Sri. A.N. Sanjay, Bangalore V. ACIT, Bangalore

ITA 1231/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0392 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 18-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR AGARWALA JT
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1231/BANG/2015 ASSESSMENT YEAR : 2006-07 SHRI A.N. SANJAY, NO.89, NGEF LAYOUT, SANJAYNAGAR, BENGALURU 560 094. PAN: ALKPS 3251L VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 14(1), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI ANIL KUMAR, CA RESPONDENT BY : SHRI SUNIL KUMAR AGARWALA, JT. CIT(DR) DATE OF HEARING : 04.05.2016 DATE OF PRONOUNCEMENT : 13.05.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 27.07.2015 OF THE CIT(APPEALS)-5, BENGALURU INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (A) SO FAR AS IS AGAINST THE APPELLANT IS AGAINST LAW, FACTS O F THE CASE AND WEIGHT OF EVIDENCE. ITA NO.1231/BANG/2015 PAGE 2 OF 7 2. THE LEARNED APPELLATE OFFICER HAS ERRED IN CONFI RMING WITH THE AO THE CONSIDERATION MENTIONED IN THE TWO SALE DEEDS AMOUNT TO RS. 81,13,000/-. 3. THE LEARNED APPELLATE OFFICER HAS ERRED IN IGN ORING 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 T HE SHARE OF THE APPELLANT IN THE LONG TERM CAPITAL GAIN AT R S. 13,60,856. 5. THE APPELLANT PRAYS THAT HE MAY BE PERMITTED TO RAISE ADDITIONAL GROUNDS AT THE TIME OF HEARING OF THIS A PPEAL. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL F OR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDER THAT THE AO HAS NOTED FROM THE ITS DETAILS THAT ASSESSEE HAS SOLD THE IMMOVABL E PROPERTY FOR RS.35 LAKHS DURING THE FINANCIAL YEAR RELEVANT TO IMPUGNE D ASSESSMENT YEAR AND ASSESSEE WAS ASKED TO EXPLAIN THE TRANSACTION. IN RESPONSE THERETO, IT WAS SUBMITTED THAT ASSESSEE JOINTLY OWNED (1/5 TH SHARE) AND SOLD IMMOVABLE PROPERTY IN TWO PARTS TO DIFFERENT PARTIES FOR RS.8 1,13,000. THE AO HAS NOTED FROM THE DETAILS AND HAS OBSERVED THAT IN THE RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR, ASSESSEE HAS DECLARED CAP ITAL GAIN OF RS.5,00,000 AND CLAIMED EXEMPTION U/S. 54EC OF THE ACT. THE ASSESSEE HAS CLAIMED THAT ASSESSEE HAS RECEIVED LESSER AMOUN T, BUT THE AO HAS TAKEN TOTAL SALE CONSIDERATION AS RS.81,13,000 AND AFTER ALLOWING EXEMPTION U/S. 54EC, ESTIMATED THE LONG TERM CAPITA L GAIN AT RS.8,63,960. ACCORDINGLY ADDITION OF RS.8,63,960 WAS MADE, AGAIN ST WHICH AN APPEAL WAS FILED BEFORE THE CIT(APPEALS). ITA NO.1231/BANG/2015 PAGE 3 OF 7 3. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS BEFOR E THE CIT(APPEALS) EXPLAINING THE RECEIPT OF LESSER AMOUNT. IT WAS AL SO CONTENDED THAT THOUGH ASSESSEE HAS RAISED A DISPUTE WITH REGARD TO ACTUAL SALE CONSIDERATION ADOPTED BY THE AO, BUT THE AO HAS NOT MADE ANY REFE RENCE TO DVO TO ASSESS THE FAIR MARKET VALUE OF THE PROPERTY. RELY ING UPON THE ASSESSMENT ORDER, THE CIT(A) CONFIRMED THE ADDITION AFTER GRAN TING PART RELIEF. 4. NOW THE ASSESSEE IS BEFORE US WITH THE SUBMISSIO N THAT ONCE THE ASSESSEE HAS RAISED AN OBJECTION TO THE VALUATION T O BE ADOPTED BY THE AO AS PER THE PROVISIONS OF SECTION 50C OF THE ACT, TH E AO SHOULD HAVE MADE A REFERENCE TO THE DVO IN ORDER TO ASCERTAIN THE FAIR MARKET VALUE OF THE PROPERTY SO THAT CAPITAL GAIN MAY BE COMPUTED PROPE RLY IF ARISEN. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT IN THE INTEREST OF JUSTICE, THE MATTER BE RESTORED TO THE AO WITH A DIRECTION T O MAKE REFERENCE TO THE DVO AND ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW IN LIGHT OF THE ASSESSEES CONTENTIONS. 5. THE LD. DR SIMPLY PLACED RELIANCE ON THE ORDER O F THE CIT(APPEALS). 6. HAVING CAREFULLY EXAMINED THE ORDER OF LOWER AUT HORITIES, WE FIND THAT UNDISPUTEDLY THE ASSESSEE RAISED AN OBJECTION TO TH E VALUATION BEING ADOPTED BY THE AO. INSTEAD OF MAKING A REFERENCE T O THE DVO, THE AO HIMSELF HAS ADOPTED THE VALUE DECLARED IN THE SALE DEEDS WITHOUT LOOKING INTO THE ASSESSEE CONTENTIONS WITH REGARD TO LESSER RECEIPT OF SALE CONSIDERATION. THE CIT(A) HAS ALSO NOT EXAMINED TH E EXPLANATION ITA NO.1231/BANG/2015 PAGE 4 OF 7 FURNISHED BEFORE HIM AND FOR THE SAKE OF REFERENCE, WE EXTRACT 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 PROPERTY BEARING PRESENT NO 68/2, KRISHNA BLOCK, 1ST 'A' MAIN ROAD, SESHADRIPUR AM, BANGALORE AND AGREEMENT HOLDER (ONE SRI L MALLIKARJ UN) SOLD BY TWO SALE DEEDS FOR A TOTAL CONSIDERATION RS. 45 LAK HS AND APPELLANT RECEIVED RS. 6 LAKHS AND INVESTED THE SAME IN NABAR D 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 WERE BEING DRAGGED ON PAST MA NY YEARS. THE AGREEMENT HOLDER HAD NO FUNDS TO MAKE PAYMENT I N TERMS OF THE AGREEMENT WHEN NEW BUYERS SHOWED INTEREST TO PU RCHASE THE PROPERTY IT WAS INTER-ALIA AGREED AMONGST THE OWNER S AND AGREEMENT HOLDER, THAT PROPERTY WAS TO BE SOLD FOR RS. 45 LAKHS AND SALE PROCEEDS BE DIVIDEND IN PARTICULAR RATIO. 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 H OLDER AS ONE OF THE VENDORS. (C) THE KARNATAKA GOVERNMENT HAS CONFERRED UNDER RU LE 7 OF THE KARNATAKA STAMP (CONSTITUTION COMMITTEE FOR ESTIMAT ION 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 ITA NO.1231/BANG/2015 PAGE 5 OF 7 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. 14.63 1AKHS = 81.13 LACS. THIS IS THE VALUE TAKEN BY AO U/S 50C O F 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 P URPOSE OF DETERMINATION OF SALE PRICE. THE PROPERTY WAS AGREE D TO BE SOLD TO THE PRESENT BUYERS WHEN THE DISPUTE BETWEEN THE OWN ERS AND AGREEMENT HOLDER EXISTED I.E O. S. NO 5409/1994 AND O. S NO. 517/1996, THE AGREEMENT HOLDER GOT RS.20 LACS WHERE AS THE OWNERS 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 HOL DER 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' 3. THE A.O HAS DETERMINED THE MARKET VALUE OF THE LAND 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 FATHER 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/-. ITA NO.1231/BANG/2015 PAGE 6 OF 7 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/- 1/4 TH SHARE 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. 7. HAVING CAREFULLY EXAMINED THE ORDER OF LOWER AUT HORITIES, WE FIND THAT THE CONTENTIONS OF THE ASSESSEE WITH REGARD TO LESS ER RECEIPT OF SALE CONSIDERATION WERE NOT EXAMINED BY THE REVENUE AUTH ORITIES. THEREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF LD. CIT(APPEALS) AND RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO READJUDICATE THE ISSUE AFRESH AFTER AFFORDING OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. IF NEED BE, REFERENCE MAY BE MADE TO THE DVO TO ASCERTAIN THE FAIR MARKET VALUE. 8. IN THE RESULT, THE APPEAL STANDS ALLOWED FOR STA TISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF MAY, 2016. SD/- SD/- ( INTURI RAMA RAO ) (SUNIL KUMAR YADA V ) ACCOUNTANT MEMBER JUDICIA L MEMBER BANGALORE, DATED, THE 13 TH MAY, 2016. /D S/ ITA NO.1231/BANG/2015 PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.