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Income Tax Appellate Tribunal, ‘B ’ BENCH : CHENNAI
Before: SHRI INTURI RAMA RAO & SHRI DUVVURU RL REDDY]
आदेश / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER
1. This appeal of the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-12, Chennai dated 19.12.2017 for assessment year 2013-14.
2. The assessee raised the following grounds.
As a matter of fact, the property sold was subject to proceedings of Chennai Metropolitan Development Authority for unauthorized construction. As per the demolition notice given by CMDA the building had an approved plan for Ground Floor + Mezzanine Floor + 3 floors whereas the building consists of Ground Floor + 6 floors hence 4th floor to 6th floor was considered unauthorized and the property of the assessee laid on the 5th floor which formed part of the unapproved construction. The same was not mentioned in the valuation officer's report.
More over the Madras High court has quashed two Tamilnadu G.O.s of October 2012 that allowed regularization of illegal constructions up to July 1 2007 in the year 2014. Due to the same the building is unauthorized till date.
3. The Government in June 2016 has reduced the guide line value of the land by 33% which indicates that the guideline value is inflated. This clearly indicates that the value of the land as per existing guideline value is more than the market value.
4. The assessee is in severe cash crunch in order to meet his day to day expenses since his business is not doing well. Also the assessee is in urgency to sell the property in order to his daughter marriage.
5. Therefore the assessee faced genuine hardship in finding the buyer of such unauthorized property and thus sold the property at a prevailing "market rate for the unapproved building" which was much lesser than the Stamp duty guideline value for the property of Rs. 1.10 crore had it been an approved property.
The Learned Assessing Officer has erred in considering the value adopted by stamp valuation authority as the comparison of value can be done only for an equivalent base. Hence it is fundamentally wrong to compare the stamp duty value of approved property with the sale value of unapproved property.
More over the motive behind implementing sec.50C of Income Tax Act 1961 is to curb the undervaluation of immoveable properties and not to burden the genuine assessees frantically. It is clearly evident from the facts that the property cannot fetch an amount close to the value determined by stamp duty authority and hence the assessee sold it at a lesser value without any intention to undervalue the property. Thus the assessee pleads to reconsider the decision taken by the ITO and the CIT(Appeals) in this regard by considering the hardship of paying tax for the amount not received by the assessee.
The brief facts of the case are that the assessee is an individual and is engaged in the business of Car Hire. The return of income for the assessment year 2013-14 was filed on 09.05.2014 declaring total income of Rs.2,31,240/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Non corporation ward 10(5), Chennai, (hereinafter referred as ‘’AO') vide order dated 30.11.2016 passed u/s.143(3) r.w.s.153(4)(iv) of the Income Tax Act, 1961 (in short ‘’the Act’’) at total income of Rs.38,30,348/-. While doing so, the Assessing Officer made addition while computing the capital gains arising out of sale of property situated at Door No.58,5th floor, West Wing, ”Brookylin Business Centre”, Nos.103-105/12 Ponamallee High road, Purasawalkam,Chennai, comprised old survey No.798/1, New Survey No.798/34,798/50,798/51, Egmore village, Egmore Nungambakkam, Chennai measuring an extent of 626.81 sft undivided share of land and building 1372 sft by adopting the deem sale consideration of Rs.1,10,00,000/- being the value for the purpose of payment of Stamp Duty. During the course of assessment proceedings, when the assessee objected the adoption value for the stamp duty purpose as Fair Market Value is much lower than the guidelines value, as the building sold was unapproved and also requested the Assessing Officer to refer the matter to DVO in terms of provisions of section 50C(2) of the Act. It is stated that DVO had not considered the objection filed before him in his report. Being aggrieved, the assessee preferred an appeal before the ld.CIT(A), who vide impugned order confirmed the action of the Assessing Officer. Being aggrieved with the order of the ld.CIT(A), the assessee is before us in the present appeal.
After hearing the rival submissions and perusing the material on record, the objection raised by the assessee before the DVO was not considered in proper perspective. Hence, we remit this matter back to the file of Assessing Officer to complete assessment after referring the matter again to DVO to consider objections of the assessee in a proper perspective and complete assessment in accordance with law.
In the result, the appeal of assessee is partly allowed for statistical purposes.