THE DCIT 22(1), NAVI MUMBAI v. M/S. CHATURBHUJ VALLABHDAS (HUF), MUMBAI

ITA 3439/MUM/2007 | 2004-2005
Pronouncement Date: 20-12-2010 | Result: Partly Allowed

Appeal Details

RSA Number 343919914 RSA 2007
Assessee PAN CEACT1871W
Bench Mumbai
Appeal Number ITA 3439/MUM/2007
Duration Of Justice 3 year(s) 7 month(s) 16 day(s)
Appellant THE DCIT 22(1), NAVI MUMBAI
Respondent M/S. CHATURBHUJ VALLABHDAS (HUF), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 20-12-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 20-12-2010
Date Of Final Hearing 26-11-2010
Next Hearing Date 26-11-2010
Assessment Year 2004-2005
Appeal Filed On 04-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI R.S.SYAL ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 3439/MUM/2007 (ASSESSMENT YEARS: 2004-05) DCIT 22(1) TOWER NO.6 12B 4 TH FL VASHI RAILWAY STATION COMPLEX VASHI NAVI MUMBAI-400705. . APPELLANT VS CHATURBHUJ VALLABHDAS (HUF) VALLABHDAS TEJPAL VADIM RAMJI ASHAR LANE GHATKOPAR (E) MUMBAU-400077 PAN:AACH0434N RESPONDENT CO NO.211MUM/2007 IN ITA NO. 3439/MUM/2007 CHATURBHUJ VALLABHDAS (HUF) CROSS-OBJECTOR V/S DCIT 22(1) RESPONDENT APPELLANT BY : SHRI P N DEVDASAN RESPONDENT BY : SHRI K SHIVRAM. O R D E R PER VIJAY PAL RAO JM THIS APPEAL BY THE REVENUE AND CROSS-OBJECTION TH ERETO BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATE D ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 2 23.02.2007 OF CIT(A)-XXII MUMBAI FOR THE ASSESSME NT YEAR 2004-05. 2. IN THIS APPEAL THE REVENUE HAS RAISED FOLLOWING EFFECTIVE GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING THE AO TO RE-COMPUTE THE CAPITAL GAINS BY ADOPTING THE VALUAT ION AS ON 1.4.1981 IN ACCORDANCE WITH THE ASSESSEES REGISTERED VALUERS REPORT; 2.. 3.THESE GROUNDS ARE IN SUPPORT OF THE GROUND NO.1 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE AO. REPORT OF REGISTERED VALUER IS N OT SACROSANCT AND IS NOT OF A BINDING NATURE ON THE A O REPORT OF THE REGISTERED VALUER HAS TO BE CONSIDERE D ON MERITS WHICH THE CIT(A) FAILED TO CONSIDER GROUNDS NO.5 6 & 7 ARE IN SUPPORT OF THE GROUNDS O F APPEAL NO.4 3. GROUNDS OF APPEAL NO.1 REGARDING ADOPTION OF VA LUATION OF LAND AS ON 1.4.1981 FOR COMPUTATION OF CAPITAL G AIN. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD THE LAND SITUATED AT KIROL VILLAGE GHATKOPAR (E) MUMB AI VIDE DEVELOPMENT AGREEMENT DATED 12.12.2003. THE SALE CONSIDERATION OF THIS LAND AMOUNT TO RS.12 71 00 00 0/- WHICH IS THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY FO R STAMP DUTY PURPOSE. IN COMPUTATION OF THE LONG TERM CAPI TAL GAIN ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 3 THE ASSESSEE HAS TAKEN THE COST OF ACQUISITION OF T HE LAND AS ON 1.4.1981 AT RS.73 33 630/- BASED ON THE REPORT O F THE REGISTERED VALUER. THE AO NOTED THAT THE REGISTER ED VALUER HAS ADOPTED THE LAND RATE AT RS.1180 PER SQ. MT. FO R 5364 SQ.MT CORRESPONDING TO THE UNUSED FSI VALUE OF LAN D. HOWEVER THE REGISTERED VALUER HAS ALSO ESTIMATED TH E COST OF CONSTRUCTION/STRUCTURE OCCUPIED BY THE ASSESSEE ONL Y AT RS.9 41 760/-. ANOTHER ELEMENT WHICH IS SHOWN IN CO ST OF ACQUISITION OF LAND IS PERTAINING TO CAPITALIZED VA LUE OF RENTS FROM TENANTS OCCUPYING THE SAID LAND AT RS.62 950/- . CONSIDERING THE TECHNICALITY INVOLVED FOR VALUATION OF THE LAND IN QUESTION THE AO SOUGHT THE OPINION FROM THE DISTRICT VALUATION OFFICER VIDE HIS LETTER DATED 8.06.2005. THE DVO HAS SUBMITTED THE VALUATION REPORT DATED 17.2.2006 WHEREIN THE LAND IN QUESTION HAS BEEN VALUED AT 45 PER SQ. FT. ACCORDINGLY THE COST OF ACQUISITION OF LAND AS ON 1.4.1981 WAS ADOPTED BY A.O. AT RS.25 50 261/- AS AGAINST RS.63 29 520/- ESTIMATED BY THE REGISTERED VALUER O F THE ASSESSEE. THE CONSTRUCTION PORTION OF THE LAND OCC UPIED BY THE ASESEEE HAS BEEN ESTIMATED AT RS.32 857/- AS A GAINST RS.9 41 160/- ADOPTED BY THE REGISTERED VALUER. T HERE WAS NO DIFFERENCE IN THE CAPITALIZED COST OF RENT IN RESPE CT OF THE LAND IN THE OCCUPATION OF THE TENANTS BECAUSE THE AO H AS ADOPTED THE SAME AS ESTIMATED Y ASSESSEE AT RS.62 950/-. AF TER ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 4 INVITING THE OBJECTIONS AND COMMENTS FROM THE ASSES SEE ON THE VALUATION REPORT OF THE DVO AS WELL AS AFTER GIVIN G THE OPPORTUNITY TO THE ASESEEE TO CROSS-EXAMINE THE DVO THE ASSESSING OFFICER ADOPTED THE VALUATION AS PER THE DVOS REPORT. 4. ON APPEAL THE CIT(A) HAS HELD THAT THE AO HA S NO JURISDICTION TO REFER THE MATTER TO THE VALUATION O FFICER. THE CIT(A) FOLLOWED THE ORDERS OF THIS TRIBUNAL IN THE CASE OF SAJJAN KUMAR M HARLALKA V/S JCIT REPORTED IN 100 ITD 418 (MUM) AND IN THE CASE OF MS. RUBAB M . KAZERANI VS THE JT. COMMISSIONER OF I.T REPORTED IN 91 ITD 429 AS WELL AS THE ORDER OF THE PUNE BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. KRISHNABAI TINGRE V/S ITO REPORTED IN 101 ITD 31 7 (PUNE). 5. BEFORE US THE LEARNED DR HAS SUBMITTED THAT T HE AO HAS GIVEN THE BASIS OF HIS VALUATION WHICH WAS NOT CONSIDERED BY THE CIT(A). HE FURTHER CONTENTED THAT IN CASE WHEN A.O. HAS NOT ACCEPTED THE REGISTERED VALUERS REPORT HE HAS THE JURISDICTION AND POWER UNDER SECTION 55A TO REFER T HE VALUATION TO D.V.O. AND EVEN OTHERWISE THE REGISTERED VALUER S REPORT IS NOT BINDING ON THE AO AND THE SAME IS SUBJECT TO T HE CONSIDERATION ON MERITS. THE LD. DR HAS POINTED OU T THAT THE AO HAS REFERRED THE VALUATION OF THE PROPERTY IN QU ESTION TO ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 5 THE DVO VIDE LETTER DATED 8.6.2005 IN FORM NO.NS-I FOR DETERMINATION OF FAIR MARKET VALUE U/S 16 OF THE W EALTH TAX ACT AND SECTION 55A OF THE INCOME TAX ACT AS WELL A S SECTION 15 R.W. SECTION 131 OF THE ACT. THE LEARNED DR HA S SUBMITTED THAT THE AO HAS EXPRESSED HIS OPINION UNDER THE REFERENCE THAT THE VALUE OF THE ASSET RETURNED IN ACCORDANCE WITH THE ESTIMATION MADE BY THE REGISTERED VALUER IS MORE TH AN THE FAIR MARKET VALUE. HE HAS HAS FILED A COPY OF THE REFER ENCE LETTER ALONG WITH THE PROFORMA IN FORM NO.SB-I AND SUBMITT ED THAT IN THE RELEVANT COLUMN OF FORM THE A.O. HAS EXPRESSE D HIS OPINION. THE LD. DR HAS ALSO RELIED UPON THE ORDE R OF THIS TRIBUNAL IN THE CASE OF VIJAY KUMAR M. SHAH VS. DY. CIT (2010) 2 ITR 116 (MUM.)(TRIB.) 6. THE LD. DR HAS FURTHER CONTENDED THAT WHEN DVO H AS ADOPTED THE RATE AFTER CONSIDERING THE SALE INSTANC ES OF THE PROPERTY AT THE RELEVANT POINT OF TIME IN THE SAME AREA AND THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO CROSS-EXAMINE THE DVO THEN THERE CANNOT BE ANY MISTAKE OR ILLEGALITY IN THE REPORT OF THE DVO. THE LEARNED DR HAS FUTHER SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 55A(B)(II) IF THE AO IS OF T HE OPINION THAT HAVING REGARD TO THE NATURE OF THE ASSETS AND IN O THER CIRCUMSTANCES IT IS NECESSARY TO REFER THE VALUE O F THE CAPITAL ASSET TO THE VALUATION OFFICER TO ASCERTAIN THE FA IR MARKET ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 6 VALUE OF THE CAPITAL ASSET THEN THE AO HAS THE JU RISDICTION AND POWER TO MAKE THE REFERENCE TO THE VALUATION OF FICER FOR VALUATION OF THE CAPITAL ASSET. HE HAS RELIED UPON THE ORDER OF THE AO. 7. ON THE OTHER HAND THE LEARNED AR HAS SUBMITTED THAT THE REFERENCE OF VALUATION OF THE LAND TO THE DVO M AY BE MADE U/S 55A ONLY WHEN THE AO IS OF THE OPINION TH AT THE VALUE OF THE ASSET CLAIMED BY THE ASSESSEE IS LES S THAN ITS FAIR MARKET VALUE AND NOT WHEN HE WAS OF THE OPINIO N THAT THE FMV OF THE PROPERTY AS ON 1.4.1981 AS SHOWN BY THE ASSESSEE WAS MORE THAN ITS REAL FMV. HE HAS RELIE D UPON THE FOLLOWING DECISIONS : 1 CIT VS. DAULAT MOHTA HUF TA NO. 1031 OF 2008 DT. 22-9-2008 (BOMBAY HIGH COURT) 2 DAULAT MOHATA VS. ITO ITA NO. 322/M/2007 BENCH 'D' DT. ... 3 SAJJAN KUMAR M HARLALKA V/S JCIT 100 ITD 418 (MUM) 4 MS. RUBAB M KAZERANI V/S JCIT 91 ITD 429 5 SMT. KRISHNABI TINGRE V/S ITO 101 ITD 317 (PUNE). 6 HIABEN JAYANTILAL SHAH VERSUS INCOME- TAX OFFICER AND ANOTHER ... (2009) 310 ITR 31(GUJ) (35) IT HAS BEEN SUBMITTED THAT THE PROVISIONS OF SECTIO N 55A(B) CANNOT BE APPLIED WHEN THE ASSESSEE HAS SUBMITTED T HE REGISTERED VALUERS REPORT. ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 7 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE RELEVANT RECORD. THE PROVISIONS OF SECTION 55A HAS EXPRESSLY SET OUT THE CIRCUMSTANCES IN WHICH AND TH E PURPOSES FOR WHICH THE REFERENCE CAN BE MADE TO THE VALUATIO N OFFICER. WE REPRODUCE THE PROVISIONS OF SECTION 55A AS UNDER : [ REFERENCE TO VALUATION OFFICER. 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER THE [ASSESSING] OFFICER MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIM ED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER IF THE [ASSESSING] OFF ICER IS OF OPINION THAT THE VALUE SO CLAIMED IS LESS THA N ITS FAIR MARKET VALUE ; (B) IN ANY OTHER CASE IF THE [ASSESSING] OFFICER I S OF OPINION (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEED S THE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE B Y MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF ; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES IT IS NECESSARY S O TO DO AND WHERE ANY SUCH REFERENCE IS MADE THE PROVISIONS OF SUB-SECTIONS (2) (3) (4) (5) AND ( 6) OF SECTION 16A CLAUSES (HA) AND (I) OF SUB-SECTION (1 ) AND SUB-SECTIONS (3A) AND (4) OF SECTION 23 SUB- SECTION (5) OF SECTION 24 SECTION 34AA SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT 1957 (27 OF 1957) SHALL WITH THE NECESSARY MODIFICATIONS APPL Y IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATIO N TO ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 8 A REFERENCE MADE BY THE [ASSESSING] OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. EXPLANATION.IN THIS SECTION VALUATION OFFICER H AS THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH-TAX ACT 1957 (27 OF 1957).] 9. THE PROVISIONS OF SECTION 55A MANIFEST THAT FO R THE PURPOSE OF COMPUTATION OF INCOME FROM CAPITAL GAIN THE AO HAS JURISDICTION TO TAKE THE EXPERT OPINION FOR ASC ERTAINING THE FMV OF THE CAPITAL ASSET. THE CIRCUMSTANCES AS SET OUT IN THE PROVISIONS INTER-ALIA IN CASE IF THE AO IS OF THE OPINION THAT HAVING REGARD TO THE NATURE OF THE ASSETS AND OTHER RELEVANT CIRCUMSTANCES IT IS NECESSARY TO REFER THE VALUATI ON OF THE CAPITAL ASSET TO THE VALUATION OFFICER WITH A VIEW TO ASCERTAIN THE FMV FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAIN. THUS IT IS CLEAR FROM THE SUB-CLAUSE (II) OF CLAUS E (B) OF SECTION 55A THAT ALL OTHER CASES/INSTANCES OF THE F MV OF THE ASSET WHICH ARE NOT SPECIFICALLY PROVIDED UNDER CLA USE (A) AND SUB-CLAUSE(I) OF CLAUSE (B) ARE COVERED UNDER SUB C LAUSE (II) OF CLAUSE (B) OF SECTION 55A. THE ONLY REQUIREMENT IS THAT AFTER CONSIDERING THE NATURE OF THE ASSET AND RELEVANT CIRCUMSTANCES IN THE OPINION OF THE A.O. IT IS NE CESSARY TO REFER THE VALUATION OF THE ASSET TO THE VALUATION O FFICER. THEREFORE FROM THE LANGUAGE OF THE SECTION 55A AN D PARTICULARLY SUB-CLAUSE (II) OF CLAUSE (B) NO SUCH CONDITION ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 9 EXPRESSLY OR IMPLIEDLY PROVIDED THAT NO REFERENCE C AN BE MADE IF THE CLAIM OF THE ASSESSEE IS SUPPORTED BY THE VA LUATION REPORT OF REGISTERED VALUER. ONLY REQUIREMENT AS P ROVIDED U/S 55A(B)(II) IS IF THE AO IS OF THE OPINION THAT AF TER CONSIDERING THE NATURE OF THE ASSETS AND RELEVANT CIRCUMSTANCES IT IS NECESSARY TO REFER THE VALUATION OF THE CAPITAL ASS ET TO THE VALUATION OFFICER. IN THE CASE IN HAND THE AO HAS EXPRESSED HIS OPINION IN THE FORM NS-I UNDER WHICH THE REFERE NCE WAS MADE ON 8.6.2005 TO THE DVO. THE RELEVANT OBSERVAT ION OF THE AO ARE AS UNDER : II A. B C. I AM OF THE OPINION THAT THE VALUE OF THE ASSET AS RETURNED IN ACCORDANCE WITH THE ESTIMATE MADE BY T HE REGISTERED VALUER IS MORE THAN MARKET VALUE. 10. THUS IT IS EVIDENCE THAT THE AO WAS OF THE OPI NION THAT THE VALUE OF THE ASSET AS RETURNED IN ACCORDANCE WI TH THE ESTIMATION MADE BY THE REGISTERED VALUER IS MORE TH AN THE MARKET VALUE. ONCE AN OPINION HAS BEEN EXPRESSED BY THE AO WHILE REFERRING THE VALUATION TO THE DVO THEN T HE CONDITIONS PROVIDED U/S 55A(B)(II) ARE SATISFIED. EVEN OTHERWISE THE EVALUATION OF THE CAPITAL ASSET AS ON 1.04.1981 IS A TECHNICAL MATTER AND THE AO IS NOT SUPPOSE TO BE AN EXPERT OF ESTIMATING THE VALUATION AS ON 1.4.1981. THE ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 10 REFERENCE TO THE DVO IS SPECIFICALLY PROVIDED UNDE R THE STATUTE TO ASCERTAIN THE FMV OF THE CAPITAL ASSET S. THUS THE AO HAS TO TAKE ASSISTANCE OF THE OPINION OF EXPERT TO DETERMINE THE FMV OF THE CAPITAL ASSET. IF THE CO NTENTION OF THE ASSESSEE IS ACCEPTED THAT THE CLAIM OF THE ASSE SSEE IS SUPPORTED BY THE REGISTERED VALUERS VALUATION THE AO CANNOT REFER THE VALUATION TO THE DVO THEN IN SUCH CASES THERE WOULD BE NO INQUIRY AND EXAMINATION BY THE AO EVEN IF THE VALUATION REPORT OF THE REGISTERED VALUER IS PRIMA FACIE NOT CORRECT. THERE IS NO NEED TO WRITE ANY ELABORATE R EASON FOR EXPRESSING THE OPINION BY THE AO FOR THE PURPOSE OF MAKING THE REFERENCE OF VALUATION TO THE DVO BECAUSE THE REFERENCE AS WELL AS THE VALUATION REPORT OF THE DVO ARE ONL Y A PART OF THE ASSESSMENT PROCEEDINGS AND CANNOT BE TAKEN AS A DECISION OF THE A.O. OR OF DVO. THUS THERE IS NO REQUIREMENT OF ANY LONG DRAWN REASONING FOR EXPRESSING THE OPINION BY THE AO TO INITIATE THE REFERENCE OF THE VALUATION O F THE CAPITAL ASSET TO THE VALUATION OFFICER. THERE ARE DECISIO NS OF THIS TRIBUNAL ON BOTH SIDES. THIS TRIBUNAL IN THE CASE OF VIJAY KUMAR M. SHAH VS. DY. CIT (SUPRA) HAS TAKEN A VIE W AGAINST THE ASSESSEE AFTER CONSIDERING THE DECISIONS OF THI S TRIBUNAL IN THE CASE OF MS. RUBAB M KAZERANI V/S JCIT (SUP RA) (THIRD MEMBER). WE FURTHER NOTE THAT IN THE SUBSEQUENT DE CISION DATED 06.04.2010 IN ITA NO. I.T.A.NO. 746/MUM/2005 AND ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 11 I.T.A.NO. 883/MUM/2005 IN THE CASE OF M/S. KILLICK NIXON LTD. THIS TRIBUNAL TAKEN A VIEW AGAINST THE ASSESSEE O N THIS ISSUE AFTER CONSIDERING THE DECISIONS RELIED UPON BY THE ASSESSEE BEFORE US. 11. EVEN OTHERWISE FOR THE SAKE OF ARGUMENT IF IT IS PRESUMED THAT THE REFERENCE MADE BY THE AO IS NOT AS PER THE PROVISIONS OF SECTION 55A THE VALUATION REPORT OF THE DVO WILL NOT LOOSE/REDUCE ITS RELEVANCY BEING A GOOD PIECE OF EVIDENCE ON THE ISSUE OF FMV OF THE CAPITAL ASSET S AS ON 1.04.1981. THE ADMISSIBILITY OF EVIDENCE IS DEPEN DS UPON ITS RELEVANCE TO THE MATTER IN ISSUE AND NOT IN THE MAN NER HOW IT HAS OBTAINED. IF THERE IS ANY IRREGULARITY IN OBTA INING THE EVIDENCE THE SAME WILL NOT RENDER EVIDENCE AS IT IS NOT ADMISSIBLE. IN THE CASE IN HAND THERE IS NO DOUB T THAT THE AO IS HAVING THE JURISDICTION OVER THE SUBJECT MATT ER I.E. THE VALUATION OF THE CAPITAL ASSETS AND THE VALUATION O FFICER IS ALSO HAVING AUTHORITY AND JURISDICTION TO VALUE THE PRO PERTY AND SUBMIT THE VALUATION REPORT. THUS THE VALUATION R EPORT OF THE DVO IS A RELEVANT AND ADMISSIBLE EVIDENCE IRRESPEC TIVE OF A QUESTION WHETHER THE REFERENCE WAS VALID OR NOT. T HE HON. SUPREME COURT IN THE CASE OF POORAN MAL. V. DIREC TOR OF INSPECTION (INVESTIGATION) REPORTED IN [1974] 93 ITR 505 (SC) HAS OBSERVED THAT EVEN IF THE SEARCH IS HELD AS IL LEGAL SEARCH NOTHING IN THE ARTICLE 19 OF THE CONSTITUTION WHI CH BARS THE ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 12 USE OF EVIDENCE OBTAINED AS A RESULT OF ILLEGAL SE ARCH. AT PAGE 525 526 527 AND 528 THE APEX COURT HAS OBSE RVED AS UNDER : NOW IF THE EVIDENCE ACT 1871 WHICH IS A LAW 'CONSOLIDATING DEFINING AND AMENDING THE LAW OF EVIDENCE NO PROVISION OF WHICH IS CHALLENGED AS VIOLATING THE CONSTITUTION PERMITS RELEVANCY AS THE ONLY TEST OF ADMISSIBILITY OF EVIDENCE (SEE SECTION 5 OF THE ACT) AND SECONDLY THAT ACT OR ANY OTHER SIMIL AR LAW IN FORCE DOES NOT EXCLUDE RELEVANT EVIDENCE ON THE GROUND THAT IT WAS OBTAINED UNDER AN ILLEGAL SEARCH OR SEIZURE IT WILL BE WRONG TO INVOKE THE SUPPOSED SPIRIT OF OUR CONSTITUTION FOR EXCLUDING S UCH EVIDENCE. NOR IS IT OPEN TO US TO STRAIN THE LANGUA GE OF THE CONSTITUTION BECAUSE SOME AMERICAN JUDGES OF THE AMERICAN SUPREME COURT HAVE SPELT OUT CERTAI N CONSTITUTIONAL PROTECTIONS FROM THE PROVISIONS OF T HE AMERICAN CONSTITUTION. A POWER OF SEARCH .. IT THEREFORE FOLLOWS THAT NEITHER BY INVOKIN G THE SPIRIT OF OUR CONSTITUTION NOR BY A STRAINED CONSTRUCTION OF ANY OF THE FUNDAMENTAL RIGHTS CAN W E SPELL OUT THE EXCLUSION OF EVIDENCE OBTAINED ON AN ILLEGAL SEARCH. SO FAR AS INDIA IS CONCERNED ITS LA W OF EVIDENCE IS MODELED ON THE RULES OF EVIDENCE WHICH PREVAILED IN ENGLISH LAW AND COURTS IN INDIA AND I N ENGLAND HAVE CONSISTENTLY REFUSED TO EXCLUDE RELEVA NT EVIDENCE MERELY ON THE GROUND THAT IT IS OBTAINED B Y ILLEGAL SEARCH OR SEIZURE. IN BARINDRA KUMAR GHOSE AND OTHERS V. EMPEROR(1) THE LEARNED CHIEF JUSTICE SIR LAWRENCE JENKINS SAYS AT PAGE 500 : MR. DAS.. IN EMPEROR V. ALLAHABAD KHAN ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 13 IN KURUMA V. THE QUEEN(2) WHERE THE PRIVY COUNCIL HAD TO CONSIDER THE ENGLISH LAW OF EVIDENCE IN ITS APPLICATION TO EASTERN AFRICA THEIR LORDSHIPS PROPOUNDED THE RULE THUS : 'THE TEST TO BE APPLIED BOTH IN CIVIL AND IN CRIMI NAL CASES IN CONSIDERING WHETHER EVIDENCE IS ADMISSIBL E IS WHETHER IT IS RELEVANT TO THE MATTERS IN ISSUE. IF IT IS IT IS ADMISSIBLE AND THE COURT IS NOT CONCERNED WIT H HOW IT WAS OBTAINED.' SOME. CERTAIN IN KURUMA'S CASE KURUMA WAS SEARCHED BY TWO POLICE OFFICERS WHO WERE NOT AUTHORISED UNDER THE L AW TO CARRY OUT A SEARCH AND IN THE SEARCH SOME AMMUNITION WAS FOUND IN THE UNLAWFUL POSSESSION OF KURUMA. THE QUESTION WAS WHETHER THE EVIDENCE WITH REGARD TO THE FINDING OF THE AMMUNITION ON THE PERS ON OF KURUMA COULD BE SHUT OUT ON THE GROUND THAT THE EVIDENCE HAD BEEN OBTAINED BY AN UNLAWFUL SEARCH. I T WAS HELD IT COULD NOT BE SO SHUT OUT BECAUSE THE FINDING OF AMMUNITION WAS A RELEVANT PIECE OF EVIDENCE ON A CHARGE FOR UNLAWFUL POSSESSION. IN A LATER CASE BEFORE THE PRIVY COUNCIL IN HERMAN KING V. THE QUEEN(3) WHICH CAME ON APPEAL FROM A COURT OF APPEAL OF JAMAICA THE LAW AS LAID DOWN IN KURUMA'S CASE WAS APPLIED ALTHOUGH THE JAMAICAN CONSTITUTION GUARANTEED THE CONSTITUTIONAL RIGHT AGAINST (1) 35 ALLAHABAD 358. (2) [1955] A.C. 197. (3) [1969] (1) A.C. 304. SEARC H AND SEIZURE IN THE FOLLOWING PROVISION OF THE JAMAL CA (CONSTITUTION) ORDER IN COUNCIL 1962 SCH. 2 S. 19 '(1) EXCEPT WITH HIS OWN CONSENT NO PERSON SHALL B E SUBJECTED TO THE SEARCH OF HIS PERSON OR HIS PROPER TY OR THE ENTRY BY OTHERS ON HIS PREMISES. '(2) NOTHIN G CONTAINED IN OR DONE UNDER THE AUTHORITY OF ANY LAW SHALL BE HELD TO BE INCONSISTENT WITH OR IN ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 14 CONTRAVENTION OF THIS SECTION TO THE EXTENT THAT TH E LAW IN QUESTION MAKES PROVISION WHICH IS REASONABLY REQUIRED FOR THE PURPOSE OF PREVENTING OR DETECTING CRIME. . . .' IN OTHER WORDS SEARCH AND SEIZURE FOR THE PURPOSES OF PREVENTING OR DETECTING CRIME REASONABLY ENFORCED WAS NOT INCONSISTENT WITH THE CONSTITUTIONAL GUARAN TEE AGAINST SEARCH AND SEIZURE. IT WAS HELD IN THAT CAS E THAT THE SEARCH OF THE APPELLANT BY A POLICE OFFICE R WAS NOT JUSTIFIED BY THE WARRANT NOR WAS IT OPEN TO THE OFFICER TO SEARCH THE PERSON OF THE APPELLANT WITHO UT TAKING HIM BEFORE A JUSTICE OF THE PEACE. NEVERTHELESS IT WAS HELD THAT THE COURT HAD A DISCRETION TO ADMIT THE EVIDENCE OBTAINED AS A RESU LT OF THE ILLEGAL SEARCH AND THE CONSTITUTIONAL PROTEC TION AGAINST SEARCH OF PERSON OR PROPERTY WITHOUT CONSEN T DID NOT TAKE AWAY THE DISCRETION OF THE COURT. FOLLOWING KURUMA V. THE QUEEN THE COURT HELD THAT I T WAS OPEN TO THE COURT NOT TO ADMIT THE EVIDENCE AGAINST THE ACCUSED IF THE COURT WAS OF THE VIEW TH AT THE EVIDENCE HAD BEEN OBTAINED BY CONDUCT OF WHICH THE PROSECUTION OUGHT NOT TO TAKE ADVANTAGE. BUT TH AT WAS NOT A RULE OF EVIDENCE BUT A RULE OF PRUDENCE A ND FAIR PLAY. IT WOULD THUS BE SEEN THAT IN INDIA AS IN ENGLAND WHERE THE TEST OF ADMISSIBILITY OF EVIDENC E LIES IN RELEVANCY UNLESS THERE IS AN EXPRESS OR NECESSARILY IMPLIED PROHIBITION IN THE CONSTITUTION OR OTHER LAW EVIDENCE OBTAINED AS A RESULT OF ILLEGAL SEARCH OR SEIZURE IS NOT LIABLE TO BE SHUT OUT. IN THAT VIEW EVEN ASSUMING AS WAS DONE BY THE HIGH COURT THAT THE SEARCH AND SEIZURE WERE IN CONTRAVENTION O F THE PROVISIONS OF SECTION 132 OF THE INCOME TAX ACT STILL THE MATERIAL SEIZED WAS LIABLE TO BE USED SUB JECT TO LAW BEFORE THE INCOME-TAX AUTHORITIES AGAINST TH E PERSON FROM WHOSE CUSTODY IT WAS SEIZED AND THEREFORE NO WRIT OF PROHIBITION IN RESTRAINT OF S UCH USE COULD BE GRANTED. IT MUST BE THEREFORE HELD TH AT THE HIGH COURT WAS RIGHT 'IN DISMISSING THE TWO WRI T PETITIONS. THE APPEALS MUST ALSO FAIL AND ARE DISMISSED WITH COSTS. ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 15 12. THUS IN VIEW OF THE DECISION OF THE HON. SUPRE ME COURT IN THE CASE OF POORAN MAL. V. DIRECTOR OF INSPECTIO N (INVESTIGATION) (SUPRA) THE VALUATION REPORT OF TH E DVO IS A RELEVANT AND ADMISSIBLE EVIDENCE ON THE MATTER IN I SSUE IRRESPECTIVE OF ILLEGALITY OF REFERENCE MADE BY THE AO. THUS THE ISSUE OF VALIDITY OR ILLEGALITY OF REFERENCE MA DE BY THE AO U/S 55A HAS BECOME PURELY ACADEMIC IN NATURE. ON MERITS 14. IN THE CASE IN HAND THE AO HAS ADOPTED THE VAL UATION REPORT OF THE DVO WHEREAS THE CIT(A) HAS NOT DEC IDED THE ISSUE ON MERITS BUT HELD THAT THE AO HAS NO JURISDI CTION TO REFER THE VALUATION OF THE ASSET TO THE DVO. THER EFORE WE ARE OF THE VIEW THAT THIS ISSUE REQUIRED TO BE RE- EXAMINED IN THE LIGHT OF THE ABOVE OBSERVATIONS. ACCORDINGLY WE SET ASIDE THE ISSUE OF FMV AS ON 1.4.1981 TO THE RECORD OF THE AO TO DECIDE THE SAME BY TAKING INTO ACCOUNT THE REGISTE RED VALUARS REPORT AS WELL AS THE DVOS REPORT AND THE OBJECT ION OF THE ASSESSEE. 15. ISSUE NO.2 REGARDING THE DEDUCTION U/S 54 OF T HE ACT. AS PER THE TERMS OF THE DEVELOPMENT THE DEVELOPER SHALL PROVIDE THREE FLATS AND TILT CAR PARKING TO THE AS SESSEE. THE ASSESSEE CLAIMED DEDUCTION U/S 54 IN RESPECT OF CAP ITAL GAIN AGAINST THESE THREE FLATS. THE AO HELD THAT THE AS SESSEE S CLAIM FOR DEDUCTION UNDER SECTION 54 IS NOT ALLOWAB LE AS SECTION 54 CLEARLY MENTIONS THAT THE ASSESSEE HAS T O PURCHASE WITHIN ONE YEAR BEFORE OR AFTER TWO YEARS OF THE DA TE ON WHICH ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 16 THE TRANSFER TOOK PLACE OR HAS CONSTRUCTED THE NEW PROPERTY WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TR ANSFER. THE AO OBSERVED THAT IN THIS CASE THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS AS PROVIDED IN SECTION 54 BECAUSE TH E TRANSFER OF THE PROPERTY IN QUESTION TOOK PLACE IN THE MONTH OF DECEMBER 2003 NEW PROPERTY WAS NOT ACQUIRED OR CONS TRUCTED BY THE ASSESSEE TILL NOVEMBER 2007 THEREFORE THE CLAIM OF DEDUCTION IS NOT ADMISSIBLE. 16. ON APPEAL THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE U/S 54 FOR THE VALUE OF THESE THREE FLATS TO THE TUNE OF RS.1 28 01 600/-. ACCORDINGLY HE HAS DIRECTED THE AO TO ALLOW THE DEDUCTION U/S 54 FOR RS.1 28 01 600/-. 17. WE HAVE HEARD THE LEARNED DR AS WELL AS THE LEA RNED AR AND CONSIDERED THE RELEVANT RECORD. THE LEANED DR HAS RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT FROM TH E LEASE AGREEMENT IT IS CLEAR THAT THE ASSESSEE DID NOT AC QUIRE OR CONSTRUCT THE FLATS IN QUESTION TILL NOVEMBER 2007. THE LD. DR HAS POINTED OUT THAT DURING THE CONSTRUCTION PERIOD THE DEVELOPER HAS PROVIDED THE ACCOMMODATION TO THE ASS ESSEE ON RENT AND AS PER THE LEASE AGREEMENT THE NEW PROPER TY WAS NOT READY TILL NOVEMBER 2007. THEREFORE THE DECISION RELIED UPON BY THE CIT(A) IS NOT APPLICABLE ON THE FACTS OF T HE PRESENT ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 17 CASE. ALTERNATIVELY THE LEARNED DR HAS SUBMITTED THAT IN ANY CASE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/ S 54 IN RESPECT OF MORE THAN ONE RESIDENTIAL HOUSE. HE HA S RELIED UPON THE DECISION OF THE SPECIAL BENCH OF THIS TRI BUNAL IN THE CASE OF ITO 19(3)(4) MUM. V. MS. SUSHILA M. JHAVER I. REPORTED IN 107 ITD 327 (SB). 18. ON THE OTHER HAND THE LEARNED AR SUBMITTED THA T VIDE CLAUSE 4 OF DEVELOPMENT AGREEMENT THE DEVELOPER H AD TO CONSTRUCT THE THREE FLATS WITHIN A PERIOD OF 36 MON THS AND HANDOVER THE POSSESSION OF THE PROPERTY. THE DEVEL OPER HAS EXPLAINED THE DELAY VIDE LETTER DATED 20.1.2009. THE MAJOR REASON WAS DISPUTED WITH THE TENANT WHICH WAS SETTL ED VIDE CONSENT TERMS IN THE SMALL CAUSE COURT. HE HAS FU RTHER CONTENDED THAT THE ASSESSEE ACQUIRED SUBSTANTIAL DO MAIN AND CONTROL OVER THE PROPERTY BY MAKING THE ENTIRE PURC HASE PRICE AT THE TIME OF ENTERING INTO THE DEVELOPMENT AGREEM ENT. THEREBY PURCHASED NEW RESIDENTIAL UNIT. HE HAS R ELIED UPON THE DECISION OF THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF ITO V/S M/S HILLA J.B. WADIA [1995] 216 ITR 376 (BOM)). THE LD. AR HAS ALSO RELIED UPON THE CIRCULAR NO.472 DATED 15.10.1986 REPORTED IN 162 ITR (ST.41) AND SUBMITTE D THAT THE ALLOTMENT OF THE FLAT IS TREATED AS CONSTRUCTION. THUS THE ASSESSEE HAS PURCHASED A NEW RESIDENTIAL HOUSE WHIL E ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 18 ENTERING INTO THE DEVELOPMENT AGREEMENT. THE LEAR NED AR HAS FURTHER SUBMITTED THAT THE ASSESSEE BEING A HU F HAS PURCHASED MORE THAN ONE RESIDENTIAL UNITS OUT OF SA LE OF RESIDENTIAL HOUSE AND THEREFORE THE ASSESSEE IS EN TITLED FOR DEDUCTION U/S 54 IN RESPECT OF THREE FLATS WHICH AR E TO BE CONSIDERED AS ONE RESIDENTIAL HOUSE AS PER THE REQU IREMENT OF THE ASSESSEE. HE HAS RELIED UPON THE DECISION OF TH E HON.KARNATAKA HIGH COURT IN THE CASE OF D. ANANDA B ASAPPA (2009) 309 ITR 329 (KAR.) AND SUBMITTED THAT WHEN THE ASSESSEE BEING A HUF SOLD ITS RESIDENTIAL HOUSE T HE CAPITAL GAIN SHOULD BE INVESTED FOR PURCHASE OF MORE THAN O NE RESIDENTIAL BUILDING KEEPING IN VIEW OF THE FUTURE NEED OF THE FAMILY MEMBERS OF THE HUF. IT CANNOT BE SAID THA T THE BENEFIT OF EXEMPTION IS TO BE DENIED U/S 54 OF THE ACT. 19. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD. IT IS UNDISPUTED FACT THAT THE ASSESSEE HA S GOT THREE FLATS IN THE PROPERTY DEVELOPED BY THE DEVELOPER AS PER THE DEVELOPMENT AGREEMENT. THE ASSESSEE ACQUIRED THE RI GHT IN THESE THREE FLATS AT THE TIME OF DEVELOPMENT AGREEM ENT AND THE PURCHASE CONSIDERATION WAS PAID IN THE SHAPE OF PROPERTY TRANSFERRED IN FAVOUR OF THE DEVELOPER. THUS IN V IEW OF THE DECISION OF THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF ITO V/S M/S HILLA J.B. WADIA (SUPRA) WE ARE OF TH E VIEW THAT ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 19 THE ACQUISITION OF THE PROPERTY BY THE ASSESSEE I S WITHIN THE PRESCRIBED TIME AS ENUMERATED UNDER SECTION 54 OF THE ACT AND THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 54 W ITH RESPECT TO THE RESIDENTIAL HOUSE PURCHASED OR ACQUIRED BY THE ASSESSEE. AS FAR AS THE CLAIM OF THE ASSESSEE REGA RDING MORE THAN RESIDENTIAL HOUSES IS CONCERNED THERE WERE D IFFERENT VIEWS EXPRESSED