BHARAT JOSHI, MUMBAI v. ASST. C.I.T., 11(2), MUMBAI

ITA 3675/MUM/2009 | 2003-2004
Pronouncement Date: 28-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 367519914 RSA 2009
Assessee PAN AAHPJ4740M
Bench Mumbai
Appeal Number ITA 3675/MUM/2009
Duration Of Justice 11 month(s) 23 day(s)
Appellant BHARAT JOSHI, MUMBAI
Respondent ASST. C.I.T., 11(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 28-05-2010
Date Of Final Hearing 13-05-2010
Next Hearing Date 13-05-2010
Assessment Year 2003-2004
Appeal Filed On 05-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI R.V. EASWAR (SR. VICE-PRESIDENT) & SHRI A.L. GEHLOT (ACCOUNTANT MEMBER) I.T.A. NO.3675/MUM/2009 (A.Y 2003-04) SHRI BHARAT JOSHI 44/48 DARASHAW BLDG. 24 JAMBULWADI KALBADEVI RD. MUMBAI-400 002. PAN: AAHPJ4740M. VS. ASST.COMMR. OF INCOME-TAX-11(2) MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHR I CHETAN KARIA. RESPONDENT BY SHRI D EBASHISH CHANDA. O R D E R PER A.L. GEHLOT AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-XI MUMBAI. 2. THE ASSESSEE HAS RAISED AS MANY AS 9 GROUNDS AN D SUMMARIZED THE SAME IN GROUND NO. 10. GROUND NO. 11 IS GENERAL. THE LD. A.R. HAS NOT PRESSED GROUND NOS. 5 6 & 7 WHICH READ AS UNDER : 5) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN NOT ADMITTING AND DECIDING ON MERITS ADDITIONAL GROUNDS RAISED BY THE APPELLANT. 6) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPRECIATE THAT APPELLANT WAS ENTITLED ONLY TO 8.33 % OF THE PROPERTY SOLD AND NOT 50%. 7)THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPRECIATE THAT THE LAND SOLD WAS AGRICULTURAL LAND AND NOT A CAPITAL ASSET WITHIN THE MEANING OF S.2(14) OF THE ACT. THE LD. A.R. HAS NOT PRESSED THESE GROUNDS. THEREFO RE THEY ARE DISMISSED. 3. THE LD. A.R. FURTHER SUBMITTED THAT GROUND NOS.1 TO 4 ARE PRINCIPALLY ONE GROUND I.E. IN RESPECT OF CONFIRMING ACTION OF THE AO BY THE CIT(A) IN SUBSTITUTING ITA 3675/M/09 BHARAT JOSHI 2 ACTUAL SALE CONSIDERATION OF RS.7 00 000/- BY ALLEG ED MARKET VALUE OF RS.1 46 85 000/-. 4. THE BRIEF FACTS OF THESE GROUNDS ARE THAT THE AS SESSEE WAS 50% OWNER OF A PLOT AT BOISAR WHICH WAS SOLD BY THE ASSESSEE DURI NG THE YEAR FOR RS.7 00 000/- THE ASSESSEES SHARE BEING RS.3 50 000/-. THE SAID PLOT WAS ACQUIRED IN 1963. THE MARKET VALUE AS ON 1-4-1981 WAS TAKEN AT RS.20 35 241/-. THE ASSESSEE SHOWED LONG-TERM CAPITAL GAINS OF RS.41 98 987/-. T HE AO ASKED THE ASSESSEE WHY THE PROPERTY HAS BEEN SOLD AT SUCH AN ABYSMALLY LOW PRICE. THE AO ENQUIRED THE SALE PRICE THROUGH THE INSPECTOR. IN THE INSPEC TORS REPORT IT WAS SUBMITTED THAT THE VALUE OF THE LAND AT THAT TIME RANGED FROM RS.1 LAKHS TO RS.1.25 LAKH PER GUNTHA. THE REPORT ALSO STATED THAT DURING THE RELE VANT PERIOD I.E. FINANCIAL YEAR 2002-03 THE RATE OF THE LAND WAS AROUND RS.50 000/ - TO RS.60 000/- PER GUNTHA. ON THE BASIS OF THE INSPECTORS REPORT THE AO ISSU ED SHOW CAUSE NOTICE DATED 17- 3-2006 IN WHICH IT IS STATED THAT IN ORDER TO DETER MINE FAIR MARKET VALUE OF THE IMPUGNED PROPERTY A REFERENCE U/S.55A OF THE I.T. ACT HAD BEEN MADE TO THE DVO-I PIRAMAL CHAMBERS PAREL MUMBAI WITH A REQU EST TO DETERMINE FAIR MARKET VALUE OF THE SAID PROPERTY AS ON 31-01-2003. BUT THE AO DID NOT RECEIVE THE VALUATION REPORT FROM THE VALUATION CELL IN SPI TE OF REPEATED REMINDERS. PARALLEL INQUIRIES WERE CONDUCTED THROUGH THE INSPE CTOR AND POINTED OUT THAT AS PER THE INSPECTORS REPORT THE TOTAL SALE PRICE OF THE ENTIRE PIECE OF LAND ADMEASURING 6 ACRES AND 27 GUNTHAS @ RS.50 000/- PE R GUNTHA COMES TO RS.1 33 50 000/- AND THE ASSESSEES 50% SHARE WORKS OUT TO RS.66 75 000/-. IN REPLY TO NOTICE OF THE AO THE ASSESSEE SUBMITTED T HAT THE LAND IN QUESTION IS OUTSIDE THE MIDC AREA. ONE ACRE & 30 GUNTHAS WERE T AKEN OVER BY PUBLIC ROAD WHICH RUNS THROUGH THE LAND. THE LAND IS ENCROACHED BY SLUMS. THE ASSESSEE DID NOT AGREE WITH THE VALUE ARRIVED AT BY THE INSPECTO R. THE AO REJECTED THE ITA 3675/M/09 BHARAT JOSHI 3 ASSESSEES SUBMISSION ON THE GROUND THAT NO PROOF W AS FURNISHED BY THE ASSESSEE. THE AO RE-CALCULATED LONG-TERM CAPITAL GA INS AND ACCORDINGLY WORKED OUT THE SALE PRICE BY APPLYING THE RATE OF RS.55 00 0/- PER GUNTHA WHICH CAME TO RS.1 46 85 000/-. AFTER GIVING COST INDEX BENEFIT THE LONG-TERM CAPITAL GAIN WAS CALCULATED AT RS.55 87 026/- AND THE ASSESSEES 50% SHARE IN LONG-TERM CAPITAL GAIN WAS RS.27 93 513/-. THE AO HELD THAT THE ASSES SEE MUST HAVE RECEIVED THE AMOUNT OF RS.40 50 506/- OVER AND ABOVE RS.3 50 000 /- SHOWN BY HIM IN CASH. THE CIT(A) CONFIRMED THE ORDER OF AO REJECTING THE ASSESSEES SUBMISSION INCLUDING THE SUBMISSION THAT HIS SHARE IN THAT PLO T WAS 8.33% AND NOT 50%. 5. THE LD. A.R. SUBMITTED THAT THE LAND IS 1 KM. FR OM THE RLY. STATION AND SURROUNDED BY FIELDS AND THERE WAS NO DEVELOPMENT. THERE WAS A SLUM ON ADJACENT LAND IN 2002. A PUBLIC ROAD TAKING UP 1 AC RE AND 30 GUNTHAS IS PASSING THROUGH THE LAND DIVIDING IT IN TWO PARTS. THERE WA S NO BOUNDARY TO THE LAND. THERE IS NO WELL OR WATER SOURCE ON IT. THE LD. A.R . SUBMITTED THAT THERE WAS A THREAT OF PROPOSED RESERVATION OF PUBLIC HOUSING IN PROPOSED DEVELOPMENT PLAN. THE LAND WAS OFFERED THROUGH LOCAL ESTATE AGENT KAS AMALI MEMON AS HE WAS NOT ENTERTAINED BY OWNERS AND HE WAS READY WITH PROSPE CTIVE PURCHASERS. AFTER PURCHASE THE LOCAL LAND MAFIA KASAMALI FILED CRIMI NAL COMPLAINTS AGAINST THE ASSESSEE FOR ASSAULTS AND INJURY. THE ASSESSEE WAS UNABLE TO CONTROL OVER POSSESSION AND EXERCISED RIGHT ON THE LAND. THE LD. A.R. FURTHER SUBMITTED THAT THE AO HAS EXAMINED THE PURCHASER BY RECORDING HIS STATEMENT ON OATH U/S.131 DATED 30-12-2005 WHEREIN THE PURCHASER HAS CONFIRME D THE SALE CONSIDERATION OF RS.7 00 000/-. THE LD. A.R. REFERRED TO QUESTION 3 AND ANSWER OF THE STATEMENT WHERE THE PURCHASER HAS CLEARLY STATED THAT THE LAN D HAS ENCUMBRANCE IN THE FORM OF ENCROACHMENT. MOREOVER A PUBLIC ROAD TAKIN G UP ABOUT 1 ACRE PASSING THROUGH THE LAND. THE PURCHASE COST OF THE LAND WAS ARRIVED AT AFTER CONSIDERING ITA 3675/M/09 BHARAT JOSHI 4 THE FACTS AND AS A RESULT OF NEGOTIATIONS WITH THE ASSESSEE AND OTHERS. THE LD. A.R. WHILE REFERRING TO THE INSPECTORS REPORT SU BMITTED THAT THE INSPECTOR HAS NOT CONSIDERED ALL THE FACTS INCLUDING THE FACT THA T THERE WAS ENCROACHMENT ON THE LAND. THE LD. A.R. SUBMITTED THAT THE ESTIMATED VAL UE REPORTED BY THE INSPECTOR IS ON ASSUMPTION BY SAYING THAT ON LOCAL ENQUIRY THAT MUCH WAS THE RATE. THE LD. A.R. WHILE REFERRING TO THE RELEVANT PROVISIONS OF THE ACT REGARDING CAPITAL CAPITAL GAINS SUBMITTED THAT THERE IS NO EVIDENCE TO INVOK E ANY PROVISIONS TO SUBSTITUTE THE SALE CONSIDERATION DECLARED BY THE ASSESSEE. TH E LD. A.R. SUBMITTED THAT THE AO DID NOT INVOKE EVEN SEC.50C OF THE ACT. THE LD. A.R. SUBMITTED THAT EVEN SEC.50C IS APPLICABLE ONLY IN RESPECT OF CASES WHER E THE CONSIDERATION RECEIVED BY THE ASSESSEE IS LESS THAN THE VALUE ADOPTED OR ASS ESSED BY THE STAMP VALUATION AUTHORITY OF THE STATE GOVT. FOR THE PURPOSE OF PAY MENT OF STAMP DUTY. BUT IN THE CASE UNDER CONSIDERATION THERE IS NO SUCH DOCU MENT BASED ON WHICH THE AO CAN INVOKE SEC. 50C OF THE ACT. THE LD. A.R. IN SU PPORT OF THIS CONTENTION RELIED UPON THE DECISION OF ITAT (JODHPUR) IN THE CASE OF NAVNEET KUMAR THAKKAR REPORTED IN (2007) 112 TTJ (JODHPUR). THE LD. A.R. FURTHER SUBMITTED THAT SEC. 50C IS NOT APPLICABLE TO THE FACTS OF THE CASE UNDE R CONSIDERATION AS THE TRANSACTION WAS PRIOR TO AMENDMENT IN THE RELEVANT PROVISIONS. SEC. 50C WAS APPLICABLE FROM 1-4-2003 WHERE THE TRANSACTION WAS BEFORE THAT DATE. ON QUERY BY THE BENCH THE LD. A.R. SUBMITTED THAT IN THE CA SE OF THE CO-OWNER THE SALE CONSIDERATION DECLARED BY THE ASSESSEE HAS BEEN ACC EPTED WHILE PROCESSING THE RETURN U/S.143(1). 6. THE LD. D.R. RELYING UPON THE ORDERS OF THE REV ENUE AUTHORITIES SUBMITTED THAT THE ASSESSEE DID NOT FURNISH ANY PROOF REGARD ING THE ENCROACHMENT AND PASSING OF PUBLIC ROAD ETC. THE LD. D.R. FURTHER S UBMITTED THAT THE AO HAS RIGHTLY CALCULATED THE SALE CONSIDERATION AS THE SAME IS SU PPORTED BY THE REPORT OF ITA 3675/M/09 BHARAT JOSHI 5 INSPECTOR. IN RESPECT OF STATEMENT OF PURCHASER TH E LD. D.R. SUBMITTED THAT THE REPLY OF THE PURCHASER IS A SELF-SERVING DOCUMENT W HICH CANNOT BE RELIED UPON. THE LD. D.R. SUBMITTED THAT THOUGH THE AO REFERRED THE MATTER TO THE VALUATION OFFICER HE DID NOT RECEIVE THE REPORT FROM THE VA LUATION CELL. THEREFORE THE AO MADE INQUIRIES THROUGH THE INSPECTOR AND THE SALE CONSIDERATION WAS DETERMINED BY THE AO ON THE BASIS OF THE INSPECTORS REPORT. T HE LD. D.R. SUBMITTED THAT THE ORDERS OF THE REVENUE AUTHORITIES MAY BE CONFIRMED. 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND PERUSED THE RECORD. SECTION 48(1) USES THE EXPRESSION FULL VAL UE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF THE CAPITAL ASSET. THE CASE UNDER CONSIDERATION IS IN RESPECT OF MEANING OF FULL VA LUE OF CONSIDERATION. FULL VALUE OF CONSIDERATION HAS NOT BEEN DEFINED IN THE ACT EXCEPT IN SECTION 50C WHICH PROVIDES DEEMED FULL VALUE OF CONSIDERATION. THE FULL VALUE OF CONSIDERATION IS THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF CAPITAL ASSET. IT IS NOT NECESSARY THAT MARKET VALUE ALWAYS REPRESENTS F ULL VALUE OF CONSIDERATION. SECTION 50C WHICH HAS BEEN INSERTED BY THE FINANCE ACT 2002 W.E.F. 1-4-2003 PROVIDES SPECIAL PROVISIONS FOR FULL VALUE OF CONSI DERATION IN CERTAIN CASES WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS L ESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVT. FOR THE PURPOSE OF STAMP DUTY IN RESPECT SUCH TRANSFER OR THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL FOR THE PURPOSES OF SEC. 48 BE D EEMED TO BE THE FULL VALUE OF CONSIDERATION. THERE IS NO OTHER PROVISION WHICH SU BSTITUTES OR DEFINES FULL VALUE OF CONSIDERATION. IN THE CASE UNDER CONSIDERATION THE ADMITTED FACTS OF THE CASE ARE THAT THE AO THOUGH REFERRED THE MATTER TO THE VALUATION CELL U/S.55A HE DID NOT RECEIVE THE VALUATION REPORT. ON EXAMINATION O F PURCHASER BY THE AO BY ITA 3675/M/09 BHARAT JOSHI 6 ISSUING SUMMONS U/S.131 THE PURCHASER IN HIS STATE MENT RECORDED U/S.131 HAS CONFIRMED THE SALE CONSIDERATION SHOWN BY THE ASSES SEE. THE AO HAS ESTIMATED THE SALE CONSIDERATION ON THE BASIS OF INSPECTORS REPORT. WE NOTICE THAT THE REPORT OF INSPECTOR WAS NOT BASED ON ANY MATERIAL E VIDENCE. HE REPORTED CERTAIN PRICES ONLY BY SAYING THAT THOSE RATES WERE POINTED OUT BY SOME AGENT AND LOCAL PERSONS. THE AO DID NOT INVOKE SEC. 50C. THEREFORE THE CASE OF REVENUE IS NOT UNDER SEC. 50C OF THE ACT. AFTER CONSIDERING THE TO TALITY OF THE FACTS OF THE CASE WE ARE OF THE CONSIDERED VIEW THAT THE AO IS NOT CO RRECT IN SUBSTITUTING THE FULL VALUE OF CONSIDERATION ON THE BASIS OF INSPECTORS REPORT. WE THEREFORE SET ASIDE THE ORDERS OF REVENUE AUTHORITIES AND THE CLAIM OF THE ASSESSEE IS ALLOWED. 8. GROUND NOS. 8 & 9 ARE IN RESPECT OF DISALLOWANCE OF TELEPHONE AND MOTOR CAR EXPENSES ON ACCOUNT OF PERSONAL USE. THE AO DIS ALLOWED 20% OUT OF TELEPHONE EXPENSES AND 25% OUT OF MOTOR CAR EXPENSE S INCLUDING DEPRECIATION ON MOTOR CARS. THE CIT(A) RESTRICTED THE DISALLOWAN CE OF MOTOR CAR EXPENSES AND DEPRECIATION TO THE EXTENT OF 20% AND CONFIRMED 20% OUT OF TELEPHONE EXPENSES. 9. AFTER HEARING THE LD. REPRESENTATIVES OF THE PAR TIES WE ARE OF THE VIEW THAT PERSONAL ELEMENT IN THE EXPENSES CANNOT BE RULED OU T. HOWEVER WE FIND THAT THE DISALLOWANCE ON ACCOUNT OF PERSONAL ELEMENT IS EXCE SSIVE. THEREFORE IT WILL BE FAIR AND JUST IF THE SAME IS RESTRICTED TO 10% INST EAD OF 20% DISALLOWANCE SUSTAINED BY THE CIT(A). THUS THESE GROUNDS ARE PA RTLY ALLOWED. 10. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 31ST DAY OF MAY 2010. SD/- SD/- (R.V. EASWAR) (A.L. GEHLOT) SR. VICE-PRESIDENT ACCOUNTANT MEMBER MUMBAI: 31ST MAY 2010. NG: ITA 3675/M/09 BHARAT JOSHI 7 COPY TO : 1. ASSESSEE. 2. DEPARTMENT. 3 CIT(A)-XI MUMBAI. 4 CIT-XI MUMBAI. 5. DR F BENCH MUMBAI. 6. MASTER FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI. ITA 3675/M/09 BHARAT JOSHI 8 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 17-5-2010 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 19-5-2010 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER