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Sunita Jain Versus I.T.O., Ward 6 (1) , Jaipur

2016 (6) TMI 451 - ITAT JAIPUR

Adoption of FMV - claim of deduction U/s 50C - allowance of indexation - inheritance of property - AO taken value on the basis of DVO’s valuation - Held that:- It is undisputed fact that the assessee inherited the property from his mother in law and has 50% share in it, which has been sold during the year under consideration at ₹ 1.20 crores. The assessee’s share was ₹ 60.00 lacs, which has been disclosed. The assessee had computed the capital gain by considering the FMV as on 01/4/1 .....

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. Therefore, the ld Assessing Officer is directed to allow the indexation for the F.Y. 1981-82 on ₹ 1,92,282/-. Further the assessee had claimed improvement cost in F.Y. 2000-01 at ₹ 3.00 lacs and in F.Y. 2004-05 at ₹ 1,30,000/- in which indexation has been claimed by the assessee but the assessee had not produced any evidence before the lower authority to demonstrate that his mother in law had incurred any cost on improvement. Even registered valuer of the assessee and DVO of .....

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n two flats.

Adoption of sale consideration - Held that:- As for deduction U/s 54, the sale consideration is to be taken on the basis of actual sale consideration received by the assessee not determined by the stamp authority for the registration purposes or determined by the DVO referred U/s 50C of the Act. - ITA No. 847/JP/2012 - Dated:- 30-5-2016 - Shri Kul Bharat, JM And Shri T. R. Meena, AM For the Assessee : Shri Anil Mathur (CA) For the Revenue : Shri Kailash Mangal (JCIT) ORDE .....

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fficer. 2. That on the facts and in circumstances of the case, the ld CIT(A) grossly erred and was otherwise excessive in not allowing the claim of assessee towards cost of improvement of asset of ₹ 4,30,000/- as incurred by the previous owner. 3. That on the facts and circumstances of the case, the ld CIT(A) grossly erred and was unjustified in not allowing roll over benefit U/s 54 of the IT Act of ₹ 36,63,880/- towards investment in more than one residential flat for personal use o .....

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/-. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act) on 26/12/2011. The assessee is an individual enjoying income from H.R. consultancy in the name and style of M/s Jaipur events, M/s Global Careers & M/s Fortune Management Consultants. All the grounds of the assessee s appeal as well as additional ground are against calculating the capital and allowing deduction U/s 54 of the Act. The ld Assessing Officer observed that during the year under c .....

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₹ 11,19,081/- Improvement cost F.Y.- 2000-01 ₹ 3,00,000/406*582 ₹ 4,30,049/- F.Y.- 2004-05 ₹ 1,30,000/480*582 ₹ 1,57,625/- ₹ 17,06,755/- ₹ 40,23,570/- Deduction U/s 54 ₹ 36,63,980/- Long Term Capital Gain ₹ 3,59,590/- The ld Assessing Officer asked to furnish the evidences of improvement made in the property for ₹ 3.00 lacs during the F.Y. 2000-01 and ₹ 1,30,000/- during the F.Y. 2004-05. The assessee submitted before the Assessi .....

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Engineer, Govt. Approved Valuer, who had valued the cost of portion of the assessee at ₹ 1,92,828/- but nothing was mentioned about any further construction on this building. The report showed that the valuer had personally visited the premises on 07/9/2008 but he had not mentioned anything about further addition after 01/4/1981. Obviously, no further construction was undertaken by the previous owner during the F.Y. 2000-01 and 2004-05. He further held that the Sub-Registrar had valued th .....

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uation. Accordingly, he referred the matter to DVO, Agra, who valued the property of assessee s share at ₹ 62,63,250/-. Further the matter was also referred for ascertaining the fair market value (in short the FMV) as on 01/4/1981, which was claimed by the assessee at ₹ 1,92,282/-. Whereas the DVO had valued FMV as on 01/4/1981 at ₹ 1,28,700/-. No further construction was reported by the assessee s valuer or by the departmental valuer. After getting the DVO s report, the ld Ass .....

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ee also challenged the FMV taken by the Assessing Officer from the DVO as on 01/4/1981. The assessee also submitted that indexation is required to be given from 1981 not from F.Y. 2005-06 on cost of improvement as well as FMV as on 01/4/1981. After considering the assessee s reply, the ld Assessing Officer held that the assessee requested to refer the matter to the DVO U/s 50C(2) of the Act. As per this Section, consideration is to be taken as per stamp value had taken for the purpose of registr .....

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perty valued or value it. He has not given indexation from F.Y. 1981. After considering the various decisions cited by the assessee before him and allowed indexation from F.Y. 2005-06 when he assessee became the owner for the first time. He also rejected the assessee s claim of additional improvement made on the property and indexation claimed on it. He further allowed the deduction U/s 54 on one flat by considering the various decisions on this issue. The case laws cited by the assessee are as .....

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e assessee by observing that the reference made to DVO U/s 50C(2) is not discretionary but mandatory for which reliance is placed on the decision of Hon ble Jodhpur Bench of ITAT in the case of Meghraj Baid Vs ITO (114 TTJ 841). In the instant case, the appellant had made request to the Assessing Officer to make reference to the DVO, which is held as per law by the ld CIT(A). The assessee s argument before him that provisions of Section 50C will not apply where the assessee had claimed exemption .....

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f ₹ 60.00 lacs. He further had not allowed the deduction U/s 54F on two flats purchased by the assessee bearing No B-6/355, Chitrakoot Nagar, Jaipur purchased on 16/02/2009 and flat No. D-6/303, Chitrakoot Nagar, Jaipur purchased on 27/4/2009 which were located very near to each other by considering the favourable decision on this issue by the various Hon'ble High Courts as well as ITAT. He has considered the Hon ble Punjab & Haryana High Court decision in the case of Pawan Arya Vs .....

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tial houses were separate and could not be combined to make one habitable unit. Therefore, he dismissed the assessee s appeal on this ground. 4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that it has been held by the ld CIT(A) that the assessee has taken FMV as on 01/4/1981 at ₹ 1,92,282/- whereas as per DVO s report, it was ₹ 1,28,700/-. Reference made by the Assessing Officer to DVO to department the FMV value as on 01/4/1981 was not found him .....

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of improvement ₹ 4,30,000/-, he had not allowed indexation on it. However, he has allowed the indexation from F.Y. 1981-82 by following the various decisions quoted on page no. 11 of the order. He has further argued that the assessee had inherited this property from his mother in law through Will which was finally executed on 3/2/2004 which came into force on 15/12/2005 at the time of death of executor. The assessee has taken value from the registered valuer who had given value as on 01/4/ .....

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w. The ld Assessing Officer cannot refer to the DVO for valuation as on 01/4/1981 U/s 50C(2) of the Act. It is further argued that for claim of deduction U/s 50C, the sale consideration shown by the assessee is to be considered while computing the capital gain as held by the various Hon ble ITATs as well as Hon'ble High Courts. It is further argued that the assessee is also entitled for deduction U/s 54F of the Act on two flats. However, the ld CIT(A) even considering the various decisions i .....

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al property. He further relied on the decision of Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. Vs CIT 196 ITR 188 wherein it has been held that interpretation of Section 54 is to be made literally to allow deduction on more than one residential unit. He further relied on the following case laws:- (i) CIT Vs Gita Duggal (Del) 30 Taxmann.com 320 (Del) (ii) CIT Vs Sunita Agarwal 284 ITR 20 (Del) (iii) Anand Basappa, 309 ITR 329 (Kar.) (iv) CIT-II, Hyderabad Vs Syed Ali Adil 33 Taxmann. .....

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7 ITR 466 (SC). He further argued that in Section 55A, no reference can be made for A.Y. 2009-10 to determine the FMV as on 01/4/1981 as this reference can be made if the assessee has shown value less than FMV. The assessee has shown more value as on 01/4/1981, therefore, no reference can be made to the DVO for FMV as on 01/4/1981. It is clarified by amending Section by the Finance Act, 2012 w.e.f. 01/7/2012 and this Sub-section (a) of Section 55A has been substituted as under:- If the A.O. is o .....

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w and has 50% share in it, which has been sold during the year under consideration at ₹ 1.20 crores. The assessee s share was ₹ 60.00 lacs, which has been disclosed. The assessee had computed the capital gain by considering the FMV as on 01/4/1981 at ₹ 1,92,282/-. However, the ld. Assessing Officer had taken value at ₹ 1,28,700/- on the basis of DVO s valuation. It is settled law that the Assessing Officer cannot refer this issue U/s 55A to the DVO as the assessee has sho .....

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