Assistant Commissioner of Income-tax, V. Jayshree Ajit Darekar, Pune

MA 37/PUN/2015

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4132 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 13-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: S DR SHANTANU PENDSE NGH
• Keywords: Capital asset; Depreciation; Cost of acquisition; Fair market value
• Section: 143(3); 28

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , , ! ' BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / MA NO.37/PN/2015 (ARISING OUT OF ITA NO.685/PN/2013) ASSESSMENT YEAR 2006-07 ACIT, CIRCLE-9, PUNE . / APPLICANT V/S SMT. JAYASHREE AJIT DAREKAR, JAYAJIT, SECTOR NO.27, PLOT NO.438, PCNTDA, NIGDI, PUNE 411044 PAN NO. AGHPD1686J . / RESPONDENT / APPLICANT BY : SHRI HITENDRA NINAWE / RESPONDENT BY : S DR. SHANTANU PENDSE NGH / ORDER PER R.K. PANDA, AM : THE REVENUE THROUGH THIS MISCELLANEOUS APPLICATION REQUEST S THE TRIBUNAL TO RECTIFY THE ORDER PASSED BY IT SINCE CE RTAIN APPARENT MISTAKES HAVE CREPT IN THE ORDER OF THE TRIBUNAL. 2. THE LD. DEPARTMENTAL REPRESENTATIVE REFERRING TO THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE DREW THE ATTE NTION OF THE BENCH TO THE CONTENTS OF THE MISCELLANEOUS APPLICATION WHICH READ AS UNDER : / DATE OF HEARING : 15.01.2016 / DATE OF PRONOUNCEMENT: 11.03.2016 2 MA NO.37/PN/2015 1. THE HONBLE ITAT, PUNE HAD PASSED AN ORDER DATED 28-01-2015 IN THE CASE OF APPELLANT NAME ABOVE IN ITA NOS. 685/PN/2 013 DATED 28-01- 2015 FOR A.Y. 2006-07 BY DISMISSING APPEAL FILED BY TH E REVENUE. 2. THE FACTS AND THE REASONS FOR FILING OF THIS MISCELLA NEOUS APPLICATION ARE AS FOLLOWS : IN THIS CASE, RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,81,037/- WAS FILED ON 25-10-2007. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS OF A.Y. 2007-08, THE AO NOTICED THAT THE ASSESSEE HAD ENT ERED INTO AGREEMENT FOR SALE OF PROPERTY AT SURVEY NO.118, 119 , PARVATI AND SURVEY NO.722, SADASHIV PETH VIDE AGREEMENTS DATED 22-11-01, 25-09-01 AND ONE UNDATED AGREEMENT OF 2005. THE ASSESSEE HAD SHOWN C APITAL LOSS RELATING TO THE SALE OF THE SAID PROPERTY IN A.Y. 200 7-08 WHICH WAS MAINLY ON ACCOUNT OF HIGHER VALUE OF LAND ADOPT4ED AS ON 01 -04-1981. THE TOTAL CONSIDERATION RECEIVED ON TRANSFER OF THESE LANDS TO RS. 57 LACS AND A FLAT ADMEASURING ABOUT 1000 SQ.MTRS. THE AO FURTHER NOTICE D THAT A COMPROMISE DECREE WAS OFFERED REGARDING THESE PROPERTI ES DURING THE PERIOD RELEVANT TO A.Y. 2006-07. THEREFORE, THE AO CAME TO THE CONCLUSION THAT CAPITAL GAIN/LOSS IN RESPECT OF THE SAID PROPERTIES WAS TO BE TAXED IN A.Y. 2006-07. SINCE, THE SAME WAS NOT RE FLECTED IN THE RETURN OF INCOME FOR A.Y. 2006-07, THE AO ISSUED NOTICE U/S.1 48 ON 31-03-2010. THEREAFTER THE AO COMPLETED THE ASSESSMENT ON 23-12-201 0 WHEREIN ADDITION OF RS.71,53,300/- WAS MADE UNDER THE HEAD L ONG TERM CAPITAL GAIN. 3. THE AO NOTICED THAT AS PER THE CONSENT DECREE, TH E ASSESSEE WAS SUPPOSED TO GET ONE MORE FLAT BESIDES SALE CONSIDERATION ON ACCOUNT OF HER SHARE IN PROPERTIES AT SR.NO.118A AT PARVATI, 129 A/129B AT PARVATI & 722 AT SADASHIV PETH AMOUNTING TO RS.67 LACS. SINCE, THE AREA IN WHICH THE ASSESSEE WAS SUPPOSED TO GET THE FLAT WAS A POSH ONE, TH E AO ESTIMATED THE VALUE OF THE FLAT AT RS.20 LACS AND ARRI VED AT THE SALE CONSIDERATION AT RS.77 LACS (RS.57 LACS + 20 LACS). 4. DURING THE COURSE OF SCRUTINY PROCEEDINGS U/S.147 R. W.S. 143(3) OF THE ACT, THE AO OBSERVED THAT THE VALUE OF PROPERTY AS ON 01-04-1981 WAS TAKEN OF RS.35,33,212/- (RS.27,93,212/- + RS.6,00,0 00/- + RS.1,40,000/-) AS PER VALUER REPORT. IT IS PERTINENT TO MENTION HERE THAT THERE IS ONLY 1.60 TIMES APPRECIATION IN VALUE OF LAN D DURING THE TENURE OF 25 YEARS, I.E. 1981 TO 2005 WHICH IS RIDICULOUSLY LOW AS COMPARED TO CURRENT MARKET PRICE OF LAND. THE AO FURTHER, CITE D CERTAIN PROPERTIES WHEREIN APPRECIATION OF PRICE OF LAND WAS FROM 95 TI ME TO 333 TIMES WHICH WAS CONSIDERED BY THE AO, CIR-9, PUNE WHILE COM PLETING THE ASSESSMENT IN THE CASE OF PREETI CHHAJAD FOR A.Y. 2007-0 8. THE DETAILS OF CITED PROPERTIES AS UNDER : SR.NO. DESCRIPTION OF LAND YEAR OF PURCHASE/ PURCHASE PRICE YEAR OF SALE/SALE OF PRICE APPRECIATION 1 MAHALUNGE LAND 1993/194000 2006/18490000 95 TIMES 2 CHINCHWAD 1982/4250 2006/382648 90 TIMES 3 PCNTDA 1979/12000 2006/60,00,000 595 TIMES 4 CHI N CHWAD 1975/12000 2006/40,00,000 333 TIMES 3 MA NO.37/PN/2015 THE AO ALSO NOTICED THAT IF SALE PRICE OF LAND OF LOW CONSIDERING THE PROBLEMS ASSOCIATED WITH THE LAND, THE SAME APPLIED TO VALUATION ON 01- 04-1981 TOO WHICH HAS NOT BEEN TAKEN INTO ACCOUNT O F REGISTERED VALUE. IGNORING THE PRICE ESTIMATED BY THE REGISTERED VALUER AS ON 01-04-1981 BY THE AO, VALUE OF TOTAL CAPITAL ASSETS WAS TAKEN INTO ACCOUNT AT 1/50 TH OF THE TOTAL VALUE OF SALES CONSIDERATION RECEIVED BY THE ASSESSEE BY VIRTUE OF ABOVE CITED VALUATION OF LAND. ACCORDINGLY, THE AO WORKED OUT THE COST OF ACQUISITION AS ON 01-04-1981 AT 1/50 TH OF SALES CONSIDERATION WHICH WORKED OUT AT RS.1,54,000/- (77,00,000X1/50) AS AGAIN ST CLAIMED BY THE ASSESSEE OF RS.35,33,212/- AND ARRIVED AT CAPITAL GAIN A T RS.71,53,300/- UNDER THE LTCG AFTER ALLOWING COST OF INDEXATION. DECISION OF THE CIT(A) 5. THE CIT(A) OBSERVED THAT THE AO AFTER CONSIDERING THE APPRECIATION IN PROPERTIES IN AREAS WHICH ARE FAR OFF FROM THE PROPERTY SITUATED AT PARVATI HAS ADOPTED THE VALUE AS ON 01-04- 1981 AT 1/50 TH OF THE SALE CONSIDERATION WHICH HAS NO BASIS. FURTHER, I T WAS OBSERVED THAT THE ASESSEE TOO HAS INFLATED THE COST ON THE BASIS OF VALU ERS REPORT AS ON 01-04-1981 IN ORDER TO REDUCE THE CAPITAL GAINS. TH EREFORE, THE AO IS RIGHT IN HOLDING THAT PROBLEMS ASSOCIATED WITH LAND DU E TO WHICH SALE CONSIDERATION WAS LOW, WAS ALSO APPLICABLE FOR VALUATIO N OF COST OF PROPERTIES AS ON 01-04-1981. TO MEET THE ENDS OF JUSTI CE, THE LD.CIT(A) DIRECTED TO ADOPT THE VALUE OF LAND AT S.NO.118A AT RS.200 PER SQ.MTR AND VALUE OF LAND AT S.NO.129 AT RS.150/- PER SQ.MTR AND CALCULATED THE COST OF LAND AS UNDER : 1. S.NO.118A AREA 6207.13 SQ.MTR X 200 RS.12,41,426/- 2. S.NO.129 AREA 1744.61 SQ.MTR X 150 RS.2,61,692/- 3. S.NO.722 (CTS 212) RS.1,40,000/- ------------------ RS.16,43,118/- ------------------ ACCORDINGLY THE LD.CIT(A) COMPLETED LTCG AS UNDER : SALE CONSIDERATION RS.77,00,000/- LESS : INDEXED COST OF ACQUISITION RS.68,33,069/- ------------------- LTCG RS.18,66,931/- ------------------- THE CIT(A) THEREFORE DIRECTED THE AO TO ADOPT THE V ALUE OF LTCG AT RS.18,66,931/- INSTEAD OF RS.71,53,300/-. 6. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE DEP ARTMENT PREFERRED APPEAL BEFORE HONBLE ITAT. 4 MA NO.37/PN/2015 DECISION OF THE HONBLE ITAT 7. THE HONBLE ITAT OBSERVED THAT NO COGENT REASONS TO DISREGARD THE ESTIMATION OF FAIR MARKET VALUE OF THE CIT(A) HA S BEEN BROUGHT OUT AND HENCE AFFIRMED THE ORDER OF THE CIT(A). THE HO NBLE ITAT HAS AFFIRMED THE DECISION GIVEN BY THE CIT(A) IN DIRECTI NG TO ADOPT THE VALUE OF LAND WHICH WAS WITHOUT ANY BASIS AND ON PRESUMPTION AND BY DIRECTING TO ADOPT THE COST OF ACQUISITION @ 200 SQ.MT R WHICH WAS WITHOUT AN SOUND BASIS. AOS COMMENTS : 8. THE DECISION OF THE HONBLE ITAT IS NOT ACCEPTABLE FOR THE FOLLOWING REASONS : (I) THE APPROVED VALUERS REPORT ON THE BASIS OF WHICH ASSESS EE HAS CALCULATED LTCG CONTAINS NO COMPARABLE SALE INSTANCES OF IMMOVABLE PROPERTY. THE VALUATION AMOUNT HAS BEEN C ALCULATED ON THE BASIS OF DEPRECIATION METHOD FOR ABOUT 28 YEAR S, WHICH IS NOT APPLICABLE. (II) IT IS A CLEAR CUT CASE WHEN THE PROVISIONS OF SECTION 55 (2)(B)(I) OF THE ACT, WHICH ALLOWED ADOPTION OF THE FMV AS ON 01 -04-1981 AS THE COST OF ACQUISITION, HAS BEEN USED BY THE ASSESSEE UNFA IRLY BY TAKING AN APPROVED VALUERS REPORT WHICH IS WITHOUT A NY BASIS. (III) THE ASSESSING OFFICER HAS POINTED OUT A NUMBER OF SALE IN STANCES AND COMPARABLE RATES FOR VARIOUS TRANSACTIONS IN LAND/ PLOT DURING THIS PERIOD WITH APPRECIATION OF OVER 90 TIMES IN 24 YEARS, THEREBY ADOPTING A PROPER SCIENTIFIC AND LOGICAL APPROACH TO ARRIVE AT THE COST OF ACQUISITION. (IV) THE CIT(A) DECIDED THE APPEAL FILED BY THE ASSESSEE BY STATING THAT THE ESTIMATION MADE BY THE AO LACKED ANY BASIS. (V) THE HONBLE ITAT HAS IGNORED AND NOT APPRECIATED SALE INSTANCES BROUGHT OUT AND DISCUSSED BY THE AO IN HIS ORDER TO AR RIVE AT THE COST OF ACQUISITION WHICH WAS CLEARLY MENTIONED IN THE GROUND OF APPEAL BEFORE THE HONBLE ITAT. 9. IN VIEW OF THE ABOVE, IT IS PRAYED THAT THE ORDER DATED 28-01-2015 AT THE HONBLE ITAT, PUNE IN ITA NO.685/PN/2013 MAY KINDLY BE RECALLED AND THE APPEAL OF THE ASSESSEE MAY BE DECIDED TAKING INTO CONSIDERATION THE FACTS AS MENTIONED IN PARA 8 ABOVE. 10. THE APPLICATION IS SUBMITTED IN TRIPLICATE. A C OPY OF THE ORDER SOUGHT TO BE RECTIFIED IS ALSO ENCLOSED. HE SUBMITTED THAT SINCE THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS SELF EXPLANATORY, THE ORDER OF THE TRIBUNAL MAY BE RECALLED 5 MA NO.37/PN/2015 FOR DECIDING THE ISSUE AFRESH OR SUITABLE MODIFICATION MAY BE MADE BY THE TRIBUNAL. 3. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT THE TRIBUNAL HAS UPHELD THE DECISION OF THE CIT(A) WHO HAS ESTIMATED THE FAIR MARKET VALUE ON THE GROUND THAT NEITH ER THE VALUE ADOPTED BY THE AO NOR THE VALUE ADOPTED BY THE ASSES SEE ARE RELIABLE. THEREFORE, WHAT THE REVENUE IS REQUESTING THE TRIBUNAL TO DO NOW AMOUNTS TO REVIEW OF ITS OWN ORDER BY THE TRIBUNAL, WHICH IS NOT PERMISSIBLE IN LAW. HE ACCORDINGLY SUBMITTED THAT THE MISCE LLANEOUS APPLICATION FILED BY THE REVENUE SHOULD BE DISMISSED. 4. WE HAVE CONSIDERED THE CONTENTS OF THE MISCELLANEOUS APPLICATION AND HEARD BOTH THE SIDES. WE FIND IN THE INSTAN T CASE THE CIT(A) WHILE DECIDING THE ISSUE HAS CONSIDERED THAT THE VALU E ADOPTED BY THE AO AS ON 01-04-1981 AT 1/50 TH OF THE SALE CONSIDERATION HAS NO BASIS. SIMILARLY THE CIT(A) HAD ALSO GIVEN A FINDING THAT T HE VALUERS REPORT PRODUCED BY THE ASSESSEE FOR VALUING TH E PROPERTY AS ON 01-04-1981 SHOWS INFLATED COST TO REDUCE THE CAPITAL GAIN. UNDER THESE CIRCUMSTANCES THE CIT(A) ESTIMATED THE FAIR MARKET VALUE OF THE LAND AS ON 01-04-1981 WHICH HAS BEEN UPHELD BY THE TRIB UNAL. WE DO NOT FIND ANY MISTAKE IN THE ORDER OF THE TRIBUNAL. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO COULD NOT POINT OUT ANY APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL SO AS TO RECALL THE ORDER OR MAKE AMENDMENTS. THE CONTENTS OF THE MISCELLANEOUS APPLICATION SHOWS THAT THE REVENUE THROUGH THE MISCELLANEOUS APPLICATION RE QUESTS THE TRIBUNAL TO RECALL ITS OWN ORDER WHICH AMOUNTS TO REVIEW O F ITS OWN ORDER BY THE TRIBUNAL WHICH IS NOT PERMISSIBLE UNDER THE LAW. UNDER THESE CIRCUMSTANCES AND IN ABSENCE OF ANY APPARENT MIST AKE IN THE 6 MA NO.37/PN/2015 ORDER OF THE TRIBUNAL BEING POINTED OUT BY THE LD. DEPAR TMENTAL REPRESENTATIVE, WE DO NOT FIND ANY MERIT IN THE MISCELLANEOU S APPLICATION FILED BY THE REVENUE. ACCORDINGLY, SAME IS DISMISS ED BEING DEVOID OF ANY MERIT. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11-03-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) ! / JUDICIAL MEMBER / ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 11 TH MARCH, 2016. LRH'K % &!( ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ ( ) - THE CIT(A)-V, PUNE 4. $ S / THE CIT-V, PUNE 5. ' **+ , + , IQ.KS / DR, ITAT, B PUNE; 6. / / GUARD FILE. / BY ORDER , ' * //TRUE COPY// Y//TRUE COPY// 12 * + / SR. PRIVATE SECRETARY +, IQ.KS / ITAT, PUNE