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TMI Blog2018 (4) TMI 1176X X X X Extracts X X X X X X X X Extracts X X X X ..... O merely rejected the contention of the assessee without any material to the contrary. Thus the valuation adopted by the assessee deserves to be upheld.- Decided in favour of assessee. Brokerage paid as allowable as deduction - Held that:- Admittedly there is no evidence at any stage to prove the payment of brokerage and the claim of the DR is that the assessee has not even made a claim in the return originally filed. CIT(A) assessee appears to have not pressed this ground. Thus reject Ground of the assessee by holding that the claim of brokerage paid has no legs to stand. Claim exemption u/s 54 - Claim of deduction of cost of items sold - Purchase of semi-finished property within the period of one year from the date of transfer of the property - Held that:- In so far as the purchase is concerned the same has to be made within one year from the date of transfer of the property. In the instant case, the assessee ought to have purchased a new property after October 2010 whereas the property was purchased in February 2010 as per the sale deed and the second contention of ‘construction’ does not apply to an assessee who purchases a property. Though the assessee contends that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He along with his wife were joint and equal owners of the property situated at 10-2-202/1, Entrenchment Road, West Marredpally, Secunderabad. The said property was sold by a registered sale deed for a total consideration of ₹ 1.65 Crs. According to the assessee, a sum of ₹ 2 lakhs was paid as brokerage for sale of his house and each co-owner is entitled to claim deduction of ₹ 1 lakh. It was also submitted that the assessee received an extra amount of ₹ 5 lakhs towards various amenities in the house. 5. The assessee declared total income of ₹ 6,21,580/- for the year under consideration. For the purpose of verification of genuineness and veracity of the exemption claimed u/s 54EC of the Act, the A.O. had taken up the matter for scrutiny and accordingly issued a notice u/s 143(2) of the Act. In response, assessee submitted that property admeasuring 462 sq. yards with built up area of about 2820 sft was sold by them jointly and he had offered long term capital gains of ₹ 1,67,000/- wherein he had taken into consideration share of the sale price on which he adopted indexed cost as 01.04.1981 and reduced the same from the sale value and thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... built up and construction value of the Ground Floor was ₹ 120/- per sq.ft and ₹ 110/- per sq. ft for First Floor. 9. It was also contended that according to the provisions of section 55(2)(b) of the Act, the assessee is eligible to adopt the fair market value of the asset as on 01st April, 1981 and accordingly the assessee has taken the value at ₹ 800/- per sq. yard having regard to the fact that the land is located in a prime locality, in the heart of the commercial hub. The proximity to commercial zone gives the land a premium price which is much more than the price fixed by the Sub-Registrar since the record of the Sub-Registrar is with regard to the entire area and it does not consider features like exact location of the property and locational advantages of the property. It was also stated that even as per the opinion of an expert, in the form of valuation report from an approved Valuer, the market value of the property in the same area in 1981 was around ₹ 800/- to ₹ 900/- per sq. yard. It was thus stated that the market value adopted by the assessee is reasonable. It was also stated that the basic value adopted by SRO is not an evidence of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on claimed u/s 54 is not in order as the assessee has not purchased the property as per the stipulations laid down u/s 54 of the Act. In response to the show-cause notice the assessee submitted that the residential house was sold on 25.10.2011. At the time of transfer i.e., on 25.10.2011 the assessee and his wife were residing in Flat No.202, Meghana Springs, West Marredpalli, Secunderabad. This residential house was purchased jointly as semi-finished and actually occupied by the assessee for his residence during January / February 2011. As per the provisions of section 54 of the Act, the assessee would be entitled for exemption on long term capital gains if a new property is purchased one year before the date of sale and thus assessee complied with the requirements of section 54 of the Act. It was also submitted that there was a lapse on his part in making proper claim earlier and revised computation was placed before the Assessing Officer which includes claim of exemption u/s 54 of the Act. 14. A.O. observed that the assessee did not make the claim at the time of filing of return or within reasonable time. Even on merits, property was purchased quite before and beyond the stip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sers, and consideration paid by them, duly certified by the purchasers. Assessee claimed that he had a few imported items like golf equipment, which he gave to some of his friends locally for a price. Though it was admitted that the assessee did not maintain / retain any bills/ vouchers for purchase of those items, it was stated that the total consideration received is approximately ₹ 4,40,000/- and he earned a profit of ₹ 50,000/- on sale of items which were admitted for tax purposes. 18. The A.O. disbelieved the claim of the assessee in the absence of documentary evidence of purchase bills / vouchers. According to him the said amount is a part of the advance received in lieu of sale of property. In his opinion no one would make / offer sale of furniture / fittings before selling of the property to the purchaser and realise cash. He accordingly treated the sum of ₹ 4,40,000/- as income from other sources . 19. Aggrieved, assessee contended before the Ld. CIT(A) that the Assessing Officer erred in disbelieving the claim of the assessee with regard to the fair market value of the property as on 01.04.1981, payment of brokerage, sale of furniture and fittings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is authentic. He thus confirmed the order of the Assessing Officer with regard to the fair market value as on 01.04.1981. 23. As regards the brokerage claimed to have been paid the Ld. CIT(A) observed that in the absence of any evidence to prove the payment of brokerage the same cannot be allowed. The assessee has not filed the details / arguments and therefore this ground of appeal was dismissed as not pressed. 24. With regard to the claim of exemption u/s 54 of the Act Ld. CIT(A) observed that exemption is available if a property is purchased within one year before the date of transfer of residential property. The claim of the assessee was that it has purchased a semi-finished property and occupied during January / February 2011 and it happens to be within one year prior to the sale i.e., 25.10.2011 but the fact remains that the assessee did not produce the copy of the sale deed even at this stage. Since basic details are not filed and no claim was made before the Assessing Officer within the time prescribed under law the Ld. CIT(A) rejected the claim of the assessee. 25. As regards the cost of the items claimed to have been sold, so as to prove the source of cash deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Office of the Registrar is only a guideline value and cannot be treated as a market value of the property at the relevant point of time. It was thus submitted that the Tax Authorities erred in re-determining the fair market value merely on the basis SRO s report. 28. On the other hand, Learned Departmental Representative strongly relied upon the orders passed by the Assessing Officer as well as the Ld. CIT(A). Learned DR also relied upon the following two decisions viz., (i) DCIT vs. Smt. A. Sarada (ITA No.922/Hyd/2009), dated 08.08.2013 and (ii) M. Siva Parvathi Ors vs. ITO (7 ITR 468) in support of the stand taken by the Assessing Officer that in the absence of any comparable cases the only alternative left is to depend upon the SRO s valuation. In the case of Smt. A. Sarada (supra), the assessee adopted value as on 01.04.1981 @ ₹ 400/- per sq. yard and filed comparable sale instances located at Nizamshahi Road which gives rate of ₹ 450/- and ₹ 446/- respectively. It was also submitted that the property sold was a commercial property and hence the value adopted by the SRO @ ₹ 80/- per sq. yard, which was for residential properties, is not proper. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee challenges the value sought to be adopted by the Assessing Officer. In other words, the moment the value adopted by the Stamp Valuation Authority is questioned, it is the duty of the Assessing Officer to refer the matter to the DVO, who is a technical expert on this matter; but the Assessing Officer chooses to merely rely upon the SRO s report which, in my considered opinion, is not in accordance with law. The ITAT Visakhapatnam Bench in the case of M. Siva Parvathi Ors (supra) did not discuss the matter in detail, as noticed in para 12 of its order, and merely observed that the assesse has not furnished any other evidences to counter the value adopted by the Sub-Registrar whereas in the instant case the value is supported by an approved Valuer s report as well as the sale took place in the near vicinity in 1980. Therefore, the decision of the ITAT Visakhapatnam Bench is of no help to the Revenue. In the case of Smt. A. Sarada (supra) ITAT Hyderabad Bench categorically observed that the determination of cost of property is a technical aspect and without having complete details of the property such as location and it surroundings, it cannot be determined and also directed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale deed and the second contention of construction does not apply to an assessee who purchases a property. 32. I have carefully considered the rival submissions and perused the record. Though the assessee contends that the possession was taken in December 2010 but sale deed clearly shows that the property was purchased in February 2010 itself and it is an outright purchase of residential house; therefore it cannot be said that the assessee constructed a residential house. Such being the case I do not find any infirmity in the orders passed by the Tax Authorities. Therefore Ground no.5 is rejected. 33. Vide Ground No.6 the assessee contends that the sale of the Golf equipment etc., ought to have been accepted by the Assessing Officer despite the fact that no evidence was produced with regard to the purchase of those items. Learned Counsel for the Assessee adverted my attention to page 82 of the paper book referring to confirmation given by Dr. B. Hemanth and Dr. V. Bharati wherein they have stated that they have purchased the following list of items from the assessee. No. of Items Item name Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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