Income Tax Appellate Tribunal - Ahmedabad
Ujjaval Maheshbhai Pandya, , Ahmedabad vs Income Tax Officer, Ward-3(1), , ... on 23 January, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "SMC" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.113/Ahd/2016
(Assessment Year:2011-12)
Shri Ujjaval Maheshbhai Pandya
23, Suryanarayan Society, Opp. Visat
Petrol Pump, Sabarmati, Ahmedabad - 380 005 Appellant
Vs.
ITO,
Ward: 3(1), Ahmedabad Respondent
PAN: BVEPP8411G
&
ITA No.114/Ahd/2016
(Assessment Year:2011-12)
Smt. Jigna Maheshbhai Pandya
23, Suryanarayan Society, Opp. Visat
Petrol Pump, Sabarmati, Ahmedabad - 380 005 Appellant
Vs.
ITO,
Ward: 3(1), Ahmedabad Respondent
PAN: AIOPP5799R
ITA Nos. 113 to 115/Ahd/2016 (Shri Ujjaval M. Pandya & two Ors.)
A.Y. 2011-12 -2-
&
ITA No.115/Ahd/2016
(Assessment Year:2011-12)
Shri Yamini Maheshbhai Pandya
23, Suryanarayan Society, Opp. Visat
Petrol Pump,Sabarmati, Ahmedabad - 380 005 Appellant
Vs.
ITO,
Ward: 3(1), Ahmedabad Respondent
PAN: BDSPP4715R
आवेदक क ओर से/By Assessee : Shri S. N. Divatia, A.R.
राज व क ओर से/By Revenue : Shri P. S. Chaudhary, Sr. D.R.
सन
ु वाई क तार ख/Date of Hearing : 18.01.2017
घोषणा क तार ख/Date of
Pronouncement : 23.01.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
These three appeals in case of as many assessees for assessment year 2011-12 arise against CIT(A)-10, Ahmedabad's separate orders; all dated 08.05.2015 in appeal nos. CIT(A)-10/ITO Ward-3(1)283/2014-15, CIT(A)- 10/ITO Ward-3(1)284/2014-15 & CIT(A)-10/ITO Ward-3(1)282/2014-15 , ITA Nos. 113 to 115/Ahd/2016 (Shri Ujjaval M. Pandya & two Ors.) A.Y. 2011-12 -3- in proceedings under section 143(3) of the Income Tax Act, 1961; in short "the Act".
2. It is evident at the outset that all these appeals suffer from delay of 161 days in filing except second case ITA No.114/Ahd/2016 involving delay of 195 days. These assessees have filed condonation petitions as well. First assessee Shri Ujwal Maheshbhai Pandya pleads therein that he is employed in IT sector in Mohali, Punjab. He is stated to be visiting his parents on very few occasions in year. The said appellant accordingly avers that his old parents had received the CIT(A)'s order in question which could be handed over to him on his visit to Ahmedabad. His further case is that after getting copy of the lower appellate order in January 2016, he initiated all necessary steps to file his instant appeal after a delay of 161 days. Later two assessees Ms. Jigna Maheshbhai Pandya and Yamini Maheshbhai Pandya are his sisters who have got married and staying away from their parents. Their case also is in the same tune that they came to know about the impugned order much later that the stipulated period. Learned Departmental Representative fails to dispute all these solemn averments. And also that these assessees' addresses have changed then those given in assessment order. We thus find all the above reasons to form just and reasonable cause for the purpose of condoning the above stated delay in all three appeals. The same are now taken up for hearing on merits.
3. We first come to common issue of cost of acquisition of the asset sold as on 01.04.1981 in all three cases. These assessees co-owned the capital asset in question i.e. a plot of land in survey no.858/1, TPS-44 admeasuring 394C sq.mtrs., Chandkheda, Ahmedabad along with other co-owners. There is no dispute that it was their ancestral property. They sold the above plot on 10.06.2010 for Rs.2,56,50,000/-. The assessees adopted its cost of ITA Nos. 113 to 115/Ahd/2016 (Shri Ujjaval M. Pandya & two Ors.) A.Y. 2011-12 -4- acquisition as on 01.04.1981 @ Rs.501/- per sq.mtr. as per Government Approved Valuer's report. The Assessing Officer however went by DVO's report in another co-owners' case to reduce the above cost of acquisition as Rs.194.34 per sq.mtr. qua the very property. He accordingly framed regular assessments in these three cases on 10.02.2014 making long term capital gain each of Rs.11,03,830/-. The CIT(A) confirms the same in the lower appellate's order under challenge.
4. Heard both sides. Learned counsel Shri Divetia at the outset files before us a copy CIT(A)-V, Ahmedabad's order dated 01.05.2015 in case of yet another co-owner Shri Yagnesh Ashwinkumar Pandya reversing Assessing Officer's action in referring valuation issue of the very capital asset in question as not sustainable u/s.55A of the Act reading as under:
"4.3. I have considered the facts of the case and submission made by the appellant. In this case, the AO has increased the long term capital gain amount by reducing the cost of acquisition of the appellant as on 1.4.1981. It has been, seen that the appellant along with 11 co-owners had sold the land admeasuring 3946 sqr. Mtrs. for the total sale consideration at Rs,2,56,50,000/-. The cost of acquisition as on 1,4,1981 was taken at Rs.32,95,077/- @, R.s.501/- per sqr. Mtr. on the basis of the valuation report of the Government Approved Registered valuer namely Shri Champaklal D. Shah. The AO found it very high find therefore a reference was made to the AVO Ahmedabad by the AO vide his office letter dtd, 7.2.2013, In response to the same, the AYO submitted his report dtd. 3,5.2013 and after necessary corrigendum vide letter dtd. 7.5.2013 he has estimated the fair market value as on 1.4.1981 at Rs.21,37,500/- considering the rate of R.s.325/- per sqr. Mtr. However, this valuation was also not accepted, by the AO and he once again referred back the matter to the valuation Officer for revaluation. In response to the same' the Valuation Officer-2, Ahmedabad vide his report dtd. 13.11.2013 has valued the property as on 1,4,1981 at Rs.12,78,200/- only considering the rate at Rs.194.34 per sqr. .Mtr. Thus as against the claim of the appellant of cost of acquisition @ Rs,501/- per sqr. Mtr on 1.4.1981 based upon valuation by registered valuer the Valuation Officer-11 in the second report has estimated the rate at Rs.194.34 per sqr.mtr .which has been challenged by the appellant through the grounds of appeal. For the various reasons discussed in the submission before the A.O. and subsequently, through the written submissions in the appellate proceedings this rate taken for cost of acquisition has been challenged which ultimately increased the long terra capital gain in the hands of the appellant to the extent of his share in the said land, ITA Nos. 113 to 115/Ahd/2016 (Shri Ujjaval M. Pandya & two Ors.) A.Y. 2011-12 -5- 4.4. Considering the facts and submission, it is found that the appellant has challenged the valuation made by the Valuation Officer on various accounts which have some substance. However, it has been found that the reference made by the AO in the assessment proceedings to the Valuation Officer in view of the Provisions of Section 55A was itself not in accordance with the previsions of law. As per the provisions of Section 55A the reference could only be made when the fair market value of the property is exceeding to the value claimed by the appellant. On the contrary in the instant ease the value claimed by the appellant as on 1.4.1981 was higher than, what the AVO has estimated. Therefore, in that situation the provisions of Section 55A are riot applicable and the reference itself becomes void-ab-initio. In support of this proposition, various Court's have given their decisions/judgments and some of .them are discussed hereunder.-
4.5. The appellant challenged the reference made by the AO to the DVO stating not legal and invalid in law in view of the Hon'ble Bombay High Court judgment in the case of CIT Vs. Pooja Prints 98 DTR 177 and CIT Vs. Dauial Mohta HUF 360 ITR 680 and mentioned that the long term capital gain determined by considering the valuation report of the DVO, and ignoring the valuation made by the registered valuer is not legal and additions made on the basis of such illegal report needs to be deleted. Further argued that the conditions laid down u/s.55A are not fulfilled as such reference to the PYO was not legal and valid in law. So no cognigence can be taken on the said invalid valuation report. 'Further it was also objected that the reference to the valuation officer lias been made without pointing out any defects/mistakes or establishing that the valuation made by the registered valuer was not proper and did not show the fair market value.
4.6. In the similar circumstances, the Hon'ble Bombay High Court in the ease of CIT Vs. Daulal Mohta HUF 360 ITR 680 has held as under:-
CAPITAL GAINS - COMPUTATION - COST OF ACQUISITON - FAIR MARKET VALUE AS ON 1-4-1981 - REFERENCE TO DEPARTMENTAL VALUAT10N OFFICER - ONLY VALUE OF CAPITAL ASSET SHOWN BY ASSESSEE LESS THAN ITS FIAR MARKET VALUE - INCOME TAX ACT, 1961 s. 55A.
Reference to the Departmental Valuation. Officer can only be made in cases where the value of the capital asset shown by the assessee is less than Us fair market value as on April, 1, 1981, 'Where the value of the capital asset shown by the assessee on the basis of the approved valuer's report was more than its fair market value, reference under section 55A of the Income-tax Act, 1961, was not valid.
4.7. Further the Hon'bie Bombay High Court in the case of CIT Vs. Puja Prints in 360 ITR 697 has also held as under:-
ITA Nos. 113 to 115/Ahd/2016 (Shri Ujjaval M. Pandya & two Ors.) A.Y. 2011-12 -6- CAPITAL GAINS - LONG TERM CAPITAL GAINS- COMPUTATION -
COST OFACQUISITON - FAIR MARKET VALUE AS ON 1,4. 1981 -
REFERENCE TO DEPARTMENTAL VALUATION OFFICER - ONLY WHEN VALUE ADOPTED BY ASSESSEE I^ESS THAN PAIR MARKET VALUE - VALUE ADOPTED BY ASSESSEE MUCH MORE THAN FAIR MARKET VALUE - REFERENCE TO VALUATION OFFICER COULD NOT BE MADE - INCOME ATAX ACT, 1961,s.55a(A)"
4.8. Further the Hon'ble Gujarat High Court in the case of CIT Vs. Gauranginiben S. Shodhan in Tax- Appeal, No. 149 to 151 of 20! 3 did. 21.1.2014 has held as under:-
"As regards reference to DVO for ascertaining the fair market value as on 1st April, 1981, such reference was also not competent- Prior to the amendment in s. 55A w.e.f, 1st July, 2012, reference could be made to the DVO if the AO was of the , opinion that the value of the asset claimed by the assessee in accordance with the : estimate made by the registered valuer was less than its fair market value - It is not the ease of the AO that the value of the asset shown as on 1st April, 1981 was less than the fair market value- For the same reson, sub-cl.(i) of cl. (b) of s. 55 A has no bearing on the fair market value as on 1st April, 1981 - AO has not resorted to sub-cl.(ii) of cl. (b) - In any case, cl. (b) applies where cl. (a) does not apply as it starts with the expression "in any other case"- If the assessee has relied upon a registered valuer's report, AO can proceed only under cl.
(a) and cl. (b) would not be applicable - in the instant case, admittedly, the assessee had relied on the estimate made by the registered valuer for the purpose of supporting its valuation of the asset - Any such situation is governed by cl. (a) of s. 55A, and the AO could not have resorted to cl. (b) thereof,"
4.9. In view of the aforesaid discussion, the reference to the DVO is not found correct and legal and such reliance upon the AVOs report and further increasing the long term capital gain-is not justified.
4.10. It is worth here to mention that the amendment in the aforesaid provisions has only be made with effect from 1.7.2012 by the Finance Act, 2012 whereby the reference can be made when there is "variance" with its fair market value. Otherwise as per the amendment it is clear that the legal position was different before pre-amendment period and this amendment could not be said to be clarificatory or retrospective in nature.
4.11. In view, of the aforesaid discussion, the AO's action for taking the cost of land as on 1.4,1981 as per the valuation report of-the DVO is found not correct as per the provisions of I.T. Act and the appellant is allowed to take the cost of acquisition as shown in the report of the registered valuer which has been considered by the appellant while arriving, at the long term capital gain amount. Thus, the stand of the AO is rejected and addition on this account is deleted." ITA Nos. 113 to 115/Ahd/2016 (Shri Ujjaval M. Pandya & two Ors.) A.Y. 2011-12 -7-
5. Learned Departmental Representative fails to indicate any distinction on facts. His only plea is that the said CIT(A)'s order is very much against the law but the department could not file appeal due to tax effect involved of less than Rs.10,00,000/-. This plea fails to impress upon us as the very cost of acquisition of the capital asset in question as on 01.04.1981 has to be adopted in all co-owners' cases instead of the particular appellant hereinabove. We can't adopt different cost of acquisition qua the very capital asset. We thus follow the same reasoning herein as well to delete the impugned long term gain addition. All these assessees accordingly succeed in their first common substantive ground. First appeal ITA No.113/Ahd/2016 raising the said sole grievance is accepted.
6. We now proceed to latter two appeals seeking to claim Section 54F deduction. The CIT(A) observes that since the latter two assessees have re- invested their sale consideration money / long term capital gains in the names of their mother and brother, they are not entitled to claim the said deduction on this score alone. This reasoning is also not sustainable in the eyes of law. We reiterate the Section 54F of the Act is in the nature of a deduction provision in a taxing statute to be liberally constitute. There is no such stipulation that the said re-investment of sale consideration/long term capital gains in question is to be made only in the names of vendor assessees. Both the parties are very fair in forming the bench that the hon'ble jurisdictional high court has not adjudicated the impugned issue. We thus quote hon'ble Delhi high court's decisions in (2013) 30 taxmann.com 34 (Delhi) CIT vs. Kamal Wahal and CIT vs. Ravinder Kumar Arora (2012) 342 ITR 38 to conclude that the above deduction provision neither provides for purchase of new residential house either in the concerned assessee's own name or exclusively in his name. The latter two assessees' deduction claim u/s.54F of ITA Nos. 113 to 115/Ahd/2016 (Shri Ujjaval M. Pandya & two Ors.) A.Y. 2011-12 -8- the Act is accordingly held allowable. Their corresponding substantive ground stands accepted.
7. These three assessees succeed in their respective appeals.
[Pronounced in the open Court on this the 23th day of January, 2017.] Sd/- Sd/-
(MANISH BORAD) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 23/01/2017
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आय!
ु त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।