M/s Aakash Association, Ahmedabad V. The Addl. CIT, Range-12, Ahmedabad

CO 68/AHD/2016

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4225 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 01-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VIMLENDU VERMA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Valuation report; Capital Gains
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2050/AHD/2013 & C.O. NO. 68/AHD/2016 (ASSESSMENT YEAR: 2009-10) ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-12, AHMEDABAD M/S. AKASH ASSOCIATION 1, MB COMPLEX, RAKHIYAL CROSS ROADS, RAKHIYAL, AHMEDABAD V/S V/S M/S. AKASH ASSOCIATION 1, MB COMPLEX, RAKHIYAL CROSS ROADS, RAKHIYAL, AHMEDABAD ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-12, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAKFA0230G APPELLANT BY : SHRI VIMLENDU VERMA, CIT/D R RESPONDENT BY : SHRI TEJ SHAH, A.R. ( )/ ORDER DATE OF HEARING : 18 -08-201 6 DATE OF PRONOUNCEMENT : 19 -08-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: ITA NO. 2050 /AHD/2013 & C.O. NO. 68 /AHD/2016 . A.Y. 2009-1 0 2 1. ITA NO. 2050/AHD/2013 & C.O. NO. 68/AHD/2016 ARE AP PEAL AND CROSS OBJECTION BY THE ASSESSEE DIRECTED AGAINST THE ORDE R OF LD. CIT(A)-XX, AHMEDABAD DATED 01.05.2013 PERTAINING TO A.Y. 2009- 10. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE ADDITION OF RS. 78,75,2511/- MADE BY T HE A.O. VIDE ORDER DATED 28.12.2011 MADE U/S. 143(3) OF THE ACT. 3. RIVAL CONTENTIONS WERE HEARD AT LENGTH. WE HAVE GIV EN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELO W. IN THIS CASE, THE ASSESSEE HAS RETURNED LONG TERM CAPITAL GAIN ON SAL E OF PLOT OF LAND. THE SALE CONSIDERATION WAS SHOWN AT RS. 6.25 CRORES AND THE SALE WAS MADE VIDE BANAKHAT DATED 2.12.2008 AND NO FINAL DOC UMENT OF SALE DEED WAS EXECUTED. 4. FROM THE SALE CONSIDERATION OF RS. 6.25 CRORES, THE ASSESSEE HAS DEDUCTED ORIGINAL PURCHASE PRICE AND THE COST OF IM PROVEMENT BY APPROPRIATE INDEXATION. 5. THE A.O. WAS OF THE OPINION THAT CONSIDERING THE RI SING MARKET PRICES, THE VALUE OF SALE SHOWN BY THE ASSESSEE IS ON THE L OWER SIDE AND ACCORDINGLY MADE A REFERENCE U/S. 55A OF THE ACT TO THE DVO FOR THE PURPOSE OF THE DETERMINATION OF CORRECT MARKET VALU E AS ON THE DATE OF TRANSFER AS PER BANAKHAT. THE VALUATION OFFICER VID E REPORT DATED 15.12.2011 SUBMITTED THE VALUATION REPORT AND ESTIM ATED THE SALE VALUE AT RS. 13,33,63,000/-. 6. THE A.O. RECOMPUTED THE INCOME FROM LONG TERM CAPIT AL GAIN BY TAKING THE MARKET VALUE OF RS. 13,33,63,000/- A S VALUED BY THE DVO. ITA NO. 2050 /AHD/2013 & C.O. NO. 68 /AHD/2016 . A.Y. 2009-1 0 3 7. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND CHALLENGED THE REFERENCE MADE TO THE DVO U/S. 55A OF THE ACT. AFTER CONSIDERING THE FACTS AND THE SUBMISSION S AND THE PROVISIONS OF SECTION 48 OF THE ACT, THE LD. CIT(A) WAS CONVIN CED THAT THE REFERENCE TO THE DVO WAS VALID BUT WAS OF THE OPINI ON THAT THE A.O. HAS NOT BROUGHT ON RECORD ANY OTHER EVIDENCE TO SHO W THAT THE ASSESSEE HAS RECEIVED CONSIDERATION OVER AND ABOVE THE DECLARED CONSIDERATION. ACCORDINGLY, THE LD. CIT(A) HELD THA T THE FAIR MARKET VALUE CANNOT BE ADOPTED AS FULL VALUE OF CONSIDERAT ION TO DETERMINE THE CAPITAL GAINS. 8. IT IS AN UNDISPUTED FACT THAT THE A.O. HAS MADE A R EFERENCE U/S. 55A OF THE ACT TO THE DVO TO DETERMINE THE CORRECT MARKET VALUE AS ON THE DATE OF THE TRANSFER. SECTION 55A, PERMITS REFERENC E TO DVO BY THE ASSESSING OFFICER UNDER CERTAIN CIRCUMSTANCES. SUCH REFERENCE, HOWEVER, IS WITH A VIEW TO ASCERTAINING THE FAIR MA RKET VALUE OF CAPITAL ASSET FOR THE PURPOSES OF CHAPTER IV. IN THE INSTAN T CASE, THE REFERENCE WAS MADE TO DVO FOR ASCERTAINING THE FAIR MARKET VA LUE OF THE CAPITAL ASSET AS ON THE DATE OF SALE. 9. PROVISION OF SECTION 48 READ AS UNDER:- THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAIN SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS RESULT OF TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS , NAMELY:- 1. EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER. 2. THE COST OF ACQUISITION OF THE ASSET AND THE COST O F ANY IMPROVEMENT THERETO. 10. A PERUSAL OF THE AFOREMENTIONED SECTION SHOWS THAT THE MAIN THRUST OF SECTION 48 IS THE FULL VALUE OF CONSIDERA TION RECEIVED OR ITA NO. 2050 /AHD/2013 & C.O. NO. 68 /AHD/2016 . A.Y. 2009-1 0 4 ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY EXPENDITURE MENTIONED THEREIN AND THE COST OF ACQUI SITION OF THE ASSET. SECTION 55A, REFERS TO THE REFERENCE TO DVO FOR ASC ERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET. SUCH ASCERTAINMENT OF FAIR MARKET VALUE WITH THE AID OF THE DVOS REPORT WOULD HAVE N O RELEVANCE FOR THE PURPOSE OF DETERMINING FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET FO R THE PURPOSES OF SECTION 48. THUS, IN OUR UNDERSTANDING OF THE LAW, THE REFERENCE TO DVO FOR ASCERTAINING THE FAIR MARKET VALUE OF THE C APITAL ASSET AS ON THE DATE OF THE SALE AS IN THE PRESENT CASE WOULD B E WHOLLY REDUNDANT. 11. WE FIND THAT SECTION 50C PROVIDES FOR SPECIAL PROVI SION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES. THE SAID S ECTION PROVIDES A DEEMING FICTION UNDER WHICH CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF A CAPITAL ASSET CAN BE REPLAC ED BY THE VALUE ADOPTED OR ASSESSED BY STAMP VALUATION AUTHORITY FO R THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. IN THE SAID SECTION 50C OF THE ACT, SUB-SECTION (2) PERMITS THE ASSESSE E TO DISPUTE SUCH VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY AND IN SUCH A CASE, IT IS OPEN FOR THE ASSESSING OFFICER TO REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER. 12. HOWEVER, IN THE PRESENT CASE, WE FIND THAT THE A.O. HAS MADE REFERENCE U/S. 55A FOR THE DETERMINATION OF MARKET VALUE FOR THE PURPOSES OF THE COMPUTATION OF CAPITAL GAIN U/S. 48 OF THE ACT. 13. OUR VIEW IS FORTIFIED BY THE DECISION OF THE HONBL E HIGH COURT OF GUJARAT IN THE CASE OF GAURANGINIBEN S. SHODHAN 367 ITR 238 WHEREIN THE HONBLE HIGH COURT HAS HELD AS UNDER:- ITA NO. 2050 /AHD/2013 & C.O. NO. 68 /AHD/2016 . A.Y. 2009-1 0 5 11 . TAKING THE QUESTION OF ASCERTAINING THE FAIR MARKET VALUE ON THE DATE OF SALE, WE NOTICE THAT SECTION 48, WHICH IS ALSO CONTAINED IN CHAPTER IV OF THE ACT PERTAINS TO METHOD OF COMPUTATION OF CAPITAL GAIN. A DETAILE D MECHANISM HAS BEEN PROVIDED FOR SUCH COMPUTATION OF THE INCOME CHARGEA BLE UNDER THE HEAD 'CAPITAL GAINS'. IT PROVIDES, INTER ALIA, THAT THE INCOME CH ARGEABLE UNDER THE HEAD 'CAPITAL GAINS', SHALL BE COMPUTED BY DEDUCTING FRO M THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF THE CAPITAL ASSET, THE AMOUNTS MENTIONED THEREIN THAT IS THE EXPENDITU RE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER AND TH E COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO. MAIN THRUST OF SECTION 48 OF THE ACT, THEREFORE, IS THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY EXP ENDITURE MENTIONED THEREIN AND THE COST OF ACQUISITION OF THE ASSET. SECTION 55 A, AS WE HAVE NOTICED, REFERS TO THE REFERENCE TO DVO FOR ASCERTAINING THE FAIR MARKET V ALUE OF A CAPITAL ASSET. SUCH ASCERTAINMENT OF FAIR MARKET VALUE WITH THE AID OF THE DVO'S REPORT WOULD HAVE NO RELEVANCE FOR THE PURPOSE OF DETERMINING FULL VA LUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPI TAL ASSET FOR THE PURPOSES OF SECTION 48 OF THE ACT. 12. IN THAT VIEW OF THE MATTER, THE REFERENCE TO DVO FO R ASCERTAINING THE FAIR MARKET VALUE OF THE CAPITAL ASSET AS ON THE DATE OF THE SALE IN THE PRESENT CASE WOULD BE WHOLLY REDUNDANT. 14. SOMEWHAT SIMILAR QUESTION CAME UP FOR CONSIDERATION BEFORE THIS COURT IN JUDGMENT DATED 28.3.2011 IN THE CASE OF C1T V. GIRI SH DAMJIBHAI PATEL [TAX APPEAL NO.1016 OF 2009] AND ALLIED MATTERS, IN WHIC H IT WAS HELD AND OBSERVED AS UNDER: '20. QUITE APART FROM THE CIT (A) DISCARDING THE VE RY VALUER'S REPORT, WE FIND THAT THE REFERENCE ITSELF WAS NOT COMPETENT INSOFAR AS HE WANTED TO ASCERTAIN FAIR MARKET VALUE OF THE LAND ON THE DATE OF SALE. IN AB SENCE OF ANY MATERIAL ON RECORD BEFORE US BY WHICH ASSESSING OFFICER COULD HAVE CON CLUDED THAT THE CONSIDERATION INDICATED IN THE SALE-DEED DID NOT REFLECT THE FULL CONSIDERATION RECEIVED BY THE ITA NO. 2050 /AHD/2013 & C.O. NO. 68 /AHD/2016 . A.Y. 2009-1 0 6 ASSESSEE, IT WAS NOT POSSIBLE TO ASSESS THE CAPITAL GAIN BY ESTIMATING WHAT WOULD BE THE FAIR MARKET VALUE OF THE LAND THROUGH VALUER S REPORT 21. DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT V. SMT. NILOFER I. SINGH [2009].309 ITR 233 WAS ALSO BROUGHT TO OUR NOTICE; WHEREIN, RELYING ON THE DECISION OF GEORGE HENDERSON & CO. LTD. (SUPRA) AND GILLANDERS ARBUTHNOT & CO. (SUPRA), THE DIVISION BENCH OBSERVED THAT EXPRE SSION 'FULL VALUE OF CONSIDERATION' USED IN SECTION 48 OF THE ACT DOES N OT HAVE REFERENCE TO THE MARKET VALUE BUT ONLY TO THE CONSIDERATION REFERRED TO IN THE SALE DEED AS SALE PARTICULARS OF THE ASSETS WHICH HAVE BEEN TRANSFERRED.' 14. CONSIDERING THE FACTS IN TOTALITY, IN THE LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE HOLD THAT THE VALUE ADOPTED AS PER THE DVOS REPORT IS UNCALLED FOR AND THE A.O. IS DIRECTED TO ACCEPT THE SALE CONSIDERATION OF RS. 6.25 CRORES AND COMPUTE THE CAPITAL GAINS ACCORDINGLY. 15. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. C.O. NO. 68/AHD/2016 FOR A.Y. 2009-10. 16. THE CROSS OBJECTION OF THE ASSESSEE IS BARRED BY LI MITATION BY 814 DAYS. IN ANY CASE, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT HE IS NOT PRESSING THE CROSS OBJECTION. THE C.O. IS AC CORDINGLY DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN OPEN COURT ON 19 - 08- 20 16. SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY