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TMI Blog2015 (3) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... the vendor and the broker. This Tribunal is of the considered opinion that by taking into consideration of the practice of payment of commission ranging from 1% to 3% on the sale price and the details furnished by the assessee with names and addresses before the assessing officer, copy of which is available at page 24, the assessing officer is not justified in restricting the claim at 2% without making any further enquiry.The very fact that the payment was made to six brokers shows that their whereabouts also could not be traced out in the efflux of time. By taking into consideration all the circumstances, this Tribunal is of the considered opinion that disallowance of ₹ 2,16,250 may not have justified. Accordingly, the orders of the lower authorities are set aside and the disallowance of ₹ 2,16,250 is deleted. - Decided in favour of assessee. Claim of the assessee u/s 54F in respect of investment made - capital gain arose on sale of land was used for construction of residential house as submitted by assessee - CIT(A) allowed the entire claim of ₹ 1,27,50,000 - Held that:- In this case, the assessee claims that a sum of ₹ 50 lakhs was spent before the due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on 27-09- 2009 as per the completion certificate issued by the Corporation of Cochin. The ld.counsel further submitted that the total cost of construction of the building is ₹ 1,27,50,000. After claiming exemption u/s 54F, the assessee returned a total income of ₹ 6,61,135. For the purpose of capital gain, according to the ld.counsel, the assessee took the fair market value as on 01-04-1981 at ₹ 1 lakh per cent. However, the assessing officer fixed the fair market value as on 01-04-1981 at ₹ 36,000 per cent. The assessee has also claimed ₹ 6,48,750 towards commission paid to the agents for selling the land. However, the assessing officer restricted the same at ₹ 4,32,500 without any reason. 4. According to the ld.counsel, the subject land is situated facing National Highway 49 on the Cochin Madurai Highway. The assessee has filed copy of the plan at pages 14 15 of the paper book. However, according to the ld.counsel, the assessing officer restricted the fair market value at ₹ 36,000 per cent as on 01-04-1981 on the basis of the information said to be obtained from the Sub Registrar. Referring to the assessment order, the ld.counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to educational institutions, such as Sacred Heart College, Thevara. Since the assessing officer has not taken any pain to ascertain the market value other than getting the information from the Sub registrar s office, the market rate adopted by the assessee at ₹ 1 lakh has to be accepted. 6. On the contrary, Shri K.K. John, the ld.DR submitted that the assessee claimed the fair market value as on 01-04-1981 at ₹ 1 lakh. However, the assessing officer obtained information from the Sub Registrar s office and found that one cent of land was sold for ₹ 36,000 in the same locality. Accordingly, the assessing officer adopted ₹ 36,000 instead of ₹ 1 lakh. Since the assessing officer has taken the value on the basis of the information obtained from the Sub-Registrar, According to the ld.DR, the CIT(A) has rightly confirmed the addition. 7. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee has sold 14.365 cents of land. It is also not in dispute that the assessee has the opting of adopting estimated cost as on 01-04-1981 for the purpose of computation of capital gain. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1009 was sold for ₹ 16,000 and the other part was ₹ 30,000. The information furnished by the Sub Registrar does not inspire confidence with regard to the market value said to be mentioned therein. In other words, the information furnished by the Sub Registrar does not disclose a uniform value in respect of the equivalent area of the land. No doubt, the information obtained by the assessing officer is also one of the factor to be considered for the purpose of determination of market value. It does not mean that the assessing officer has to take the value shown therein. As found by this Tribunal in the case of Kurian Joseph vs Dy.CIT in ITA No.137/Coch/2014 dated 17-10-2014 both the members are party to the order taking 10% of the sale consideration is also one of the approved methods of valuation. In this case, the property was sold for a sale consideration of ₹ 2,16,25,000. The value of one cent of land comes to only ₹ 15,05,325. 10% of this comes to ₹ 1,50,540. However, the assessee claims only ₹ 1 lakh per cent. Since this Tribunal in the case of Kurian Joseph (supra) found that taking 10% of the sale price as market value as on 01-04-1981 is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the land. However, the assessing officer has allowed only 2%. The assessee has filed the details of the brokers, their addresses, etc. before the assessing officer, copy of which is available at page 24 of the paper book. There is no reason to reduce the commission paid by the assessee to 2%. According to the ld.counsel, the prevailing rate of commission is 3% in Kerala. Therefore, the assessing officer has no justification for restricting the claim of the assessee at 2%. 10. On the contrary, Shri K.K. John, the ld.DR submitted that the assessee has claimed ₹ 6,48,750 towards payment of commission. However, the assessing officer allowed only ₹ 4,32,500 being brokerage / commission. In the absence of any other material, according to the ld.DR, the CIT(A) has rightly confirmed the addition made by the assessing officer. 11. We have considered the rival submissions on either side and also perused the material available on record. The assessee claimed ₹ 6,48,750 towards commission payment for sale of the land. This appears to be 3% of the total sale consideration. The assessing officer has allowed ₹ 4,32,500 and disallowed a sum of ₹ 2,16,250 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Rosamma Korah in ITA No.646/Coch/2013 dated 07-03-2014 and also the judgment of the Kerala High Court in Dr Xavier J Pulikkal ITA No.10 of 2014 judgment dated 20- 02-2014, copy of which is available on record. According to the ld.DR, if the money could not be spent before the due date for filing the return of income, the same has to be deposited in the capital gain account as required u/s 54F(4) of the Act. 14. On the contrary, Shri K.K. Chandrasekharan, the ld.counsel for the assessee submitted that the assessee started the construction in November, 2007 and the same was actually completed on 27-10-2009. From November, 2007 to October, 2008 the assessee has spent nearly ₹ 50 lakhs. From November, 2008 to October, 2009 the assessee has spent nearly ₹ 120 lakhs. The ld.counsel submitted that upto October, 2008, major portion of the construction was completed. From November, what was done is construction of wall, plastering, electrical work and construction of compound wall, etc. Therefore, according to the ld.counsel the CIT(A) has rightly allowed the claim of the assessee. The ld.counsel submitted that the entire details of construction was available in the lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, the CIT(A) allowed the entire claim of ₹ 1,27,50,000. 16. We have carefully gone through the provisions of section 54F(4). Section 54F(1) clearly says that the capital gain arising from transfer of long term capital asset is exempt from capital gain tax provided the assessee has within a period of one year before or two years after the date of transfer purchased or has within a period of 3 years constructed a residential house. Section 54F(4) clearly says that the net consideration which is not appropriated by the assessee towards the purchase of new asset within one year before the date on which the transfer of original asset took place or which is not utilized by him for purchase or construction of the new asset before the due date for filing the return of income u/s 139(1) of the Act, the same shall be deposited in the capital gain account. This Tribunal in the case of Smt. Rosamma Korah (supra) has an occasion to consider the same. This Tribunal found after considering the judgment of the Kerala High Court in CIT vs V.R. Desai (2011) 197 Taxman 52 (Ker) and Prakash Nath Khanna And Another vs CIT (2004) 266 ITR 1 (SC) that the matter needs to be re-examined in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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