Eagle Apparel LLP, CHENNAI V. ITO, CHENNAI

CO 70/CHNY/2016

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4241 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 08-06-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 23-05-2016
• Court: TRIBUNAL
• Department Lawyers: V VIVEKANANDAN
• Assessee Lawyers: M P SENTHIL KUMAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Valuation report; Capital Gains
• Section: 50C; 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . ! , ' !# $ [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.817/MDS/2016 & C.O.NO.70/MDS/2016 / ASSESSMENT YEAR : 2012-13 THE INCOME TAX OFFICER CORPORATE WARD 2(1) CHENNAI VS. M/S EAGLE APPARELS LLP 47 & 8. T.V.K.INDUSTRIAL ESTATE GUINDY, CHENNAI 600 032 [PAN AAACE 1453 E ] ( APPELLANT) ( RESPONDENT & CROSS OBJECTOR) DEPARTMENT BY : SHRI V. VIVEKANANDAN, CIT ASSESSEE BY : SHRI PHILIP GEORGE & SHRI M.P.SENTHIL KUMAR, ADVOCATES / DATE OF HEARING : 08 - 06 - 2016 / DATE OF PRONOUNCEMENT : 18 - 08 - 2016 % / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE AND THE CROSS OBJEC TION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CO MMISSIONER OF INCOME-TAX (APPEALS)-6, CHENNAI, DATED 28.1.2016 FO R ASSESSMENT YEAR 2012-13. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: ITA NO. 817/16 CO 70/16 :- 2 -: 2.1 THE CIT(A) ERRED ON FACTS IN NOT CONSIDERING THAT T HE ASSESSEE COMPANY HAD ACTUALLY RECEIVED A SUM OF RS.20,74,60,4001-, EQUIVALENT TO THE GUIDELINE VALU E ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF ST AMP DUTY. 2.2 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT RECT IFICATION DEED SUBSEQUENT ENTERED CANNOT CHANGE THE TAXABILITY OF CAPITAL GAINS IN THE HANDS OF THE ASSESSEE WHICH WAS AS PER THE R EGISTERED SALE DEED. 2.3 THE CIT(A) HAS ERRED IN ACCEPTING THE ARGUMENT OF THE ASSESSEE THAT THE MISTAKE HAD OCCURRED IN CONSIDERA TION MENTIONED IN THE ORIGINAL SALE DEED WHICH WAS TO A HUGE EXTENT. 2.4 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT TH E VALUATION OFFICER HAD REBUTTED THE OBJECTIONS RAISED BY THE A SSESSEE POINTWISE IN HIS FINAL REPORT. 2.5 THE CIT(A) ERRED IN IGNORING THE AGREEMENT DT.14.06.2011 BEING A VERY VITAL EVIDENCE IN ARRIVING AT THE VALU E OF THE PROPERTY. 2.6 THE CIT(A) WHILE OBSERVING THAT THE STAMP DU TY PAYMENT WAS TO BE PAID BY THE PURCHASER AND NOT BY THE SELL ER, OUGHT NOT TO HAVE IGNORED THE RECEIPT OF CONSIDERATION OF RS.20, 74,60,400/- BY THE ASSESSEE AS PER THE REGISTERED .SALE DEED AND S IGNED BY THE PARTIES. 2 .7 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE GUIDE LINE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY IS REFLECT IVE OF THE TRUE MARKET VALUE OF THE PROPERTY AS THE STAMP VALUATION AUTHORITY HAS NOT DEVIATED FROM THE GUIDELINE VALUE OF RS.2,910/- PER SQ.FT. 2.8. THE RELIED UPON DECISION OF THE SUPREME COUR T IN THE CASE OF R. SAI BHARATHI VS. J. JAYALALITHA & OTHERS IS DIST INGUISHABLE FROM THE INSTANT CASE. 3. IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED TH E GROUNDS WITH REGARD TO SLUMP SALE, VALUATION OF PROPERTY, C APITAL GAINS ON BUILDING AND RENTAL INCOME. ITA NO. 817/16 CO 70/16 :- 3 -: 4. FACTS OF THE CASE ARE THAT THE ASSESSEE LLP IS ENG AGED IN THE BUSINESS OF MANUFACTURE AND EXPORT OF READYMADE GARMENTS AND FABRICS. THE ASSESSING OFFICER RECEIVED AIR INFORM ATION THAT THE ASSESSEE LLP HAD REGISTERED A DOCUMENT ON 9.11.2011 FOR TRANSFER OF PROPERTY FOR A CONSIDERATION OF ` 20,74,60,400/- BUT NO CAPITAL GAINS WAS DISCLOSED IN THE RETURN OF INCOME FOR THE ASSES SMENT YEAR 2012- 13. THE ASSESSEE LLP WAS THE OWNER OF LAND AND BUILD ING SITUATED AT DOOR NO.2/79, OLD MAHABALIPURAM ROAD (HEREINAFTE R REFERRED AS OMR), OGGIAM THORAIPAKKAM, CHENNAI - 600096. BEFORE THE AO, THE ASSESSEE LLP TOOK THE PLEA THAT THE REGISTRATI ON OF THE DOCUMENT ON 09.11.2011 WAS MERELY TO COMPLETE THE L EGAL FORMALITY BY WAY OF REGISTRATION, CONSEQUENT TO THE TRANSFER OF THE SAID PROPERTY BY WAY OF A 'SLUMP SALE AGREEMENT' DA TED 31.03.2011. IT WAS CONTENDED THAT VIDE THE SLUMP SA LE, THE VACANT POSSESSION OF THE PROPERTY ON THE DATE OF AGREEMENT WAS TRANSFERRED FOR A CONSIDERATION OF RS.3,15,00,000/- . THE ASSESSING OFFICER, FOR THE REASONS MENTIONED IN THE ORDER REJ ECTED THE ASSESSEES CLAIM FOR SLUMP SALE, AND HELD THAT THE IMPUGNED TRANSACTION WAS LIABLE FOR CAPITAL GAINS IN THE A.Y .2012-13. THE TRANSFER WAS REGISTERED VIDE THE DOCUMENT DATED 09. 11.2011, WHEREIN THE MARKET VALUE OF THE PROPERTY HAS BEEN S HOWN ON PAGE 22 OF THE DEED AT RS.20,74,60,400/-. ITA NO. 817/16 CO 70/16 :- 4 -: 4.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSEE LLP FILED A 'REGISTERED RECTIFICATION DEED' DATED 1 7.12.2014. THE REASON FOR RECTIFICATION OF THE ORIGINAL DEED DATED 09.11.2011 WAS STATED TO CORRECT 'CERTAIN MISTAKES AND INACCURACIES' THAT 'HAVE ACCIDENTALLY AND INADVERTENTLY CREPT IN'. THE RECTIFICATION DEED MENTIONED THE FOLLOWING: (I) THE SALE OF THE PROPERTY WAS AT BOOK VALUE OF R S. 57,533/- FOR THE LAND AND RS. 1,69,853/- TOWARDS T HE BUILDING TOTALLING TO RS. 2,27,386/- (II) THE POSSESSION OF THE PROPERTY WAS HANDED OVE R ON 31.3.2011 AND NOT ON THE DATE OF PRINCIPAL DEED DT 9.11.2011. (III) THE ADDRESS OF THE PROPERTY MENTIONED AS DOO R NO.2/79, OLD MAHABALIPURAM ROAD IN THE PRINCIPAL DE ED IS NOT CORRECT, AS THE IMPUGNED PROPERTY HAS ACCESS ON LY FROM GANGAI AMMAN KOIL STREET AND PILLAIYAR KOIL ST REET, AND THE PROPERTY WAS NOT BOUNDED BY OLD MAHABALIPUR AM ROAD ON ANY SIDE. 4.2 SINCE THE TRANSFER WAS DONE AT BOOK VALUE, THE AO REFERRED THE MATTER OF VALUATION OF THE IMPUGNED PROPERTY TO THE DISTRICT VALUATION OFFICER (DVO) TO ASCERTAIN THE FAIR MARKET VALUE (FMV) FOR THE COMPUTATION OF CAPITAL GAINS. THE DRAFT VALUATION R EPORT DATED 20.03.2015 WAS RECEIVED FROM THE DVO VALUING THE IM PUGNED PROPERTY AT RS.20,48,38,430/-. THE ASSESSEE LLP FILED ITS O BJECTIONS TO THE PROPOSED VALUATION ON 27.03.2015. THE AO FINALIZED THE ASSESSMENT ON 31.03.2015 ASSESSING THE VALUE OF THE PROPERTY A T ITA NO. 817/16 CO 70/16 :- 5 -: RS.20,74,60,400/- BEING THE GUIDELINE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AT THE TIME OF THE REGISTRATION , INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. DVO, AFTER COUNTERING THE OBJECTIONS OF THE ASSESSEE LLP, ISSUED HIS FINAL V ALUATION ON 27.05.2015. IN THE REPORT, THE DVO ESTIMATED THE FA IR MARKET VALUE OF THE IMPUGNED PROPERTY, AS PER THE DRAFT REPORT, THE AMOUNT BEING RS.20,48,38,430/-. 5. REGARDING SLUMP SALE, THE CIT(A) OBSERVED THAT AS P ER SECTION 2(42C) OF THE ACT, SLUMP SALE IS A TRANSFER OF ONE OR MORE UNDERTAKINGS FOR LUMP SUM CONSIDERATION, WITHOUT VA LUES BEING ASSIGNED TO THE INDIVIDUAL ASSETS AND LIABILITIES. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE, THE CIT(A) HO LD THAT THE IMPUGNED TRANSACTION WILL NOT QUALIFY FOR SLUMP SAL E DUE TO THE REASONS MENTIONED HEREUNDER: A) THERE IS NO TRANSFER OF 'BUSINESS' OR 'UNDERTAKING' . THE DIRECTOR OF THE APPELLANT COMPANY HAS ADMITTED DURING THE COURSE OF SURVEY THAT THERE HAS BEEN NO BUSINESS OR MANUFACTURING ACTIVITY SINC E A.Y.2002-03. B) SLUMP SALES INVOLVES SALE OF THE ENTIRE BUSINESS OR UNDERTAKING TOGETHER WITHOUT INDIVIDUAL VALUES BEING ASSIGNED. IN THE APPELLANTS CASE, IT IS SEEN THAT THE PLANT AND MACHINERY OF THE BUSINES S, WHICH ARE GERMANE TO THE OPERATIONS OF AN UNDERTAKING HAD BEEN SEPARA TELY SOLD MUCH EARLIER DURING THE F.Y.2005-06. ITA NO. 817/16 CO 70/16 :- 6 -: C) IN THE DEED OF RECTIFICATION, THE APPELLANT LLP HAS ASSIGNED SEPARATE SPECIFIC VALUES TO THE ASSETS. ON PAGE 3 OF THE DEE D OF RECTIFICATION DATED 17.12.2014, A VALUE OF RS.57,533/- HAS BEEN ASSIGNE D TO THE LAND, AND VALUE OF RS.1,69,853/- HAS BEEN ASSIGNED TO THE FAC TORY BUILDING. D) THE DIRECTOR OF THE APPELLANT LLP IN THE SURVEY OPERATIONS AGREED TO THE CONTENTION THAT THIS WAS NOT SLUMP SALE, AND PA ID AN AMOUNT OF RS.1.21 CRORES AS THE CAPITAL GAINS TAX. THIS FACT HAS NOT BEEN DISRUPTED BY THE APPELLANT COMPANY IN THEIR WRITTEN SUBMISSIONS IN THIS APPEAL. T HE CIT(A) HELD THAT THE ASSESSING OFFICER HAD RI GHTLY REJECTED THE CLAIM OF THE ASSESSEE COMPANY OF THE IMPUGNED TRAN SACTION BEING A SLUMP SALE. AS SUCH, THE CIT(A) DISMISSED THE GR OUNDS OF THE ASSESSEE. 6. REGARDING THE VALUATION OF THE PROPERTY, THE CIT(A) OBSERVED THAT GUIDELINE VALUE FOR GANGAI AMMAN KOIL STREET I S RS.636/- PER SQ FT AND FOR THE PILLAIYAR KOIL STREET IS RS. 800/- PER SQ FT. HE DIRECTED THE ASSESSING OFFICER TO CONSIDER THE HIGHER OF THESE T WO VALUATIONS RS.800/- FOR THE PILLAIYAR KOIL STREET AS BASE RATE FOR ESTIMATION OF THE FAIR MARKET VALUE FOR THE COMPUTATION OF CAPITAL GA INS IN THE HANDS OF THE ASSESSEE. AGAINST THIS, THE REVENUE IS IN APPE AL BEFORE US. ITA NO. 817/16 CO 70/16 :- 7 -: 7. THE LD.D.R SUBMITTED BEFORE THIS TRIBUNAL THAT THE CIT(A) ERRED ON FACTS IN NOT CONSIDERING THAT THE ASSESSEE COMPA NY HAS ACTUALLY RECEIVED A SUM OF RS.20,74,60,400/- EQUIVALENT TO T HE GUIDELINE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PU RPOSE OF STAMP DUTY. THIS FACT IS EVIDENT FROM PARA NO.1 AT PAGE 3 OF THE REGISTERED SALE DEED DT. 09.11.2011 FOR TRANSFER OF PROPERTY BY THE ASSESSEE, WHICH READS AS FOLLOWS: 'THAT IN PURSUANCE OF THE SAID AGREEMENT AND IN CONSIDERATION OF RS.20, 74, 60,400/- (RUPEES TWENTY CRORE SEVENTY FOUR LAKH SIXTY THOUSAND FOUR HUNDRED ONLY) PAID BY THE PURCHASER TO THE VENDOR, THE RECEIPT OF WHICH SUM THE VENDOR HEREIN DOTH HEREBY ACKNOWLEDGE AND THE PAYMENT WHEREFROM THE VENDOR DOTH HEREBY SELL, CONVEY, ASSIGN AND TRANSFER ABSOLUTELY UNTO THE PURCHASER THE SCHEDULE-B MENTIONED PROPERTY, A MERE STATEMENT BY THE ASSESSEE IN THE 'RECTIFICAT ION DEED' SUBSEQUENTLY ENTERED ON 17.12.2014 , DURING THE COURSE OF SCRUTINY PROCEEDINGS STATING THAT THE CONSIDERATION FOR' THE TRANSFERRED PROPERTY WAS ONL Y RS.2,27,386/-, AS AGAINST RS.20,74,60,400/- AS PER THE REGISTERED SALE DEED, CANNOT CHANGE THE TAXABILITY OF CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. THE LEARNED CIT(A) ACCEPTING THIS SINGLE ARGUMENT OF TH E ASSESSEE HAS LEAD HIS WRONG INFERENCE IN THE CASE. HE FURTHER SUBMITTED THAT THE LEARNED CIT(A) HAS GR OSSLY ERRED IN LISTING OUT THE 'UNDISPUTED FACTS' IN HIS ORDER: AT PARA 9.8 OF THE ORDER, THE CIT(A) STATES AS FOLL OWS: I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. LET US RECALL THE UNDISPUTED FACTS AND CIRCUMSTANCES (EMPHASIS SUPPLIED IN ITA NO. 817/16 CO 70/16 :- 8 -: THE ORDER) NECESSARY TO ADJUDICATE ON THE MATTER. A. B. E. THE AMOUNT OF RS.20,74,60,400/- MENTIONED IN THE PRINCIPAL DEED WAS NEVER RECEIVED BY THE APPELLANT COMPANY. .. . THE LEARNED CIT(A) HAS ERRED IN MAKING THE ABOVE OB SERVATION WHEN THE PARTIES TO THE REGISTERED DOCUMENT DT.9.1.2011 HAVE REDUCED TO WRITING UNDER THEIR SIGNATURE THAT THE CONSIDERATIO N OF RS.20,74,60,400/- HAD PASSED TO THE SELLER FROM THE PURCHASER. THE CH ANGE OF THIS POSITION BY THE PARTIES TO THE SALE DEED IN THE 'RE CTIFICATION DEED' DT.17.12.2014 WITHOUT ANY EVIDENCE WHATSOEVER, TO S UBSTANTIATE THEIR CLAIM, CANNOT BE ACCEPTED. THE 'RECTIFICATION DEED' OF THE ASSESSEE CLAIMS THA T THE TRANSFER OF THE PROPERTY TOOK PLACE AT BOOK VALUE O N 31/03/2011 (ASST YEAR 2011-12) AND NOT ON 09/11/2011 (ASST YEAR 2012-13) AS PER THE SALE DEED. THE ASSESSING OFFICER DID NOT ACCEPT THIS ARGUMENT OF T HE ASSESSEE WHILE PASSING THE ASSESSMENT ORDER AND THE ASSESSMENT WAS COMPLETED FOR THE ASST YEAR 2012-13, CONSIDERING THE DATE OF TRANSFER AS 09/11/2011. THE LEARNED CIT(A) HAS CONFIRMED THIS STAND OF THE ASSESSING OFFICER THAT THE TRANSFER RELATES TO THE ASST YEAR 2012-13 AND HAS CONFIRMED THE ASSESSMENT MADE, EXCEPT FOR THE GUIDELINE VALUE ADOPTED. THE LD. CI T(A) HAS CONFIRMED THE TRANSFER OF THE PROPERTY AS PER T HE SALE DEED DT 9/11/2011 REJECTING THE ASSESSEES CLA IM OF SLUMP SALE ON 31/3/2011. HAVING CONFIRMED THAT THE DATE OF SALE OF THE PROPERTY AS 9.11.2011 AS PER TH E SALE DEED DT 9.11.2011, THE LD. CIT(A) HAS ERRED I CONCLUDING THAT THE SUM OF RS.20,74,60,400/- WAS NEVER RECEIVED BY THE ASSESSEE COMPANY, WHICH IS AGAINST THE CONTENTS OF THE SALE DEED ITSELF. ITA NO. 817/16 CO 70/16 :- 9 -: ' THE 'RECTIFICATION DEED' DT.17/12/2014 SEEKS TO RECTIFY CERTAIN MISTAKES IN THE ORIGINAL SALE DEED DT 09/11/2011 AS MENTIONED IN PAGE 2 OF THE 'RECTIFICATION DEED' WHICH IS REPRODUCED AS FOLLOWS : 'AND WHEREAS IN THE PRINCIPAL DEED THERE ARE CERTAI N MISTAKES AND INACCURACIES HAVE ACCIDENTALLY AND INADVERTENTLY CREPT IN, NOT INTENDED BY THE VENDOR AND PURCHASER WHICH ARE AS FOLLOWS:' WHILE MISTAKES AND INACCURACIES IN RESPECT OF DATE OR ADDRESS IS UNDERSTANDABLE, MISTAKE IN THE CONSIDERA TION MENTIONED IN THE ORIGINAL SALE DEED, TO SUCH A HUGE EXTENT (RECTIFICATION DEED SEEKS TO RECTIFY THE CONSIDERAT ION FROM RS.20, 74,60,4001 - TO RS. 2,27,386/ -) CANNOT BE ACCEPTED. THE LEARNED CIT(A) HAS ERRED IN ACCEPTING THIS ARGU MENT OF THE ASSESSEE. THE LEARNED CIT(A) HAS ERRED IN HIS OBSERVATION IN PARA 9.9 OF THE ORDER, WHICH IS REPRODUCED AS UNDER: 'THE AD, IN HIS ORDER, WITHOUT REBUTTING THE OBJECTIONS OF THE APPELLANT COMPANY HAS INVOKED THE PROVISIONS OF SEC. 50C BASED ON THE GUIDELINE VALUE OF OMR. ' IT IS TO BE STATED THAT THE OBJECTIONS RAISED BY TH E APPELLANT AGAINST THE OBSERVATIONS OF THE DISTRICT VALUATION OFFICER CANNOT BE REBUTTED BY THE ASSESSING OFFICER BUT CAN ONLY BE REBUTTED BY THE DISTRICT VALUATION OFFI CER. THE VALUATION OFFICER HAS REBUTTED THE OBJECTIONS R AISED BY THE ASSESSEE, POINT-WISE, IN HIS FINAL REPORT. THE LEARNED CIT(A) HAS ERRED IN IGNORING THE AGREEMENT DT. 14/06/2011, BEING A VERY VITAL EVIDEN CE IN ARRIVING AT THE VALUE OF THE P ROPERTY. THE AGREEMENT DT.14/06/2011 IS THE RETIREMENT DEED BETWEEN THE ASSESSEE COMPANY AND SHRI.RANVIR R SHAH (LE BETWEEN THE PARTNERS OF M/S.R K TEXTILES (INDIA), A PARTNERSHIP FIRM IN WHICH THE ASSESSEE C OMPANY AND SHRI.RANVIR R SHAH WERE PARTNERS). SHRI.RANVIR R SHAH RETIRED FROM THE SAID PARTNERSHIP ON 31/0312011 AND AS PER THE ABOVE RETIREMENT DEED, THE EASTERN PORTION OF T HE PROPERTY HAVING DIRECT ENTRY FROM OMR (ADJOINING TH E IMPUGNED PROPERTY ON THE WESTERN SIDE) WAS TO BE TRANSFERRED IN FAVOUR OF SHI. RANVIR SHAH. THE LEARNED CIT(A) HAS IGNORED THE VITAL FACT THAT AS O N THE DATE OF SALE DEED ON 09/11/2011 OF THE IMPUGNED PROPERTY, ITA NO. 817/16 CO 70/16 :- 10 -: SHRI. RANVIR R SHAH, THE PURCHASER WAS ALREADY IN POSSESSION OF THE EASTERN PORTION OF THE PROPERTY H AVING DIRECT ACCESS FROM OMR (ADJOINING THE IMPUGNED PROP ERTY ON THE WESTERN SIDE). THIS IS EVIDENT FROM CLAUSE 7 AT PAGE 5 OF THE RETIREMENT DEED DT.14/0612011, WHICH IS REPRODUCED AS UNDER: 7. THE IMMOVABLE PROPERTY OF THE FIRM SITUATE AT THORAPAKKAM, CHENNAI (PART) AND AT PUDUPAKKAM VILLLLAGE, KANCHEEPURAM (PART), KANCHEEPURAM DISTRI CT, SHALL BE PARTIALLY TAKEN OVER AND OWNED EXCLUSIVELY/ ABSOLUTELY BY THE RETIRING PARTNER MR. RANVIR R SHA H, TO THE ENTIRE EXCLUSION OF THE OTHER RETIRING PARTNERS AND THE CONTINUING PARTNERS, DETAILS OF THE PROPERTY MORE SPECIFICALLY MENTIONED IN THE SCHEDULE 'C', ALONGWI TH THE AREA MAP;' FROM THE ABOVE, IT IS CLEAR THAT SHRI RANVIR R.SHAH WAS THE OWNER OF THE EASTERN PORTION OF THE PROPERTY HA VING DIRECT ACCESS FROM OMR AND WHICH IS ADJOINING THE IMPUGNED PROPERTY PURCHASED BY SHRI RANVIR R. SHAH BY WAY OF SALE DEED DT 9/11/2011. THIS HAS BEEN RIGHT LY OBSERVED AND MENTIONED IN THE VALUATION REPORT BY T HE DISTRICT VALUATION OFFICER. THE FAIR MARKET VALUE OF A PROPERTY WILL DEPEND O N THE FACTORS SUCH AS ITS EXTENT, SIZE, GRADIENT, SURROUN DING ROADS AND ROAD WIDTH ETC. IT IS NEEDLESS TO SAY TH AT THE VALUE OF A PROPERTY INCREASES WHEN THE SAME IS PURCHASED BY THE OWNER OF THE ADJOINING PROPERTY AS THIS WILL HAVE AN IMPACT ON ALL THE ABOVE FACTORS, PARTI CULARLY WHEN THE ADJOINING PROPERTY HAS ITS ENTRY FROM THE ROAD WITH A GREATER WIDTH SUCH AS OMR. THE VALUE ADOPTE D BY THE STAMP VALUATION AUTHORITY AND THE CONSIDERATION STATED TO BE TRANSFERRED IN THE REGISTERED SALE DEE D DT 9/11/2011 HAS A DIRECT LINK TO THIS FACT, WHICH HAS BEEN CLEARLY BROUGHT OUT BY THE DVO IN HIS VALUATION REP ORT. THIS VITA OBSERVATION OF THE DVO HAS BEEN IGNORED B Y THE LD. CIT(A) IN DECIDING THE CASE IN FAVOUR OF THE AS SESSEE . PARA 9.12 OF THE ORDER, IN HIS COMMENTS ON THE ASSE SSEE NOT DISPUTING THE VALUE ADOPTED BY THE STAMP VALUAT ION AUTHORITY, THE CIT(A) HAS STATED AS FOLLOWS: IN ANY CASE, IN SO FAR AS THE STAMP DUTY IS CONCERNED, THE IS PAID BY THE PURCHASER OF THE PROP ERTY, IN THIS CASE BEING SHRI.RANVIR R SHAH, AND NOT THE SELLER I.E. APPELLANT LLP. HENCE, IN MY CONSIDERED OPINION , THE ITA NO. 817/16 CO 70/16 :- 11 -: NON CHALLENGE OF THE GUIDELINE VALUATION OF OMR FOR THE PURPOSE OF STAMP DUTY WILL NOT VITIATE THE CASE FOR THE APPELLANT LLP. ' AS RIGHTLY OBSERVED BY THE CIT(A), THE GUIDELINE VA LUE ADOPTED BY THE STAMP VALUATION AUTHORITY WAS NOT CHALLENGED BY THE ASSESSEE AS THE STAMP DUTY PAYMENT WAS TO BE PAID B Y THE PURCHASER, SHRI. RANVIR R SHAH. BUT, THE RECEIPT OF CONSIDERATION OF RS.20,74,60,400/ - BY THE ASSESSEE AS PER THE REGISTERED SALE DEED DT. 09/11/2011 AND SIGNED BY THE PARTIES TO THE REGISTERED DEED HAS BEEN IGNORED BY THE CIT(A) WITHOUT ASSIGNI NG ANY REASON, IN DECIDING THE CASE IN FAVOUR OF THE ASSES EE. FURTHER, THE CIT(A), IN PARA 9.12 OF THE ORDER, HAS REFERRED TO THE DECISION OF THE HON' BLE SUPREME CO URT OF I NDIA, IN ITS JUDGEMENT DT.24/11/2003 IN THE CASE OF R.SAI BHARATHI VS J.JAYALALITHA & OTHERS. THE GIST OF THE DECISION RE PRODUCED BY THE CIT(A) IS AS UNDER: 'THE GUIDELINE VALUE HAS RELEVANT ONLY IN THE CONTEXT OF SECTION 47 A OF THE INDIAN STAMP ACT (AS AMENDED BY TN ACT 24 OF 1967) WHICH PROVIDES FOR DEALING WITH INSTRUMENTS OF CONVEYANCE WHICH ARE UNDERVALUED. THE GUIDELINE VALUE IS A RATE FIXE D FOR AUTHORITIES UNDER THE STAMP ACT FOR THE PURPOSE OF DETERMINING THE TRUE MARKET VALUE OF PROPERTY DISCLOSED IN AN INSTRUMENT REQUIRING PAYMENT OF STAMP DUTY. THUS, THE GUIDELINE VALUE FIXED IS NOT FINAL RATE ONLY A PRIMA FACIE RATE PREVAILING IN TH E AREA. ' (EMPTIASIS SUPPLIED) THE CIT(A) HAS FAILED TO APPRECIATE THAT THE ABOVE OBSERVATION OF THE HON'BLE SUPREME COURT OF INDIA IN THE SAID C ASE SQUARELY APPLIES TO THE CASE OF THE ASSESSEE AS EXPLAINED BE LOW: THE GUIDELINE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY IS REFLECTIVE OF THE TRUE MARKET VALUE OF THE PROPERTY, AS THE STAMP VALUATION AUTHORITY HAS NOT DEVIATED FROM THE GUIDELINE VALUE OF RS.2,9101- PER SQFT. AT WHICH THE IMPUGNED PROPERTY HAS BEEN VALUED FOR THE PURPOSE OF STAMP DUTY. THE GUIDELINE VALUE FIXED IS NOT THE FINAL RATE BUT ONLY A PRIMA FACIE RATE PREVAILING IN THE AREA. THE GUIDEL INE VALUE IS NOT REVISED EVERY YEAR. THE GUIDELINE VALUE OF RS.2 , 910/ - FIXED FOR THE IMPUGNED PROPERTY WAS FIXED ON 01/08/2007. THE VALUE REMAINS THE SAME AS ON THE DATE OF REGISTRATI ON ON 09/11/2011. IT IS IN THIS CONTEXT THAT THE HON'BLE SUPREME ITA NO. 817/16 CO 70/16 :- 12 -: COURT HAS OBSERVED THAT THE GUIDELINE VALUE FIXED R IS NOT THE FINAL RATE BUT ONLY A PRIMA FACIE RATE PREVAILING I N THE AREA, INDICATING THAT THE GUIDELINE VALUE AS ON THE DATE OF TRANSFER COULD BE MUCH MORE THAN THE ONE FIXED BY THE GOVERN MENT AUTHORITIES AT AN EARLIER DATE. THE DISTRICT VALUAT ION OFFICER, IN HIS VALUATION OF THE PROPERTY, HAS RIGHTLY APPLI ED THIS PRINCIPLE BY PROVIDING FOR INCREMENTAL VALUE OF THE GUIDELINE VALUE ON ACCOUNT OF APPRECIATION FROM THE LAST GUID ELINE VALUE FIXED ON 01/08/2007. THUS, THE DECISION OF THE CIT(A) IS AGAINST THE SPIRIT OF THE DECISION OF THE HON'BLE SUPREME COURT QUOTED BY THE CIT(A) IN H IS ORDER. 8. IN VIEW OF THE ABOVE, ACCORDING TO THE LD. DR, THE DECISION OF THE CIT(A) IS AGAINST THE SPIRIT OF THE DECISION OF THE SUPREME COURT IN THE CASE OF R. SAI BHARATHI VS J. JAYALALITHA & OTH ERS (SUPRA). 9. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT THE RE CTIFICATION DEED OF THE ASSESSEE-COMPANY WAS ONLY FOR RECTIFICA TION OF CERTAIN MISTAKES CREPT IN THE ORIGINAL REGISTERED DOCUMENTS . HE SUBMITTED THAT THE DVO HAS NOT PROPERLY CONSIDERED THE OBJECTION F ILED BY THE ASSESSEE AT VARIOUS STAGES AGAINST THE PROPOSAL OF VALUATION OF PROPERTY BY DVO. ACCORDING TO THE LD. AR, THE SUBJ ECT PROPERTY ACCESS ROAD IS ONLY GANGAI AMMAN KOIL STREET AND PILLAIYAR KOIL STREET AND NOT THE OMR. THE SALE DEED DATED 09.11.2011 REGISTERED AS DOC. NO. 7 497/2011 EXECUTED BY THE ASSESSEE IN FAVOUR OF MR. RANVIR R. SHAH ON THE NORTH AND WEST, THE ACCESS ROAD ARE MENTIONED AS GANGAI AMMAN KOIL STREET AND PILLAIYAR KOIL STREET RESPECTIVELY. ATTACHED PLAN TO THE DOC UMENT MAKES IT CLEAR THAT THERE IS NO ACCESS TO OMR FROM THIS PROPERTY. ACCO RDING TO THE LD. LD. A.R , ITA NO. 817/16 CO 70/16 :- 13 -: DEED OF RECTIFICATION DATED 17.12.2014 REGISTERED A S DOC. NO.9231/2014 ALSO MAKES IT CLEAR THAT THE SUBJECT PROPERTY IS NORTHER N PORTION OF DOOR NO.2/79 OLD MAHABALIPURAM ROAD, HAVING ACCESS ONLY FROM GANGAI AMMAN KOIL STREET AND PILLAIYAR KOIL STREET AND WITHOUT ANY ACCESS FROM O LD MAHABALIPURAM ROAD. THE DVO HAS NOT REPLIED NOR CONSIDERED THE OBJECTIN THA T THE SUBJECT PROPERTY HAS NO ACCESS TO OMR. THE DVO HAD MORE THAN ONCE STATE D THAT THE VALUATION OF THE SUBJECT PROPERTY IS ARRIVED ONLY ON THE BASIS O F PHYSICAL FEATURE AFTER PHYSICAL INSPECTION AND NOTHING HAS BEEN ADDED EXTR A IN THE CALCULATION OF THE FAIR MARKET VALUE, BUT ADOPTED THE BASE MARKET VALU E OF HE PROPERTY AT RS.2,910/- PER SQ FT APPLICABLE FOR OMR AS PER THE LETTER FROM THE SRO, NEELANGARAI, TO THE DISTRICT VALUATION OFFICER VIDE NO.180/2015 DT 19.3.2015, WITHOUT CONSIDERING THE VALUE OF RS.636/- PER SQ FT FOR GANGAI AMMAN KOL STREET AND RS.800/- PER SQ FT FOR PILLAIYAR KOIL ST REET, WHICH ARE THE ACCESS ROADS FOR THE SUBJECT PROPERTY. AS REGARDS THE ADJACENT PROPERTY OWNED BY MR. RANVIR R. SHAH, THE LD. LD. A.R SUBMITTED THAT THE MAIN F ACTOR INFLUENCED AND BIASED THE MIND OF THE DVO IN ARRIVING AT THE FAIR MARKET VALUE OF THE SUBJECT PROPERTY IS THAT THE ADJACENT PROPERTY COMPRISED ON SURVEY N O.81 [PART] AND 114 [PART] AT OKKIYAM THORAIPAKKAM VILLAGE HAVING MUNICIPAL DO OR NO.2/79, OLD MAHABALIPURAM ROAD, THORAIPAKKAM, CHENNAI 600 097 O N THE EASTERN SIDE OF THE SUBJECT PROPERTY WAS OWNED BY MR. RANVIR R. SHA H. THE DEFINITION OF FAIR MARKET VALUE AS PER SECTION 2(22B) OF THE ACT WHIC H READS AS UNDER: FAIR MARKET VALUE IN RELATION TO A CAPITAL ASSE T MEANS- ITA NO. 817/16 CO 70/16 :- 14 -: (I) THE PRICE THAT THE CAPITAL ASSET WOULD ORDINARILY F ETCH ON SALE IN THE OPEN MARKET ON THE RELEVANT DATE; AND (II) WHERE THE PRICE REFERRED TO IN SUB-CLAUSE(I) IS NOT ASCERTAINABLE, SUCH PRICE AS MAY BE DETERMINED IN ACCORDANCE WITH THE RULES MADE UNDER THIS ACT. 10. AS PER THE LD. LD. A.R , THE DVO IS CALLED UPON IN REFERENCE TO ARRIVE AT FAIR MARKET VALUE OF THE SUBJECT PROPERTY. THE PRICE THAT THE PROPERTY WOULD ORDINARILY FETCH IN THE OPEN MARKET IS THE FAIR MAR KET VALUE. OPEN MARKET WOULD MEAN THAT ANY PERSON WITHOUT ANY RESTRICTION TO ANY ADJACENT OWNERS OF THE PROPERTY. 11. AS REGARDS NON-CHALLENGE OF STAMP DUTY LEVIED, THE LD. LD. A.R SUBMITTED THAT THE DVO OBSERVED THAT THE ASSESSEE H AD NOT CHALLENGED STAMP DUTY LEVIED FOR SUBJECT PROPERTY BY SUB REGISTRAR. WHILE ARRIVING AT THE FAIR MARKET VALUE, THE DVO IS REQUIRED TO CONSIDER WHAT PRICE THE PROPERTY WOULD FETCH IF IT IS SOLD IN THE OPEN MARKET. AS PER CLA USE (B) TO SUBSECTION (2) OF SECTION 50C, THE VALUE ADOPTED BY THE STAMP VALUATI ON AUTHORITY SHOULD NOT HAVE BEEN DISPUTED IN ANY APPEAL OR REVISION OR REF ERENCE BEFORE ANY AUTHORITY, COURT OR HIGH COURT. THE LD. LD. A.R FURTHER SUBM ITTED THAT THE REFERENCE U/S 50C(2) WAS NOT MADE TO DVO TO ARRIVE AT A FAIR MARK ET VALUE ON THE BASIS OF THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, BUT TO ARRIVE AT A FAIR MARKET VALUE WITHOUT GETTING INFLUENCED BY THE VALU E ADOPTED BY THE STAMP VALUATION AUTHORITY. 12. AS REGARDS THE OBJECTIONS TO THE VALUATION REPORT A ND ORDER U/S 16A(5) OF THE WEALTH TAX ACT, 1957 R.W.S 55A 50C(2) OF THE ACT DT 27.5.2015, ITA NO. 817/16 CO 70/16 :- 15 -: THE LD. LD. A.R SUBMITTED THAT THE ASSESSEE REITER ATED THE OBJECTION DT 27.3.2015 FILED BEFORE THE DVO. THE DVO HAS NOT CO NSIDERED THE OBJECTION IN THE PROPER PERSPECTIVE AND GIVEN EVASIVE REPLY TO U PHOLD HIS DRAFT VALUATION REPORT. HE FURTHER SUBMITTED THAT WHILE REPLYING TO OBJECTION NO.1, THE DVO MADE A REFERENCE TO LAST PARA UNDER ABOUT THE PROP ERTY IN THE VALUATIO REPORT FOR ACCESS T THE PROPERTY. THE ASSESSEES SUBMISSI ON WAS THAT THE SUBJECT PROPERTY HAS NO ACCESS TO OMR. IN THE LAST PARA CI TED BY DVO, WHICH WAS ASLSO OBJECTED TO BY THE ASSESSEE IN OBJECTION NO.7, HAS AFTER REFERRING TO PILLAIYAR KOIL STREET O THE WEST AND GANGAI AMMAN KOIL STREET ON THE NORTH, STATED THATS THE SUBJECT SITE HAS GOT ADDITIONAL ADVANTAG E OF MULTIPLE ACCESS FROM TWO OR MORE STREETS IN ADDITION TO THE DIRECT ENTRY/ACC ESS THROUGH OMR. THIS OBSERVATION WAS MADE BY DVO BY REFERRING TO THE FOL LOWING FACTORS: (I) IN BETWEEN OMR AND EASTERN SIDE OF THE SUBJECT PROP ERTY, ANOTHER PROPERTY COMPRISED IN SURVEY NO.81[PART] AN D 114[PART] WAS OWNED BY MR. RANVIR R. SHAH. (II) MR RANVIR R. SHAH IS ONE OF THE PARTNER [SIC] OF THE ASSE AND R.K. TEXTILES (INDIA) (III) ASSESSEE IS ALSO ONE OF THE PARTNER OF R.K. TEXTILE S (INDIA) (IV) ANNEXURE A TO VALUATION REPORT REFLECTS DIRECT ACCE SS TO THE SUBJECT PROPERTY FROM OMR THROUGH THE ADJACENT PROP ERTY OWNED BY MR. RANVIR R. SHAH. ITA NO. 817/16 CO 70/16 :- 16 -: (V) AS PER RETIREMENT DEED DT 14.6.2011, MR. RANVIR R. SHAH WAS THE OWNER OF PROPERTY ON EASTERN SIDE OF THE SUBJECT PR OPERTY. AS PER THE LD. LD. A.R , THE DEFINITION OF FAIR MAR KET VALUE THE VALUATION OFFICER HAS TO ESTIMATE THE VALUE THAT IT WOULD FETCH IN TH E OPEN MARKET, NOT IF IT IS SOLD TO MR. RANVIR R. SHAH. HE FURTHER SUBMITTED THAT T HE ACTIN OF THE DVO IN TAKING THE ABOVE EXTRANEOUS FACTORS CANNO REFLECT THE FAIR MARKET VALUE. THE PROPERTY WAS SOLD BY THE ASSESSEE. CAPITAL GAINS HAS TO BE COMPUTED IN THE HANDS OF THE ASSE ON THE FAIR MARKET VALUE AS ARRIVE AT UNDER TH E PROVISIONS OF SECTION.50C(2) R.W.S 55A. THE ASSESSEE HAD NO CONTROL OVER WHAT THE PURCHASER WILL DO IN RESPECT OF THE PROPERTY SOLD BY THE ASSESSEE . THE REFORE, THE DVO IS NOT CORRECT IN CONSIDERING THE EXTRANEOUS FACTORS VIZ. T HE PURCHASER FROM THE ASSESSEE WAS OWNING ANOTHER PROPERTY ABUTTING OMR W ILL NOT IN ANY WAY REFLECT OR INFLUENCE THE FAIR MARKET VALUE OF THE SUBJECT P ROPERTY. 13. THE LD. A.R FURTHER SUBMITTED THAT THE DVO IS NOT CORRECT IN ADOPTING THE BASE MARKET VALUE OF THE PROPERTY UNDE R THE HEADING CALCULATION AT RS.2910/- PER SQ FT APPLICABLE FOR OMR AS PER TH E LETTER FROM THE SRO, NEELANGARAI, TO THE DVO VIDE NO.180/2015 DT 19.3.20 15 WITHOUT CONSIDERING THE VALUE OF RS.636/- PER SQ FT FOR GANGAI AMMAN KO IL STREET AND RS.800/- PER SQ FT FOR PILLAIYAR KOIL STREET, WHICH ARE THE ACCE SS ROADS FOR THE SUBJECT PROPERTY. THE LD. A.R FURTHER SUBMITTED THAT THE DVO OUGHT TO HAVE ADOPTED THE AVERAGE VALUE FOR PILLAIYAR KOIL STREET AND GAN GAI AMMAN KOIL STREET AS BASE VALUE OF HE SUBJECT PROPERTY WHILE CALCULATIO N OF THE FAIR MARKET VALUE. ITA NO. 817/16 CO 70/16 :- 17 -: 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. IN THIS CASE, THE SALE DEED WA S EXECUTED ON 9.11.2011 IN RESPECT OF PROPERTY CONSISTING OF LAND AND BUILDING AT NO.2/79, OKKIYAM, FOR A CONSIDERATION OF RS.20,74, 60,400/-. HOWEVER, THE ASSESSEE OFFERED NO CAPITAL GAINS IN THE RETURN OF INCOME. IT HAD CLAIMED THAT IT WAS SLUMP SALE FOR A CONSIDERATION OF RS.3,15,00,000/- AND COMPUTED THE CAPITAL GAINS ON SLUMP SALE FOR ASSESSMENT YEAR 2011-12 AS FOLLOWS: SALE CONSIDERATION RS.3,15,00,000 NET WORTH RS.3,14,98,548 CAPITAL GAIN ON SLUMP SALE RS. 1,451 15. SINCE THERE IS NO TRANSFER OF BUSINESS OR UNDERTAKI NG AS A WHOLE AND ALSO THE ASSESSEE-COMPANY HAS ADMITTED DU RING THE COURSE OF SURVEY THAT THERE WAS NO BUSINESS OR MANUFACTURI NG ACTIVITY SINCE ASSESSMENT YEAR 2002-03. FURTHER THE ASSESSEE HAS ALREADY SOLD THE PLANT AND MACHINERY OF THE BUSINESS OF THE ASSESSE E UNDERTAKING SEPARATELY DURING THE FINANCIAL YEAR 2005-06. IT I S ALSO BROUGHT ON RECORD THAT THE ASSESSEE HAS ASSIGNED SEPARATE SPE CIFIC VALUE TO THE AEETS EVEN IN THE RECTIFICATION DEED DATED 17.12.20 14, A VALUE OF RS.57,533/- HAS BEEN ASSIGNED TO THE LAND AND VALUE OF RS.1,69,853/- ASSIGNED TO THE FACTORY BUILDING. THE DIRECTORS OF THE ASSESSEE- COMPANY, DURING THE COURSE OF SURVEY ADMITTED THAT IT IS NOT A CASE OF ITA NO. 817/16 CO 70/16 :- 18 -: SLUMP SALE. IN VIEW OF THIS, THE CIT(A) OBSERVED T HAT THE TRANSACTION IS NOT A SLUMP SALE AND LIABLE FOR CAPITAL GAIN TAX. HOWEVER, HE HAS GIVEN EFFECT TO RECTIFICATION DEED DATED 17.12.2014 WHERE IN TOTAL SALE CONSIDERATION WAS REDUCED TO ` 2,27,386/- FROM ` 20,74,60,400/-. 16. NOW COMING TO THE VALUE OF THE PROPERTY, THE ASSES SEES MAIN PLEA IS THAT RECTIFICATION DEED EXECUTED ON 17 .12.2014 TO BE CONSIDERED IN THE PLACE OF SALE DEED DULY REGISTERE D ON 9.11.2011 SHOWING SALE CONSIDERATION OF RS.20,74,60,400/-. F URTHER, THE ARGUMENT OF THE LD. AR IS THAT THE DVOS REPORT VAL UING THE PROPERTY AT RS.20,48,38,430/- CANNOT BE CONSIDERED FOR DETERMIN ING THE SALE CONSIDERATION IN TERMS OF SEC. 50C OF THE ACT. 17. FIRST OF ALL, WE REFER TO SECTION 50C WHICH IS AS U NDER: 50C(1) SPECIAL PROVISION FOR FULL VALUE OF CONSIDE RATION IN CERTAIN CASES. (1) WHERE THE CONSIDERATION RECEIV ED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS L ESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STA TE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAY MENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O ADOPTED OR ASSESSED SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RE CEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE: (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUBSECTION (1) ITA NO. 817/16 CO 70/16 :- 19 -: EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS HOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT. THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REF ERENCE IS MADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), ( 4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION ( 1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTIO N (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECT ION 16A OF THAT ACT. EXPLANATION.-FOR THE PURPOSES OF THIS SECTION, 'VAL UATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSEE BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE T AKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER.] 17 .1 THIS SECTION WAS INTRODUCED BY THE FINANCE ACT, 2002 WITH EFFECT FROM 1.4.2003. THE INTENTION OF THE LEGISLAT URE FOR INTRODUCING THIS SECTION CAN BE GAUGED FROM THE EXPLANATORY NOT ES TO THE AMENDMENT. FOR THIS PURPOSE, WE REFER TO THE SAME A S UNDER: ITA NO. 817/16 CO 70/16 :- 20 -: INTRODUCTION.- BY THE FINANCE ACT, 2002 (20 OF 200 2), NEW SECTION 50C HAS BEEN INSERTED (WITH EFFECT FROM 1.4 .2003). THE SCOPE AND EFFECT OF SUCH INSERTION HAVE BEEN ELABORATED IN THE FOLLOWING PORTION OF THE DEPARTME NTAL CIRCULAR NO. 8 OF 2002, DATED 27TH AUGUST, 2002, AS UNDER: 37. COMPUTATION OF CAPITAL GAINS IN REAL ESTATE TRANSACTIONS. 37.1 THE FINANCE ACT, 2002, HAS INSE RTED A NEW SECTION 50C IN THE INCOME-TAX ACT TO MAKE A SPE CIAL PROVISION FOR DETERMINING THE FULL VALUE OF CONSIDE RATION IN CASES OF TRANSFER OF IMMOVABLE PROPERTY. 37.2 IT PROVIDES THAT WHERE THE CONSIDERATION DECLA RED TO BE RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION, A ND CAPITAL GAINS SHALL BE COMPUTED ACCORDINGLY UNDER S ECTION 48 OF THE INCOME-TAX ACT. 37.3 IT IS FURTHER PROVIDED THAT WHERE THE ASSESSE E CLAIMS THAT THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES EXCEEDS THE FAIR MARKET VALUE OF THE PROPE RTY AS ON THE DATE OF TRANSFER, AND HE HAS NOT DISPUTED TH E VALUE SO ADOPTED OR ASSESSED IN ANY APPEAL OR REVISION OR REFERENCE BEFORE ANY AUTHORITY OR COURT, THE ASSESS ING OFFICER MAY REFER THE VALUATION OF THE RELEVANT ASS ET TO A VALUATION OFFICER IN ACCORDANCE WITH SECTION 55A OF THE INCOME-TAX ACT. IF THE FAIR MARKET VALUE DETERMINED BY THE VALUATION OFFICER IS LESS THAN THE VALUE ADOPTED FO R STAMP DUTY PURPOSES, THE ASSESSING OFFICER MAY TAKE SUCH FAIR MARKET VALUE TO BE THE FULL VALUE OF CONSIDERATION. HOWEVER, IF THE FAIR MARKET VALUE DETERMINED BY THE VALUATION OFFICER IS MORE THAN THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES, THE ASSESSING OFF ICER SHALL NOT ADOPT SUCH FAIR MARKET VALUE AND SHALL TA KE THE ITA NO. 817/16 CO 70/16 :- 21 -: FULL VALUE OF CONSIDERATION TO BE THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES. 37.4 THIS AMENDMENT WILL TAKE EFFECT FROM 1ST APRIL , 2003 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASS ESSMENT YEAR 2003-04 AND SUBSEQUENT YEARS. 