R.Santhanalskhmi, Pondicherry vs Assessee

( नधा रण वष / Assessment Year : 2008-2009)

The Deputy Commissioner of Income M/s. R. Santhanalakshmi, Tax, Circle -I, Vs. No.33, South Street, D.P. Thottam, Kuruvinatham P.O. Puducherry 605 003. Pondicherry.

[PAN :APDPS 3465D] (अपीलाथ /Appellant) ( यथ /Respondent/Cross Objector)

अपीलाथ" क# ओर से / Appellant by : Smt. P. Radhakrishnan, IRS, JCIT. %&यथ" क# ओर से / Respondent by : Shri. Philip George, Advocate.

सन ु वाई क# तार*ख/Date of hearing : 19.01.2015. घोषणा क# तार*ख /Date of Pronouncement : 30.01.2015.

आदे श / 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- I.T.A. No.1431/Mds/2012 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 B79/- per sq.ft as against

the rate of B33/- 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 B145/- per sq.ft as fixed by the Registered Valuer.

2. 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 B1,33,07,500/- 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 B22,18,333/- and FMV of the building

at B2,76,388/- aggregating to B24,94,721/-. The Assessing Officer sought

-3- I.T.A. No.1431/Mds/2012 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 B17,000/-

per ground i.e B7.08 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 B145/- per sq.ft and the

value of building at B2,94,037/-. 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 B32.96 to 48.61 per sq.ft. Based on the

information collected, the Assessing Officer determined the rate of land @

B.33/- per sq.ft as on 01.04.1981 and adopted the value of building as

determined by Shri. Raja Kuppusamy, i.e B2,76,388/-. 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

B79/- per sq.ft after rejecting the claim of the assessee at B145/- per sq.ft

-4- I.T.A. No.1431/Mds/2012 and C.O. No.148/Mds/2012

and FMV adopted by the Assessing Officer at B33/- per sq.ft. The

Commissioner of Income Tax (Appeals) adopted the FMV of building at

B2,94,037/- 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.

3. 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 B79/- 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- I.T.A. No.1431/Mds/2012 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.

4. 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

B145/- 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 ITA No.783/Mad/2001

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.

5. 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 B33/- per

sq.ft and the value of building as B2,76,388/-. Whereas, the assessee has

relied on the report of the Registered Valuer Shri. Prathaban, wherein the

value of the land is determined at B145/- per sq. ft. and the value of building

-6- I.T.A. No.1431/Mds/2012 and C.O. No.148/Mds/2012

at B2,94,037/-. 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. B7.08/- per sq.ft and GLR as on the date of sale i.e B 1000/-

per sq.ft. Thus, the Commissioner of Income Tax (Appeals) estimated the

FMV of land @ B 79/- per sq.ft aggregating to B3,92,320/-. 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- I.T.A. No.1431/Mds/2012 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 B1,70,00,000/- with UCO Bank

and B2,00,00,000/- with the State Bank of India under specified scheme.

Thus, the assessee had deposited a total sum of B3,70,00,000/- 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- I.T.A. No.1431/Mds/2012 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- I.T.A. No.1431/Mds/2012 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.

Sd/- Sd/- (बी.आर. बा करन) (!वकास अव थी) (B.R. BASKARAN) (VIKAS AWASTHY) लेखा सद य/ ACCOUNTANT MEMBER या#यक सद य /JUDICIAL MEMBER

-दनांक/Dated:30.01.2015. K.V आदे श क# % त/ल प अ0े षत/Copy to: 1. अपीलाथ"/Appellant 2.%&यथ"/ Respondent 3. आयकर आय2 ु त (अपील)/CIT(A) 4. आयकर आय2 ु त/CIT 5. वभागीय % त न5ध/DR 6. गाड फाईल/GF.