Income Tax Appellate Tribunal - Mumbai
Income Tax Officer vs Smt. Lalitaben B. Kapadia on 20 September, 2007
Equivalent citations: (2008)115TTJ(MUM)938
ORDER
P. Madhavi Devi, J.M.
1. This appeal is filed by the Revenue. The cross-objection is filed by the assessee. The appeal and the cross-objection are directed against the order of the CIT(A)-XIX dt. 29th Sept., 2004. The appeal arises out of the assessment completed under Section 143(3) of the IT Act, 1961.
2. The only ground raised by the Revenue is that the CIT(A) has erred indirecting the AO to allow the indexed cost of acquisition at Rs. 37,98,219as against Rs. 24,60,546 calculated by the AO after considering thereport of District Valuation Officer.
3. The brief facts of the case are that the assessee is an individual who filed the return of income declaring net taxable income at Rs. 86,75,610 which included long-term capital gain from sale of immovable property. During the assessment proceedings under Section 143(3) of the IT Act, the AO observed that the assessee has shown fair market value of property as in 1980-81 as Rs. 10,00,000 and indexed value in financial year 2000-01 at Rs. 40,60,000. The AO referred to the Valuation Officer under Section 55A of the IT Act vide letter dt. 5th Nov., 2002 to value the property for the purpose of determining capital gain tax. The valuation report dt. 11th March, 2004 was received from the District Valuation Officer-II determining the share of the assessee's property at fair market value of Rs. 6,06,046 as on 1st April, 1981. On the basis of the said report, the AO valued the indexed capital value of acquisition at Rs. 24,60,546 and determined the capital gain accordingly. Aggrieved, assessee filed an appeal before the CIT(A) who held that the assessee retains with her 11.10 per cent of the total constructed area of 22,500 sq. ft. and applying the same percentage on the area of the land transferred, discount may be given only in respect of 466.20 sq. ft. of the land and valuation on the basis of this works out to Rs. 9,35,522 and he directed the AO to adopt the cost of acquisition as on 1st April, 1981 at Rs. 9,35,522 and the indexed cost of acquisition at Rs. 37,98,219 as against the claim of Rs. 40,60,000 made by the assessee and calculated the capital gain accordingly. Aggrieved, Revenue is in appeal before us.
4. The learned Departmental Representative relied upon the order of the AO and submitted that the AO had valued the indexed capital (sic-cost) on the basis of the DVO's report. The learned Counsel for the assessee submitted that the assessee had valued the property at Rs. 10,16,190 whereas the DVO had valued it at Rs. 6,06,046 which is less than the assessee's valuation. He submitted that a reference to the Valuation Officer under Section 55A could be made only if the AO is of the opinion that the value so claimed is less than its fair market value. He relied upon the Special Bench (Third Member) decision of this Tribunal in the case of Ms. Rubab M. Kazerani v. Jt. CIT in support of his contention.
5. Having heard both the parties and having considered their rival submissions, we are in agreement with the contentions of the learned Counsel for the assessee that the reference to the DVO can be made under Section 55A of the Act only when the AO is of the opinion that the value claimed by the assessee is less than its fair market value. In the case on hand the DVO valued the property at Rs. 6,06,046 which is less than the fair market value claimed by the assessee and the AO accepting the same proves that the AO referred it to the Valuation Officer as he was of the opinion that the assessee's claim was more than its fair market value. Therefore, we are satisfied that the ratio propounded by Mumbai Bench of the Tribunal in the case of Ms. Rubab M. Kazerani v. Jt. CIT (supra) is applicable to the case in hand. Respectfully following the decision, we dismiss this ground of appeal raised by the Revenue.
6. The assessee has raised following grounds in its cross-objection:
1. The learned CIT(A) erred in directing the AO to adopt the cost of acquisition as on 1st April, 1981 at Rs. 9,35,522 instead Rs. 10,00,000.
2. The learned CIT(A) erred in accepting the claim of expenditure only to the extent of Rs. 10,70,000 instead of Rs. 15,40,000.
3. The learned CIT(A) erred in not deciding the issue of reference to DVO under Section 55A is invalid as per the decision of Gujarat High Court in M.V. Shah Official Liquidator Anant Mills Ltd. v. U.J. Matain and Anr. and Madras High Court in 259 ITR207(sic).
7. As regards cross-objection No. 1, we find that this ground of cross- objection succeeds in view of our finding in the Revenue appeal, that the reference to the DVO is invalid and the AO is therefore directed to adopt the cost of acquisition as on 1st April, 1981 at Rs. 10,00,000 as claimed by the assessee.
8. The ground No. 3 is also allowed for the reason given in ground No. 1 above.
9. As regards ground No. 2, the brief facts are that the assessee had sold her Juhu bungalow by deed of assignment-cum-conveyance dt. 15th May, 2000 and received her 50 per cent share of Rs. 1,62,50,000. The assessee claimed expenses totalling Rs. 15,40,000 as expenditure incurred in connection with transfer. The AO observed that the whole of the expenditure on the transfer of the bungalow has been claimed by the assessee which is not permissible. He observed that the assessee was the co-owner of the 50 per cent of the bungalow and the sale receipt is taken separately by the assessee and co-owners. The expenses against transaction should also be shared proportionately in the share of property.
10. On enquiry by the AO, the assessee submitted that the assessee being the head of the family, it was mutually decided amongst the family members that the obligation on behalf of the family will be fulfilled by the assessee and accordingly all the expenses were met by her. However, the AO disallowed 50 per cent of the expenses claimed and added the same to the income of the assessee. Aggrieved, assessee filed an appeal before CIT(A) who restricted the disallowance to Rs. 10,70.000 in terms of Section 48 of the Act. Aggrieved by the said restriction, the assessee is in cross- objection before us.
11. The learned Counsel for the assessee submitted that the assessee has produced all the bills and vouchers before the AO as well as the CIT(A). He submitted that the AO had disallowed 50 per cent of the expenses on the ground that the assessee was only 50 per cent owner of the bungalow. He submitted that AO disregarded the evidence filed by the assessee to show the agreement between the family members and that the family arrangement has been abided by the assessee. He submitted that having found the family arrangement to be genuine, the CIT(A) ought not to have restricted the disallowance only to Rs. 10,70,000 as against the claim of Rs. 15,40,000.
12. The learned Departmental Representative on the other hand supported the order of the CIT(A) and submitted that the assessee failed to produce any evidence in support of her claim of having incurred expenses of entire amount of Rs. 15,40,000 and CIT(A) has rightly restricted the claim to Rs. 10,70,000 which is the actual amount incurred by her.
13. Having heard both the parties and having considered the rival contentions, we find that the assessee's claim of incurring expenses for the transfer of the asset is accepted by the authorities below and the AO has allowed 50 per cent of expenses. The CIT(A) has restricted it to the actual payment made by the assessee. We find that the CIT(A) has considered the factual matrix of the case and also the bank account of the assessee to arrive at the figure of Rs. 10,70,000. It has also been Observed that the expenses have been incurred out of the bank account of the assessee and out of the sale consideration received and that the other joint owners have not claimed any deduction on account of such expenditure over and above Rs. 10,70,000.
14. There fore, we do not see any reason to interfere with the order of the CTT(A) as the assessee has not been able to file any evidence before us either, in support of her claim for the balance of the expenditure. In the result, this ground of appeal of the assessee is rejected.
15. Cross-objection is partly allowed.