IN THE ITAT MUMBAI BENCH ‘B’
Smt. Myrtle D’Souza
v/s.
Income-tax Officer
IT APPEAL NO. 3168 (MUM.) OF 2011
[ASSESSMENT YEAR 2006-07]
JUNE 20, 2012
ORDER
R.S. Syal, Accountant Member
This appeal by the assessee arises out of the order passed by the Commissioner of Income-tax (Appeals) on 28.02.2011, in relation to the assessment year 2006-2007.
2. The only dispute raised in this appeal is against the computation of capital gain. There are several aspects involved in this appeal relating to computation of capital gain, which we will shortly advert to. Briefly stated the facts of the case are that the assessee entered into development agreement dated 31.05.2005 with M/s. Calvin Construction Company in respect of an immovable property at CTS No.B/63, B/64-B & B/64C, Lily Rodrigues House, 14 Waroda Road, Bandra (West), Mumbai – 400 050 for a total consideration of Rs. 1.50 crore. The assessee was to receive two flats on 2nd and 3rd floor of the proposed building. The market value of the property was computed by the stamp duty authorities at Rs. 3,98,31,000 as on the date of sale. The assessee as a co-owner had 50% share in the said property. Accordingly, long term capital gain was determined on the transfer of such property, against which exemption was claimed u/s 54 and 54EC thereby reducing taxable long term capital gain to Rs. Nil. Deduction u/s 54 was claimed for a payment of Rs. 17.50 lakh against the construction cost of the additional flats received. The deduction u/s 54EC was claimed on account of investment in NHAI bonds, on which there is no dispute in the present appeal. While computing long term capital gain, the assessee had shown the value of property as on 01.04.1981 at Rs. 12 lakh, being the cost of acquisition on such date. This value was arrived at as per the valuation report of the registered valuer, a copy of which was submitted by the assessee along with the return of income. The Assessing Officer disputed various aspects of the capital gain, viz, the full value of consideration, cost of acquisition and exemption u/s 54. It was noticed by the AO that the assessee received monetary consideration of Rs. 1.50 crore and non-monitory consideration in the shape of two flats and two stilt car park. The assessee had shown only a sum of Rs. 1.50 crore as full value of consideration. By considering the market rate of the property as per the Ready reckoner, the Assessing Officer valued two flats and car parks at Rs. 2,02,60,512 thereby making total consideration received by the assessee on account of transfer of development rights at Rs. 3,52,60,512. By considering the fact that the stamp authorities valued it at Rs. 3,98,31,000, the Assessing Officer adopted such higher amount as full value of consideration as per the provisions of section 50C of the Act. He however made a reference to the Departmental Valuation Officer for valuing the property as on 01.04.1981 and also as on the date of sale i.e. 31.12.2005. Since the valuation report was not received and the assessment was getting time barred, the A.O. computed capital gain at Rs. 1,44,08,500 by reducing, inter alia, the indexed cost of acquisition at Rs. 59.64 lakh from the total consideration as per section 50C at Rs. 3.98 crore. Thereafter, deduction was allowed u/s 54EC from the above computation. The Assessing Officer also accepted the assessee’s claim regarding deduction u/s 54 to the tune of Rs. 8.75 lakh, as relatable to one flat alone, as against claimed by the assessee on both the flats.
3. Apart from assailing the finding of the AO on other aspects, it was contended before the learned CIT(A) that the assessee was entitled to exemption u/s 54 on two flats acquired by her which was erroneously restricted by the A.O. to one flat only. The learned first appellate authority observed that after the passing of the assessment order, the report from District Valuation Officer was received, who valued the property as under:-
