ITO, CHENNAI v. Smt. Usha Ramesh, CHENNAI

ITA 916/CHNY/2010 | 2007-2008
Pronouncement Date: 23-09-2011 | Result: Allowed

Appeal Details

RSA Number 91621714 RSA 2010
Assessee PAN AGFPR5777C
Bench Chennai
Appeal Number ITA 916/CHNY/2010
Duration Of Justice 1 year(s) 3 month(s) 15 day(s)
Appellant ITO, CHENNAI
Respondent Smt. Usha Ramesh, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 23-09-2011
Date Of Final Hearing 16-09-2011
Next Hearing Date 16-09-2011
Assessment Year 2007-2008
Appeal Filed On 07-06-2010
Judgment Text
IN THE INCOMETAX APPELLATE TRIBUNAL: A-BENCHL;CHENN AI (BEFORE SHRI U.B.S.BEDI JUDICIAL MEM BER AND SHRI ABRAHAM P. GEORGE. ACCOU NTANT MEMBER) ITA NO. 916 / MDS / 10 ASST. YEAR 2007-08 THE ITO BUSINESS WARD V(4) CHENNAI VS SMT. USHA RAMESH D-3 BLOCK-3 GREEN PARK APARTMENTS CEEBROS 2 LIC COLONY MAIN RD VELALCHERRY CHENNAI 600042 PAN: AGFPR5777C (APPELLANT) (RESPONDENT) APPELLANT BY: RESPONDENT BY: SHRI SHAJI P.JACOB SNMT.PUSHYA SITARAMAN ORDER PER SHRI ABRAHAM P.GEORGE ACCOUNTANT MEMBER: IN THIS APPEAL OF THE REVENUE ITS GRIEVANCE IS THAT CIT(A) DELETED THE ADDITION MADE BY THE AO BY ADOPTING A FAIR MARKET V ALUE OF ` 15 000/- PER GROUND AS ON 01-04-1981 FOR COMPUTING OF LONG TERM CAPITA L GAINS. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD SHOWN CAPITAL GAINS FOR SALE OF 1/9 TH UNDIVIDED SHARE IN LAND AT SURVEY NO.85/2 AND 85/5 OF THIRUVANMIYUR VILLAGE MYLAPORE CHENNAI IN HER RETURN OF INCOME. FOR WOR KING OUT THE SAID CAPITAL GAINS COST AS ON 01-04-1981 WAS ADOPTED BY ASSESSE E AS ` 1 LAKH PER GROUND. ITA NO.916/MDS/10. 2 THE AO FOR THE PURPOSE OF ASCERTAINING THE CORRECT NESS OF THE COST SHOWN BY THE ASSESSEE DEPUTED HIS INSPECTOR TO COLLECT INFORMAT ION FROM THE SUB-REGISTRY OFFICE AT SAIDAPET. ACCORDING TO THE AO THE DETAILS FURNISHED BY THE CONCERNED SUB-REGISTRAR MENTIONED THAT AT SURVEY NOS.85/2 AND 85/5 THIRUVANMIYUR VILLAGE THE VALUE PER GROUND WAS ONLY ` 15 000/- AS ON 01-04-1981. ASSESSEE WAS PUT ON NOTICE IN THIS REGARD WHEREUPON SHE FIL ED A REPLY ENCLOSING THEREWITH A REPORT OF APPROVED VALUER AS PER WHICH THE FAIR MARKET VALUE PER GROUND AS ON 01-04-1981 WAS ESTIMATED AT ` 1 20 000/- . HOWEVER AO WAS NOT IMPRESSED BY THIS REPLY. HE COMPLETED THE ASSESSMENT COMPUTING T HE CAPITAL GAINS TAKING ` 15 000/- PER GROUND AS THE FAIR MARKET VALUE AS ON 01-04-981. 3. IN HER APPEAL BEFORE THE CIT(A) ARGUMENT OF THE ASSESSEE WAS THAT THE VALUATION FURNISHED BY REGISTERED VALUER WAS REJECT ED WITHOUT ANY REASON. ACCORDING TO THE ASSESSEE THE GUIDELINE VALUE FIXE D BY STATE GOVERNMENT COULD NOT BE TAKEN AS SUCH SINCE IT COVERED WIDER AREAS AND WAS NOT LOCATION SPECIFIC.. ASSESSEE ALSO ARGUED THAT THE INSPECTOR WAS NEVER D EPUTED TO INSPECT THE SUBJECT PROPERTY BUT ON THE OTHER HAND FOR GETTING A GUIDELINE FOLLOWED BY THE SUB-REGISTRY. AS PER THE ASSESSEE THE PROPERTY WAS IN PRIME RESIDENTIAL AREA AND LOCATED NEAR SRI MARUNDEESHWARAR TEMPLE THIRUV ANMIYUR BUS TERMINUS AT ECR ROAD. RELYING ON SEC. 2(22B) OF THE INCOME-TAX ACT 1961 (THE ACT FOR SHORT) IT WAS ARGUED BY THE ASSESSEE THAT FAIR MAR KET VALUE IN RELATION TO A CAPITAL ASSET MEANT THE PRICE SUCH CAPITAL ASSET WOULD ORDI NARILY FETCH ON SALE IN THE OPEN MARKET AND NOT THE GUIDELINE VALUE. RELIANCE WAS PLACED BY THE ASSESSEE ITA NO.916/MDS/10. 3 ON THE DECISION OF THE HON. JURISDICTIONAL HIGH COU RT IN THE CASE OF THULASIMANI AMMAL V. CIT (158 CTR 5). 4. LD. CIT(A) WAS APPRECIATIVE OF THE CONTENTIONS O F THE ASSESSEE. ACCORDING TO HIM THE FAIR MARKET VALUE COULD BE DIFFERENT FR OM THE VALUE ADOPTED BY THE REGISTRATION AUTHORITY AND THE GUIDELINE VALUE WAS NOT A CONCLUSIVE PROOF IN THIS REGARD. RELYING ON THE DECISION OF HON. JURISDICTI ONAL HIGH COURT IN THE CASE OF THULASIMANI AMMAL (SUPRA) HE DIRECTED THE AO TO ADO PT THE MARKET VALUE OF THE LAND AS ON 01-04-1981 AT ` 1 LAKH PER GROUND THEREBY ALLOWING THE APPEAL OF T HE ASSESSEE. 5. NOW BEFORE US LD. DR ASSAILING THE ORDER OF THE CIT(A) SUBMITTED THAT GUIDELINE VALUE GIVEN BY THE SUB-REGISTRAR SHOULD B E GIVEN PREFERENCE TO THE VALUE FIXED BY THE REGISTERED VALUER. ACCORDING TO HIM BOTH WERE ESTIMATES AND THE ESTIMATE OF THE SUB-REGISTRAR BEING A GOVERNMEN T AUTHORITY HAD TO BE PREFERRED. 6. PER CONTRA LD. AR APART FROM RELYING ON THE DEC ISION OF THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF THULASIMAN I AMMAL (SUPRA) ALSO SUBMITTED THAT COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS. MRS. N.MEENAKSHI (319 ITR (AT) 262) HAD HELD THAT GUIDEL INE VALUE COULD NOT BE A ITA NO.916/MDS/10. 4 CONCLUSIVE PROOF AND FAIR MARKET VALUE COULD BE DI FFERENT FROM THE VALUE ADOPTED BY THE REGISTRATION AUTHORITY. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE RECORDS. ASSESSEE HAD RETURNED THE COST AT THE RATE OF ` 1 LAKH PER GROUND AND COMPUTED HER CAPITAL GAINS. AO HAD ADOPTED ` 15 000/- PER GROUND AND RECOMPUTED THE CAPITAL GAINS. ASSESSEE SUPPORTED HER VALUATION THR OUGH A REPORT OF THE REGISTERED VALUER AS PER WHICH THE COST PER GROUND AS ON 01-04-1981 WAS ` 1 20 000/- PER GROUND. THE REGISTERED VALUER HAD S PECIFICALLY MENTIONED THAT HE WAS A CONSULTING CIVIL ENGINEER WITH 40 YEARS EX ISTENCE IN VALUATION OF PROPERTY AND ` 1 20 000/- PER GROUND WAS BEING FIXED BY HIM AS THE LAND VALUE PREVAILING AS ON 01-04-1981 AFTER CONSIDERING THE PROXIMITY OF THE PROPERTY TO THE MARUNDEESHWARAR TEMPLE THIRUVANMIYUR BUS TERMINUS AND ECR ROAD. LD. DR WAS NOT ABLE TO PLACE BEFORE US THE REPORT OF THE S UB-REGISTRAR ON THE BASIS OF WHICH THE SUB-REGISTRAR HAD COME TO A CONCLUSION TH AT THE MARKET VALUE OF THE PROPERTY WAS ONLY ` 15 000/- PER GROUND AS ON 01-04-1981. AS ALREADY N OTED ABOVE THE REGISTERED VALUER HAD CONSIDERED THE SPEC IFIC LOCATION OF THE PROPERTY WHILE MAKING HIS VALUATION. HON. JURISDICTIONAL HI GH COURT HAS CLEARLY HELD IN THULASIMANI AMMALS CASE (SUPRA) THAT GUIDELINE VAL UE HAD ONLY EVIDENTIARY VALUE BUT IT WOULD NOT BY ITSELF BE SUFFICIENT TO E STABLISH THE MARKET VALUE AS SUCH. AGAINST ` 1 20 000/- PER GROUND FIXED BY THE REGISTERED VALUE R ASSESSEE HAD ONLY TAKEN ` 1 LAKH PER GROUND IN HER COMPUTATION. WE ARE OF THE OPINION THAT THE AO HAD ADOPTED A FIGURE OF ` 15 000/- PER GROUND WITHOUT GIVING PROPER JUSTIFICATION FOR REJECTING THE VALUE MENTIONED BY THE ASSESSEE THUS WE FIND THAT ITA NO.916/MDS/10. 5 THE CIT(A) HAS TAKEN A CORRECT DECISION IN DIRECTIN G THE AO TO ADOPT THE VALUE OF THE LAND AT ` 1 LAKH PER GROUND AS ON 01-04-1981 AND FOR THIS PUR POSE RELIANCE PLACED BY HIM ON THE DECISION OF HON. JURISDICTION AL HIGH COURT IN THE CASE OF THULASIMANI AMMALS CASE (SUPRA) CANNOT BE FAULTED. WE THEREFORE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A ) IN THIS REGARD. 8. IN THE RESULT APPEAL OF THE REVENUE STANDS DISM ISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON -01-2 011. (U.B.S.BEDI) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: JANUARY 2011. AS PER SEPARATE ORDER . NBR SD/- JM / 21.4.11 CC: ASSESSEE /ASSESSING OFFICER/ CIT(A)/ CIT/ D .R/ GUARD FILE. ITA NO.916/MDS/10. 6 PER U.B.S. BEDI J.M. 9. DESPITE BEST PERSUASION OF MYSELF I HAVE NOT B EEN ABLE TO AGREE WITH THE CONCLUSION AND FINDING AS ARRIVED BY THE LD. ACCOUN TANT MEMBER IN HIS PROPOSED ORDER. SO I PROCEED TO WRITE MY SEPARATE ORDER AS UNDER: 10. FACTS IN BRIEF ARE THAT THE ASSESSEE HAD SHOWN CAPITAL GAINS FOR SALE OF 1/9 TH UNDIVIDED SHARE IN LAND AT SURVEY NO.85/2 AND 85/5 OF THIRUVANMIYUR VILLAGE MYLAPORE CHENNAI IN HER RETURN OF INCOME AND IN ORDER TO WORK OUT THE CAPITAL GAINS COST AS ON 01.04.1981 WAS ADOPTED BY THE ASSESSEE AT ` .1 LAKH PER GROUND. WHEREAS THE ASSESSING OFFICER FOR THE PUR POSE OF CONSIDERING THE CORRECTNESS OF THE COST SHOWN BY THE ASSESSEE SENT HIS INSPECTOR TO COLLECT THE INFORMATION FROM THE SUB-REGISTRAR OFFICE AT SAIDAP ET CHENNAI. THE INFORMATION FURNISHED BY THE CONCERNED SUB-REGISTRAR INDICATES THAT AT SURVEY NO.85/2 AND 85/5 THIRUVANMIYUR VILLAGE MYLAPORE THE VALUE PER GROUND WAS ` .15 000/- PER GROUND AS ON 01.04.1981. THE ASSESSING OFFICER SENT A NOTICE TO THE ASSESSEE GIVING SUCH INFORMATION TO HIM GIVEN BY THE SUB-REG ISTRAR THROUGH HIS INSPECTOR AND IN REPLY THERETO THE ASSESSEE WHILE ENCLOSING REPORT OF SOME APPROVED VALUER AS PER WHICH THE FAIR MARKET VALUE WAS STATE D TO BE ` .1 20 000/- PER GROUND AS ON 01.04.1981. THE ASSESSING OFFICER DID NOT AGREE WITH SUCH REPLY OF THE ASSESSEE AND HE COMPLETED THE ASSESSMENT COMPUT ING CAPITAL GAINS BY ADOPTING ` .15 000/- PER GROUND AS THE FAIR MARKET VALUE AS ON 01.04.1981 AGAINST WHICH THE ASSESSEE PREFERRED APPEAL AND TH E LD. CIT(A) WHILE CONSIDERING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THULASIMANI AMMAL VS. CIT (158 CTR 5) AND COORDINAT E BENCH DECISION IN THE ITA NO.916/MDS/10. 7 CASE OF ACIT VS. MRS. N. MEENAKSHI (2009) 319 ITR ( AT 262) HAS DIRECTED THE ASSESSING OFFICER TO ADOPT THE MARKET VALUE OF THE LAND AS ON 01.04.1981 AT ` .1 00 000/- PER GROUND TO COMPUTE THE CAPITAL GAINS THEREBY ALLOWING THE APPEAL OF THE ASSESSEE. 11. AGGRIEVED BY SUCH ORDER THE DEPARTMENT HAS CO ME UP IN APPEAL AND WHILE RELYING UPON THE GUIDELINE VALUE AS PROVIDED BY THE SUB-REGISTRAR CONCERNED IT WAS PLEADED THAT SUCH VALUE SHOULD BE GIVEN PREFERENCE TO THE VALUE FIXED BY THE REGISTERED VALUER BECAUSE THE VA LUE AS GIVEN BY THE APPROVED VALUE AT ` .1 20 000/- PER GROUND IS NOT SUPPORTED BY ANY DOCU MENTARY EVIDENCE WHEREAS THE SUB-REGISTRAR WHO IS REGISTERING VARI OUS TRANSFER DOCUMENTS WITH REGARD TO LAND IN THAT AREA HAS A VALID BASIS FOR Q UOTING PARTICULAR PRICE AS ON 01.04.1981 AND THE LD. CIT(A) HAS JUST ACCEPTED THE PLEA OF THE ASSESSEE. THEREFORE IT WAS PLEADED FOR REVERSAL OF THE ORDER OF THE LD. CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER. 12. THE LD. COUNSEL FOR THE ASSESSEE WHILE RELYIN G UPON THE ORDER OF THE LD. CIT(A) AND TAKING SUPPORT FROM THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF THULASIMANI AMMAL VS. CIT (SUPRA) AN D THE COORDINATE BENCH DECISION IN THE CASE OF ACIT VS. MRS. N. MEENAKSHI IN WHICH IT HAS BEEN HELD THAT GUIDELINE VALUE COULD NOT BE CONCLUSIVE PROOF AND FAIR MARKET VALUE CAN BE DIFFERENT FROM THE VALUE ADOPTED BY THE REGISTRATIO N AUTHORITY IT WAS PLEADED FOR CONFIRMATION OF THE IMPUGNED ORDER AS THE LD. CIT( A) HAS ADOPTED MIDWAY PATH BECAUSE THE REGISTERED VALUER HAS GIVEN THE FAIR MA RKET VALUE AT ` .1 20 000/- PER GROUND AS ON 01.04.1981 WHEREAS THE FIRST APPELLAT E AUTHORITY HAS ADOPTED ITA NO.916/MDS/10. 8 ` .1 00 000/- AS ON 01.04.1981. THEREFORE IT CANNOT BE SAID THAT THE ORDER OF THE LD. CIT(A) IS NOT JUST AND PROPER. RELYING UPON THE LD. CIT(A)S ORDER IT WAS PLEADED FOR CONFIRMATION OF THE SAME BY DISMISSING THE APPEAL OF THE REVENUE. 13. AFTER HAVING CONSIDERED THE RIVAL SUBMISSIONS PRECEDENTS RELIED UPON FACTS OF THE CASE AND REASONING AND BASIS GIVEN BY THE ASSESSING OFFICER AS WELL AS LD. CIT(A) IT IS FOUND THAT THE ASSESSEE IN TH IS CASE HAS ADOPTED THE VALUE OF ` .1 00 000/- PER GROUND AS ON 01.04.1981 FOR THE PRO PERTY UNDER REFERENCE WITHOUT QUOTING ANY BASIS AND REASONING FOR WORKING OUT CAPITAL GAINS. THE ASSESSING OFFICER DEPUTED HIS INSPECTOR TO VISIT TH E CONCERNED SUB-REGISTRAR IN ORDER TO GET FAIR MARKET VALUE OF THE LAND WHO QUO TED ` .15 000/- PER GROUND AS ON 01.04.1981 AND WHEN THE ASSESSEE WAS CONFRONTED WITH THIS HE CAME FORWARD WITH A VALUATION REPORT OF SOME REGISTERED VALUER WHO QUOTED ` .1 20 000/- PER GROUND AS ON 01.04.1981 WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER WHO ADOPTED ` .15 000/- PER GROUND AS ON 01.04.1981 TO WORK OUT T HE CAPITAL GAINS AND THE LD. CIT(A) WHILE MENTIONING ABOUT VA LUATION FILED BY THE ASSESSEE FROM SOME REGISTERED VALUER HAS DIRECTED THE ASSES SING OFFICER TO ADOPT ` .1.00 LAKH PER GROUND AS ON 01.04.1981 WHICH WAS THE VAL UE ADOPTED BY THE ASSESSEE TO WORK OUT THE CAPITAL GAINS. 14. THE RELEVANT PORTION OF THE DECISION OF THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THULASIMANI AMMAL VS. CIT 158 CTR (M AD) 5 (QUOTED BY THE ASSESSEE AND RELIED UPON BY THE LD. CIT(A)] READS A S UNDER: IT IS WELL SETTLED THAT GUIDELINE VALUE OF THE REGI STRATION DEPARTMENT REGARDING VALUATION OF THE PROPERTY HAS EVIDENTIARY VALUE AND THEY ARE ONLY INTENDED TO GIVE INFORMATION OR INSTRUCTION TO THE REGISTERING AUTHORITIES BUT THE GUIDELINES AS SUCH WOULD NOT ESTABLISH THE MA RKET VALUE OF THE LAND. ITA NO.916/MDS/10. 9 HERE THE CIT HAS NOT CONDUCTED ANY INDEPENDENT INV ESTIGATION ON THE QUESTION OF DETERMINATION OF THE MARKET VALUE OF TH E PROPERTY GIFTED BY COLLECTING NECESSARY MATERIALS FOR THE DETERMINATIO N OF THE SAME DE HORS THE GUIDELINE VALUE. SINCE THE DETERMINATION OF TH E MARKET VALUE OF THE PROPERTY BY THE CIT IS NOT BASED ON RELEVANT MATERI ALS AND THE CIT HAS OVERLOOKED THE MATERIAL PRODUCED BY THE PETITIONER THE MATTER MAY HAVE TO BE REMITTED TO THE CIT FOR FRESH DETERMINATION O F THE MARKET VALUE OF THE PROPERTY. HOWEVER CONSIDERING THE FACT THAT THE ASSESSMENT IS OF THE YEAR 1971-72 AND THE ORDER OF THE GTO WAS MADE AS E ARLY AS 8 TH AUG. 1979 INSTEAD OF REMITTING THE MATTER TO THE CIT THE MARKET VALUE SHOWN BY THE PETITIONER WHICH IS BASED ON THE VALUERS R EPORT VIZ. A SUM OF `. 83 330 CAN BE TAKEN AS THE MARKET VALUE OF THE PROP ERTY SO THAT FURTHER PROCEEDINGS ON THE DETERMINATION OF THE MARKET VALU E CAN BE AVOIDED. FURTHER THE VALUE SHOWN BY THE PETITIONER IS BASED ON THE REPORT OF THE APPROVED VALUER AND THERE ARE NO JUSTIFIABLE REASON S TO DISCARD THE SAME.. 15. FROM THE ABOVE OBSERVATION OF THE HONBLE HIGH COURT IT WOULD BE SEEN THAT APPROVED VALUERS REPORT HAS BEEN ACCEPTED FOR THE REASONS OF BEING OLD ONE OTHERWISE IT HAS CLEARLY BEEN MENTIONED THAT MATTER HAD TO BE REMITTED BACK AND IN THE CASE IN HAND THE ASSESSEE DID NOT BASE THE VALUE AS ON 01.04.1981 ON ANY APPROVED VALUERS REPORT AND WHEN ENQUIRY WA S MADE BY THE ASSESSING OFFICER AND GUIDELINE VALUE WAS OBTAINED FROM THE S UB-REGISTRAR CONCERNED WHICH WAS CONFRONTED TO THE ASSESSEE HE CAME FORWA RD WITH A VALUERS REPORT SHOWING VALUE AT `. 1 20 000/- PER GROUND AS ON 01.04.1981 WHICH HAS N EITHER BEEN ADOPTED BY THE ASSESSEE NOR BY THE LD. CIT(A) TO REVERSE THE ORDER OF THE ASSESSING OFFICER. THE HONBLE HIGH COURT HAS OTHE RWISE HELD THAT GUIDELINE VALUE HAS A EVIDENTIARY VALUE AND THE ASSESSING OFF ICER COULD MAKE FURTHER ENQUIRIES ON ASSESSEE HAVING BEEN FILED THE VALUATI ON REPORT OF HIS APPROVED VALUER BUT SAME WAS NOT DONE AND THE LD. CIT(A) AL SO DID NOT MAKE ANY ENQUIRY WITH REGARD TO THE VALUE OF THE PROPERTY AS ON 01.0 4.1981. THEREFORE IN VIEW OF ITA NO.916/MDS/10. 10 THE FACTS CIRCUMSTANCES AND MATERIAL ON RECORD IT IS HELD THAT NEITHER THE ACTION OF THE ASSESSING OFFICER NOR THAT OF THE LD. CIT(A) CAN BE HELD TO BE PROPER AND JUSTIFIED. AS SUCH IN THE INTEREST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER IT WOULD BE JUST AND APPROPRIATE TO SET ASIDE THE ORDE RS OF AUTHORITIES BELOW AND TO REMIT BACK THE ISSUE OF VALUATION ON THE FILE OF TH E ASSESSING OFFICER WITH THE DIRECTION TO RE-DECIDE THE SAME AFTER MAKING PROPER ENQUIRIES AND GATHERING MATERIAL AND INSTANCES OF TRANSACTION TAKEN PLACE I N THAT AREA OR IN CLOSE PROXIMITY AS ON THE DATE OF VALUATION. IT IS HELD AND ORDERED ACCORDINGLY. 16. IN THE RESULT THE APPEAL OF THE REVENUE GETS A CCEPTED FOR STATISTICAL PURPOSE. SD/ (U.B.S. BEDI) JUDICIAL MEMBER DATED 21.04.2011 VM/- ITA NO.916/MDS/10. 11 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI B E F O R E DR. O.K.NARAYANAN VICE PRESIDENT THIRD MEMBER I.T.A. NO.916(MDS)/2010 (ASSESSMENT YEAR: 2007-08) THE INCOME-TAX OFFICER BUSINESS WARD- V(4) CHENNAI. VS. SMT. USHA RAMESH D-3 BLOCK-3 GREEN PARK APARTMENTS CEEBROS 2 LIC COLONY MAIN ROAD VELACHERRY CHENNAI-42. PAN AGFPR 5777 C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB SR. DR RESPONDENT BY : SMT. PUSHYA SITARAMAN SR.ADVOCATE DATE OF HEARING : 10 TH AUGUST 2011 DATE OF ORDER : 10 TH AUGUST 2011 O R D E R PER DR. O.K. NARAYANAN VICE-PRESIDENT THE QUESTION REFERRED TO THE THIRD MEMBER IS AS FOL LOWS : IN VIEW OF THE FACTS AND CIRCUMSTANCES WHETHER TH E ORDERS OF AUTHORITIES BELOW COULD BE SET ASIDE AND ITA NO.916/MDS/10. 12 MATTER CAN BE REMITTED BACK TO THE ASSESSING OFFICE R FOR CONSIDERATION OR ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) COULD BE UPHELD. 2. SMT. USHA RAMESH THE ASSESSEE IS AN INDIVIDUAL. SHE HAD SOLD HER SHARE IN THE LANDED PROPERTY MEASURING 33 GROUNDS AT THIRUVANMIYUR CHENNAI. THE ASSESSEE HAD 1/9 TH SHARE IN THE SAID PROPERTY ORIGINALLY PURCHASED BY HER GRAND-FATHER VENUGOPAL PILLAI. THE PROPERTY PURCHASED BY HER GRAND-FATHER WAS SETT LED IN THE NAME OF HER FATHER SHRI T.DEVENDRAN ON 18.07.1958. ASS ESSEES FATHER SHRI T. DEVENDRAN THEREAFTER SETTLED THE PROPERTY BETWEEN HIMSELF AND CHILDREN WHEREBY THE ASSESSEE ACQUIRED 1/9 TH RIGHT IN THE PROPERTY OF 33 GROUNDS AT THIRUVANMIYUR CHENNAI. 3. THE ABOVE SALE TRANSACTION RESULTED IN GENERATIN G LONG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE IN THE P REVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE HAS RETURNED A TOTAL INCOME OF ` 2 63 050/- BY WAY OF LONG TERM CAPITAL GAINS. 4. AS THE PROPERTY WAS ACQUIRED BY THE PREVIOUS OWN ER BEFORE 1 ST APRIL 1981 THE ASSESSEE AVAILED THE OPTION OF ADO PTING THE FAIR ITA NO.916/MDS/10. 13 MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 AS THE COST OF ACQUISITION AS PROVIDED UNDER SEC.55(2) OF THE INCOME-TAX ACT 1961. THE ASSESSEE ADOPTED ` 1 00 000/- PER GROUND AS THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981. THE LONG TERM CAPITAL GAINS LIABLE FOR TAXATION WAS COMPUTED BY THE ASSESSEE IN THIS MANNE R. 5. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSING AUTHORITY DEPUTED THE INCOME-TAX INSPECTOR TO COLLE CT RELEVANT INFORMATION REGARDING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981. THE INSPECTOR VISITED THE CONCERNED SUB- REGISTRAR OFFICE AT SAIDAPET CHENNAI AND GATHERED THE DETAILS WHICH ST ATED THAT THE GUIDELINE VALUE ADOPTED FOR THE PROPERTY COVERED BY SURVEY NOS.85/2 AND 85/5 OF THIRUVANMIYUR VILLAGE AIBEA NAGAR IN W HICH AREA THE PROPERTY SOLD BY THE ASSESSEE SITUATED WAS ONLY ` 15 000/- PER GROUND. IN THE LIGHT OF THE ABOVE INFORMATION THAT THE GUIDELINE VALUE OF THE PROPERTY WAS ` 15 000/- PER GROUND AS ON 1.4.1981 THE ASSESSING OFFICER INVITED THE OBJECTIONS OF THE ASS ESSEE AGAINST ADOPTING THE FAIR MARKET VALUE OF THE PROPERTY AT ` 15 000/- PER GROUND AS AGAINST THE RATE OF ` 1 00 000/- PER GROUND ADOPTED BY THE ASSESSEE. THE ASSESSEE REPLIED TO THE ASSESSING AU THORITY THAT THE GUIDELINE VALUE IS DIFFERENT FROM THE MARKET VALUE AND FOR THE PURPOSE ITA NO.916/MDS/10. 14 OF COMPUTING CAPITAL GAINS WHAT IS TO BE LOOKED INT O IS THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981. THE ASSESSEE SUBMITTED THAT THE GUIDELINE VALUE OF ` 15 000/- PER GROUND PROPOSED BY THE ASSESSING AUTHORITY WAS NOT FAIR. THE ASSESSEE ALS O FURNISHED ALONG WITH HER REPLY A VALUATION REPORT PREPARED BY A CO NSULTING ENGINEER AND APPROVED VALUER BY NAME SHRI K. VADIVELU. THE APPROVED VALUER ESTIMATED THE FAIR MARKET VALUE OF THE PROPERTY AT ` 50/- PER SQ.FT. WORKING OUT AT ` 1 20 000/- PER GROUND. THE ASSESSEE ALSO PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF THULASIMANI AMMAL V. CIT (158 CTR 5) WHEREI N THE COURT HAS HELD THAT GUIDELINE VALUE REGARDING VALUATION O F PROPERTY HAS EVIDENTIARY VALUE AND THEY ARE ONLY INTENDED TO GIV E INFORMATION OR INSTRUCTION TO THE REGISTERING AUTHORITIES BUT THE GUIDELINE VALUE AS SUCH WOULD NOT ESTABLISH THE MARKET VALUE OF THE LA ND. 6. THE ASSESSING OFFICER ON THE GROUND THAT THE VA LUATION REPORT DID NOT MAKE ANY COMPARISON OF SIMILAR CASES AND FO R WANT OF RELEVANT DETAILS ADOPTED THE GUIDELINE VALUE COLLE CTED FROM THE SUB- REGISTRAR OFFICE AND COMPUTED THE TAXABLE CAPITAL G AINS ON THE BASIS OF FAIR MARKET VALUE OF ` 15 000/- PER GROUND AS ON 1.4.1981. ITA NO.916/MDS/10. 15 7. IN FIRST APPEAL THE COMMISSIONER OF INCOME-TAX (APPEALS) ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND HELD T HAT THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 SHOULD BE CONSIDERED AT ` 1 00 000/- PER GROUND. THUS THE FIRST APPEAL WAS DECIDED IN FAVOUR OF THE ASSESSEE. 8. AGGRIEVED BY THE SAID ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) THE REVENUE CAME BEFORE THE TRIBUNAL IN SECOND APPEAL. THE LEARNED ACCOUNTANT MEMBER WHO AUTHORED THE ORDE R RELYING ON THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN TH E CASE OF THULASIMANI AMMAL V. CIT (158 CTR 5) HELD THAT THE GUIDELINE VALUE COLLECTED FROM THE SUB-REGISTRAR OFFICE COULD NOT R EFLECT THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 AND THEREFORE THE ASSESSING AUTHORITY WAS NOT JUSTIFIED IN ADOPTING ` 15 000/- PER GROUND AS THE FAIR MARKET VALUE AS ON 1.4.1981. THE LEARNED ACCO UNTANT MEMBER HELD THAT THE VALUATION REPORT FRAMED BY THE REGIST ERED VALUER HAD ESTIMATED THE FAIR MARKET VALUE AS ON 1.4.1981 AFTE R CONSIDERING THE SPECIFIC LOCATION OF THE PROPERTY AND OTHER RELEVAN T FACTORS. THE APPROVED VALUER HAS WORKED OUT THE FAIR MARKET VALU E AT ` 1 20 000/- PER GROUND WHEREAS THE ASSESSEE HAS CLAIMED ONLY ` 1 00 000/- PER GROUND AS THE FAIR MARKET VALUE. THE LEARNED ACCOU NTANT MEMBER ITA NO.916/MDS/10. 16 ACCORDINGLY UPHELD THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND CONFIRMED THE ADOPTION OF ` 1 00 000/- PER GROUND AS THE FAIR MARKET VALUE AS ON 1.4.1981. 9. THE LEARNED JUDICIAL MEMBER WHO DIFFERED FROM TH E ORDER OF THE LEARNED ACCOUNTANT MEMBER HELD THAT NEITHER THE ASS ESSING OFFICER NOR THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS DI SCUSSED THE BASIS AND REASONING FOR ADOPTING THE RESPECTIVE MAR KET VALUES OF ` 15 000/- AND ` 1 00 000/- PER GROUND AS ON 1.4.1981. HE HELD THEREFORE THAT IT IS NECESSARY ON THE PART OF THE ASSESSING OFFICER TO MAKE EFFECTIVE ENQUIRIES TO WORK OUT THE FAIR MARKE T VALUE AS ON THAT DATE. HE HELD THAT IT IS NOT POSSIBLE TO CONFIRM T HE VALUE ADOPTED EITHER BY THE ASSESSING OFFICER OR BY THE COMMISSIO NER OF INCOME-TAX (APPEALS). ACCORDINGLY HE SET ASIDE THE ISSUE BAC K TO THE ASSESSING OFFICER WITH A DIRECTION TO MAKE FURTHER ENQUIRIES AND PASS A FRESH ASSESSMENT ORDER AFTER GIVING THE ASSESSEE AN OPPOR TUNITY OF BEING HEARD. 10. IT IS IN THIS BACKGROUND THAT I HAVE TO CONSIDE R THE QUESTION REFERRED TO ME AS A THIRD MEMBER. ITA NO.916/MDS/10. 17 11. I HEARD SHRI SHAJI P. JACOB THE LEARNED COMMIS SIONER OF INCOME-TAX FOR THE REVENUE AND SMT. PUSHYA SITARAMA N THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE. 12. THE PROPERTY SOLD BY THE ASSESSEE WAS ACQUIRED BY THE EARLIER OWNER BEFORE 1.4.1981. THAT GAVE THE ASSESSEE AN O PTION TO ADOPT THE COST OF ACQUISITION OF THE PROPERTY AT THE FAIR MARKET VALUE AS ON 1.4.1981. THE ASSESSEE EXERCISED THE ABOVE STATUTO RY OPTION AND ADOPTED THE FAIR MARKET VALUE OF THE PROPERTY AT ` 1 00 000/- PER GROUND. IN SUPPORT OF HER CLAIM THE ASSESSEE HAS FILED VALUATION REPORT FRAMED BY AN APPROVED VALUER WHERE THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 WAS ADOPTED AT ` 1 20 000/- PER GROUND. 13. ON THE OTHER HAND THE ASSESSING OFFICER RELIED ON THE GUIDELINE VALUE COLLECTED FROM THE SUB-REGISTRAR OFFICE WHICH STOOD AT ` 15 000/- PER GROUND AS ON 1.4.1981. 14. IT IS TO BE SEEN THAT THE EXACT MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 CANNOT BE WORKED OUT WITH MATHEMATICAL ACC URACY. AN ELEMENT OF ESTIMATION IS INHERENT IN SUCH EXERCISES . BUT WHAT IS IMPORTANT IS THAT SUCH ESTIMATE SHOULD NOT BE ARBIT RARY AND ITA NO.916/MDS/10. 18 UNREASONABLE. THERE SHOULD BE SOME BASIS AND REASO NING IN ARRIVING AT A PARTICULAR AMOUNT AS THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981. THE GUIDELINE VALUE COLLECTED FROM THE S UB-REGISTRAR OFFICE IS ONE AMONG THE GUIDING FACTORS AS HELD BY THE HON BLE MADRAS HIGH COURT IN THE CASE OF THULASIMANI AMMAL V. CIT (158 CTR 5). SUCH GUIDELINE VALUES NEED NOT BE THE MARKET VALUE ALL T HE TIME. THE MARKET VALUE IS DETERMINED BY SO MANY EXTERNAL FACT ORS INCLUDING THE PREVALENT MARKET CONDITIONS. IT MEANS THAT SOME ENQ UIRY IS CALLED FOR TO ARRIVE AT A REASONABLE AMOUNT OF FAIR MARKET VAL UE AS ON 1.4.1981. 15. AS RIGHTLY POINTED OUT BY THE LEARNED JUDICIAL MEMBER THE ASSESSING OFFICER DID NOT TURN LEFT OR RIGHT; HE SI MPLY ADOPTED THE GUIDELINE VALUE AT ` 15 000/- PER GROUND WITH A MECHANICAL ARM. THE ASSESSING AUTHORITY SHOULD HAVE MADE FURTHER ENQUIR IES LIKE THE MARKET VALUE ADOPTED FOR SIMILAR PROPERTIES IN THE SAME LOCALITY OTHER COMPARABLE SALE INSTANCES ETC. WHILE DEPUTING THE INSPECTOR TO THE OFFICE OF THE SUB-REGISTRAR THE ASSESSING OFFICER COULD HAVE DIRECTED THE INSPECTOR TO VISIT THE CONCERNED SITE OF THE PR OPERTY ALSO. THE ASSESSING OFFICER COULD HAVE AVAILED THE ASSISTANCE OF THE DEPARTMENTAL VALUER. THEREFORE IT IS VERY CLEAR T HAT THE ASSESSING OFFICER HAS NOT DONE ANY ENQUIRIES EXCEPT MECHANICA LLY ADOPTING THE ITA NO.916/MDS/10. 19 GUIDELINE VALUE FURNISHED BY THE SUB-REGISTRAR OFFI CE. THIS IS AN ARBITRARY APPROACH IN FIXING THE FAIR MARKET VALUE. 16. LIKEWISE THE ASSESSEE ALSO HAS NOT STATED THE BASIS OF FIXING THE FAIR MARKET VALUE AT ` 1 00 000/- PER GROUND AS ON 1.4.1981. THE VALUATION REPORT WAS FILED BY THE ASSESSEE ALONG WI TH THE OBJECTIONS TO THE PROPOSAL MOOTED BY THE ASSESSING AUTHORITY. THE SAID VALUATION REPORT IS ALSO NOT A COMPREHENSIVE ONE. THE APPROVED VALUER HAS STATED HIS EXPERIENCE AND WISDOM ALONE AS THE BASIS FOR VALUING THE PROPERTY. OF COURSE EXPERIENCE AND WI SDOM ARE VERY PRECIOUS. AT THE SAME TIME IT IS NECESSARY TO BRI NG ON RECORD CERTAIN PARAMETERS BASED ON WHICH IT IS POSSIBLE FOR ANYBOD Y TO SAY THAT THE VALUE HAS BEEN WORKED OUT ON THE BASIS OF CERTAIN M ATERIALS. MENTIONING THE LOCATION OF THE PROPERTY ALONE IS NO T SUFFICIENT. THERE IS NO CASE OF ANY COMPARABLE SALES OR ANY OTHER REL EVANT INFORMATION WHICH WOULD SUPPORT THE VALUE ADOPTED BY THE APPROV ED VALUER. THEREFORE AS RIGHTLY HELD BY THE LEARNED JUDICIAL MEMBER IT IS NOT POSSIBLE TO UPHOLD THE FAIR MARKET VALUE ADOPTED BY THE ASSESSEE AS WELL. ITA NO.916/MDS/10. 20 17. IN THESE CIRCUMSTANCES THE LEARNED JUDICIAL ME MBER HAS RIGHTLY SET ASIDE THE ISSUE BACK TO THE ASSESSING OFFICER F OR FRESH CONSIDERATION IN ACCORDANCE WITH LAW. 18. HAVING CONCLUDED AS ABOVE I AGREE WITH THE VIE W EXPRESSED BY THE LEARNED JUDICIAL MEMBER. 19. NOW THIS FILE WILL BE PLACED BEFORE THE REGULAR BENCH FOR PASSING ORDERS TO FINALLY DISPOSE OF THE CASE ON A MAJORITY VIEW. SD/- (DR.O.K.NARAYANAN) VICE-PRESIDENT CHENNAI DATED THE 10 TH AUGUST 2011 MPO* ITA NO.916/MDS/10. 21 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER I.T.A. NO. 916/MDS/2010 (ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER BUSINESS WARD V(4) CHENNAI 600 034. (APPELLANT) V. SMT. USHA RAMESH D-3 BLOCK-3 GREEN PARK APARTMENTS CEEBROS 2 LIC COLONY MAIN ROAD VELACHERRY CHENNAI 600 042. PAN : AGFPR5777C (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB SR.DR RESPONDENT BY : MS. G. V ARDINI DATE OF HEARING : 16.09.2011 DATE OF PRONOUNCEMENT : 23.09.2011 ORDER GIVING EFFECT PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER : ON A DIFFERENCE OF OPINION BETWEEN THE MEMBERS CO NSTITUTING THE BENCH FOLLOWING QUESTION WAS REFERRED TO THIRD MEMBER :- IN VIEW OF THE FACTS AND CIRCUMSTANCES WHETHER THE ORDERS OF AUTHORITIES BELOW COULD BE SET ASIDE AND MATTER CAN BE REMITTED BACK TO THE ASSESSING OFFICER FOR ITA NO.916/MDS/10. 22 CONSIDERATION OR ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) COULD BE UPHELD. 2. HON'BLE VICE PRESIDENT SITTING AS THIRD MEMBER HAS AGREED WITH THE VIEW OF THE HON'BLE JUDICIAL MEMBER. AS P ER THE MAJORITY VIEW THE ISSUE REGARDING FIXATION OF MARKET VALUE AS ON 1.4.1981 IS REMITTED BACK TO THE FILE OF A.O. FOR FRESH CONSIDE RATION IN ACCORDANCE WITH LAW. 3. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE COURT ON 23 RD SEPTEMBER 2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 23 RD SEPTEMBER 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-VIII CHENNAI/ CIT-VI CHENNAI/D.R./GUARD FILE