Assistant Commissioner of Income Tax-1,, BHILAI(CG) v. Shri. Veenu Jain,, BHILAI(CG)

ITA 250/BIL/2011 | 2007-2008
Pronouncement Date: 31-07-2015 | Result: Dismissed

Appeal Details

RSA Number 25024714 RSA 2011
Assessee PAN AEZPJ4695K
Bench Raipur
Appeal Number ITA 250/BIL/2011
Duration Of Justice 3 year(s) 7 month(s)
Appellant Assistant Commissioner of Income Tax-1,, BHILAI(CG)
Respondent Shri. Veenu Jain,, BHILAI(CG)
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 31-07-2015
Assessment Year 2007-2008
Appeal Filed On 30-12-2011
Judgment Text
1 TA NO. 250/BLPR/2011. IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH RAIPUR BEFORE SHRI MUKUL K. SHRAWAT JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER. I.T. A. NO. 250/BLPR/2011 ASSESSMENT YEAR : 2007-08. ASSTT. COMMISSIONER OF INCOME-TAX-1 SHRI VEENU JAIN BHILAI. V/S. 63 NEHRU NAGAR (OLD) BHILAI. PAN AEZPJ4695K (APPELLANT) RESPONDENT. APPELLANT BY : SMT. SHEETAL S . VERMA. RESPONDENT BY : SHRI R.B. DOSHI. DATE OF HEARING : 18-06-2015 DATE OF PRONOUNCEMENT : 31 ST JULY 2015. O R D E R PER SHRI SHAMIN YAHYA A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) RAIPUR DATED 23-09-2011 AND PERTA INS TO ASSESSMENT YEAR 2007- 08. THE GROUNDS OF APPEAL READ AS UNDER : 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN GRANTING RELIEF BY ALLOWING CLAIM OF PAY MENT OF ` .17 50 875/- MADE TO INDFOS LTD. AS PER TRIAL COURTS ORDER. 2. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN DIRECTING THE AO TO ADOPT FAIR MARKET V ALUE OF THE PROPERTY AS ON 2 TA NO. 250/BLPR/2011. 01/04/1981 AT ` .13 09 000/- FOR THE PURPOSE OF INDEXATION AND COMP UTATION OF CAPITAL GAIN. 2. APROPOS GROUND NO. 1: ON THIS ISSUE THE ASSESSI NG OFFICER OBSERVED THAT THE ASSESSEE HAS DEDUCTED AN AMOUNT OF ` .23 36 000/- BEING INDEX AMOUNT OF ` .17 50 875/- PAID TO M/S INDFOS INDIA LTD. IN F.Y. 1999-2000 FOR VACATING THE FLAT. THE ASSESSEE WAS SPECIFICALLY ASKED AS TO WHY THE CLAIM OF DEDUCTION OF ` .23 36 000/- BE ALLOWED. VIDE REPLY DATED 17-10-200 8 THE ASSESSEE SUBMITTED THAT HE WAS OWING THE FLAT NO. 25/5 INDIA HOUSE NO. 4 CO-OP. HOUSING SOCIETY LTD. KEMP CARNER PEDDAR ROAD MUMBAI. THE FLAT WAS PURC HASED LONG BACK IN 1966 FOR ` .35 000/-. DISPUTE CROPPED UP WITH THE TENANT AND T ENANT REFUSED TO VACATE THE FLAT. MATTER THEN WENT TO COURT. THE ASSESSEE THEN PAID THROUGH COURT TO INDFOS INDIA LTD. ` .17 50 000/- IN FEBRUARY 2000 TO GET THE VACANT PO SSESSION OF THE FLAT. 3. THE ASSESSING OFFICER WAS OF THE OPINION THAT TH E SAID AMOUNT CANNOT BE TREATED AS COST OF IMPROVEMENT AND HE REJECTED THE CLAIM OF THE ASSESSEE. 4. UPON ASSESSEES APAPEAL LEARNED CIT(APPEALS) G RANTED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER : I HAVE GONE THROUGH THE OBSERVATIONS OF THE A.O. AND SUBMISSIONS OF THE APPELLANT. ADMITTEDLY THE APPELLANT HAS PAID ` .17 50 000/- TO INDFOS INDUSTRIES LTD. AS PER COURTS ORDER IN FEB. 200 0 AND THERE IS NO DISPUTE ON THIS COUNT. THE COURT CASE WAS INSTITUTED SOMETIME IN 1983 AND APPARENTLY WITH REFERENCE TO SALE AGREEMENT ENTERED INTO BY T HE APPELLANT WITH A BUYER BUT DUE TO PROLONGED LITIGATION IT COULD NOT BE E XECUTED NOR KEPT ALIVE. IT APPEARS THE AO REJECTED THIS SUBMISSION ONLY FOR THE REASON THAT THE AGREEMENT WAS NOT PRESENT AT THE TIME OF MAKING TH E PAYMENT TO THE TENANT. IT TOOK MORE THAN 16 YEARS TO GET THE MATTER RESOL VED. THEREFORE IT CANNOT BE EXPECTED THAT ANY BUYER WOULD TOLERATE SUCH LINGER ING AND THE WALKING OUT OF THE AGREEMENT WAS NOT UNNATURAL. ULTIMATELY THE AP PELLANT SOLD THE PROPERTY AFTER SETTLEMENT OF THE DISPUTE MAY BE AFTER SIX YEARS AND THIS SHOWS THAT 3 TA NO. 250/BLPR/2011. THERE WAS A GENUINE INTENTION TO DISPOSE OF THE PR OPERTY. THEREFORE IT HAS TO BE HELD THAT THE AMOUNT PAID IN CONSIDERATION OF V ACATION OF THE PROPERTY AS PER THE COURTS ORDER THOUGH AFTER TERMINATION OF INITIAL SALE AGREEMENT HAS TO BE REGARDED AS RELATABLE TO TRANSFER BECAUSE T HE AGREEMENT TO SALE WAS IN VOGUE AS ON THE DATE OF INSTITUTION OF THE COURT C ASE. ACCORDINGLY I AM OF THE CONSIDERED OPINION THAT THE CLAIM OF THE APPELLANT IS ALLOWABLE AND THE AO IS DIRECTED TO ALLOW THE SAME. 5. AGAINST THE ABOVE ORDER REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORD. LEARNED D.R. PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFF ICER. LEARNED COUNSEL OF THE ASSESSEE SUMMARIZED HIS SUBMISSION AS UNDER : 1. AMOUNT OF ` .17 50 875/- PAID FOR EVICTION OF TENANT IN FY 1999 -2000. IT REPRESENTS COST OF IMPROVEMENT. 2. THE PROPERTY WAS SUBJECT MATTER OF SALE AGREEME NT DT. 10-08-1983. DUE TO THE PROPERTY OCCUPIED BY TENANT SALE COULD NOT BE EXECUTED WITH THE PURCHASER. COURT CASE FILED IN 1983 WHICH WAS DECI DED IN 1999-2000. 3. COST OF IMPROVEMENT. RELIANCE ON. I) CIT V/S. RAMASWAMY MUDALIAR (1992) 196 ITR 93 9 (MAD.) II) CIT V/S. MISS PIROJA C. PATEL (2000) 242 ITR 582 (BOM.) III) NAOZAR CHENOY V/S. CIT (1998) 234 ITR 95 (AP ) IV) MS. NITA PATEL V/S. ITO (2011) 128 ITD 24 (MU M.) V) CIT V/S. SPENCERS AND CO. LTD. (2013) 359 ITR 644 (MAD.) 4. THERE IS CLOSE NEXUS BETWEEN PAYMENT OF COMP ENSATION AND ENHANCEMENT OF VALUE OF PAYMENT. 7. UPON CAREFUL CONSIDERATION WE FIND THAT IT IS UN DISPUTED THAT THE ASSESSEE HAD TO PAY THE ABOVE SUM OF ` .17 50 875/- TO GET THE TENANT EVICTED. WITHOUT GE TTING EVICTION THE ASSESSEE COULD NOT HAVE SOLD THE HOUSE . AS EVIDENT FROM THE CASE LAW 4 TA NO. 250/BLPR/2011. FROM CIT V/S. SPENCERS & CO. (SUPRA) OF HONBLE MAD RAS HIGH COURT COMPENSATION PAID TO TENANT FOR VACATING THE PREMIS ES CAN BE SAID TO BE AMOUNTING TO IMPROVEMENT OF COST. NO CONTRARY DECISION HAS B EEN PRODUCED BEFORE US. IN THIS VIEW OF THE MATTER WE ARE OF THE CONSIDER OPINION THAT THE LEARNED CIT(APPEALS) IS CORRECT IN HOLDING THAT THE AMOUNT OF ` .17 50 875/- PAID FOR VACATING OF TENANT REPRESENTS COST OF IMPROVEMENT. ACCORDINGLY WE UPHO LD THE ORDER OF LEARNED CIT(APPEALS). 8. APROPOS GROUND NO. 2: ON THIS ISSUE THE ASSESSI NG OFFICER OBSERVED THAT THE ASSESSEE HAS TAKEN NOTIONAL VALUE OF THE FLAT O N 01-04-1981 AT ` .13 09 000/- AS PER VALUATION REPORT OF THE VALUER M/S ANMOL SEKHRI & ASSOCDIATES. THE PROPERTY WAS ALSO REFERRED TO THE DVO FOR VALUATION UNDER SE CTION 142A. IN THE VALUATION REPORT THE VALUER DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01-04- 1981 AT ` .8 54 000/-. THE ASSESSING OFFICER WAS OF THE OPINI ON THAT THE VALUATION OFFICER HAS MENTIONED DEFECTS IN THE VALUATION ADO PTED BY THE REGISTERED VALUER. THE ASSESSEE WAS GIVEN OPPORTUNITY TO SUBMIT HIS OB JECTION BEFORE THE VALUATION OFFICER. HENCE THE ASSESSING OFFICER HELD THAT THE VALUE OF THE FLAT WOULD BE TAKEN AT ` .8 54 000/-. MAKING SOME ADJUSTMENTS THE ASSESSING OFFICER HELD THE VALUE OF THE PROPERTY AS ON 01-04-1981 TO BE AT ` .8 86 400/-. 9. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE LEA RNED CIT(APPEALS) GRANTED RELIEF TO THE ASSESSEE HOLDING AS UNDER : I HAVE GONE THROUGH THE OBSERVATIONS OF THE A.O. AND SUBMISSIONS OF THE APPELLANT. ADMITTEDLY THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.01.1981 SHOWN BY THE APPELLANT AT ` .13 09 000/- ON THE BASIS OF APPROVED VALUER IS MORE THAN THE VALUE ESTIMATED BY THE VAL UATION OFFICER. THEREFORE THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE C ASE OF DAULAL MOHTA (HUF) (SUPRA) IS DIRECTLY APPLICABLE TO THIS CASE AND SINCE THE PROPERTY WAS LOCATED AT MUMBAI IT IS BINDING ALSO. THE OTHER D EFECTS POINTED OUT BY THE 5 TA NO. 250/BLPR/2011. APPELLANT ALSO CANNOT BE BRUSHED ASIDE. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT AND OTHER CA SE LAWS RELIED UPON BY THE APPELLANT THE A.O. IS DIRECTED TO ADOPT THE F MV OF THE PROPERTY AS ON 01.04.1981 AT ` .13 09 000/- FOR THE PURPOSE OF INDEXATION AND COMP UTE THE CAPITAL GAIN ACCORDINGLY. AGAINST THE ABOVE ORDER REVENUE IS IN APPEAL BEFOR E US. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER. LEAR NED COUNSEL OF THE ASSESSEE SUMMARIZED HIS SUBMISSIONS AS UNDER 1. REFERENCE MADE BY AO U/S 55A. 2. ASSESSEE FILED REPORT FROM A REGISTERED VALUE R CERTIFYING FAIR MARKET VALUE AS ON 01.04.1981. SINCE THE FAIR MARKET VALU E AS ON 01.04.1981 CLAIMED BY THE ASSESSEE WAS MORE THAN THAT ESTIMAT ED BY THE DVO/AO REFERENCE UNDER SECTION 55A(A) WAS NOT VALID. RELIANCE ON: HIA BEN JAYANTILAL SHAH V/S. ITO 310 ITR 31 (GUJ.) SMT. SARLA N. SAKRANEY V/S. ITO (2011) 130 ITD 167 (MUM.) 3. SINCE REFERENCE MADE U/S 55A IS INVALID THE REPORT OF DVO AND VALUE ESTIMATED BY HIM DESERVES TO BE IGNORED. 11. UPON CAREFUL CONSIDERATION WE FIND THAT THE IS SUE IS COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF HIABEN JAYANTILAL SHAH 310 ITR 31. IN THIS CASE THE HONBLE HIGH COURT HAS EXPOUNDED A S UNDER : (HEAD NOTES) CLAUSE (B) OF SECTION 55A OF THE INCOME-TAX ACT 1961 CAN BE INVOKED ONLY WHEN THE VALUE OF THE ASSET CLAIMED BY THE AS SESSEE IS NOT SUPPORTED BY THE VALUATION REPORT OF A REGISTERED VALUER. FOR I NVOKING SECTION 55A OF THE ACT THERE HAS TO BE A CLAIM MADE BY THE ASSESSEE BEFORE THE ASSESSING 6 TA NO. 250/BLPR/2011. OFFICER CAN RECORD HIS OPINION EITHER UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 55A OF THE ACT TO MAKE A REFERENCE TO THE VALUATIO N OFFICER. THE PETITIONER WAS THE CO-OWNER OF A PROPERTY ALONG WITH HER HUSBAND AND SON. ON NOVEMBER 29 29 1994 THE PETITIONER ENTE RED INTO AN AGREEMENT TO SELL THE PROPERTY AS A WHOLE ALONG WITH THE CO-OW NERS FOR A SUM OF RS. 1.40 CRORES. THE PETITIONER WHO HAD A 25 PER CENT. SHA RE IN THE PROPERTY WAS THUS ENTITLED TO ` .35 LAKHS AS HER SHARE IN THE SALE CONSIDERATION. O N AUGUST 27 1996 THE PETITIONER FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 1996-97 SHOWING CAPITAL GAIN WORKED OUT AT ` .17 43 750 ON THE BASIS OF THE VALUATION REPORT OF A REGISTERED VALUER WHEREUNDE R THE COST OF ACQUISITION OF THE PROPERTY WAS ARRIVED AT IN TERMS OF THE OPTIO N EXERCISED UNDER SECTION 5(2). THE PETITIONER RECEIVED A NOTICE FROM THE VA LUATION OFFICER INFORMING HER THAT A REFERENCE WAS MADE BY THE ASSESSING OFF ICER ON APRIL 26 1996 UNDER SECTION 55A OF THE ACT TO THE VALUATION OFFI CER. THE VALUATION OFFICER THEREFORE PROPOSED TO ESTIMATE THE MARKE T VALUE OF THE PROPERTY AS ON APRIL 1 1981 AT ` .3 97 000 AS AGAINST ` .6 25 000 SHOWN BY THE PETITIONER AND ALSO ESTIMATE THE FAIR MARKET VALUE OF THE PRO PERTY AS ON DECEMBER 28 1995 (THE DATE OF EXECUTION OF THE SALE DEED I.E. TRANSFER) AT ` .8 08 000. ON A WRIT PETITION CHALLENGING THE REFERENCE: HELD THAT IN SO FAR AS THE FAIR MARKET VALUE OF THE PROPERTY AS ON APRIL 1 1981 WAS CONCERNED THE PETITIONER HAD CLAIMED IT AT A SUM OF ` .6 25 000 AS PER THE REGISTERED VALUERS REPORT. THEREFORE THE ASSESSING OFFICER WAS REQUIRED TO FORM AN OPINION THAT THE VALUE SO CLA IMED WAS LESS THAN THE FAIR MARKET VALUE SHOWN BY THE ASSESSEE AS ON APRIL 1 1981. THEREFORE CLAUSE (A) OF SECTION 5A OF THE ACT COULD NOT BE MADE APP LICABLE. CLAUSE (B) OF SECTION 55A OF THE ACT CAN BE INVOKED ONLY IN ANY OTHER CASE NAMELY WHEN THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE WAS NOT SUPPORTED BY AN ESTIMATE MADE BY A REGISTERED VALUER. IN THE FACTS OF THE PRESENT CASE CLAUSE (B) OF SECTION 55A OF THE ACT ALSO COULD NOT BE IN VOKED. THE REFERENCE WAS MADE ON APRIL 26 1996 WHEREAS THE RETURN OF INCO ME HAD BEEN FILED BY THE 7 TA NO. 250/BLPR/2011. ASSESSEE ONLY ON AUGUST 27 1996. HENCE ON THE DAT E OF MAKING THE REFERENCE BY THE ASSESSING OFFICER NO CLAIM WAS M ADE BY THE ASSESSEE AND THE ASSESSING OFFICER COULD NOT HAVE FORMED ANY OP INION AS TO THE EXISTENCE OF PRESCRIBED DIFFERENCE BETWEEN THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE AND THE FAIR MARKET VALUE. THEREFORE ALS O THE PROVISIONS OF SECTION 55A OF THE ACT COULD NOT BE RESORTED TO. THE ONLY GROUND ON WHICH REFERENCE WAS MADE TO THE VALUATION OFFICER WAS TH AT THE VALUE DECLARED BY THE ASSESSEE AS ON THE DATE OF THE EXECUTION AND R EGISTRATION OF THE SALE DEED WAS LOWER BY MORE THAN 25 PER CENT. THERE WAS NO P ROVISION IN THE ACT WHICH PERMITS THE ASSESSING OFFICER TO DISTURB THE SALE CONSIDERATION AT LEAST SECTION 55A OF THE ACT COULD NOT BE INVOKED FOR TH E SAID PURPOSE. THE REFERENCE TO THE VALUATION OFFICER WAS NOT VALID. 12. WE NOW EXAMINE THE PRESENT CASE ON THE ANVIL OF AFORESAID CASE LAW. IT IS CLEAR FROM THE ABOVE CASE LAW THAT SINCE THE CLAIM OF THE ASSESSEE IS SUPPORTED BY VALUATION REPORT OF A REGISTERED VALUER CLAUSE (B) OF SECTION 55A CANNOT BE INVOKED. AS FAR AS CLAUSE (A) OF SECTION 55A IS C ONCERNED THE ASSESSEE IN THIS CASE HAS CLAIMED THE FAIR MARKET VALUE OF THE PROPERTY O N APRIL 1 1981 AT ` .13 09 000/- AS PER THE REGISTERED VALUERS REPORT. THEREFORE T HE ASSESSING OFFICER WAS REQUIRED TO FORM AN OPINION THAT THE VALUE SO CLAIMED WAS LE SS THAN THE FAIR MARKET VALUE. THE ESTIMATED VALUE PROPOSED BY THE VALUATION OFFIC ER WAS ` .8 54 000/- WHICH WAS LESS THAN THE FAIR MARKET VALUE SHOWN BY THE ASSESS EE AS ON APRIL 1 1981. THEREFORE CLAUSE (A) OF SECTION 55A OF THE ACT COU LD NOT BE MADE APPLICABLE. THUS EXAMINING THE PRESENT CASE ON THE ANVIL OF HONBLE GUJRAT HIGH COURT DECISION WE FIND THAT REFERENCE MADE UNDER SECTION 55A IS NO T SUSTAINABLE. NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE. IN THIS VI EW OF THE MATTER RESPECTFULLY FOLLOWING THE PRECEDENT FROM THE HONBLE GUJARAT HI GH COURT AS ABOVE WE UPHOLD THE ORDER OF LEARNED CIT(APPEALS). 8 TA NO. 250/BLPR/2011. 13. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF JULY 2015. SD/- SD/- (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. DATED: 31 ST JULY 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT 5. THE D.R. ITAT RAIPUR. 6. GUARD FILE. T RUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR ITAT NAGPUR