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Income Tax Appellate Tribunal, DELHI BENCH “F” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI L.P. SAHU
O R D E R PER AMIT SHUKLA, J.M.: The aforesaid cross appeals have been filed by the Revenue as well as by the Assessee against the impugned order dated 19.02.2015, passed by Commissioner of Income
2 I.T.As. No.2381 & 4836/DEL/2015 Tax (Appeals)-XIX, New Delhi for the quantum of assessment passed u/s.143(3) for the Assessment Year 2010-11.
At the outset, it was admitted by both the parties that in the appeal filed by the Revenue the tax effect is below Rs.20 lac, and therefore, in view of the CBDT Circular No. 03/2008 [F.No.279/Misc.142/2007-ITJ (Pt)] dated 11th July, 2018, the appeal of the Revenue is not maintainable.
In view of the aforesaid CBDT Circular, the appeal of the Revenue is treated as not maintainable and is dismissed in limine.
In so far as the assessee’s appeal is concerned, the only ground raised by the assessee is that, ld. CIT(A) is not justified in restricting the fair market value of the property as on 01.04.1981 at Rs.13,66,500/- as against 22,69,500/- adopted by the assessee for the purpose of computation of long-term capital gain. In so far as ground no.2 on account of disallowance of cost of acquisition of improvement amounting to Rs.4,05,731/- has not been pressed, therefore, the same is dismissed as not pressed. Lastly, the assessee has contended that benefit of Section 54 should have been given on the investment of capital gain in the residential house property.
The facts in brief are that based on AIR information that assessee has sold immovable property during the year for Rs.1,50,00,000/-, the case of the assessee was selected for scrutiny. In return of income, the assessee has shown Long Term Capital Loss at Rs.8,65,616/- based on registered
3 I.T.As. No.2381 & 4836/DEL/2015 Valuer’s report wherein the fair market value of the property as on 01.04.1981 was taken at Rs.22,69,500/-. The Assessing Officer rejected the valuation report and has referred the property to the DVO to determine the fair market value as on 01.04.1981. However, no such report could be obtained from the DVO. Instead of examining the fair market value as on 01.04.1981, the Assessing Officer took the stand that the assessee has acquired the property only vide ‘Conveyance Deed’ dated 27.09.2007, and therefore, assessee is entitled only for cost of indexation from financial year 2007 only. Further, AO has adopted cost of acquisition of the sold property at Rs.72,000/- based on the purchased agreement entered by the assessee’s father on 19.01.1973 and has also noted that assessee has inherited the above property by way of partition deed dated 23.02.1983. Apart from that, the assessee had claimed the benefit of cost of improvement for four years but Assessing Officer has restricted the cost of improvement to Rs.10,30,920/- being the cost of stamp duty and registration charges incurred by the assessee for the conveyance deed dated 27.09.2007. Accordingly, the Assessing Officer has computed the Long Term Capital Gain at Rs.1,38,86,496/-.
Before the ld. CIT (A), the main contention of the assessee was that the property was inherited by her from her father, and therefore, the cost of acquisition of the previous owner of the property has to be taken; and since the property was acquired prior to 01.04.1981, therefore, the fair market
4 I.T.As. No.2381 & 4836/DEL/2015 value as on 01.04.1981 was required to be adopted for computing the Long Term Capital Gain. Ld. CIT(A0 has observed that, it is a matter of record that even the DVO has not submitted any report for valuation on the point of which the Assessing Officer has made a reference i.e., determining the value of the property as on 01.04.1981. From the conveyance deed itself as noted by the Assessing Officer, it was pointed out that assessee had acquired the property through a registered partition deed dated 23.02.1983, and therefore, in view of provision of Section 49(1)(iii)(a) r.w.s. 55(2)(b)(ii), the assessee had adopted the fair market value of the property as on 01.04.1981 at Rs.22,69,500/- by adopting the value at Rs.725/- per sq. meter based on the registered Valuer’s report. The area of the sold flat was mentioned as 2,633 per sq. feet as per the conveyance deed dated 27.09.2007, therefore, the value of the flat was estimated at Rs.19,08,925/- by the assessee and car parking area was separately estimated at Rs.1 lac. The detailed working was given before the ld. CIT (A).
Ld. CIT (A) held that the estimation by the assessee as on 01.04.1981 are on higher side, therefore, the fair market value of the property as on 01.04.1981 should be estimated at Rs.500/- per sq. meter and has valued the car parking as on 01.04.1981 e at Rs.50,000/- Thus, the fair market value of the property as on 01.04.1981 was estimated by him at Rs.13,66,500/-.
5 I.T.As. No.2381 & 4836/DEL/2015
We have hear both the parties and perused the relevant findings given in the impugned orders as well as material referred to before us. The undisputed facts are that ,the property in question is a flat in a multi-storied complex known as ‘Penn Court, Alipore, Kolkata’. This property was purchased by assessee’s father on 19.01.1973 for a consideration of Rs.72,000/-. Later on, this property devolved upon the assessee by way of partition deed dated 23.02.1983. Subsequently, after the death of father of the assessee, the name of the assessee was substituted vide conveyance deed dated 27.09.2007. The ld. Assessing Officer has treated the date of conveyance, i.e., 27.09.2007 as the date of acquisition by the assessee. Such a view of the ld. Assessing Officer at the face of the record is completely divorced from the facts, because assessee has inherited the property on death of her father who had acquired the property much before 01.04.1981. Section 49(1)(iii)(a) r.w.s. 55(2)(b)(iii) reads as under: Section 49(1)(iii)(a) Where the capital asset became the property of the assessee by succession, inheritance or devolution the cost of acquisition of the asset shall be deemed to be the cost for the previous owner of the property acquired it as increased by the cost of improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. Section 55(2)(b)(ii) For the purposes of section 49, Where the capital asset became the property of the assessee by any of the modes mentioned in section 49 and the capital asset became the property of the previous owner before 1st DAY OF APRIL 1981
6 I.T.As. No.2381 & 4836/DEL/2015 then cost of acquisition means the cost of the capital asset to the previous owner or the fair market value of the asset as on 1st day of April 1981, at the option of the assessee.
Thus, the cost of acquisition in case of inheritance or succession has to be taken as a cost for the previous owner of the property acquired and if the property of the previous owner was acquired prior to 01.04.1981, then the cost of acquisition has to be reckoned as cost of capital asset to the previous owner or the fair market value of the asset as on 01.04.1981 at the option of the assessee. The assessee has opted for cost of acquisition as on 01.04.1981, therefore, the Assessing Officer has wrongly held that date of conveyance deed should be taken as the date of acquisition, because on that date assessee has merely inherited the property after the death of her father.
The only issue now remains, is the determination of fair market value of the property as on 01.04.1981 for the purpose of indexation. Here in this case, assessee has submitted a report of registered Approved Valuer to justify the fair market value of the property as on 01.04.1981 and to ascertain correctness and veracity of such valuation, matter was referred to the DVO by the Assessing Officer. However, no such valuation has been done by the DVO nor there is any subsequent report as observed by the ld. CIT (A). Thus, in such a situation, the approved Valuer’s report remain un- rebutted and even the ld. CIT (A) has reduced the fair market value as on 01.04.1981 on estimate basis. Thus, such an 7 I.T.As. No.2381 & 4836/DEL/2015 estimate without any proper basis and scientific reason cannot be accepted. Under these facts and circumstances, the fair market value as shown by the assessee as on 01.04.1981 has to be accepted and consequently the indexation has to be based on the value shown by the assessee as on 01.04.1981 i.e. at Rs.22,69,500/-. Accordingly, this issue is decided in favour of the assessee.
In the result, the appeal of the assessee is partly allowed and Revenue’s appeal is dismissed. Order pronounced in the open Court on 28.5.2019.