The ITO, Ward-4, Patan V. M/s. Venu Proteins Industries, Mehsana

ITA 1087/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6049 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 08-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: T M TRIVEDI
• Keywords: Sale consideration of property below Jantri Value; Gift; Set aside; Capital Gains
• Section: 50C; 148; 6; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.1087/AHD/2010 A. Y.: 2006-07 THE INCOME TAX OFFICER, PATAN WARD-4, 2 ND FLOOR, APOLLO ENCLAVE, HIGHWAY, MEHSANA VS M/S. VENU PROTEINS INDUSTRIES, CHHATRAL MEHSANA HIGHWAY, VILLAGE RAJPUR, TAL. KADI, DIST. MEHSANA PA NO. AAFFV 6212N (APPELLANT) (RESPONDENT) C.O. NO.127/AHD/2010 (IN ITA NO.1078/AHD/2010 A. Y.: 2006-07) M/S. VENU PROTEINS INDUSTRIES, CHHATRAL MEHSANA HIGHWAY, VILLAGE RAJPUR, TAL. KADI, DIST. MEHSANA PA NO. AAFFV 6212N VS THE INCOME TAX OFFICER, PATAN WARD-4, 2 ND FLOOR, APOLLO ENCLAVE, HIGHWAY, MEHSANA (APPLICANT) (RESPONDENT) DEPARTMENT BY SMT. NEETA SHAH, DR ASSESSEE BY SHRI T. M. TRIVEDI, AR O R D E R PER BHAVNESH SAINI: THE DEPARTMENTAL APPEAL AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A), GANDHINAGAR DATED 23-02-2010 FOR ASSESSMENT YEAR 2006-07. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERE D THE MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE DID NO T PRESS THE CROSS OBJECTION. THE SAME IS DISMISSED AS WITHDRAWN. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE HAD PURC HASED A PLOT OF LAND MEASURING 96.18 SQ. MTRS. AND A BUILDING MEASU RING 572.5 SQ. ITA NO.1087/AHD/2010 AND CO NO.127/AHD/2010 ITO VS VENU PROTEINS INDUSTRIES, MEHSANA 2 MTRS. AT A COST OF RS.21,00,000/- AND PAID A STAMP DUTY AMOUNTING TO RS.1,76,400/-. HOWEVER, THE CONCERNED AUTHORITY CHA RGED AN ADDITIONAL STAMP DUTY OF RS.66,612/- VALUING THE PROPERTY AT R S.28,93,000/-. CONSEQUENT TO POSSESSION OF THIS INFORMATION THE AO REOPENED THE ASSESSMENT U/S 148 ON 18-03-2009 AND ISSUED SHOW CA USE NOTICE TO THE ASSESSEE ON 04-11-2009. REJECTING THE CONTENTION OF THE ASSESSEE THAT PROVISIONS OF SECTION 50C OF THE IT ACT IS NOT APPL ICABLE IN THE CASE OF THE ASSESSEE, THE AO CONCLUDED THAT THE ASSESSEE HAS UN DERVALUED THE PROPERTY BY AN AMOUNT OF RS.7,93,000/- AND MADE THE ADDITION. 4. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED CIT(A) AND IT WAS SUBMITTED THAT SECTION 50C OF THE IT ACT IS APPLICA BLE IN THE CASE OF SELLER OF THE ASSETS FOR CHARGING CAPITAL GAIN ON THE BASI S OF VALUATION MADE BY STAMP DUTY AUTHORITIES. IT IS NOT APPLICABLE IN THE CASE OF PURCHASER. HOWEVER, FINANCE ACT, 2009 PROVIDES PROVISIONS WITH EFFECT FROM 01-10-2009 TO CHARGE SUCH DIFFERENTIAL VALUE OF THE PROPERTY AS GIFT RECEIVED BY THE PURCHASER ON THE PROPERTY UNDER THE HEAD OF INCOME FROM OTHER SOURCES AND THIS PROVISION IS NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER APPEAL I.E. 2006-07. IT WAS, THEREFORE, PRAYED THAT ADDITION MAY BE DELETED. THE LEARNED CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE DELETED THE ENTIRE ADDITION. HIS FINDINGS IN PARA 2.3 AND 2.4 ARE REPRODUCED AS UNDER: 2.3 THE MATTER HAS BEEN CONSIDERED IN THE LIGHT OF THE LEGAL POSITION AS IT EXISTED AT THE RELEVANT POINT, I THINK THE ADDITION MADE IS NOT JUSTIFIED. APPLICABILITY OF SE CTION 50C IS PRIMA-FACIE INCORRECT AS IT PERTAINS TO CHARGING OF CAPITAL GAINS WHICH IS TO BE CONSIDERED IN THE HANDS OF THE SELLE R. IN THE INSTANT CASE, THE ASSESSING OFFICER WAS DEALING WIT H THE PURCHASER OF TH4E PROPERTY. NOTWITHSTANDING HAT THE ADDITION COULD WELL HAVE BEEN MADE IN CASE HAD THE ASSESSING OFFICER BEEN IN POSSESSION OF ANY OTHER INFORMATION WHICH C OULD INDICATE THAT THE DECLARED SALE PRICE WAS NOT THE A CTUAL SALE PRICE. THE HIGHER REGISTRATION VALUE IN ITSELF DOES NOT PROVE THE FACT THAT THE TRANSACTION HAS TAKEN PLACE AT A FIGU RE DIFFERENT ITA NO.1087/AHD/2010 AND CO NO.127/AHD/2010 ITO VS VENU PROTEINS INDUSTRIES, MEHSANA 3 THAN THAT RECORDED BY THE APPELLANTS BOOKS. ON THE OTHER HAND, THE DEEMING PROVISION INTRODUCED BY SECTION 5 6 AS RIGHTLY POINTED OUT BY THE AUTHORISED REPRESENTATIV E, ARE APPLICABLE FROM 01/10/2009 AND THEREFORE IT IS TO B E ASSUMED THAT PRIOR TO THIS SUCH A DIFFERENCE BETWEEN THE VA LUE AS PER DOCUMENTS AND VALUE AS PER STAMP DUTY AUTHORITIES I S NOT TO BE TREATED AS A GIFT AND HENCE NOT TO BE TREATED AS INCOME. 2.4 HENCE, CONSIDERING ALL THE ASPECTS, THE ADDITION OF RS.7,93,000/- IS DELETED. 5. THE LEARNED DR RELIED UPON THE ORDER OF THE AO A ND SUBMITTED THAT THE AO WAS JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE BECAUSE THERE WAS A HUGE DIFFERENCE IN THE SALE CONSIDERATION NOT ED BY THE AO AND IN THE SALE DEED DECLARED BY THE ASSESSEE. THE LEARNED DR SUBMITTED THAT THE AO HAS RIGHTLY MADE THE ADDITION IN THE MATTER. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT SEC TION 50C OF THE IT ACT IS NOT APPLICABLE IN THE CASE OF THE PURCHASER AND RELIED UPON THE ORDER OF THE ITAT MUMBAI BENCH IN THE CASE OF INDRALOK HO TEL PVT. LTD. VS ITO 122 TTJ 125 WHEREIN IT WAS HELD THAT SECTION 50C IS APPLICABLE ONLY FOR THE PURPOSE OF DETERMINING THE SALE CONSIDERATI ON FOR COMPUTATION OF CAPITAL GAINS AND IT CANNOT BE APPLI ED FOR DETERMINING THE INCOME UNDER OTHER HEADS. 6. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE A DDITION. THE IDENTICAL ISSUE WAS CONSIDERED BY THE ITAT AHMEDABAD B BENC H IN THE CASE OF REKHABEN RAJENDRA SHAH VS ACIT IN ITA NO.3069/AHD/2 008 DATED 09-04-2010 IN WHICH IT WAS HELD IN PARA 5 AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE PROPERTIES UNDER CONSIDERATION HAVE BEEN PURCHASED BY THE ASSESSEE THROUGH REGISTERED SALE DEEDS. THE ASSESSE E ITA NO.1087/AHD/2010 AND CO NO.127/AHD/2010 ITO VS VENU PROTEINS INDUSTRIES, MEHSANA 4 CLAIMED THAT SHE HAS PAID ACTUAL CONSIDERATION WHIC H IS RECORDED IN THE SALE DEEDS. THE ADDITIONAL STAMP DU TY WAS IMPOSED UPON THE ASSESSEE AS PER THE RATE PRESCRIBE D BY JANTRI. THE STAMP VALUATION AUTHORITY ADOPTED SUCH VALUATION AS PER THE JANTRI WHICH IS NOTIONAL VALUE FOR THE P URPOSE OF DETERMINING THE STAMP DUTY PAYABLE. THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD THAT THE ASSESSEE IN FACT HA D PAID MORE CONSIDERATION AS AGAINST THE CONSIDERATION REC ORDED IN SALE DEEDS. NO MATERIAL IS BROUGHT ON RECORD TO PRO VE THAT THE ASSESSEE HAD INVESTED MORE THAN WHAT HAD BEEN SHOWN IN THE SALE DEEDS. IT WAS, THEREFORE, AN INFERENCE OF THE AO THAT ASSESSEE PAID MORE CONSIDERATION AS AGAINST THE CONSIDERATION SHOWN IN THE SALE DEEDS. THE LEARNED CIT(A) NOTED THAT EVEN IF SECTION 50C OF THE IT ACT IS NOT INVOKED BY THE AO BUT THE AO HAS APPLIED ITS PRINCIPLE. WE DO NOT AGREE WITH THE FINDINGS OF THE LEARNED CIT(A) BECAUSE ITA T AHMEDABAD BENCH IN THE CASES OF JALARAM & CO. AND R ICHA NARESH JAIN (SUPRA) HAVE HELD THAT PROVISIONS OF SE CTION 50C OF THE IT ACT ARE NOT APPLICABLE IN THE HANDS OF TH E PURCHASER. IT WOULD, THEREFORE, SHOW THAT THERE IS NO FOUNDATI ON FOR MAKING THE ABOVE ADDITIONS AGAINST THE ASSESSEE. IN THE ABSENCE OF ANY FACTUAL FOUNDATION IN FAVOUR OF THE REVENUE, WE DO NOT FIND IT TO BE A FIT CASE FOR SUSTAINING T HE ADDITIONS IN THE HANDS OF THE ASSESSEE. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE BOTH THE ADDITIONS. AS A RESULT, GROUND NOS. 1 AND 2 OF THE APPEAL OF T HE ASSESSEE ARE ALLOWED. 7. CONSIDERING THE ABOVE FACTS AND THE DECISIONS RE LIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, WE ARE OF THE VIE W THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE R EVENUE BY THE ORDERS OF ITAT AHMEDABAD BENCH (SUPRA). WE ACCORDINGLY, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). WE CO NFIRM THE SAME AND DISMISS THE APPEAL OF THE REVENUE. ITA NO.1087/AHD/2010 AND CO NO.127/AHD/2010 ITO VS VENU PROTEINS INDUSTRIES, MEHSANA 5 8. AS A RESULT, THE DEPARTMENTAL APPEAL AND THE CRO SS OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11-06-2010 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 11-06-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD