Income Tax Appellate Tribunal - Panji
Shri Dinesh Bhailalbhai Patel,, Anand vs The Dy.Cit, Intl. Taxn., Vadodara on 22 December, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "SMC" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
ITA No. 3650/Ahd/2015
(Assessment Year: 2012-13)
Shri Dinesh Bhailalbhai Patel
Haridas Ni Khadki, Motu Adadh
Anand - 388011 Gujarat Appellant
Vs.
The Dy. Commissioner of Income Tax,
International Taxation, Vadodara Respondent
PAN: ADOPP8844N
&
ITA No. 3651/Ahd/2015
(Assessment Year: 2012-13)
Shri Kamlesh Bhailalbhai Patel
Haridas Ni Khadki, Motu Adadh
Anand - 388011 Gujarat Appellant
Vs.
The Dy. Commissioner of Income Tax,
International Taxation, Vadodara Respondent
PAN: BLQPP5766A
&
ITA No. 3652/Ahd/2015
(Assessment Year: 2012-13)
Shri Jitendra Bhailalbhai Patel
Haridas Ni Khadki, Motu Adadh
Anand - 388011 Gujarat Appellant
ITA Nos. 3650 to 3652/Ahd/2015 (Dinesh B. Patel & 2 others) -2-
Vs.
The Dy. Commissioner of Income Tax,
International Taxation, Vadodara Respondent
PAN: ADUPP3148D
आवेदक क ओर से/By Assessee : Shri Mukund Bakshi, A.R.
राज व क ओर से/By Revenue : Shri Prasoon Kabra, Sr. D.R.
सन
ु वाई क तार ख/Date of Hearing : 28.11.2017
घोषणा क तार ख/Date of
Pronouncement : 22.12.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
These three assessees' appeals for assessment year 2012-13 arise against the CIT(A)-13, Ahmedabad's common order dated 26.10.2015 in case nos. CIT(A)- 13/Ahd/Int. Taxn./106/2014-15, CIT(A)-13/Ahd/Int.Taxn./107/2014-15 & CIT(A)- 13/Ahd/Int. Taxn./108/2014-15 upholding Assessing Officer's identical action inter alia disallowing Section 54EC deduction claim(s) of Rs.42lacs each as well as determining indexed cost of the capital asset in question by applying its market rate as on 01.04.1981 to be measuring 2996sq.mtrs. instead of total area of 3946 sq.mtrs.; respectively, in proceedings u/s. 143(3) of the Income Tax Act, 1961; in short "the Act".
Heard both the parties. Case file perused.
2. We come to the former issue of Section 54EC deduction disallowance of Rs.42lacs each in all these cases. There is no dispute that three assessees co-owned the capital asset in question in the nature of non-agricultural land in Revenue Survey No.549/1 TP Scheme No.7, Final Plot No.187 at Anand. They entered into a development agreement with Directors of M/s. Deveraj Infraspace Pvt. Ltd. on 07.02.2012 for consideration amount of Rs.4,28,42,800/- including advance money of Rs.1,70,00,000/-. These assessees handed over possession of the property as ITA Nos. 3650 to 3652/Ahd/2015 (Dinesh B. Patel & 2 others) -3- well to the said developer. The vendee in question thereafter paid the remaining consideration amount as well whose last installment came on 28.03.2013 as per the registered sale deed executed on 25.07.2013. These assessees therefore raised their 54EC deduction claim to the tune of Rs.34lacs as on 31.03.2012. There is no dispute that both the lower authorities accepted the same to be correct. The issue however arose between the parties qua the remaining re-investment of capital gains amounting to Rs.42lacs each in these three cases. Both the lower authorities are of the opinion that the said deduction claim happened to be made well beyond "six months from the date of transfer" of the capital asset in question coming to be the date of agreement itself i.e. 07.02.2012 as the assessees had very well handed over the capital asset to the vendee(s) in question. They therefore declined the impugned deduction in assessment as well as the lower appellate proceedings.
3. We have given our thoughtful consideration to rival contentions. Common case records comprising of development agreement dated 07.02.2012, sale deed dated 25.07.2013, Section 17(1A) of Registration Act, 1908, judicial precedents C. S. Atwal vs. CIT 378 ITR 244 (P&H), ACIT vs. Jawaharlal L. Agicha 75 taxmann.com 121 (Mum-trib), Lemes E. D'souza vs. ITO ITA No.5802/Mum/2013 dated 10.04.2017 and CIT vs. Subhash Vinayak Supnekar (2017) 77 taxmann.com 226 (Bombay) alongwith Board's CBDT circular nos. 359, 762, 794 dated 10.05.1983, 18.02.1998 & 09.08.2000 stand perused. Both the learned representatives reiterate their respective pleadings qua the issue in question as to whether it is the agreement dated 07.02.2012 or the last date of receiving the sale consideration in question which forms the relevant transfer for the purpose of computing six months time period for the purpose of reinvestment of the impugned capital gains. We find that a co-ordinate bench's decision hereinabove in Lemes E. D'Souza case has already settled this issue in assessee's favour in allowing the very deduction claim u/s.54EC of the Act made within six months of receiving last installments of the sale consideration in question. This is not the Revenue's case that there has been any inordinate delay on assessee's part in reinvesting the impugned capital gains in REC bonds in question. We therefore rely on above co- ordinate bench's decision to adopt a liberal interpretation of the impugned ITA Nos. 3650 to 3652/Ahd/2015 (Dinesh B. Patel & 2 others) -4- deduction provision in peculiar facts herein. The impugned disallowance of Rs.42lacs each in all three cases is directed to be deleted. This renders assessees' additional grounds raised in all these three appeals in assailing correctness of both the lower authorities' action in treating the above agreement dated 07.02.2012 as transfer u/s. 2(47) of the Act as infructuous. The first identical substantive ground in all these appeals is accepted.
4. We now advert to the latter common issue of area of the capital asset in question i.e. whether it is 2996 sq.mtrs. or 3946sq.mtrs. as on 01.04.1981. The CIT(A) discusses the instant issue as follows:
"8. With respect to Ground No. 3, the appellant has raised the ground as tinder:-
"3. The ld. DCIT while determining the indexed cost of land transferred has erred in applying the market rate of land as at 1.4.1981 to only 2996 square meters and not on the total land of 3946 which existed on 1.4.1981. The ld. DCIT while adopting the rate as per, the valuation report has conveniently disregarded the fact stated in the valuation report that the original land as it existed on the valuation date was 3946 meters which got reduced to 2996 meters on account of deductions due to implementation of Town Planning Scheme. The addition of Rs. 1,78,157 made on this account deserves to be deleted."
9. With respect of Ground No. 3, the A.O. has made certain factual observations in para-4.1, 4.2 and 4.3. For the sake of ready reference, the paras are reproduced herein as under:-
"4.1 It was noticed from the submission of the assessee that the assessee's share in the property sold was 20%. The total sale consideration, received was Rs.4,28,42,800/-. The total area of the property sold was 2996 sq. mtrs. In order, to ascertain the cost of acquisition, the assessee has relied on a valuation report prepared by a Govt. Registered Valuer. As per the valuation report, the total are of the skid property has been quoted as 3946 sq. mtrs. It is noted that as per the valuation report, the value per sq. rn.tr. of the said property has been ascertained as Rs.119 per sq. mtr. The total area has been taken as 3946 sq. mtrs. Hence, the total value o the property at 1982 prices has been ascertained as 3946 x 119 = Rs.4,69,574/-. Applying the cost inflation index, indexed cost of acquisition has been worked out at Rs.33,48,500/- (1/5th of which is Rs.7,37,900/-). Thus, there are two problems with the indexed cost of acquisition used by the assessee.
i) First, it is at variance with the valuation, worked out by the valuation officer.
ITA Nos. 3650 to 3652/Ahd/2015 (Dinesh B. Patel & 2 others) -5-
ii) Secondly, the valuation of Rs.4,69,574/- worked out by the valuation officer pertains to an area of 3946 sq. mtrs. of the said property as against 2996 sq. mtrs. Of the land actually sold by the assessee.
4.2 In relation to the first issue, it is noticed that the valuation officers has incorrectly taken the CII as 713 instead of 785 for F.Y. 2011-12. Once the correct CII is substituted, the value obtained tallies with the value used by the assessee.
4.3 However, on the second issue, it is seen that the land sold by the assessee is less than the land plot for which the valuation has been done. Applying the rate of Rs.l 19 per sq. mtr. to the area of 2996 sq. mtr of land sold, the value works out to Rs.3,56,524/-. Applying the CII for F.Y. 2011- 12 as 785, the Indexed Cost of Acquisition works out to Rs.27,98,713/-. I/5th of this amount works out to Rs. 5,59,743/-. Thus, total long Term Capital Gains of the assessee is worked out as follows:
Total sale consideration Rs.42842800/-
Total Indexed Cost of Acquisition Rs. 2798713/-
Total Long Term Capital Gains Rs.40044087/-
Share of assessee Rs. 8008817/-
20. The appellants with respect to this ground has submitted as under:-
[2] Indexed cost working: The assessee claimed indexed cost of acquisition of land on the basis of 3946 square meters of land as it existed on 01.04.1981 as per the revenue records. Due to Town Planning scheme the land area which was originally 3946 sq meters got reduced to 2996 square meters as a result of deductions to the land. The Ld. DCIT while determining the indexed cost of land applied the market rate of land as at 1.4.1981 to only 2996 square meters and not on the total land of 3946 which existed on 1.4.1981. The Ld. DCIT while adopting the area of 2996 sq meters on the basis of the valuation report .has not considered the fact that the cost to the assessee has to be allowed for the entire area of land before the Town Planning scheme deductions. The valuation report also clearly states that the original land as it existed on 01.04.1981 as per the revenue records was 3946 meters which got reduced to 2996 meters on account of deductions due to implementation of Town Planning Scheme.
The Ld DCIT should have considered this fact which is clearly mentioned in the valuation report.
In view of the above it is submitted that the disallowance of deduction U/s 54EC claimed for Rs.44,30,660/- and disallowance of indexed cost of acquisition of land Rs. 1,78,157 be deleted."
FINDING:-
21. I have perused the assessment order and the written submissions made in this regard. I am of the view that the action of the A.O. has brought out the correct factual position with respect to the area of the property as evident from ITA Nos. 3650 to 3652/Ahd/2015 (Dinesh B. Patel & 2 others) -6- the valuation report and with respect to sale deed comprehensively. The variation of valuation as worked out by the Valuation Officer and what is adopted by the appellant is quite evident. The Valuation Officer has taken an area of 3946 sq. mtrs. against the area of 2996 adopted by the appellant. I find that the contention of the appellant in this regard, without any basis or evidences, which can contravene the observations made by the A.O. The action of the A.O. on the basis of factual observations in making an addition of Rs.1,78,157/- is sustainable. The same is, therefore confirmed."
5. Learned counsel representing assessee fails to rebut correctness of the above extracted clinching conclusion that the Valuation Officer had rightly adopted the area in question to be 3946sq.mtrs. as on 01.04.1981 with the help of any relevant evidence in the paper book. We therefore decline this latter substantive ground in all three cases.
6. These three assessees' appeals are partly allowed.
[Pronounced in the open Court on this the 22nd day of December, 2017.] Sd/- Sd/-
(AMARJIT SINGH) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 22/12/2017
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 आयु!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 ।