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Income Tax Appellate Tribunal, HYDERABAD ‘ A ‘ BENCH, HYDERABAD.
Before: SHRI S.S. GODARA & SHRI LAXMI PRASAD SAHUSmt. Nandamuri Padmaja Devi,
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ‘ A ‘ BENCH, HYDERABAD.
BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER (Through Physical Hearing)
ITA No.2248/Hyd/2017 (Assessment Year : 2011-12) Smt. Nandamuri Padmaja Devi, Vs. Deputy Commissioner Ramakrishna 70 MM, of Income Tax, NTR Estates, Abids, Circle 2(1), Hyderabad. Hyderabad-500 001 PAN AAXPN 3203B Appellant Respondent
Appellant By : Shri G.Kalyan Das & Shri A. harish. Respondent By : Shri Rohit Majumdar (D.R.)
Date of Hearing : 17.02.2021. Date of Pronouncement : 30.04.2021.
O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2014-15 arises from the
Commissioner of Income Tax (Appeals)-2, Hyderabad’s order
dt.13.10.2017 passed in case No.0088/CIT(A)-2/Hyd/2016-17
in proceedings under Section 143(3) r.w.s. 147 of Income Tax
Act, 1961 (‘the Act’).
2 ITA No.2248/Hyd/2017 Heard both the parties. Case file perused.
The assessee has raised the following substantive
grounds in the instant appeal :
“ 1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to law and the facts. 2. Authorities below erred in not accepting Capital Gains Rs. 819.54 lakhs admitted by the Appellant on Sale of Property. 3. Authorities below further erred in estimating Cost of Acquisition FMV of land as on 01-4-1981 at Rs. 2.51 lakhs against Rs. 21.90 lakhs determined by Registered Valuer. 4. Authorities below ought to have noted, that subject land was since purchased before 01-04-1981, in the absence of SRO/Govt. notified value during 1976 to 1995, FMV of land having regard to the provisions of sec 55(2)(b )(ii) of the Act, was determined by the Registered Valuer at Rs. 21.90 lakhs. 5. Authorities below erred in not considering objections made before DVO and ld. AO while estimating cost of acquisition of land as on 01-04-1981. 6. Authorities below erred in law in making reference to DVO Dis 50C of the Act for valuation of acquisition cost of land as on 01- 04-1981 and consequent valuation report being invalid and is bad in law. Without prejudice to above the appellant contends that :
3 ITA No.2248/Hyd/2017 7. Authorities below erred in law in determining acquisition cost of land on 01-04-1981 at Rs. 2.51 lakhs pursuant to provisions of Sec 55A of the Act when the appellant admitted acquisition cost at higher value at Rs. 21.90 lakhs. 8. The appellant contends while the cost of acquisition of property admitted by appellant at higher value at Rs. 21.90 lakhs, against Rs. 2.51 lakhs determined, in accordance with the provisions of Sec 55A of the Act the ld AO cannot refer for valuation to DVO and consequent valuation report is invalid and bad in law. 9. The ld CIT(A) erred in holding cost of land determined by the registered valuer at Rs. 21.90 lakhsis based on, without any rational or logical explanation and therefore is labile to through into dustbin. 10. The ld CIT(A) further erred in not considering amount of Rs.3.74 lakhs spent by the appellant's husband in construction of house property of the appellant while computing capital gains. 11. For these and other grounds that may be urged before disposal of appeal, appellant prays Capital pains admitted by appellant at Rs. 819.54 lakhs lakhs be accepted or grant any other relief under law.” 3. The assessee has thereafter filed her petition seeking to
raise the following substantive grounds :
4 ITA No.2248/Hyd/2017 “ 12. The Id CIT(A) erred in disallowing the amount spent Rs.1,60,000 (Rs.1,40,000 + Rs.20,000) by the Assessee's Husband on Construction of' Residential house of the Appellant. 13. The Id CIT(A) ought to have noted the amount spent on Construction of House by Appellant's husband was disclosed in his Wealth Tax Returns and the ld. AO having verified the correctness of the facts, allowed the claim of the Appellant. 14. The Id CJT(A) grossly erred in law in disallowing the claim allowed by the ld. AO, resulting in enhancement of the Assessment without issuing Enhancement Notice and opportunity of being Heard to the appellant.”
