Sh. Janardhan Swaroop Gupta, Meerut V. ITO, Meerut

ITA 1229/DEL/2014

• Counselvise Citation: 122920114 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 06-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHIM SINGH
• Assessee Lawyers: V RAJA KUMAR ADVS; K SAMPATH S KRISHNAN
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Valuation report; Benefit of exemption
• Section: 50C; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 1 , NEW DELHI BEFORE SH. N. K. SAINI, AM ITA NO. 1229 /DEL/201 4 : ASSTT. YEAR : 2007 - 08 JANARDHAN SWAROOP GUPTA, 75, SUN CITY, ROORKEE ROAD, MEERUT - 250001(UP) VS INCOME TAX OFFICER , WARD - 1( 3 ) , MEERUT (APPELLANT) (RESPONDENT) PAN NO. A HOPG6774E ASSESSEE BY : SH . K. SAMPATH, S. KRISHNAN & V. RAJA KUMAR, ADVS. REVENUE BY : SH. BHIM SINGH , SR. DR DATE OF HEARING : 06 .0 7 .2015 DATE OF PRONOUNCEMENT : 16 .09 .2015 ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 11.12.2013 OF LD. CIT (A), MEERUT . 2 . FOLLOWING GROUND S HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE LEARNED AO ERRED IN LAW AND ON FACTS IN APPLYING THE PROVISIONS OF SECTION 50C OF THE IT ACT AND MAKING AN ADDITION OF RS. 3,00,000/ - AS ALLEGED LONG TERM CAPITAL GAIN SHOWN SHORT BY THIS AMOUNT. THAT THE LD. CIT(A) ALSO ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADDITION AND OBSERVATIONS OF THE LD. AO. 2. THAT THE LD. AO AND LD. CIT(A) ERRED IN NOT ALLOWING THE BENEFIT OF EXEMPTION U/S 54 OF THE IT ACT FOR AN AMOUNT OF RS. 7,26,975/ - FOR COST OF SEMI FINISHED HOUSE AND FURTHER INVESTMENT OF RS. ITA NO.1229 /DEL /2014 JANARDHAN SWAROOP GUPTA 2 2,76,000/ - FOR MAKING IT A RESIDENTIAL UNIT. THAT THE ACTUAL CL AIM OF EXEMPTION BEFORE THE LD. AO IN RESPECT OF FURTHER INVESTMENT DURING THE SPECIFIED PERIOD WAS OF RS. 2,91,903/ - AS AGAINST RS. 2,76,000/ - AS ESTIMATED BY THE APPROVED VALUER. 3. THAT THE OBSERVATIONS MADE BY THE LD. AO AND UPHELD BY THE LD. CIT(A) F OR MAKING THE ADDITION AND DISALLOWANCE AS MENTIONED IN GROUND NOS. 1 & 2 ARE IN CONSISTENT WITH THE FACTUAL AND LEGAL POSITION OF THE CASE. 3 . FACTS OF THE CASE IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE AO NOTICED THAT THE ASSE SSEE HAS SOLD HIS 1/3 RD SHARE IN HOUSE PROPERTY NO. 81 (JAMNOTRI) SITUATED AT HILL STREET, MEERUT CANTT AND HAD SHOWN SALE CONSIDERATION AT RS. 18,33,333/ - . ACCORDING TO THE AO THE VALUE OF THE PROPERTY FOR STAMP PURPOSES WAS AT RS. 64,00,000/ - AND THE ASS ESSEE S SHARE CAME TO RS. 21,33,333/ - . THEREFORE, THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) WERE APPLICABLE AND THE ASSESSEE HAD SHOWN SALE CONSIDERATION VALUE SHORT BY RS. 3,00,000/ - . THE AO MADE THE ADDITI ON TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF LONG TERM CAPITAL GAIN SHOWN SHORT BY RS. 3,00,000/ - . 4 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD ONLY OCCUPANCY RIGHT IN THE LAN D AS THE PROPERTY WAS AN OLD GRANT PROPERTY . IT WAS FURTHER STATED THAT THE RIGHTS OF THE PROPERTY WERE TRANSFERRED THROUGH A REGISTERED AGREEMENT ITA NO.1229 /DEL /2014 JANARDHAN SWAROOP GUPTA 3 DATED 23.05.2006 AND NO SALE DEED WAS EXECUTED AND A T THAT TIME, THE VALUE OF THE PROPERTY WAS ASSESSED AT RS. 55,00,000/ - AN D STAMP DUTY OF RS. 2.20 LAKHS WAS PAID. IT WAS CONTENDED THAT ONCE THE VALUATION OF THE PROPERTY HAD BEEN ASSESSED, IT COULD NOT BE VARIED. IT WAS POINTED OUT THAT PRIOR TO 01.10.2009, PROVISIONS OF SECTION 50C OF THE ACT COULD ONLY B E INVOKED IF THE STAM P DUTY IN RESPECT OF PROPERTY WAS ACTUALLY ASSESSED AT A PRICE HIGHER THAN THE CONSIDERATION RECEIVED AND COULD NOT BE INVOKED IF IT WAS ONLY ASSESSABLE AT A HIGHER RATE. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT T HE AGREEMENT DATED 23.05.2006 REVEALED THAT THERE WAS NO STATEMENT IN THE AGREEMENT THAT THE STAMP DUTY VALUE OF THE PROPERTY WAS RS. 55,00,000/ - . HE FURTHER OBSERVED THAT IN THE UNDATED AGREEMENT BY WHICH THE ASSESSEE CLAIMED TO HAVE TRANSFERRED THE POSSE SSION OF THE PROPERTY , IT WAS CATEGORICALLY STATED THAT THE STAMP DUTY VALUE OF THE PROPERTY WAS RS. 64,00,000/ - . HE ALSO OBSERVED THAT IF THE AGREEMENT OF 23.05.2006 WAS CONCLUSIVE THAN THERE WAS NO NEED TO EXECUTE ANOTHER AGREEMENT. THE LD. CIT(A) ACCORD INGLY CONFIRMED THE ADDITION MADE BY THE AO. 6 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE WAS NOT HAVING ANY RIGHT IN THE PROPERTY B UT ONLY RIGHT TO USE THE PROPERTY WAS SOLD, SO THERE WAS NO TRANSFER OF THE ITA NO.1229 /DEL /2014 JANARDHAN SWAROOP GUPTA 4 PROPERTY. IT WAS FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 50C OF THE ACT WERE NOT APPLICABLE FOR TRANSFERRING THE RIGHT TO USE. THE RELIANCE WAS PLACED ON THE FOLLOWING CAS E LAWS: NAVNEET KUMAR THAKKAR VS ITO (2008) 110 ITD 525 7 . IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW AND REITERATED THE OBSERVATIONS MADE BY THE LD. CIT(A) IN THE IMPUGNED ORDER. 8 . I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSEE HAD SOLD HIS SHARE IN RIGHT TO USE THE PROPERTY ON THE BASIS OF REGISTERED AGREEMENT DATED 23.05.2006 WHEREIN THE VALUE O F THE PROPERTY WAS ASSESSED AT RS. 55,00,000/ - AND STAMP DUTY OF RS. 2.20 LAKHS W AS PAID. HOWEVER, THE LD. CIT(A) CONSIDERED THE UNDATED AGREEMENT WHEREIN THE VALUE OF THE PROPERTY WAS SHOWN AT RS. 64,00,000/ - . IN THE PRESENT CASE, WHEN THE LD. CIT(A) HIMS ELF ADMITTED THAT THE SUBSEQUENT AGREEMENT WAS UNDATED AND NO TRANSACTION TOOK PLACE ON THE BASIS OF THE SAID AGREEMENT THEN IT IS NOT CLEAR HOW H E ADOPTED THE VALUE SHOWN IN THE SAID AGREEMENT. FURTHERMORE, NEITHER THE AO NOR THE LD. CIT(A) HAS CONSIDERED THIS SUBMISSIONS OF THE ASSESSEE THAT THERE WAS TRANSFER OF RIGHT TO USE THE PROPERTY AND THE PROPERTY ITSELF WAS NOT SOLD. IN MY OPINION, THE FACTS OF THIS CASE ARE NOT CLEAR, THEREFORE, IT DESERVES TO BE REMAND ED BACK TO THE FILE OF THE AO TO BE ADJUDIC ATED AFRESH IN ITA NO.1229 /DEL /2014 JANARDHAN SWAROOP GUPTA 5 ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9 . THE ANOTHER ISSUE VIDE GROUND NO. 2 RELATES TO THE DENIAL OF BENEFIT OF EXEMPTION U/S 54 OF THE ACT. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD CLAIMED EXEMPTION OF LONG TERM CAPITAL GAIN U/S 54 OF THE ACT, O N THE BASIS THAT HE HAD PURCHASED ONE RESIDENTIAL HOUSE ON 21.07.2004 PRIOR TO THE SALE OF HOUSE ON 31 .05.2006. THE AO WAS OF THE VIEW THAT THE EXEMPTION U/S 54 OF THE ACT COULD HAVE BEEN CLAIMED IF THE ASSESSEE PURCHASED A RESIDENTIAL HOUSE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS LATER FROM THE DATE ON WHICH THE TRANSFER TOOK PLACE OR WITHIN A PER IOD OF THREE YEARS AFTER THE DATE OF TRANSFER HAD CONSTRUCTED A RESIDENTIAL HOUSE. THE AO REJECTED THE CLAIM AMOUNTING TO RS. 2,91,903/ - OF THE ASSESSEE U/S 54 OF THE ACT. 10 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT HE HAD PURCHASED A SEMI - FINISHED HOUSE ON 21.07.2004 AND THE INVESTMENT WAS MADE IN THIS PROPERTY OUT OF THE ADVANCES RECEIVED TOWARDS THE SALE OF HIS OLD RESIDENTIAL PROPERTY. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD INVESTED FUNDS TO MAKE THE SEMI - FINISHED HOUSE PURCHASED ON 21.07.2004 , FIT FOR A RESIDENTIAL UNIT AND THE INVESTMENT MADE BY THE ASSESSEE IN THE PERIOD APRIL 2006 TO JULY 2007 ITA NO.1229 /DEL /2014 JANARDHAN SWAROOP GUPTA 6 WAS AT RS. 2,76,000/ - AS PER THE VALUATION REPORT. THEREFORE, THE ASSESSEE WAS ENTITLED FOR EXEMPTION U/S 54 OF THE ACT. 11 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD TRANSFERRED THE PROPERTY ON 23.05.2006. THEREFORE, THE BENEFIT OF EXEMPTION U/S 54 OF THE ACT FOR THE PURCHASE OF PROPERTY ON 21.07.2004 WAS INADMISSIBLE. HE FURTHER OBSERVED THAT FOR THE INVESTMENT MADE SUBSEQUENT TO THE PURCHASE, NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE PROPERTY PURCHASED ON 21.07.2004 WAS SEMI - FINISHED OR THAT ANY ACTUAL INVESTMENT WAS MADE, EXCEPT FOR A REPO RT OF THE VALUER. HE ACCORDINGLY CONFIRMED THE ACTION OF THE AO. 12 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT NEITHER THE AO NOR THE LD. CIT(A) HAD CONSIDERED THEIR VITAL FACT THAT THE ASSESSEE RENOVATED THE SEMI - FINISHED HOUSE DURING THE PERIOD APRIL 2006 TO JULY 2007 AND THE PROPERTY WAS SOLD ON 23.05.2006. THEREFORE, THE ASSESSEE WAS ENTITLED FOR THE BENEFIT OF EXEMPTION U/S 54 OF THE ACT. 13 . IN HIS RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. ITA NO.1229 /DEL /2014 JANARDHAN SWAROOP GUPTA 7 14 . I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LD. CIT(A) AT THE O NE HAND A DMITTED THAT THE ASSESSEE HAS FUR NISHED THE VALUATION REPORT AND O N THE OTHER HAND, HE MENTIONED THAT THE ASSESSEE HAD NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT THE INVESTMENT WAS MADE SUBSEQUENT TO THE PURCHASE. IN MY OPINION, THE LD. CIT(A ) HAS GIVEN THE CONTRADICTORY FINDING AND THE FACTS ARE NOT CLEAR , THEREFORE, THIS ISSUE ALSO REQUIRES A FRESH ADJUDICATION. I, THEREFOR E SET ASIDE THE IMPUGNED ORDER O N THIS ISSUE AND REMAND THE SAME TO THE FILE OF THE AO TO BE ADJUDICATED AFRESH IN ACCOR DANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 1 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ( ORDER PRON OUNCED IN THE COURT ON 16 /09 /2015 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DATED: 16 /09 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR