Smt. P.T. Geeta Ramani, CHENNAI V. ACIT, CHENNAI

CO 144/CHNY/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2687 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 16-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-09-2016
• Court: TRIBUNAL
• Department Lawyers: G BASKAR
• Assessee Lawyers: SUPRIYA PAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value
• Section: 50C; 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , # $ BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 2384/MDS/2016 & C.O. NO. 144/MDS/2016 / ASSESSMENT YEAR : 2010-11 ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 10(1), ROOM NO. 620, 6TH FLOOR, NEW BLOCK, 121, MAHATMA GANDHI ROAD, CHENNAI 600 034. VS. SMT. P.T. GEETHA RAMANI, NO. 29-31, (OLD NO. 234) DOSHI ROYALE, B BLOCK FLAT, KILPAUK GARDEN ROAD, CHENNAI - 600 010. [PAN: ALWPG 5281G] ( / APPELLANT) ( / RESPONDENT) ./ I.T.A. NO. 2385/MDS/2016 & C.O. NO. 145/MDS/2016 / ASSESSMENT YEAR : 2010-11 ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE 10(1), ROOM NO. 620, 6TH FLOOR, NEW BLOCK, 121, MAHATMA GANDHI ROAD, CHENNAI 600 034. VS. SHRI P. N. THIAGARAJAN, B BLOCK, C FLAT, NO. 29-31, OLD NO. 234, KILPAUK GARDEN ROAD, CHENNAI - 600 010. [PAN: AADPT 1455B] ( / APPELLANT) ( / RESPONDENT) :-2-: I.T.A.NOS.2428 & 2429/MDS/2016 C.O. NOS. 148 & 149/MDS/2016 & ' / APPELLANT BY : MR. SUPRIYA PAL, JCIT *+& ' / RESPONDENT BY : SHRI G. BASKAR, ADVOCATE ' /DATE OF HEARING : 16.11.2016 ' /DATE OF PRONOUNCEMENT : 31.01.2017 /O R D E R PER BENCH: THESE ARE THE APPEALS FILED BY THE REVENUE AND THE CO BY THE ASSESSEE AGAINST THE DIFFERENT ORDERS OF CIT(A) FOR THE ASSESSMENT YEAR 2010-11. SINCE, THE ISSUE IS IN APPEALS ARE COMMON IN NATURE , THE APPEALS ARE CLUBBED AND HEARD TOGETHER AND DISPOSED OFF BY THE COMMON ORDER . FOR THE SAKE OF CONVENIENCE, NOW WE TAKE UP THE FACTS NARRATED IN T HE APPEAL ITA NO. 2385/MDS/2016. 2. THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDE R OF CIT(A) IN DELETING THE DISALLOWANCE OF LONG TERM CAPITAL GAIN S FOR THE ASSESSMENT YEAR 2010- 11, WHERE TRANSFER TOOK PLACE IN THE FINANCIAL YEAR 2008-09, AS PER THE UNREGISTERED SALE AGREEMENT DATED 23.07.2008. THE LD. CIT(A) ER RED IN APPLYING THE PROVISIONS OF SECTION 2(47)(VI) OF THE ACT R.W.S. 53A OF THE TRANSFER OF PROPERTY ACT HOLDING THAT THE ASSESSEE HAS GIVEN POSSESSION TO THE PURCHASER, WHEREAS THE PROPERTY WAS IN POSSESSION OF M/S. VOLTAS LTD., ON A LONG LEASE AND OVER LOOKED THE JUDICIAL DECISIONS, IRRESPECTIVE OF THE FACT THAT, THE TRANSFER TOOK PL ACE ONLY ON THE DATE OF REGISTRATION OF SALE DEED ON 27.04.2009. :-3-: I.T.A.NOS.2428 & 2429/MDS/2016 C.O. NOS. 148 & 149/MDS/2016 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE FI LED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 DISCLOSING TOTAL IN COME OF RS. 14,32,470/- AND THE ASSESSING OFFICER ISSUED NOTICE U/S. 148 OF THE ACT . IN COMPLIANCE TO NOTICE, THE ASSESSEE FILED A LETTER TO TREAT THE RETURN OF INCO ME FILED EARLIER AND LD. AR APPEARED FROM TIME TO TIME AND SUBMITTED THE INFORMATION. T HE ASSESSEE HAS UNDIVIDED SHARE IN ANCESTRAL PROPERTY ALONG WITH 18 CO-OWNERS AND P ROPERTY WAS LEASED OUT TO M/S. VOLTAS LTD., IN THE YEAR 1975 FOR THE PERIOD OF 30 YEARS. SUBSEQUENTLY, SAID PROPERTY WAS SOLD BY THE LEGAL HEIRS AND SPOUSES AND CHILDRE N ON LATE P.N. CHETTIAR TO PAO HOLDER SHRI S. SARAVANAN, THOUGH THE SALE DEED WAS REGISTERED ON 27.04.2009. THE ASSESSING OFFICER ON VERIFICATION OF THE RETURN OF INCOME FOUND THAT THESE FACTS WERE NOT DISCLOSED IN RETURN OF INCOME. THE ASSESSEE EXP LAINED THAT THE ASSESSEE HAS ENTERED INTO AGREEMENT ON 23.07.2008 THOUGH SALE DE ED WAS EXECUTED ON 27.04.2009 BY THE POWER OF ATTORNEY HOLDER MR. SARA VANAN. WHEREAS, THE ASSESSING OFFICER APPLYING THE PROVISIONS OF SECTION 50C OF T HE ACT CAME TO A CONCLUSION THAT THE ASSESSEE HAS SOLD THE PROPERTY DURING THE FINAN CIAL YEAR 2009-10 IRRESPECTIVE OF FACTS THAT THE POSSESSION WAS GIVEN TO PURCHASER BA SED ON THE SALE AGREEMENT AT 23.07.2008 FOR THE CONSIDERATION OF RS. 3,07,55,400 /- AND OF THE OPINION THAT THE TRANSFER TOOK PLACE IN THE ASSESSMENT YEAR 2010-11 AND THE CAPITAL GAIN IS TAXABLE IN THE HANDS OF ASSESSEE AND ADOPTED SRO VALUE OF PROP ERTY U/S. 50C OF THE ACT AND ALLOWED THE COST OF ACQUISITION VALUE AS ON 01.04.1 981 AND MADE AN ADDITION OF LONG TERM CAPITAL GAIN OF RS. 5,97,01,104/- AND PASSED O RDER U/S. 143(1) R.W.S 147 OF THE ACT DATED 17.03.2014. :-4-: I.T.A.NOS.2428 & 2429/MDS/2016 C.O. NOS. 148 & 149/MDS/2016 4. AGGRIEVED BY THE AO'S ORDER, THE ASSESSEE HAS FI LED AN APPEAL WITH THE CIT(A). BEFORE CIT(A), THE LD. AR ARGUED THE G ROUNDS THAT THE ASSESSING OFFICER ERRED IN ASSESSING THE SUM OF RS. 5,97,01,104/- AS LONG TERM CAPITAL GAINS FOR THE ASSESSMENT YEAR 2010-11 IRRESPECTIVE OF TRANSFER U/ S. 2(47) AND POSSESSION OF CAPITAL ASSET IN THE PREVIOUS YEAR RELEVANT ASSESSMENT YEA R 2009-10. FURTHER, THE LD. AO ERRED IN ADOPTING FMV AS ON 01.04.1981 AT RS. 10.41 /SQ.FT. AND ADOPTING PROVISIONS OF SECTION 50C OF THE ACT. THE VITAL ISSUE BEING T HE ASSESSEE HAS COMPLIED TO PROVISION U/S. 53A OF TRANSFER OF PROPERTY ACT AND GIVEN POSSESSION OF CAPITAL ASSET THOUGH SALE DEED WAS EXECUTED ON 24.07.2009. THE LD. CIT(A) FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 54F AND 54EC OF THE ACT IN RESPECT OF LONG TERM CAPITAL GAINS AND THE SALE AGREEMENT WAS ENTER ED ON 23.07.2008 AND THE ASSESSEE RECEIVED CONSIDERATION TO HIS SHARE RS. 3, 07,55,540/- PAID ON THE DATE OF SALE AGREEMENT AND BALANCE CONSIDERATION OF RS. 50 LAKHS WAS PAID WITHIN A PERIOD OF 10 DAYS FROM THE DATE OF SALE AGREEMENT. WHEREA S, SHRI SARAVAN WAS IN CONSTRUCTIVE POSSESSION OF THE PROPERTY TOOK CHARGE OF THE LEASE PROPERTY AND ALSO SUIT FILED IN HIGH COURT OF MADRAS IN C.S. NO. 846/ 2006 ON RENEWAL OF LEASE. THE LD. CIT(A) CONSIDERED THE SALE AGREEMENT AND ALSO CONSI DERED THAT THE TRANSACTION TOOK PLACE IN THE FINANCIAL YEAR 2008-09 AND THE ASSESSE E HAS RECEIVED FULL SALE CONSIDERATION OF RS. 3,07,55,400/- THOUGH THE PROPE RTY WAS REGISTERED IN FAVOUR OF ATTORNEY I.E., SHRI SARAVANAN. THE LD. CIT(A) CONS IDERED THE PROVISIONS OF SECTION 2(47) OF THE ACT AND SEC 53A OF THE TRANSFER OF PRO PERTY ACT AND THE JUDICIAL DECISIONS OF THE JURISDICTIONAL HIGH COURT SMT. D. KASTURI VS CIT (2010) 323 ITR 40 (MAD) , WHERE IT WAS HELD THAT THE CAPITAL GAINS AR ISE TO THE ASSESSEE ON THE BASIS OF :-5-: I.T.A.NOS.2428 & 2429/MDS/2016 C.O. NOS. 148 & 149/MDS/2016 SALE OF AGREEMENT BETWEEN VENDOR AND VENDEE AND APP LIED THE PROVISIONS OF SEC 2(47)(V) OF THE ACT AND THE TRANSFER IS COMPLETE IN ALL ASPECTS. THE ASSESSEE HAS GIVEN POSSESSION OF PROPERTY ON 23.07.2008 IN THE F INANCIAL YEAR 2008-09 RELEVANT TO THE ASSESSMENT YEAR 2009-10 AND LD. CIT(A) RELIED O N THE FINDINGS AND JUDICIAL DECISIONS OBSERVED AT PAGE 14 PARA 32 READ AS UNDER : ' IN THE LIGHT OF THE ABOVE DISCUSSION, IT IS FOU ND THAT THE ASSESSING OFFICER HAS WRONGLY HELD THAT THE CAPITAL GAINS IS ELIGIBLE IN THIS CASE IN ASSESSMENT YEAR 2010-11, BUT NOT IN TH E ASSESSMENT YEAR 2009-10, WHEN IT WAS ACTUALLY OFFERED BY THE ASSESS EE IN HIS RETURN OF INCOME. I MAY ADD HERE THAT THE ABOVE VIEW TAKEN B Y ME HAS ALSO BEEN UPHELD BY CIT(A) IN THE CASE OF OTHER CO-OWNER S OF THE SAME PIECE OF LAND. FOR EXAMPLE, IN THE CASE OF N.S. SR INIVASAN, THE LD. CIT(A) -7, VIDE HIS ORDER IN ITA NO. 63/CIT(A)-7/14 -15 FOR THE ASSESSMENT YEAR 2010-11 DATED 18.05.2015, HAS SIMIL ARLY HELD THAT LONG TERM CAPITAL GAINS WOULD BE ASSESSED IN ASSESS MENT YEAR 2009- 10, BASED ON THE MEMORANDUM OF UNDERSTANDING ENTERE D INTO WITH SHRI S. SARAVANAN DATED 14.08.2008. I AM GIVEN TO UNDER STAND THAT NO FURTHER APPEAL HAS BEEN FILED BY THE DEPARTMENT AGA INST THE SAID ORDER OF THE CIT(A)-7. SIMILARLY, IN THE CASE OF SHRI P. N. MANISUNDAR, THE SAME CIT(A)-7, CHENNAI VIDE HIS COMBINED ORDER IN I TA NOS. 64, 65 & 80IA/CIT(A)-7/14-15 DATED 18.05.2016 FOR THE ASSESS MENT YEAR 2009- 10, 2010-11 & 2012-13 HAS SIMILARLY HELD THAT THE C APITAL GAINS ON SALE OF PORTION OF THE SAME PROPERTY WHICH IS SOLD BY TH E PRESENT ASSESSEE, WOULD BE ASSESSABLE TO TAX IN ASSESSMENT YEAR 2009- 10 ONLY ACCORDINGLY, THE ASSESSING OFFICER'S ACTION TO TAX A SUM OF RS. 5,97,01,104/- TOWARDS LONG TERM CAPITAL GAINS ON SA LE OF LAND AT ANNA SALAI IN THE ASSESSMENT YEAR 2010-11 IS DIRECTED TO BE DELETED. CONSEQUENTLY, THE GROUNDS NO. 2,3 & 6 ARE ALLOWED. ' :-6-: I.T.A.NOS.2428 & 2429/MDS/2016 C.O. NOS. 148 & 149/MDS/2016 THE LD. CIT(A) WITH ABOVE OBSERVATIONS CONSIDERED T HAT THE ASSESSEE HAS COMPLIED THE PROVISIONS IN THE FINANCIAL YEAR 2008-09 AND PA ID CAPITAL GAINS TAX AND HENCE, THERE IS NO LONG TERM CAPITAL GAINS TAXABLE IN ASSE SSMENT YEAR 2010-11. 5. THE SECOND ISSUE THE LD. AR ARGUED THAT THE ASSE SSING OFFICER CONSIDERED THE VALUE OF COST OF ACQUISITION AT RS. 10.41 PER SQ.FT ., THE LD. CIT(A) DISCUSSED ON DVO CERTIFICATE SUPPORTED WITH THE VALUE OF RS. 3,85,00 0/- PER GROUND AS ON 01.04.1981. THE LD. CIT(A) HAS DEALT ON THE PROVISIONS OF SECTI ON 50C(1) OF THE ACT AMENDED IN THE FINANCIAL ACT, 2009 ON 01.10.2009. WHEREAS, TH E SALE AGREEMENT ENTERED BY ASSESSEE TOOK PLACE ON 23.07.2008, WHICH WAS MADE P RIOR TO THE AMENDMENT OF PROVISIONS AND ALSO NO SALE DEED WAS EXECUTED ON TH E SAID DATE AND HENCE, THE AMENDED PROVISIONS ARE NOT APPLICABLE TO ASSESSEE. THE LD. CIT(A) GAVE FINDING THAT THE TRANSFER HAS TAKEN PLACE ON THE BASIS OF S ALE AGREEMENT ON 23.07.2008 AND THE ASSESSEE COMPLIED THE PROVISIONS OF INCOME TAX AND FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 DISCLOSING THESE FACTS, BUT THE LD. AO HAS ADOPTED THE FAIR MARKET VALUE AT RS. 10..41 PER SQ.FT. WHICH WAS NOT ACCEPTED BY THE ASSESSEE AND THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER ADOPTING FMV AT RS. 10.41 PER SQ.FT. FINALLY, THE LD. CIT(A) IS OF THE OPINION THAT THE PROVISIONS OF SECTION 50C WAS NOT APPLICABLE, AS TRANSFER TOOK PL ACE ON 23.07.2008 PRIOR TO APPLICABILITY OF AMENDED PROVISIONS U/S. 50C OF TH E ACT TO THE ASSESSEE BEING 01.10.2009 AND PARTLY ALLOWED THE APPEAL. :-7-: I.T.A.NOS.2428 & 2429/MDS/2016 C.O. NOS. 148 & 149/MDS/2016 6. AGGRIEVED BY THE ORDER OF THE CIT(A), REVENUE HA S PREFERRED AN APPEAL. THE LD. DR REITERATED THE SUBMISSIONS WHERE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF INCOME FROM LONG TERM CAPITAL GAINS ON THE BASIS OF THE UNREGISTERED SALE AGREEMENT DATED 23.07.2008, WHEREAS, THE SALE DEED REGISTERED ON 27.04.2009 AND RELIED ON THE PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, THE LD. CIT(A) NOT CONSIDERED THE FACTS THAT THE TRANSFER O F SAID PROPERTY TO SHRI SARAVANAN IS EFFECTIVE ON 27.04.2009 AND PRAYED FOR SETTING A SIDE THE ORDER OF CIT(A). CONTRA, LD. AR RELIED ON THE ORDERS OF THE CIT(A) AND SALE AGREEMENT WHERE THE PROPERTY WAS TRANSFERRED TO THE POWER OF ATTORNEY HOLDER WIT H POSSESSION. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND THE FACTS IN THE COURSE OF HEARING. THE LD. AR SUBMITTED THA T THE SAME HAS RECEIVED SALE CONSIDERATION AT THE TIME OF SALE AGREEMENT ON 23.0 7.2008 AND CLAIMED EXEMPTION U/S. 54F AND 54EC OF THE ACT. THE FACT REMAINS THA T THE CIT(A) HAS CONSIDERED THESE WORKINGS AND DISCUSSED ELABORATELY IN HIS ORD ERS EMPHAZING ON THE PROVISIONS OF SECTION 50C AND 2(47) OF THE INCOME TAX ACT AND SEC. 53A OF THE TRANSFER OF PROPERTY ACT. WE ARE CONSCIOUS THAT THERE HAS SINC E BEEN AMENDMENT TO SEC. 50C(1) INCORPORATING THE WORD 'OR ASSESSABLE', SO T HAT THE VALUE THAT WOULD STAND TO BE ASSESSED WOULD SUBSTITUTE THE STATED CONSIDER ATION. THE SAID AMENDMENT, AS HELD BY THE HON'BLE JURISDICTION HIGH COURT IN CIT VS. R. SUGANTHA RAVINDRAN (2013), 352 ITR 488 (MAD) IS EFFECTIVE ONLY FROM 01.10.2009 , I.E., SUBSEQUENT TO THE TRANSFER DATE IN THE PRESENT CASE. HENCE, CAPITAL GAINS HAVE TO BE ASSESSED FOR THE ASSESSMENT YEAR 2009-10 AND THERE IS NO DISPUTE ON THE COMPLIANCE OF REQUISITE CONDITIONS FOR CLAIMING EXEMPTION U/S. 54 AND 54EC FOR THE ASSESSMENT YEAR 2009- :-8-: I.T.A.NOS.2428 & 2429/MDS/2016 C.O. NOS. 148 & 149/MDS/2016 10. CONSIDERING THE APPARENT FACTS, MATERIAL ON REC ORD AND JUDICIAL DECISIONS. WE ARE OF THE OPINION THAT THE ASSESSEE HAS COMPLIED T HE PROVISIONS OF LAW AND CIT(A) HAS CONSIDERED THESE ASPECTS VIS-A-VIS THE EXPLANAT IONS OF THE ASSESSEE AND FINDINGS OF THE ASSESSING OFFICER AND DELETED THE ADDITION . ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) AND UPHEL D THE SAME AND THE APPEAL OF THE REVENUE IS DISMISSED 8. THE ASSESSEE HAD FILED CROSS OBJECTIONS FOR THE ASSESSMENT YEAR 2010-11. SINCE, THE REVENUE APPEAL IS DISMISSED THE CROSS OB JECTIONS BECOME INFRUCTOUS AND DISMISS. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. 10. SIMILARLY, IN THE CASE OF ITA NO. 2384/MDS/2016 FILED BY THE REVENUE ON THE SIMILAR FACTS IS DISMISSED AND CO NO. 144/MDS/2016 FILED BY THE ASSESSEE IS ALSO DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 31ST DAY OF JANUAR Y, 2017 AT CHENNAI. SD/ - ( ) (SANJAY ARORA) / ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) $ /JUDICIAL MEMBER /CHENNAI, 0 /DATED: 31ST JANUARY, 2017 JPV ' *#23 43 /COPY TO: 1. APPELLANT 2. *+& /RESPONDENT 3. 5 ( )/CIT(A) 4. 5 /CIT 5. 3 *## /DR 6. 9 /GF