Ketan Lalitbhai Patel, Surat V. The Income Tax Officer, Ward-2(3)(2), Surat

ITA 1216/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2112 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 09-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Assessee Lawyers: P M JAGASHETH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Valuation report; Revised return
• Section: 37; 54B; 50C

Judgement Text

SHRI KETAN LALITBHAI PATEL V. ITO 2(3)(2) SURAT /I.T.A. NO.1216 /AHD/2016/A.Y.:12-13 PAGE 1 OF 10 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO.1216/AHD/2016 / A.Y.:2012-13 SHRI K ETAN LALITBHAI PATEL, BAWALIYA FALIYA AT&POST ABHAVA TALUKA CHORYASHI DISTRICT SURAT 395007 PAN: AORPP 4348B V S . INCOME TAX OFFICER, WARD 2(3)(2) SURAT APPELLANT /RESPONDENT /ASSESSEE BY SHRI P. M. JAGASHETH, CA /REVENUE BY SHRI R. P. RASTOGI, SR. D.R. / DATE OF HEARING: 17.04.2018 /PRONOUNCEMENT ON 18.04.2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, SURAT [IN SHORT THE CIT(A)] DATED 31.03.2016 PERTAINING TO ASSESSMENT YEAR 2012-13, WHICH IN TURN HAS ARISEN FROM THE ORDER DATED 24.02.2015 PASSED BY THE INCOME TAX OFFICER, WARD 2(3)(2) SURAT SHRI KETAN LALITBHAI PATEL V. ITO 2(3)(2) SURAT /I.T.A. NO.1216 /AHD/2016/A.Y.:12-13 PAGE 2 OF 10 (IN SHORT THE AO ) UNDER SECTION 143 (3) OF INCOME TAX ACT,1961 ( IN SHORT THE ACT). 2. GROUND NO. 1 STATES THAT THE LD. CIT (A) ERRED IN CONFIRMING ACTION OF THE AO IN MAKING ADDITION OF RS. 16,84,349 ON ACCOUNT OF CAPITAL GAINS UNDER SECTION 50C OF THE ACT. 3. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE HAS SOLD AN AGRICULTURAL LAND FOR SALE CONSIDERATION OF RS. 18,66,601 WHICH WAS VALUED AT RS. 35,50,950 BY STAMP DUTY VALUATION. IN ORIGINAL RETURN OF INCOME , THE ASSESSEE HAS SHOWN SALE CONSIDERATION AT RS. 28,11,989 AND CLAIMED, COST OF ACQUISITION AT RS. 13,51,483, COST OF IMPROVEMENT AT RS. 15,01,400, EXPENDITURE ON TRANSFER AT RS. 7,250 AND THUS, SHOWN SHORT-TERM CAPITAL LOSS AT RS. 48,144. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED REVISED RETURN ON 05.02.2015 CLAIMING THAT PROPERTY SOLD IN QUESTION WAS ACQUIRED ON 11.04.2005 BY WAY OF IRREVOCABLE POWER OF ATTORNEY AND SAID PROPERTY WAS SOLD ON SHRI KETAN LALITBHAI PATEL V. ITO 2(3)(2) SURAT /I.T.A. NO.1216 /AHD/2016/A.Y.:12-13 PAGE 3 OF 10 07.07.2011 FOR TOTAL CONSIDERATION OF RS. 1,20,05,000 JOINTLY WITH 7 CO-OWNERS IN WHICH ASSESSEE SHARE IS WORKED OUT AT RS. 11,65,000. THUS, THE SHORT-TERM CAPITAL GAINS SHOWN IS ACTUALLY LONG-TERM CAPITAL GAIN AS PERIOD OF PURCHASE AND SALE EXCEEDED 3 YEARS. THE ASSESSEE FURTHER CLAIMED THAT COST OF IMPROVEMENT SHOWN AT RS. 15,01,400 IS ACTUALLY INVESTMENT IN ACQUISITION OF NEW PROPERTY AT RS. 11,65,000 PURCHASED ON 19.10.2011 AT LAND AT KARVADA VILLAGE AND MADE A CLAIM OF DEDUCTION UNDER SECTION 54B OF THE ACT. HOWEVER, THE AO DID NOT ACCEPT THE REVISED CLAIM AS REVISED RETURN WAS FILED LATE, HENCE, IT WAS NOT FOUND ACCEPTABLE IN THE LIGHT OF DECISION OF HON`BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. V CIT [2006] 284 ITR 323 (SC). HOWEVER, IN APPEAL THE CIT (A) HAS ACCEPTED THE CLAIM OF LONG- TERM CAPITAL GAIN AND DEDUCTION UNDER SECTION 54B AS CLAIMED IN REVISED RETURN AND DIRECTED THE AO TO CONSIDER SALE CONSIDERATION AT RS. 35,50,950 AS PER STAMP DUTY VALUATION, COST OF ACQUISITION AT RS. 3,74,650 AND ALLOW INDEXATION WITH EFFECT FROM 11.04.2005 SHRI KETAN LALITBHAI PATEL V. ITO 2(3)(2) SURAT /I.T.A. NO.1216 /AHD/2016/A.Y.:12-13 PAGE 4 OF 10 AND DEDUCTION OF RS. 12,35,600 UNDER SECTION 54B AND COMPUTE LONG-TERM CAPITAL GAIN ACCORDINGLY. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT (A) HAS ERRED IN NOT REFERRING THE PROPERTY SOLD FOR DVO FOR DETERMINATION OF FAIR MARKET VALUE AS THE ASSESSEE HAS MADE A REQUEST BEFORE THE AO AS WELL AS DURING THE COURSE OF APPELLATE PROCEEDINGS, VIDE LETTER DATED 18.12.2015. THE CIT (A) IN PARA 6.2 OF HIS ORDER OBSERVED THAT THE ASSESSEE HAS NOT MADE REQUEST FOR REFERENCE TO DVO DURING ASSESSMENT PROCEEDINGS AS REQUIRED UNDER SECTION 50C(2)(A) OF THE ACT. THEREFORE, THE CLAIM OF THE ASSESSEE WAS DENIED. 4. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE OBSERVATION MADE IN PARA 6.2 OF APPELLATE ORDER IS NOT CORRECT AS THE ASSESSEE HAS MADE CLAIM FOR REFERENCE TO DVO DURING ASSESSMENT PROCEEDINGS. THE LEARNED COUNSEL FOR THE ASSESSEE FILED A COPY LETTER DTD. 09.02.2015 BY WHICH THE ASSESSEE HAS MADE A REQUEST TO THE AO TO REFER THE PROPERTY FOR SHRI KETAN LALITBHAI PATEL V. ITO 2(3)(2) SURAT /I.T.A. NO.1216 /AHD/2016/A.Y.:12-13 PAGE 5 OF 10 VALUATION TO DVO AS THE PROPERTY WAS SOLD AT MARKET RATE AND VALUE DETERMINED BY STAMP DUTY AS ON DATE OF TRANSFER WAS HIGHER THAN THE MARKET VALUE. THEREFORE, IT WAS URGED UPON US THAT THE ISSUE OF DETERMINATION OF FAIR MARKET VALUE BE SET-ASIDE TO THE AO WITHOUT DISTURBING THE OTHER FINDINGS OF LD. CIT (A) REGARDING TRANSFER DATE, LONG-TERM CAPITAL GAIN CLAIM AND DEDUCTION UNDER SECTION 54B OF THE ACT. 5. PER CONTRA, THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS SHOWN THE ACTUAL SALE CONSIDERATION OF RS. 18,66,601 AS AGAINST STAMP DUTY VALUATION AT RS. 35,50,950. THUS, THERE IS DIFFERENCE IN ACTUAL SALE CONSIDERATION , FAIR MARKET VALUE AND STAMP DUTY VALUATION OF THE PROPERTY SOLD FOR WHICH THE ASSESSEE HAS MADE A REQUEST BEFORE THE AO DURING THE COURSE OF ASSESSMENT SHRI KETAN LALITBHAI PATEL V. ITO 2(3)(2) SURAT /I.T.A. NO.1216 /AHD/2016/A.Y.:12-13 PAGE 6 OF 10 PROCEEDINGS VIDE LETTER DATED 09.02.2015. WE MAY REFER THE RELEVANT PROVISIONS OF SECTION 50C WHICH ARE AS UNDER: 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED 86[OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE SHRI KETAN LALITBHAI PATEL V. ITO 2(3)(2) SURAT /I.T.A. NO.1216 /AHD/2016/A.Y.:12-13 PAGE 7 OF 10 PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB- SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODI-FICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. [EXPLANATION 1].FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). [EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY.] (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECTION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] BY SUCH AUTHORITY SHALL BE SHRI KETAN LALITBHAI PATEL V. ITO 2(3)(2) SURAT /I.T.A. NO.1216 /AHD/2016/A.Y.:12-13 PAGE 8 OF 10 TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER.] 7. FROM A READING OF THE PROVISIONS OF SECTION 50C(2), IT IS CLEARLY MANDATED THAT WHEN AN ASSESSEE CHALLENGE OR OBJECT TO THE ASSESSING OFFICER ADOPTING THE GUIDELINE VALUE OF THE PROPERTY FOR STAMP DUTY PURPOSES IN PLACE OF THE STATED CONSIDERATION IN THE SALE DEED FOR THE PURPOSES OF COMPUTING LTCG, THEN THE ASSESSING OFFICER OUGHT TO REFER THE PROPERTY FOR VALUATION TO THE VALUATION OFFICER OF THE INCOME TAX DEPARTMENT. IN THE INSTANT CASE, IT IS SEEN THAT THE ASSESSEES OBJECTION, TO THE ASSESSING OFFICERS ADOPTION OF THE STAMP DUTY VALUATION AT RS. 35,50,950 IN PLACE OF THE STATED CONSIDERATION OF RS. 18,66,601 IN THE SALE DEED, WERE REJECTED BY THE CIT (A) AS NO OBJECTION WAS CLAIMED TO HAVE RAISED BEFORE THE AO. WE ARE, THEREFORE, OF THE VIEW THAT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 50C(2)(A), THE AO SHOULD HAVE MADE A REFERENCE TO THE VALUATION OFFICER OF THE INCOME TAX DEPARTMENT FOR VALUATION OF THE SAID PROPERTY. THE PROVISIONS OF SECTION 50C(3), THEN COME INTO PLAY STIPULATING THE CIRCUMSTANCES AND MANNER FOR ADOPTING THE VALUE OF THE PROPERTY (I.E. GUIDELINE VALUE OR AS PER VALUATION REPORT) IN COMPUTING THE SHRI KETAN LALITBHAI PATEL V. ITO 2(3)(2) SURAT /I.T.A. NO.1216 /AHD/2016/A.Y.:12-13 PAGE 9 OF 10 LTCG. THE AO IN NOT COMPLYING WITH THE EXPRESS PROVISIONS OF SECTION 50C(2)(A) OF THE ACT OF MAKING A REFERENCE TO THE VALUATION OFFICER FOR VALUATION OF THE PROPERTY AND THE LEARNED CIT(A) IS NOT DIRECTING HIM TO DO SO WHEN THE MATTER WAS IN APPEAL, IN OUR OPINION, HAVE BY SUCH ACTION DENIED THE ASSESSEE HIS RIGHT TO HAVE THE PROPERTY VALUED BY THE VALUATION OFFICER OF THE INCOME TAX DEPARTMENT WHERE IS STAMP DUTY VALUATION IS MUCH HIGHER THAN THE DECLARED FAIR MARKET VALUE BY THE ASSESSEE. WE ARE OF THE CONSIDERED OPINION THAT THIS ACTION BY THE ASSESSING OFFICER IS VIOLATIVE OF THE PROVISIONS OF SECTION 50C(2) OF THE ACT. SINCE THIS GOES TO THE VERY ROOT OF THE MATTER IN THE INSTANT CASE, WE, IN THE INTEREST OF JUSTICE AND EQUITY REMIT THE ISSUE FOR LIMITED PURPOSE ONLY FOR DETERMINATION OF FAIR MARKET VALUE AS TO BE DETERMINED BY THE DVO AS ON DATE OF TRANSFER FOR COMPUTATION OF LONG-TERM CAPITAL GAIN ON SALE OF PROPERTY BY THE ASSESSEE AS ON 07.07.2011 TO THE FILE OF THE ASSESSING OFFICER FOR TAKING THE CONSIDERATION BY MAKING A REFERENCE TO THE VALUATION OFFICER OF THE INCOME TAX DEPARTMENT TO VALUE THE SAID PROPERTY AND TO COMPUTE THE LTCG AFTER RECEIPT OF THE VALUATION REPORT OF THE SAID PROPERTY. WE SHRI KETAN LALITBHAI PATEL V. ITO 2(3)(2) SURAT /I.T.A. NO.1216 /AHD/2016/A.Y.:12-13 PAGE 10 OF 10 MAY MAKE IT CLEAR THAT THE OTHER FINDINGS ON THE ISSUE UNDER CONSIDERATION OF LD. CIT (A) WILL REMAIN INTACT. 8. GROUND NO. 2 RELATING TO NOT ALLOWING EXPENSES OF RS. 16,250 OF THE SHARE OF THE ASSESSEE BEING FEES AND BROKERAGE EXPENSES OF RS. 1,30,000 HAS NOT BEEN PRESSED BEFORE US HENCE, IT IS DISMISSED AS NOT PRESSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR THE TERM INDICATED ABOVE AND PARTLY ALLOWED FOR STATISTICAL PURPOSE. 10. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.04.2018 SD/ - ( . . ) SD/ - ( . . ) ( C.M. GARG) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER / SURAT: / DATED : 18 TH APRIL, 2018/OPM COPY SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT