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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
This appeal of the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-4, Mumbai [in short CIT(A)], in Appeal No CIT(A)-4/IT-36/ITO-19(1)(1)/2017-18 vide order dated 24.04.2018. The Assessment was framed by the Income Tax Officer, Ward 19(1)(1) Mumbai (in short ‘ITO/ AO’) for the A.Y. 2008-09 vide order dated 17.03.2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee, is that, what should be the cost of acquisition as on 19.04.1981 of plot of land sold by assessee for the purpose of computation of long term capital gain.
Brief facts are that the assessee along with other three became co-owners in a plot of land bearing CST No. 96, Village Erangal, Taluka Goregaon/ Borivali having 1/4th share each after the demise of their father on 22.02.1991. The said property was transferred vide agreement dated 01.11.2007 for a total consideration of ₹ 22 lakhs. The AO referred the matter to DVO for valuation since the stamp duty valuation was at ₹ 31,42,452/- which was more than the actual consideration declared in sale deed at ₹ 22 lakhs. The AO noted that even the CIT(A) has confirmed the stamp duty value of ₹ 31,42,542/- in one of the other co- owner Ms. Avan J. Mistry and assessment made of the same. Thereby, the assessee’s 1/4th share comes to ₹ 7,85,635/-. The AO adopted he cost of acquisition for the purpose of computation of long term capital gain as on 01.04.1981 i.e. at the rate of the plot of land in that year at ₹ 12 per sq. meter. He computed the value as on 01.04.1981 and computed the indexed cost at ₹ 1,41,440/- by computing as under : -
15572.85 X 12 ₹ 1,86,874/- 1/4th Share as discussed above ₹ 46,719
Indexed cost is as under ₹ 1,41,440/-. 46719X551/182
Thereby, the AO computed the long term capital gain at ₹ 6,44,225/-. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) not at all dealt with the issue rather gone on different tangent, while deciding the issue vide Para 5 and 6 as under: -
“5. After looking to the facts of the case and considering the assessment order, the Ld. authorized representative of the assessee was asked as to how the issue raised in the appeal were emanating from the assessment order and the matter was discussed with Ld. AR. Accordingly, following was noted on the order sheet dated 24 04.2018, which has been duly signed by the Ld. AR of the appellant.
"Shri Yazad Bajan, CA, attended, riled submission & argued the case. Ld AR was asked as what was the dispute which emanated from the Assessment order which is sought to be redressed. Ld. AR stated that cost acquisition as 01.04.1981 taken by AO was not correct. However, such disputed issue is not seen to be arising out of the order under appeal. Ld. AR stated that they would file rectification application u/s 154 to the AO for redressal of their grievances and that the issue raised in this appeal are not pressed and the appeal may be allowed to be withdrawn. Case accordingly discussed."
6. It can be seen from the aforesaid noting that the Ld. AR has stated that they would file rectification application u/s 154 before the AO for redressal of their grievances and that the issues raised in this appeal are not being pressed and that the appeal may be allowed to be withdrawn. In view of such specific submission of the Ld. AR of the appellant, this appeal is allowed to be withdrawn and for statistical purposes it is treated as dismissed.”
Now, before us, the learned Counsel for the assessee in the above given facts stated that the issue is squarely covered, even the fact is noted by the AO that in the case of other co-owners namely Ms. Avan J. Mistry. The CIT(A) has confirmed the addition of long term capital gain of ₹ 6,44,196/-. The learned Counsel for the assessee stated that the identical issue i.e. value of land as per ready reckoner rate showing market value of the immovable property as on 01.04.1981 is ₹ 60 per square meter instead of taken by AO at ₹ 12 per sq. meter. The learned Counsel for the assessee drew our attention to Para 6 of the Tribunal order in the case of Ms. Avan J. Mistry in for AY 2008-09 vide order dated 03.02.2017 wherein finding is giving as under: -
“6. At the outset, the Ld. A.R. of the assessee has brought our attention to page 20 of the paper book which is a copy of ready reckonor showing market value of immovable property in Mumbai as on 01.04.1981. The Ld. A.R. has further submitted that the property in question is situated in the area mentioned at Sl. No.2. A perusal of the above document shows that the market rate of undeveloped vacant land as on 01.04.1981 is mentioned as Rs.12/- per sq. mtr. whereas the rate of developed vacant land has been mentioned as Rs.60/- per sq. mtr. The rate of land + building have also been mentioned at Rs.200/- per sq. mtr. for residential unit without lift, Rs.400/- for industrial/office and Rs.480/- for shop/commercial building. A perusal of the above document reveals that different rates have been mentioned for undeveloped and developed vacant land. The Ld. A.R. has further invited our attention to the copy of deed of conveyance wherein it has been mentioned that the property was transferred along with structure standing thereupon. He has further invited our attention to show that a structure consisting of cement sheets was built upon the property and that the covered area of the property was 1000 sq. feet. He, therefore, has stated that though the property in question cannot be considered as land + building but the above recitals in the sale deed would show that the land in question would fall within the purview and scope of ‘development land’ and not undeveloped land. The ready reckonor rate for the developed vacant land as mentioned is Rs.60/- per sq. mtr.
After hearing the Ld. Representatives of the parties we are quite convinced that though the structure made on the property may not fall within the definition of building for which separate rates have been mentioned in the ready reckonor, however, the property can be said to fall within the scope of developed vacant land. We accordingly allow this issue in favour of the assessee and direct the Assessing Officer to take the market value of the property as on 01.04.1981 as per the ready reckonor value for developed vacant land and compute the capital gains tax accordingly. The Ld. A.R. has stated that if the market value of the property as on 01.04.1981 is taken as applicable for developed vacant land as per ready reckonor then ultimately he will not be liable to pay any tax as the resultant capital gains will be negative after availing the benefit of indexation. He, therefore, has pleaded that he does not press the remaining grounds at this stage. The remaining grounds of the appeal of the assessee therefore are dismissed as not pressed. However, the assessee will be at liberty to raise the same, if need be, in future and if he so found entitled to do so as per law.”
In view of the above, the learned Counsel for the assessee stated that since the facts are similar, the Bench should decide the issue in the light of the decision taken by the Tribunal in other co-owner namely Ms. Avan J. Mistry.
I noted from the above facts that the only dispute before us is the ready reckonor rate of property i.e. plot of land bearing CST No. 96, Village Erangal, Taluka Goregaon/ Borivali as on 01.04.1981. The Tribunal has already noted from the records that ready reckoner rate for this property is ₹ 60 per sq. meter. I also adopt the same ready reckonor rate as adopted by the tribunal in other co- owner. Even now before us, the revenue could not brought any evidence to disturb the rate adopted by co-ordinate Bench in co- owners case. Hence, I directed the AO to adopt the cost of the land at the rate of 60 per sq. meter and compute the capital gains accordingly.
In the result, the appeal of assessee is allowed in term of the above. Order pronounced in the open court on 25-06-2019.