RAKHEE PULPARAMBIL RAMESH,CALICUT V. ACIT, CIRCLE-1(1) & TPS, CALICUT

ITA 786/COCH/2024

AI Insights

The case involves Rakhee Pulparambil Ramesh, the appellant, who contested the assessment order for the Assessment Year 2014-15, which significantly increased her declared income from capital gains. The Assessing Officer (AO) had rejected the fair market value adopted by the appellant for the computation of capital gains, substituting it with a lower value based on SRO data and a previous sale instance. The appellant argued that the AO's method was unreasonable and cited precedents supporting her valuation method. The Tribunal agreed with the appellant on the valuation issue but dismissed her appeal regarding the deduction under section 54C, affirming the AO's decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 47284 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Other Referred Cases: CIT vs. Ashven Datla [2013] 37 taxmann.com 261 (AP), ACIT vs. Shri Narayan Krishnanand in ITA Nos. 321 to 322/Coch/2017 dated 14.08.2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: VENUGOPAL M.V.
• Keywords: Capital asset; Fair market value; Capital Gains; Valuation report
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI GEORGE GEORGE K., VP AND SHRI INTURI RAMA RAO, AM ITA Nos. 786/Coch/2024 Assessment Year: 2014-15 Rakhee Pulparambil Ramesh .......... Appellant Platinum Crescent, Wayanad Road Calicut 673001 [PAN: ACUPR8175P] vs. Asst. Commissioner of Income Tax .......... Respondent Circle - 1(1) & TPS, Calicut Appellant by: Shri Venugopal M.V., CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 01.04.2025 Date of Pronouncement: 08.04.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)], dated 07.08.2024 for Assessment Year (AY) 2014-15. 2. The appellant is an individual deriving income from capital gains. The return of income for AY 2014-15 was filed on 29.07.2015 declaring total income of Rs. 2,21,67,080/-. Against the said return of income the assessment was completed by the Assessing Officer 2 ITA No. 786/Coch/2024 Rakhee Pulparambil Ramesh (AO) vide order dated 28.12.2016 passed us 143(3) of Income Tax Act, 1961 (hereinafter \"the Act\") at a total income of Rs. 6,48,14,348/-. While doing so, the AO made addition of Rs. 4,26,47,268/- under the head ‘long term capital gains’ 3. The factual background leading to the above addition is that the appellant is one of the co-owners of the property situated in Wayanad Road, Calicut. During the previous year relevant to AY 2014-15, the appellant along with other co-owners entered into an agreement with M/s. Crescent Builders. In terms of the said agreement, the appellant had granted permission to construct an apartment complex in consideration of receipt of advance amount of Rs. 1 crore and 35% of the total built up area. In the return of income, the appellant returned capital gain in respect of the same. While computing the capital gain the appellant adopted fair market value as on 01.04.1981 at Rs. 1 lakh per cent. However, the AO rejected the above fair market value and proceeded with computation of capital gain by adopting Rs. 18,181/- per cent as fair market value based on the SRO data for transfer of land from Commonwealth Trust Ltd. to Government of Kerala. The AO also took notice of the fact that the appellant itself sold part of the same property in 1981 for a consideration @ Rs. 2,000/- per cent only. Accordingly he computed the capital gain and made addition of Rs. 4,26,47,268/-. The AO also denied the claim for deduction of Rs. 3 ITA No. 786/Coch/2024 Rakhee Pulparambil Ramesh 30,00,000/- u/s. 54 of the Act for belatedly depositing the money in specified bonds. 4. Being aggrieved by the order of the CIT(A) assessee is in appeal before us in the present appeal. 5. It is submitted that the fair market value of the property sold as on 01.04.1981 cannot be determined on the basis of the guidelines value available at Sub-Registrar office. He further submitted that the valuation report submitted by the assessee is based on the reverse indexation method which a valid and acceptable method of valuation. In this connection the appellant also placed reliance of the decision of the Hon'ble Andhra Pradesh High Court in the case of CIT vs. Ashven Datla [2013] 37 taxmann.com 261 (AP) and also placed reliance on the decision of the Coordinate Bench of this Tribunal in the case of ACIT vs. Shri Narayan Krishnanand in ITA Nos. 321 to 322/Coch/2017 dated 14.08.2018. 6. On the other hand, the ld. Sr. DR submitted that the method adopted by the AO for arriving at the fair market value of the property as on 01.04.2981 is reasonable and requires no interference. 7. We have heard rival contentions and perused the material available on record. The dispute in the present appeal relates to adoption of fair market value as on 01.04.1981, while computing the 4 ITA No. 786/Coch/2024 Rakhee Pulparambil Ramesh capital gains on sale of the said property. The appellant adopted the fair market value @ Rs. 1 lakh per cent based on the valuation report, who in arriving at that fair market value adopted backward indexation method. Whereas, it adopted the fair market value based on the sale instance of the property in the same locality in the year 1981. It is settled law to the extent that the guideline value as per SRO record does not always represent the fair market value. The method adopted by the appellant for arriving at the fair market value is one of the acceptable methods and is based on the valuation report. The AO ought to have accepted the fair market value as adopted by the appellant. In the result, the appeal of the assessee on this ground of appeal is allowed. 8. Ground of appeal Nos. 1 and 9 are general in nature and does not require any adjudication. Grounds of appeal 2 to 8 challenges the disallowance of claim for Rs. 20,00,000/- u/s. 54 of the Act. On a mere perusal of the assessment order it would be clear that the AO disallowed the claim of deduction for Rs. 20,00,000/- only on the ground that the appellant had failed to deposit the amount in specified bonds within 6 months. On perusal of provisions section 54C, it would be clear that the AO is not empowered to condone the delay in deposit of the consideration in specified bonds. The AO has rightly denied the claim for deduction of Rs. 20.00,000/- u/s. 54C of the Act. We find no reason to interfere with the order of the AO. Grounds of appeal dismissed. 5 ITA No. 786/Coch/2024 Rakhee Pulparambil Ramesh 9. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open court on 8th April, 2025. Sd/- Sd/- GEORGE GEORGE K. VICE PRESIDENT (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 8th April, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "