MADHU C. GANWANI,MUMBAI vs. ITO 19(1)(1), MUMBAI

The assessee has raised the following grounds:-

Under this issue, the assessee has assailed the confirmation of the order of the Assessing Officer in which the indexed value of the property was taken in to consideration the FMV as on 01.04.1981. to assessed the Long Term Capital Gain. The learned departmental representative has argued that the assessee alongwith Shri Chimanlal Thakurda Ganwani, Smt. Chandra Naraindas Ganwani and Shri Kushi Naraindas Ganwani were owners of the property in question by virtue of conveyance deed dated 21.03.1978 bearing plot no.369 of the Khar Scheme, Khar West admeasuring 645.48 sq. yards. The assessee was having the 25% share of the mentioned property. It was argued that the assessee demolished the old structure and raised the new construction in 1979-80 and also construction on 01.04.1981 but the Assessing Officer has wrongly taken into consideration the indexed cost of the property. However, the FMV of the property as on 01.04.1981 was required to be taken into the consideration, therefore the order passed by the CIT(A) is wrong against law and facts. It 3 A.Y.2006-07 is specifically argued that the land as well at the construction cannot be separately to be assessed for the purpose of disallowing the Long Term / Short Term Capital Gain in view of the law settled in CIT Vs. Hindustan Hotels Ltd. 335 ITR 60 Hon’ble Bombay High Court and CIT Vs. Smt. Lakshmi B. Menon 264 ITR 76 Hon’ble Kerela High Court and CIT Vs. C.R.Subramanian 242 ITR 342 Hon’ble Karnataka High Court and CIT Vs. Vimal Chand Golecha 201 ITR 442 Hon’ble Rajastan High Court which has not been considered by the Assessing Officer, therefore the order passed by the CIT(A) confirming the order of the Assessing Officer is wrong against law and facts and is liable to be set aside. However, on the other hand the learned departmental representative has strongly relied upon the order passed by the CIT(A) in question. On appraisal of the order passed by the CIT(A) in question it came into the notice that the plea in connection with the ownership of the assessee upon the property in question by virtue of conveyance deed dated 31.03.1978 has not been discussed at all. In view of the above mentioned law it is quite clear that the land and superstructure can be assessed separately. The assessee moved an application under Rule 9 of the Act to allow her to produce the documents which are necessary to adjudicate the matter of controversy. The assessee also took the plea that she failed to produce these documents before the lower authorities. On appraisal of the application u/s.29 of the Act, it came into the notice that the assessee wanted to adduced the copy of agreement dated 08.09.1977, copy of agreement dated 05.02.1978, copy of agreement dated 05.01.1979, copy of conveyance deed dated 21.02.2006, copy of confirmation letter from the society dated 07.01.2014, copy of electricity bill for the month of January 2011 and December 2013 and 4 A.Y.2006-07 photographs of both the flats evidencing their use as one unit. This piece of evidence nowhere produced before the lower authority and nowhere discussed in the order in question. However, these documents were necessary to adjudicate the matter of controversy in the interest of justice. Further, it also came into the notice that in the case of Khushi Ganwani the District Valuation Officer-II(DVO) has assessed the FMV of the property while in the instant case the value of the property was assessed on the basis of the cost of acquisition. In view of the above mentioned law the land and superstructure can be assessed separately and in this regard the additional evidence mentioned above seems necessary to adjudicate the matter of controversy. Therefore, we are of the view that the additional evidence is liable to be allowable, therefore, we allowed the same and direct the Assessing Officer to re-assess the matter of controversy in the light of the above said evidence in accordance with law. Accordingly, in view of the above said observation we remand the issue on the file of the Assessing Officer to decide the matter afresh by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue.

Under this issue the claim of the assessee is that the assessee claimed the deduction u/s.54F of the Act in respect of the two adjoining flats which was confined to the only one flat. The assessee did not adduced the evidence in this regard, however, in view of the application for additional evidence he want to adduce the additional evidence in respect of his claim in connection with the two units which has been converted into the one unit 5 A.Y.2006-07 this is exemption u/s.54 of the Act under the different law settled in CIT Vs. Devdas Naik 366 ITR 12 Hon’ble Bombay High Court and Joseph J. Mudaliar Vs. ACIT 65 SOT 87 Hon’ble Income Tax Appellate Tribunal, Mumbai and DCIT Vs. Jai Trikanand Rao 149 ITD 112 Hon’ble Income Tax Appellate Tribunal, Mumbai and CIT Vs. Raman Kumar Suri 212 Taxman 411 Hon’ble Bombay High Court. However, on the other hand the learned departmental representative has strongly relied upon the order passed by the CIT(A) in this question but on appraisal of the entire record of the file it came into the notice that no proper evidence was given by the assessee in support of her claim. Now she wanted to adduced the additional evidence in support of her claim and in which some documents are related to this issue also. Therefore, in view of the said circumstances we set aside the finding of the CIT(A) on this issue and direct the Assessing Officer to decide the matter afresh in the light of the evidence adduced by the assessee in accordance with law by giving an opportunity of being heard to the assessee. Therefore, in the said circumstances, we decide this issue in favour of the assessee against the revenue.