M/s. Shri Gopal Lalji Maharaj Trust, Jabalpur V. ACIT, Jabalpur

CO 23/JAB/2010

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8935 (ITAT-JABALPUR)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 18-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Fair market value
• Section: 143(3); 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BENCH, JABALPUR BEFORE SHRI JOGINDER SINGH(JM) AND SHRI R.C. SHARM A (AM) I.T.A. NO.104/JAB/2010 ASSESSMENT YEAR:2 006-07 ACIT, CIRCLE 1(1), JABALPUR VS. M/S. SHRI GOPAL LALJI MAHARAJ TRUST,HANUMANTAL, JABALPUR PAN/GIR NO. : AAATG 2124 P APPELLANT ) .. RESPONDENT ) C.O.NO.23/JAB/2010 (ARISING OUT OF I.T.A. NO.104/JAB/2010) M/S. SHRI GOPAL LALJI MAHARAJ TRUST,HANUMANTAL, JABALPUR VS. ACIT, CIRCLE 1(1), JABALPUR PAN/GIR NO. : AAATG 2124 P APPELLANT ) .. RESPONDENT ) APPELLANT BY : SHRI ABHISHEK SHUKLA, SR. DR CROSS OBJECTOR BY : SHRI SUMIT NEMA DATE OF HEARING : 18/9/20 13 DATE OF PRONOUNCEMENT : 19 /09/2013 O R D E R PER R.C.SHARMA, AM: THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 26.5. 2010 OF LD 2 I.T.A. NO.104/JAB/2010 C..23/JAB/2010 ASSESSMENT YEAR:2 006-07 COMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESS MENT YEAR 2006-07, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF TH E ACT. 2. GROUND TAKEN BY THE REVENUE IN ITS APPEAL READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN D ELETING THE ADDITION OF RS.12,43,08,414/- MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 50C OF THE I.T.A CT ON ACCOUNT OF LONG TERM CAPITAL GAIN. 3. BRIEFLY STATED THE RELEVANT FACTS ARE LIKE THIS. ON THE BASIS OF INFORMATION RECEIVED FROM THE REGISTRAR OFFICE, THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS TRANSACTED IN IMMOVABLE PROPERTY THROUGH REGISTERED SALE DEED DURING THE YEAR UNDER CONSIDERATION. THE REFORE, THE CASE WAS REOPENED BY ISSUE OF NOTICE UNDER SECTION 148 OF TH E ACT. IN THE ASSESSMENT SO FRAMED UNDER SECTION 143(3) OF THE AC T, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS OWNED HUGE C HUNKS OF LAND SINCE 1915, SITUATED AT PRIME LOCALITIES OF JABALPUR AND SURROUNDING AREAS. ON SUCH LANDS, ASSESSEE HAS CONVERTED THE LANDS FROM A GRICULTURE TO NON- AGRICULTURE FROM LOCAL AUTHORITIES. ON SUCH LANDS THE ASSESSEE GOT THE MAPS SANCTIONED FOR CONSTRUCTION OF LARGE NUMBER OF REAL ESTATE. FOR 3 I.T.A. NO.104/JAB/2010 C..23/JAB/2010 ASSESSMENT YEAR:2 006-07 CONSIDERATION OF REAL ESTATE THE ASSESSEE HAS ENTER ED INTO A DEVELOPMENT AGREEMENT WITH VARIOUS BUILDERS. WHEN THE CONSTRUC TED BUILDING IS BEING SOLD THE ASSESSEE IS SIGNING A PROPER SALE DEED J OINTLY WITH RESPECTIVE BUILDERS IN FAVOUR OF THE PURCHASER. ON ABOVE FACTS THE TRANSACTION IS NOTHING BUT TRANSFER OF LAND TO THE PURCHASER IN FA VOUR OF WHOM THE ASSESSEE HAS SIGNED THE 'SALE DEED'. IN THIS CONNEC TION ASSESSEE HAS CONTENDED THAT AS PER DEVELOPMENT AGREEMENT WITH BU ILDERS THE LAND OWNED BY ASSESSEE HAS BEEN GIVEN ON LEASE AND THERE FORE, IS NOT TRANSFER OF ASSET AND ASSESSEE IS NOT LIABLE FOR LONG TERM C APITAL GAIN ON SUCH LANDS. THE ASSESSING OFFICER DID NOT ACCEPT THE CO NTENTION OF THE ASSESSEE ON THE FOLLOWING FACTS AND DETERMINED THE CAPITAL G AINS AT RS. 12,43,08,414.00: 1. THAT THE PROPERTY HAS BEEN SOLD AS PER 'SALE DEEDS' EXECUTED BY THE ASSESSEE IN FAVOUR OF THE PURCHASER. 2. THAT THE POSSESSION OF THE PROPERTY INCLUDING LAND HAS BEEN PASSED ONTO THE PURCHASER AS PER 'SALE DEED'. 3. THAT AS CONSIDERATION OF SUCH 'SALE DEED' ASSE SSEE HAS RECEIVED SUMS OF MONEY FROM THE BUILDERS IN TERMS OF 'DEVELOPMENT AG REEMENT' DATED 02/08/2004. 4 I.T.A. NO.104/JAB/2010 C..23/JAB/2010 ASSESSMENT YEAR:2 006-07 4. THAT THE PROPERTY HAS BEEN CONVEYED IN FAVOUR OF THE PURCHASER AS PER 'SALE DEEDS' SIGNED SEPARATELY IN EACH CASE. 5. THAT ON THE FACTS OF THE CASE THE PROPERTY UND ER CONSIDERATION IS A 'CAPITAL ASSET' AS DEFINED IN SECTION 2(14). 4. THE ASSESSING OFFICER OBSERVED THAT THE FACTS OF THE CASE CLEARLY INDICATE THAT ASSESSEE HAS TRANSFERRED THE CAPITAL ASSET AS PER DEFINITION OF TRANSFER IN SECTION 2(47) AS REPRODUCED HEREIN BE LOW: 2(47) [TRANSFER IN RELATION TO A CAPITAL ASSET, I NCLUDES (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW, O R (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM, AS STOCK IN TRADE OF A BUSINESS CA RRIED ON BY HIM, SUCH CONVERSION OR TREATMENT] (OR) (IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON BOND; O R] [(V) ANY TRANSACTION INVOLVING THE ALLOWING OF T HE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO SECTION 53A O F THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882); OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECO MING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPAN Y OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT O R ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHIC H HAS THE 5 I.T.A. NO.104/JAB/2010 C..23/JAB/2010 ASSESSMENT YEAR:2 006-07 EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT O F, ANY IMMOVABLE PROPERTY.' IN LIGHT OF ABOVE FACTS AND POSITION OF LAW THERE I S NO DOUBT THAT ASSESSEE HAS TRANSFERRED CAPITAL ASSETS I.E. LAND AND BUILDING A ND ON SUCH TRANSFER IS LIABLE TO SHOW INCOME FROM CAPITAL GAINS. HOWEVER FROM THE RE TURN OF INCOME IT IS FOUND THAT ASSESSEE HAS NOT OFFERED ANY INCOME TOWARDS CA PITAL GAINS. THEREFORE, THE LONG TERM CAPITAL GAINS IN CASE OF ASSESSEE IS COMP UTED AS BELOW:- FULL VALUE OF CONSIDERATION FOR PLOT NO. 13 SHEET N O. 2, KHASRA NO. 282/1 AND HOUSE NO. G-4-15 UPON IT. AREA 941 SQUARE FOOT - VA LUE AS PER STAMP VALUATION AUTHORITY = RS. 24,55,000/- THEREFORE, MARKET RATE PER SQUARE FOOT = 2455000/ 941 = RS.2,609/- TOTAL AREA OF PROPERTY TRANSFERRED BY ASSESSEE AS P ER TABLE ABOVE = 47646 SQ. FT. MARKET VALUE OF 47646 SQUARE FOOT = 47646X260 9 = RS.12,43,08,414.00 HENCE, THE LONG TERM CAPITAL GAINS IN THE CASE OF A SSESSEE IS DETERMINED AT RS. 12,43,08,414.00 WITHOUT GIVING ANY DEDUCTION FOR CO ST OF ACQUISITION AS SAME IS NOT AVAILABLE ON RECORDS. 5. AGAINST THE ABOVE ORDER OF THE ASSESSING OFFICER , ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, WHO DE LETED THE ADDITION BY OBSERVING AS UNDER: NOW THE CONTENTION OF THE APPELLANT IS FOUND TO BE CORRECT. FIRSTLY, IF THE INFORMATION WAS GATHERED FROM THE REGISTRARS OFFIC E REGARDING THE SALE 6 I.T.A. NO.104/JAB/2010 C..23/JAB/2010 ASSESSMENT YEAR:2 006-07 CONSIDERATION AND THE FAIR MARKET VALUE OF THE PROP ERTY, IT WAS THE LEGAL DUTY OF THE ASSESSING OFFICER TO BRING THE SAME TO THE KNOW LEDGE OF THE ASSESSEE AND AFTER ALLOWING HIM FARE AND REASONABLE OPPORTUNITY TO PUT FORTH HIS EXPLANATION SHOULD HAVE PROCEEDED TO ASCERTAIN THE VALUE OF EAC H SOLD UNIT INSTEAD OF STRAIGHTWAY UTILIZING AGAINST THE ASSESSEE. THIS IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND SUCH DENIAL OF OPPORTUNITY RENDERS THE ASSESSMENT ORDER TO BE BAD IN LAW. AS A MATTER OF FACT AS PER THE GUIDE LINES OF THE STATE GOVERNMENT THE RATE OF THE PROPERTY IN THE AREA UNDER CONSIDERATION DUR ING THE RELEVANT PERIOD WAS RS2,609/- PER SQ.MTR. NOW THE EVIDENCES GATHERED BY THE APPELLANT FROM THE STAMP VALUATION AUTHORITY UNDER THE RIGHT TO INFORM ATION ACT THEMSELVES PROVE THAT THE SALE VALUE AND THE MARKET VALUE ARE THE SA ME AND THERE IS NO DIFFERENCE AS MIS-UNDER STOOD BY THE AO. NOW THE AGREEMENT ENT ERED WITH THE BUILDER M/S KAMAKSHI CONSTRUCTION MAKES IT CLEAR THAT THE ASSES SEE TRUST RECEIVED ONLY THE LAND PREMIUM FROM THE BUILDER FOR USE OF THE LAND A ND EARNED ONLY THE ANNUAL LEASE RENT. ACCORDING TO THE AGREEMENT THE BUILDER HAD TO CONSTRUCT HOUSES/SHOPS AND HE WAS AUIHORI/CD TO SEL L THE HOUSE SO CONSTRUCTED TO ANY PURCHASER AND THUS EARN PROFIT THERE FROM. NO IOTA OF EVIDENCE HAS BEEN BROUGHT OUT BY THE AO IN HIS ASSESSMENT ORDER TO BR ING OUT THAT THE TRUST HAD INFACT SOLD THE LAND AND HAD EARNED ANY INCOME THER E FROM; THE TRUST INFACT NEVER SOLD THE LAND TO ANY PURCHASER BUT JUST EARNED LEAS E RENT FROM THEM ON ANNUAL BASIS. THIS IS WELL CONFIRMED FROM THE SALE DEED OF PROPERTY. NOW THE BUILDER IN RESPECT OF SUCH TRANSACTIONS HAS DECLARED THE PROFI T IN HIS RETURN OF INCOME INDEPENDENTLY WHICH HAS BEEN BROUGHT TO TAX ALSO. L IKEWISE WHATSOEVER INCOME WAS EARNED BY THE TRUST WAS OFFERED FOR THE PURPOSE OF TAXATION IN ITS RETURN AND THEREFORE THERE WAS NO ESCAPEMENT OF AN INCOME LO B E TAXED IN THE HANDS OF THE TRUST U/S!47. FURTHER IT WAS SIMPLY TRI-PARTY AGREE MENT BETWEEN THE LAND OWNER, BUILDER AND THE PURCHASER AND AS PER THE AGREEMENT ONLY THE TRANSACTIONS WERE EXECUTED. AS A RESULT BOTH THE PARTY NAMELY THE ASS ESSEE TRUST AS WELL AS THE 7 I.T.A. NO.104/JAB/2010 C..23/JAB/2010 ASSESSMENT YEAR:2 006-07 BUILDER DECLARED WHATEVER INCOME WAS EARNED FROM SU CH TRANSACTIONS, IN THEIR INCOME TAX RETURNS RESPECTIVELY AND APPARENT!) AS I T WAS A SIMPLE CASE OF SALE OF CONSTRUCTED UNITS ON THE PROPERTY OF THE APPELLANT, WHICH WAS NEVER SOLD, THERE WAS NO QUESTION OF ANY CAPITAL GAINS. THE ASSESSIN G OFFICER THEREFORE DIRECTED TO TAX THE INCOME/LOSS AS DECLARED BY THE ASSESSEE AND THE CAPITAL GAINS BROUGHT TO TAX OF RS.12,43,08,414/- IS HEREBY DELETED. THE AS SESSING OFFICER IS ALSO DIRECTED TO GIVE SPECIFIC FINDING REGARDING CARRY FORWARD OF LOSS. 6. BEING AGGRIEVED, THE REVENUE IS IN FURTHER APPEA L BEFORE THE TRIBUNAL. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REC ORDS PERUSED. FROM THE RECORDS, WE FOUND THAT DURING THE YEAR UNDER CO NSIDERATION, ASSESSEE HAS ENTERED INTO TRANSACTION OF SALE. THE SALE DEE D WAS EXECUTED WITH RESPECT TO THE LAND AS WELL AS BUILDING CONSTRUCTED THEREON. THE LAND WAS OWNED BY THE ASSESSEE, WHEREAS THE BUILDING WAS CON STRUCTED BY THE BUILDER FOR WHICH CONSIDERATION WAS ALSO RECEIVED B Y THEM. THE CONTENTION OF LD A.R. WAS THAT ASSESSEE HAS MERELY GIVEN LEASE FOR 30 YEARS AND THERE WAS NO SALE TRANSACTION. HE FURTHER CONTENDED THAT THE BUILDING WAS CONSTRUCTED BY THE BUILDER AND ASSESSEE WAS NOT THE OWNER OF SUCH BUILDING, THEREFORE, ASSESSING OFFICER WAS NOT JUST IFIED IN TAXING THE ENTIRE SALE CONSIDERATION WITH RESPECT TO LAND AND BUILDIN G. AS PER LD A.R,. 8 I.T.A. NO.104/JAB/2010 C..23/JAB/2010 ASSESSMENT YEAR:2 006-07 ASSESSING OFFICER DID NOT DISCLOSE AS TO HOW AND FR OM WHERE HE GOT THE RATE APPLIED IN RESPECT OF LAND SOLD DURING THE YEA R. HOWEVER, LD COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED TH E ADDITION BY OBSERVING THAT THE SALE VALUE OF THE PROPERTY AS WE LL AND THE MARKET VALUE OF THE PROPERTY AS PER REGISTRAR WAS SAME, THEREFOR E, NO ADDITION WAS WARRANTED U/S. 50C OF THE I.T.ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BY OBSERVING THAT NO IOTA OF EVIDENCE HAS BEEN BROUGHT OUT BY THE ASSESSING OFFICER IN THE AS SESSMENT ORDER TO BRING OUT THAT THE ASSESSEE TRUST HAD IN FACT SOLD THE LA ND AND HAD EARNED ANY INCOME THEREFROM AND THE ASSESSEE TRUST IN FACT NEV ER SOLD THE LAND TO ANY PURCHASER BUT JUST EARNED LEASE RENT ON ANNUAL BASI S. AS PER LD COMMISSIONER OF INCOME TAX (APPEALS), THIS FACT IS CONFIRMED FROM THE SALE DEED OF PROPERTY. LD COMMISSIONER OF INCOME TAX (A PPEALS) HAS ALSO OBSERVED THAT IT IS ONLY TRIPARTITE AGREEMENT BETWE EN THE LAND OWNER, BUILDER AND PURCHASER. AS PER AGREEMENT, ONLY TRAN SACTIONS WERE EXECUTED, WHEREIN, BOTH PARTIES NAMELY ASSESSEE TRU ST AS WELL BUILDER DECLARED WHATEVER INCOME WAS EARNED FROM SUCH TRANS ACTION IN THEIR INCOME TAX RETURNS. HOWEVER, THE OBSERVATION OF LD COMMISSIONER OF 9 I.T.A. NO.104/JAB/2010 C..23/JAB/2010 ASSESSMENT YEAR:2 006-07 INCOME TAX (APPEALS) IS CONTRARY TO THE MATERIAL ON RECORD AND THE OBSERVATION MADE BY THE ASSESSING OFFICER WITH RESP ECT TO REGISTERED SALES DEED.. LD CITA) HAS NOT INDICATED THE DOCUMENTARY EVIDENCE BY RELYING ON WHICH, HE HAS REACHED TO THE CONCLUSION THAT ASSESS EE HAS NOT SOLD THE LAND WHEREAS THE SALE DEED PLACED ON RECORD AS DEAL T WITH IN DETAIL BY THE ASSESSING OFFICER CLEARLY DESCRIBE THE PROPERTY SOL D BY THE ASSESSEE TRUST, WHICH CONSISTED OF LAND PLUS BUILDING. SINCE ASSES SEE WAS ONLY THE OWNER OF THE LAND, PROFIT ACCRUING FROM SALE OF LAND IS T O BE TAXED IN THE HANDS OF THE ASSESSEE. AS PER OBSERVATION OF THE ASSESSING OFFICER, THE VALUATION AUTHORITY HAS DETERMINED THE VALUE OF LAND MORE THA N THE SALE CONSIDERATION SHOWN IN THE SALE DEED, THEREFORE, PR OVISIONS OF SECTION 50C ARE APPLICABLE WHILE COMPUTING THE CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. THE FINDINGS OF THE COMMISSIONER OF INCO ME TAX (APPEALS) TO THE EFFECT THAT ASSESSEE HAS DISCLOSED PROFIT ON SA LE OF LAND IS NOT ALSO SUPPORTED BY ANY MATERIAL ON RECORD INSOFAR AS ASSE SSEE HAS FILED ITS RETURN OF INCOME AT A LOSS OF RS.,97,81,128/-. IN VIEW OF THESE FACTS, THERE IS NO JUSTIFICATION IN THE ORDER OF LD COMMISSIONER OF IN COME TAX (APPEALS FOR DELETION OF ADDITION OF RS.12,43,08,414/- MADE BY T HE ASSESSING OFFICER BY 10 I.T.A. NO.104/JAB/2010 C..23/JAB/2010 ASSESSMENT YEAR:2 006-07 INVOKING THE PROVISIONS OF SECTION 50C ON ACCOUNT O F LONG TERM CAPITAL GAINS. THEREFORE, IN THE INTEREST OF JUSTICE, WE S ET ASIDE THE ORDERS OF LOWER AUTHORITIES AND RESTORE THE MATTER TO THE FIL E OF THE ASSESSING OFFICER FOR DECIDING THE ISSUE AFRESH AFTER MAKING DETAILED ENQUIRY WITH RESPECT TO THE PROPERTY SOLD DURING THE YEAR, ACTUAL SALE CONS IDERATION RECEIVED BY THE ASSESSEE FOR LAND VIS--VIS SALE CONSIDERATION DETE RMINED BY THE REGISTRAR FOR THE PURPOSE OF STAMP DUTY. ASSESSING OFFICER I S TO DECIDE THE ISSUE AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE , KEEPING IN VIEW OUR ABOVE OBSERVATION. 8. IN THE CROSS OBJECTION, ASSESSEE HAS SUPPORTED T HE ACTION OF LD COMMISSIONER OF INCOME TAX (APPEALS) FOR DELETING T HE ADDITION MADE BY THE ASSESSING OFFICER U/S.50C. IT WAS CONTENDED TH AT SINCE THERE IS NO DIFFERENCE IN THE SALE PRICE AND STAMP VALUATION, N O ADDITION WAS WARRANTED U/S.50C. AS DISCUSSED ABOVE THE ORDER OF COMMISSION ER OF INCOME TAX (APPEALS) IS DEVOID OF ANY MERIT, WE DISMISS THE CR OSS OBJECTION FILED BY THE ASSESSEE. 11 I.T.A. NO.104/JAB/2010 C..23/JAB/2010 ASSESSMENT YEAR:2 006-07 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS A LLOWED IN TERMS INDICATED HEREINABOVE, WHEREAS CROSS OBJECTION FIL ED BY ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH SEPTEMBER, 2013. SD/- SD/- (JOGINDER SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER JABALPUR DATED 19 / 09/2013 B.K.PARIDA, SR. PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : ACIT, CIRCLE 1(1), JABALPUR 2. / THE RESPONDENT/CROSS OBJECTOR: M/S. SHRI GOPAL LALJI MAHARAJ TRUST,HANUMANTAL, JABALPUR 3. ( ) / THE CIT(A)-JABALPUR 4. / CIT CONCERNED. 5. , , / DR, ITAT, JABALPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR.PRIVATE SECRETARY,ITAT CAMP AT JABALPUR