Thar Heat Transfer Equipment Pvt. Ltd. , Jodhpur V. Pr. CIT-1, Jodhpur

ITA 113/JODH/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7257 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 07-07-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANCHITA KUMAR
• Assessee Lawyers: ABHINAV KOTHARI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Revision of order; Depreciation; Rectification of order; Fair market value; Prejudicial to interest; Set aside; Capital Gains
• Section: 263; 154; 143(3); 50C; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH, JODHPUR BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA NO. 113/JODH/2020 (ASSESSMENT YEAR 2015-16) THAR HEAT TRANSFER EQUIPMENTS PVT. LTD., B-13 TO 16, INDUSTRIAL AREA, JODHPUR. VS. PR.CIT-1, JODHPUR. PAN NO. AACCT 7832 L O R D E R PER: SANDEEP GOSAIN, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. PR.CIT-1, JODHPUR DATED 20/03/2020 FOR A.Y. 2015-16 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THE LD. PR. CIT HAS ERRED IN INVOKING SECTION 263 AND THE SETTING ASIDE OF THE ORDER PASSED U/S 143(3), IS BAD IN LAW AND BAD ON FACTS. THE ORDER MADE U/S 143(3) CANNOT BE SAID TO ERRONEOUS OR PREJUDICIAL TO INTEREST OF REVENUE. 2. THE ORDER PASSED U/S 143(3), WAS MADE AFTER DULY EXAMINING THE ISSUE RELATING TO CAPITAL GAINS AND THE SAID ORDER CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OR REVENUE. THE ALLOCATION OF VALUE OF SALE OF LAND WAS ON THE BASIS OF VALUATION ADOPTED BY THE STAMP AUTHORITIES AND WAS ALSO VERIFIABLE. THE LD. PR. CIT HAD ERRED IN OBSERVING THAT THE APPELLANT HAD TAKEN THE HIGHER VALUE OF AGRICULTURE LAND. 3. THE APPELLANT CRAVE LIBERTY TO ADD, AMEND, ALTER, OR MODIFY ANY OF THE GROUND OF APPEAL ON OR BEFORE ITS HEARING BEFORE YOUR HONOUR. ASSESSEE BY SHRI AMIT KOTHARI, CA & SHRI ABHINAV KOTHARI, CA REVENUE BY SMT. SANCHITA KUMAR, CIT-DR DATE OF HEARING 09 /08/2021 DATE OF PRONOUNCEMENT 06/09/2021 2 ITA 113/JODH/2020 THAR HEAT TRANSFER EQUIPMENTS P LTD. VS PCIT 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SUBMITTED RETURN OF INCOME ON 30.9.2015 DECLARING INCOME OF RS. 18,93,650 AND THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 29.12.2017 AT TOTAL INCOME OF RS. 37,92,518/-. SUBSEQUENTLY A RECTIFICATION ORDER WAS PASSED U/S 154 ON 26.4.2018 RECTIFYING THE INCOME TO RS. 35,87,112/-. 3. THE ASSESSEE DURING THE YEAR HAD SOLD CERTAIN INDUSTRIAL LAND, FACTORY BUILDING AND AGRICULTURE LAND. ON SALE OF LAND BEING LONG TERM CAPITAL GAIN WAS SHOWN, AND ON FACTORY BUILDING AND PLANT AND MACHINERY BEING DEPRECIABLE ASSET THE COMPUTATION OF GAIN ON TRANSFER OF SUCH ASSET WAS MADE AS PER SECTION 50 OF THE INCOME TAX ACT. ON SALE OF AGRICULTURE LAND IT WAS CLAIMED THAT THE SAME WAS NOT FALLING WITHIN THE DEFINITION OF CAPITAL ASSET THE GAIN, AS WAS SITUATED OUTSIDE THE LIMITS PRESCRIBED AND WAS NOT LIABLE TO TAX. 4. THE OBJECTION OF THE LD PCIT WITH REGARD TO THE ALLOCATION SALE CONSIDERATION TOWARDS AGRICULTURE LAND AND THE OTHER INDUSTRIAL LAND AND ACCORDING TO HIM THE ALLOCATION TOWARDS AGRICULTURE LAND WAS DISPROPORTIONATE. THE LD PCIT OBSERVED THAT THE AO ACCEPTED THE BIFURCATION OF THE SALE CONSIDERATION AS SUBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. HE WAS OF THE VIEW THAT EVEN IF THE PROPORTIONATE TO AREA THE VALUE IS BIFURCATED, THE ALLOCATION TO THE INDUSTRIAL LAND SHOULD HAVE BEEN MORE. THE CIT WAS OF THE VIEW THAT THE ORDER SO MADE IS THEREFORE PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE DIRECTED TO BE REFRAMED DENOVO AFTER MAKING PROPER ENQUIRIES. 3 ITA 113/JODH/2020 THAR HEAT TRANSFER EQUIPMENTS P LTD. VS PCIT 5. THE CONTENTION OF THE ASSESSEE IS THAT THE LAND IN QUESTION IS SITUATED AMONGST THE AGRICULTURE LAND AND THE ENTIRE AREA IS AGRICULTURE AND THERE ARE HARDLY ANY INDUSTRIES IN THE SAID AREA. OUT OF THE AGRICULTURE LAND OWNED BY THE ASSESSEE COMPANY, A PORTION OF LAND WAS CONVERTED INTO INDUSTRIAL LAND. IT WAS FURTHER CONTENDED THAT THE VALUE OF THE FACTORY BUILDING, BOUNDARY WALL, TINE SHED, INDUSTRIAL LAND AND AGRICULTURE LAND WAS ADOPTED ON THE BASIS OF RATES PRESCRIBED RATES BY THE GOVERNMENT. THE DETAILS OF SUCH RATES WAS ALSO SUBMITTED DURING THE ASSESSMENT AND WAS ALSO SUBMITTED DURING THE PROCEEDINGS U/S 263. THE ASSESSEE SUBMITTED THE WORKING OF SUCH ALLOCATION AS UNDER : A. INDUSTRIAL LAND 8906.32 SQ.MTS. X 1992 PER SQ. MTS. 1,77,41,389/ - B. AGRICULTURE LAND [2.65 X1936 SQ.YARDS X9] (46173.60 SQ. FTS. X 380 SQ. FTS) 1,75,45,968/- C. OTHER ASSETS : RCC CONSTRUCTION 1% DEPRECIATION EACH YEAR 2280X 600 STONE PATTI 1 % DEPRECIATION EACH YEAR TINSHEET 20718 FTS. X .0929 + 1924.70 X 1500 BOUNDARY WALL 333 RUNNING MTS. X 300 LESS DEPRECIATION 13,68,000/- 8,36,800/- 28,87,053/- 99,900/- 3,79,100/- 48,12,643/- TOTAL FAIR MARKET VALUE 4,01,00,000/ - 6. THE ASSESSEE ALSO SUBMITTED DETAILS OF SUCH RATES ADOPTED FOR DIFFERENT ASSETS WHICH WERE PLACED IN THE PAPER BOOK AT PAGES 22 TO 24, GIVING THE LAND RATES OF AGRICULTURE, INDUSTRIAL LAND, STONE PATTI, TIN SHED AND 4 ITA 113/JODH/2020 THAR HEAT TRANSFER EQUIPMENTS P LTD. VS PCIT BOUNDARY WALL. THE VALUE OF DIFFERENT ASSETS AS ADOPTED BY DISTRICT LEVEL COMMITTEE RATES WAS THE BASIS ON WHICH THE CALCULATION OF CAPITAL GAINS WAS MADE. THEREFORE IF THE CONTENTION OF THE ASSESSEE AFTER DUE CONSIDERATION IF ACCEPTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS CANNOT BE SAID TO BE ANY ERROR IN THE ORDER. 7. THE CONTENTION OF THE ASSESSEE HAD BEEN THAT THE ASSESSMENT ORDER PASSED AFTER DUE EXAMINATION OF THE RELEVANT RECORDS AND THE APPLICATION OF LAW, ONE OF THE POSSIBLE OPINION HAD BEEN DRAWN BY THE AO, WHICH CANNOT BE SAID TO BE ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF MALABAR INDUSTRIAL CO LTD V CIT (2000) 243 ITR 83 (SC) THAT UNLESS TWIN CONDITIONS ARE SATISFIED THE REVISION U/S 263 WAS NO PERMISSIBLE. THE ASSESSEE ALSO REFERRED TO THE DECISION IN THE CASE OF CIT V/S. GIRDHARI LAL (2002) 176 CTR (RAJ) 92 THAT IF THE AO HAS CONSIDERED ALL RELEVANT MATERIAL ON RECORD, AND SUCH DECISION IS ONE POSSIBLE VIEW, SUCH ORDER CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSEE ALSO REFERRED TO VARIOUS OTHER JUDICIAL DECISIONS ALSO WHICH WERE ALSO CONSIDERED. 8. ON THE OTHER HAND, THE LD CIT-DR HAS RELIED ON THE ORDER OF THE LD. PCIT. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. INDISPUTABLY, THE POWER OF REVISION OF ORDERS PASSED BY THE AO UNDER S. 263 OF THE ACT IS IN THE NATURE OF SUPERVISORY JURISDICTION WHICH IS PERMISSIBLE TO BE EXERCISED ONLY WHEN THE TWO CIRCUMSTANCES SPECIFIED 5 ITA 113/JODH/2020 THAR HEAT TRANSFER EQUIPMENTS P LTD. VS PCIT THEREIN ARE SATISFIED; (I) THE ORDER PASSED BY THE AO IS ERRONEOUS AND (II) ON ACCOUNT OF ORDER BEING ERRONEOUS, PREJUDICE HAS BEEN CAUSED TO THE INTEREST OF REVENUE. IN THE INSTANT CASE, WHILE RECORDING THE CONCLUSION THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, APPARENTLY THE RECORD OF THE ASSESSMENT PROCEEDINGS WAS NOT EXAMINED BY THE PRINCIPAL CIT IN ITS ENTIRETY AND OBJECTIVITY. THE ALLOCATION WAS MADE ON THE BASIS OF THE RATES ADOPTED FOR STAMP DUTY PURPOSES AND IF ON THE SAID BASIS THE ALLOCATION OF THE COMPOSITE SALE CONSIDERATION HAS BEEN MADE, SUCH A FACT CANNOT BE IGNORED AND CANNOT BE SAID TO BE AN ERRONEOUS JUDGMENT OF THE ASSESSING OFFICER. IT IS ONE OF THE BASIS ON WHICH SUCH VALUATION CAN BE ACCEPTED. IT IS NOT THE CASE THAT THE TOTAL VALUE AS PER STAMP DUTY PURPOSES AS PER SECTION 50C WAS MORE THAN WHAT WAS ADOPTED FOR THE DIFFERENT CAPITAL ASSETS BEING SOLD. THE ASSESSMENT ORDER APPEARS TO HAVE BEEN MADE AFTER DUE CONSIDERATION OF THE MATERIAL. IN THIS VIEW OF THE MATTER, THE MATERIAL ON RECORD AND THE CONCLUSIONS ARRIVED AT, THE PROCEEDING INITIATED BY THE PRINCIPAL CIT UNDER S. 263 OF THE ACT IS NOT JUSTIFIED AND THE ORDER IS THEREFORE SET ASIDE. 10. IN THIS RESULT, THIS APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/09/2021. SD/- SD/- (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER JODHPUR DATED 06/09/2021 *RANJAN 6 ITA 113/JODH/2020 THAR HEAT TRANSFER EQUIPMENTS P LTD. VS PCIT COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A) 5. THE DR 6. GUARD FILE ASSISTANT REGISTRAR JODHPUR BENCH