Income Tax Appellate Tribunal - Jaipur
Sunita Jain , Jaipur vs Assessee on 30 May, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI T.R.MEENA, AM
vk;dj vihy la-@ITA No. 847/JP/2012
fu/kZkj.k o"kZ@Assessment Year : 2009-10
Sunita Jain, cuke I.T.O.,
D-6/303, Vaishali Nagar, Vs. Ward 6(1),
Jaipur. Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AENPJ 3230 N
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Anil Mathur (CA)
jktLo dh vksj ls@ Revenue by : Shri Kailash Mangal (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 21/04/2016.
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 30/05/2016.
vkns'k@ ORDER
PER T.R. MEENA, A.M.
This is an appeal filed by the assessee against the order dated 30/08/2012 passed by the ld. CIT(A)-II, Jaipur for the assessment year 2009-10 wherein the assessee raised following grounds as under:
"1. That on the facts and in circumstances of the case, the ld CIT(A) grossly erred and acted illegally in not allowing claim of assessee for taking the FMV of asset as on 1/4/1981 at Rs. 1,99,282/- but confirming the value of Rs. 1,28,700/- as taken by the Assessing Officer.2 ITA No. 847/JP/2012
Sunita Jain Vs ITO
2. That on the facts and in circumstances of the case, the ld CIT(A) grossly erred and was otherwise excessive in not allowing the claim of assessee towards cost of improvement of asset of Rs. 4,30,000/- as incurred by the previous owner.
3. That on the facts and circumstances of the case, the ld CIT(A) grossly erred and was unjustified in not allowing roll over benefit U/s 54 of the IT Act of Rs. 36,63,880/- towards investment in more than one residential flat for personal use of assessee but restricting it to Rs. 17,48,980/- for one residential flat only."
The assessee has also raised an additional ground, which is reproduced as under:-
"That the ld CIT(A) erred in confirming the action of Assessing Officer in taking the value of sale consideration at Rs. 62,63,250/- U/s 50C(2) and not Rs. 60.00 lacs being actual sales consideration for claiming exemption U/s 54 of the Act.
2. The assessee filed return on 30/09/2009 declaring total income of Rs. 4,90,050/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act) on 26/12/2011. The assessee is an individual enjoying income from H.R. consultancy in the name and style of M/s Jaipur events, M/s Global Careers & M/s Fortune Management Consultants. All the grounds of the assessee's appeal as well as additional ground are against calculating the capital and allowing deduction U/s 54 of the Act. The ld Assessing Officer observed that during the year under 3 ITA No. 847/JP/2012 Sunita Jain Vs ITO consideration, the assessee had sold immovable property situated at Municipal Water Rate No. 64/252 and 64/253, Dampier Nagar, Mathura for Rs. 1.20 crores. The assessee was having half share in the property, therefore, the assessee had shown her share at Rs. 60.00 lacs. The assessee has calculated capital gain on sale of this building as under:-
Sales Consideration Rs. 60,00,000/-
Less:- Transfer expenses Rs. 2,69,675/-
Value to previous owner
F.Y. 1981-82 Rs. 1,92,282/100*582 Rs. 11,19,081/-
Improvement cost
F.Y.- 2000-01 Rs. 3,00,000/406*582 Rs. 4,30,049/-
F.Y.- 2004-05 Rs. 1,30,000/480*582 Rs. 1,57,625/-
Rs. 17,06,755/-
Rs. 40,23,570/-
Deduction U/s 54 Rs. 36,63,980/-
Long Term Capital Gain Rs. 3,59,590/-
The ld Assessing Officer asked to furnish the evidences of improvement made in the property for Rs. 3.00 lacs during the F.Y. 2000-01 and Rs. 1,30,000/- during the F.Y. 2004-05. The assessee submitted before the Assessing Officer that this improvement was carried out by mother in law from whom she inherited the property. The assessee does not have any proof for improvement made in the property sold. The property was received by her through Will executed by her mother in law on 03/2/2004, which came into force on 15/12/2005 at the time of death of executor. After considering the assessee's reply, the ld Assessing Officer held that 4 ITA No. 847/JP/2012 Sunita Jain Vs ITO valuation report dated 09/9/2008 obtained from Shri O.P. Agarwal, Chartered Civil Engineer, Govt. Approved Valuer, who had valued the cost of portion of the assessee at Rs. 1,92,828/- but nothing was mentioned about any further construction on this building. The report showed that the valuer had personally visited the premises on 07/9/2008 but he had not mentioned anything about further addition after 01/4/1981. Obviously, no further construction was undertaken by the previous owner during the F.Y. 2000-01 and 2004-05. He further held that the Sub-Registrar had valued the property for the purposes of stamp duty at Rs. 1,55,52,000/- whereas the assessee had disclosed sale valued at Rs. 1.20 crores and her share was declared at Rs. 60.00 lacs instead of 77,76,000/- as per Section 50C of the Act. Therefore the ld Assessing Officer gave reasonable opportunity of being heard on this issue. It was submitted before the Assessing Officer that the Sub-Registrar had taken higher value which is not acceptable. She further requested to refer this matter for valuation. Accordingly, he referred the matter to DVO, Agra, who valued the property of assessee's share at Rs. 62,63,250/-. Further the matter was also referred for ascertaining the fair market value (in short the FMV) as on 01/4/1981, which was claimed by the assessee at Rs. 1,92,282/-. Whereas the DVO had valued FMV as on 01/4/1981 at Rs. 1,28,700/-. No 5 ITA No. 847/JP/2012 Sunita Jain Vs ITO further construction was reported by the assessee's valuer or by the departmental valuer. After getting the DVO's report, the ld Assessing Officer again gave the reasonable opportunity of being heard to the assessee. The show cause letter has been reproduced by the Assessing Officer on page No. 3 and 4 of the assessment order. Before the ld Assessing Officer, the assessee submitted that the FMV valued by the DVO is based on estimation and difference between the sale consideration shown by the assessee and value determined by the DVO is less than 5%, therefore, it could be ignored because the DVO estimated the FMV. The assessee also challenged the FMV taken by the Assessing Officer from the DVO as on 01/4/1981. The assessee also submitted that indexation is required to be given from 1981 not from F.Y. 2005-06 on cost of improvement as well as FMV as on 01/4/1981. After considering the assessee's reply, the ld Assessing Officer held that the assessee requested to refer the matter to the DVO U/s 50C(2) of the Act. As per this Section, consideration is to be taken as per stamp value had taken for the purpose of registration. There is two valuation held from registered valuer given by the assessee and another DVO taken by the Assessing Officer as on 01/4/1981. The ld Assessing Officer decided to take DVO's FMV as on 01/4/1981 authentic than registered valuer. He further relied on the 6 ITA No. 847/JP/2012 Sunita Jain Vs ITO decision in the case of Namita Sarkar Vs CIT (2005) 275 ITR 590 (Cal) wherein it has been held that for computation of capital gave, the report of the valuer was not conclusive, Income tax authorities can reject report and get property valued or value it. He has not given indexation from F.Y. 1981. After considering the various decisions cited by the assessee before him and allowed indexation from F.Y. 2005-06 when he assessee became the owner for the first time. He also rejected the assessee's claim of additional improvement made on the property and indexation claimed on it. He further allowed the deduction U/s 54 on one flat by considering the various decisions on this issue. The case laws cited by the assessee are as under:-
(i) ITO Vs Sushila M. Jhaveri (ITAT, Mumbai-Special Bench) 107 ITD 327.
(ii) Cit Vs D.Ananda Basappa 2009 TMI 32481 (2009) 309 ITR 329 (Karn).
(iii) K.C. Kaushik Vs. P.B. Rane, ITO (1990) 185 ITR 499 (Bom) Therefore, he allowed the deduction U/s 54 of the Act at Rs. 17,45,980/-. Finally calculated the capital gain at Rs. 40,93,484/-.
3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had dismissed the appeal of the assessee by observing that the reference made to DVO U/s 50C(2) is 7 ITA No. 847/JP/2012 Sunita Jain Vs ITO not discretionary but mandatory for which reliance is placed on the decision of Hon'ble Jodhpur Bench of ITAT in the case of Meghraj Baid Vs ITO (114 TTJ 841). In the instant case, the appellant had made request to the Assessing Officer to make reference to the DVO, which is held as per law by the ld CIT(A). The assessee's argument before him that provisions of Section 50C will not apply where the assessee had claimed exemption U/s 54F or 54EC since she could have never envisaged that his sale consideration would be enhanced from Rs. 60.00 lacs to Rs. 62,63,250/- by relying on the various decisions of the Hon'ble ITAT. However, the ld CIT(A) found favourable decision of Hon'ble Mumbai High Court in the case of Bhatia Nagar Premises Cooperative Society Ltd. Vs Union of India (2010-TIOL-600-HC-Mumbai). Therefore, he taken sale value of consideration for computing of capital gain at Rs. 62,63,250/- in place of Rs. 60.00 lacs. He further had not allowed the deduction U/s 54F on two flats purchased by the assessee bearing No B-6/355, Chitrakoot Nagar, Jaipur purchased on 16/02/2009 and flat No. D-6/303, Chitrakoot Nagar, Jaipur purchased on 27/4/2009 which were located very near to each other by considering the favourable decision on this issue by the various Hon'ble High Courts as well as ITAT. He has considered the Hon'ble Punjab & Haryana High Court decision in the case of Pawan Arya Vs CIT 8 ITA No. 847/JP/2012 Sunita Jain Vs ITO 49 DTR 123, decision of Hon'ble Karnataka High Court in the case of CIT Vs Smt. K.G. Rukminiamma 331 ITR 211 and decision of Hon'ble Pune Bench in the case of Gopal D. Shetty Vs ITO 298 ITR AT 049. The case laws referred by the assessee were found distinguishable on facts and circumstances of the case. In this case, two houses were combined together to make one habitable unit whereas in the present case, two residential houses were in B-Block and D-Block in Vaishali Nagar. These two residential houses were separate and could not be combined to make one habitable unit. Therefore, he dismissed the assessee's appeal on this ground.
4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that it has been held by the ld CIT(A) that the assessee has taken FMV as on 01/4/1981 at Rs. 1,92,282/- whereas as per DVO's report, it was Rs. 1,28,700/-. Reference made by the Assessing Officer to DVO to department the FMV value as on 01/4/1981 was not found him justifiable. He further relied on the decision of Hon'ble Calcutta High Court in the case of Namita Sarkar Vs CIT (supra). The DVO at the time of inspection of property on 30/10/2011 had noticed that building had been demolished. Therefore, he also did not comment about further improvement to the impugned property. However, he had determined 9 ITA No. 847/JP/2012 Sunita Jain Vs ITO FMV of the structure at Rs. 1,28,700/-. Even the bills and details of payments are also not available with her. In absence of any evidence for the cost of improvement Rs. 4,30,000/-, he had not allowed indexation on it. However, he has allowed the indexation from F.Y. 1981-82 by following the various decisions quoted on page no. 11 of the order. He has further argued that the assessee had inherited this property from his mother in law through Will which was finally executed on 3/2/2004 which came into force on 15/12/2005 at the time of death of executor. The assessee has taken value from the registered valuer who had given value as on 01/4/1981 at Rs. 1,92,828/-. Thereafter incurred improvement expenditure in F.Y. 2000-01 for Rs. 3.00 lacs and in F.Y. 2004-05 at Rs. 1.30 lacs. It is fact that the assessee does not have any evidence for improvement cost as was done by his mother in law, therefore indexation on improvement cost is to be allowable as per law. Further it is also contended that the ld CIT(A) upheld the FMV value taken on the basis of DVO's report as on 01/4/1981 at Rs. 1,28,000/-, which is not as per law. The ld Assessing Officer cannot refer to the DVO for valuation as on 01/4/1981 U/s 50C(2) of the Act. It is further argued that for claim of deduction U/s 50C, the sale consideration shown by the assessee is to be considered while computing the capital gain as held by the various Hon'ble 10 ITA No. 847/JP/2012 Sunita Jain Vs ITO ITATs as well as Hon'ble High Courts. It is further argued that the assessee is also entitled for deduction U/s 54F of the Act on two flats. However, the ld CIT(A) even considering the various decisions in favour of the assessee had allowed the deduction under this Section on one flat. He has referred the various decisions on this issue i.e. CIT Vs K.G. Rukminianna (2011) 331 ITR 211 wherein it has been held that a residential house is used in Section 54 does not convey the meaning of a single residential house. The singular, a residential house, also permits use of plural by virtue of section 13(2) of the General Clauses Act. Therefore, deduction U/s 54 can be allowed to more than one residential property. He further relied on the decision of Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. Vs CIT 196 ITR 188 wherein it has been held that interpretation of Section 54 is to be made literally to allow deduction on more than one residential unit. He further relied on the following case laws:-
(i) CIT Vs Gita Duggal (Del) 30 Taxmann.com 320 (Del)
(ii) CIT Vs Sunita Agarwal 284 ITR 20 (Del)
(iii) Anand Basappa, 309 ITR 329 (Kar.)
(iv) CIT-II, Hyderabad Vs Syed Ali Adil 33 Taxmann.com 212 (AP).
(v) CIT Vs Jyothi K Mehta (2011) 201 Taxmann 79. 11 ITA No. 847/JP/2012 Sunita Jain Vs ITO
The case laws referred by the Assessing Officer as well as ld CIT(A) are distinguishable. It is settled law that if there are more than one views on the issue, then favourable view will be taken to the assessee as held by the Hon'ble Supreme Court in the case of CIT Vs Vegetable Products Ltd.
(1973) 88 ITR 192 (SC), which has been confirmed by the Hon'ble Supreme Court in the case of CIT Vs Vatika Township Pvt. Ltd. (2014) 367 ITR 466 (SC). He further argued that in Section 55A, no reference can be made for A.Y. 2009-10 to determine the FMV as on 01/4/1981 as this reference can be made if the assessee has shown value less than FMV.
The assessee has shown more value as on 01/4/1981, therefore, no reference can be made to the DVO for FMV as on 01/4/1981. It is clarified by amending Section by the Finance Act, 2012 w.e.f. 01/7/2012 and this Sub-section (a) of Section 55A has been substituted as under:-
"If the A.O. is of the opinion that the value so claimed is at variance with its fair market value."
Therefore, the same is applicable from 01/7/2012. Accordingly, he prayed to accept the assessee's FMV taken on the basis of registered valuer.
5. At the outset, the ld DR has vehemently supported the order of the ld CIT(A).
12 ITA No. 847/JP/2012
Sunita Jain Vs ITO
6. We have heard the rival contentions of both the parties and perused the material available on the record. It is undisputed fact that the assessee inherited the property from his mother in law and has 50% share in it, which has been sold during the year under consideration at Rs. 1.20 crores. The assessee's share was Rs. 60.00 lacs, which has been disclosed. The assessee had computed the capital gain by considering the FMV as on 01/4/1981 at Rs. 1,92,282/-. However, the ld. Assessing Officer had taken value at Rs. 1,28,700/- on the basis of DVO's valuation. It is settled law that the Assessing Officer cannot refer this issue U/s 55A to the DVO as the assessee has shown FMV as on 01/4/1981 at Rs. 1,92,282, which is more than FMV decided by the DVO at Rs. 1,28,700/-. Sub-section (a) of Section 55A of the Act had been amended by the Finance Act, 2012 w.e.f. 01/7/2012 and variance word inserted in this sub-section. Therefore, the ld Assessing Officer is directed to allow the indexation for the F.Y. 1981-82 on Rs. 1,92,282/-. Further the assessee had claimed improvement cost in F.Y. 2000-01 at Rs. 3.00 lacs and in F.Y. 2004-05 at Rs. 1,30,000/- in which indexation has been claimed by the assessee but the assessee had not produced any evidence before the lower authority to demonstrate that his mother in law had incurred any cost on improvement. Even registered valuer of the assessee and DVO of 13 ITA No. 847/JP/2012 Sunita Jain Vs ITO the department has not referred any improvement in the valuation report, therefore, we dismiss the assessee's appeal on indexation claimed in F.Y. 2000-01 and 2004-05.
6.1 The assessee had claimed deduction U/s 54F of the Act on two flats situated at B-6/355, Chitrakoot Nagar, Jaipur and D-6/303, Chitrakoot Nagar, Jaipur. This issue has been considered by the various courts and in number of cases that this deduction is allowable on even two flats, which can be a complete unit or even can be on different floors of the apartment. Accordingly we allow the deduction U/s 54F of the Act on two flats. Further the ld Assessing Officer had taken full value of consideration on the basis of DVO's report U/s 50C at Rs. 62,63,250/- as argued by the ld AR that the Hon'ble Jaipur Bench of ITAT in the case of Nand Lal Sharma Vs. ITO in ITA No. 413/JP/2012 order dated 15/05/2015 has held that while computing the exemption U/s 54 actual sale consideration is to be taken and not as per stamp duty valuation U/s 50C. He also placed reliance of various decisions. Therefore, we have also considered view that for deduction U/s 54, the sale consideration is to be taken on the basis of actual sale consideration received by the assessee not determined by the stamp authority for the registration purposes or determined by the 14 ITA No. 847/JP/2012 Sunita Jain Vs ITO DVO referred U/s 50C of the Act. Accordingly, we partly allow the assessee's appeal as observed above.
7. In the result, appeal of assessee is partly allowed.
Order pronounced in the open court on 30/05/2016.
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(Kul Bharat) (T.R. Meena)
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Tk;iqj@Jaipur
fnukad@Dated:- 30th May, 2016
Ranjan*
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Smt. Sunita Jain, Vaishali Nagar, Jaipur.
2. izR;FkhZ@ The Respondent- The ITO, Ward 6(1), Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 847/JP/2012) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar