Urmila Gopal Changrani, Mumbai vs Department Of Income Tax
- CitationITA No.3339/M/2012
Ratio decidendi
The rule this decision rests on
Where the sale consideration of an asset is fixed by a registered sale agreement and the stamp duty authorities have adopted that value, the tribunal will not substitute an estimated value for the sale consideration; the registered value on record governs. Where a registered valuer's report on the fair market value of a capital asset as on 01.04.1981 is on record, and there is no other document or contrary evidence showing that value to be wrong or improper, the appellate authority is not justified in rejecting that report and estimating the value itself without assigning cogent or convincing reasons; the value declared in the registered valuer's report must be adopted as the cost of acquisition, with indexation allowed accordingly. A party's having adopted a particular figure (here, nil cost of acquisition) before the assessing officer is no bar to its making a different claim before the appellate authorities. Where the purchase of the new residence and the sale of the old flat are undisputed, and the assessee is otherwise entitled to the exemption, the claim under section 54 is not defeated merely by the assessing officer's objection to the source of funds where the appellate authority's determination of the capital gain leaves no taxable gain to which the exemption would apply. Where additional evidence produced before the first appellate authority is relevant to a just and proper decision of an issue and was not admitted, the matter is to be restored to the assessing officer to consider that evidence and decide the issue afresh in accordance with law.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
ITO Ward 19(3)(4), 3rd Floor, Smt. Urmila Gopal Changrani, Piramal Chamber, Room No.402, Bandra Beach Room No.304 Vs. View CHSL 77, Chimbai Road, Lalbaug, Bandra (W), Mumbai - 400 012 Mumbai - 400 050 PAN: AHIPC 5507B (Appellant) (Respondent)
ITA No.3630/M/2012 Assessment Year: 2003-04
Mrs. Urmila Changrani, Income Tax Officer - 19(3)(4), Room No.402, Bandra Beach Room No.304, 3rd Floor, View CHSL, Piramal Chambers, Vs. 77, Chimbai Road, Lalbaug, Bandra (W), Parel, Mumbai - 400 050 Mumbai - 400 012 PAN: AHIPC 5507B (Appellant) (Respondent)
Assessee by : Shri Pritesh Mehta, A.R. Revenue by : Shri N. Padmanabhan, D.R.
Date of Hearing : 31.12.2014 Date of Pronouncement :14.01.2015
ORDER
Per Sanjay Garg, Judicial Member:
These cross appeals, one by the assessee and the other by the Revenue, directed against the order dated 13.02.2012 of the Commissioner of Income Tax (Appeal) [hereinafter referred to as the CIT(A)] relevant to assessment year 2003-04 are being disposed off with this common order.
ITA No.3339/M/2012 & ITA No.3630/M/2012 2 Smt. Urmila Gopal Changrani
2. The brief facts of the case are that the assessee had shown sale of flat at Mumbai for a consideration of Rs.20 lakhs vide agreement dated 17.07.02. The Assessing Officer (hereinafter referred to as the AO) took the market value of the said property as per the stamp duty ready recknor at Rs.29,60,256/-. The assessee had claimed deduction under section 54 on account of investment of the capital gains in residential property at Bandra, Mumbai for a consideration of Rs.45 lakhs vide agreement dated 31.08.01. The AO observed that the property claimed to have been purchased was not from the funds arising out of the sale proceeds of the flat sold vide agreement dated 17.07.02. The assessee had shown a loan of Rs.36,68,750/- from her husband as on 01.01.02 but no confirmation or bank details were furnished before the AO. The AO held that the assessee had failed to establish the genuineness of the source of funds for the purchase of property. The AO also doubted the creditworthiness of the husband of the assessee to advance her the loan amount. The AO therefore computed the long term capital gains at Rs.29,60,256/- by adopting the purchase cost of Rs.'nil' and also rejected the claim of the assessee under section 54 of the Act.
3. In appeal before the Ld. CIT(A), it was submitted by the assessee that the old flat was sold for a consideration of Rs.20 lakhs in the month of July 2002. The agreement was duly registered and the stamp duty was paid at a price as per the value of the property adopted by the Stamp Duty Authorities at Rs.23,38,500/-. The market value of the old flat as on 01.04.81 was Rs.5,82,400/- as per the registered property valuer. The indexed cost of the old flat in the year of sale as per the valuation certificate of the registered valuer was Rs.26,03,328/-. It was also submitted that the assessee had purchased a residential house vide agreement dated 31.08.01 at Bandra for a consideration of Rs.45 lakhs. The funds for purchase of the flat were arranged by assessee ITA No.3339/M/2012 & ITA No.3630/M/2012 3 Smt. Urmila Gopal Changrani
from her own sources as well as loan from her husband. The assessee also submitted the details of the payments made for the purchase of new flat along with the sources from which the payments were made.
The assessee also filed copies of bank statement, FDRs, foreign inward remittance certificates retained by her husband Mr. Gopal Changrani as well as his copies of acknowledgement of income tax returns and balance sheet pertaining to A.Y. 2002-03 & 2003-04. It had also been submitted that the indexed value of old flat itself was higher than the value of the old flat and hence no capital gain was taxable on the sale of old flat. It was not necessary that the payments made for the purchase of new flat should be out of the funds received from sale of old flat.
4. After consideration of the matter, the Ld. CIT(A) held that since the agreement for the sale of old flat was registered with the Stamp Duty Authorities, hence, the AO should adopt the sale value of the flat at Rs.23,38,500/-. He further observed that the AO had wrongly taken the purchased value of the flat at nil. He observed that the assessee was residing in the said flat since the year 1969. Though the assessee had submitted that the purchased value as per the valuer's report be taken at Rs.5,82,400/- as on 01.04.81, he, however, rejected the said report on the ground that the same was not submitted before the AO. He thereafter himself estimated the value of the flat at Rs.3,99,360/- as on 01.04.1981 as against the value at Rs.5,82,400/- given in the registered valuer's report.
So far so the claim of the assessee for deduction under section 54 of the Act was concerned, the Ld. CIT(A) observed that the assessee had not satisfactorily explained the source of the funds. He therefore upheld the findings of the AO in rejecting the claim of the assessee under section 54 of the ITA No.3339/M/2012 & ITA No.3630/M/2012 4 Smt. Urmila Gopal Changrani
Act. He therefore directed the AO to compute the capital gains of the assessee by adopting the market value of the flat as on date of sale at Rs.23,38,500/- as per the value adopted by Stamp Duty Authorities and to allow the indexation taking the cost of purchase of flat as on 01.04.81 at Rs.3,99,360/-.
5. Being aggrieved by the order of the Ld. CIT(A), the assessee has come in appeal before us, agitating the action of the Ld. CIT(A) in rejecting the registered valuer's report regarding the value of the property as on 01.04.81 and also the rejection of claim under section 54 of the Act.
On the other hand, the Revenue has agitated the action of the Ld. CIT(A) in directing the AO to compute the long term capital gains by adopting the cost of acquisition of property as on 01.04.81 at Rs.3,99,360/- and then to allow indexation on the same as against the action of the AO in treating the cost of acquisition at nil. The Revenue has also agitated the action of the Ld. CIT(A) in treating the sale value of consideration of the old flat at Rs.23,38,500/- as against the value of Rs.29,60,256/- adopted by the AO as per ready recknor.
6. We have heard the rival contentions of the Ld. Representatives of both the parties and have also gone through the records. So far the action of the Ld. CIT(A) in taking the sale value of the old flat at Rs.23,38,500/- is concerned, we find that the flat in question was sold through registered agreement. The Ld. CIT(A) has noted that the Stamp Duty Authorities had adopted the value of the flat at Rs.23,38,500/-. When the correct registered value of the property was on record, there was no question for adopting any value on estimation basis. Hence, we do not find any infirmity in the order of the Ld. CIT(A) so far as the adoption of the sale value of the old flat is concerned.
6.1 So far as the finding of the Ld. CIT(A) for adopting the cost of acquisition of the property as on 01.04.81 at Rs.3,99,360/- is concerned, we ITA No.3339/M/2012 & ITA No.3630/M/2012 5 Smt. Urmila Gopal Changrani
find that the assessee had submitted the report of the registered valuer wherein the registered valuer had estimated the value of the property at Rs.5,82,400/-. In our view, the Ld. CIT(A) was not justified in rejecting the registered valuer's report and estimating the value of the property himself without assigning any cogent or convincing reason. In the absence of any other document showing any other value of the property as on 01.04.81 or any contradictory evidence on the file to show that the value declared by the registered valuer was wrong or not proper, the Ld. CIT(A) was not justified in rejecting the said report. In the absence of any other evidence to the contradictory, it was incumbent upon the Ld. CIT(A) to adopt the value as declared by the registered valuer. Hence, we direct that the cost of acquisition be taken as per the registered valuer's report and indexation be allowed accordingly thereupon.
6.2 So far so the contention that the assessee herself had adopted the cost of acquisition at nil before the AO is concerned, it may be noted that there is no bar for the assessee to make a claim before the appellate authorities. The claim of the assessee was considered by the Ld. CIT(A) and in fact was admitted by the Ld. CIT(A) but at different value as estimated himself by him. However, in view of our findings given above, the AO is directed to adopt the value of the property as per registered valuer's report and give indexation accordingly.
6.3 Though the assessee had given the full details about the source of investment in the purchase of new house, however, since we have directed the adoption of the value as on 01.04.81 and indexation thereupon as per registered valuer's report, hence as submitted by the Ld. A.R., there will not be any taxable capital gains. However, since purchase of new flat was not disputed and the sale of flat was also not disputed, hence in our view, the assessee otherwise is also entitled to deduction under section 54 of the Act.
ITA No.3339/M/2012 & ITA No.3630/M/2012 6 Smt. Urmila Gopal Changrani
7. The second issue raised in the appeal of the assessee is regarding the calculation of capital gains on the sale of shares. The AO had added Rs.4,30,256/- into the income of the assessee under section 68 of the Act which was claimed by the assessee to have been received as sale proceeds of shares. The assessee before the Ld. CIT(A) filed certain details showing the evidence of purchase and sale of shares etc. However, the Ld. CIT(A) did not admit the additional evidences produced before him.
8. After hearing the Ld. Representatives of the parties, we find that the evidences produced by the assessee before the Ld. CIT(A) were important evidences. The said evidences, in our view, are necessary to be considered for just and proper decision of the issue under consideration. Hence, we restore the matter on this issue to the file of the AO with a direction to consider the evidences regarding the purchase and sale of shares etc. submitted by the assessee and decide the issue afresh in accordance with law.
9. In view of our above discussion, the appeal of the Revenue is hereby dismissed whereas the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 14.01.2015.
Sd/- Sd/- (R.C. Sharma) (Sanjay Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 14.01.2015. * Kishore, Sr. P.S.
Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai ITA No.3339/M/2012 & ITA No.3630/M/2012 7 Smt. Urmila Gopal Changrani
The DR Concerned Bench //True Copy// [
By Order
Dy/Asstt. Registrar, ITAT, Mumbai.
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