HARSHAND P. SHAH, MUMBAI v. ITO 16(1)(1), MUMBAI

ITA 1714/MUM/2010 | 2005-2006
Pronouncement Date: 15-07-2011 | Result: Allowed

Appeal Details

RSA Number 171419914 RSA 2010
Assessee PAN AAHPS4940E
Bench Mumbai
Appeal Number ITA 1714/MUM/2010
Duration Of Justice 1 year(s) 4 month(s) 11 day(s)
Appellant HARSHAND P. SHAH, MUMBAI
Respondent ITO 16(1)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 15-07-2011
Date Of Final Hearing 04-07-2011
Next Hearing Date 04-07-2011
Assessment Year 2005-2006
Appeal Filed On 05-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.1714/MUM/2010 (ASSESSMENT YEAR: 2005-06) HARSHAD P. SHAH 11 LEJARDIN KASHIBAI NAVRANGE MARG GAMDEVI MUMBAI -400 007 ....... APPELLANT VS INCOME TAX OFFICER WARD -16(2) (2) MATRU MANDIR TARDEO MUMBAI ..... RESPONDENT PAN: AAHPS 4940 E APPELLANT BY: SHRI REEPAL G. TRALSHAWALA RESPONDENT BY: SHRI GOLI SRINIWAS RAO O R D E R PER R.S. PADVEKAR JM: IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-27 MUMBAI DATED 8.01.2010 FOR T HE A.Y. 2005-06. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROU NDS:- I. THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF A.O. IN TAKING VALUATION OF STAMP DUTY AUTHORITIES OF SION PROPERTY AS SALE CONSIDERATION WITHOUT REFERRING THE VALUATI ON TO THE DEPARTMENTAL VALUATION OFFICER AS REQUIRED U/S.50C OF THE ACT. II. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACT ION OF A.O. IN MAKING REFERENCE U/S.55 OF THE ACT TO THE VALUATION OFFICER ITA 1714/MUM/2010 HARSHAD P. SHAH 2 FOR ASCERTAINING THE VALUE FOR 01/04/1981 WHICH WAS SUPPORTED BY VALUATION REPORT OF THE ARCHITECT / RE GISTERED VALUER AS REFERRED TO IN PARA 4 OF THE ORDER. 2. BRIEFLY STATED THE FACTS ARE AS UNDER. THE ASS ESSEE WAS A CO- OWNER OF THE PROPERTY BEARING PLOT NO.10B(E) OF SIO N-MATUNGA ESTATE MUMBAI. THE SAID PROPERTY WAS SOLD ON 22.06..2004 FOR A CONSIDERATION OF ` 4 29 00 000/- FOR THE PURPOSE OF THE PAYMENT OF TH E STAMP DUTY THE MARKET HAS ADOPTED AT ` 4 94 61 000/- AND THE ASSESSEE PAID THE STAMP DUTY ON THE SAID MARKET VAL UE AND MARKET VALUE DETERMINED FOR THE PURPOSE OF STAMP DUTY WAS NOT DISPUTED. THE A.O. THEREFORE ADOPTED THE FAIR MARKET VALUE DETERMINED BY THE STAMP AUTHORITIES AS FULL VALUE OF THE CONSIDERATIO N U/S.50C OF THE ACT. AS A PROPERTY WAS ACQUIRED PRIOR TO 1.4.1981 THE ASSESSEE FILED VALUATION REPORT OF THE SAID PROPERTY AS ON 1.4.198 1 FROM M/S. H. GANJAWALA & CO. WHICH WAS APPROVED REGISTERED VALU ER. AS PER THE VALUATION REPORT FILED BY THE ASSESSEE THE MARKET VALUE OF THE SAID PROPERTY AS ON 1.4.1981 WAS SHOWN AT ` 43 10 000/- AND INDEX COST OF ACQUISITION WAS WORKED OUT AT ` 2 06 88 000/-. THE A.O. REFERRED THE MATTER TO THE DISTRICT VALUATION OFFICER-(I) MUMBA I (D.V.O.) AS PER PROVISIONS OF SECTION 55(2)(I) OF THE ACT FOR DETER MINING THE CORRECT FAIR MARKET VALUE AS ON 1.4.1981 AS IN THE OPINION OF TH E A.O. THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 DETERMI NED BY THE ASSESSEES VALUER WAS AT A HIGHER SIDE. THE A.O. THEREFORE WORKED OUT THE CAPITAL GAIN SUBSTITUTING THE SALE CONSIDER ATION SHOWN BY THE ASSESSEE WITH THAT OF THE MARKET VALUE DETERMINED F OR THE PURPOSE OF PAYMENT OF THE STAMP DUTY U/S.50C AND ALSO ACCEPTED THE FAIR MARKET VALUE OF THE SAID PROPERTY AS ON 1.4.1981 HAS DETER MINED BY THE ASSESSEES REGISTERED VALUER AS THE VALUATION REPOR T FROM THE DEPARTMENTAL VALUER COULD NOT REACH BEFORE THE A.O. AT THE TIME OF PASSING THE ASSESSMENT ORDER. IT APPEARS THAT SUB SEQUENTLY DVO MUMBAI DETERMINED THE FAIR MARKET VALUE OF THE SAID PROPERTY AS ON 1.4.1981 STOOD AT ` 29.62 LAKHS AS AGAINST ` 43.10 LAKHS. THE A.O. ITA 1714/MUM/2010 HARSHAD P. SHAH 3 THEREFORE RECTIFIED THE SAID ORDER U/S.154 OF THE ACT. THE ASSESSEE CHALLENGED THE CAPITAL GAIN WORKED OUT BY THE A.O. BEFORE THE LD. CIT (A) BUT WITHOUT SUCCESS. NOW THE ASSESSEE IS IN AP PEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD S. THE LD. COUNSEL SUBMITS THAT IN RESPECT OF THE OTHER CO-OWN ER THE MATTER HAS REACHED BEFORE THE TRIBUNAL AND BOTH THE GROUNDS TA KEN IN THIS APPEAL ARE IDENTICAL AS THOSE TAKEN IN THE CASE OF THE OTH ER CO-OWNER I.E. MRS. ASHA BHARAT SHAH. THE LD. COUNSEL ALSO FILED A COP Y OF THE TRIBUNAL ORDER IN THE CASE OF MRS. ASHA BHARAT SHAH VS. ITO IN ITA NO.1716/M/2010 DATED 15.02.2011 AND SUBMITTED THAT THE A.O. MAY BE DIRECTED TO REFER THE MATTER OF VALUATION FOR DE TERMINING THE FAIR MARKET VALUE ON DATE OF THE SALE TO THE DVO AS PER PROVISIONS OF SUB- SECTION (2) TO SECTION 50C. HE FURTHER SUBMITS TH AT THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 DETERMINED BY THE ASSESESES VALUER IS MORE THAN THE DETERMINED BY THE DVO. THE A.O. MAY BE DIRECTED TO ADOPT THE FAIR MARKET VALUE DECLARED BY THE ASSESSEE AS PER HIS VALUATION REPORT. WE HAVE ALSO HEARD THE LD. D .R. 4. WE FIND THAT IN THE CASE OF OTHER CO-OWNER I.E. MRS. ASHA BHARAT SHAH ON IDENTICAL SET OF FACTS AS WELL AS THE GROU NDS THE TRIBUNAL HAS HELD AS UNDER:- 3. SECTION 50C IS A DEEMING PROVISION AND IT IS APPLICABLE IN RESPECT OF TRANSFER OF THE LAND OR BU ILDING OR BOTH BY THE ASSESSEE. IT PROVIDES THAT IN CASE OF TRANSFER OF A LAND OR A BUILDING IF THE VALUATION MADE FOR THE PURPOSE OF THE PAYMENT OF THE STAMP-DUTY BY THE STATE REGISTRA TION AUTHORITY IS MORE THAN THE SALE CONSIDERATION DECLA RED BY THE ASSESSEE IN THE CONVEYANCE THEN THE SAID VALUE WILL BE ADOPTED AS A CONSIDERATION FOR COMPUTATION OF THE CAPITAL GAIN U/S.48 OF THE ACT. SUB-SECTION (2) PROVIDES T HAT IF THE ASSESSEE CLAIMS BEFORE THE A.O. THAT THE VALUE ADOP TED BY ITA 1714/MUM/2010 HARSHAD P. SHAH 4 THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARK ET VALUE OF THE PROPERTY AS ON THE DATE OF THE TRANSFE R WHICH HAS NOT BEEN DISPUTED BY THE ASSESSEE IN ANY LEGAL PROCEEDINGS THEN THE A.O. MAY REFER THE CASE TO THE VALUATION OFFICER AS PER THE PROVISIONS OF THE WEA LTH-TAX ACT 1957. THE LD. CIT (A) DECLINED TO ENTERTAIN T HE PLEA OF THE ASSESSEE FOR REFERRING THE MATTER TO THE DVO BY HOLDING THAT THE WORD MAY IS USED BY THE LEGISLATURE AND IT IS DISCRETION OF THE A.O. TO REFER OR NOT TO REFER. I N THE CASE OF MEGHRAJ BAID (SUPRA) IT IS HELD THAT THE WORD MAY USED IN SUB-SEC. (2) TO SEC. 50C SIGNIFIES THAT IN CASE THE A.O. IS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THEN HE SHOULD REFER THE MATTER TO THE DVO FOR THE VALUATIO N. WE THEREFORE FOLLOWING THE DECISION OF THE TRIBUNAL I N MEGHRAJ BAID (SUPRA) ALLOW GROUND NO.1 TAKEN BY THE ASSESSE E AND DIRECT THE A.O. TO REFER THE MATTER TO THE DISTRICT VALUATION OFFICER FOR DETERMINING THE FAIR MARKET VALUE AS PE R PROVISIONS OF SUB-SEC. (2) OF SECTION 50C. ACCORDI NGLY GROUND NO.1 IS ALLOWED. 4. GROUND NO.2 READS AS UNDER:- 2. LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF T HE A.O. IN MAKING REFERENCE U/S.55 OF THE ACT TO THE VALUAT ION OFFICER FOR ASCERTAINING THE VALUE OF 01/04/1981 WH ICH WAS SUPPORTED BY VALUATION REPORT OF THE ARCHITECT / RE GISTERED VALUER AS REFERRED TO IN PARA 4 OF THE ORDER. 5. WE HAVE HEARD THE PARTIES. AS THE SAID PROPERTY WAS PURCHASED PRIOR TO 1.4.1981 THE ASSESSEE ADOPT ED FAIR MARKET VALUE OF THE PLOT FOR THE PURPOSE OF TH E INDEX COST OF THE ACQUISITION (ICA). THE ASSESSEE FILED THE VALUATION REPORT OF THE REGISTERED VALUER AND AS PE R THE VALUATION MADE BY THE REGISTERED VALUER THE FAIR MA RKET ITA 1714/MUM/2010 HARSHAD P. SHAH 5 VALUE OF THE SAID PROPERTY AS ON 1.4.1981 AT ` 43 1 0 100/- AND INDEX COST WAS WORKED OUT AT ` 2 06 88 000/-. THE A.O. MADE A REFERENCE TO THE DISTRICT VALUATION OFF ICER I MUMBAI U/S. 55A OF THE ACT. IT APPEARS THAT AS THE VALUATION REPORT WAS NOT RECEIVED FROM THE DVO AND ASSESSMENT WAS GETTING TIME BARRED THE A.O. COMPLE TED THE ASSESSMENT SUBJECT TO THE FURTHER RECTIFICATION . NOW THE ASSESSEE HAS CHALLENGED THE ACTION OF THE A.O. FOR REFERRING THE MATTER TO THE VALUATION. 6. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL SUBMITTED THAT THE DVO HAS DETERMINED THE FAIR MARK ET VALUE OF THE PROPERTY AS ON 1.4.1981 AT ` 29.62 LAK HS AS AGAINST THE VALUE DECLARED BY THE ASSESSEE AT ` 43. 10 LAKHS. IT IS ARGUED THAT NO REFERENCE CAN BE MADE BY THE DVO FOR DETERMINING THE LESSER FAIR MARKET VALUE AN D THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY T HE DECISION OF THE ITAT MUMBAI IN THE CASE OF SMT. SAR ALA N. SAKRANEY VS. ITO 46 DTR (MUM)(TRIB) 208. HE THERE FORE PLEADED THAT THE A.O. MAY BE DIRECTED TO ADOPT THE FAIR MARKET VALUE AS PER VALUATION MADE BY ASSESSEES VA LUER. WE HAVE ALSO HEARD THE LD. D.R. 7. AFTER ELABORATELY DISCUSSING THE PROVISIONS OF S ECTION 55A AND RELYING ON THE DECISION IN THE CASE OF CIT VS. DAULAL MOHTA (HUF)1031 OF 2008 JUDGMENT DATED 22ND SEPTEMBER 2008 AND HELD AS UNDER:- 14. IN VIEW OF THE AFORESAID DECISIONS WE ARE OF THE VIEW THAT REFERENCE BY THE AO TO THE DVO UNDER S.55A FOR VALUATION OF FAIR MARKET VALUE OF THE PROPERTY AS O N 1ST APRIL 1981 IS NOT VALID FOR THE REASON THAT FAIR M ARKET VALUE DECLARED BY THE ASSESSEE AS PER GOVERNMENT REGISTER ED VALUERS REPORT WAS MORE THAN THE FAIR MARKET VALUE AS ESTIMATED BY THE DVO. SINCE DETERMINATION OF THE F AIR MARKET VALUE AS ON 1ST APRIL 1981 WAS BASED ON THE REPORT ITA 1714/MUM/2010 HARSHAD P. SHAH 6 OF THE DVO THE SAME IS HELD TO BE INVALID. CONSEQ UENTLY ESTIMATION OF THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1ST APRIL 1981 AS MADE BY THE ASSESSEE IS DIRECTED TO BE ACCEPTED. GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 8. IN THE PRESENT CASE THE FAIR MARKET VALUE DECLA RED BY THE ASSESSEE AS ON 1.4.1981 IS MORE THAN THE FAI R MARKET VALUE DETERMINED BY THE DVO HENCE THE ASSES SEES CASE IS SQUARELY COVERED BY THE DECISION OF THE ITA T MUMBAI IN THE CASE OF SMT. SARALA N. SAKRANEY (SUPR A) AND ACCORDINGLY GROUND NO.2 IS ALLOWED AND THE A.O. IS DIRECTED TO ADOPT THE FAIR MARKET VALUE DECLARED BY THE ASSE SSEE AS PER THE VALUATION REPORT AS ON 1.4.1981. 5. IN RESPECT OF THE GROUND NO.1 WE DIRECT THE A.O. TO REFER THE MATTER TO THE DVO FOLLOWING THE DIRECTIONS IN THE LIGHT OF OUR DIRECTIONS AND FINDINGS IN THE CASE OF CO-OWNERS MR S. ASHA BHARAT SHAH AND OTHERS. ACCORDINGLY GROUND NO.1 IS ALLOW ED. 6. SO FAR AS GROUND NO.2 IS CONCERNED FOLLOWING TH E FINDINGS OF THE TRIBUNAL IN THE CASE OF OTHER CO-OWNER MRS. ASHA BH ARAT SHAH WE DIRECT THE A.O. TO ADOPT THE FAIR MARKET VALUE OF T HE PROPERTY AS ON 1.4.1981 AS DECLARED BY THE ASSESSEE AS PER THE VAL UATION REPORT. 7. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 5TH JULY 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE: 15TH JULY 2011 COPY TO:- ITA 1714/MUM/2010 HARSHAD P. SHAH 7 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)27 MUMBAI. 4) THE CIT-CITY-XVI MUMBAI. 5) THE D.R. H BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 1714/MUM/2010 HARSHAD P. SHAH 8 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 05.07.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 06.07.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER