Shri Rupam Sinha, Kolkata V. I.T.O.,Ward-2(4), Kolkata

ITA 1034/KOL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4434 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 03-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V N PUROHIT
• Keywords: Sale consideration of property below Jantri Value; Competent authority; Set aside
• Section: 56(2)(vii)(b); 143(3); 56(2)

Judgement Text

ITA NO. 1034/KOL/2019 AS SESSMENT YEAR: 2014-2015 SHRI RUPAM SINHA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT I.T.A. NO. 1034/KOL/2019 ASSESSMENT YEAR: 2014-2015 SHRI RUPAM SINHA,.................................. .................................APPELLANT C-1/14, ALLAUDDIN KHAN BITHI, CITY CENTRE, DURGAPUR-713216 [PAN: AWMPS2034A] -VS.- INCOME TAX OFFICER,,............................... ..................................RESPONDENT WARD-2(4), DURGAPUR, AAYAKAR BHAWAN, AAYAKAR BITHI, CITY CENTRE, DURGAPUR-713216 APPEARANCES BY: SHRI V.N. PUROHIT, FCA, FOR THE APPELLANT SHRI JAYANTA KHANRA, JCIT, SR. D.R , FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : OCTOBER 14, 2019 DATE OF PRONOUNCING THE ORDER : NOVEMBER 27, 2019 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), DURGAPUR DATE D 20.03.2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE ADDITION OF RS.19,25,617/- MADE BY THE ASSESSING OFFICER AND CO NFIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 56(2)(VII)(B) OF THE ACT . 2. THE ASSESESE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS CARRYING ON MEDICAL PROFESSION. THE RETURN OF INCOME FOR THE YE AR UNDER CONSIDERATION WAS FILED BY HIM ON 27.03.2015 DECLAR ING TOTAL INCOME OF RS.12,45,530/-. AS NOTICED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE DURING THE YEA R UNDER CONSIDERATION HAD PURCHASED AN IMMOVABLE PROPERTY F OR A CONSIDERATION OF RS.43,12,068/-. THE VALUE OF THE SAID PROPERTY A S DETERMINED BY THE COMPETENT AUTHORITY FOR THE PURPOSE OF PAYMENT OF S TAMP DUTY, HOWEVER, ITA NO. 1034/KOL/2019 AS SESSMENT YEAR: 2014-2015 SHRI RUPAM SINHA 2 WAS RS.62,37,685/-. THE ASSESSING OFFICER, THEREFOR E, INVOKED SECTION 56(2)(VII)(B) OF THE ACT AND ADDED THE DIFFERENCE O F RS.19,25,617/- TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMP LETED UNDER SECTION 143(3) VIDE AN ORDER DATED 31.08.2016. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS FILED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) CHALLENGING THE ADDITION MADE BY THE ASSESSING OFFI CER UNDER SECTION 56(2)(VII)(B) OF THE ACT. DURING THE COURSE OF APPE LLATE PROCEEDINGS, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE IM MOVABLE PROPERTY IN QUESTION WAS AGREED TO BE SOLD BY THE VENDOR AND PU RCHASED BY THE ASSESSEE ON 05.01.2010 VIDE A LETTER OF ALLOTMENT A ND SINCE A SUM OF RS.2,50,000/- WAS ALSO PAID BY THE ASSESSEE TO THE VENDOR IN TERMS OF THE SAID AGREEMENT, SECTION 56(2)(VII)(B) WAS NOT APPLI CABLE AS PER THE PROVISOS TO SECTION 56(2)(VII)(B). THE LD. CIT(APPE ALS) DID NOT FIND MERIT IN THIS CONTENTION RAISED ON BEHALF OF THE ASSESSEE AND PROCEEDED TO CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 56(2)(VII)(B) FOR THE FOLLOWING REASONS GIVEN IN PA RAGRAPH NO. 7 TO 10 OF HIS IMPUGNED ORDER:- 7. AT THIS STAGE, IT IS NECESSARY TO REFER TO THE PROVISIONS OF SECTION 56(2)(VII)(B) OF THE ACT, WHICH ARE AS UNDE R: 56(2) IN PARTICULAR, AND WITHOUT PREJUDICE TO THE GENERALITY OF THE PROVISIONS OF SUB-SECTION (1), TH E FOLLOWING INCOMES, SHALL BE CHARGEABLE TO INCOME-TA X UNDER THE HEAD 'INCOME FROM OTHER SOURCES', NAMELY:- (VII) (B) ANY IMMOVABLE PROPERTY,- (I) WITHOUT CONSIDERATION, THE STAMP DUTY VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES, THE STAMP DUTY VALUE OF SUCH PROPERTY; (II) FOR A CONSIDERATION WHICH IS LESS THAN THE STA MP DUTY VALUE OF THE PROPERTY BY AN AMOUNT EXCEEDING FIFTY THOUSAND RUPEES, THE STAMP DUTY VALUE OF SUCH PROPERTY AS EXCEEDS SUCH CONSIDERATION: PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXIN G THE AMOUNT OF CONSIDERATION FOR THE TRANSFER OF ITA NO. 1034/KOL/2019 AS SESSMENT YEAR: 2014-2015 SHRI RUPAM SINHA 3 IMMOVABLE PROPERTY AND THE DATE OF REGISTRATION ARE NOT THE SAME, THE STAMP DUTY VALUE ON THE DATE OF T HE AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF THIS SUB - CLAUSE: PROVIDED FURTHER THAT THE SAID PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION REFERRED TO THEREIN, OR A PART THEREOF, HAS BEEN PA ID BY ANY MODE OTHER THAN CASH ON OR BEFORE THE DATE O F THE AGREEMENT FOR THE TRANSFER OF SUCH IMMOVABLE PROPERTY;] 8. IN THE PRESENT CASE, THE CONTROVERSY RELATES TO THE APPLICATION OF THE PROVISOS TO SECTION 56(2)(VII)(B). IT IS STA TED THEREIN THAT THERE HAS TO BE AN 'AGREEMENT' BETWEEN THE PURCHASE R AND THE SELLER. AN AGREEMENT IMPLIES, A DOCUMENT WHICH SETS IN THE TERMS AND CONDITIONS AND THE RIGHTS AND DUTIES OF THE PER SONS INVOLVED IN THE AGREEMENT AND THAT THE SAID DOCUMENT IS LEGA LLY ENFORCEABLE. 9. WHAT THE ID. AR HAS RELIED UPON IS A LETTER ISSU ED BY THE BUILDER TO THE APPELLANT AFTER HE PAID A SUM OF RS. 2,50,000 TO THE BUILDER. THE LETTER UNDER REFERENCE STATES THAT SIN CE THE APPELLANT HAS PAID RS.2,50,000 WHICH FORMS 20% OF T HE TOTAL COST OF RS.43,33,737 THE AFORESAID FLAT HAS BEEN ALLOTTE D TO THE APPELLANT. IT ALSO DETAILS OUT THE PAYMENT SCHEDULE AT FUTURE DATES SUCH AS, 20% ON ALLOTMENT, 10% ON COMPLETION OF FOUNDATION, 10% ON COMPLETION OF FIRST FLOOR CASTIN G, 5% ON COMPLETION OF 3RD FLOOR CASTING AND SO ON AND SO FO RTH. IT ALSO STATES THAT POSSESSION SHALL BE HANDED OVER TO THE APPELLANT ON PAYMENT OF THE REMAINING 5% OF THE TOTAL COST. 10. IT IS OBSERVED THAT THE LETTER UNDER REFERENCE IS NOT AN 'AGREEMENT' IN THE STRICTEST TERM OF THE WORD. IT I S A LETTER ON A PLAIN PAPER (NOT ON A JUDICIAL OR NON-JUDICIAL STAM P PAPER) WHICH ACKNOWLEDGES THAT THE APPELLANT HAS PAID RS.2 ,50,000 TOWARDS PURCHASE OF THE SAID PROPERTY AND IT ENLIST S THE STAGES AT WHICH THE APPELLANT IS SUPPOSED TO MAKE FURTHER PAYMENTS BEFORE THE POSSESSION CAN BE HANDED OVER TO HIM. TH E LETTER MAKES IT CLEAR THAT A 'SPACE' WHICH IS YET TO BE CO NSTRUCTED HAS BEEN 'ALLOTTED' TO THE APPELLANT. THIS IN NO WAY IS AN AGREEMENT TO 'SALE'. AT BEST, THIS IS AN ACKNOWLEDGMENT OF PA YMENT MADE BY THE APPELLANT AND AN ASSURANCE BY THE BUILDER THAT IF PAYMENTS AS PER SCHEDULE ARE MADE, THE PROPERTY WOULD BE HAN DED OVER TO HIM. IF THE APPELLANT FAILED TO ADHERE TO THE CONDI TIONS LAID IN THE LETTER, THE POSSESSION OF THE FLAT WOULD NOT BE GIVEN TO HIM. THEREFORE, THE ID. AR'S ARGUMENT THAT THIS WAS AN A GREEMENT, IS FOUND TO BE UNTENABLE. HENCE, THE DOCUMENT BEING RE LIED UPON BY THE ID. AR, IN MY VIEW, SERVES NO PURPOSE SO FAR AS APPLICATION OF PROVISO TO SECTION 56(2)(VII)(B) OF THE ACT IS CONC ERNED. ITA NO. 1034/KOL/2019 AS SESSMENT YEAR: 2014-2015 SHRI RUPAM SINHA 4 AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS INVITED MY ATTENTION TO THE LETTER OF ALLOTMENT DAT ED 05.01.2010 PLACED AT PAGES NO. 15 & 16 OF THE PAPER BOOK TO POINT OUT TH AT THE IMMOVABLE PROPERTY IN QUESTION COMPRISING OF FLAT NO. 17E IN TOWER-4 AT DIAMOND CITY SOUTH, TOLLYGUNGE, KOLKATA WAS AGREED TO BE SO LD BY THE CONCERNED DEVELOPER M/S. SHREE RAJAT ENTERPRISES TO THE ASSES SEE ON 05.01.2010 ITSELF. HE HAS CONTENDED THAT THE BOOKLET WAS ALSO ANNEXED BY THE DEVELOPER TO THE SAID ALLOTMENT LETTER STIPULATING ALL THE TERMS AND CONDITIONS OF THE SAID TRANSACTION. HE HAS ALSO INV ITED MY ATTENTION TO THE COPY OF FINAL CONVEYANCE DEED EXECUTED ON 06.12.201 3, WHEREIN IT WAS CATEGORICALLY MENTIONED THAT SALE AGREEMENT SHALL MEAN THE ALLOTMENT LETTER DATED 05.01.2010 ISSUED BY THE DEVELOPER TO THE PURCHASER, WITH BOOKLET OF TERMS AND CONDITIONS ANNEXED THERETO, WH EREBY AND WHEREUNDER THE PURCHASER AGREED TO PURCHASE AND ACQ UIRE THE SAID UNIT AND SHALL INCLUDE ANY MODIFICATION/SUPPLEMENTARY DO CUMENTS IF MADE IN WRITING IN CONNECTION WITH THE SAID UNIT. KEEPING IN VIEW THIS STIPULATION SPECIFICALLY MADE IN THE FINAL CONVEYANCE DEED AND HAVING REGARD TO THE LETTER OF ALLOTMENT DATED 05.01.2010 ISSUED BY THE CONCERNED DEVELOPER SPECIFYING ALL THE TERMS AND CONDITIONS OF THE TRAN SACTION OF SALE OF IMMOVABLE PROPERTY IN QUESTION BETWEEN THE ASSESSEE AND THE SAID DEVELOPER, I FIND MERIT IN THE CONTENTION OF THE LD . COUNSEL FOR THE ASSESSEE THAT THE LETTER OF ALLOTMENT DATED 05.01.2 010 WAS IN THE NATURE OF AN AGREEMENT BETWEEN THE ASSESSEE AND THE CONCER NED DEVELOPER FOR TRANSFER OF IMMOVABLE PROPERTY. THE AMOUNT OF CONSI DERATION FOR THE TRANSFER OF IMMOVABLE PROPERTY IN QUESTION THUS WAS FIXED ON 05.01.2010 IN TERMS OF THE SAID AGREEMENT AND THE ASSESSEE HAV ING PAID A PART OF THE SAID CONSIDERATION BY CHEQUE BEFORE THE DATE OF THE SAID AGREEMENT, THE STAMP DUTY VALUE AS ON 05.01.2010 IS REQUIRED TO BE TAKEN FOR THE PURPOSE ITA NO. 1034/KOL/2019 AS SESSMENT YEAR: 2014-2015 SHRI RUPAM SINHA 5 OF APPLYING SECTION 56(2)(VII)(B) AS PER THE 1 ST AND 2 ND PROVISO TO THE SAID SECTION. I, THEREFORE, SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(APPEALS) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RE-COMPUTE THE ADDITION, IF ANY, TO BE MADE UNDER SECTION 56(2 )(VII)(B) BY TAKING INTO CONSIDERATION THE STAMP DUTY VALUE OF THE IMMOVABLE PROPERTY IN QUESTION AS ON 05.01.2010. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 27, 2019. SD/- (P.M. JAGTAP) VICE-PRESIDENT KOLKATA, THE 27 TH DAY OF NOVEMBER, 2019 COPIES TO : (1) SHRI RUPAM SINHA, C/O. V.N. PUROHIT & CO., CHARTERED ACCOUNTANTS, DIAMOND CHAMBERS, 4, CHOWRINGHEE LANE, UNIT-III, 4 TH FLOOR, SUITE NO. 4G, KOLKATA-700016 (2) INCOME TAX OFFICER, WARD-2(4), DURGAPUR, AAYAKAR BHAWAN, AAYAKAR BITHI, CITY CENTRE, DURGAPUR-713216 (3) COMMISSIONER OF INCOME TAX (APPEALS), DURGAPU R, (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.