17.2 IT CLEARLY SHOWS THAT THE INTENTION OF THE LE GISLATURE WAS TO SUBSTITUTE THE SALE CONSIDERATION BY THE STAMP DUTY VALUATION IN A SITUATION WHERE THE CONSIDERATION RECEIVED OR ACCRU ING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET BEIN G LAND OR BUILDING OR BOTH) IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY AN AUTHORITY OF STATE GOVERNMENT FOR THE PURPOSES OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. SUB-SECTION (2) THEREOF IS APPLIED IN A S ITUATION WHERE ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT T HE VALUE ADOPTED BY STATE VALUATION AUTHORITY HAS NOT BEEN DISPUTED IN APPEAL, REVISION OR REFERENCE BEFORE ANY AUTHORITY ,COURT OR HIGH CO URT. UNDER THAT SITUATION, THE ASSESSING OFFICER MAY REFER VALUATIO N OF THE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE SUCH REFERENCE IS MADE THEN THE PROVISIONS OF SUB-SECTIONS (2)(2A), (3), (4),(5) AN D(6) OF 16A OF W.T. ACT AND OTHER PROVISIONS OF SECTION 23A, 24, 34AA, 35 AND 37 OF W.T. ACT WITH NECESSARY MODIFICATION WILL APPLY IN RELAT ION TO A REFERENCE SO MADE BY THE ASSESSING OFFICER UNDER SECTION 50C OF THE I.T. ACT. THUS, THE PROVISIONS OF SECTION 50C(2) ARE ON THE LINES O F SECTION 55A WITH CERTAIN MODIFICATIONS. ITA NO. 817/16 CO 70/16 :- 22 -: 17.3 SUB-SECTION (3) OF SECTION 50C IS APPLICABLE WHERE THE VALUE ASCERTAINED BY THE DVO EXCEEDS THE VALUE ADOPTED OR ASSESSED BY STAMP VALUATION AUTHORITY AS REFERRED TO IN SECTION 50C(I). IN THAT SITUATION, THE VALUE SO ADOPTED OR ASSESSED BY SUCH STAMP VALUATION AUTHORITY SHALL BE TAKEN TO BE THE FULL VALUE OF CO NSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. FROM THIS IT FOLLOWS THAT WHERE THE ASSESSEE DOES NOT OBJECT TO THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY, THEN THAT VALUATION WOULD BE A DOPTED AND WHERE HE OBJECTS AND ACCORDINGLY ASSESSING OFFICER MAKES A REFERENCE TO THE DVO AND IF VALUATION AS PER DVO IS HIGHER THAN THE VALUE AS PER STAMP VALUATION AUTHORITY, THEN AS PER SUB-SECTION (3), T HE VALUATION AS DONE BY STAMP VALUATION AUTHORITY WILL BE ADOPTED AS A S ALE CONSIDERATION. 18. IN THE PRESENT CASE, THE ASSESSEE SHOWS THE SALE CONSIDERATION THROUGH VALID SALE DEED EXECUTED ON 9 .11.2011 AT RS.20,74,60,400/-. HOWEVER, AFTER A LONG PERIOD OF AROUND THREE YEARS, N 17.12.2014, THE ASSESSEE SAID TO BE RECTI FIED THE SALE DEED THROUGH REGISTERED RECTIFICATION DEED AND LOWERED T HE SALE CONSIDERATION TO RS.2,27,386/-. THE VALUATION BY D VO WAS UNDER SEC. 50C WAS AT RS.20,48,38,430/-. THE ASSESSING OFFICE R CONSIDERED THE ORIGINAL SALE DEED VALUE REFLECTED IN THE ORIGINAL SALE DEED DATED 9.11.2011 AT RS.20,74,60,400/- WHICH IS HIGHER THAN THE VALUE ITA NO. 817/16 CO 70/16 :- 23 -: DETERMINED BY THE DVO AT RS.20,48,38,430/- AND ACCO RDINGLY, CALCULATED THE CAPITAL GAINS. IN OUR OPINION, DVOS VALUATION TO BE CONSIDERED FOR CALCULATING THE CAPITAL GAINS. 19. WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE A SSESSING OFFICER. THE LD. AR HAS PLACED STRONG RELIANCE ON THE RECTIFICATION DATED 17.12.2014. THE ARGUMENT OF THE LD. AR IS THA T THE DVO HAS NOT CONSIDERED ALL THE FACTS PROPERLY AND HAS VALUED TH E PROPERLY IN AN ARBITRARY MANNER. THE DVO IN THIS CASE ACTUALLY CO NSIDERED THE ENTIRE FACTS AND CIRCUMSTANCES AND DETERMINED THE VALUE OF THE PROPERTY WHICH IS LOWER THAN THE VALUE ADOPTED BY THE SUB-RE GISTRAR FR THE PURPOSE OF REGISTRATION. THE MATERIAL BROUGHT ON R ECORD BY THE ASSESSEE DOES NOT SHOW THAT THE VALUATION MADE BY T HE DVO IN ANY WAY ADVERSELY AFFECT THE FACT THAT HE HAS NOT TAKEN THE FACTS WHILE VALUING THE PROPERTY U/S 50C OF THE ACT. THE OTHE R CONTENTION OF THE LD. AR IS THAT THE DVO HAS NOT GIVEN ANY CREDENCE T O THE RECTIFICATION DEED DATED 17.12.2014 THOUGH IT WAS AVAILABLE AT TH AT TIME. IN OUR CONSIDERED VIEW, THIS OBJECTION HAS NO MERIT BECAUS E WHAT HAS TO BE COMPARED AS PER SEC. 50C(3) IS THE DVOS REPORT AND STAMP DUTY VALUATION AND NTHING ELSE. FOR THE PURPOSE OF INVO KING THE PROVISIONS OF SEC. 50C(1) OF THE ACT WHAT IS TO BE CONSIDERED IS THE CONSIDERATION SHOWN BY THE ASSESSEE AND THE VALUATION SHOWN BY S TAMP VALUATION AUTHORITIES. THE RECTIFICATION DEED WHICH WAS EXEC UTED AFTER A LONG ITA NO. 817/16 CO 70/16 :- 24 -: PERIOD HAS NO EVIDENTIARY VALUE ON THE SIMPLE REASO N THAT WHEN LANGUAGE USED IN A DOCUMENT I.E SALE DEED, IS PLAIN IN ITSELF, AND WHEN IT APPLIES ACCURATELY TO THE EXISTING FACTS, EVIDEN CE MAY NOT BE GIVEN TO SHOW THAT IT WAS NOT MEANT TO APPLY TO SUCH FACTS. SECTION 94 OF THE INDIAN EVIDENCE ACT, 1872 ALSO STIPULATED THE SAME . FURTHER, IT IS TO BE NOTED THAT SALE DEED IS AN IMPORTANT LEGAL DOCUM ENT FOR TRANSFER OF OWNERSHIP OF THE PROPERTY FROM THE SELLER TO THE B UYER WHICH WAS PREPARED WITH UTMOST CARE. ERRORS MAY OCCUR IN A SALE DEED AT TIMES. SOME OF THE COMMON ERRORS IN A SALE DEED WHICH COULD BE RECTIFIED SUBSEQUENTLY ARE AS FOLLOWS: (I) INCORRECT DESCRIPTION OF THE PROPERTY SUCH AS ITS A REA AND DIMENSION (II) INCORRECT DESCRIPTION OF PARTIES SUCH AS THEIR NAME S AND ADDRESSES (III) INCORRECT LOCATION, ADDRESS AND SURVEY NUMBER OF THE PROPERTY (IV) INCORRECT DESCRIPTION OF REVENUE RECORDS (V) INCORRECT INFORMATION ABOUT PRIOR TITLE DEEDS (VI) INCORRECT DETAILS ABOUT OWNERSHIP OR POWER OF ATTORNEY (VII) TYPOGRAPHICAL ERRORS 20. THE SALE DEED IS EXECUTED ON A STAMP PAPER AND SIGN ED BY BOTH THE PARTIES TO THE SALE DEED, WITNESSED BY APP ROPRIATE WITNESSES. BEING SO, ANY APPARENT ERROR NOTICED AFTER THE EXEC UTION OF THE SALE DEED COULD BE RECTIFIED BY RECTIFICATION DEED. IN THE PRESENT CASE, THE ASSESSEE WANTS TO RECTIFY THE TOTAL CONSIDERATION P AID AND RECEIVED BY OTHER PARTIES WHICH IS CLEARLY MENTIONED IN THE SAL E DEED BY ITA NO. 817/16 CO 70/16 :- 25 -: SUBSTITUTING THE SALE CONSIDERATION AT RS.2,27,386/ - IN PLACE OF ORIGINAL SALE CONSIDERATION OF RS.20,74,64,400/-. THIS IS N OT A FACTUAL ERROR PERTAINING TO THIS TRANSACTION AND THE REASON SUBMI TTED BY THE LD.AR FOR RECTIFICATION IS SHOCKING TO THE CONSCIOUS OF T HE BENCH. IN OUR OPINION, SUCH RECTIFICATION CANNOT BE GIVEN ANY CRE DENCE AND IT CANNOT BE SAID THAT IT IS BONA FIDE. THE ASSESSEES CONT ENTION IS THAT THE PURCHASER ALSO AGREED THAT THE CONSIDERATION PASSED WAS ONLY RS.2,27,386/- AND ACTUALLY THE CONSIDERATION OF RS. 20.74,64,400/- IS NOT AT ALL PASSED TO THE OTHER PARTY. WE CANNOT AP PRECIATE THIS ARGUMENT OF THE ASSESSEES LD. AR. WE DO NOT SAY T HAT THERE CANNOT BE CHANCES OF OCCURRING SOME MISTAKES. IT MAY HAPP EN IN THE PROCESS OF EXECUTION OF DOCUMENTS AND THAT MISTAKE CANNOT B E TO SUCH EXENT OF CHANGING THE CONSIDERATION IN SUCH A MANNER. TH ERE CAN BE TYPING ERRORS IN MENTIONING THE SALE VALUE AT FIGURES AS C OMPARED TO IN WORDS AND THIS TYPE OF ERRORS CAN BE SAID THAT TYPOGRAPH ICAL ERRORS HAPPENED IN THE NORMAL COURSE. THE ASSESSEE WITH THE MALAFI DE INTENTION, AFTER A PERIOD OF THREE YEARS, CHANGED THE CONSIDERATION WHICH CANNOT BE APPRECIATED BY THIS TRIBUNAL. ACCORDINGLY, WE ARE OF THE OPINION THAT THE CONSIDERATION SHOWN IN THE ORIGINAL SALE DEED D ATED 9.11.2011 I.E RS.20,74,64,400/- HAS TO BE CONSIDERED FOR DETERMIN ATION OF THE CAPITAL GAIN ARISING OUT OF THE TRANSFER OF THE CAPITAL ASS ET IN THIS CASE. WE ITA NO. 817/16 CO 70/16 :- 26 -: THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE. 21. MORE SO, THE JUDGMENT RELIED UPON BY THE CIT(A) IN THE CASE OF R. SAI BHARATHI VS J. JAYALALITHA (SUPRA) HAS NO APPLICATION WHICH WAS DELIVERED IN THE CONTEXT OF PROVISIONS OF SEC. 50C(1) WHICH WAS INTRODUCED WITH EFFECT FROM 1.4.2003 IS APPLICABLE FROM ASSESSMENT YEAR 2004-05. 22. IN THE RESULT, THE REVENUES APPEAL IS PARTLY ALLOW ED. 23. COMING TO THE CROSS OBJECTION FILED BY THE ASSESSE E, GROUND NO.1 WITH REGARD TO SLUMP SALE IS ALREADY ADJUDICAT ED IN EARLIER PART OF THIS ORDER WHILE DISPOSING OF THE REVENUES APPEAL. AS SUCH, THIS GROUND REQUIRES NO SPECIFIC ADJUDICATION. 24. GROUND NO.2 IS WITH REGARD TO VALUATION OF PROPERTY . SINCE WE HAVE REVERSED THE ORDER OF THE CIT(A) IN TOTALIT Y AND DIRECTED TO CONSIDER THE VALUE MENTIONED IN THE ORIGINAL SALE D EED DATED 9.11.201, THIS GROUND ALSO REQUIRES NO SPECIFIC ADJUDICATION. 25. AS REGARDS GROUND NO.3 WITH REGARD TO ENHANCEME NT OF ASSESSMENT OF CAPITAL GAINS ON BUILDING AND GROUND NO.4 WITH REGARD TO ENHANCEMENT OF RENTAL INCOME, THE FACTS ARE THA T DURING THE COURSE OF HEARING BEFORE THE CIT(A), THE ASSESSING OFFICER VIDE COMMUNICATION DATED 23.9.2015 SUBMITTED THE FOLLOWI NG ISSUES FOR ENHANCEMENT OF ASSESSMENT: ITA NO. 817/16 CO 70/16 :- 27 -: (A) AS PER ANNEXURES 1A TO THE SALE DEED, MARKET VALUE OF BUILDING ON THE DATE OF SALE IS RS.48,49,185/- WDV OF SUCH BUILDING AS ON 1.4.2011 AS PER THE DEPRECIATIO N TABLE IS RS.1,69,853/-. HENCE, THE DIFFERENCE F RS.46,79,332/- NEEDS TO BE ASSESSED AS SHORT TERM CAPITAL GAINS UNDER SECTION 50B OF THE ACT AD TAXED AT THE RATE OF 30% AS AGAINST 20% LEVIED. (B) AS PER THE STATEMENT RECORDED FROM THE MANAGING DIRECTOR OF HE ASSESSEE ON 25.2.2015 THE LAND WITH BUILDING AT LKKIAM, THORAIPAKKAN WAS LET OUT TO M/S FABRICS INDIA, AND A RENTAL OF RS.2,50,000/- PER AN NUM WAS BEING RECEIVED, AND THE SAME NEEDED TO BE TAXED IN THE PRESENT ASSESSMENT YEAR 2012-13. 26. ON THIS, AS REGARDS THE FIRST ISSUE, THE CIT(A) OBS ERVED THAT THE BUILDING SOLD BY THE ASSESSEE WAS A DEPRECIA BLE ASSET. IN CASE OF DEPRECIABLE ASSET, THE WDV HAS TO BE TAKEN AS TH E COST OF ACQUISITION. THE DIFFERENCE BETWEEN THE MARKET VAL UE OF THE DEPRECIABLE ASSET AND THE WDV AS ON THE DATE OF TRA NSFER IS TREATED AS SHORT TERM CAPITAL GAIN AND TAXED AS SUCH. THE CIT (A) FURTHER OBSERVED THAT IT IS IMMATERIAL THAT THE BUILDING (D EPRECIABLE ASSET) WAS SOLD ALONGWITH ANOTHER CAPITAL ASSET. THE TREATMEN T OF THE GAINS FROM THE TRANSFER OF DEPRECIABLE CAPITAL ASSET WOULD NOT CHANGE BECAUSE OF THE SALES TOGETHER. THE CIT(A) DIRECTED THE ASSESS ING OFFICER COMPUTE THE CAPITAL GAINS ARISING FROM THE SALE OF BUILDING I.E RS.46,79,332/- AS SHORT TERM CAPITAL GAINS AND CHARGE THE SAME TO TAX AT THE RATE OF 30%. THE ASST WAS THEREFORE, ENHANCED ON THIS ISSU E. 27. AS REGARDS THE RENTAL INCOME, THE CIT(A) OBSERVED T HAT IT IS UNDISPUTED THAT THE MANAGING DIRECTOR OF THE ASSES SEE HAD DEPOSED ITA NO. 817/16 CO 70/16 :- 28 -: ON OATH THAT THE IMPUGNED LAND AND BUILDING WAS LET OUT TO M/S FABRIC INDIA. THE ONUS WAS ON THE ASSESSEE TO SUBSTANTI ATE WITH DOCUMENTARY EVIDENCE, ITS CONTENTION THAT THERE WAS NO RENTAL INCOME DURING THE YEAR. DESPITE GIVEN THE OPPORTUNITY TO DO SO, NO EVIDENCE HAS BEEN PRODUCED. THEREFORE, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO BRING THE RENTAL INCOME OF RS.2,50,000/- TO TAX AFTER GIVING ONE FINAL OPPORTUNITY TO THE ASSESSEE TO PRODUCE E VIDENCE TO THE SATISFACTION OF THE ASSESSING OFFICER THAT THERE WA S NO RENTAL INCOME DURING THE YEAR. HOWEVER, FOR TECHNICAL PURPOSES, T HE ASSESSMENT WAS ENHANCED BY BRINGING TO TAX THE INCOME ON ACCOUNT O F RENT RECEIVED BY THE ASSESSEE FROM M/S FABRICS INDIA. 28. AT THE TIME OF HEARING, THE LD. AR DID NOT ADVANCE ANY ARGUMENT ON THE ABOVE TWO ISSUES AND RELIED ON THE GROUNDS OF THE CROSS OBJECTION. WE, THEREFORE, DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE CIT(A) ON THE ABOVE ISSUES AND DISMISS THE GROU NDS RAISED BY THE ASSESSEE. 29. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ITA NO. 817/16 CO 70/16 :- 29 -: 30. TO SUMMARIZE, THE APPEAL OF THE REVENUE IS PARTLY A LLOWED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH AUGUST, 2016, AT CHENNAI. SD/- SD/- ( . ! ) (G. PAVAN KUMAR) ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER / CHENNAI / DATED: 18 TH AUGUST, 2016 RD ' #$ %$ / COPY TO: 1 . &' / APPELLANT 4. ( / CIT 2. ')&' / RESPONDENT 5. $*+ ' , / DR 3. ( () / CIT(A) 6. +/ 0 / GF