SAMIRA MERCHANT,MUMBAI vs. I.T.O.-19(3)(4)`, MUMBAI

आयकर आयकर आयकर अपीलीय आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, “ई” खंडपीठ अिधकरण खंडपीठ खंडपीठ मुंबई खंडपीठ मुंबई मुंबई मुंबई INCOME TAX APPELLATE TRIBUNAL,MUMBAI-“E”,BENCH सव"ी राजे"", लेखा सद"य एवं एवं एवं संदीप गोसांई, "याियक सद"य एवं Before S/Sh. Rajendra,Accountant Member & Sandeep Gosain,Judicial Member आयकर अपील आयकर अपील संसंसंसं/.ITA No.1804/Mum/2011 िनधा"रण िनधा"रण वष" वष"/Assessment Year-2003-04 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" आयकर आयकर अपील आयकर आयकर अपील अपील संसंसंसं/.ITA No.5797/Mum/2012 िनधा"रण अपील िनधा"रण िनधा"रण वष" िनधा"रण वष" वष"/Assessment Year-2005-06 वष" Mrs. Samira Merchant Income tax Officer-19(3)-4 Room No.304, 3rd floor, Flat No.1001/1002 B.J. Road/Pereira Road Parel,Mumbai-400 012. Bandra (W),Mumbai-400 050. PAN:ACZPM 1844 M (अपीलाथ" /Assessee ) (""यथ" / Respondent) िनधा"रती िनधा"रती ओर ओर सेसेसेसे/Assessee by िनधा"रती िनधा"रती ओर ओर : Shri Satish R. Mody राज"व क" ओर से/ Revenue by :Sh. Sachidanand Dubey-DR सुनवाई सुनवाई सुनवाई क" सुनवाई क" क" तारीख क" तारीख तारीख / Date of Hearing :18- 11 -2015 तारीख घोषणा क" तारीख / Date of Pronouncement : 01.01.2016 आयकर आयकर आयकर अिधिनयम आयकर अिधिनयम अिधिनयम,1961 क" अिधिनयम क" क" धारा क" धारा धारा 254(1)केकेकेके अ"तग"त धारा अ"तग"त अ"तग"त आदेश अ"तग"त आदेश आदेश आदेश Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद"य लेखा लेखा सद"य सद"य राजे"" सद"य राजे"" राजे"" केकेकेके अनुसार राजे"" अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the orders dated 28.01.11and 18.6.12 of CIT(A)-30 the assessee has filed appeals for the above mentioned two assessment years.The dates of filing of returns, returned incomes dates of asst order and assessed income can be summarised as under :- A.Y. ROI filed on Returned Income(Rs.) Assessment dt. Assessed Income (Rs.) 2003-04 22.09.2003 78,625/- 29.08.2008 37,36,548/- 2005-06 31.08.2005 1,00,248/- 19.12.2007 21,64,290/-

ITA/1804/Mum/2011 (2003-04): 2.Assessee, an individual had shown income from other sources under the head long term capital gain(LTCG)to the tune of s.2.63 lacs.During the assessment proceedings,the AO found that she had sold two plots of land at Kalyan,that she had claimed long term capital loss(LTCL) on sale of above mentioned plots in the AY.2005-06.The AO was of the opinion that the said LTCG pertained to AY.03-04,so he issued a notice u/s. 148 of the Act.During the assessment proceedings the AO observed that vide development agreement,dt.4.6.02,the assessee and the other co-owners had sold above plots of land for consideration of Rs.25.53 lacs and Rs.21.89 lacs respectively, that she did not offer LTCG for taxation in her original return of income, that in the revised return filed after issue of notice u/s. 148 LTCG offered for taxation.He further found that for the purpose of cost of acquisition the fair market value (FMV) as on 1.4.81 had been taken at Rs.6.32 lacs and Rs.5.41 lacs respectively for the said plots, that FMV had been adopted as per the valuation done by a Govt. Registered Valuer, that the valuer had adopted FMV of the plot of land at 540/sq.mtr as on 1.4.81.The AO referred the matter to the Assistant Valuation Officer(AVO)to determine the FMV of the plots of land,who adopted the rate of land @ Rs.22 per Sq.meter as on 01.04.1981.The AO adopted the same value for deciding the LTCG, after inviting the objections from the assessee

1804/11&5797/12 Samira M

.Finally,the AO held that the assessee was liable to pay tax on LTCG of Rs.37.36 lacs (29.05 lacs for 1st plot + 8.31 lacs for the 2nd plot of land). 2.1.Aggrieved by the order the assessee preferred an appeal before the First Appellate Authority(FAA).After considering the submission of assessee and the assessment order, he held that registered valuer had adopted the FMV @ 540 perSq.mtr.as on 1981, that the assessee had purchased the land @ Rs.7.00 per sq.mtr in 1979,that the AVO had rightly adopted the rate at Rs.22/- per sq.mtr as FMV.Finally,the FAA upheld the order of the AO. 2.2.During the course of hearing before us, the Authorised Representative (AR) stated that the AO had wrongly referred the matter to the AVO for determining the FMV, that the value shown by the registered valuer was more than the purchase price, that the reference to the AVO and resultant addition was against the provision of the Act .He referred to the case of Puja Prints(360 ITR 697). Departmental Representative (DR) supported the order of the FAA. 2.3.We have heard the rival submissions and perused the material before us.We find that the plots of land were purchased in 1979, that they were sold in the year under appeal, that the assessee had hired the services of a registered valuer for determining the FMV as on 1.4.81, that the AO had referred the matter to the AVO and had determined the LTCG . We find that the issue has been conclusively decided by the Hon’ble High Court in the case of Puja Prints(supra) as well as in the case of Daulal Mehta(HUF). The amendment to section 55A(a) is not retrospective and therefore, no reference can be made if the value shown by the assessee as on 1.4.81 is higher than the purchase price.Here we would like to reproduce the relevant portion of the decision of Puja Prints(supra).Before that we would like to narrate the facts.In that matter the assessee, for the AY.2006-07,claimed LTCG of Rs. 11.20 lakhs in respect of sale of its property for a consideration of Rs. 2 crores. The assessee also claimed a deduction on account of brokerage of Rs. 5 lakhs and the indexed cost at Rs. 1.78 crores, on the basis of the value of the property being Rs. 35.99 lakhs as on April 1, 1981. This valuation of Rs. 35.99 lakhs as a fair market value as on April 1, 1981, of the property was on the basis of a valuation report.The AO referred the issue of valuation to the Departmental Valuation Officer who valued the property at Rs. 6.68 lakhs as on April 1, 1981, and the indexed cost at Rs. 33.20 lakhs. Consequently,he enhanced the capital gains of the assessee from Rs. 11.20 lakhs to Rs. 1.61 crores.The FAA held against the assessee. The Tribunal held that in view of section 55A(a) it was not permissible for the AO to make a reference to the Departmental Valuation Officer for the purpose of valuation, as the value of the property declared by the assessee was not less than its fair market value.Deciding the matter in favour of the assessee,the Hon’ble Court held as under :- “(ii) That the amendment to section 55A(a) of the Act in 2012 by which the words “is less then its fair market value” were substituted by the words “is at variance with its fair market value” was made effective only from July 1, 2012. Parliament has not given retrospective effect to the amendment. Therefore, the law to be applied in the assessee’s case was section 55A(a) as existing during the period relevant to the assessment year 2006-07. At the relevant time, very clearly reference could be made to the Departmental Valuation Officer only if the value declared by the assessee was in the opinion of Assessing Officer less than its fair market value. (iii) That section 55A(b) states that it would apply in any other case, i.e., a case not covered by section 55A(a) . There was no dispute that the issue was covered by section 55A(a) . Therefore, recourse could not be had to the residuary clause provided in section 55A(b)(ii) . Therefore, the Central Board of Direct Taxes Circular dated November 25 1972 (see [1973] 91 ITR (St.) 1), could have no application in the face of the clear position in law. Hence, the reference to the Departmental Valuation Officer by the Assessing Officer was not sustainable in view of section 55A(a)(ii).” 2

1804/11&5797/12 Samira M

Respectfully following the above,effective ground of appeal is decide in favour of the assessee . ITA 5797/Mum/2007 -AY.05-06: 3.During the course of hearing before us, the AR stated that considering the smallness of tax effect the assessee was not interested in pursuing Ground No.5.Hence, the Ground No.5 stand dismissed as not pressed.Ground No.3 and 4 are about the reference made by the AO to the valuation officer u/s.55A of the Act.It was stated that the AO had made protective assessment for the year under consideration.While deciding the appeal for the AY 2003-04 we had decide the issue in favour of the assessee.Following the same, Ground No.3 and 4 are decided in her favour. 3.1.The effective ground of appeal is about confirming the order of the AO in assessing the capital gain on sale of a flat under the head STCG instead of LTCG. During the assessment proceedings,the AO found that the assessee had claimed LTCG of Rs.2.08 lakhs on sale of a flat at Mira Road,that she had purchased the property vide agreement on 08.10.2004,that the flat was sold on 26.02.2005.The AO was of the opinion that profit arising out of the transaction was to be assessed under the head STCG. He called for an explanation from the assessee in that regard,who stated that she had purchased the property in the year 1995-96,that she had paid entire consideration except for Rs.5,000/-,that the developer issued allotment letter to her.However,the AO held that the agreement was entered into on 08.10.2004, that the profit had to assessed as STCG. 3.2.In the appellate proceedings,before the FAA,the assessee relied upon various cases and stated that the flat was acquired in 1995-96. The FAA confirmed the order of the AO.Before us, the AR stated that while deciding the appeal the FAA simply endorsed the finding of the AO, that he had not given any reasoning for confirming the order, that the submissions made by the assessee were not at all considered while adjudicating the appeal.The DR left the issue to the discretion of the Bench. 3.3.We have heard the rival submissions we find that the FAA had supported the order of the AO without assigning any reason and without considering the basic facts.Therefore, we are of the opinion that,in the interest of justice,the matter should be restored back to the file of the FAA for fresh adjudication,who will afford a reasonable opportunity of hearing to the assessee .Ground No. 1 is decided in favour of the assessee in part.

As a result,appeal filed by the assessee for AY 2003-04 stands allowed and the appeal for assessment year 2005-06 is partly allowed. फलतः िनधा"रती "ारा िन.व. 2003-04 के िलए दािखल क" गई अपील मंजूर क" जाती है और िन.व. 2005-06 के िलए दािखल क" गई अपील आंिशक "प से मंजूर क" जाती है Order pronounced in the open court on 1st January, 2016. आदेश क" घोषणा खुले "यायालय म" "दनांक 01 जनवरी, 2016 को क" गई । (संदीप गोसांई/Sandeep Gosain ) (राजे"" / Rajendra) "याियक सद"य/Judicial Member लेखा सद"य/Accountant Member मुंबई Mumbai, "दनांक Date: 01.01.2016 व.िन.स.Jv.Sr.PS. 3

1804/11&5797/12 Samira M

आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत/Copy of the Order forwarded to : आदेश आदेश आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत