Sandipkumar R. Doshi, Ahmedabad V. The Asstt. Commissioner of Income Tax, Circle-12, Ahmedabad

ITA 1244/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2405 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 11-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APOORVA BHARDWAJA
• Assessee Lawyers: K C THAKER
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value
• Section: 50C

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.1244/AHD/2016 / ASSESSMENT YEAR: 2011-12 SANDIPKUMAR R. DOSHI 302, 3 RD FLOOR, AASHKA FLATS OPP: LIONS HALL MITHAKHALI SIX ROAD AHMEDABAD. PAN : QQQPD 3641 L VS ACIT, CIOR.12 NARAYAN CHAMBERS AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI K.C. THAKER, AR REVENUE BY : MS.APOORVA BHARDWAJA, SR.DR / DATE OF HEARING : 07/08/2018 /DATE OF PRONOUNCEMENT : 30 /08/2018 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF LD.CIT(A)-6, A HMEDABAD DATED 22.2.2016 PASSED FOR THE ASSTT.YEAR 2011-12. 2. THOUGH THE ASSESSEE HAS TAKEN FOUR GROUNDS OF AP PEAL, BUT HIS GRIEVANCE RELATES TO ONLY ONE ISSUE VIZ. THE LD.CIT (A) HAS ERRED IN CONFIRMING ADDITION OF RS.6,90,968/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 27.9.2011 DECLARING TOTAL INCOME AT RS.27 ,31,990/-. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THA T THE ASSESSEE HAS ITA NO.1244/AHD/2016 - 2 - SHOWN CAPITAL GAIN AT AN AMOUNT OF RS.11.75 LAKHS O N SALE OF CAPITAL ASSET BEING RESIDENTIAL PROPERTY SITUATED AT SUB-PLOT NO. 1/B, PLOT NO.1, SURVEY NO.51, FP NO.68, SHREE DUTT CO-OP. HOUSING S OCIETY, PALDI, ADMEASURING 209.3 SQ.METERS. IT IS PERTINENT TO NO TE THAT A PLOT OF 418.5 SQ.METERS WAS PURCHASED BY THE ASSESSEE ALONG WITH CHIRAG HASMUKHBHAI SHAH IN THE YEAR 2008. THE ASSESSEE WA S HAVING HALF- SHARE IN THE ABOVE PLOT. THE ASSESSEE HAS SOLD HIS PLOT ON 19.10.2010 FOR A CONSIDERATION OF RS.80 LAKHS. THE ASSESSEE WHILE C OMPUTING SHORT TERM CAPITAL GAIN CLAIMED COST OF ACQUISITION OF PROPERT Y AT RS.68.25 LAKHS. THE LD.AO MADE REFERENCE UNDER SECTION 55A OF THE I NCOME TAX ACT TO THE VALUATION OFFICER AND DIRECTED HIM TO DETERMINE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF SALE. THE LD.DVO DETER MINED FAIR MARKET VALUE ON THE DATE OF SALE AT RS.85,63,968/-. IT CO NTAINED FAIR MARKET VALUE OF THE PLOTS AND ITS CONSTRUCTION AS ON 19.10.2010. BY ADOPTING THIS SALE CONSIDERATION, THE LD.AO DETERMINED SHORT TERM CAPI TAL GAIN IN THE HANDS OF THE ASSESSEE. HE DISTURBED THE ACQUISITIO N OF COST CALCULATED BY THE ASSESSEE IN THE SHAPE OF CONSTRUCTION EXPENDITU RE ETC. SOMEHOW FOR THE PURPOSE OF ISSUE INVOLVED IN THIS APPEAL THAT F ACTOR IS NOT IN DISPUTE, BECAUSE THE LD.CIT(A) HAS ALREADY DELETED THIS ADDI TION. QUESTION BEFORE US IS, WHETHER ON THE BASIS OF DVOS REPORT, THE FU LL VALUE OF CONSIDERATION SHOULD BE REPLACED WITH FAIR MARKET V ALUE OF CONSIDERATION DETERMINED BY THE DVO ON THE DATE OF SALE. 4. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 48 OF THE IN COME TAX ACT PROVIDES MODE OF COMPUTATION OF CAPITAL GAIN. THIS SECTION CONTEMPLATES THAT INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAIN SHALL BE COMPUTED BY ITA NO.1244/AHD/2016 - 3 - DEDUCTING FROM THE VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER, THE AMOUNTS, VIZ. (I) EXPEN DITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER, A ND (II) THE COST OF ACQUISITION ASSET AND THE COST OF ANY IMPROVEMENT T HERETO. 5. BEFORE ADVERTING TO CONSTRUE THE MEANING OF SECT ION 48, WE DEEM IT APPROPRIATE TO TAKE INTO CONSIDERATION SECTION 50C OF THE INCOME TAX ACT. THIS SECTION PROVIDES THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL FO R THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERA TION. IN OTHER WORDS, FULL CONSIDERATION MENTIONED IN SECTION 48 IS TO BE REPLACED BY THE CONSIDERATION ON WHICH VALUE OF THE PROPERTY WAS AD OPTED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. THUS, SECTION 50C CREATE S DEEMING FICTION, WHEREIN IT PROVIDES THAT VALUE ON WHICH STAMP DUTY WAS PAID ON TRANSFER OF CAPITAL ASSETS BEING LAND OR BUILDING OR BOTH, THEN SUCH VALUE COULD BE DEEMED AS FULL VALUE OF CONSIDERATION PROVIDED IN S ECTION 48. IN THE PRESENT CASE, THE STAMP DUTY VALUATION AUTHORITY HA S ACCEPTED THE VALUE DECLARED BY THE ASSESSEE AT RS.80 LAKHS. THERE IS NO DIFFERENCE IN IT. THUS, THE FULL VALUE OF CONSIDERATION DISCLOSED BY THE AS SESSEE AND ACCEPTED BY THE STAMP DUTY VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY ARE SAME. THERE IS NO OTHER PROVISION IN THE INCOME TAX ACT WHICH CAN AUTHORISE THE AO TO REPLACE THE FULL VALUE OF C ONSIDERATION AS CONTEMPLATED IN SECTION 48. HE CANNOT MAKE REFEREN CE TO DVO FOR ASCERTAINING FAIR MARKET VALUE. THERE IS NO OTHER EVIDENCE POSSESSED BY ITA NO.1244/AHD/2016 - 4 - THE AO SHOWING THAT THE ASSESSEE HAS RECEIVED SOMET HING MORE THAN THE ONE SHOWN IN THE SALE DEED. THE LD.REVENUE AUTHORI TIES HAVE ERRED IN APPRECIATING THE ABOVE POSITION OF LAW. WE SET ASI DE ORDER OF THE REVENUE AUTHORITIES AND DIRECT THE AO TO RE-COMPUTE THE SHO RT TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE BY ADOPTING FULL VALUE OF CONSIDERATION AT RS.80 LAKHS. AS FAR AS STAMP DUTY COST AND COST OF CONST RUCTION FOR THE PURPOSE OF ACQUISITION COST ARE CONCERNED, THESE ADDITIONS HAVE BEEN DELETED BY THE LD.CIT(A). THUS, THE LD.AO WOULD TAKE INTO CONSIDE RATION SUCH ACQUISITION COST AT RS.68.25 LAKHS. WE ARE NOT DIS TURBING THIS ISSUE. WE ONLY DIRECT THE AO TO TAKE SALE CONSIDERATION AT RS .80 LAKHS INSTEAD OF RS.85,63,968/-. IN OTHER WORDS, NO ADDITION WOULD SURVIVE IN CALCULATION OF SHORT TERM CAPITAL GAIN. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2018. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 30/08/2018