MOHAMED NAYEEM,CHENNAI vs. ITO, NON CORP WARD 7(4), CHENNAI

The assessee filed this appeal against the order of Commissioner of Income Tax (Appeals)-7, Chennai in dated 31.10.2018 for assessment year 2013-14.

The assessee filed this appeal belatedly by 1 day. It was pleaded that the assessee was suffering from viral fever, unable to attend to the office and in view of that there was one day delay in filing the appeal, which is neither wilful or wanton and prayed to condone the one day delay of filing the appeal.

We heard the rival parties and condone the delay.

Shri. M. Mohamed Nayeem, the assessee an Income Tax practitioner, admitted, inter alia, short term capital gains in his return of income. The AO found that the assessee, jointly with his wife, purchased a flat from Tamil Nadu Housing Board for Rs. 24,85,200/- vide document dated 18.12.2010,. It was sold on 21.06.2012 for a consideration of Rs. 43 lakhs. However, the registration department valued the property at Rs. 50,40,000/-. Adopting the registered value of the property as the sale consideration u/s. 50C, the Assessing Officer computed the capital gains.

The case was posted for video conferencing. The Ld. AR inviting our attention to the concise grounds of appeal submitted that the assessee is a co-owner of the property, however, the capital gain on the entire property was assessed in the hands of the assessee. The Ld. CIT(A) erred in sustaining such action of the Assessing Officer. The Ld. AR submitted that the Ld. CIT(A) erred in mechanically adopting the fair market value determined by the DVO without assigning proper reason and justification and failed to appreciate the fact that the difference between actual value and the DVO value is less than 10%. Therefore, the value shown by the assessee should have been accepted. The AR further submitted that the Ld. CIT(A) having found that the assessee purchased the flat availing housing loan, paid the interest on such loan from the date of purchase to sale but he has not claimed such interest again the rental income admitted in the income returns of earlier years etc., erred in partly allowing the interest expenditure for the assessment year 2013-14 alone as a deduction, instead of directing the AO to allow the entire interest at Rs. 3,62,367/-. Therefore, he pleaded that the assessee’s appeal to be allowed. Per contra, the Ld DR submitted that the assessee filed his return of income admitting the capital gains in his hands. Although, he has taken the plea that the property is of joint ownership, he has not furnished any evidence that his wife had her own sources of income out of which the impugned property was purchased and no corroborative evidences such as returns of income etc have been furnished. Therefore, the assessee’s plea for the joint ownership has been correctly rejected by the lower authorities and hence, the Ld. DR supported the orders of the lower authorities. Before the Ld. CIT(A), the assessee sought a reference to the DVO for fixing the fair market value of the property. On a reference, the DVO after giving due opportunity to the assessee, fixed the value at Rs. 47,28,600/-, which has been accepted by the assessee also.

We heard the rival submissions and gone through the relevant material. The assessee admitted the short term capital gains in his return claiming that he is the owner of the flat purchased from the Tamil Nadu Housing Board. However, during the assessment and appeal proceedings, he claimed that he is a co-owner of the property. But, he has not furnished any evidences before the lower authorities that he is a joint owner of the property. Therefore, we do not find any reason to interfere with the orders of the lower authorities. Therefore, the assessee is correctly treated as owner of the property. As per documents, the flat was sold for Rs. 43 lakhs. However, the registration authority fixed the value of the property at Rs. 50,40,000/-. Since, the assessee objected to the adoption of the value fixed by the registration department, the property was referred to the DVO. The DVO after giving due opportunity to the assessee fixed the value at Rs. 47,28,600/-. The assessee has accepted this value before the DVO also. Therefore, the fair market value determined by the DVO at Rs. 47,28,600/- is directed by the Ld. CIT(A) to be adopted as the full value of consideration received as a result of transfer. This is in accordance with provisions of section 50C r.w.s. 16A of the Wealth Tax Act. Therefore, we do not find any merit in the submissions of the assessee. With regard to the assessee’s claim that the interest paid on the capital asset should form part of the cost of asset when computing the capital gains, it is clear from the order of the Ld.

In the result, the assessee’s appeal is partly allowed.