Income Tax Appellate Tribunal - Chennai
Usha Ramesh, Chennai vs Department Of Income Tax on 21 April, 2011
IN THE INCOMETAX APPELLATE TRIBUNAL: A-BENCHL;CHENNAI
(Before Shri U.B.S.Bedi, Judicial Member and
Shri Abraham P. George. Accountant Member)
ITA No. 916 / Mds / 10
Asst. year 2007-08
The ITO, Vs Smt. Usha Ramesh,
Business Ward V(4), D-3 Block-3, Green Park
Chennai Apartments,
"CEEBROS", 2 LIC Colony
Main Rd, Velalcherry,
Chennai 600042
PAN: AGFPR5777C
(Appellant) (Respondent)
Appellant by: Shri Shaji P.Jacob
Respondent by: Snmt.Pushya Sitaraman
ORDER
PER SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER:
In this appeal of the Revenue its grievance is that CIT(A) deleted the addition made by the AO by adopting a fair market value of `15,000/- per ground as on 01-04-1981, for computing of long term capital gains.
2. Short facts apropos are that assessee had shown capital gains for sale of 1/9th undivided share in land at survey No.85/2 and 85/5 of Thiruvanmiyur village, Mylapore, Chennai in her return of income. For working out the said capital gains, cost as on 01-04-1981 was adopted by assessee as `1 lakh per ground. ITA NO.916/Mds/10. 2 The AO, for the purpose of ascertaining the correctness of the cost shown by the assessee, deputed his Inspector to collect information from the Sub-Registry office at Saidapet. According to the AO the details furnished by the concerned Sub-Registrar mentioned that at Survey Nos.85/2 and 85/5, Thiruvanmiyur village, the value per ground was only `15,000/- as on 01-04-1981. Assessee was put on notice in this regard, whereupon she filed a reply enclosing therewith a report of approved valuer, as per which, the fair market value per ground as on 01-04-1981 was estimated at `1,20,000/- . However, AO was not impressed by this reply. He completed the assessment computing the capital gains taking `15,000/- per ground as the fair market value as on 01-04-981.
3. In her appeal before the CIT(A) argument of the assessee was that the valuation furnished by registered valuer was rejected without any reason. According to the assessee, the guideline value fixed by State Government could not be taken as such, since it covered wider areas and was not location specific.. Assessee also argued that the Inspector was never deputed to inspect the subject property but on the other hand, for getting a guideline followed by the Sub-Registry. As per the assessee, the property was in prime residential area and located near Sri Marundeeshwarar Temple, Thiruvanmiyur Bus Terminus at ECR Road. Relying on sec. 2(22B) of the Income-tax Act, 1961 ('the Act" for short), it was argued by the assessee that fair market value in relation to a capital asset meant the price such capital asset would ordinarily fetch on sale in the open market and not the guideline value. Reliance was placed by the assessee ITA NO.916/Mds/10. 3 on the decision of the Hon. Jurisdictional High Court in the case of Thulasimani Ammal v. CIT (158 CTR 5).
4. Ld. CIT(A) was appreciative of the contentions of the assessee. According to him, the fair market value could be different from the value adopted by the Registration authority and the guideline value was not a conclusive proof in this regard. Relying on the decision of Hon. jurisdictional High Court in the case of Thulasimani Ammal (supra) he directed the AO to adopt the market value of the land as on 01-04-1981 at `1 lakh per ground, thereby allowing the appeal of the assessee.
5. Now before us, ld. DR assailing the order of the CIT(A) submitted that guideline value given by the Sub-Registrar should be given preference to the value fixed by the registered valuer. According to him, both were estimates and the estimate of the Sub-Registrar being a Government authority, had to be preferred.
6. Per contra, ld. AR apart from relying on the decision of the Hon. Jurisdictional High Court in the case of Thulasimani Ammal (supra), also submitted that coordinate Bench of this Tribunal in the case of ACIT vs. Mrs. N.Meenakshi (319 ITR (AT) 262) had held that guideline value could not be a ITA NO.916/Mds/10. 4 conclusive proof and fair market value could be different from the value adopted by the registration authority.
7. We have heard the rival submissions and carefully perused the records. Assessee had returned the cost at the rate of `1 lakh per ground and computed her capital gains. AO had adopted `15,000/- per ground and recomputed the capital gains. Assessee supported her valuation through a report of the registered valuer, as per which the cost per ground as on 01-04-1981 was `1,20,000/- per ground. The Registered Valuer had specifically mentioned that he was a consulting civil engineer with 40 years existence in valuation of property and `1,20,000/- per ground was being fixed by him as the land value prevailing as on 01-04-1981 after considering the proximity of the property to the Marundeeshwarar Temple, Thiruvanmiyur Bus Terminus and ECR Road. Ld. DR was not able to place before us the report of the Sub-registrar on the basis of which the Sub-registrar had come to a conclusion that the market value of the property was only `15,000/- per ground as on 01-04-1981. As already noted above the Registered Valuer had considered the specific location of the property while making his valuation. Hon. Jurisdictional High Court has clearly held in Thulasimani Ammal's case (supra) that guideline value had only evidentiary value but it would not by itself be sufficient to establish the market value, as such. Against `1,20,000/- per ground fixed by the registered valuer, assessee had only taken `1 lakh per ground in her computation. We are of the opinion that the AO had adopted a figure of `15,000/- per ground without giving proper justification for rejecting the value mentioned by the assessee, Thus, we find that ITA NO.916/Mds/10. 5 the CIT(A) has taken a correct decision in directing the AO to adopt the value of the land at `1 lakh per ground as on 01-04-1981 and for this purpose, reliance placed by him, on the decision of Hon. Jurisdictional High Court in the case of Thulasimani Ammal's case (supra) cannot be faulted. We, therefore, do not find any reason to interfere with the order of the CIT(A) in this regard.
8. In the result, appeal of the Revenue stands dismissed.
Order was pronounced in the Open Court on -01-2011.
(U.B.S.BEDI) (ABRAHAM P. GEORGE)
Judicial Member Accountant Member
Chennai: January, 2011. As per separate order.
Nbr" sd/- JM / 21.4.11
Cc: Assessee /Assessing Officer/ CIT(A)/ CIT/ D.R/ Guard File.
ITA NO.916/Mds/10. 6
Per U.B.S. Bedi, J.M.
9. Despite best persuasion of myself, I have not been able to agree with the conclusion and finding as arrived by the ld. Accountant Member in his proposed order. So, I proceed to write my separate order as under:
10. Facts in brief are that the assessee had shown capital gains for sale of 1/9th undivided share in land at Survey No.85/2 and 85/5 of Thiruvanmiyur village, Mylapore, Chennai in her return of income and in order to work out the capital gains, cost as on 01.04.1981 was adopted by the assessee at `.1 lakh per ground. Whereas, the Assessing Officer, for the purpose of considering the correctness of the cost shown by the assessee sent his Inspector to collect the information from the Sub-Registrar Office at Saidapet, Chennai. The information furnished by the concerned Sub-Registrar indicates that at Survey No.85/2 and 85/5, Thiruvanmiyur village, Mylapore the value per ground was `.15,000/- per ground as on 01.04.1981. The Assessing Officer sent a notice to the assessee giving such information to him given by the Sub-Registrar through his Inspector and in reply thereto, the assessee while enclosing report of some approved valuer as per which the fair market value was stated to be `.1,20,000/- per ground as on 01.04.1981. The Assessing Officer did not agree with such reply of the assessee and he completed the assessment computing capital gains, by adopting `.15,000/- per ground as the fair market value as on 01.04.1981, against which, the assessee preferred appeal and the ld. CIT(A), while considering the decision of Hon'ble Jurisdictional High Court in the case of Thulasimani Ammal vs. CIT (158 CTR 5) and coordinate Bench decision in the ITA NO.916/Mds/10. 7 case of ACIT vs. Mrs. N. Meenakshi (2009) 319 ITR (AT 262), has directed the Assessing Officer to adopt the market value of the land as on 01.04.1981 at `.1,00,000/- per ground to compute the capital gains thereby allowing the appeal of the assessee.
11. Aggrieved by such order, the Department has come up in appeal and while relying upon the guideline value as provided by the Sub-Registrar concerned, it was pleaded that such value should be given preference to the value fixed by the Registered Valuer because the value as given by the approved value at `.1,20,000/- per ground is not supported by any documentary evidence, whereas, the Sub-Registrar, who is registering various transfer documents with regard to land in that area has a valid basis for quoting particular price as on 01.04.1981 and the ld. CIT(A) has just accepted the plea of the assessee. Therefore, it was pleaded for reversal of the order of the ld. CIT(A) and restoring that of the Assessing Officer.
12. The ld. Counsel for the assessee, while relying upon the order of the ld. CIT(A), and taking support from the decision of Hon'ble Jurisdictional High Court in the case of Thulasimani Ammal vs. CIT (supra) and the coordinate Bench decision in the case of ACIT vs. Mrs. N. Meenakshi, in which it has been held that guideline value could not be conclusive proof and fair market value can be different from the value adopted by the Registration authority, it was pleaded for confirmation of the impugned order, as the ld. CIT(A) has adopted midway path because the Registered valuer has given the fair market value at `.1,20,000/- per ground as on 01.04.1981, whereas the first appellate authority has adopted ITA NO.916/Mds/10. 8 `.1,00,000/- as on 01.04.1981. Therefore, it cannot be said that the order of the ld. CIT(A) is not just and proper. Relying upon the ld. CIT(A)'s order, it was pleaded for confirmation of the same by dismissing the appeal of the Revenue.
13. After having considered the rival submissions, precedents relied upon, facts of the case and reasoning and basis given by the Assessing Officer as well as ld. CIT(A), it is found that the assessee, in this case, has adopted the value of `.1,00,000/- per ground as on 01.04.1981 for the property under reference without quoting any basis and reasoning for working out capital gains. The Assessing Officer deputed his Inspector to visit the concerned Sub-Registrar in order to get fair market value of the land, who quoted `.15,000/- per ground as on 01.04.1981 and when the assessee was confronted with this, he came forward with a valuation report of some registered valuer who quoted `.1,20,000/- per ground as on 01.04.1981, which was not accepted by the Assessing Officer who adopted `.15,000/- per ground as on 01.04.1981 to work out the capital gains and the ld. CIT(A), while mentioning about valuation filed by the assessee from some registered valuer, has directed the Assessing Officer to adopt `.1.00 lakh per ground as on 01.04.1981, which was the value adopted by the assessee, to work out the capital gains.
14. The relevant portion of the decision of the Hon'ble jurisdictional High Court in the case of Thulasimani Ammal vs. CIT 158 CTR (Mad) 5 (quoted by the assessee and relied upon by the ld. CIT(A)] reads as under:
"It is well settled that guideline value of the Registration Department regarding valuation of the property has evidentiary value and they are only intended to give information or instruction to the registering authorities but the guidelines, as such, would not establish the market value of the land.ITA NO.916/Mds/10. 9
Here, the CIT has not conducted any independent investigation on the question of determination of the market value of the property gifted by collecting necessary materials for the determination of the same, de hors the guideline value. Since the determination of the market value of the property by the CIT is not based on relevant materials and the CIT has overlooked the material produced by the petitioner, the matter may have to be remitted to the CIT for fresh determination of the market value of the property. However, considering the fact that the assessment is of the year 1971-72 and the order of the GTO was made as early as 8th Aug., 1979, instead of remitting the matter to the CIT , the market value shown by the petitioner, which is based on the valuer's report, viz. a sum of `. 83,330 can be taken as the market value of the property so that further proceedings on the determination of the market value can be avoided. Further, the value shown by the petitioner is based on the report of the approved valuer and there are no justifiable reasons to discard the same....."
15. From the above observation of the Hon'ble High Court, it would be seen that approved valuer's report has been accepted for the reasons of being old one, otherwise, it has clearly been mentioned that matter had to be remitted back and in the case in hand, the assessee did not base the value as on 01.04.1981 on any approved valuer's report and when enquiry was made by the Assessing Officer and guideline value was obtained from the Sub-Registrar concerned, which was confronted to the assessee, he came forward with a valuer's report showing value at `. 1,20,000/- per ground as on 01.04.1981, which has neither been adopted by the assessee nor by the ld. CIT(A) to reverse the order of the Assessing Officer. The Hon'ble High Court has otherwise held that guideline value has a evidentiary value and the Assessing Officer could make further enquiries on assessee having been filed the valuation report of his approved valuer, but same was not done and the ld. CIT(A) also did not make any enquiry with regard to the value of the property as on 01.04.1981. Therefore, in view of ITA NO.916/Mds/10. 10 the facts, circumstances and material on record, it is held that neither the action of the Assessing Officer nor that of the ld. CIT(A) can be held to be proper and justified. As such, in the interest of justice and to have fair play in the matter, it would be just and appropriate to set aside the orders of authorities below and to remit back the issue of valuation on the file of the Assessing Officer with the direction to re-decide the same after making proper enquiries and gathering material and instances of transaction taken place in that area or in close proximity as on the date of valuation. It is held and ordered accordingly.
16. In the result, the appeal of the Revenue gets accepted for statistical purpose.
Sd/ (U.B.S. Bedi) Judicial Member Dated 21.04.2011 Vm/-
ITA NO.916/Mds/10. 11
IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, CHENNAI BEFORE Dr. O.K.NARAYANAN, VICE PRESIDENT THIRD MEMBER I.T.A. No.916(Mds)/2010 (Assessment Year: 2007-08) The Income-tax Officer, Smt. Usha Ramesh, Business Ward- V(4), Vs. D-3 Block-3, Green Park Chennai. Apartments, "CEEBROS", 2 LIC Colony, Main Road, Velacherry, Chennai-42.
PAN - AGFPR 5777 C
(Appellant) (Respondent)
Appellant by : Shri Shaji P. Jacob, Sr. DR
Respondent by : Smt. Pushya Sitaraman, Sr.Advocate Date of Hearing : 10th August, 2011 Date of Order : 10th August, 2011 O R D E R PER Dr. O.K. NARAYANAN, VICE-PRESIDENT The question referred to the Third Member is as follows :
"In view of the facts and circumstances, whether the orders of authorities below could be set aside and ITA NO.916/Mds/10. 12 matter can be remitted back to the Assessing Officer for consideration or order of the learned Commissioner of Income-tax(Appeals) could be upheld."
2. Smt. Usha Ramesh, the assessee is an individual. She had sold her share in the landed property measuring 33 grounds at Thiruvanmiyur, Chennai. The assessee had 1/9th share in the said property originally purchased by her grand-father, Venugopal Pillai. The property purchased by her grand-father was settled in the name of her father Shri T.Devendran on 18.07.1958. Assessee's father, Shri T. Devendran, thereafter settled the property between himself and children whereby the assessee acquired 1/9th right in the property of 33 grounds at Thiruvanmiyur, Chennai.
3. The above sale transaction resulted in generating long term capital gains in the hands of the assessee in the previous year relevant to the assessment year under appeal. The assessee has returned a total income of ` 2,63,050/- by way of long term capital gains.
4. As the property was acquired by the previous owner before 1st April, 1981, the assessee availed the option of adopting the fair ITA NO.916/Mds/10. 13 market value of the property as on 1.4.1981 as the cost of acquisition as provided under sec.55(2) of the Income-tax Act, 1961. The assessee adopted ` 1,00,000/- per ground as the fair market value of the property as on 1.4.1981. The long term capital gains liable for taxation was computed by the assessee in this manner.
5. In the course of assessment proceedings, the assessing authority deputed the Income-tax Inspector to collect relevant information regarding the fair market value of the property as on 1.4.1981. The Inspector visited the concerned Sub-registrar Office at Saidapet, Chennai and gathered the details which stated that the guideline value adopted for the property covered by Survey Nos.85/2 and 85/5 of Thiruvanmiyur village, AIBEA Nagar in which area the property sold by the assessee situated, was only `15,000/- per ground. In the light of the above information that the guideline value of the property was ` 15,000/- per ground as on 1.4.1981, the Assessing Officer invited the objections of the assessee against adopting the fair market value of the property at ` 15,000/- per ground as against the rate of ` 1,00,000/- per ground adopted by the assessee. The assessee replied to the assessing authority that the guideline value is different from the market value and for the purpose ITA NO.916/Mds/10. 14 of computing capital gains what is to be looked into is the fair market value of the property as on 1.4.1981. The assessee submitted that the guideline value of `15,000/- per ground proposed by the assessing authority was not fair. The assessee also furnished along with her reply, a valuation report prepared by a Consulting Engineer and approved valuer by name Shri K. Vadivelu. The approved valuer estimated the fair market value of the property at ` 50/- per sq.ft. working out at `1,20,000/- per ground. The assessee also placed reliance on the judgment of the Hon'ble Madras High Court in the case of Thulasimani Ammal v. CIT (158 CTR 5) wherein the Court has held that guideline value regarding valuation of property has evidentiary value and they are only intended to give information or instruction to the registering authorities, but the guideline value, as such would not establish the market value of the land.
6. The Assessing Officer, on the ground that the valuation report did not make any comparison of similar cases and for want of relevant details, adopted the guideline value collected from the Sub- Registrar Office and computed the taxable capital gains on the basis of fair market value of ` 15,000/- per ground as on 1.4.1981. ITA NO.916/Mds/10. 15
7. In first appeal, the Commissioner of Income-tax (Appeals) accepted the contentions of the assessee and held that the fair market value of the property as on 1.4.1981 should be considered at ` 1,00,000/- per ground. Thus, the first appeal was decided in favour of the assessee.
8. Aggrieved by the said order of the Commissioner of Income-tax (Appeals), the Revenue came before the Tribunal in second appeal. The learned Accountant Member who authored the order, relying on the judgment of the Hon'ble Madras High Court in the case of Thulasimani Ammal v. CIT (158 CTR 5) held that the guideline value collected from the Sub-registrar Office could not reflect the fair market value of the property as on 1.4.1981 and therefore, the assessing authority was not justified in adopting ` 15,000/- per ground as the fair market value as on 1.4.1981. The learned Accountant Member held that the valuation report framed by the Registered Valuer had estimated the fair market value as on 1.4.1981 after considering the specific location of the property and other relevant factors. The approved valuer has worked out the fair market value at ` 1,20,000/- per ground whereas the assessee has claimed only ` 1,00,000/- per ground as the fair market value. The learned Accountant Member ITA NO.916/Mds/10. 16 accordingly upheld the order of the Commissioner of Income-tax (Appeals) and confirmed the adoption of ` 1,00,000/- per ground as the fair market value as on 1.4.1981.
9. The learned Judicial Member who differed from the order of the learned Accountant Member held that neither the Assessing Officer nor the Commissioner of Income-tax (Appeals) has discussed the basis and reasoning for adopting the respective market values of ` 15,000/- and ` 1,00,000/- per ground as on 1.4.1981. He held therefore, that it is necessary on the part of the Assessing Officer to make effective enquiries to work out the fair market value as on that date. He held that it is not possible to confirm the value adopted either by the Assessing Officer or by the Commissioner of Income-tax (Appeals). Accordingly, he set aside the issue back to the Assessing Officer with a direction to make further enquiries and pass a fresh assessment order after giving the assessee an opportunity of being heard.
10. It is in this background that I have to consider the question referred to me as a Third Member.
ITA NO.916/Mds/10. 17
11. I heard Shri Shaji P. Jacob, the learned Commissioner of Income-tax for the Revenue and Smt. Pushya Sitaraman, the learned counsel appearing for the assessee.
12. The property sold by the assessee was acquired by the earlier owner before 1.4.1981. That gave the assessee an option to adopt the cost of acquisition of the property at the fair market value as on 1.4.1981. The assessee exercised the above statutory option and adopted the fair market value of the property at ` 1,00,000/- per ground. In support of her claim, the assessee has filed valuation report framed by an approved valuer where the fair market value of the property as on 1.4.1981 was adopted at `1,20,000/- per ground.
13. On the other hand, the Assessing Officer relied on the guideline value collected from the Sub-registrar Office which stood at ` 15,000/- per ground as on 1.4.1981.
14. It is to be seen that the exact market value of the property as on 1.4.1981 cannot be worked out with mathematical accuracy. An element of estimation is inherent in such exercises. But what is important is that such estimate should not be arbitrary and ITA NO.916/Mds/10. 18 unreasonable. There should be some basis and reasoning in arriving at a particular amount as the fair market value of the property as on 1.4.1981. The guideline value collected from the Sub-registrar Office is one among the guiding factors as held by the Hon'ble Madras High Court in the case of Thulasimani Ammal v. CIT (158 CTR 5). Such guideline values need not be the market value all the time. The market value is determined by so many external factors including the prevalent market conditions. It means that some enquiry is called for to arrive at a reasonable amount of fair market value as on 1.4.1981.
15. As rightly pointed out by the learned Judicial Member, the Assessing Officer did not turn left or right; he simply adopted the guideline value at ` 15,000/- per ground with a mechanical arm. The assessing authority should have made further enquiries like the market value adopted for similar properties in the same locality, other comparable sale instances etc. While deputing the Inspector to the Office of the Sub-registrar, the Assessing Officer could have directed the Inspector to visit the concerned site of the property also. The Assessing Officer could have availed the assistance of the Departmental Valuer. Therefore, it is very clear that the Assessing Officer has not done any enquiries except mechanically adopting the ITA NO.916/Mds/10. 19 guideline value furnished by the Sub-registrar Office. This is an arbitrary approach in fixing the fair market value.
16. Likewise, the assessee also has not stated the basis of fixing the fair market value at ` 1,00,000/- per ground as on 1.4.1981. The valuation report was filed by the assessee along with the objections to the proposal mooted by the assessing authority. The said valuation report is also not a comprehensive one. The approved valuer has stated his experience and wisdom, alone, as the basis for valuing the property. Of course, experience and wisdom are very precious. At the same time, it is necessary to bring on record certain parameters based on which it is possible for anybody to say that the value has been worked out on the basis of certain materials. Mentioning the location of the property alone is not sufficient. There is no case of any comparable sales or any other relevant information which would support the value adopted by the approved valuer. Therefore, as rightly held by the learned Judicial Member, it is not possible to uphold the fair market value adopted by the assessee, as well.
ITA NO.916/Mds/10. 20
17. In these circumstances, the learned Judicial Member has rightly set aside the issue back to the Assessing Officer for fresh consideration in accordance with law.
18. Having concluded as above, I agree with the view expressed by the learned Judicial Member.
19. Now this file will be placed before the regular Bench for passing orders to finally dispose of the case on a majority view.
Sd/-
(Dr.O.K.NARAYANAN) Vice-President Chennai, Dated the 10th August, 2011 mpo* ITA NO.916/Mds/10. 21 IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, CHENNAI BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A. No. 916/Mds/2010 (Assessment Year : 2007-08) Smt. Usha Ramesh, The Income Tax Officer, D-3 Block-3, Business Ward - V(4), v. Green Park Apartments, "CEEBROS" Chennai - 600 034. 2, LIC Colony Main Road, Velacherry, Chennai - 600 042.
PAN : AGFPR5777C
(Appellant) (Respondent)
Appellant by : Shri Shaji P. Jacob, Sr.DR
Respondent by : Ms. G. Vardini
Date of Hearing : 16.09.2011
Date of Pronouncement : 23.09.2011
ORDER GIVING EFFECT
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
On a difference of opinion between the Members constituting the Bench, following question was referred to Third Member :-
"In view of the facts and circumstances, whether the orders of authorities below could be set aside and matter can be remitted back to the Assessing Officer for ITA NO.916/Mds/10. 22 consideration or order of the learned Commissioner of Income Tax (Appeals) could be upheld."
2. Hon'ble Vice President, sitting as Third Member, has agreed with the view of the Hon'ble Judicial Member. As per the majority view, the issue regarding fixation of market value as on 1.4.1981 is remitted back to the file of A.O. for fresh consideration in accordance with law.
3. In the result, appeal of the Revenue is allowed for statistical purposes.
The order was pronounced in the Court on 23rd September, 2011.
sd/- sd/-
(Hari Om Maratha) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 23rd September, 2011.
Kri.
Copy to: Appellant/Respondent/CIT(A)-VIII, Chennai/
CIT-VI, Chennai/D.R./Guard file