BY VARIOUS BENCHES OF THIS TRIBUNAL THEREFORE SPECIAL BENCH WAS CONSTITUTED IN THE CA SE OF SUSHILA M JHAVERI REPORTED IN 107 ITD 327 TO RESO LVE THE ISSUE. THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF SUSHILA M JHAVERI (107 ITD 327) (SB) IN PARAGRAPHS 10 AND 11 HAS HELD AS UNDER : 10. HOWEVER WE ARE IN AGREEMENT WITH CERTAIN DECISIONS OF THE TRIBUNAL RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE WHEREIN EXEMPTION WAS ALLOWED IN RESPECT OF INVESTMENTS IN TWO ADJACENT O R CONTINUOUS UNITS CONVERTED INTO ONE RESIDENTIAL HOU SE BY HAVING COMMON PASSAGE/STAIR CASE COMMON KITCHEN ETC INTENDED TO BE USED AS SINGLE HOUSE FO R THE RESIDENTIAL OF THE FAMILY. AS ALREADY OBSERVED THE INTENTION OF THE LEGISLATURE IS THAT INVESTMENT SHO ULD BE MADE IN ONE RESIDENTIAL HOUSE. SO LONG AS THE HOUSE PURCHASED IS ONE EVEN AFTER CONVERSION THE EXEMPTION WOULD BE AVAILABLE ON THE OTHER HAND IF THE INVESTMENTS IS MADE IN TWO INDEPENDENT RESIDENTIAL HOUSE EVEN LOCATED IN THE SAME COMPLEX THEN IN O UR OPINION EXCEPTION CANNOT BE ALLOWED FOR INVESTMENT IN BOTH THE HOUSES. HOWEVER THE CHOICE WOULD BE WITH ASSESSEE TO AVAIL EXEMPTION IN RESPECT OF ANY ONE HOUSE AS HELD BY THE HON. BOMBAY HIGH COURT IN THE CASE OF K C KAUSHIK (SUPRA). THE VIEW TAKEN BY US IN THIS PARA IS ALSO JUSTIFIED BY THE DECISION OF THE HON. CALCUTTA HIGH COURT IN THE CASE OF B B SARKA R V ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 20 CIT (1981) 132 ITR 150 WHEREIN PURCHASE OF GROUND FLOOR OF A HOUSE AND THEREAFTER CONSTRUCTION OF FIR ST FLOOR GROUND FLOOR OF A HOSE AND THEREAFTER CONSTRUCTION OF FIRST FLOOR WAS HELD TO BE AN INVESTMENT IN ONE HOUSE ONLY. THEIR LOSRDSHIPS AT PAGE 156 OBSERVED AS UNDER : IF A FLOOR IS CONSTRUCTED TO THE NEW HOUSE OR IF IT IS RENOVATED IT REMAINS A HOUSE AND THIS WILL NOT BE TWO HOUSES 11. IN VIEW OF THE ABOVE DISCUSSION IT IS HELD THA T EXEMPTION UNDER SECTION 54 AND 54F OF THE ACT WOULD BE ALLOWABLE IN RESPECT OF ONE RESIDENTIAL HOUSE ON LY. IF THE ASSESSEE HAS PURCHASED MORE THAN ONE RESIDENTIAL HOUSE THEN THE CHOICE WOULD BE WITH ASSESSEE TO AVAIL THE EXEMPTION IN RESPECT OF EITHE R OF THE HOUSES PROVIDED THE OTHER CONDITIONS ARE FULFIL LED. HOWEVER WHERE MORE THAN ONE UNIT ARE PURCHASED WHICH ARE ADJACENT TO EACH OTHER AND ARE CONVERTED INTO ONE HOUSE FOR THE PURPOSE OF RESIDENCE BY HAVI NG COMMON PASSAGE COMMON KITCHEN ETC THEN IT WOULD BE A CASE OF INVESTMENT IN ONE RESIDENTIAL HOUSE AN D CONSEQUENTLY THE ASSESSEE WOULD BE ENTITLED TO EXEMPTION 20. THUS IT IS CLEAR FROM THE ABOVE DECISION OF TH E SPECIAL BENCH OF THIS TRIBUNAL THAT THE EXEMPTION U/S 54F OF THE ACT WOULD BE ALLOWABLE IN RESPECT OF ONE RESIDENTIAL UN IT ONLY. IN THE CASE IN HAND THE ASSESSEE-HUF PURCHASED THREE FLATS. THEN THE INVESTMENT IN SUCH MORE THAN ONE FLATS I S NOT ELIGIBLE FOR EXEMPTION. IT WAS MADE CLEAR BY THE S PECIAL BENCH THAT IF THE INVESTMENT IS MADE IN TWO INDEPE NDENT RESIDENTIAL HOUSE EVEN LOCATED IN THE SAME COMPLEX THEN THE EXEMPTION CAN NOT BE ALLOWED FOR THE INVESTMENT MAD E IN THE BOTH HOUSES. HOWEVER CHOICE WOULD BE WITH THE AS SESSEE TO ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 21 AVAIL EXEMPTION IN RESPECT OF ANY ONE HOUSE IF THE OTHER CONDITIONS ARE FULFILLED. IN THE CASE IN HAND THE RE IS NO AMBIGUITY OR DOUBT THAT THESE THREE FLATS WERE FUL FILLED RESIDENTIAL UNIT HAVING SEPARATE KITCHEN AND SEPARA TE ENTRANCE AND LOCATED AT DIFFERENT FLOOR. THEREFORE THESE TH REE FLATS CANNOT BE SAID TO BE CONTIGUOUS UNITS CONVERTED IN TO ONE RESIDENTIAL HOUSE. IN THE CASE IN HAND IT IS NOT THE RECONSTRUCTION OF EXISTING HOUSE BY THE ASSESSEE BU T IT WAS CONSTRUCTED IN MULTISTORIED APARTMENTS FOR SALE PU RPOSES. ACCORDINGLY BY FOLLOWING THE DECISION OF THE SPECI AL BENCH OF THIS TRIBUNAL IN THE CASE OF SMT. SUSHILA M JHAVE RI (SUPRA) WE SET ASIDE THE ORDER OF THE CIT(A) AND ALLOW THE DEDUCTION ONLY IN RESPECT OF ONE FLAT AS PER THE CHOICE OF TH E ASSESSEE. THE DECISION OF THE HON.KARNATAKA HIGH COURT IN THE CASE OF D. ANANDA BASAPPA (SUPRA) IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE BECAUSE IN THE SAID CASE THE HON.H IGH COURT HAS DECIDED THE ISSUE ON THE BASIS OF SPECIFIC FACT S AS REPRODUCED IN THE PARAGRAPH 8 OF THE SAID DECISION AS UNDER : 8. ON FACTS IT IS SHOWN BY THE ASSESSEE THAT THE APARTMENTS ARE SITUATED SIDE BY SIDE. THE BUILDER HAS ALSO STATED THAT HE HAS EFFECTED MODIFICATION OF T HE FLATS TO MAKE IT AS ONE UNIT BY OPENING THE DOOR IN BETWEEN TWO APARTMENTS. THE FACT THAT AT THE TIME WHEN THE INSPECTOR INSPECTED THE PREMISES THE FLAT S WERE OCCUPIED BY TWO DIFFERENT TENANTS IS NOT THE GROUND TO HOLD THAT THE APARTMENTS IS NOT A ONE RESIDENTIAL UNIT. THE FACT THAT THE ASSESSEE COULD HAVE PURCHASED BOTH THE FLATS IN ONE SINGLE SALE DE ED OR COULD HAVE NARRATED THE PURCHASE OF TWO PREMISES ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 22 AS ONE UNIT IN THE SALE DEED IS NOT THE GROUND TO H OLD THAT THE APARTMENT IS NOT A ONE RESIDENTIAL UNIT. T HE FACT THAT THE ASSESSEE COULD HAVE PURCHASED BOTH TH E FLATS IN ONE SINGLE SALE DEED OR COULD HAVE NARRATE D THE PURCHASE OF TWO PREMISES AS ONE UNIT IN THE SAL E DEED IS NOT THE GROUND TO HOLD THAT THE ASESEEE HAD NO INTENTION TO PURCHASE THE TWO FLATS AS ONE UNIT 21. THUS IT IS CLEAR FROM THE FACTS RECORDED BY TH E HON. HIGH COURT IN THE SAID DECISION THAT THE TWO RESIDENTIAL FLATS WERE CONVERTED INTO ONE RESIDENTIAL HOUSE BY MODIFICATIO N AND NECESSARY ALTERATION WHICH IS NOT IN THE CASE IN HA ND. 22. THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. CO NO.211MUM/2007 23. THE ASSESSEE IN THE CROSS-OBJECTION HAS RAISED THE FOLLOWING GROUNDS : 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING ADDI TION OF RS.28 11 820/- IN THE HAND OF HUF INSTEAD OF THREE INDIVIDUALS BEING COMPENSATION RECEIVED BY TH E THREE CO-PARCENERS AS INDIVIDUALS BEING OCCUPANTS LIKE OTHER TENANTS OF THE PROPERTY FOR THE TRANSIT PERIOD FOR THE TEMPORARY FLATS PROVIDE BY THE DEVELOPERS T O THEM UNDER THE PROVISIONS OF MHADA ACT; 2. IN ANY EVENT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A ) OUGHT TO HAVE APPRECIATED THAT THE SUM OF RS.11 00 000/- OUT OF THE COMPENSATION AMOUNT OF RS.28 11 820/- PAID TO SHRI MAHENDRAKUMAR C MERCHANT IN LIEU OF THE PREMISES PROVIDED FOR THE TRANSIT PERIOD IN CASH IN THE HANDS OF THE APPELL ANTS ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 23 WHEN THE SAME WAS ALREADY OFFERED IN HIS INDIVIDUAL CAPACITY IN HIS RETURN OF THE RESPECTIVE YEARS; 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT DELETING TH E INTEREST CHARGED U/S 234C EVEN THOUGH THE POSSESSION OF PROPERTY UNDER SALE ADMITTEDLY WAS GIVEN ON 27 TH MARCH 2004 AND SUCH LETTER OF POSSESSION WAS FILED WITH AO; 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THREE FLATS GIVEN TO THREE CO-PARCENERS BY THE DEVELOPERS AS INDIVIDUALS WERE ALLOTTED TO THE M AS OCCUPIERS OF THE PREMISES IN THE PROPERTY BEFORE SALE IN THEIR PERSONAL CAPACITY JUST LIKE OTHER TE NANTS OCCUPIERS WERE ENTITLED TO EACH FLAT VIE THE AGREEMENT OF SALE UNDER REFERENCE TO THE BENEFITS O F SECTION 54; 5. IN ANY EVENT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE VALUE OF THE TH REE PREMISES ALLOTTED BY THE DEVELOPERS UNDER THE PROVISIONS OF MHADA ACT TO THE THREE OCCUPIERS IN INDIVIDUAL CAPACITY WHO INCIDENTALLY HAPPENED TO B E COPARCENERS OF THE APPELLANT HUF AS PER THE AGREEMENT OF SALE AS THE INCOME OF THE HUF INSTEAD OF THE INCOME OF THREE INDIVIDUALS 24. THE ASSESSEE HAS ALSO FILED PETITION FOR ADMITT ING ADDITIONAL GROUND AS WELL AS ADDITIONAL EVIDENCE AL ONG WITH THE ADDITIONAL GROUND WHICH READS AS UNDER : WITHOUT PREJUDICE TO ABOVE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE VALUATION OF 3 FLATS MAY BE TAKEN AS PER VALUATION DONE BY THE STAMP AUTHORITIES AT RS.98 77 000/- AS AGAINST THE VALUATION DONE BY THE AO AT RS.1 28 01 600 25. WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEA RNED DR AND CONSIDERED THE RELEVANT RECORD. SINCE THE ADDIT IONAL ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 24 GROUND RAISED BY THE ASSESSEE IS ON THE POINT OF VA LUATION OF THREE FLATS BY TAKING INTO CONSIDERATION THE STAMP DUTY VALUATION DONE BY THE STAMP AUTHORITY FOR DECIDING THE EXEMPTION UNDER SECTION 54. THE ASSESSEE HAS ALSO F ILED ADDITIONAL EVIDENCE SHOWING STAMP DUTY VALUATION OF THREE FLATS AND THE STAMP VALUATION IS DONE ON 15.09.2008 WHICH IS SUBSEQUENT TO THE DATE OF IMPUGNED ORDER OF THE CI T(A). THE STAMP VALUATION BY SAME AUTHORITY HAVE BEEN DONE WH EN THE AGREEMENT REGARDING THESE FLATS WAS EXECUTED BETW EEN THE DEVELOPER AND THE ASSESSEE AND ITS CO-PARCENERS. T HUS IT IS CLEAR THAT THE ADDITIONAL EVIDENCE IN THE SHAPE OF THE REGISTERED AGREEMENT BETWEEN THE DEVELOPER AND THE ASSESSEE WERE NOT AVAILABLE AT THE TIME OF THE ASSESSMENT OR DER AS WELL AS THE IMPUGNED ORDER OF THE CIT(A). UNDER THESE CIRCUMSTANCES AND IN VIEW OF THE DECISION OF THE H ON. SUPREME COURT IN THE CASE OF THE NATIONAL THERMAL P OWER COMPANY LTD. (229 ITR 383) WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. AS WE HAVE DISCUSSED ABOVE THE ADDITIONAL EVIDENCE WAS NOT AVAILABLE BEFORE THE L OWER AUTHORITIES DUE THE SUBSEQUENT EXECUTION AND REGIST RATION OF THE AGREEMENT. ACCORDINGLY IN THE INTEREST OF JUS TICE AND FAIR PLAY WE SET ASIDE THE ADDITIONAL ISSUE RAISED BY T HE ASSESSEE IN THE ADDITIONAL GROUND TO THE RECORD OF THE AO F OR ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 25 VERIFICATION OF THE EVIDENCE FILED BY THE ASSESSEE AND DECIDE THE SAME AS PER LAW. . ORIGINAL GROUND RAISED IN THE CROSS-OBJECTION 27. GROUNDS NO.1 2 4 AND 5 REGARDING THE ADDITI ON OF RS.28 11 820/- BEING THE SALE CONSIDERATION IN THE SHAPE OF COMPENSATION IN THE FORM OF ACCOMMODATION PROVIDED BY THE DEVELOPER TO THE FAMILY MEMBERS OF THE ASESEEE HUF. APART FROM THE MONEY THE CONSIDERATION FOR SALE OF THE LAND IN QUESTION THE ASSESSEE GOT THREE FLATS AND ALSO ACCOMMODATION PROVIDED BY THE DEVELOPER DURING THE PERIOD OF CONSTRUCTION AND THEREAFTER TILL HANDOVER OF THE THREE FLATS. ACCORDINGLY THE AO HAS ADDED A SUM OF RS.28 11 82 0/- BEING CONSIDERATION IN THE FORM OF COMPENSATION /RENT. ON APPEAL THE CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE AO. 28. BEFORE US THE LEARNED AR OF THE ASSESSEE HAS S UBMITTED THAT THE ACCOMMODATION WERE PROVIDED TO THREE IND IVIDUAL AND NOT TO THE ASSESSEE HUF THEREFORE THE COMPEN SATION AMOUNT OF RS.28 11 820/- ACCRUED IN LIEU OF THE P REMISES PROVIDED FOR THE TRANSIT PERIOD HAS TO BE TREATED A S INCOME IN THE HANDS OF THE COPARCENERS OF HUF AND NOT IN THE HANDS OF HUF AS SALE CONSIDERATION. HE HAS FURTHER POINTED OUT THAT IN ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 26 ANY CASE THE SUM OF RS.11 LAKHS OUT OF THE SAID CO MPENSATION OF RS.28 11 280 PAID TO SHRI MAHENDRAKUMAR C MERC HANT WAS ALREADY OFFERED BY HIM IN HIS INDIVIDUAL CAPACITY IN THE RETURN OF INCOME OF THE RESPECTIVE YEAR AND THEREFORE THE SAME CANNOT BE INCLUDED AS A SALE CONSIDERATION IN THE HANDS OF THE ASSESSEE. HE HAS FURTHER POINTED OUT THAT AS PER T HE TERMS OF THE DEVELOPMENT AGREEMENT ALTERNATIVE ACCOMMODATION WAS PROVIDED TO THE INDIVIDUAL AND NOT TO THE HUF TH EREFORE THE COMPENSATION AMOUNT IN LIEU OF THE ACCOMMODATION P ROVIDED BY THE DEVELOPER CANNOT BE TREATED AS SALE CONSIDER ATION IN THE HANDS OF THE HUF. THE LEARNED AR HAS FURTHER POINTED OUT THAT THESE INDIVIDUALS SHOULD BE TREATED AT PAR WITH THE OTHER TENANTS IN THE PREMISES WITH WHOM THE DEVELO PER HAD SEPARATELY AND INDIVIDUALLY DEALT WITH FOR GETTING THE PREMISES EVICTED. THEREFORE IT WAS OBLIGATORY ON THE PART OF THE DEVELOPER TO PROVIDE ACCOMMODATION TO THE OCCUPANT IN THE NEWLY DEVELOPED PROPERTY AS WELL AS CO-PARCENERS WH O WERE OCCUPANT IN THEIR INDIVIDUAL CAPACITY AND THEREFOR E THE FACILITIES OF TENANCY BELONG TO THEM IN THE INDIVID UAL CAPACITY. 30. ON THE OTHER HAND THE LEARNED DR HAS SUBMITT ED THAT THE CO-PARCENERS GOT ACCOMMODATION FROM THE DEVELO PER ONLY IN THE CAPACITY OF COPARCENERS OF HUF AND NOT AS AN INDEPENDENT INDIVIDUAL. HE HAS FURTHER POINTED OU T THAT HUF ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 27 PER SE CANNOT OCCUPY THE RESIDENTIAL PREMISES BUT T HE REAL OCCUPANT IS THE FAMILY MEMBERS OF THE HUF. THEREF ORE IT DOES NOT EFFECT THE NATURE OF POSSESSION WHETHER TH E PREMISES WERE PROVIDED TO THE INDIVIDUAL COPARCENERS OR TO THE HUF. HE HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORIT IES. 31. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND R ELEVANT RECORD. IT IS UNDISPUTED THAT THE PROPERTY IN QUES TION WAS TRANSFERRED BY THE HUF TO THE DEVELOPER AND THE HUF APART FROM THE CASH CONSIDERATION RECEIVED THREE FLATS AS WELL AS THREE ACCOMMODATIONS DURING THE TRANSIT PERIOD. WE ARE NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE THA T THESE ARE INDIVIDUAL ACCOMMODATIONS GIVEN TO THE CO-PARCENERS IN THEIR INDIVIDUAL CAPACITY AND NOT TO THE HUF. THE DEVEL OPER HAS PROVIDED THE ACCOMMODATION FOR THE TRANSIT PERIOD ONLY BECAUSE THE ASSESSEE- HUF HAS TRANSFERRED THE PROP ERTY IN QUESTION AND THE ACCOMMODATION WAS REQUIRED FOR TH E HUF MEMBERS. HUF ITSELF IS NOT A LIVING PERSON WHO REQ UIRES AN ACCOMMODATION FOR RESIDENCE BUT IT IS THE MEMBERS O F THE HUF HAVE TO OCCUPY THE ACCOMMODATION. THEREFORE T HE MEMBERS AND CO-PARCENERS OF THE HUF WERE PROVIDED T HE ACCOMMODATION BY THE DEVELOPER ONLY BECAUSE OF BEIN G THE MEMBERS OF THE CO-PARCENERS OF THE HUF AND NOT IN ANY INDEPENDENT AND INDIVIDUAL CAPACITY. THE SAID TRAN SACTION IS ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 28 BETWEEN THE HUF AND THE DEVELOPER. THEREFORE THE ACCOMMODATION WAS ALSO PROVIDED BY THE DEVELOPER TO THE HUF OR TO THE MEMBERS ON BEHALF OF THE HUF AND TO B E OCCUPIED BY ITS MEMBERS. THE MEMBERS OF THE HUF C ANNOT BE TREATED AT PAR WITH THE TENANTS BECAUSE THE MEMBER S WERE NOT PAYING ANY RENT OR RESIDING IN THE PREMISES IN THE CAPACITY OF THE TENANT BUT AS CO-PARCENERS BEING THE MEMBERS O F THE HUF. ACCORDINGLY WE DO NOT FIND ANY MERIT IN T HE GROUND NO.1 AND 2 OF THE CROSS-OBJECTION THE SAME ARE DISM ISSED. 32. GROUNDS OF CROSS-OBJECTION NO.3 REGARDING THE LEVY OF INTEREST U/S 234C. WE HAVE HEARD THE LEARNED AR AN D THE LEARNED DR AND CONSIDERED THE RELEVANT RECORD. TH E LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT THE AO HAS C OMPUTED THE INTEREST U/S 234C BY TAKING INTO CONSIDERATION THE DATE OF AGREEMENT DATED 12.12.2003 WHEREAS THE POSSESSION OF THE PROPERTY UNDER CONSIDERATION WAS GIVEN ONLY ON 27 .3.2004. THUS THE LEARNED AR OF THE ASSESSEE HAS SUBMITTED THAT THE INTEREST IF ANY HAS TO BE CALCULATED ONLY BY TAKI NG INTO CONSIDERATION THE DATE OF ACTUAL POSSESSION HANDED OVER BY THE ASSESSEE TO THE DEVELOPER. ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 29 33. ON THE OTHER HAND THE LEARNED DR HAS SUBMITTED THAT THAT ASSESSEE HAS TO PAY THE INTEREST FOR DEFAULT IN PAYING THE ADVANCE TAX AS PER THE PROVISIONS OF SECTION 234C. 34. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND RE LEVANT RECORD. IT IS NOT CLEAR FROM THE ASSESSMENT ORDER AS FROM WHICH DUE DATE OF THE ADVANCE TAX THE A.O. HAS CA LCULATED THE INTEREST U/S 234C. THE CIT(A) HAS ALSO NOT ADJ UDICATED UPON THIS ISSUE. WE FURTHER NOTE THAT THE ASSESSE E HAS NOT RAISED THE ISSUE OF INTEREST U/S 234C BEFORE THE CIT(A) AND ACCORDINGLY THE CIT(A) HAS NOT DECIDED THE ISSUE O F CHARGING OF INTEREST U/S 234C. ACCORDINGLY THIS ISSUE DOES NOT EMANATE FROM THE IMPUGNED ORDER OF THE CIT(A). IN ABSENCE OF ANY APPLICATION OR PETITION BY THE ASSESSEE FOR RAISIN G THE ISSUE THE SAME CANNOT BE ADMITTED AS AFRESH AT THIS STAG E. THIS ISSUE IS REJECTED. 35. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY ALLOWED AND CROSS-OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED F OR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 20.12.2010 SD SD (R.S.SYAL) (VIJ AY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ON THIS 20 TH DAY OF DEC 2010 ITA NO. 3439/MUM/2007 CO NO.211MUM/2007 30 SRL:81210 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI