SMT. NEELADEVI RAMKISAN KABRA, Nagpur V. ITO-WARD-2(4), Nagpur

ITA 128/NAG/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2148 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 20-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: R V LOYA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Valuation report; Tax effect
• Section: 50C; 54F; 147; 37

Judgement Text

1 ITA NO . 128/NAG/2014 AND ITA NO. 244/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 128/NAG/2014. ASSESSMENT YEAR : 2004 - 05. SMT. NEELADEVI RAMKISHAN KABRA, THE INCOME - TAX OFFICER, NAGPUR. VS. WARD - 2(4), NAGPUR. PAN ADGPK6897A. APPELLANT. RESPONDENT. I.T.A. NO. 244/NAG/2014. ASSESSMENT YEAR : 2004 - 05. THE INCOME - TAX OFFICER, SMT. NEELADEVI RAMKISHAN KABRA, WARD - 1(3), NAGPUR. VS. NAGPUR. A SSESSEE BY : SHRI R.V. LOYA. DEPARTMENT BY : SHRI A.R., NINAWE. DATE OF HEARING : 18 - 07 - 2016 DATE OF PRONOUNCEMENT : 19 TH JULY, 2016 O R D E R THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 10 - 01 - 2014 AND PERTAIN TO ASSESSMENT YEAR 2004 - 05. 2. REVENUES APPEAL: THE GROUNDS RAISED BY THE REVENUE READ AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.22,00,000/ - MADE BY THE A.O. IN RESPECT OF UNACCOUNTED SALE CONSIDERATION WHICH WAS SUPPOSED BY TE UNSIGNED AGREEMENT DT. 01.08.2013. 2 ITA NO . 128/NAG/2014 AND ITA NO. 244/NAG/2014 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN ALLOWING THE FULL DEDUCTION U/S 54F IGNORING THE FACT THAT THE ASSESSEE HAD INVESTED TWO DISTINCT AND SEPARATE HOUSE PROPERTIES AND EXEMPTION U/S 54F WAS AVAILABLE FOR INVESTMENT IN ONE HOUSE ONLY. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN ALLOWING THE COST OF IMPROVEMENT TO THE EXTENT OF RS.3,41,018/ - IGNORING THE FACT THAT THE ASSESSEE WAS NOT ABOVE TO SUBSTANTIATE THE SAME BY DOCUMENTARY EVIDENCE/VOUCHERS FOR WHICH ONUS LIES ON THE ASSESSEE. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN IGNORING THE FACT THAT WITHDRAWAL FROM CAPITAL ACCOUNT DID NOT PROVE ITS UTILIZATION FOR RENOVATION OF THE HOU SE PROPERTY UNDER CONSIDERATION AS CLAIMED BY THE ASSESSEE. 3. AT THE OUTSET THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE TAX EFFECT IN THIS APPEAL FILED BY THE REVENUE IS BELOW RS. 10 LAKHS WHICH IS BELOW THE TAX LIMIT AS PRESCRIBED BY THE CBDT IN ITS CIRCULAR NO. 21/2015 DATED 10 - 12 - 2015. LEARNED COUNSEL ALSO RELIED ON THE LETTER NO. F.NO. 279/MISC./M - 142/2007 - ITJ(PART), DATED 08 - 03 - 2016 WHEREIN IT WAS CLARIFIED THAT THE MONETARY LIMIT OF RS.10 LAKHS FOR FILING APPEALS BEFORE THE ITAT WOULD APP LY EQUALLY TO CROSS OBJECTION U/S 253(4) OF THE ACT. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE RELIED ON THE DECISION OF DELHI BENCHES OF ITAT IN ITA NO. 245/DEL/2014 AND C.O. NO. 254/DEL/2014 DATED 07 - 01 - 2016 IN THE CASE OF AJAY KALIA. 4. I HAVE HEAR D BOTH THE COUNSEL AND PERUSED THE RECORDS. AT THE THRESHOLD I NOTE THAT AS PER THE CBDT CIRCULAR NO. 21/2015 DATED 10 - 12 - 2015 THE MONETARY LIMIT FIXED FOR FILING APPEALS BY THE DEPARTMENT BEFORE THE INCOME - TAX APPELLATE TRIBUNAL IS HAVING TAX EFFECT OF M ORE THAN RS.10,00,000/ - . IT HAS BEEN MENTIONED IN PARA 10 OF THE ABOVE SAID CIRCULAR THAT THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS. FURTHER IT HAS BEEN PROVIDED THAT THE PENDING APPEALS BELOW THE SPECIFIED LIMIT MAY BE WITHDRAWN/NOT P RESSED. I FIND THAT IN THIS APPEAL THE TAX EFFECT IS BELOW RS.10,00,000/ - . 3 ITA NO . 128/NAG/2014 AND ITA NO. 244/NAG/2014 5. THERE ARE CERTAIN EXCEPTIONS PROVIDED IN THE ABOVE SAID CIRCULAR. LEARNED D.R. DID NOT DISPUTE THAT THIS APPEAL IS BELOW THE ABOVE SAID LIMIT. FURTHER HE COULD NOT POINT OUT ANY FEATURE IN THE PRESENT APPEAL INVITING ANY OF THE EXCEPTIONS IN THE SAID CIRCULAR. 6. IN THE LIGHT OF THE ABOVE OBSERVATIONS, THIS APPEAL BY THE REVENUE STANDS DISMISSED IN LIMINE ON ACCOUNT OF TAX EFFECT. 7. ASSESSEES APPEAL. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER : 1. THAT THE ORDER OF THE ASSESSING OFFICER IS BAD IN LAW AND ON FACTS AND LEARNED C.I.T.(A) HAS ERRED IN CONFIRMING THE SAME. ON THE FACTS AND CIRCUMSTANCES OF THE CASE ACTION OF BOTH THE AUTHORITIES IS UNJUSTIFIED. 2. THAT THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN REOPENING THE ASSESSMENT U/S 147 AND THE LEARNED CIT(A) WAS UNJUSTIFIED IN UPHOLDING THE ACTION OF THE AO. 3. THAT THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN MAKING ADDITION OF RS. 22 LAKHS BY HOLDIN G THAT THE ASSESSEE HAS UNDERSTATED THE SALE CONSIDERATION OF THE PROPERTY SOLD BY RS.44 LAKHS (50% ASSESSEES SHARE) AND THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.6,08,061/ - . ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AC TION OF BOTH THE AUTHORITIES IS ARBITRARY AND WITHOUT ANY SOUND BASIS. 4. THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN ADOPTING THE FAIR MARKET VALUE OF THE IMPUGNED PROPERTY AT RS.73,16,122/ - AS SALE CONSIDERATION IN PLACE OF THE ACTUAL SALE CONSIDER ATION RECEIVED AND THEREBY CONFIRMING THE ADDITION TO THE INCOME AT RS.6,08,061/ - . ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ACTION OF THE LEARNED CIT(A) IS UNWARRANTED AND UNJUSTIFIED. 8. AT THE OUTSET LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT HE SHALL NOT BE PRESSING FOR GROUND NO. 1 AND 2. HENCE THE ONLY EFFECTIVE GROUND IS THAT THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.6,08,061/ - . 9 . IN THIS CASE THE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE BY THE AO ON ACCOUNT OF AN UNSIGNED AGREEMENT FOR PURCHASE WHICH SHOWED THE PRICE 4 ITA NO . 128/NAG/2014 AND ITA NO. 244/NAG/2014 CONSIDERATION IN EXCESS OF SALE VALUE CONSIDERATION OF RS.22 LAKHS. THIS ADDITION WAS DELETED BY THE LEARNED CIT(APPEALS) ON THE BASIS THAT THE UNSIGNED AGREEMENT CANNOT BE A BASIS FOR ADDITION. HOW EVER, THE LEARNED CIT(APPEALS) CONFIRMED THE ADDITION OF RS.6,08,061/ - . 10. AGAINST THE ABOVE ORDER, THE ASSESSEE HAS APPEALED BEFORE THE ITAT. 11 . LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ADDITION SUSTAINED BY THE LEARNED CIT(APPEALS) HAS NO BASIS AS THE SAME IS IN CONTRAVENTION TO THE PROVISION OF SECTION 50C(3). LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 12 . UPON CAREFUL CONSIDERATION I FIND THAT THE OBSERVATION OF THE LEARNED CIT(APPEALS) IN THIS REGARD MAY BE GAINFULLY REFERRED HEREUNDER : IT, HOWEVER, IS PERUSED FROM RECORDS THAT THE PROPERTY IN QUESTION WAS REFERRED TO VALUATION OFFICER FOR DETERMINATION OF FMV OF THE PROPERTY AS ON 23.03.2003. THE FMV WAS DETERMINED AT RS.73,16,122/ - VIDE VALUATION REPORT DATED 22.1 0.2010. HOWEVER, THE LEARNED AO OMITTED TO CONSIDER THE SAME IN THE IMPUGNED ORDER UNDER APPEAL. THE AR OF THE APPELLANT HAS NOT DISPUTED THE FMV DETERMINED BY THE VALUATION OFFICER AT RS.73,16,122/ - , THEREFORE, THE AO IS DIRECTED TO ADOPT THE VALUE OF THE PROPERTY TRANSFERRED IN QUESTION AT RS.73,16,122/ - , AS AGAINST RS.61,00,000/ - AND ACCORDINGLY, THE ADDITION TO THE TUNE OF RS.6,08,061/ - (ASSESSEES SHARE BEING 50%) STANDS CONFIRMED. THUS, THE ADDITION OF RS.22,00,000/ - , MADE ON THE BASIS OF UNSIGNED AGR EEMENT TO SALE, IS DIRECTED TO BE DELETED. BUT, THE ADDITION TO THE TUNE OF RS.6,08,061/ - ON ACCOUNT OF DIFFERENCE IN VALUATION OF THE PROPERTY IS CONFIRMED. 13 . I FIND THAT SECTION 50C READS AS UNDER : 50C. (1) WHERE THE CONSIDERATION RECEI VED 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 [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 5 ITA NO . 128/NAG/2014 AND ITA NO. 244/NAG/2014 ( 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 AN Y SUCH REFERENCE IS MADE, THE 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 WEA LTH - TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, 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 PURP OSES 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 VALU ATION 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 PROVI SIONS CONTAINED IN SUB - SECTION (2), WHERE THE VALUE ASCERTAINED UNDER SUB - SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED 18 [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB - SECTION (1), THE VALUE SO ADOPTED OR ASSESSED 18 [OR ASSESSABLE] BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDE RATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER.] 14. THUS I FIND THAT SECTION 50C(3) MANDATES THAT IN A SITUATION AS A PRESENT ONE WHEN THE VALUE ADOPTED BY THE VALUATION OFFICER IS HIGHER THAN THE STAMP VALUATION FIGURE, THE STAMP VALUATION FIGURE SHOULD BE ADOPTED. HENCE I MODIFY THE CIT(APPEALS) ORDER AND DIRECT THAT THE AO SHOULD ADOPT THE STAMP VALUATION FIGURE OF RS.62,15,000/ - AND MAKE THE COMPUTATION ACCORDINGLY. 15 . IN THE RESULT, THIS APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. 6 ITA NO . 128/NAG/2014 AND ITA NO. 244/NAG/2014 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JULY,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 19 TH JULY, 2016. COPY FORWARDED TO : 1. S MT. NEELADEVI RAMKISAN KABRA, C/O LOYA BAGRI & CO., C.AS. GANDHIBAGH, NAGPUR. 2. I.T.O. WARD - 2(4)/ ITO WARD - 1(3), NAGPUR. 3. C.I.T. - I, NAGPUR. 4. CIT(APPEALS), - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.