M/S PANCHWATI PROMOTERS PVT LTD , RANCHI V. DCIT CIRCLE-1 , RANCHI

ITA 109/RAN/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8266 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHA SINGH MARR
• Keywords: Sale consideration of property below Jantri Value
• Section: 43CA; 43B; 143(3); 50C; 56(2); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER& MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 109/RAN/2018 (ASSESSMENT YEAR: 2014-15) M/S. PANCHWATI PROMOTERS PVT. LTD. 401, PANCHWATI PLAZA, 4 TH FLOOR, KUTCHERY ROAD, RANCHI- 834001 VS. DCIT CIRCLE-1, CENTRAL REVENUE BUILDING(ANNEXE), RANCHI-834001 [PAN NO. AAD CP5 863 C] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI M. K. CHOUDHURY WITH PANKAR KEJRIWAL, ADV. RESPONDENT BY : SHRI NISHA SINGHMARR, JCIT (D.R.) DATE OF HEARING 06.11.2019 DATE OF PRONOUNCEMENT 23.01.2020 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL AT THE BEHEST OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 09.02.2018 PASSED BY THE LD. CIT(APPEAL S), RANCHI, JHARKHAND ARISING OUT OF THE ORDER DATED 23.12.2016 PASSED UN DER SECTION 143(3) OF THE INCOME TAX ACT (HEREINAFTER REFERRED AS TO THE ACT ) BY THE DCIT CIRCLE-1, RANCHI FOR A.Y. 2014-15. GROUND NO.1:- 2. ADDITION ON THE BASIS OF STAMP DUTY VALUATION AS ON THE DATE OF REGISTRATION OF THE PROPERTIES UNDER SECTION 43CA I NSTEAD OF STAMP DUTY ITA NO.109/RAN/2018 M/S. PANCHWATI PROMOTERS PVT. LTD. VS. DCIT ASST.YEAR 2014-15 - 2 - VALUATION AS ON THE DATE OF AGREEMENT AS PROVIDED U NDER SECTION 43CA(3) R.W.S. 43CA(4) OF THE ACT HAS BEEN CHALLENGED BEFOR E US. 3. THE FACTS RELATING TO THE CASE IS THIS THAT THE ASSESSEE A BUILDER AND PROMOTER ENTERED INTO AN AGREEMENT OF SALE OF ONE O FFICE SPACE TO NISHA GUPTA ON 31.07.2013 FOR A TOTAL CONSIDERATION OF RS . 1,65,39,200/-. RS. 5,00,000/- WAS PAID TO HIM BY A/C PAYEE CHEQUE BY T HE PURCHASER, AS THE FIRST PART PAYMENT. THE SALE DEED WAS SUBSEQUENT RE GISTERED ON 27.08.2013. THE ASSESSEE FURTHER ENTERED INTO AN AGREEMENT FOR SALE OF OFFICE SPACE WITH ONE ASHWINI KR. RAJGARIAH ON 09.04.2013 FOR A TOTAL CONSIDERATION OF RS. 1,57,49,800/-; RS. 11,000/- AND 5,00,000/- WERE PAI D THROUGH A/C PAYEE CHEQUES DATED 11.04.2013 AND 14.05.2013 RESPECTIVEL Y INITIALLY. THE STAMP DUTY VALUATION RATE PRIOR TO 01.08.2013 WAS OF RS. 4254/- SQUARE FEET OF THE CONSTRUCTED WHEREIN RS. 4,38,933/- WAS RATE FIXED P ER DECIMAL. ON THAT BASIS THE STAMP DUTY VALUATION THE TOTAL CONSIDERAT ION WAS DETAINED AT RS. 1,80,71,800/- IN RESPECT OF THE FIRST PROPERTY AND OF RS. 1,71,95,000/- IN RESPECT OF SECOND PROPERTY. THE REVENUE AUTHORITIE S TOOK INTO CONSIDERATION THE STAMP DUTY VALUATION RATE W.E.F. 01.08.2013 AT RS. 4,679/- PER SQUARE FEET OF THE CONSTRUCTED AREA AND RS. 4,82,827/- PER DECIMAL (LAND) AND THEREUPON WORKED OUT THE DIFFERENCE BETWEEN THE PUR CHASE CONSIDERATION AND THE GOVERNMENT STAMP DUTY VALUATION AT RS. 15,3 1,600/- AND RS. 14,45,200/- RESPECTIVELY AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE WHICH IS CHALLENGED BEFORE US. HEARD THE PARTIES, PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. ITA NO.109/RAN/2018 M/S. PANCHWATI PROMOTERS PVT. LTD. VS. DCIT ASST.YEAR 2014-15 - 3 - 4. THE CASE OF THE ASSESSEE IS THIS THAT THOUGH THE DEED OF SALE WAS REGISTERED AFTER 01.08.2013 BEING 27.08.2013 IN CAS E OF THE PROPERTY OF NISHA GUPTA AND 02.12.2013 IN CASE OF THE PROPERTY OF ASHWINI KR. RAJGARIAH, SINCE THE AGREEMENT EXECUTED PRIOR TO TH AT ON 31.07.2013 AND 09.04.2013 RESPECTIVELY, THE SALE CONSIDERATION SHO ULD HAVE BEEN ON THE BASIS OF THE CONSIDERATION AS AGREED UPON UNDER SEC TION 43CA(3) R.W.S 43CA(4) AND NOT AS THE REGISTERED DEED OF SALE EXEC UTED ON 27.08.2013 AND 02.12.2013 RESPECTIVELY. THE FINDING OF THE APPELL ATE AUTHORITY THAT STAMP DUTY VALUATION ON THE DATE OF REGISTRATION SHOULD B E TAKEN INTO CONSIDERATION UNDER SECTION 50C OF THE ACT AS PER P ROVISION OF SEC. 43CA IS, THEREFORE, LIABLE TO BE SET-ASIDE. ON THE CONTRARY , THE CASE OF THE REVENUE IS THIS THAT THE DEED OF AGREEMENT AND THE DATE OF REG ISTRATION OF THE PROPERTY IN QUESTION WERE MADE IN THE SAME F.Y. 2013-14 AND SIN CE THE ASSESSEE BEING A BUILDER TREATED THE PROPERTY TRANSFERRED AS STOCK IN TRADE, THE CASE SQUARELY ATTRACTS SEC. 43CA. IN ORDER TO SETTLE THE ISSUE WE NEED TO CONSIDER T HE CONCERN SECTION WHICH IS REPRODUCED HEREIN BELOW:- (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING A S A RESULT OF THE TRANSFER BY AN ASSESSEE OF AN ASSET (OTHER THAN A CAPITAL AS SET), BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE 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 A SSESSED OR ASSESSABLE SHALL, FOR THE PURPOSE OF COMPUTING PROFITS AND GAINS FROM TRANSFER OF SUCH ASSET, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RE CEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER: [ PROVIDED THAT WHERE THE VALUE ADOPTED OR ASSESSED OR ASSESSA BLE BY THE AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY DOES NOT EXCEED ONE HUNDRED AND FIVE PER CENT OF THE CONSIDERATION RECE IVED OR ACCRUING AS A RESULT OF THE TRANSFER, THE CONSIDERATION SO RECEIV ED OR ACCRUING AS A RESULT OF THE TRANSFER SHALL, FOR THE PURPOSES OF COMPUTING P ROFITS AND GAINS FROM TRANSFER OF SUCH ASSET, BE DEEMED TO BE THE FULL VA LUE OF THE CONSIDERATION.] ITA NO.109/RAN/2018 M/S. PANCHWATI PROMOTERS PVT. LTD. VS. DCIT ASST.YEAR 2014-15 - 4 - (2) THE PROVISIONS OF SUB-SECTION (2) AND SUB-SECTI ON (3) OF SECTION 50C SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO DETERMINATIO N OF THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE UNDER SUB-SECTION (1). (3) WHERE THE DATE OF AGREEMENT FIXING THE VALUE OF CONSIDERATION FOR TRANSFER OF THE ASSET AND THE DATE OF REGISTRATION OF SUCH T RANSFER OF ASSET ARE NOT THE SAME, THE VALUE REFERRED TO IN SUB-SECTION (1) MAY BE TAKEN AS THE VALUE ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT F OR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER ON THE DA TE OF THE AGREEMENT. (4) THE PROVISIONS OF SUB-SECTION (3) SHALL APPLY O NLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION OR A PART THEREOF HAS BEEN RECEIVED 43B [BY WAY OF AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT] 43C [OR THROUGH SUCH OTHER ELECTRONIC MODE AS MAY BE PRESCRIBED] ON OR BEFORE THE DATE OF AGREEMENT FOR TRANSFER OF THE ASSET.] THUS, IT APPEARS FROM ABOVE THAT WHEN THE AGREEMEN T FOR SALE AND THE DATE OF EXECUTION OF THE SALE IS NOT THE SAME, THE STAMP VALUATION PREVAILING ON THE DATE OF AGREEMENT SHOULD BE TAKEN INTO CONSI DERATION. WE FIND THE INTENTION OF THE LEGISLATURE IS TO ADOPTED THE CIRC LE RATE PREVAILING AS ON THE DATE OF AGREEMENT SUBJECT TO COMPLIANCE OF CONDITIO N THAT THE AMOUNT OF CONSIDERATION OR A PART THEREOF IS PAID BY A/C PAYE E CHEQUE BOTH IN SEC. 43CA AND SEC. 50C OF THE ACT. WE HAVE CAREFULLY CONSIDERED THE JUDGMENT RELIED U PON BY THE LD. AR IN THE CASE OF OM PRAKASH GUPTA VS. ACIT JAIPUR WHERE IN THE IDENTICAL STATE OF FACTS THE VALUATION ADOPTED BY THE REVENUE ON THE BASIS OF THE DATE OF REGISTRATION HAS BEEN DELETED ON THE SAME PREMIS ES. THE RELEVANT PORTION WHEREOF IS AS FOLLOWS:- 2.6 I HAVE HEARD THE RIVAL CONTENTIONS AND GONE T HROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT IN THE INSTANT CASE THE AO HAS ADOPTED SALE CONSIDERATION OF PLOT SOLD AT RS. 40,3 1,163/- ON THE BASIS OF VALUE THEREOF ADOPTED FOR THE PURPOSE OF STAMP DUTY ON TH E DATE OF SALE BY INVOKING ITA NO.109/RAN/2018 M/S. PANCHWATI PROMOTERS PVT. LTD. VS. DCIT ASST.YEAR 2014-15 - 5 - PROVISION OF SECTION 50C OF THE I.T. ACT, 1961 INST EAD OF RS. 33,84,590/- ACTUALLY RECEIVED BY THE ASSESSEE AND THEREBY MADE AN ADDITION OF RS. 6,46,573/- TO THE INCOME OF THE ASSESSEE AS INCOME FROM LONG TERM CAPITAL GAIN. I ALSO FOUND THAT THE PLOTS WERE ALLOTTED BY THE COOPERATIVE SOCIETY BUT NO PHYSICAL POSSESSION WAS HANDED OVER TO THE ASSES SEE. I FOUND THAT PHYSICAL POSSESSION WAS WITH THE OWNER AND AS SUCH THE LAND WAS DISPUTED ONE. BECAUSE OF THE DISPUTED LAND, THE ASSESSEE AGREED T O SELL THE SAID PLOTS ON 17- 12-2011 FOR A SUM OF RS. 33,84,590/- UNDER AGREEMEN T TO SELL. AS PER AGREEMENT TO SELL, OUT OF TOTAL SALE CONSIDERATION, A SUM OF RS. 2.00 LACS WAS RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUE DA TED 17-12-2011. OUT OF THE BALANCE CONSIDERATION, A SUM OF RS. 11,67,100/- WAS PAYABLE TO KASTHKARS WHO WERE HOLDING PHYSICAL POSSESSION AND REMAINING RS. 20,17,490/- TO THE ASSESSEE. ALL THESE FACTS ARE VERIFIABLE FROM THE A GREEMENT TO SELL FILED BY THE ASSESSEE BEFORE THE AO. THUS THE ASSESSEE AGREED TO SELL THE DISPUTED LAND ON 17-12-2011. I ALSO FOUND THAT REGISTRATION OF THIS LAND WAS SUBJECT TO ISSUANCE OF PATTA/LEASE DEED FROM JAIPUR DEVELOPMENT AUTHORI TY. THE SAID PATTA WAS ISSUED ON 14-02-2012 AND THAT THE ASSESSEE AGREED T O SALE THE ABOVE SAID PLOTS OF LAND AT THE PREVAILING MARKET RATE ON 17-1 2-2011 AND AS SUCH THE STAMP DUTY VALUE OF THE SAID PROPERTY SHOULD BE CON SIDERED AS ON THE SAID DATE I.E. 17-12-2011. THE STAMP DUTY RATE ON THE SAID DA TE I.E. 17-12-2011 WAS RS. 6880/- PER SQ. YARD. A COPY OF THE DLC RATE CHART I SSUED BY THE RAJASTHAN STATE GOVT. SUB-REGISTRAR- AMER IN SUPPORT OF ABOVE FACTS WAS FILED BEFORE AO. AS PER SAID RATE THE TOTAL SALE VALUE WORKS OUT TO RS. 32,11,859/- AS AGAINST THE ACTUAL SALE CONSIDERATION OF RS. 33,84, 590/- I.E. THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE IS MORE THAN THE DLC RATE AND THE ASSESSEE CORRECTLY ADOPTED THE SAID VALUE FOR COMPUTATION OF CAPITAL GAIN. THE AO HAS NOT CONTROVERTED THESE FACTS. THE INTENTION OF THE LEGISLATURE AS BROUGHT BY PROVISO TO SECTION 50C BY FINANCE ACT, 2 016 WAS CLARIFICATORY PROVISIONS, ACCORDING TO WHICH LEGISLATURE INTENDED THAT DLC RATE ON THE DATE OF AGREEMENT SHOULD BE ADOPTED IF THE AMOUNT OF CON SIDERATION OR A PART THEREOF IS PAID BY ACCOUNT PAYEE CHEQUE. SECTION 50 C FIRST AND SECOND PROVISO WERE INSERTED BY FINANCE ACT, 2016, THOUGH THE AMEN DMENT IS STATED TO BE W.E.F. 01-04-2017 BUT BEING CLARIFICATORY PROVISION APPLIES RETROSPECTIVELY. I FOUND THAT SIMILAR PROVISIONS AS THAT OF SAID PROVI SO TO SECTION 50C EXITS IN SECTION 43CA INTRODUCED BY FINANCE ACT, 2013 W.E.F. 1-4-2014 AND IN PROVISO TO SECTION 56(2) (VII) INSERTED BY FINANCE (NO. 2) ACT, 2009 W.E.F. 1-10-2009 WHICH PROVISIONS ARE ALSO TO ACHIEVE THE SAME OBJEC TS AS THAT OF SECTION 50C. THUS IT IS MANIFEST THAT THE INTENTION OF LEGISLATU RE IS TO ADOPT DLC RATE PREVAILING AS ON DATE OF AGREEMENT SUBJECT TO COMPL IANCE OF CONDITION THAT AMOUNT OF CONSIDERATION OR A PART THEREOF IS PAID B Y ACCOUNT PAYEE CHEQUE. IF THE DLC RATE EXISTED ON THE DATE OF AGREEMENT IS AD OPTED, THE DECLARED CONSIDERATION OF SALE IS IN ACCORDANCE WITH SECTION 50C. ITA NO.109/RAN/2018 M/S. PANCHWATI PROMOTERS PVT. LTD. VS. DCIT ASST.YEAR 2014-15 - 6 - 2.6.1 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS N OT IN DISPUTE THAT AT THE TIME OF ENTERING INTO AGREEMENT TO SELL ON 17-1 2-2011, THE ASSESSEE RECEIVED RS. 2.00 LACS BY ACCOUNT PAYEE CHEQUE DATE D 17-12-2011 DRAWN ON ALLAHABD BANK, VIDHYADHAR NAGAR BRANCH, JAIPUR. THU S I DO NOT FIND ANY MERIT FOR THE VALUE TAKEN BY THE AO AS ON REGISTRAT ION OF THE AGREEMENT DATED 12-04-2012. ACCORDINGLY, THE AO IS DIRECTED TO DELE TE THE ADDITION SO MADE BY THE AO. THUS THE SOLITARY GROUND OF THE ASSESSEE IS ALLOWED. THUS, RELYING UPON THE SAID RATIO LAID DOWN BY THE AFORESAID JUDGMENT WE FIND NO MERIT IN DETERMINING THE VALUATION OF TH E PROPERTY ON THE BASIS OF THE CIRCLE RATE PREVAILING ON THE DATE OF REGISTRAT ION OF THE CONCERNED PROPERTIES AND THUS WE DO NOT HESITATE TO DELETE SU CH ADDITION ON THE DIFFERENCE OF THE PURCHASE CONSIDERATION AND THE GO VERNMENT STAMP DUTY VALUATION OF THE AMOUNT OF RS. 29,76,800/-. THIS G ROUND OF APPEAL IS THUS ALLOWED. GROUND NO.2:- 5. THIS GROUND RELATES TO THE INTEREST CHARGEABLE UNDER SECTION 234B OF THE ACT. THE LD. AR IS DIRECTED TO CHARGE INTEREST ON THE RETURN INCOME ONLY TAKING INTO CONSIDERATION THE JUDGMENT PASSED BY TH E HONBLE JURISDICTIONAL JHARKHAND HIGH COURT IN THE CASE OF AJAY PRAKASH VE RMA VS. ITO IN TA NO. 38 OF 2010 IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE ASSESSEES APPEAL IS, THEREFO RE, ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 23/01/2020 SD/- SD/- (PRADIP KUMAR KEDIA) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/01/2020 TANMAY, SR. PS TRUE COPY ITA NO.109/RAN/2018 M/S. PANCHWATI PROMOTERS PVT. LTD. VS. DCIT ASST.YEAR 2014-15 - 7 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, RANCHI 6. &' () / GUARD FILE. / BY ORDER, (SR. PRIVATE SECRETARY) / ITAT, RANCHI 1. DATE OF DICTATION 20.01.2020 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.01.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 23.01.2020 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .01.2020 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S .01.2020 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.01.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER