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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
आयकर अपील�य अ�धकरण, राजकोट �यायपीठ, राजकोट । IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE SHRI RAJPAL YADAV, HON’BLE JUDICIAL MEMBER AND SHRI WASEEM AHMED HON’BLE ACCOUNTANT MEMBER ITA No.52/RJT/2018 �नधा�रण वष�/ Asstt. Year: 2012-13 Smt.Amarbhai Dhanji Jadav ITO, International Taxation Gandhidham. C/o. Shri Nanji Kalyanji Vekariya Vs. Upalo Vas, Village-Baldiya Tal. Bhuj-Kutch 370 001. ITA No.53/RJT/2018 �नधा�रण वष�/ Asstt. Year: 2012-13 Shri Mavji Dhanji Jadva ITO, International Taxation Gandhidham. C/o. Shri Nanji Kalyanji Vekariya Vs. Upalo Vas, Village-Baldiya Tal. Bhuj-Kutch 370 001. (Applicant) (Responent) Assessee by : Shri M.J. Ranpura, AR Revenue by : Shri Anil Kumar Das, DR सुनवाई क� तार�ख/Date of Hearing : 18/09/2019 घोषणा क� तार�ख /Date of Pronouncement: 20/09/2019 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: Assessees are in appeals before the Tribunal against separate orders of the ld.CIT(A)-13, Ahmedabad dated 30.1.2017 passed on the respective appeals of the assessees for assessment years 2012-13.
Assessees are mother and son and issue involved in both appeals relates to computation of long term capital gain required to be determined in the
ITA No.52 and 53/RJT/2018 2 hands of both the appellants on sale of joint property. Therefore, we heard both the appeals together and deem it appropriate to dispose of them by this common order.
Solitary grievance of both the appellants is that the ld.CIT(A) has erred in confirming the addition of Rs.23,21,164/- in each hand of appellants independently.
Brief facts of the case are that a plot bearing no.54/A situated at Jadavji Nagar, Bhuj-Kutch was purchased by both the appellants in equal shares. According to the appellants, a construction of house was raised in F.Y.2000- 01 after incurring a sum of Rs.23,21,164/-. The house was damaged in the earthquake occurred on 26th January, 2001, and hence it was got repaired by incurring a sum of Rs.14,55,751/- in the F.Y.2001-02. This, the house was stated to be sold for a consideration of Rs.50 lakhs during the accounting year relevant to the Asstt.Year 2012-13. The ld.AO got information that the value of the house for the purpose of stamp duty was determined by the stamp duty valuation authority at Rs.77,60,099/-. Thus, share of the each assessee comes at Rs.38,80,050/-. The long term capital gain calculated by each assessee reads as under: Sales Consideration Rs.38,80,050/- Less: Indexed cost of Rs.1,18,580/- land ii) Indexed cost of Rs.23,21,164/- construction in F.Y.2000-01 iii) Index cost of Rs.14,55,751/- construction in F.Y.2001-02 Rs.38,95,495/- Net Long Term Capital Loss Rs.15,446/-
ITA No.52 and 53/RJT/2018 3 5. The ld.AO was not satisfied with the calculation made by the appellants. He referred the matter to the DVO for determining the fair market cost of the property in F.Y.2001-02. The DVO has reported the cost of construction in F.Y.2001-02 at Rs.24,33,000/-. The ld.AO did not accept this cost of construction on the ground that since the assessees themselves have shown cost of construction at Rs.14,55,751/- therefore this cost is accepted and he accordingly computed capital gain in each hand of the assessee as under: Sales Consideration Rs.38,80,050/- Less: i) Indexed cost of Rs.1,18,580/- land ii) Index cost of Rs.14,55,751/- construction in F.Y.2001-02 15,74,331/- Net Long Term Capital Gain Rs.23,05,719/-
This exercise lead to an addition of Rs.23,05,719/- in the respective hands of the appellants. Appeal to the CIT(A) did not bring any relief to the assessee.
With the assistance of the ld.representatives, we have gone through the record carefully The stand of the assessee is that they have applied for permission to commence construction on the plot in question from the Municipal Authority, Bhuj. Such permission was granted to them vide letter dated 7.1.2000 and copy of the letter has been placed on record at page no.27 of the paper book. We deem it appropriate to take note of this letter, which reads as under: “ No.BMC/98/99 Permission No.________ OFFICE OF SHRI BHUJ MUNICIPALITY BHUJ MUNICIPALITY
ITA No.52 and 53/RJT/2018 4 ENGINEERING BRANCH DT.07/01/2000 TO, SHRI AMARBHAI DHANJI JADVA & MAVJI DHANJI JADVA JADAVJI NAGAR BHUJ-KUTCHCHH With reference to your Application Dt._____, I am to inform you that permission for construction as under at Ward NO.12, Plot No.54/A is accorded on the following conditions: Construction Permission for construction of Ground Floor and First Floor as per Sanction Plan in the plot of your ownership is granted on the following conditions.
SD/- JUNIONR ENGINEER BHUJ-KUTCHCHH 8. The construction was completed, and thereafter a completion certificate was also issued by the Municipal committee. Copy of this completion certificate has been placed on page no.30 of the paper book, which reads as under: “ No.BMC/98/99 Permission No.________ OFFICE OF SHRI BHUJ MUNICIPALITY BHUJ MUNICIPALITY ENGINEERING BRANCH DT.17/11/2000
TO, SHRI AMARBHAI DHANJI JADVA & MAVJI DHANJI JADVA JADAVJI NAGAR BHUJ-KUTCHCHH COMPLETION CERTIFICATE
ITA No.52 and 53/RJT/2018 5
With reference to your Application Dt._____, as the construction admeasuring Sq.Mt. 359.22 = sq.ft. 3865.21 at Jadavji Nagar, Plot NO.54/A, has been completed as per Construction Permission Dt.07/01/2000, permission to make use of it is accorded under Section 157 of the Gujarat Municipal Act, 1963.
SD/- JUNIONR ENGINEER BHUJ-KUTCHCHH 9. Thus, according to the appellants, they have constructed the house whose completion certificate was issued in the month of November, 2000. This house got damaged in the earthquake came on 26th Jan., 2001 and it was got repaired. The ld.AO has disbelieved this claim of the assessees on the ground that they have failed to produce any supporting evidence in the shape of bills, vouchers, showing purchase of material, payments to the contractor/labourers etc. On appeal, while appreciating the material on record, the ld.CIT(A) made reference to a certificate of registered valuer, which is dated 1.10.2000. According to the ld.CIT(A) if this certificate showing estimate for proposed residential bungalow was October, 2000, then it is not possible to complete construction upto November, 2000, and therefore, it suggested that construction was completed after this estimation, and thus, it was not completed before the earthquake occurred on 26th Jan., 2001. It is to be construed that there was no old construction, rather it was erected after the earthquake and cost of construction shown by the assessee at Rs.14,55,751/- is to be adopted for the purpose of indexation.
We have gone through the finding of the ld.Revenue authorities. In our opinion, both the Revenue authorities have failed to appreciate the true nature of the claim made by the assessee. According to the appellants, they have purchased a plot; sought permission from the municipal authorities for
ITA No.52 and 53/RJT/2018 6 constructing a house. It is pertinent to note that in every municipal area whenever residential house is required to be constructed then site plan was required to be approved from the municipal committee and permission would be required for raising the construction. The authorities in their regular course of business have to issue such certificate. Similarly, on completion of the construction, a completion certificate is required to be taken so that electricity connection, water connection and sewerage connection can be obtained. Now this certificate has been bruised aside very lightly without raising any reason; more so just putting a reliance on the certificate a chartered engineer, which is relevant for demonstrating the cost of construction estimated by him. Certificate might have been taken after completion of construction for collateral purposes. It cannot be a concluding factor to assume that this certificate be construed in a manner that residential house must have been started after obtaining this estimate. If this certificate vis-à-vis certificate issued by the municipal authorities is compared for their evidentiary value, then no doubt scale would tilt in favour of the certificate issued by the authorities who are meant for such activity. The second evidence which has been considered by the ld.AO for rejecting the claim of the assessee is that they have failed to furnish bills, vouchers, etc. It is highly improbable that individual will keep details of construction cost for 12 years under the expectation that when they sell their house, the assessing officer would require such details. The expenditure cannot be inquired into even for the purpose of income –tax after expiry of six years from the year in which such expenditure is incurred. It is such an aspect which can only be visualized keeping in view the estimated cost of construction of such a building. On the basis of expert’s opinion, the ld.AO has not given any reasons for even ignoring the report of the DVO, who has determined the cost of construction in F.Y.2001-02 at Rs.24,33,000/-. This opinion of the DVO would suggest that cost of construction, one year back must be near to that
ITA No.52 and 53/RJT/2018 7 which has been adopted by the assessee at Rs.23,21,164/-. The house constructed at this cost got damaged due to earthquake, and thereafter it repaired at Rs.14,55,751/-. Nobody can deny the factum of earthquake. It is a natural calamity and everybody is aware about it. The action at the end of the AO in ignoring all these facts is unjustifiable and not sustainable in the eyes of law. Therefore, we allow both the appeals and set aside orders of the Revenue authorities. We direct the AO to accept the calculation of long term capital gain shown by both the assessees in their returns of income.
It emerges out from the record that the assessees have raised additional grounds of appeal with regard to their claim under section 54F of the Act. However, at the time of hearing, the ld.counsel for the assessees did not press this ground, hence it is rejected.
In the result, both the appeals of the appellants are allowed partly. Order pronounced in the Court on 20th September, 2019 at Rajkot.
Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER