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л From the Courts »
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 ITO vs. Vikram A. Pradhan (ITAT Mumbai)

M/s Intech Corporation, C/o Suresh Shah, 3/A Hashim Building, 40, Veer Nariman Road, Fort, Mumbai-400001 Vs. Income Tax Officer, 20(1)(3), Piramal Chambers, Parel, Lalbaug, Mumbai-400012
October, 30th 2015
                  ,   "" 
       IN THE INCOME TAX APPELLATE TRIBUNAL "I" BENCH, MUMBAI

     BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM)
      ..,      ,                                       
                 /I.T.A. No.5820/Mum/2013
              (   / Assessment Year : 2005-06)
M/s Intech Corporation,          / Income Tax Officer, 20(1)(3),
C/o Suresh Shah,                     Piramal Chambers,
3/A Hashim Building,
                                 Vs.
                                     Parel,
40, Veer Nariman Road,               Lalbaug,
Fort,                                Mumbai-400012
Mumbai-400001
       ( /Appellant)              ..     ( / Respondent)

        ./   ./PAN :AAAFI 1299P

            / Appellant by                 Shri Sanjay R Parikh
            / Respondent by                Shri Ravindra Sindhu


             / Date of Hearing                     : 29.10.2015
             /Date of Pronouncement :29.10.2015

                              / O R D E R

Per B.R.BASKARAN, Accountant Member:

       The assessee has filed this appeal challenging the order dated 12-
08-2013 passed by Ld CIT(A)-31, Mumbai for the assessment year 2005-
06 confirming the penalty of Rs.16,74,180/- levied by the assessing officer
u/s 271(1)(c) of the Act.


2.     The assessee had sold a factory premises and land during the year
under consideration. In respect of land, the assessee computed long term
capital loss by adopting the fair market value of the land as on 1.4.1981 at
Rs.25.00 lakhs on the basis of valuation report obtained from an approved
                                     2                   ITA No.5820/Mum/2013







valuer.     In the assessment proceedings, the AO referred the matter of
valuation to the DVO, who estimated the fair market value as on 1.4.1981
at Rs.3,22,940/-. Accordingly the AO computed the Long term capital gain
at Rs.1,00,56,584/- by adopting the FMV as on 1.4.1981 as determined by
the DVO.      In the appellate proceedings, the Ld CIT(A)     held that the
reference to DVO was not valid. Hence the Ld CIT(A) made enquiries with
MIDC and on the basis of comparable cases determined the FMV at Rs.750
per Sq. Mt or Rs.75/- per sq. Ft. Accordingly, the amount of Long term
capital gain came down to Rs.80,06,600/-. Further the AO also noticed
that the stamp duty valuation of the property was more by Rs.99,000/-.
Hence by applying the provisions of sec. 50C, the AO enhanced the sale
consideration by Rs.99,000/-The AO levied penalty on the long term
capital gain determined after the order of Ld CIT(A) and also on the
addition made u/s 50C of the Act for furnishing of inaccurate particulars of
income. The Ld CIT(A) confirmed the penalty levied by the AO and hence
the assessee has filed this appeal before us.


3.        With regard to the Long term capital gain computed by the tax
authorities, the Ld A.R submitted that the assessee did not furnish any
inaccurate particulars of income, since the fair market value as on
1.4.1981 was a matter of estimation only and normally two different
persons would arrive at two different valuation only. He submitted that
the assessee had obtained valuation report from an approved value, who
had estimated the fair market value as on 1.4.1981 at Rs.25.00 lakhs and
adopted the same for computing the long term capital gain. The Ld A.R
placed reliance on the decision rendered by Hon'ble Supreme Court in the
case of Dilip N Shroff (291 ITR 519)(SC) and submitted the estimation of
fair market value cannot lead to furnishing of inaccurate particulars of
income.      With regard to the addition made u/s 50C of the Act, he
submitted that the said addition has been made on account of legal fiction
                                     3                  ITA No.5820/Mum/2013




brought under that section and the same would not result in furnishing of
inaccurate particulars of income. In this regard, he placed reliance on the
decision rendered by the Hon'ble jurisdictional Bombay High Court
rendered in the case of CIT Vs. Fortune Hotels and Estates Pvt Ltd (ITA
No.1164 of 2012 dated 26-09-2014) and also the decision rendered by
Calcutta High Court in the case of CIT Vs. Madan Theaters Ltd (2013)(88
DTR 217).


4.     On the contrary, the Ld D.R placed strong reliance on the order
passed by Ld CIT(A).


5.    We heard the parties and perused the record.      We notice that the
difference in the computation of Long term capital gain has arisen only on
account of the difference in the amount of fair market value (FMV)
adopted by the assessee as well as the tax authorities. While the assessee
had adopted the FMV at Rs.25.00 lakhs on the basis of the valuation
obtained from an approved valuer, the AO has adopted the same at
Rs.3,22,940/- as per the value estimated by the DVO. Thus, we notice
that the two technical experts, i.e., approved valuer and the DVO has
reached two different fair market values as on 1.4.1981 in respect of same
property. However, the Ld CIT(A) did not consider both the values. In
fact, the Ld CIT(A) held that the reference made by the AO to the DVO
was not valid and hence proceeded to ascertain the value from MIDC and
also on the basis of comparable sales instances. Ultimately, the Ld CIT(A)
determined the FMV as on 1.4.1981 at a value, which was more than the
value determined by the DVO, but less than the value determined by the
approved valuer. These discussions would show that the determination of
FMV as on 1.4.1981 was a matter of estimation and hence we find merit in
the submissions of the assessee that the difference in the estimation
would not lead to furnishing of inaccurate particulars of income.
                                      4                   ITA No.5820/Mum/2013







Accordingly, we are of the view the penalty u/s 271(1)(c) of the Act would
not be exigible in respect of the difference in estimation of FMV as on
1.4.1981.    In respect of the addition made u/s 50C of the Act, the
assessee gets support from the two decision relied upon by him.


6.    In view of the above, we are unable to agree with the order passed
by Ld CIT(A). Accordingly, we set aside the order passed by Ld CIT(A)
and direct the AO to delete the penalty levied in the impugned order.


7.    In the result, the appeal filed by the assessee is allowed.

      Pronounced accordingly in the open court on 29th Oct, 2015.

              th
            29 Oct, 2015    

      Sd                                           sd
     ( /SANJAY GARG)                      ( .. / B.R. BASKARAN)
  / JUDICIAL MEMBER                     / ACCOUNTANT MEMBER
 Mumbai: 29th Oct, 2015
.../ SRL , Sr. PS

    /Copy of the Order forwarded to :
1.  / The Appellant
2.    / The Respondent.
3.    () / The CIT(A)- concerned
4.      / CIT concerned
5.    ,   ,  /
     DR, ITAT, Mumbai concerned
6.     / Guard file.
                                                            / BY ORDER,
             True copy
                                                     (Asstt. Registrar)
                                             ,  /ITAT, Mumbai

 
 
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