ITO, CHENNAI v. Shri M.Venkatesan, CHENNAI

ITA 2055/CHNY/2008 | 2005-2006
Pronouncement Date: 22-07-2011 | Result: Allowed

Appeal Details

RSA Number 205521714 RSA 2008
Assessee PAN ADRPV6948G
Bench Chennai
Appeal Number ITA 2055/CHNY/2008
Duration Of Justice 2 year(s) 8 month(s) 16 day(s)
Appellant ITO, CHENNAI
Respondent Shri M.Venkatesan, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted C
Tribunal Order Date 22-07-2011
Date Of Final Hearing 14-07-2011
Next Hearing Date 14-07-2011
Assessment Year 2005-2006
Appeal Filed On 05-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI U.B.S. BEDI JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER) .. I.T.A. NO. 2055/MDS/2008 ASSESSMENT YEAR : 2005-06 THE INCOME TAX OFFICER BUSINESS WARD II(2) CHENNAI 600 034. (APPELLANT) V. SHRI M. VENKATESAN 111 DR. RADHAKRISHNAN SALAI MYLAPORE CHENNAI 600 004. PAN : ADRPV6948G (RESPONDENT) APPELLANT BY : DR. I. VIJAYAKUMAR CIT-DR RESPONDENT BY : SHRI G. BA SKAR ADVOCATE O R D E R PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER DATED 20 TH JUNE 2008 OF THE COMMISSIONER OF INCOME TAX (APPEA LS)-VI CHENNAI. TOTAL GROUNDS TAKEN BY THE REVENUE ARE FO UR. GROUND NOS.1 AND 5 ARE GENERAL NEEDING NO ADJUDICATION. I SSUE RAISED THROUGH GROUND NOS. 2 TO 4 IS REGARDING A CLAIM OF DEDUCTION UNDER SECTION 54 OF INCOME-TAX ACT 1961 (IN SHORT THE A CT) MADE BY THE I.T.A. NO. 2055/MDS/08 2 ASSESSEE DISALLOWED BY THE A.O. BUT ALLOWED BY TH E CIT(APPEALS). AS PER THE REVENUE THE NEW ASSET ON THE PURCHASE O F WHICH ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT WAS NOT A RESIDENTIAL PROPERTY AND THE ASSESSEE DID NOT FIL E ANY MATERIAL IN SUPPORT OF HIS CLAIM THAT WHAT WAS PURCHASED ORIGIN ALLY WAS A RESIDENTIAL PROPERTY. 2. ASSESSEE ALSO FILED AN APPLICATION UNDER RULE 27 OF APPELLATE TRIBUNAL RULES 1963 WHEREBY IT PLEADED THAT LD. CI T(APPEALS) HAVING NOT DEALT WITH ITS OBJECTION REGARDING ASSESSING OF FICER NOT FOLLOWING PROCEDURE LAID DOWN UNDER SECTION 50C(2) OF THE ACT THE MATTER HAS TO BE RESTORED BACK TO THE A.O. 3. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD SOLD A N IMMOVABLE PROPERTY AT DOOR NO.109 USMAN ROAD T. NAGAR CHEN NAI-17 ON 26.1.2005 FOR A CONSIDERATION OF ` 1.25 CRORES. ASSESSEE USING THE PROCEEDS PURCHASED A BUILDING NO.61 (NEW NO.111) DR. RADHAKRISHNAN SALAI MYLAPORE CHENNAI-4 ALONG WITH HIS SON SHRI M.V. JAYAPRAKASH. THE SAID ACQUISITION WAS FOR 50% UNDIVIDED SHARE OF TWO GROUNDS AND 1129 SQ. FT. CONSTRUCTED AREA TH EREON. IN HIS I.T.A. NO. 2055/MDS/08 3 RETURN OF INCOME ASSESSEE HAD WORKED OUT LONG TERM CAPITAL GAINS ON THE SALE OF THE PROPERTY AT ` 99 83 223/- AND CLAIMED EXEMPTION UNDER SECTION 54 OF THE ACT ON SUCH AMOUNT FOR THE PURCHA SE OF THE PROPERTY MADE BY HIM. ASSESSING OFFICER WAS OF THE OPINION THAT BENEFIT OF SECTION 54 COULD NOT BE GIVEN TO THE ASSESSEE SINCE ACCORDING TO HIM THE ASSET PURCHASED WAS NOT A RESIDENTIAL HOUS E BUT A COMMERCIAL COMPLEX. HE REACHED THIS CONCLUSION BAS ED ON THE PURCHASE DEED EXECUTED ON 21.2.2005 IN FAVOUR OF AS SESSEE. A.O. ALSO DEPUTED HIS INSPECTOR FOR MAKING AN INSPECTION OF THE ASSET PURCHASED BY THE ASSESSEE. THE INSPECTOR REPORTED THAT THE ASSET PURCHASED WAS A COMMERCIAL COMPLEX NAMED DEV REGEN CY AND THERE WAS NO KITCHEN WHATSOEVER AVAILABLE IN THE SA ID BUILDING PURCHASED BY THE ASSESSEE. THE INSPECTOR ALSO NOTE D THAT THE PREMISES WAS RENTED OUT BY THE ASSESSEE FOR COMMERC IAL PURPOSES AND ALSO USED COMMERCIALLY BY THE TENANTS FOR THEIR RESPECTIVE BUSINESS. IN SUPPORT OF THIS IT SEEMS STATEMENTS BASED ON QUESTIONNAIRE WERE ALSO OBTAINED FROM THE TENANTS. EXPLANATION OF THE ASSESSEE WAS THAT THE BUILDING WAS CONSTRUCTED AS RESIDENTIAL HOUSE ORIGINALLY WITH KITCHEN AND BED ROOMS BUT SINCE PROPERTY I.T.A. NO. 2055/MDS/08 4 COULD NOT BE PUT TO USE FOR RESIDENTIAL PURPOSES A SSESSEE GAVE IT ON RENT FOR BUSINESS PURPOSES TO THE TENANTS AND IT WA S FOR THIS REASON THAT THE KITCHENS WERE NOT UTILIZED FOR THE PURPOSE OF COOKING BUT CONVERTED AND USED FOR THE PURPOSE OF BUSINESS OF T HE TENANTS. NEVERTHELESS ASSESSING OFFICER WAS NOT IMPRESSED. ACCORDING TO HIM NOT ONLY WAS THE PURCHASED PROPERTY COMMERCIAL IN NATURE BUT THE PURCHASE WAS EFFECTED IN THE JOINT NAME OF THE ASSESSEE AND HIS SON. THEREFORE ASSESSING OFFICER CAME TO A CONCLU SION THAT EXEMPTION UNDER SECTION 54 OF THE ACT COULD NOT BE GIVEN TO THE ASSESSEE. A.O. ALSO PROPOSED TO SUBSTITUTE GUIDELI NE VALUE AS ON THE DATE OF SALE OF THE PROPERTY AT USMAN ROAD FOR FIX ING THE CONSIDERATION FOR THE TRANSFER AND WORKING OUT THE CAPITAL GAINS. THE VALUE OF THE LAND FIXED BY THE REGISTRATION DEPARTM ENT WAS ` 1 30 39 020/- AND THIS WAS CONSIDERED TO BE THE FUL L CONSIDERATION RECEIVED BY THE ASSESSEE ON THE TRANSFER. HE THER EFORE RECOMPUTED THE CAPITAL GAINS OF THE ASSESSEE TAKING FULL CONSI DERATION OF SALE OF THE PROPERTY EFFECTED BY ASSESSEE AT ` 1 39 83 020/- AND DENYING THE ASSESSEE EXEMPTION CLAIMED UNDER SECTION 54 OF THE ACT. I.T.A. NO. 2055/MDS/08 5 4. IN HIS APPEAL BEFORE LD. CIT(APPEALS) CONTENTIO N OF THE ASSESSEE WAS THAT THE PROPERTY PURCHASED ON WHICH E XEMPTION UNDER SECTION 54 OF THE ACT WAS DENIED WAS A RESIDENTIAL HOUSE AND IN SUPPORT A CERTIFICATE COPY OF THE PLAN APPROVAL R ECEIVED FROM CMDA WAS PRODUCED. AS PER THE ASSESSEE A KITCHEN WAS N OT PROVIDED SO AS TO CATER TO THE REQUIREMENT OF THE TENANTS. REL YING ON THE BOARDS CIRCULAR DATED 20.9.1973 IT WAS ARGUED BEFORE LD. CIT(APPEALS) THAT A RESIDENTIAL HOUSE THOUGH USED FOR COMMERCIAL PURPO SE THE BUILDING WOULD NOT LOOSE ITS CHARACTER OF RESIDENTIAL PROPER TY. VIS--VIS INCLUSION OF NAME OF THE ASSESSEES SON IN THE DOCU MENT EXPLANATION OF THE ASSESSEE WAS THAT WHAT WAS INVESTED WAS ONLY HIS CAPITAL GAINS AND THE NAME OF THE ASSESSEES SON WAS INCLUD ED FOR FAMILY SECURITY PURPOSES. AS PER THE ASSESSEE IN THE PUR CHASE DEED THE WORD COMMERCIAL COMPLEX WAS INADVERTENTLY USED. VIS--VIS COMPUTATION OF CAPITAL GAINS FOR PROPERTIES SOLD A RGUMENT OF THE ASSESSEE WAS THAT GUIDELINE VALUE OF THE SUB-REGIST RAR WOULD NOT REPRESENT THE MARKET VALUE OF THE PROPERTY AND RELI ANCE WAS PLACED ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COUR T IN THE CASE OF SMT. THULASIMANI AMMAL V. CIT (158 CTR 5) IN THIS R EGARD. I.T.A. NO. 2055/MDS/08 6 5. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE LD. CIT(APPEALS) CAME TO A CONCLUSION THAT CMDAS PLAN CLEARLY SHOWED THAT THE ORIGINAL APPROVAL WAS GIVEN FOR CONSTRUCTI ON OF RESIDENTIAL HOUSE. AS PER LD. CIT(APPEALS) JUST BECAUSE THE B UILDING WAS USED FOR COMMERCIAL PURPOSES IT WOULD NOT MEAN THAT IT WAS NOT A RESIDENTIAL HOUSE. LD. CIT(APPEALS) NOTED THAT CIR CULAR OF THE BOARD DATED 20.9.1973 WOULD ONLY GO TO SHOW THAT USE OF A PREMISES FOR COMMERCIAL PURPOSE BY THE TENANTS WOULD NOT CHANGE THE NATURE OF THE BUILDING. HE WAS THEREFORE OF THE OPINION TH AT ASSESSEE COULD SHOW THE CONSTRUCTION OF THE PROPERTY WHICH WAS PU RCHASED BY HIM WAS ONLY A RESIDENTIAL HOUSE AND THEREFORE WAS ENT ITLED TO EXEMPTION UNDER SECTION 54 OF THE ACT. NEVERTHELESS HE DID NOT DECIDE THE ISSUE REGARDING FULL VALUE OF THE CONSIDERATION CON SIDERED BY A.O. AS THE VALUE FIXED BY THE REGISTRATION DEPARTMENT FOR A REASON THAT WHEN EXEMPTION UNDER SECTION 54 OF THE ACT WAS GIVEN TH ERE WAS NOTHING LEFT TO BE TAXED AS CAPITAL GAINS. IN SO FAR AS TH E CONTENTION OF THE A.O. THAT THE ACQUIRED PROPERTY WAS IN THE NAME OF ASSESSEE ALONG WITH HIS SON LD. CIT(APPEALS) WAS OF THE OPINION T HAT DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T V. NATARAJAN (287 I.T.A. NO. 2055/MDS/08 7 ITR 271) WAS CLEARLY APPLICABLE TO THE ASSESSEES C ASE. HE THEREFORE HELD THE ASSESSEE TO BE ENTITLED TO THE DEDUCTION UNDER SECTION 54 OF THE ACT. 6. NOW BEFORE US LEARNED D.R. STRONGLY ASSAILING THE ORDER OF LD. CIT(APPEALS) SUBMITTED THAT THE INSPECTORS REPORT PLACED AT PAPER- BOOK PAGE 1-2 CLEARLY SHOWED THE USE OF THE PROPER TY BY THE TENANTS FOR COMMERCIAL PURPOSES. RELYING ON A LETTER OF AS SISTANT REVENUE OFFICER PLACED AT PAPER-BOOK PAGE 3 LEARNED D.R. S UBMITTED THAT THE SAID PROPERTY WAS FULLY USED FOR COMMERCIAL PURPOSE S AND THE CORPORATIONS ASSESSMENT RECORDS ALSO REFLECTED THE NATURE OF THE PROPERTY AS COMMERCIAL. AGAIN RELYING ON A LETTER FROM TAMIL NADU ELECTRICITY BOARD PLACED AT PAPER-BOOK PAGE 4 LEAR NED D.R. SUBMITTED THAT EVEN THE ELECTRICITY WAS PROVIDED UN DER THE COMMERCIAL TARIFF. SPECIFIC REFERENCE WAS MADE TO CONVEYANCE DEED THROUGH WHICH ASSESSEE PURCHASED THE PROPERTY PLAC ED AT PAPER- BOOK PAGES 9 TO 23. LEARNED D.R. SUBMITTED THAT TH E DESCRIPTION OF THE PROPERTY GIVEN THEREIN WAS COMMERCIAL COMPLEX. AS PER LEARNED D.R. AT THE TIME WHEN THE ASSESSEE PURCHASED THE P ROPERTY ON 21 ST FEBRUARY 2005 THE CONSTRUCTION STOOD ALREADY COMP LETE AND I.T.A. NO. 2055/MDS/08 8 ASSESSEE HAD ACQUIRED 50% UNDIVIDED SHARE ALONG WIT H PROPORTIONATE BUILT-UP AREA THEREIN. LEARNED D.R. ALSO BROUGHT T O OUR NOTICE LEASE DEED EXECUTED BY THE VENDORS OF THE PROPERTY PLACED AT PAPER-BOOK PAGES 24 TO 30 WHICH ACCORDING TO HIM CLEARLY SUB STANTIATED THAT THE PROPERTIES WERE LEASED OUT AS COMMERCIAL PREMISES O NLY AND NOT AS RESIDENCE. ACCORDING TO HIM BENEFIT OF SECTION 54 COULD BE GIVEN ONLY FOR PURCHASE OF RESIDENTIAL PROPERTY AND THERE FORE LD. CIT(APPEALS) WENT IN ERROR IN GOING BY THE PLAN APP ROVAL OF CMDA AND GRANTING THE ASSESSEE EXEMPTION UNDER SECTION 5 4 OF THE ACT. FURTHER AS PER LEARNED D.R. THE PURCHASE OF THE A SSET WAS DONE BY THE ASSESSEE ALONG WITH HIS SON AND THEREFORE ASSE SSEE COULD NOT CLAIM BENEFIT OF SECTION 54 OF THE ACT ON SUCH JOIN T PURCHASE. RELIANCE WAS PLACED ON THE DECISION OF HON'BLE PUNJ AB & HARYANA HIGH COURT IN THE CASE OF DR. A.S. ATWAL V. CIT (27 7 ITR 462) DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F PRAKASH V. ITO (312 ITR 40) AND DECISION OF HYDERABAD BENCH OF THI S TRIBUNAL IN THE CASE OF ITO V. SMT. ROHINI REDDY [313 ITR (AT) 346] . 7. PER CONTRA LEARNED A.R. SUBMITTED THAT THE CMDA APPROVAL WAS FOR A RESIDENTIAL COMPLEX AND NOT FOR COMMERCIA L COMPLEX. I.T.A. NO. 2055/MDS/08 9 ACCORDING TO HIM KITCHENS WERE CONVERTED ONLY TO A CCOMMODATE THE TENANTS SINCE THE TENANTS WERE NOT WILLING TO TAKE THE PROPERTY ON RENT FOR RESIDENTIAL USE. LEARNED A.R. POINTED OUT THAT THE ASSESSEE HAD PURCHASED ONLY WITH AN INTENTION OF ACQUIRING A RES IDENTIAL PROPERTY AND THIS INTENTION OF THE ASSESSEE WAS CORROBORATED BY THE CMDA APPROVAL. HENCE. ACCORDING TO HIM ORDER OF LD. CI T(APPEALS) IN THIS REGARD HAD TO BE SUSTAINED. AS FOR THE CONTENTION OF LEARNED D.R. THAT 50% OF THE PROPERTY PURCHASED WAS HELD BY THE ASSES SEE IN THE NAME OF HIS SON LEARNED A.R. SUBMITTED THAT HON'BL E JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF CIT V. NATARAJ AN (SUPRA) CLEARLY STOOD IN ASSESSEES FAVOUR. AS PER LEARNED A.R. E VEN IF IT WAS PRESUMED THAT EXEMPTION UNDER SECTION 54 OF THE ACT WOULD NOT BE AVAILABLE TO THE ASSESSEE THE A.O. ERRED IN NOT RE FERRING THE ISSUE OF VALUATION OF PROPERTY SOLD BY THE ASSESSEE TO A VA LUATION OFFICER IN ACCORDANCE WITH SUB-SECTION (2) OF SECTION 50C OF T HE ACT SINCE ASSESSEE HAD MADE SPECIFIC APPLICATION IN THIS REGA RD BEFORE THE ITO. LEARNED A.R. POINTED OUT THAT VIDE LETTERS DATED 20 TH DECEMBER 2007 AND 31 ST DECEMBER 2007 FILED BY THE ASSESSEE BEFORE THE A. O. ASSESSEE HAD OBJECTED THE PROPOSAL OF THE A.O. TO S UBSTITUTE THE I.T.A. NO. 2055/MDS/08 10 VALUE ADOPTED BY THE REGISTRATION AUTHORITIES FOR T HE PURPOSE OF COMPUTING CAPITAL GAINS. 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. THE FIRST QUESTION TO BE ANSWERED IS WHETHER THE PR OPERTY ACQUIRED BY THE ASSESSEE WAS RESIDENTIAL OR COMMERCIAL? NO DOU BT AS PER SECTION 54 OF THE ACT THE EXEMPTION MENTIONED THER EIN WOULD BE AVAILABLE ONLY ON PURCHASE OF A RESIDENTIAL HOUSE. IF WE LOOK AT PAPER-BOOK PAGES 9 TO 23 WHICH IS A COPY OF CONVEY ANCE DEED THROUGH WHICH ASSESSEE ACQUIRED PROPERTY ON 21 ST FEBRUARY 2005 IT IS CLEAR THAT THE VENDORS HAD IN 1994 DECIDED TO DE MOLISH THE STRUCTURE STANDING THEREIN AND HAD DECIDED TO DEVEL OP A COMMERCIAL COMPLEX THEREIN. RELEVANT PARA APPEARING AT PAGE 4 OF THE CONVEYANCE DEED IS REPRODUCED HEREUNDER:- WHEREAS IN 1994 THEY DECIDED TO DEMOLISH THE THEN EXISTING SUPERSTRUCTURE IN THE LAND DESCRIBED IN TH E SCHEDULE HEREUNDER FOR THE PURPOSE OF DEVELOPING THE PROPERT Y INTO A COMMERCIAL COMPLEX CONSISTING OF SEVERAL UNITS OF O FFICE SPACE JOINTLY WITH DEV APARTMENTS A REGISTERED PARTNERSHI P FIRM REPRESENTED BY ITS MANAGING PARTNER P.G. VENUGOPAL HAVING CERTIFICATE OF REGISTRATION NO.596 / 1993 ISSUED BY THE REGISTRAR OF ASSURANCES SOUTH MADRAS HAVING OFFIC E AT NO.7/2. FIRST MAIN ROAD KASTHURI BAI NAGAR ADYAR CHENNAI 600 020. I.T.A. NO. 2055/MDS/08 11 AGAIN AT PAGE 5 OF THE SAID DEED IT SAID AS UNDER: - WHEREAS IN PURSUANCE OF THE SAID AGREEMENT THE BUILDING THEN EXISTING IN THE SAID PROPERTY WAS DEMO LISHED AND A COMMERCIAL COMPLEX WAS CONSTRUCTED ON THE LAND BY DE V APARTMENTS IN CONSIDERATION OF THE VENDORS TRANSFER RING 50% OF THE UNDIVIDED SHARE IN THE LAND TO THE NOMINEES OF DEV APARTMENTS AGAINST DEV APARTMENTS PARTING WITH 50% OF THE BUILT UP AREA IN THE SAID COMPLEX IN FAVOUR OF THEM . . .. . . . . . . . . . . . . . . . . WHEREAS THE VENDORS ARE THUS NOW THE OWNERS OF 50% OF UNDIVIDED SHARE IN THE LAND DESCRIBED IN THE SCH EDULE HEREUNDER TOGETHER WITH THE PROPORTIONATE BUILT UP AREA THEREIN HAVING ALREADY SOLD THE REMAINING 50% SHARE IN THE L AND AND IN THE BUILT UP AREA TO THE NOMINEES OF DEV APARTMENTS UNDER DIFFERENT SALE DEEDS EXECUTED ON THEIR BEHALF BY THE IR AGENT P.G. VENUGOPAL SON OF LATE GANGAPPA NAICKER HAVIN G OFFICE AT NO.7/2 1 ST MAIN ROAD KASTHURI BAI NAGAR ADYAR CHENNAI 600 020 APPOINTED UNDER POWER OF ATTORNEY DT. 26.08.199 4 REGD. AS DOCT. NO.236/1994 AT THE OFFICE OF THE SUB-REGISTRA R TRIPLICANE CHENNAI 600 005. WHAT HAS BEEN SOLD TO THE ASSESSEE BY THE VENDORS AS MENTIONED IN CONVEYANCE DEED PAGES 5 AND 6 ARE REPRODUCED HEREU NDER:- (A) BASEMENT FRONT 694.37 SQ.FT. F1 (B) GROUND FLOOR FRONT 617.48 SQ.FT. F3 (C) SECOND FLOOR FULL 2406.68 SQ.FT. F7 & F8 (D) THIRD FLOOR REAR 1132.68 SQ.FT. F10 (E) ROOM IN THE TOP FLOOR 66.48 SQ.FT. F11 4917.69 SQ.FT. I.T.A. NO. 2055/MDS/08 12 (F) TERRACE RIGHTS IN THE FRONT PORTION OF THE FLAT OR PENT HOUSE 1290.33 SQ.FT. F12 G) CAR PARKING SPACE IN THE COMMON AREA 1004.56 SQ.FT. (H) COMMON AREA EARMARKED 649.31 SQ.FT. FURTHER EVEN BEFORE EXECUTING THE ABOVE SALE DEED TO THE ASSESSEE ON 21 ST FEBRUARY 2005 THE VENDORS HAD ALREADY GIVEN ON L EASE ATLEAST A PART OF THE PROPERTY VIDE A LEASE DEED DA TED 2 ND DECEMBER 2004 AND A COPY OF THE LEASE DEED PLACED AT PAPER-B OOK PAGES 24 TO 30 WOULD CLEARLY SHOW THAT WHAT WAS LEASED OUT WAS NOTHING BUT A COMMERCIAL PROPERTY. OTHER LEASE DEEDS EXECUTED BY THE ASSESSEE AFTER THE PURCHASE OF THE PROPERTY PLACED AT PAGES 31 TO 38 WOULD ALSO SHOW THAT THE PROPERTY LEASED OUT WAS OF COMME RCIAL NATURE. ADMITTEDLY THERE WAS NO CONVERSION WHATSOEVER OF T HE CONSTRUCTION. THE INTENTION OF THE VENDORS WAS TO CONSTRUCT A COM MERCIAL BUILDING. WHAT WAS CONSTRUCTED WAS ALSO A COMMERCIAL BUILDING . HENCE ASSESSEE CANNOT SAY THAT WHAT WAS ACQUIRED WAS A RE SIDENTIAL PROPERTY. RELIANCE PLACED BY THE A.O. ON CMDAS PL AN APPROVAL IN OUR OPINION IS OF NO CONSEQUENCE IN SUCH CIRCUMSTA NCES. WHAT HAS BEEN CONSTRUCTED WAS A COMMERCIAL COMPLEX AND WHAT WAS ACTUALLY I.T.A. NO. 2055/MDS/08 13 INTENDED TO BE CONSTRUCTED BY THE VENDORS WAS ALSO A COMMERCIAL COMPLEX. ASSESSEE HAD PURCHASED THE BUILT-UP AREA AFTER THE CONSTRUCTION WAS OVER. THE LD. CIT(APPEALS) GAVE U NDUE STRESS ON THE PLAN APPROVAL OF CMDA DESPITE RECORDS SHOWING T HAT THE SUBJECT PROPERTY WAS NOTHING BUT A COMMERCIAL COMPLEX. HEN CE WE ARE OF THE OPINION ASSESSEE COULD NOT HAVE CLAIMED EXEMPTI ON UNDER SECTION 54 FOR ACQUISITION OF THIS PROPERTY ON THE CAPITAL GAINS DERIVED BY HIM ON SALE OF PROPERTY. DECISION OF LD. CIT(AP PEALS) IN THIS REGARD IS REVERSED. NEVERTHELESS IT IS TO BE MENTIONED T HAT THE PURCHASE OF THE PROPERTY HAVING BEEN MADE OUT OF THE SALE CONSI DERATION RECEIVED ON TRANSFER OF THE PROPERTY EVEN IF SUCH PURCHASE WAS MADE IN THE JOINT NAME OF ASSESSEES SON WOULD NOT MAKE ANY DIF FERENCE WHATSOEVER. 9. NOW COMING TO THE ISSUE OF REFERENCE HAVING NOT BEEN MADE TO VALUATION OFFICER DESPITE REQUEST OF THE ASSESSEE LETTER DATED 20 TH DECEMBER 2007 FILED BY THE ASSESSEE BEFORE THE INC OME TAX OFFICER DOES MENTION THAT THE GUIDELINE VALUE DID NOT REPRE SENT FAIR MARKET VALUE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAI NS OR THIS CANNOT BE CONSIDERED AS A BASIS. NO DOUBT THE ASSESSEE HAS GIVEN A I.T.A. NO. 2055/MDS/08 14 COMPUTATION OF WHAT COULD BE THE CAPITAL GAINS IF T HE GUIDELINE VALUE WAS ADOPTED BUT NEVERTHELESS IT REMAINS A FACT T HAT ADOPTION OF GUIDELINE FOR FIXING THE FULL VALUE OF CONSIDERATIO N ON TRANSFER OF HIS ASSET WAS DISPUTED. THERE WAS ALSO ANOTHER LETTER FILED ON 31 ST DECEMBER 2007 WHICH SPECIFICALLY REQUESTED THE A.O . TO REFER THE CASE TO VALUATION CELL FOR ARRIVING AT THE MARKET V ALUE OF THE PROPERTY SOLD. NO DOUBT THE ASSESSMENT ORDER THOUGH DATED 28 TH DECEMBER 2007 HAS BEEN SIGNED BY THE A.O. ON THE LAST PAGE ONLY ON 31.12.2007. SO WHEN THE ASSESSEE FILED HIS OBJECT ION TO THE VALUATION THERE WAS A DISTINCT PROBABILITY THAT HE HAD NOT RECEIVED THE ASSESSMENT ORDER. IN FACT LEARNED A.R. POINTED OU T THAT ASSESSMENT ORDER WAS RECEIVED ONLY ON 28.1.2008. THEREFORE W HEN THESE TWO LETTERS OF THE ASSESSEE ONE FILED ON 20 TH DECEMBER 2007 WHICH WAS WELL BEFORE THE DATE OF ASSESSMENT AND OTHER LETTER DATED 31 ST DECEMBER 2007 WHICH WAS FILED ON THE DATE OF SIGNI NG OF THE ASSESSMENT ORDER ARE READ TOGETHER IT WOULD CLEAR LY SHOW THAT THE ASSESSEE HAD OBJECTION IN ADOPTING THE VALUE TAKEN BY THE STAMP REGISTRATION AUTHORITY AS THE FULL VALUE OF THE CON SIDERATION. THIS BEING SO IN OUR OPINION THE ASSESSING OFFICER SHOULD HA VE REFERRED THE I.T.A. NO. 2055/MDS/08 15 VALUATION OF THE ASSET TO THE VALUATION CELL AS PER SUB-SECTION (2) OF SECTION 50C OF THE ACT. LD. CIT(APPEALS) FELT IT N OT NECESSARY TO ADJUDICATE ON THIS ISSUE HAVING DECIDED TO GIVE TH E ASSESSEE EXEMPTION CLAIM MADE UNDER SECTION 54 OF THE ACT. NEVERTHELESS WE FIND THAT ASSESSEE AS AFORESAID HAD OBJECTED TO THE ADOPTION OF VALUE AS FOUND IN THE STAMP VALUE AUTHORITY FOR THE PURPO SE OF WORKING OUT THE CAPITAL GAINS ON THE PROPERTY TRANSFERRED. THE REFORE IN THE INTEREST OF JUSTICE WE SET ASIDE THE ORDERS OF LD. CIT(APPEALS) AND A.O. IN THIS REGARD AND REMIT THE ISSUE REGARDING C OMPUTATION OF CAPITAL GAINS BACK TO THE FILE OF THE A.O. THE A.O . SHALL PROCEED IN ACCORDANCE WITH LAW AFTER CONSIDERING THE OBJECTION OF THE ASSESSEE FOR SUBSTITUTING THE CONSIDERATION AS PER THE DEED WITH THE VALUE ADOPTED BY STAMP VALUE AUTHORITY FOR STAMP DUTY PUR POSES. IF THE ASSESSEE IS ABLE TO SHOW THAT THERE HAS BEEN NO DIS PUTE WITH REGARD TO VALUE FIXED BY THE STAMP VALUE AUTHORITY IN AN A PPEAL OR REFERENCE BEFORE ANY OF THE AUTHORITY THEN THE ASSESSING OFF ICER HAS TO MAKE A REFERENCE TO THE VALUATION OFFICER IN ACCORDANCE WI TH SUB-SECTION (2) OF SECTION 50C OF THE ACT. ORDERED ACCORDINGLY. I.T.A. NO. 2055/MDS/08 16 10. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE COURT ON 22 ND JULY 2011. SD/- SD/- (U.B.S. BEDI) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 22 ND JULY 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-VI CHENNAI-34 (4) CIT CHENNAI-IV CHENNAI (5) D.R. (6) GUARD FILE