Smt. Malini Bharath, Bangalore V. ITO, Bangalore

ITA 1215/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5310 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 10-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 1215/BANG/2016 ASSESSMENT YEAR : 2006-07 SMT. MALINI BHARATH, NO. 71, 16 TH CROSS, 6 TH MAIN, MALLESHWARAM, BANGALORE 560 094. PAN: AEXPB 3788B VS. THE INCOME TAX OFFICER, WARD 14(9) / NEW A.O., BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI ANIL KUMAR, CA RESPONDENT BY : SHRI M.K. BIJU, JCIT DATE OF HEARING : 22.05.2017 DATE OF PRONOUNCEMENT : 31.05.2017 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 21.03.2016 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. THE ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS. 1.THE ORDER OF THE COMMISSIONER OF INCOME TAX (A) S O FAR AS IS AGAINST THE APPELLANT IS AGAINST LAW, FACTS OF THE CASE AND WEIGHT OF EVIDENCE. 2.THE LEARNED APPELLATE OFFICER HAS ERRED IN CONFIR MING WITH THE AO THAT CONSIDERATION BE TAKEN AS RS. 81,13,000/- F OR COMPUTING THE CAPITAL GAIN. ITA NO. 1215/BANG/2016 PAGE 2 OF 6 3.THE LEARNED APPELLATE OFFICER HAS ERRED IN IGNORI NG THE SUBMISSION, THE ORDER NOW PASSED BY A.O. WITHOUT RE FERRING IT TO VALUATION OFFICER, IS AN INVALID ORDER. 4.THE APPELLATE OFFICER HAS ERRED IN DETERMINING TH E SHARE OF THE APPELLANT IN THE LONG TERM CAPITAL GAIN AT RS. 13,6 0,856/-. 5.THE APPELLANT PRAYS THAT SHE MAY BE PERMITTED TO RAISE ADDITIONAL GROUNDS AT THE TIME OF HEARING OF THIS APPEAL. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION AND ADJUDIC ATION OF THIS TRIBUNAL IS REGARDING THE FULL VALUE CONSIDERATION OF SALE O F PROPERTY IN QUESTION AND CONSEQUENTLY LONG TERM CAPITAL GAIN ASSESSED IN THE HAND OF THE ASSESSEE. THE ASSESSEE ALONG WITH THE CO-OWNERS SO LD THE IMMOVABLE PROPERTY FOR RS. 35 LAKHS. THE AO NOTED THAT THE M ARKET VALUE OF THE PROPERTY AS PER SALE IT IS RS. 66,50,000/- AND THE SALE CONSIDERATION ADMITTED BY THE ASSESSEE IS LESS THAN THE MARKET VA LUE. THE AO TOOK THE VALUE AS ADOPTED BY THE STAMP VALUATION AUTHORITY A T RS. 81,13,000/- AND AFTER ALLOWING THE DEDUCTION U/S. 54EC ASSESSED THE 1/5 TH SHARE OF THE ASSESSEE AS LONG TERM CAPITAL GAIN. THE ASSESSEE C HALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) REGARDING THE VALUATION AD OPTED BY THE AO AS WELL AS SHARE OF THE ASSESSEE IN THE SALE CONSIDERA TION AND CONTENTED THAT THE AO HAS NOT CONSIDERED THE SHARE GIVEN TO THE TH IRD PARTY WHO HAS FILED A SUIT AGAINST THE TRANSFER OF THE PROPERTY AND THE REFORE, THE MATTER WAS SETTLED AFTER PARTING WITH A SHARE OF SALE CONSIDER ATION. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONFI RMED THE ADDITION OF ITA NO. 1215/BANG/2016 PAGE 3 OF 6 THE AO EXCEPT THE RELIEF GRANTED IN RESPECT OF THE INDEXED COST OF ACQUISITION AS WELL AS DEDUCTION U/S. 54EC. 3. I HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSI DERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET IT WAS BROUGHT T O MY NOTICE THAT IN THE CASE OF CO-OWNER SHRI A.N. SANJAY VS ACIT THE COORD INATE BENCH OF TRIBUNAL HAS CONSIDERED THIS ISSUE VIDE ORDER DATED 13.05.2016 IN ITA NO. 1231/BANG/2015 AND SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER FOR READJUDICATION AFFAIRS IN PAR A 6 AS UNDER. 6. HAVING CAREFULLY EXAMINED THE ORDER OF LOWER AUT HORITIES, WE FIND THAT UNDISPUTEDLY THE ASSESSEE RAISED AN OBJEC TION TO THE VALUATION BEING ADOPTED BY THE AO. INSTEAD OF MAKIN G A REFERENCE TO THE DVO, THE AO HIMSELF HAS ADOPTED TH E VALUE DECLARED IN THE SALE DEEDS WITHOUT LOOKING INTO THE ASSESSEE CONTENTIONS WITH REGARD TO LESSER RECEIPT OF SALE C ONSIDERATION. THE CIT(A) HAS ALSO NOT EXAMINED THE EXPLANATION FU RNISHED BEFORE HIM AND FOR THE SAKE OF REFERENCE, WE EXTRAC T THE RELEVANT PORTION OF THE SUBMISSIONS MADE BEFORE THE CIT(APPE ALS) AS UNDER:- I. (A) DURING THE ACCOUNTING YEAR ENDED 31.03.2006 THE APPELLANT ALONG WITH OTHER CO-OWNERS OF THE PROPERT Y BEARING PRESENT NO 68/2, KRISHNA BLOCK, 1ST 'A' MAIN ROAD, SESHADRIPURAM, BANGALORE AND AGREEMENT HOLDER (ONE SRI L MALLIKARJUN) SOLD BY TWO SALE DEEDS FOR A TOTAL CON SIDERATION RS. 45 LAKHS AND APPELLANT RECEIVED RS. 6 LAKHS AND INV ESTED THE SAME IN NABARD BONDS AND CLAIMED EXEMPTION U/S 54EC . (B) THE IMMOVABLE PROPERTY SOLD WAS UNDER LITIGATIO N. THE PROPERTY WAS AGREED TO BE SOLD TO ONE SRI L MALLIKA RJUN (HEREINAFTER REFERRED AS AGREEMENT HOLDER) AND THE AGREEMENT HOLDER HAD FILED TWO SUITS UNDER SPECIFIC PERFORMAN CE CLAUSE. THE SUITES WERE NUMBERED AS O.S. NO.540911994 AND O .S. NO.51711996 AND CASES ERE BEING DRAGGED ON PAST MAN Y YEARS. THE AGREEMENT HOLDER HAD NO FUNDS TO MAKE PA YMENT IN TERMS OF THE AGREEMENT WHEN NEW BUYERS SHOWED INTER EST TO PURCHASE THE PROPERTY IT WAS INTER-ALIA AGREED AMON GST THE OWNERS AND AGREEMENT HOLDER, THAT PROPERTY WAS TO B E SOLD FOR RS. 45 LAKHS AND SALE PROCEEDS BE DIVIDEND IN PARTI CULAR RATIO. ITA NO. 1215/BANG/2016 PAGE 4 OF 6 THE SUIT WAS COMPROMISED AND DISMISSED AS SETTLED O N 28.11.2005 ON THE UNDERSTANDING THE AGREEMENT HOLDE R WILL RECEIVE RS.20 LAKHS AND THE OWNERS (APPELLANT, FATH ER OF APPELLANT BROTHER(S) AND SISTER OF APPELLANT) WILL RECEIVE RS 25 LAKHS. THE PROPERTY WAS SOLD FOR RS.45 LAKH MAKING AGREEMENT HOLDER AS ONE OF THE VENDORS. (C) THE KARNATAKA GOVERNMENT HAS CONFERRED UNDER RU LE 7 OF THE KARNATAKA STAMP (CONSTITUTION COMMITTEE FOR EST IMATION OF PROPERTIES) RULES, 1992 THE RIGHT FOR DETERMINATION OF THE ESTIMATED MARKET VALUE OF THE IMMOVABLE PROPERTIES COMING UNDER THE JURISDICTION OF EACH SUB REGISTRY OFFICES OF THE STATE. THESE ARE CALLED 'GUIDE LINE VALUE' AND SUB REGISTR AR IS BOUND TO FOLLOW 'THE SAME. THERE IS NO QUESTION DETERMINA TION OF THE MARKET VALUE ON THE DATE OF TRANSFER. THE RATES ARE GIVEN FOR SQUARE FEET ROAD WISE AND IF THERE IS NO SPECIFIC R ATES MENTIONED FOR ONES PROPERTY, THE RATE MENTIONED NEAREST TO TH E IMMOVABLE TO BE TRANSFERRED IS TO BE ADOPTED FOR STAMP VALUE. NO REDUCTION IS GIVEN FOR INFERIOR LAND BIGGER AREA OF THE SITE ETC. HENCE THE STAMP DUTY AND REGISTRATION CHARGES WERE PAID BY THE PURCHASERS BY DDS AS MENTIONED IN THE SALE DEEDS EN CLOSED BASED ON 'GUIDE LINE VALUE' AT RS. 66.50 LACS + RS. 14.631AKHS = 81.13 LACS. THIS IS THE VALUE TAKEN BY AO U/S 50C OF THE I T ACT. (D) THE APPELLANT HAS SUBMITTED BEFORE THE A.O THAT VALUE DETERMINED FOR STAMP DUTY BY THE REGISTERING AUTHOR ITY IS MORE THAN THE FAIR MARKET VALUE ON THE DATE OF TRANSFER AND SAME MUST NOT BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF DETERMINATION OF SALE PRICE. THE PROPERTY WAS AGREED TO BE SOLD T O THE PRESENT BUYERS WHEN THE DISPUTE BETWEEN THE OWNERS AND AGRE EMENT HOLDER EXISTED I.E O. S. NO 5409/1994 AND O. S NO. 517/1996, THE AGREEMENT HOLDER GOT RS.20 LACS WHEREAS THE OWN ERS INCLUDING APPELLANT GOT ONLY RS.25 LACS. (E) THE AO HAS DETERMINED THE SALE PROCEEDS U/S 50C AT RS. 81,13,000 AND HAS COMPUTED THE CAPITAL GAIN WITHOUT REFERRING THE ISSUE OF VALUATION TO VALUATION OFFICER AS REQU IRED UNDER SECTION 50C (2). IN VIEW OF THE SAME THE ORDER NOW PASSED IS AN INVALID ORDER AND HENCE TO BE CANCELLED. 2. THE A.O HAS HELD IN THE ORDER THE AGREEMENT HOLD ER SRI L MALLIKARJUN HAS GOT 1/5 TH RIGHT TO THE PROPERTY AND 4/5TH RIGHT BELONGS TO VENDORS 1 TO 4. THE RIGHT OF THE APPELLA NT HAS BEEN DETERMINED AT 1/5TH WHEREAS THE RIGHT OF THE APPELL ANT OUGHT TO HAVE BEEN DETERMINED AT 25/45 X 1/4 = 25/180 = 5/36 ONLY BASED ACTUAL AMOUNT RECEIVED ITA NO. 1215/BANG/2016 PAGE 5 OF 6 3. THE A.O HAS DETERMINED THE MARKET VALUE OF THE L AND AS 1.04.81 AT RS.50 PER SQUARE FEET TO DETERMINE THE C OST OF SALE. THE VALUE FIXED IS TOO LOW. IT MAY BE FIXED AT RS. 100 PER SQUARE FEET, AS PRAYED FOR. IN THE CASE OF APPELLANTS FATH ER SRI D N CHAR THE SAME HAS BEEN DETERMINED AT RS 79 SQ FEET. A CO PY OF THE ORDER IS ENCLOSED. THE SAID VALUATION IS ALSO CHALL ENGED IN APPEAL BEFORE YOU. 4. WITHOUT PREJUDICE TO THE CONTENTION THE ORDER PA SSED IS AN INVALID ORDER, THE NET SALE CONSIDERATION TO BE ACC OUNTED FOR THE PURPOSE OF DETERMINATION OF THE CAPITAL GAIN BE TAK EN AT RS.45,07,222/-. THE LONG TERM CAPITAL GAIN OF APPELLANT WILL WORK O UT TO RS.730200/- AS AGAINST RS.1463900/-. NOTIONAL SALE CONSIDERATION RS.4507222/- LESS: INDEX COST RS.1586420/- LONG TERM CAPITAL GAIN RS.2920802/- 1/4THSHARE OF APPELLANT RS. 730200/- AMOUNT INVESTED IN BONDS RS. 600000/- HENCE TAXABLE INCOME RS. 130200/- INCOME TAX ON LTCG @ 20% RS.26040 BEFORE SC & EC. 4. FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL IN CASE OF CO-OWNER OF THIS PROPERTY THIS MATTER IS SET ASIDE TO THE RECORD OF THE AO WITH SIMILAR DIRECTIONS OF DECIDING AFRESH. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY, 2017 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DATED, THE 31 ST MAY, 2017. / MS/ ITA NO. 1215/BANG/2016 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.