS ORDER DATED 3.8.2012. SINCE THE TRIBUNAL HAS ULTIMATELY, VIDE PARA 6 OF ITS ORDER DATED 3.8.2012, SET ASIDE THE MAIN ISSUE TO THE FILE OF THE CIT(A), FOR REDECIDING THE SAME AFTER VERIFYING THE FACT WHETHER A B U ILDIN G EXISTED OVER THE LAND WHEN IT WAS TRANSFERRED TO THE DEVELOPER UNDER THE DEVELOPMENT AGREEMENT, WE ARE INCLINED TO MODIFY PARA 6 OF OUR ORDER, BY INSERTING THE FOLLOWING SENTENCE AS A PENULTIMATE ONE OF THAT PA RA - 6. .. WHILE DOING SO, THE CIT(A) IS ALSO DIRECTED TO TAKE NOTE OF THE FACT THAT THE PROPERTY WAS CONVERTED INTO FREEHOL D PROPERTY IN 1997 AND AS SUCH, FAIR MARKET VALUE CANNOT B E TAKEN INTO CONSIDERATION AS ON 1.4.1981, WHEN THE ASSESSEE WAS ONLY H AVING LEASEHOLD RIGHTS . .. WE DO SO ACCORDINGLY, AND AFTER THE IN SE RTION OF THE SAID SENTENCE AS A PENULTIM A TE ONE, PARA 6 OF OUR ORDER DATED 3.8.2012 SHOULD BE READ AS FOLLOWS - MA NOS. 178 AND 179/HYD/2013 (IN ITA NO. 96 & 9 7/ HYD/2013 ) MS. DOREEN ADAMS A ND ANR. SECUNDERA BAD 5 6. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR AND PERUSED THE MATERIA L ON RECORD. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE AO HAS CLEARLY MENTIONED IN PARA - 2 OF THE ORDER THAT UNDER THE DEVELOPMENT AGREEMENT, THE SCHEDULE OF PROPERTY IS MENTIONED AS PIECE AND PARCEL OF LAND AND PLOT NO.223 PREMISES NO.10 - 2 - 406 & 407 AD MEASURING 600 SQ. YARDS AND THERE WAS NO MENTION OF ANY BUILDING. THE CIT (A) HOWEVER HAS ACCEPTED THE ASSESSEES CONTENTION THAT AT THE TIME OF TRANSFER OF THE PROPERTY UNDER THE DEVELOPMENT AGREEMENT, A BUILDING WAS STANDING OVER THE LAND. IT IS SEEN FROM THE ORDER OF THE CIT (A) THAT HE HAS NOT MADE ANY ENQUIRY TO FIND OUT WHETHER IN REALITY A BUILDING WAS EXISTING ON THE LAND TRANSFERRED TO THE DEVELOPER UNDER THE DEVELOPMENT AGREEMENT. THE CIT (A) HAS SIMPLY ACCEPTED THE VERSION OF ASSESSEE WITHOUT MAKING VERIFICATION. ON T HE AFORESAID VIEW OF THE MATTER, WE CONSIDER IT PROPER TO SET ASIDE THE ORDER PASSED BY THE CIT (A) AND RESTORE THE MATTER BACK TO HIM FOR VERIFYING THE FACT AS TO WHETHER A BUILDING EXISTED OVER THE LAND WHEN IT WAS TRANSFERRE D TO THE DEVELOPER UNDER THE DEVELOPMENT AGREEMENT. SINCE THE CLAIM OF DEDUCTION U/S 54 OF THE ACT IS DEPENDENT UPON THE FACT AS TO WHETHER BOTH THE BUILDING AND LAND HAVE BEEN TRANSFERRED OR NOT, WE ALSO REMIT THIS MATTER BACK TO THE FILE OF THE CIT (A) FOR ADJUDICATING THE SAME AFRESH. WHILE DOING SO, THE CIT(A) IS ALSO DIRECTED TO TAKE NOTE OF THE FACT THAT THE PROPERTY WAS CONVERTED INTO FREEHOLD PROPERTY IN 1997 AND AS SUCH, FAIR MARKET VALUE CANNOT BE TAKEN INTO CONSIDERATION AS ON 1.4.1981, WHEN TH E ASSESSEE WAS ONLY HAVING LEASEHOLD RIGHTS. THE CIT (A) SHALL AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE COMPLETING THE PROCEEDINGS. MA NOS. 178 AND 179/HYD/2013 (IN ITA NO. 96 & 9 7/ HYD/2013 ) MS. DOREEN ADAMS A ND ANR. SECUNDERA BAD 6 SUBJECT TO THE ABOVE MODIFICATION IN PARA 6 OF OUR ORDER, THERE IS NO MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL, WARRANTING ANY FURTHER RECTIFICATION OR RECALL THEREOF . W E ORDER ACCORDINGLY. 7. IN THE RESULT, BOTH THE MISCELLANEOUS APPLICATIONS OF THE REVENUE ARE PARTLY ALLOWED . ORDER PRONOUNCED IN THE COURT ON 7. 2 . 2 0 14 SD/ - SD/ - (CHANDRA POOJARI) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 7 TH FEBRUARY, 2014 COPY FORWARDED TO: 1. 2. ? MS. DOREEN ADAMS, 1 ST FLOOR, ADAMS ARCADE APARTMENTS, P LOT N O.129, ROAD N O.9, WEST M ARREDPALLY, SECUNDERABAD. MS. DOREEN ADAMS, 1 ST FLOOR, ADAMS ARCADE APARTMENTS, PLOT NO.129, ROAD NO.9, WEST MARREDPALLY, SECUNDERABAD. 3 . 4 . 5 . 6 . INCOME TAX OFFICER, WARD 10(4), HYDERABAD COMMISSIONER OF INCOME - TAX(APPEALS) V I, HYDERABAD COMMISSIONER OF INCOME - TAX V , HYDER ABAD DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B . V . S .