TMI Blog2010 (12) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... VO then the conditions provided u/s 55A(b)(ii) are satisfied - It would thus be seen that in India, as in England, where the test of admissibility of evidence lies in relevancy, unless there is an express or necessarily implied prohibition in the Constitution or other law evidence obtained as a result of illegal search or seizure is not liable to be shut out - The appeals must also fail and are dismissed with costs Regarding deduction u/s 54 - Certain decisions of the Tribunal relied on by the learned counsel for the assessee wherein exemption was allowed in respect of investments in two adjacent or continuous units converted into one residential house by having common passage/stair case, common kitchen, etc intended to be used as single house for the residential of the family - It is held that exemption under sections 54 and 54F of the Act would be allowable in respect of one residential house only - In the case in hand, the assessee-HUF purchased three flats - Special Bench was constituted in the case of Sushila M Jhaveri reported in (2007 -TMI - 59614 - ITAT BOMBAY) – Held that allow the deduction only in respect of one flat as per the choice of the assessee Regarding the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orresponding to the unused FSI value of land. However the registered valuer has also estimated the cost of construction/structure occupied by the assessee only at Rs. 9,41,760. Another element which is shown in cost of acquisition of land is pertaining to capitalized value of rents, from tenants occupying the said land at Rs.62,950. Considering the technicality involved for valuation of the land in question, the AO sought the opinion from the District Valuation Officer vide his letter dated 8.06.2005. The DVO has submitted the valuation report dated 17.2.2006 wherein the land in question has been valued at 45 per sq. ft. Accordingly, the cost of acquisition of land as on 1.4.1981 was adopted by A.O. at Rs. 25,50,261 as against Rs. 63,29,520 estimated by the registered valuer of the assessee. The construction portion of the land occupied by the assessee has been estimated at Rs. 32,857 as against Rs. 9,41,160 adopted by the registered valuer. There was no difference in the capitalized cost of rent in respect of the land in the occupation of the tenants because, the AO has adopted the same as estimated y assessee at Rs. 62,950. After inviting the objections and comments from the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having regard to the nature of the assets and in other circumstances, it is necessary to refer the value of the capital asset to the valuation officer to ascertain the fair market value of the capital asset then the AO has the jurisdiction and power to make the reference to the valuation officer for valuation of the capital asset. He has relied upon the order of the AO. 7. On the other hand, the learned AR has submitted that the reference of valuation of the land to the DVO may be made u/s 55A only when the AO is of the opinion that the value of the asset claimed by the assessee is less than its fair market value and not when he was of the opinion that the FMV of the property as on 1.4.1981 as shown by the assessee was more than its real FMV. He has relied upon the following decisions : 1 CIT v. Daulat Mohta HUF ITA No. 1031 of 2008 dt.22-9-2008(Bombay High Court) 2 Daulat Mohata v. ITO ITA No. 322/m/2007 Bench 'D' Dt. ... 3 Sajjan kumar M Harlalka v. JCIT 100 ITD 418 (Mum.) 4 Ms. Rubab M Kazerani v. JCIT 91 ITD 429 5 Smt. Krishnabi Tingre v. ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset. The circumstances as set out in the provisions inter-alia in case, if the AO is of the opinion that having regard to the nature of the assets and other relevant circumstances, it is necessary to refer the valuation of the capital asset to the valuation officer with a view to ascertain the FMV for the purposes of computation of capital gain. Thus, it is clear from the sub-clause ( ii ) of clause ( b ) of section 55A that all other cases/instances of the FMV of the asset which are not specifically provided under clause ( a ) and sub-clause ( i ) of clause ( b ) are covered under sub clause ( ii ) of clause ( b ) of section 55A. The only requirement is that after considering the nature of the asset and relevant circumstances, in the opinion of the A.O., it is necessary to refer the valuation of the asset to the valuation officer. Therefore, from the language of the section 55A and particularly sub-clause ( ii ) of clause ( b ) no such condition expressly or impliedly provided that no reference can be made if the claim of the assessee is supported by the valuation report of registered valuer. Only requirement as provided u/s 55A( b )( ii ) is if the AO is of the opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent decision dated 06.04.2010 in ITA No. I.T.A. No. 746/Mum/2005 and I.T.A. No. 883/Mum/2005 in the case of M/s. Killick Nixon Ltd., this Tribunal taken a view against the assessee on this issue after considering the decisions relied upon by the assessee before us. 11. Even otherwise, for the sake of argument, if it is presumed that the reference made by the AO is not as per the provisions of section 55A, the valuation report of the DVO will not loose/reduce its relevancy being a good piece of evidence on the issue of FMV of the capital assets as on 1.04.1981. The admissibility of evidence is depends upon its relevance to the matter in issue and not in the manner how it has obtained. If there is any irregularity in obtaining the evidence the same will not render evidence as it is not admissible. In the case in hand, there is no doubt that the AO is having the jurisdiction over the subject matter i.e. the valuation of the capital assets and the valuation officer is also having authority and jurisdiction to value the property and submit the valuation report. Thus, the valuation report of the DVO is a relevant and admissible evidence irrespective of a question whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officers who were not authorised under the law to carry out a search and, in the search, some ammunition was found in the unlawful possession of Kuruma. The question was whether the evidence with regard to the finding of the ammunition on the person of Kuruma could be shut out on the ground that the evidence had been obtained by an unlawful search. It was held it could not be so shut out because the finding of ammunition was a relevant piece of evidence on a charge for unlawful possession. In a later case before the Privy Council in Herman King v. The Queen (3) which came on appeal from a Court of Appeal of Jamaica, the law as laid down in Kuruma's case was applied although the Jamaican Constitution guaranteed the constitutional right against ( 1 ) 35 Allahabad, 358. ( 2 ) [1955] A.C. 197. ( 3 ) [1969] ( 1 ) A.C. 304. search and seizure in the following provision of the Jamaica ( Constitution ) Order in Council 1962, Sch. 2, s. 19 " ( 1 ) Except with his own consent, no person shall be subjected to the search of his person or his property or the entry by others on his premises. " ( 2 ) Nothing contained in or done under the authority of any law shall be held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference made by the AO u/s 55A has become purely academic in nature. On merits 14. In the case in hand, the AO has adopted the valuation report of the DVO, whereas the CIT(A) has not decided the issue on merits but held that the AO has no jurisdiction to refer the valuation of the asset to the DVO. Therefore, we are of the view that this issue required to be re-examined in the light of the above observations. Accordingly, we set aside the issue of FMV as on 1.4.1981 to the record of the AO to decide the same by taking into account the registered valuar's report as well as the DVO's report and the objection of the assessee. 15. Issue No.2, regarding the deduction u/s 54 of the Act. As per the terms of the development, the developer shall provide three flats and tilt car parking to the assessee. The assessee claimed deduction u/s 54 in respect of capital gain against these three flats. The AO held that the assessee's claim for deduction under section 54 is not allowable as section 54 clearly mentions that the assessee has to purchase within one year before or after two years of the date on which the transfer took place or has constructed the new property within a perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 162 ITR (St.41) and submitted that the allotment of the flat is treated as construction. Thus, the assessee has purchased a new residential house while entering into the development agreement. The learned AR has further submitted that the assessee being a HUF has purchased more than one residential units out of sale of residential house and therefore, the assessee is entitled for deduction u/s 54 in respect of three flats which are to be considered as one residential house as per the requirement of the assessee. He has relied upon the decision of the Hon ble Karnataka High Court in the case of D. Ananda Basappa (2009) 309 ITR 329 (Kar.) and submitted that when the assessee being a HUF sold its residential house, the capital gain should be invested for purchase of more than one residential building keeping in view of the future need of the family members of the HUF. It cannot be said that the benefit of exemption is to be denied u/s 54 of the Act. 19. We have considered the rival contentions and relevant record. It is undisputed fact that the assessee has got three flats in the property developed by the developer as per the development agreement. The assessee acquired the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w house or if it is renovated it remains a house and this will not be two houses" 11. In view of the above discussion, it is held that exemption under sections 54 and 54F of the Act would be allowable in respect of one residential house only. If the assessee has purchased more than one residential house, then the choice would be with assessee to avail the exemption in respect of either of the houses provided the other conditions are fulfilled. However, where more than one unit are purchased which are adjacent to each other and are converted into one house for the purpose of residence by having common passage, common kitchen, etc, then, it would be a case of investment in one residential house and consequently, the assessee would be entitled to exemption". 20. Thus, it is clear from the above decision of the Special Bench of this Tribunal, that the exemption u/s 54F of the Act would be allowable in respect of one residential unit only. In the case in hand, the assessee-HUF purchased three flats. Then, the investment in such more than one flats is not eligible for exemption. It was made clear by the Special Bench that if the investment is made in two independent residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration which is not in the case in hand. 22. The appeal of the revenue is partly allowed. CO No. 211Mum/2007 23. The assessee in the cross-objection has raised the following grounds : "1. Under the facts and circumstances of the case and in law, the ld. CIT ( A ) erred in confirming addition of Rs. 28,11,820 in the hand of HUF instead of three individuals being compensation received by the three co-parceners as individuals being occupants like other tenants of the property for the transit period for the temporary flats provide by the developers to them under the provisions of MHADA Act; 2. In any event, under the facts and circumstances of the case and in law, the ld. CIT ( A ) ought to have appreciated that the sum of Rs. 11,00,000 out of the compensation amount of Rs. 28,11,820 paid to Shri Mahendrakumar C Merchant in lieu of the premises provided for the transit period in cash, in the hands of the appellants when the same was already offered in his individual capacity in his return of the respective years; 3. Under the facts and circumstances of the case and in law, the ld. CIT ( A ) erred in not deleting the interest charged u/s 234C even though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (229 ITR 383), we admit the additional ground raised by the assessee. As we have discussed above, the additional evidence was not available before the lower authorities due the subsequent execution and registration of the agreement. Accordingly, in the interest of justice and fair play, we set aside the additional issue raised by the assessee in the additional ground to the record of the AO for verification of the evidence filed by the assessee and decide the same as per law. Original ground raised in the Cross-objection 27. Grounds Nos. 1, 2, 4 and 5, regarding the addition of Rs. 28,11,820 being the sale consideration in the shape of compensation in the form of accommodation provided by the developer to the family members of the assessee HUF. Apart from the money, the consideration for sale of the land in question, the assessee got three flats and also accommodation provided by the developer during the period of construction and thereafter till handover of the three flats. Accordingly the AO has added a sum of Rs. 28,11,820 being consideration in the form of compensation /rent. On appeal, the CIT(A) has confirmed the addition made by the AO. 28. Before us, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that these are individual accommodations given to the co-parceners in their individual capacity and not to the HUF. The developer has provided the accommodation for the transit period only because the assessee- HUF has transferred the property in question and the accommodation was required for the HUF members. HUF itself is not a living person who requires an accommodation for residence but it is the members of the HUF have to occupy the accommodation. Therefore, the members and co-parceners of the HUF were provided the accommodation by the developer only because of being the members of the co-parceners of the HUF and not in any independent and individual capacity. The said transaction is between the HUF and the developer. Therefore, the accommodation was also provided by the developer to the HUF or to the members on behalf of the HUF and to be occupied by it's members. The members of the HUF cannot be treated at par with the tenants because the members were not paying any rent or residing in the premises in the capacity of the tenant but as co-parceners being the members of the HUF. Accordingly, we do not find any merit in the ground Nos. 1 and 2 of the cross-objection the same a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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