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Income Tax Appellate Tribunal, ‘’A” BENCH, CHENNAI
Before: SHRI B.R. BASKARAN & SHRI VIKAS AWASTHY
आदेश / O R D E R
PER VIKAS AWASTHY, JUDICIAL MEMBER
The appeal has been filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-XII, Chennai dated 01.03.2012 for the assessment year 2008-2009. The assessee has also filed cross objections
-2- and C.O. No.148/Mds/2012. against the order of the Commissioner of Income Tax (Appeals). The Revenue in its appeal has impugned the findings of First Appellate Authority on two grounds viz., (i) In adopting value of land at �79/- per sq.ft as against the rate of �33/- per sq.ft adopted by the Assessing Officer; and (ii) In allowing exemption u/s.54 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’). The assessee in its cross objections has assailed the findings of the Commissioner of Income Tax (Appeals) in not accepting the value of land at �145/- per sq.ft as fixed by the Registered Valuer.
Brief facts of the case are: The assessee is an individual. The assessee in her return of income for the assessment year 2008-2009 admitted long term capital gain of �1,33,07,500/- on the sale of residential property bearing New No.28, Old No.14, Nainar Nadar Road, Mylapore, Chennai. The assessee had acquired the aforesaid property from her father by way of settlement deed dated 04.06.2003. The father of the assessee had purchased the plot measuring 4840 sq.ft in 1951 and had constructed building thereon before 1960 consisting of two floors having covered area of 2000 sq.ft each. During the course of scrutiny assessment, the assessee filed valuation report from Shri. K. Raja Kuppusamy, Registered Valuer. He worked out fair market value (FMV) of the land as on 01.04.1981 at �22,18,333/- and FMV of the building at �2,76,388/- aggregating to �24,94,721/-. The Assessing Officer sought
-3- and C.O. No.148/Mds/2012 guideline value of the property as on 01.04.1981 from the office of Sub- Registrar, Mylapore. The Sub-Registrar vide letter dated 15.09.2010 intimated the guideline value of the property in question as on 01.04.1981 at �17,000/-
per ground i.e �7.08 per sq.ft. Thereafter, the assessee submitted second valuation report from another registered valuer Sh. M. Prathaban. He determined FMV of the land as on 01.04.1981 at �145/- per sq.ft and the value of building at �2,94,037/-. The Assessing Officer again sought information from the Sub-Registrar, Mylapore with regard to sale instances of the property around the property in question. The Sub-Registrar vide letter dated 22.12.2010 gave list of the properties in the area which were transferred during the year 1981 to 1984. According to Sub-Registrar rate per sq.ft excluding building ranged from �32.96 to 48.61 per sq.ft. Based on the information collected, the Assessing Officer determined the rate of land @ �.33/- per sq.ft as on 01.04.1981 and adopted the value of building as determined by Shri. Raja Kuppusamy, i.e �2,76,388/-. Further, the Assessing Officer held that the assessee is not eligible to claim benefit of section 54 of the Act.
Aggrieved by the assessment order dated 31.12.2010, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) estimated the FMV of the land at �79/- per sq.ft after rejecting the claim of the assessee at �145/- per sq.ft
-4- and C.O. No.148/Mds/2012 and FMV adopted by the Assessing Officer at �33/- per sq.ft. The Commissioner of Income Tax (Appeals) adopted the FMV of building at �2,94,037/- as valued by Shri. M. Prathaban. Further, he allowed the claim of the assessee with regard to grant of exemption u/s.54 of the Act. Against, these findings of the Commissioner of Income Tax (Appeals), the Revenue has come in appeal and the assessee has filed cross objections before the Tribunal.
Smt. P. Radhakrishnan representing the department vehemently
supported the assessment order and prayed for setting aside the findings of the Commissioner of Income Tax (Appeals) with respect to adopting value of the land at �79/- per sq.ft and grant of exemption u/s. 54 of the Act. The learned Departmental Representative contended that the Commissioner of Income Tax (Appeals) has ignored the information received from the office of the Sub-Registrar, Mylapore. The learned
Departmental Representative further contended that the assessee is not eligible to claim exemption u/s.54 as money utilized in acquiring new residential house was not the same which was realized from the sale of original asset. The sale proceeds were deposited with State Bank of India whereas, the amount was withdrawn from UCO Bank. He further submitted
-5- and C.O. No.148/Mds/2012 that the construction of the residential house was not completed within the time specified u/s. 54 of the Act.
On the other hand, Shri. Philip George appearing on behalf of the assessee assailed the findings of the Commissioner of Income Tax (Appeals) in not accepting the FMV of the land as valued by the Registered Valuer at �145/- per sq.ft. The learned counsel submitted that the Registered Valuer has determined the value in accordance with the decision of the Tribunal rendered in the case of P.C. Ramakrishna (HUF) in decided on 28th July, 2006. With regard to eligibility of assessee claiming exemption u/s. 54 of the Act, the learned counsel supported the findings of the First Appellate Authority.
We have heard the submissions of both sides and have perused the orders of the authorities below. The first issue in appeal is with respect to determining Fair Market Value(FMV) of the land and building. The assessee has also impugned the FMV of land adopted by Commissioner of Income Tax (Appeals). The Assessing Officer determined FMV of the land at �33/- per sq.ft and the value of building as �2,76,388/-. Whereas, the assessee has relied on the report of the Registered Valuer Shri. Prathaban, wherein the value of the land is determined at �145/- per sq. ft. and the value of building
-6- and C.O. No.148/Mds/2012 at �2,94,037/-. The Commissioner of Income Tax (Appeals) rejected the value adopted by Assessing Officer with the following observations:-
“ ….. though the guideline value (GLR) or the sale incidents in the near by areas, adopted by the Assessing Officer, will not reflect the true and proper FMV, as on 01.04.1981, this value forms a more reliable FMV in the absence of any other value or basis. Further, the in highly commercial areas, the market price of the properties varies drastically from property to property based on its location and proximity to the main road etc., even though the properties are located in the same locality/survey number. Hence, the method of determining the FMV based on the sales in the same area, cannot be considered as the accurate method.”
The Commissioner of Income Tax (Appeals) determined FMV as on 01.04.1981 on proportionate basis by adopting guideline value (GLR) as on 01.04.1981 i.e. �7.08/- per sq.ft and GLR as on the date of sale i.e � 1000/-
per sq.ft. Thus, the Commissioner of Income Tax (Appeals) estimated the FMV of land @ � 79/- per sq.ft aggregating to �3,92,320/-. In determining the FMV of building the Commissioner of Income Tax (Appeals) placed reliance on the report of Shri. Prathaban. While adopting the valuation report of Shri.
Prathaban, the Commissioner of Income Tax (Appeals) observed that full and precise details of build up area is given in valuation report, whereas, the valuation report of Shri.Raja Kuppusamy is devoid of full particulars. We concur to the findings of the Commissioner of Income Tax (Appeals) in determining FMV of the land and adopting the value of building and reasons for adopting valuation of building as given in the report by Shri. Parathaban.
We do not find any error in the impugned order on this issue. Accordingly,
-7- and C.O. No.148/Mds/2012 this ground of appeal of the Revenue and the cross objections raised by the assessee on this issue are dismissed.
6. The second issue raised by the Revenue in appeal is eligibility of assessee in claiming exemption u/s. 54 of the Act. The Assessing Officer has denied the benefit of Sec.54 of the Act to the assessee on two grounds.
Firstly, the amount utilized by the assessee for construction of new house is not from the account maintained with State Bank of India where the amount of sale consideration of the original asset was deposited and secondly, the house is not constructed within the time frame of three years as specified in the provisions of Section 54 of the Act. So far as the amount utilized for purchase of new asset is concerned, the Commissioner of Income Tax (Appeals) has given details of the amount deposited in the Capital Gains Deposit Scheme. The assessee has invested �1,70,00,000/- with UCO Bank and �2,00,00,000/- with the State Bank of India under specified scheme.
Thus, the assessee had deposited a total sum of �3,70,00,000/- in capital gains deposit schemes account. The assessee has filed before the Tribunal the details of the Capital Gain Accounts scheme and the details of withdrawal from these accounts. All these details were available before the authorities below. Thus, argument of the learned Departmental Representative that the amount utilized for construction of new house was not from the specified
-8- and C.O. No.148/Mds/2012 deposit scheme account is not tenable.
So far as the construction of the residential house within time frame of three years as per section 54 is concerned, it is an undisputed fact that the assessee initiated construction of the house well within the time limit of three years. It has come on record that the assessee had completed substantial construction work within the three year period. The Hon’ble High Court of Madras in the case of CIT v. Saradarmal Kothari reported as 302 ITR 286 (Mad) held that benefit u/s.54F shall be granted even if the construction is not complete, what has to be ascertained is the investment of entire net consideration within the stipulated time. Similar, view has been taken by the co-ordinate bench of the Tribunal in the case of Mrs. Seetha Subramanian v.
ACIT reported as 59 ITD 94 (Mad). It is not the case of Revenue before us that the assessee has not utilized entire sum of capital gains towards construction of house within the period of three years as specified u/s.54 of the Act. The provisions of Section 54 are pari- materia with the provisions of Section 54F of the Act. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) on this issue.
-9- and C.O. No.148/Mds/2012 In the result, the appeal of the Revenue as well as Cross objection of the assessee are dismissed being devoid of merit.
Order pronounced on Friday, the 30th of January, 2015, at Chennai.