Victor Zachrias Pinto, A-3/7 John CHS, Beach Complex, DSP Nagar, Naigaon (W), Vasai 401207 Vs. The ITO Wd 4(4), Thane
May, 17th 2014
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IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "F", MUMBAI
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Before ShriI P Bansal, Judicial Member & Shri N K Billaiya, AM
./ ITA No.6433/Mum/2012
[ [ / Assessment Year 2009-10
Victor Zachrias Pinto, The ITO Wd 4(4),
A-3/7 John CHS, Thane
Beach Complex, DSP Nagar, Vs.
( /Appellant) (×/Respondent)
Appellants By : Shri Subodh L Ratnaparkhi
Respondent By : Shri Ravi Prakash
Date of Hearing :13.05.2014. Date of Pronouncement : 16.05.2014
/ O R D E R
Per N K Billaiya, AM:
This appeal by the assessee is directed against the order of the CIT(A)-2, Thane
dated 09.07.12 pertaining to A.Y. 2009-10. The grievance of the assessee reads as
"1A. The ld. CIT(A) erred in upholding the action of the ld. A.O. in
determining Long Term Capital Gains on sale of property at
Rs.12,53,161/- by relying upon the provisions of Sec.50C of the I.T.Act
1B. The ld. CIT(A) erred in not appreciating the claim of the
appellant that in the course of assessment proceedings, he had
claimed before the ld. A.O. that the value of property adopted by the
stamp valuation authority far exceeding the fair market value of the
property and therefore the same was required to be valued as
provided by section 50C(2) of the I.T.Act, 1961.
1C. The ld. CIT(A) erred in not appreciating the reasons put forth
by the appellant for the fair market value of the property to be lower
than the value as per stamp valuation authority, particularly on
account f the said property being possession of tenants.
1D The ld. CIT(A) erred in holding that the AR of the appellant had
agreed to the correct valuation of the property as on the date of sale
to be Rs.50,77,108/- which is not factually correct.
2. The ld. CIT(A) erred in dismissing the claim of the appellant
that the cost of acquisition to be adopted for working out the Long
Term Capital Gains should be the fair market value of the property as
on 01.04.1981 as provided in Section 55(2)(b)(i) of the I.T.Act, 1961
and not the actual cost of the said property acquired prior to
3. The ld. CIT(A) erred in dismissing the claim of the appellant for
deduction u/s. 80C amounting to Rs.45,000 paid as tuition fees for the
education of his daughter."
2. The assessee is a salaried employee. The return for the year under
consideration was filed on 30.07.2009 declaring total income at Rs.1,46,080/-. The
return was selected for scrutiny under CASS. Statutory notices were issued and
served upon the assessee. The AO noticed that the assessee had sold immovable
property of Rs.50,77,108/-. The sale transaction was registered before the Jt. Sub
Registrar, Andheri-2 on 12.05.2008. The AO further noticed that the assessee was
joint owner of the said property along with three others. The total sale
consideration was shown at Rs.14 lacs. The share received by each co-owner was
Rs.3,50,000/- As per the information received from the Jt. Sub Registrar Andheri-2,
the stamp duty paid on the said property was at a sale value of Rs.50,77,108. The
AO invoked the provisions of section 50C of the Act for taking the stamp duty value
of the property as the full value of the consideration received as a result of such
transfer. Opportunity of being heard was given to the assessee. The assessee
responded to the notice of the AO and filed a valuation opinion of a government
approved valuer claiming that the value of the transferred property is much less
than the stamp duty value adopted by the sub-registrar. The submissions/claim of
the assessee was rejected by the AO, who went on to compute the long term capital
gain by adopting the stamp duty of the sale consideration and computed the share
of the assessee at Rs.12,53,161/-. The assessee carried the matter before the
CIT(A). The assessee reiterated its claim that the fair market value of the property
was much less than the value adopted by the stamp duty valuation authority. It
was strongly contended before the CIT(A) that the AO ought to have referred the
case for independent valuation by the valuation officer of the department. It was
further claimed that the AO has not considered the value of the said property as on
01.04.1981 as the said property was purchased by the original owner on
08.11.1963. The submissions of the assessee did not find favour from the CIT(A)
The CIT(A) was convinced that the AO has rightly applied the provisions of section
50C of the Act. Aggrieved by this the assessee is before us.
3. The counsel for the assessee reiterated what has been submitted before the
lower authorities. It is the say of the counsel that once the assessee has objected
the stamp duty value by bringing cogent material evidence on record in the form of
valuation report of a government approved valuer, the AO ought to have referred
the matter to the valuation officer, failing which the findings of the AO are
erroneous and the CIT(A) erred in upholding the said findings of the AO. The DR
strongly supported the orders of the lower authorities.
4. We have carefully perused the orders of the authorities below. It is not in
dispute that the assessee has filed a valuation report in support of his claim that the
value adopted by the stamp duty valuation authority is on the higher side. A
perusal of section 50C clause 2 clearly show that the assessee can object to the
value adopted by the stamp valuation authority and if this is done, the AO may refer
the valuation to the valuation officer. In the instant case, we find that the AO has
not followed this procedure. When this issue was raised before the CIT(A), the
CIT(A) also did not direct the AO to refer the matter to the valuation officer.
5. In our understanding of law, whenever objection is taken or claim is made
before the AO that the value adopted by the stamp valuation authority under sub
section (1) of section 50C exceeds fair market value of the property on the date of
transfer, the AO has to apply his mind on the validity of the objection of the
assessee. If the assessee has filed a report of the approved valuer, the AO may
either accept the valuation of the property on the basis of this report or refer the
question of valuation to the department valuation officer in accordance with section
55A of the Act. We, therefore, set aside the order of the CIT(A). The mater is
restored to the files of the AO. The AO is directed to refer the matter to the DVO
and then decide the issue afresh as per the provisions of law after giving reasonable
opportunity of being heard to the assessee. Accordingly, ground nos.1A, 1B, 1C and
1D are allowed for statistical purposes.
6. Ground 2 relates to the dismissal of the claim of the assessee relating to the
cost of acquisition to be fair market value as on 01.04.1981.
As per the provisions of section 55(2)(b)(i), where the capital asset became
the property of the assessee before the 1st day of April,1981, The cost of
acquisition means the cost of acquisition of the asset to the assessee or the fair
market value of the asset on 01.04.1981, at the option of the assessee shall be the
cost of acquisition. This means that an option is given to the assessee to substitute
fair market value as on 01.04.1981 if the property became the property of the
assessee before 01.04.1981. In the case before us the assessee has claimed that
the property was acquired in 1963 therefore, the cost of acquisition should be the
fair market value as on 01.04.1981. We, therefore, restore this issue to the file of
the AO to verify the claim of the assessee as per the provisions of law. If the AO is
satisfied that the property is prior to 01.04.1981 then the AO is directed to adopt
the fair market value as on 01.04.1981 as the cost of acquisition for the purpose of
computation of Long term capital gains.
Ground no.2 is set aside and according allowed for statistical purposes.
7. Ground no.3 relates to the denial of the claim of deduction u/s. 80C of the
Act amounting to Rs.45,000 paid as tuition fees. We find that at para 3 of the
assessment order the AO has referred to the claim of deduction u/s. 80C at
Rs.83,519/- relating to the payment of housing loan. However, in the assessment
order while computing the assessed income, no deduction u/s. 80C in respect of
tuition fees has been allowed by the AO. The AO is therefore directed to allow the
claim of the assessee for deduction u/s. 80C of the Act in relation to the payment of
housing loan amounting to Rs.83,519/- along with the claim of payment of tuition
fees of Rs.45,000. The assessee is directed to submit necessary details in relation
to this claim. Ground no.3 is allowed for statistical purpose.
8. In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on this 16th day of May, 2014.
(I P Bansal) (N K Billaiya)
Û /JUDICIAL MEMBER / ACCOUNTANT MEMBER
Mumbai; Dated : 16th May, 2014.
/Copy of the Order forwarded to :
1. /The Appellants.
2. × / The Respondent.
3. () / The CIT(A), Mumbai.
4. / CIT
5. , , / DR, `F' Bench, ITAT, Mumbai
/ BY ORDER,
× //True Copy//
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai