The ACIT., New Delhi V. Shri Ramesh Kakkar, New Delhi

ITA 1178/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9930 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 08-09-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 30-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Keywords: Capital asset; Cost of acquisition; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI D.R.SINGH, JM AND SHRI R.C.SHARMA, AM ITA NO.1178/DEL/2009 ASSESSMENT YEAR : 2005-06 ASSTT.COMMISSIONER OF INCOME TAX, CIRCLE-46(1), NEW DELHI. VS. SHRI RAMESH KAKKAR, 33/24, EAST PATEL NAGAR, NEW DELHI. PAN NO.AAKPK2836M. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.K.LAL, DR. RESPONDENT BY : SHRI RAJIV JAIN, CA. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 27.1.2009 FOR THE AY 2005-06 WHEREIN FOLLOWING GRIE VANCE WAS RAISED BY THE REVENUE :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITIONS AMOUN TING TO RS.27,51,870/- RIGHTLY MADE BY THE AO ON ACCOUNT OF DIFFERENCE IN FAIR MARKET VALUE AS VALUED BY THE VALUER BY THE AS STT.VALUATION OFFICER AND SALE CONSIDERATION SHOWN BY THE ASSESSE E. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO FOUND THAT THE ASSESSEE HAS SOLD A FLAT NO.104, BHAGAYAVAN APARTMENT, MAYUR VIH AR, DELHI FOR A CONSIDERATION OF RS.27,00,000/- TO SH.RAJIV AGARWAL , WHEREAS THE ASSESSEE HAS ADMITTED THE SALE OF FLAT FOR RS.9,00,000/- ONLY. THE MATTER WAS REFERRED TO THE DVO U/S 55A OF THE INCOME-TAX ACT AND THE DVO ESTIM ATED THE FAIR MARKET VALUE OF THE FLAT AT THE TIME OF SALE AT RS.36,77,000/-. WHEN THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE DIFFERENCE IN SALE CONSIDERATION THE AS SESSMENT WAS COMPLETED AT TOTAL ITA-1178/D/2009 2 INCOME OF RS.44,22,520/- ADDING AN AMOUNT OF RS.27, 51,870/- AS INCOME FROM CAPITAL GAIN. 3. BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE AD DITION BY RELYING ON THE DECISION OF ITAT DELHI BENCH IN THE CASE OF TEJ PRA TAP SINGH 22 SOT 156 AND THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF SMT.NILOFER I.SINGH 176 TAXMAN 252. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH AND THE ORDERS OF THE AUTHORITIES BELOW. WITH REGARD TO THE QUEST ION OF MAKING A REFERENCE U/S 55A TO THE DVO, FOLLOWING WAS THE OBSERVATION OF TH E HON'BLE DELHI HIGH COURT IN THE CASE OF SMT.NILOFER I.SINGH (SUPRA) :- 8. WITH REGARD TO THE ARGUMENTS OF THE LEARNED COU NSEL FOR THE APPELLANT BASED ON THE PROVISION OF S. 55A OF THE S AID ACT, IT IS IMMEDIATELY TO BE NOTICED THAT THE SAID PROVISION B EGINS WITH THE EXPRESSION WITH A VIEW TO ASCERTAINING THE FAIR MA RKET VALUE OF A CAPITAL ASSET. IN OTHER WORDS, THE REFERENCE TO A VALUATION OFFICER UNDER S. 55A IS FOR THE OBJECT OF ASCERTAINING THE FAIR MARKET VALUE OF A CAPITAL ASSET. IT IS ONLY WHEN THE AO IS REQUIRE D TO ASCERTAIN THE FAIR MARKET VALUE OF A CAPITAL ASSET THAT THE PROVI SIONS OF S. 55A CAN BE INVOKED. THERE MAY BE CERTAIN SITUATIONS WHERE THE AO IS REQUIRED TO DETERMINE THE FAIR MARKET VALUE. ONE O F THE SITUATIONS IS INDICATED IN S. 45(4) OF THE SAID ACT WHERE THE PRO FITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET BY WAY OF DIST RIBUTION OF CAPITAL ASSETS ON THE DISSOLUTION OF A FIRM OR OTHER AOP OR BOI ARE TO BE COMPUTED IS IN QUESTION. IN SUCH A SITUATION, THE PROVISION ITSELF MAKES IT CLEAR THAT FOR THE PURPOSES OF S. 48, THE FAIR MARKET VALUE OF THE ASSET ON THE DATE OF SUCH TRANSFER SHALL BE DEE MED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. IN A SITUATION, AS ONE OBTAINING UNDER S . 45(4) OF THE ACT, SINCE THERE IS NO APPARENT CONSIDERATION FOR THE TR ANSFER OF THE ASSET, THE FULL VALUE OF THE CONSIDERATION HAS TO BE DETER MINED IN AN INDIRECT MANNER AND THAT INDIRECT MANNER HAS BEEN INDICATED TO BE THE FAIR MARKET VALUE OF THE ASSET. THUS, WHEN THE FAIR MAR KET VALUE OF THE ASSET UNDER S. 45(4) IS TO BE DETERMINED, IT IS OBV IOUS THAT S. 55A OF THE ACT WOULD GET TRIGGERED AND A REFERENCE TO THE VALUATION OFFICER WOULD BE NECESSARY. ITA-1178/D/2009 3 5. ITAT DELHI BENCH IN THE CASE OF TEJ PRATAP SINGH (SUPRA) ALSO OBSERVED THAT UNDER PROVISIONS OF SECTION 48, CAPITAL GAIN I S TO BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF CAPITAL ASSET, I.E. COST OF ACQUISITION AND EXPENDITURE INCURRED IN CONNECTION WITH THE TRANSFER, ARE TO BE DEDUCTED FR OM THE FULL VALUE OF THE ASSET. THE EXPRESSION FULL VALUE OF CONSIDERATION DOES N OT MEAN MARKET VALUE OR FAIR MARKET VALUE OF THE ASSET TRANSFERRED. HENCE, CAP ITAL GAIN TAX CANNOT BE COMPUTED OR LEVIED WITH REFERENCE TO THE FAIR MARKET VALUE D ETERMINED ON THE BASIS OF VALUATION REPORT. 6. IN VIEW OF THE RATIOS DISCUSSED HEREINABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) FOR DELETING THE ADDITION M ADE ON THE BASIS OF THE FAIR MARKET VALUE DETERMINED BY DVO. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF HEARING ON 8 TH SEPTEMBER, 2009. SD/- SD/- (D.R.SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 08.09.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-1178/D/2009 4