Income Tax Appellate Tribunal - Pune
Deputy Commissioner Of Income Tax,, ... vs Ganesh Pandurang Kumbhar,, Raigad on 28 February, 2019
आयकर अपील य अ धकरण "बी" यायपीठ पण
ु े म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, PUNE
BEFORE SHRI ANIL CHATURVEDI, AM AND
SHRI PARTHA SARATHI CHAUDHURY, JM
आयकर अपील सं. / ITA No. 402/PUN/2017
नधा रण वष / Assessment Year : 2012-13
The Deputy Commissioner of Income Tax,
Panvel Circle, Panvel
.......अपीलाथ / Appellant
बनाम / V/s.
Shri Ganesh Pandurang Kumbhar,
001, Ulwa Gaon, Kumbhar Aali,
Panvel, Raigad-400 707
PAN : AZEPK6049A
...... यथ / Respondent
Assessee by : Shri Subodh Ratnaparkhi
Revenue by : Shri Abhijit Haldar
सन
ु वाई क तार ख / Date of Hearing : 27.02.2019
घोषणा क तार ख / Date of Pronouncement : 28.02.2019
आदे श / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the Revenue emanates from the order of Ld. CIT(Appeal)-2, Thane dated 30.11.2016 for the assessment year 2012-13 as per following grounds of appeal on record:
"1.Whether on facts and circumstances of the case CIT(A) is correct in deleting the addition made by AD and directing the AD to determine the value of LTCG by adopting the market value of the plot as on the date of allotment.2 ITA No.402 /PUN/2017
A.Y.2012-13
2. Whether on facts and circumstances of the case CIT(A) is correct in relying upon the case of Atul G Puranik Vs ITO 132 ITO 499 (2011) (Mum).
3. Whether on facts and circumstances of the case CIT(A) is correct in NOT relying upon the case of ITO Vs Hemant Tandel in I.T.A. No. 1934/Mum/2012 wherein ITAT, after also taking consideration of the order of ITAT in the case of Atul G. Puranik, has taken the view that:
"............ as actual amount paid by the assessee for getting the leasehold right in these plots is available on record, we do not find it necessary for adopting market value of the same."
4. The order of the CIT(A) may be vacated and that of the Assessing Officer may be restored.
5. The appellant craves leave to add, amend, alter or delete any ground of appeal."
2. The brief facts of the case are that the return of income declaring total income of Rs 66,60,220/- was filed on 31.03.2014 by the assessee and the same was processed U/s.143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). The case was selected for scrutiny, therefore, the statutory notices u/s.142(1)/143(2) of the Act, along with questionnaire, were issued and served upon the assessee. In compliance the assessee filed necessary details and after considering the submission, the assessment U/s.
143(3) of the Act, was completed on 27.03.2015, determining total income at Rs 1,88,98,345/-, by assessing the undisclosed long term capital gain of Rs 1,22,38,125/-.
3. Aggrieved with the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A). The relevant facts with regard to the issue of long term capital gain are that the land belong to the father of the assessee, was acquired by the land acquisition authorities and compensation of Rs.6,96,913/-was originally paid. Thereafter, the late father of the assessee contested the issue of quantum of compensation and was finally granted plot of land from CIDCO under the 12.50% scheme, vide lease deed dated 04.06.2008, in addition to the above compensation. In the said land plot the 3 ITA No.402 /PUN/2017 A.Y.2012-13 assessee's share was 1/4th. The same was given for development to the developer, for total consideration of Rs.4,89,52,500/-. The share of the assessee, in the said sale consideration being 1/4th was taken at Rs.1,22,38,125/- (1/4th of Rs.4,89,52,500/-), whereas the indexed cost of acquisition, on the basis of valuation report of valuer, was determined at Rs.
1,39,29,704/- and accordingly worked out the value of long term capital gain. The valuer has valued the land, as per ready reckoner value, as on 04.06.2008. The assessee claimed that the computation of long term capital gain was as per the decision of the Mumbai Bench of the Tribunal in the case of Atul G. Puranik, 132 ITD 499 (Mumbai). The Assessing Officer also admitted that the ratio of the above decision was applicable to the facts of the assessee's case, however, took a different view, by holding that the manner of adopting cost of acquisition, as per the order of the Mumbai Bench of the Tribunal, was not in accordance with law. The Assessing Officer, therefore, computed the long term capital gain by granting 'Nil' cost of acquisition at Rs.1,22,38,125/-.
4. At the time of hearing before the Ld. CIT(A), the Ld. AR of the assessee has filed detailed written submissions which are as under:
"1. The appellant is an individual having income from the other sources. The return of income for the year under appeal was filed on 31.03.2014, declaring total income of Rs.66,60,220/-. The grandfather of the appellant late Shri Shankar Ragho Kumbhar was the owner of several parcels of agricultural/and at village Bambavi, Taluka Panvel, Dist. Raigad. The said lands were compulsorily acquired under the Land Acquisition Act of 1894 for the New Bombay Project and under award dt. 25.08. 1989, a sum of Rs.6,96,913/- was paid as compensation. As the agricultural land was not within the ambit of the term "capital asset"
as contained in Section 2(14) of the I. Tax Act 1961. Shri Shankar Ragho Kumbhar expired on 29.06.1995. The appellant who is the grandson of the late Shri Shankar Ragho Kumbhar was bequeathed 1/4th share in the additional compensation claim sought by the late Shri Shankar Ragho Kumbhar by contesting the compensation originally paid towards acquisition of agricultural land.
3.2. Subsequently, on 04.06.2008, the appellant along with 3 others (all being heirs of the original owner, Mr. Shankar Ragho Kumbhar) were 4 ITA No.402 /PUN/2017 A.Y.2012-13 granted lease hold rights in-respect of plot of land admeasuring about 5099.18 sq. mtrs as part of additional compensation for acquisition of agricultural land, under what is commonly known as the 12,5% scheme. The said scheme applied to persons whose lands' were acquired for the New Bombay development, As the additional compensation received in the form of plots, under the 12,5% scheme, arose on account of original acquisition of agricultural land which was not a "capital asset", no liability to tax arose on allotment of the plot of land at Ulwe, Taluka Panvel, Dist. Raigad in the previous year relevant to asst. yr, 2009-10, The appellant along- with three other co-owners continued to hold the said land as a capital asset.
3.3. In the year under appeal, the appellant along-with 4 co-owners under tripartite agreement dt.12.12.2011, transferred the lease hold rights in respect of 5099,18 sq, mtrs of land bearing plot no.123 to 125A, Sector 23, Ulwe, Taluka Panvel, Dist. Raigad to one, M/s. seeyona Enterprises, The deemed consideration for transfer of lease hold rights is adopted at Rs.4,89,52,500/- being the market value as per stamp valuation Authorities. The said transaction is the subject matter of the addition in the present appeal.
Computation of Long Term Capital Gain Agreement value 91,800/-
Value as per stamp duty 4,89,52,500/-
Therefore consideration taken as per sec. 50C For computation of capital gain u/s.45(3) 4,89,52,500/-
-------------------------
1/4th share thereof 1,22,38,125/-
Less : Indexed cost of acquisition Restricted to 1,39,29,704/-
1,22,38,125/-
Working for indexed cost of acquisition Plot acquired through Lease Deed dt. 04.06.2008 4,13,20,000/-
Ready Reckoner Value as per Register of the said plot 4,13,10,000/- Therefore, Cost of Acquisition to assessee (1/4th share) 1,03,27,500/- ( As per valuation report of valuer, Mahendra Patil Enclosed at pg. Nos. 84 to 102) Cost of inflation index for F.Y.2008-09 582 Cost of inflation index for F.Y. 2011-12 785 Therefore index cost of acquisition is (10327500*785/582) Rs.1,39,29,704/-
5. The Id. AO has discussed and concurred with the above narrated facts in the asst order. The Id AO has further candidly admitted that the case of the appellant is covered by decision of the Hon. Jurisdictional Tribunal in Atul G. Puranik-vs -ITO, 132 ITO 499 (2011) (Mum). The ld AO then on the logic that the rationale of the decision in the case of Atul G. Puranik-vs -ITO, 132 ITO 499 is not in accordance with the provisions 5 ITA No.402 /PUN/2017 A.Y.2012-13 of the IT Act 1961, has held the cost of acquisition of land to be NIL, resulting in addition of Rs. Rs. 1,22,38,125/- to the returned income.
6. The issue of grant of deduction for indexed cost of acquisition does not warrant any ambiguity as made out by the Id. AO. The market value of leasehold rights in the plot as on the date of allotment (in this case 04.06.2008) would be the cost of acquisition with the appropriate indexation leading to the working of indexed cost of acquisition for determination of long term capital gains.
The Hon. jurisdictional Mumbai tribunal in the case of ACIT, Rg 16(2) - Vs- Shri. Nirmallihogilal, ITA No. 2942/Mum/02, dt. 23.11.2005, where the assessee was similarly allotted a plot of land at Navi Mumbai as additional compensation under the 12.5% scheme and the issue arose before the Hon. Tribunal as to the " cost of acquisition" of such plots, the Hon'ble Tribunal held as under:
From the above discussion the question arises whether the said piece of land was allotted to the assessee without any financial criteria i.e. if cash was given to the assessee in lieu of allotment of piece of land then what would have been the amount of cash. There has been reference to the award in the letter of allotment (both preliminary as well as final) but the copy of the award has not been placed on record. Admittedly, lands have been allotted by the govt. to various people as a result of mass representation therefore, by no stretch of imagination it can be assumed that there were no monetary criteria for deciding the quantum of land to be allotted to various persons under the said scheme. Therefore, we are of the considered opinion that such financial equivalent of the land allotted by the govt. should be the cost of acquisition and direct the Assessing Officer to obtain necessary information from the concerned govt. authorities in this regard to determine the cost of acquisition. If the land was allotted without any financial criteria, then market value of the similar plots in the same locality would be the cost of acquisition of impugned land. The difference between the cost of acquisition so determined and transfer consideration received by the assessee would be chargeable to tax as short term capital gains."
Similar, decisions have been taken by the Hon. Mumbai Tribunal in the case of Copy enclosed At pg. nos.
(i) Atul G. Puranik Vs. ITO 132 ITD 499 (2011) ( Mum) 116 to 127
(ii) Ramesh Abaji Walavlkar Vs. ACIT 54 SOT 15 (2012) ( Mum) 128 to 136 Thus, on facts very similar to that of the appellant, the jurisdictional tribunal has consistently held that the market value of the 6 ITA No.402 /PUN/2017 A.Y.2012-13 'plot as on the date of allotment would constitute the cost of acquisition to the assessee.
Reliance is also placed on the decision of the Hon. Supreme Court in the case of CIT- Vs-Groz-Beckert Saboo Ltd., 116 ITR 125 (SC) wherein the issue of determination of "cost of acquisition" of an asset received without any apparent monetary consideration is discussed and decided. (Copy of the said order is enclosed at pg Nos. 137 to 141)
8. It is accordingly submitted that the ld. AO has erred in adopting the cost of acquisition of lease hold rights at Nil. The resultant addition of Rs.1,22,38,125/- is not as per law."
5. The Ld. CIT(A) after considering the submissions of the assessee, facts of the case and the assessment order has held as follows:
"6. I have carefully considered the facts of the case, findings of the AO in the assessment order, submissions of the Ld. AR and the material placed on record. From the facts of the case, it is noticed that the grandfather of the appellant ( not his late father as stated by the AO in the order) was the owner of several parcels of agricultural land at Village Bambavi, Taluka Panvel, Dist. Raigad which was acquired under Land Acquisition Act for the new Bombay project. Originally the compensation of rs.6,69,913/- was paid. Thereafter, with the late grandfather agitating the issue of compensation and accordingly a lease hold rights, in plots of about 5099.18 sq mtrs, were allotted at Ulwe, as additional compensation, under 12.50% scheme. The grandfather of the appellant was expired, therefore, the appellant and 3 others co-owners, claimed 1/4th share in the said plots. During the year under appeal, vide agreement dt. 12.12.2011, they had transferred lease hold rights in the said plots, to one M/s. Seeyona Enterprises, for total consideration of Rs.4,89,52,500/-. (Appellants 1/4th share was worked out at Rs.1,22,38,125/-). The AO, after considering the submission of the appellant, had taken the entire share of appellant of Rs.1,22,38,125/-, as LTCG, by holding the cost of plot as nil.
6.1 On the other hand the appellant, while determining the LTCG, has taken indexed cost of acquisition at Rs.1,39,29,704/- and accordingly reduced the same from the total consideration of Rs. 1,22,38,125/-, as per above working, to determine the value of LTCG. The appellant claims that the market value of plots, as on the date of allotment, has to be the cost of the acquisition and the indexed cost thereof has been claimed as deduction, for computing LTCG.
6.2 The appellant had received the leasehold rights, in the said plots, as additional compensation for acquisition of agricultural land, on 04,.06.2008. No other monetary cost was incurred to get the said plots of land. Accordingly, the appellant has taken the market value of the said leasehold plots, as on the date of allotment, as cost of acquisition, relying on the decisions in the above cases. The appellant had determined the cost of plots at Rs.1,03,27,500/-, based upon valuation report of one Mr. Mahendra Patil, who has relied upon several comparable sales instances of the locality, for said period, for determining such value. It is seen that the valuation report of the valuer, has not been disputed by the AO.
7 ITA No.402 /PUN/2017A.Y.2012-13 6.3 As admitted by the AO in the asst. order, the issue is covered by the decision of the Hon. Mumbai Tribunal in the case of Atul Puranik, 132 ITD 499 (Mumbai). The AR of the appellant has also drawn my attention to another unreported decision, in the case of ACIT, Rg 16(2) -Vs- Shri. Nirmal Bhogilal, ITA No. 2942/Mum/02, dt. 23.11.2005, wherein the similar issue was decided by the Hon. Tribunal, by observing, inter- alia, at para 10 of the order as under:
"10. From the above discussion the question arises whether the said piece of land was allotted to the assessee without any financial criteria i.e. if cash was given to the assessee in lieu of allotment of piece of land then what would have been the amount of cash. There has been reference to the award in the letter of allotment (both preliminary as well as final) but the copy of the award has not been placed on record. Admittedly, lands have been allotted by the govt. to various people as a result of mass representation therefore, by no stretch of imagination it can be assumed that there was no monetary criteria for deciding the quantum of land to be allotted to various persons under the said scheme. Therefore, we are of the considered opinion that such financial equivalent of the land allotted by the govt. should be the cost of acquisition and direct the Assessing Officer to obtain necessary information from the concerned govt. authorities in this regard to determine the cost of acquisition. If the land was allotted without any financial criteria, then market value of the similar plots in the same locality would be the cost of acquisition of impugned land. The difference between the cost of acquisition so determined and transfer consideration received by the assessee would be chargeable to tax as short term capital gains.
The Hon'ble Jurisdiction Tribunal followed the above decision in the case of Atul G. Puranik Vs. ITO 132 ITD 499 (2011) ( Mum) and held as under.
"10.5 Having held that s. 49(1) is not applicable, the immediate question which arises for consideration then is that what is the cost of acquisition of rights in the plot transferred on 25th Aug., 2005 to M/s. Pathik Construction. The learned Authorised Representative argued that the market value of the plot of land on the date of allotment should be taken as the cost of acquisition, as has been held by the Tribunal in Asstt. CIT vs. Nirmal Bhogilal (supra). From the factual matrix of the case, it is noted that the assessee was allotted rights in the plot on 16th Aug., 2004 as compensation for the acquisition of lands acquired by the Special Land Acquisition Officer way back in the years 1970/1972. The value of rights in the plot is quid pro quo for the acquisition of lands from assessee's father in the past. In other words, the market value of such rights in the plot was considered by the State Government as compensation for acquisition of land in earlier years. If such rights in the plot had not been allotted, then the assessee would have been given cash equivalent to the market value of such rights as compensation for acquisition of lands. As it is a transaction with the Government, the question of any under-hand payment also stands ruled out. Sec. 48 deals with the mode of computation of income chargeable under the head 'Capital gains. It provides that such income shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset, the cost of acquisition of the asset and the cost of improvement, if any, along with the expenditure incurred wholly and exclusively in connection with such transfer. The full value of the consideration received or accruing as a result of the acquisition by the Government is the amount given as consideration for such acquisition or in the alternative the market value of any other capital asset given to the assessee against such acquisition. As in the instant case the Government has allotted rights in the plot as the full value of consideration on the acquisition of lands by it in the years 1970/1972, the market value of 8 ITA No.402 /PUN/2017 A.Y.2012-13 such right is to be considered as full value of consideration at the time of computing capital gain on the first transaction in the preceding year. Once a particular amount is considered as full value of consideration at the time of its purchase, the same shall automatically become the cost of acquisition-at the time when such capital asset is subsequently transferred. Thus, the full value of consideration should mean the market value of the lease rights in the plot for sixty years at the time of the first transaction which was completed on 16th Aug., 2004, and the same amount shall become the cost of acquisition when such rights in the plot became subject-matter of transfer in the current year on 25th Aug., 2004. We, therefore. set aside the view taken by the learned CIT(A) on this issue and hold that the market value of such lease rights for sixty years in the plot as on 16th Aug .. 2004 shall constitute the cost of acquisition for the purpose of computing capital gain when it was assigned for a consideration of Rs. 2.50 crores on 25th Aug. 2005. The AO is directed to determine the cost of acquisition in terms indicated above after allowing a reasonable opportunity of being heard to the assessee.
6.4. From the above decisions, it is seen that the ratio laid down by the Hon'ble Mumbai Tribunal, in the above cases, is squarely applicable, in the facts of the case under appeal. Accordingly, the addition made by the AO cannot be sustained. The AO, therefore, is directed to determine the value of LTCG, by adopting the market value of the plot, as on date of allotment, keeping and mind the ratios laid down in the above cases. Grounds No. 1 to 3 are allowed accordingly.
6. In the result appeal is allowed."
6. We have perused the case records and analyzed the facts and circumstances in this case and have given thoughtful consideration of the findings of Ld. CIT(A). The facts on record show that the Assessing Officer prima facie has admitted that the ratio laid down in the case of Atul G. Puranik (supra.) was applicable to the facts of the case of the assessee.
However, the Assessing Officer, thereafter, has taken different view. The Ld. CIT(A) has not only considered the decision of Atul G. Puranik but also has referred to similar decision on same issue by the Mumbai Bench of the Tribunal in the case of ACIT Vs. Shri Nirmal Bhogilal, ITA No.2942/Mum/02 dated 23.11.2005. During First Appellate proceedings, the Ld. CIT(A) deleted all the addition made by the Assessing Officer on long term capital gain and directed the Assessing Officer to determine value of long term capital gain by adopting fair market value of the plot as on date of allotment in conformity with the judicial pronouncements as referred in his order.
9 ITA No.402 /PUN/2017A.Y.2012-13
7. The Revenue in grounds of appeal has objected regarding reliance placed in the case of Atul G. Puranik (supra.) whereas, as per Revenue, the Ld. CIT(A) should have considered the decision of ITO Vs. Hemant Tandel in ITA No. 1934/Mum/2012. At the time of hearing, the Ld. AR of the assessee furnished the copy of order of Mumbai Bench of the Tribunal in the case of ITO Vs. Hemant Tandel (supra.) and demonstrated that the facts therein are substantially different from the facts of the case of assessee. In the case of Atul G. Puranik (supra.), the Tribunal has held that the actual cost or alternatively the market value of the leasehold right should be taken as cost of acquisition whereas in Hemant Tandel's case the assessee has paid cost towards the plot of land, which has been ascertained by the authorities and confirmed by them. That prima facie even the Assessing Officer in his order has agreed that the ratio in Atul G Puranik (supra.) is applicable to the facts of the assessee's case.
That In view of matter, we do not find any infirmity in the order of Ld. CIT(A) and relief provided to the assessee is thereby sustained.
8. In the result, appeal of the Revenue is dismissed.
Order pronounced on 28th day of February, 2019.
Sd/- Sd/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER
पुणे / Pune; दनांक / Dated : 28th February, 2019. SB 10 ITA No.402 /PUN/2017 A.Y.2012-13 आदे श क! " त$ल%प अ&े%षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-2, Thane.
4. The Pr. CIT-2, Thane.
5. "वभागीय %त%न&ध, आयकर अपील य अ&धकरण, "बी" ब*च, पण ु े / DR, ITAT, "B" Bench, Pune.
6. गाड- फ़ाइल / Guard File.
/// True Copy // आदे शानुसार / BY ORDER, %नजी स&चव / Private Secretary आयकर अपील य अ&धकरण, पण ु े / ITAT, Pune.
11 ITA No.402 /PUN/2017A.Y.2012-13 Date 1 Draft dictated on 27.02.2019 Sr.PS/PS 2 Draft placed before author 28.02.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order