Shri J R Mrithunjay Singh V. The Income Tax Officer Ward-7(3)

ITA/420/2014

AI Insights

The case involves an appeal by Shri J R Mrithunjay Singh against the Income Tax Appellate Tribunal's decision, which upheld the market value of a property based on an alleged agreement of sale dated 12.12.1978. The property in question was assessed at Rs.10 lakhs as of 1st April 1981, derived from the agreement which was for a sale price of Rs.7,00,000. However, the related suit for specific performance based on this agreement was dismissed, leading to the contention that the agreement was not a valid basis for valuation. The High Court agreed with the appellant's argument, finding that the Tribunal's reliance on the agreement was misplaced, and directed a fresh assessment of the property's fair market value.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 794046 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-04-2015
• Assessment Year: misc
• Other Referred Cases: O.S.No.2339/1981
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: BALRAM RAO
• Keywords: Agreement of sale; Assessment Year 2006-07; Immovable Property; Income Tax; Market value
• Section: 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF APRIL 2015 PRESENT THE HON’BLE MR.JUSTICE VINEET SARAN AND THE HON’BLE MRS.JUSTICE S SUJATHA ITA NO.420 OF 2014 BETWEEN SHRI J R MRITHUNJAY SINGH NO.164, 5TH MAIN ROAD, DEFENCE COLONY, INDIRANAGAR, BANGALORE-560031 PAN-AMPSM4669B AGED ABOUT 73 YEARS, S/O LATE MAHARAJKUMAR DR VIJAYA ANAND ... APPELLANT (BY SRI BALRAM R RAO, ADV.) AND THE INCOME TAX OFFICER WARD-7(3), KENDRIYA SADAN, 4TH FLOOR, B & C WING, 17TH MAIN, KORAMANGALA, BANGALORE-560034. ... RESPONDENT (BY SRI K V ARAVIND, ADV.) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:09/05/2014 PASSED IN ITA 2 NO.1371/BANG/2012, FOR THE ASSESSMENT YEAR 2006-07 PRAYING THIS HON'BLE COURT TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. II. ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE ITAT, DATED:09/05/2014 BEARING IN ITA NO.1371/BANG/2012 FOR THE ASSESSMENT YEAR 2006-07. THIS APPEAL COMING ON FOR ADMISSION THIS DAY, VINEET SARAN J., DELIVERED THE FOLLOWING: JUDGMENT The appeal is admitted on the following substantial question of law: “Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal, Bangalore is right in upholding the determination of the market value of immovable property No.72, Cunningham Road, (S.R.T. Road) Bangalore at Rs.10 lakhs as on 1st April 1981 based on the alleged agreement of sale dated 12th December 1978, when in the suit filed by Mr .M.Nachaiah Chittiappa and others before the XI Addl. City Civil Judge Bangalore for specific performance based on the said agreement and numbered as O.S.No.2339/1981 has been dismissed with costs on 21st day of July 2001?” 3 2. We have heard Sri Balram R.Rao, learned Counsel appearing for the appellant as well as Sri K.V.Aravind, learned Counsel appearing for the respondent-Department and perused the record. 3. With consent of learned Counsel for the parties, this appeal has been heard and is being finally disposed of at this stage. 4. In short, the dispute in the present appeal is with regard to the determination of the market value of the property in question as on 01.04.1981. The valuation of the said property has been made on the basis of an alleged agreement of sale dated 12.12.1978. The Tribunal in its order, which is impugned in this appeal, has held that the suit filed by the purchaser on the basis of the agreement dated 12.12.1978 was decreed in favour of the purchaser. 5. Learned Counsel for the parties do not dispute the fact that the suit filed by the purchaser was in fact dismissed and not decreed in favour of the purchaser. The contention of the learned Counsel for 4 the appellant thus is that on the basis of the said agreement dated 12.12.1978, which was for sale of the property for a value of `7,00,000/-, the finding that the value of the property in question was `10,00,000/- as on 01.04.1981 would be incorrect, as the agreement itself was not found to be a valid agreement by the Trial Court, and the suit was in fact dismissed and not allowed. It is thus contended that the value of the property as on 01.04.1981 ought to have been determined on the basis of assessment of the fair market value and not on the basis of the alleged agreement for sale, which agreement was held not to be a valid agreement in the eyes of law. 6. We find substance in the submissions made by learned Counsel for the appellant, as the very basis for valuation of the property, which was the agreement for sale, was itself held not to be a valid agreement. The fair market value of the property as assessed by the Tribunal cannot be said to be a proper mode of assessment. 5 7. We therefore hold that the fair market value of the property as determined by the Tribunal, was without any proper basis. We thus answer the question of law in favour of the assessee and against the revenue. 8. Learned Counsel for the parties have agreed that the matter should be decided afresh by the Assessing Officer after ignoring the agreement for sale dated 12.12.1978 and on the basis of the other factors relevant, for consideration of the fair market value. As such, we direct that the matter may be considered afresh by the Assessing Officer in accordance with law. Appeal stands allowed. There would be no order as to costs. Sd/- JUDGE Sd/- JUDGE JT/- "