Learned department representative vehemently
opposed the assessee’s petition seeking admission of additional
grounds at this later stage which allegedly tends to alter the
issues already rasied. We find no merit in the Revenue’s instant
technical objection in light of hon’ble apex court judgement in
NTPC Ltd Vs. CIT 229 ITR 383 (SC) as considered in tribunal’s
Special Bench decision in All Cargo Logistics Ltd. Vs. DCIT (2012)
137 ITD 287 (Mum) that any additional grounds could very well
be raised in sec.254 proceedings in order to determine correct
tax liability of an assessee provided all the relevant facts are
5 ITA No.2248/Hyd/2017 already on record. We accordingly admit the assessee's
grounds of petition.
We now take up the assessee's first and foremost
grievance seeking to reverse both the lower authorities’ action
making Long Term Capital Gains (LTCG) addition of
Rs.9,97,42,562 as upheld in the CIT(Appeals) order as follows :
“ 5. Grounds No.2.1 to 2.5, 5,6.7 and 8.1 to 9.2 of appeal pertain to the action of the AO in adopting FMV as on 01.04.1981 at Rs.2.50 lakhs as against Rs.21.90 lakhs adopted by the appellant. The AR submitted that in the absence of the SRO Government valuation during the period 1976 to 1995 and in accordance with the provisions of Section 55(2)(b) of the Act, the FMV of the land as on 01.04.1981 has to be determined as per the valuation of the registered valuer and relied upon a number of case laws of ITAT in support of the contention. The registered valuer determined the FMV based on the index value on reverse working method, which has been approved by the courts including that of ITAT, Hyderabad in the case of ACIT vs Aditya Waghray &. Arpan Waghray dated 30.12.2016. The AO made reference to OVO for determining the FMV as on 01.04.1981 u/s.50C of the Act. The provisions of Section 5OC are applicable only when the property is sold, whereas in the present case, the assessee purchased the land. The DVO through his
6 ITA No.2248/Hyd/2017 communication to the appellant referred to the provisions of Section 5OC for determining the FMV and the AR enclosed copies of the notices issued by the DVO to the appellant. Therefore, the entire proceedings for determination of FMV as on 01.04.1981 by the ova is null and void and have no sanctity of law. Thus, the FMV determined by the DVO at Rs.2.5 lakhs cannot be considered for computation of capital gains. Further, the AO erred in law in making reference to the DVOu/s.50C of the Act and therefore, the proceedings are bad in law. Furthermore, the ova having determined the valuation of the land u/s.5OC of the Act, made passing reference to Section 55A while objections were filed by the appellant and made valuation pursuant to proceedings u/s.50C of the Act and thus the proceedings of the AO/DVO are bad in law. 5.1 Without prejudice to the above, even the provisions of Section 55A have no application for making reference by the Aa for valuation by the DVO for the AY 2011-12 since, amended provisions of Section 55A(a) of the Act for making reference for valuation when there is variance with FMV came in to effect only from 01.07.2012 relevant to AY 2013-14. Prior to this amendment, reference to ova can be made only when the value of the capital asset is less than the FMV. Whereas, in the case of assessee, the value of the capital asset adopted by the valuer as on 01.04.1981 at Rs.21.90 lakhs is higher than the value determined by the DVO.
7 ITA No.2248/Hyd/2017 6. I have carefully considered the issue and submissions made by the AR. The determination of FMV as on 01.04.1981 by the registered valuer and the indexation method by backward working process may be approved by the Tribunals and other courts. But this by itself cannot give credence to the valuation made by the registered valuer as on 01.04.1981 at Rs.21.90 lakhs. This is particularly when the assessee purchased the said property on 22.01.1980 only for Rs.2.48Iakhs. It is not known as to how the value of the land would go up by 8.75 times in a short span of just 14 months. On the face of it, it is evident that the valuation made by the registered valuer is fantastic and beyond comprehension. The basis adopted is very simplistic and rudimentary without any rational/ logical explanation or basis for such working. The valuation report of the registered valuer cannot stand the test of scientific/technical scrutiny and therefore is liable to throw into dustbin. 6.1 Coming to the legal validity of reference made by the AO to the DVO and the report submitted by the DVO, my observations are as under:- 6.1.1 From the perusal of reference made by the A.O to the DVO as available in the assessment record, it is seen that nowhere it was mentioned the reference was made u/s 5OC of the IT Act. Therefore, the alleged notice given by the DVO to the appellant that FMV is being done u/s.5OC of the Act is of little relevance. As regards the contention that reference u/s.55A cannot be
8 ITA No.2248/Hyd/2017 made to the DVO before 01.07.2012 when the cost of capital asset is more than FMV, it is my considered opinion that the relevant provisions of Section 5OC or 55A are applicable with regard sale of the property. In the present case, the FMV of the asset, which was acquired was sought to be ascertained, rather than the property which is sold. Since, the appellant did not furnish the guideline value of SRO as on 01.04.1981, the AO chose to avail the services of the DVO for arriving at the FMV as on 01.04.1981. It cannot be the contended that the AO cannot avail the services of experts available with the Department during the assessment proceedings. 6.1.2 From the report of the DVO, it is evident that he has duly considered the objections raised by the appellant and arrived the FMV as on 01.04.1981 at Rs.2.50 lakhs. On the face of it, the report of the DVO appears reasonable and well considered, since the estimation by him as on1.04.1981 at RS.2.50 lakhs is almost reasonable and near to the cost of the acquisition as on 22.01.1980 of Rs.2.84 lakhs (including registration charges and stamp duty) whereas, the registered valuer estimated the same at a fantastic figure of RS.21.90 lakhs. 6.2 In view of the above, the contents of the appellant are found to be unacceptable and the grounds of appeal are dismissed.” 6. We have heard rival submissions against and in support
of the impugned LTCG addition. Learned authorized
9 ITA No.2248/Hyd/2017 representative stated at the Bar that the actual date of purchase
of the capital asset involved herein is 1.9.1980 since we are
dealing with an issue of Fair Market Value (FMV) thereof u/s.
48(ii) r.w.s. Expl (iii) r.w.s. 55A of the Act. He sought to buttress
the point that although its cost of acquisition as per the
purchase deed was Rs.98,500 only qua the area involving 1370
sq. m., the same could not be taken as FMV u/s.55A of the Act
as on 1.4.1981. Learned counsel made a very strong endeavour
to highlight the fact that the Sub-Registrar Office (SRO) rates in
and around Hyderabad remained unchanged from the year
1976 to 2005 which sufficiently indicates that they could only
be adopted for the purpose of collecting stamp duty for realizing
revenue than for determining the fair market value in income
tax proceedings.
Learned counsel next referred to section 55A(a);
before its amendment by the Finance Act, 2012 w.e.f. 1.7.2012,
that the same contained the clinching statutory expression
“less than its FMV” only. Meaning thereby that the assessee's
registered valuer’s report had rightly determined the FMV of
10 ITA No.2248/Hyd/2017 the capital asset @ Rs.1038 per sq. yard turning out to be much
more than FMV and therefore, the Assessing Officer ought not
to have disturbed the same as per the hon’ble Gujarat high
court CIT Vs. Gauranginiben S Shodhan (2014) 367 ITR 23 (Guj).
Learned counsel lastly placed before us a catena of case law of
this tribunal’s co-ordinate benches as upheld hon’ble
jurisdictional high court; estimating the FMV to be much more
than that determined by the departmental authorities.
Learned department representative has placed a very
strong reliance on both the lower authorities action rejecting
assessee's registered valuer’s report.
We have given our thoughtful considerations to rival
pleadings. Suffice to say, the assessee's endeavour herein to
claim the fair market value of its capital asset as per her
registered valuer’s report going by sec. 55A(a), its amendment
and therefore, this valuation report to have been adopted @
Rs.1308 per sq. yard as on 1.4.1981. All these assessee's
arguments fail to evoke our concurrence. This is mainly for the
reason that there is hardly any time gap worth counting
11 ITA No.2248/Hyd/2017 between the date of assessee's purchase deed i.e. 1.9.1980 and
the statutory clauses of cost of acquisition i.e. 1.4.1981
respectively. And also that her registered valuer’s report
dt.30.1.2015 in pages 33-36 of the paper book does not even
make a mention if at all he had even tried to find any
comparable case in the concerned Masab Tank locality. This
registered valuer’s report deserves rejection only on account of
these clinching aspect(s). We rather notice that the DVO’s
report dt.30.3.2016 (pages 24-32) has duly considered
comparable case(s) resulting in average FMV of Rs.118.05 per
sq. yard only. The assessee's legal as well as technical pleas
seeking to claim her FMV as per registered valuer’s report go
against the comparable cases and stand declined for the very
reasons therefore.
Coming to assessee's legal argument that the legislature
has used the clinching statutory expressions “fair market value”
only, we find prima facie force in her stand that the purpose of
stamp valuation is to collect revenue only than that of the FMV
which is required to compute capital gains arising from transfer
12 ITA No.2248/Hyd/2017 of a capital asset. He further placed reliance on a number of
judicial precedents estimating FMV do not deserve to be
followed in entirety as per hon’ble jurisdictional high court’s
decision in (1993) 202 ITR 222 (AP) CIT Vs. B R Constructions P.
Ltd. (FB) that any decision not based on identical facts and the
corresponding statute but on mere estimation of FMV; adopting
one or the other price as per middle path, would not form a
judicial precedent. The fact also remains that this issue of FMV
of a capital asset w.e.f. 1.4.1981 has witnessed many booms
and slumps in the intervening time span of four decades as on
date. We keep in mind all these aspects and hold that FMV of
the assessee's capital asset @ Rs.400 per sq. yard by applying
“thumb rule” would be just and proper in the given facts and
circumstances with a rider that the same shall not be treated as
a precedent. Ordered accordingly. This former issue is partly
accepted in above terms.
We next advert to assessee's additional ground s(supra)
and notice from a perusal of the CIT(A)’s detailed discussion in
paras 7.7.3 that he has rejected assessee's claim of her husband
13 ITA No.2248/Hyd/2017 to have spent Rs.1,60,000 (Rs.1,40,000 in A.Y. 1989-90 and
Rs.20,000 in A.Y. 1990-91); respectively and that too, when the
Assessing Officer had not made any such disallowance. This is a
clear cut instance of enhancement u/s.251(1)of the Act without
even issuing notice to this effect. We thus reverse the CIT(A)’s
impugned action on this count alone. The assessee's 12 & 13
substantive grounds are accepted. Necessary computation shall
follow as per law.
No other ground has been pressed before us.
The assessee's appeal is partly allowed in above terms.
Order pronounced in the open court on 30th April, 2021.
Sd/- Sd/- (LAXMI PRASAD SAHU) (S.S. GODARA) Accountant Member Judicial Member
Hyderabad, Dt.30.04.2021. * Reddy gp
14 ITA No.2248/Hyd/2017 Copy to : 1. Smt. Nandamuri Padmaja Devi, Ramakrishna 70 MM, NTR Estates, Abids, Hyderabad-500 001 2. DCIT, Circle 2(1), Hyderabad. 3. Pr. C I T-2, Hyderabad. 4. CIT(Appeals)-2, Hyderabad. 5. DR, ITAT, Hyderabad. 6. Guard File.
By Order Sr. Pvt. Secretary, ITAT, Hyderabad.