SHAKUNTLA H. SHAH, MUMBAI v. ITO 16(1)(1), MUMBAI

ITA 1715/MUM/2010 | 2005-2006
Pronouncement Date: 28-02-2011 | Result: Allowed

Appeal Details

RSA Number 171519914 RSA 2010
Assessee PAN AAHPS4941F
Bench Mumbai
Appeal Number ITA 1715/MUM/2010
Duration Of Justice 11 month(s) 25 day(s)
Appellant SHAKUNTLA H. SHAH, MUMBAI
Respondent ITO 16(1)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 28-02-2011
Assessment Year 2005-2006
Appeal Filed On 05-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI J SUDHAKAR REDDY A.M. AND SHRI V. DURG A RAO J.M. ITA NO. 1715/MUM/2010 ASSESSMENT YEAR: 2005-06 SHAKUNTALA H. SHAH APPELLANT 11 LEJARDIN KASHIBAI NAVRANGE MARG GAMDEVI MUMBAI 400 007. (PAN AAHPS4941F) VS. INCOME TAX OFFICER-16(1)(1) RESPONDENT MATRU MANDIR TARDEO MUMBAI. APPELLANT BY : MR. REEPAL TRISHAWALA RESPONDENT BY : MR. JITENDRA YADAV . ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- 27 MUMBAI PASSED ON 08/01/2010 FOR THE AS SESSMENT YEAR 2005-06. 2. GROUND NO. 1 IS AS FOLLOWS:- THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF A O IN TAKING VALUATION OF STAMP DUTY AUTHORITIES OF SION PROPERT Y AS SALE CONSIDERATION WITHOUT REFERRING THE VALUATION THE D EPARTMENT VALUATION OFFICER AS REQUIRED U/S 50C OF THE ACT. 3. BRIEFLY THE FACTS RELATING TO THIS GROUND ARE TH AT THE ASSESSEE WAS A CO-OWNER OF A PROPERTY SITUATED AT PLOT NO. 1 05B(E) ON SION MATUNGA ESTATE MUMBAI. DURING THE FY 2004-05 THE PROPERTY WAS SOLD FOR A TOTAL CONSIDERATION OF RS. 4.21 CRORES A S PER DEVELOPMENT ITA NO. 1715/MUM/10 SHAKUNTALA H. SHAH 2 AGREEMENT DT. 22/06/04. THE ASSESSMENT HAD BEEN COM PLETED BY THE AO TAKING THE VALUE OF THE PROPERTY AT RS. 4.94 CRO RES AS DETERMINED BY THE STAMP DUTY AUTHORITIES AND CAPITAL GAIN OF T HE ASSESSEES SHARE HAD BEEN COMPUTED ACCORDING TO THAT VALUE. BEFORE T HE CIT(A) THE ASSESSEE CONTENDED THAT THE AO HAD ERRED IN TAKING THE VALUE OF THE PROPERTY AS COMPUTED BY THE STAMP DUTY AUTHORITIES RATHER THAN THE SALE CONSIDERATION SHOWN BY THE ASSESSEE. IT HAS BE EN ARGUED BY THE LEARNED AR OF THE ASSESSEE THAT THE ACTION OF THE A O TO TAKE THE CONSIDERATION FOR PURPOSE OF CALCULATION OF LONG TE RM CAPITAL GAIN AT RS. 4.94 CRORES WAS NOT CORRECT AS ACCORDING TO SEC . 50C OF THE ACT HE DID NOT REFER THE MATTER TO THE DVO DESPITE A SPECI FIC REQUEST BY THE ASSESSEE AND IT WAS MANDATORY FOR THE AO TO REFER T HE MATTER TO THE DVO. THE ASSESSEE RELIED UPON THE DECISION OF ITAT LUCKNOW BENCH IN THE AKG CONSULTANT PVT. LTD. AND THE DECISION OF JO DHPUR BENCH IN THE CASE OF MEGHRAJ BAID VS. ITO. IT WAS SUBMITTED THAT THE ASSESSEE COULD NOT GET MORE THAN THE AGREED PRICE FROM THE D EVELOPER AS THE PROPERTY WAS TENANTED AND IT HAD TO BE GOT VACATED AFTER SETTING DISPUTES WITH THE TENANTS AND THE SALE CONSIDERATIO N SHOULD BE TAKEN AS THE AMOUNT ACTUALLY RECEIVED. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE CIT(A)HELD THAT THE ASSESSEES CO NTENTION DOES NOT HAVE MUCH FORCE AND THE AO HAD RIGHTLY TAKEN THE VA LUE AS ADOPTED BY THE STAMP DUTY AUTHORITIES AS THE PROPERTY WAS PRIM E PROPERTY. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 4. BEFORE US THE LEARNED COUNSEL HAS CANVASSED THA T THE ISSUE IS COVERED BY THE DECISION OF ITAT MUMBAI BENCHES MU MBAI IN THE CASE OF MRS. ASHA BHARAT SHAH IN ITA NO. 1716/MUM/2010 F OR AY 2005-06 VIDE ORDER DATED 15 TH FEBRUARY 2011. 5. ON THE OTHER HAND THE LEARNED DR HAS RELIED UPO N THE ORDERS OF THE REVENUE AUTHORITIES. ITA NO. 1715/MUM/10 SHAKUNTALA H. SHAH 3 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE IS SUE IN DISPUTE IS COVERED BY THE DECISION OF THE ITAT MUMBAI BENCHES IN THE CASE OF MRS. ASHA BHARAT (SUPRA) WHEREIN THE ITAT HELD AS U NDER:- 3. SECTION 50C IS A DEEMING PROVISION AND IT IS APPLIC ABLE IN RESPECT OF TRANSFER OF THE LAND OR BUILDING OR BOTH BY THE ASESSSEE. IT PROVIDES THAT IN CASE OF TRANSFER OF A LAND OR A BUILDING IF THE VALUATION MADE FOR THE PURPOSE OF T HE PAYMENT OF THE STAMP DUTY BY THE STATE REGISTRATION AUTHORITY IS MORE THAN THE SALE CONSIDERATION DECLARED 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 THAT IF THE ASSESSEE CLAIMS BEFORE THE AO THAT THE VALUE ADOPTED BY THE STAMP VALUATIO N AUTHORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF THE TRANSFER WHICH HAS NOT BEEN DISPUTED BY THE ASS ESSEE IN ANY LEGAL PROCEEDINGS THEN THE AO MAY REFER THE CASE TO THE VALUATION OFFICER AS PER THE PROVISIONS OF THE WEALTH TAX AC T 1957. THE LD. CIT(A) DECLINED TO ENTERTAIN THE PLEA OF THE ASSESS EE FOR REFERRING THE MATTER TO THE DVO BY HOLDING THAT THE WORD MAY IS USED BY THE LEGISLATURE AND IT IS DISCRETION OF THE AO TO R EFER OR NOT TO REFER. IN THE CASE OF MEGHRAJ BAID 114 TTJ 814 (JD .) IT IS HELD THAT THE WORD MAY USED IN SUB-SEC. (2) TO SECTION 50C SIGNIFIES THAT IN CASE THE AO IS NOT SATISFIED WITH THE EXPLA NATION OF THE ASSESSEE THEN HE SHOULD REFER THE MATTER TO THE DVO FOR THE VALUATION. WE THEREFORE FOLLOWING THE DECISION OF THE TRIBUNAL IN MEGHRAJ BAID (SUPRA) ALLOW GROUND NO. 1 TAKEN BY TH E ASSESSEE AND DIRECT THE AO TO REFER THE MATTER TO THE DISTRI CT VALUATION OFFICER FOR DETERMINING THE FAIR MARKET VALUE AS PE R PROVISIONS OF SUB-SEC.(2) OF SECTION 50C. ACCORDINGLY GROUND NO. 1 IS ALLOWED. 7. SINCE THE ISSUE UNDER CONSIDERATION IS MATERIALL Y IDENTICAL TO THAT OF THE CASE DECIDED BY THE ITAT IN THE CASE OF MRS. ASHA BHARAT SHAH (SUPRA) WE RESPECTFULLY FOLLOW THE SAME AND I N THE LIGHT OF THAT WE REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO REFER THE MATTER TO THE DVO FOR DETERMINING THE FAIR MARK ET VALUE AS PER PROVISIONS OF SECTION 50C OF THE ACT. THUS THIS GR OUND IS ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO. 2 READS AS UNDER:- THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION O F THE AO IN MAKING REFERENCE U/S 55 OF THE ACT TO THE VALUATION OFFICER FOR ASCERTAINING THE VALUE FOR 01/04/1981 WHICH WAS SUP PORTED BY ITA NO. 1715/MUM/10 SHAKUNTALA H. SHAH 4 VALUATION REPORT OF THE ARCHITECT/REGISTERED VALUER AS REFERRED TO IN PARA 4 OF THE ORDER. 9. THE ASSESSEE HAD TAKEN VALUE OF THE PROPERTY AT RS. 43 10 000/- AS ON 01/04/1981 AND TOOK THE INDEXED COST ON DATE OF TRANSFER AT RS. 2 06 68 000/-. THE AO REFERRED THE MATTER U/S 55(2) (1) OF THE ACT. BEFORE THE CIT(A) IT HAD BEEN STATED BY THE ASSESS EE THAT THIS ACTION OF THE AO WAS WITHOUT ANY APPLICATION OF MIND WHEN THE ASSESSEE HAS FILED A REPORT OF THE APPROVED VALUER AND THE VALUE TAKEN BY THE AO WAS AS PER THE VALUATION REPORT FILED BY THE ASSESS EE AS PER THE APPROVED VALUER THE CIT(A) HELD THAT REFERRING THE MATTER TO THE DVO APPEARS TO BE CORRECT AS IT IS SEEN FROM THE REPORT OF THE DVO THAT THE APPROVED VALUER HAD GIVEN THE VALUE AS ON 01/04/198 1 AT RS. 43.10 WITHOUT ANY BASIS WHICH THE AO FELT THAT THE ASSESS EE HAD TAKEN LOW VALUE FOR INDEXATION PURPOSES TO LOWER THE CAPITAL GAIN TAXABLE. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 10. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF THE ITAT MUMBAI BENCHES IN THE CASE OF MRS. ASHA BHARAT SHAH (SUPR A). 11. ON THE OTHER HAND THE LEARNED DR HAS RELIED UP ON THE ORDER OF THE REVENUE AUTHORITIES. 12. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND PERUSED THE RECORD. WE FIND THAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF THE ITAT IN THE CASE OF MRS. ASHA BHARA T SHAH (SUPRA) WHEREIN THE ITAT HELD AS UNDER:- 8. IN THE PRESENT CASE THE FAIR MARKET VALUE DECLA RED BY THE ASSESSEE AS ON 01/04/1981 IS MORE THAT THE FAIR MAR KET VALUE DETERMINED BY THE DVO HENCE THE ASSESSEES CASE I S SQUARELY COVERED BY THE DECISION OF THE ITAT MUMBAI IN THE C ASE OF SMT. SARALA N. SAKRANEY 46 DTR (MUM.)TRIB.) AND ACCORDI NGLY GROUND NO. 2 IS ALLOWED AND THE AO IS DIRECTED TO ADOPT TH E FAIR MARKET VALUE DECLARED BY THE ASSESSEE AS PER THE VALUATION REPORT AS ON 01/04/1981. ITA NO. 1715/MUM/10 SHAKUNTALA H. SHAH 5 13. SINCE THE ISSUE IS MATERIALLY IDENTICAL TO THAT OF THE CASE DECIDED BY THE ITAT IN MRS. ASHA BHARAT SHAH (SUPRA) WE RE SPECTFULLY FOLLOW THE SAME AND IN THE LIGHT OF THAT WE DIRECT THE AO TO ADOPT THE FAIR MARKET VALUE DECLARED BY THE ASSESSEE AS PER THE VA LUATION REPORT AS ON 01/04/1981. THUS THIS GROUND OF APPEAL OF THE A SSSSEE IS ALLOWED. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF FEBRUARY 2011. SD/- SD/- (J SUDHAKAR REDDY) (V. D URGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 28 TH FEBRUARY 2011. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE D BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV