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Income Tax Appellate Tribunal, ‘ B’ BENCH : CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:
These are cross appeals filed by the Revenue and assessee respectively directed against an order dated 31.03.2016 of the ld. Commissioner of Income Tax (Appeals)-2, Chennai.
Appeal of the Revenue is taken up first for disposal. 2.
Grounds taken by the Revenue read as hereunder:-
The order of the learned CIT (A) is contrary to law and facts of the case. 2.The learned CIT (A) failed to appreciate that as per explanation (iii) to section 48 of the Act the base year to be adopted for cost indexing should be the cost inflation index relevant to the year of acquisition of the property and not by the previous owner
3.For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT (A) may be set aside and that of the Assessing Officer restored’’.
Ld. Assessing Officer had adopted cost inflation index relating to financial years 2009-2010 and 2008-2009 for computing long term capital gains with respect to two pieces of land sold by the assessee during the relevant previous year. First piece of land was of 8.53 acres at Survey No.534 B-2. This was originally purchased by one Ms. A. Suseela Ammal on 07.05.1960 and later gifted to the assessee on 29.07.2009. Second piece of land was of two acres at Survey No.534-B, and this was originally purchased by one Ms. A. &2835/16 :- 3 -: Muralidharan on 13.06.1985, later gifted to Ms. A. Suseela Ammal on 12.01.2005, who in turn gifted it to the assessee on 15.04.2008. Ld. Assessing Officer had relied on Explanation (iii) to Sec. 48 of the Income Tax Act, 1961 (in short ‘’the Act’’) for taking the year of acquisition as 2009-10 and 2008-09 respectively for working out long term capital gains in respect of the above two land transactions.
Assessee had adopted 1981 as the base year for the first property and 1985 has the base year for second property. When the matter reached ld. Commissioner of Income Tax (Appeals), he held in favour of the assessee relying on the judgment of Hon’ble Bombay High Court in the case of CIT vs. Manjula J.Shah, 355 ITR 474. Ld. Commissioner of Income Tax (Appeals) held that the land having given to the assessee by virtue of gifts, period of holding of the previous owner was also to be included for indexing the cost of acquisition.
Now before us, ld. Departmental Representative assailing the view taken by the ld. Commissioner of Income Tax (Appeals) submitted that Explanation (iii) to Sec. 48 of the Act did not allow the type of interpretation given by the ld. Commissioner of Income Tax (Appeals).
Per contra, ld. Authorised Representative strongly supported the orders of the authorities below. Reliance was also placed on the &2835/16 :- 4 -: judgment of Hon’ble Karnataka High Court in the case of CIT vs.
Kaveri Thimmaiah, 369 ITR 81.
We have considered the rival contentions and perused the 6. orders of the authorities below. It is not disputed that first piece of land namely 8.53 acres at Survey No.534 B-2, came into assessee’s ownership through a gift on 29.07.2009. Ms. A. Suseela Ammal had acquired the said property on 07.05.1960. The second piece of land had come to the ownership of the assessee on 15.04.2008 again through a gift from Ms. A. Suseela Ammal. Ms. A. Suseela Ammal had in turn received it as a gift from one Ms. A. Muralidharan on 12.01.2005. Ms. A. Muralidharan had purchased the above land on 13.06.1985. By virtue of judgments of Hon’ble Bombay High Court in the case of Manjula J.Shah (supra) as well as Hon’ble Karnataka High Court in the case of Kaveri Thimmaiah (supra), period of holding of the earlier owner had to be considered for indexing the cost of acquisition where the property had come to the assessee through gifts. Ld. Commissioner of Income Tax (Appeals) was right in holding so. We do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals) in this regard.
Now, we take up appeal of the assessee. Assessee through its grounds numbered as 1 to 9 has effectively raised two grievances.
First grievance is regarding adoption of fair market value as on &2835/16 :- 5 -: 01.04.1981 for 8.53 acres of land at Survey No.534 B-2 at Rs.3000/-
per cent. As per the assessee it should be Rs.6000/- per cent for which Chartered Engineer’s report was available.
Ld. Authorised Representative submitted that fair market value of 8.35 acres of land as on 01.04.1981 should have been considered at the rate of Rs.6,000/- per cent based on the valuation report of the Chartered Engineer. According to him, ld. Commissioner of Income Tax (Appeals) fell in error in relying on the report given by the Sub-Registrar, Kelur, Tuticorin wherein it was stated that guideline value of the property as on 01.04.1981 was Rs.3000/- per cent only. As per the ld. Authorised Representative, the Sub- Registrar, Kelur, Tuticorin had not reported any transaction based on which he had reached this conclusion. As against this, contention of the ld. Authorised Representative was that report of the Chartered Engineer was ignored without assigning any reason. Reliance was placed on the judgment of Hon’ble Jurisdictional High Court in the case of CIT vs. J. Chelladurai, (2012) 204 Taxman 0258.
Per contra, ld. Departmental Representative strongly 9.
supporting the order of the ld. Commissioner of Income Tax (Appeals), submitted that the case of J. Chelladurai (supra) relied on by the ld. Authorised Representative was on a different set of facts. As per the ld. Departmental Representative in the said case, the guideline value &2835/16 :- 6 -: given by the Sub-Registrar was disowned by very same Sub- Registrar. As against this, as per the ld. Departmental Representative here there was no such retraction by the Sub-Registrar.
We have considered the rival contentions and perused the orders of the authorities below. Sub-Registrar, Kelur, Tuticorin had given the guideline value of the property as on 01.04.1981 Rs.3000/-
per cent. As against this, assessee had filed a valuation report of Chartered Engineer which mentioned Rs.6000/- per cent. No doubt in the case of J. Chelladurai (supra), Hon’ble Jurisdictional High Court had held that average of the value determined by the ld. Assessing Officer and the value adopted by the assessee could be considered as fair market value as on 01.04.1981. However, in the said case there was a very clear finding by the ld. Assessing Officer that the certificate issued by Sub-Registrar was disowned by the Sub-Registrar himself. It was for this reason that the Hon’ble Jurisdictional High Court directed averaging of the rates. However, in the case before us, the Sub Registrar had fixed the price of the land at Rs.3000/- per cent as on 01.04.1981. Assessee could not demonstrate why preference should be given to the Chartered Engineer’s valuation report over the certificate issued by the Sub-Registrar. Hence, we do not find any reason to interfere with the order of ld. Commissioner of Income Tax (Appeals) in this regard. &2835/16 :- 7 -: 11. Other grievance raised by the assessee is with regard to its claim on expenditure on land filling which was curtailed to Rs.21,92,000/-.
Assessee had claimed land filling expenditure of Rs.27,40,000/- while computing long term capital gains. However, the ld. Assessing Officer had noted certain discrepancies in the vouchers and disallowed 20% of such claim. Even before us, ld. Authorised Representative was unable to demonstrate that he had complete vouchers for the expenditure of Rs.27,40,000/- claimed for land filling. We do not find any reason to interfere with the orders of the lower authorities in this regard as well.
In the result, appeals of the Revenue as well as the 13. assessee are dismissed.
Order pronounced on Thursday, the 12th day of October, 2017, at Chennai.