Income Tax Appellate Tribunal - Chennai
Nasheman Taherbhai Millwala, Kolkata vs Acit, Chennai on 22 February, 2017
आयकर अपील य अ धकरण, 'बी' यायपीठ, चे नई।
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH: CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं
ी "ड.एस. सु दर %संह, लेखा सद य के सम*
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No.2055/Mds/2016
नधा+रण वष+ /Assessment Year: 2010-11
Smt. Nasheman Taherbhai Millwala, Vs. The Asst. Commissioner of
25-B, Royd Street, Ground Floor, Income Tax,
Kolkata- 700 016. Business Circle-IX, Chennai.
[PAN: AEBPM 3761 R]
(अपीलाथ./Appellant) (/0यथ./Respondent)
अपीलाथ. क1 ओर से/ Appellant by : Mr.V.S.Jayakumar, Adv.
/0यथ. क1 ओर से /Respondent by : Mr.H.Kabila, JCIT
सन
ु वाई क1 तार ख/Date of Hearing : 02.02.2017
घोषणा क1 तार ख /Date of Pronouncement : 22.02.2017
आदे श / O R D E R
PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against an Order dated 02.03.2016 of Commissioner of Income Tax (Appeals)-13, Chennai, in ITA No.262 /CIT(A)-13/2010-11 for the AY 2010-11 and raised the following grounds:
ITA No.2055/Mds/2016
:- 2 -:
1. The order u/s 250(6) passed by the learned Commissioner of income Tax (Appeals)-13 Chennai [CIT (A)] dated 2/03/2016 in ITA No.262/CIT(A)-13/2010-11 dismissing the Appellant's valid grounds raised in the appeal for the Assessment Year 2010-11 for determining the Appellant's 1/5th share of the Capital Gains on transfer of the properties at Buddi Saheb Street and Acharappan Street, Chennai during the relevant financial year is erroneous and contrary to law, facts and circumstances of the case.
2. The learned CIT (A) erred in dismissing the Appellant's ground for adopting the value of the above said properties u/s.48(ii) of the Income Tax Act, 1961 by substituting the cost of acquisition declared as per the return of income with the valuation made by a registered Valuer as per his Report without assigning any valid grounds or reasonings in his Appellate Order.
3. The learned CIT (A) also erred in rejecting the valid ground of the Appellant that the Assessing Officer (AO) had wrongly adopted the sale consideration in respect of the transfer of the said properties at an uniform rate of ₹3,000/- per square feet for computation of Capital Gains for all the sale deeds relating to the above said properties without adopting the different guideline values adopted for the purposes of stamp duty for different sale deeds as mandated u/s.50C thus wrongly assessing a higher Capital Gains than legally warranted.
4. The learned CIT (A) further erred in rejecting the Appellant's valid ground for adoption of the indexed cost of acquisition of the said properties for computation of Capital Gains at ₹3,16,000/- as against the amount of ₹89,533/- arrived at by the AO.
5. For the above ground and such other ground(s) that may be adduced at the time of hearing of appeal, it is prayed that the order of the learned CIT (A) be quashed in toto, the indexed cost of acquisition of the said properties be directed to be determined as claimed by the Appellant, the Appellant's share of Capital Gains be adopted in accordance with law as claimed in the grounds above and justice rendered.
2.0 Ground Nos.1 & 5 are general in nature which do not require specific adjudication.
3.0 Ground Nos.2 & 4 are related to the cost of acquisition of the capital assest and the indexed cost of acquisition for computing the capital gains.
During the previous year relevant to the AY 2010-11, the assessee filed return of income admitting total income of ₹27,80,670/- which included capital gains of ₹22,84,000/- in respect of 1/5th share of properties at 75, Acharappan Street, Sowcarpet, Chennai. The assessee has admitted the sale proceeds of ₹40 lakhs after availing indexation benefit on the cost of acquisition. The capital gains was worked out to ₹22,84,000/- the ITA No.2055/Mds/2016 :- 3 -:
assessee claimed deduction u/s.54F of ₹14 lakhs and the remaining balance was offered to tax.
4.0 In the return of income filed by the assessee, the assessee claimed the indexed cost of acquisition at ₹3,16,000/- in the computation of income. The Assessing Officer (hereinafter referred to as 'AO') called for the purchase deeds and as per purchase deeds, it was noticed by the AO that the property was purchased in 1975 for ₹70,000/- and paid stamp duty of ₹830/- and the total cost of the property was ₹70,830/-. The indexed cost of acquisition the total property was worked to ₹4,47,665/-
and the individual share of acquisition was ₹89,355/-(4,47,665/5) as against the claim of the assessee ₹3,16,000/-.Therefore the AO disallowed the difference amount of ₹2,26,467/-(316000-89533). 5.0 During the pendency of proceedings, the assessee furnished the Valuation Report from the registered Valuer valuing the property at ₹9,59,747/- in respect of Buddi Saheb Street and ₹16,53,726/- in respect of the property of Acharappan Street, and requested the AO to allow the cost of acquisition at Rs. 9,59,747/- and ₹16,53,726/- for buddi sahib street property and Acharappan Street properties respectively as on 01/04/1981 instead of ₹89,833/-. The AO rejected the Valuation Report submitted by the assessee and adopted the indexed cost of ₹89,833/- i.e.1/5th share of ₹4,47,665/- as per the purchase deed. ITA No.2055/Mds/2016
:- 4 -:
6.0 Aggrieved by the Order of the AO, the assessee went on appeal before the Ld.CIT(A) and the Ld.CIT(A) dismissed the assessee's appeal. Therefore, the assessee is on appeal before us.
7.0 Appearing for the assessee, the Learned Authorized Representative (hereinafter referred to as 'Ld.AR') argued that the assessee has adopted the indexed cost of acquisition at ₹3,16,000/- and during the pendency of the assessment proceedings, the assessee has submitted the Valuation Report valuing the property at ₹9,59,741/- and ₹16,53,726/- in respect of Buddi Saheb and Acharrappan Street properties respectively. Since the assessee has submitted the Valuation Report from the registered Valuer, the AO has to accept the fair market value as on 1981 as per the Valuer's Report and compute the capital gains. On the other hand, the Learned Departmental Representative (hereinafter referred to as 'Ld.DR') relied on the lower authorities orders.
8.0 We heard the rival submissions and perused the material placed before us.
The Contention of the Ld.A.R was that the Ld.AO should have accepted the fair market value as per the approved Valuer and computed the capital gains.. The assessee has admitted indexed cost of acquisition of ₹3,16,000/- in the computation of income. The basis for adopting the ITA No.2055/Mds/2016 :- 5 -:
indexed cost of acquisition at ₹3,16,000/- was not explained by the assessee. As per the provisions of Sec.48(2), the cost of acquisition of the asset required to be allowed as deduction. In the case of the assessee, the asset was purchased in 1975 for a consideration of ₹70,000/- and the Stamp Duty was paid at ₹830/- and the total cost of the property was ₹70,830/-. The assessee has furnished the fair market value and consequent indexed cost of acquisition as on 01.04.1981 at Rs.316000/- in the return of income. The basis of adopting the Indexed cost of FMV at ₹3,16,000/- was not explained by the assessee. Subsequently, when the AO has called for the basis of FMV at Rs.316000/- the assessee approached the registered valuer and obtained the report valuing the properties at Rs. ₹9,59,741/- and ₹16,53,726/- and the assessee has relied on the Valuation Report which was submitted during the course of the assessment proceedings. We have gone through the Valuation Report, the Valuation Report is not based on any actual transaction in the area during 1981. It was worked out on the basis of value of property as on the date of sale reduced by percentage escalation backwards which is unscientific and unacceptable method. The valuation of FMV always should be made on the basis of actual transactions took place in the area in 1981 or the market value as on 01.04.1981 from any reliable source. The Valuation Report given by the Registered Valuer was a pure guess work and not scientific and not based on the actual transaction hence not ITA No.2055/Mds/2016 :- 6 -:
acceptable. Therefore, we hold that the Ld.CIT(A) has rightly rejected the assessee's contention and this ground of the appeal is dismissed.
9.0 The assessee has argued in Ground No.4 to adopt ₹3,16,000/- as indexed cost of acquisition for computation of capital gain. The AO adopted the amount of ₹89,533/- as indexed cost of acquisition. A sum of ₹89,533/- was 1/5th share of indexed cost of acquisition of the property discussed in paragraph No.4 of this Order. The FMV as on 01.04.1981 has to be taken and the indexed cost of acquisition should be allowed as deduction. The AO has not made any effort to verify the cost of acquisition as on 01.04.1981 but merely substituted the same with ₹17,830/- which was the 1/5th share of purchase cost as per the Sale Deed instead of Fair Market Value as on 01.04.1981 and increased by the cost of indexation. The assessee has claimed cost of acquisition at ₹3,16,000/- . Though, there was no evidence for FMV and indexed cost of acquisition at ₹3,16,000/-, since the AO has not brought on record any evidence to show that the indexed cost of acquisition was less than Rs.3,16,000/- we direct the AO to adopt ₹3,16,000/- as indexed cost of acquisition for computing capital gains as claimed by the assessee. This ground of appeal is allowed.
10.0 Ground No.3 is related to adoption of uniform rate @ ₹3,000/- per sq.ft. for all the Sale Deeds instead of the value adopted by the Sub- ITA No.2055/Mds/2016
:- 7 -:
Registrar for each of the Sale Deed independently. The Ld.AR of the assessee argued that the AO has adopted the sale of different plots at uniform rate @ ₹3,000/- per sq.ft. for all the Sale Deeds instead of the actual amount of transaction for each deed independently or the guideline value of the property of each property separately. The Ld.AR argued that the approach of the AO was arbitrary and totally wrong. On the other hand, the Ld.DR relied on the orders of the lower authorities.
11.0 We heard the rival submissions and perused the material placed before us.
The assessee along with five other Co-owners sold six plots and one of which property was sold @ ₹3,000/- per sq.ft. The AO has not furnished any information regarding the Stamp Duty Valuation/Guideline Value fixed by the Stamp Valuation Authorities on the remaining five plots. The AO has to adopt the guideline value fixed by the Stamp Valuation Authority as per Sec.50C of Income Tax Act per each plot independently. In this case, the AO stated that the case was referred to the District Revenue Officer for under valuation by the SRO, Sowcarpet. However, the proceedings of the District Revenue Officer was not received by the SRO. Therefore, the AO adopted the rate of Rs.3,000/- per sq.ft. We produce here under Sec.50C of Income Tax Act:
[Special provision for full value of consideration in certain cases. 91 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed 92[or assessable] by any authority of a State Government (hereafter in this ITA No.2055/Mds/2016 :- 8 -:
section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed 92[or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.
(2) Without prejudice to the provisions of sub-section (1), where--
(a) the assessee claims before any Assessing Officer that the value adopted or assessed 92a[or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer;
(b) the value so adopted or assessed 92a[or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modi-fications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-
section (1) of section 16A of that Act.
93[Explanation 1].--For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). 94 [Explanation 2.--For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.] (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed 94[or assessable] by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed 94[or assessable] by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.] 12.0 In this case, the assessee objected for valuation of all the properties @ ₹3,000/- per sq.ft. As per the provisions of Sec.50C of Income Tax Act, the AO has no option except to adopt the actual consideration/guideline value as per the valuation fixed by the Stamp Valuation Authority on the remaining five plots. Therefore, on this issue we remit the matter back to the file of AO to verify the valuation fixed by the Stamp Valuation Authorities/guideline value for the remaining properties and compute the capital gains as per Sec.50C of Income Tax Act.
ITA No.2055/Mds/2016
:- 9 -:
13.0 In the result, this ground of the appeal is allowed for statistical purposes.
Order pronounced in the Open Court on 22nd February, 2017, at Chennai.
Sd/- Sd/-
(एन.आर.एस. गणेशन) ("ड.एस. सु दर %संह)
(N.R.S. GANESAN) (D.S.SUNDER SINGH)
या यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER
चे नई/Chennai,
6दनांक/Dated: 22nd February, 2017.
tln
आदे श क1 / त%ल7प अ8े7षत/Copy to:
1. अपीलाथ./Appellant 4. आयकर आयु9त/CIT
2. /0यथ./Respondent 5. 7वभागीय / त न ध/DR
3. आयकर आयु9त (अपील)/CIT(A) 6. गाड+ फाईल/GF