ACIT, CHENNAI V. M/s. Southern Power Systems Pvt. Ltd., CHENNAI

ITA 1303/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58026 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 07-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M VISWANATHAN
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 147; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.1303(MDS)/2011 ASSESSMENT YEAR : 2005-06 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE VI(3), CHENNAI. VS. M/S.SOUTHERN POWER SYSTEMS PVT. LTD., 5-SMITH ROAD, CHENNAI-600 002. PAN AABCS2196R. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P JACOB, IRS, C OMMISSIONER OF IT RESPONDENT BY:SHRI M.VISWANATHAN, C.A. DATE OF HEARING : 13 TH MARCH, 2012 DATE OF PRONOUNCEMENT : 13 TH MARCH, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2005-06. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-V AT CHENNAI, DATED 7-4-2011 AND ARISS OUT OF THE ASSESSMENT COMP LETED - - ITA 1303 OF 2011 2 UNDER SECTION 143(3), READ WITH SECTION 147 OF THE INCOME-TAX ACT, 1961. 2. THE GROUNDS RAISED BY THE REVENUE ARE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DI RECTING THE ASSESSING OFFICER TO ADOPT THE SALE PRICE AT ` 1.40 CRORES, BEING THE PRICE REALIZED BY THE ASSESSEE, AS AGAINST THE VALUE ADOPTED BY THE ASSESSING OFFICER AS PER THE PROVISIONS OF S ECTION 50C OF THE INCOME-TAX ACT, 1961. IT IS THE CASE OF THE RE VENUE THAT SECTION 50C IS A SPECIAL PROVISION TO CHECK TAX EVA SION IN RESPECT OF CAPITAL GAINS AND HENCE THERE CAN BE NO JUSTIFIC ATION TO ADOPT THE PRICE REALIZED BY THE ASSESSEE HIMSELF FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. IT IS ALSO THE CASE OF TH E REVENUE THAT THE ASSESSING OFFICER HAS RIGHTLY INVOKED THE PROVI SION OF SECTION 50C AND ADOPTED THE VALUE GIVEN BY THE VALUATION OF FICER AS MANDATED BY THE PROVISIONS OF SECTION 50C. 3. WE HEARD SHRI SHAJI P JCOB, THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENU E AND SHRI M.VISWANATHAN, THE CHARTERED ACCOUNTANT APPEAR ING FOR THE RESPONDENT-ASSESSEE. - - ITA 1303 OF 2011 3 4. SECTION 50C HAS BEEN INTRODUCED BY THE FINANCE ACT, 2002 WITH EFFECT FROM 1-4-2003. IT MEANS THAT IT APPLIES TO THE ASSESSMENT YEAR 2003-04 ONWARDS. HERE, IN THE PRESENT CASE, THE ASSESSMENT YEAR IS 2005-06. THEREFORE, S ECTION 50C APPLIES. 5. SECTION 50C IS A DEEMING PROVISION WHEREBY THE SALE CONSIDERATION OF A CAPITAL ASSET IS TAKEN AS T HE GUIDELINE VALUE DECLARED BY THE STATE AUTHORITIES IRRESPECTIV E OF THE ACTUAL CONSIDERATION RECEIVED BY THE SELLER. IF THE ACTUA L PRICE REALIZED BY AN ASSESSEE AND THE GUIDELINE VALUE ARE THE SAME , THERE IS NO PROBLEM IN ADMINISTERING SECTION 50C. THERE IS A FRIENDLY CONCLUSION OF EVENTS. 6. BUT THE PROBLEM ARISES WHERE THE GUIDELINE VALU E IS DIFFERENT FROM THE APPARENT CONSIDERATION STATED IN THE DOCUMENT. IF THE APPARENT CONSIDERATION STATED IN THE DOCUMEN T IS LESS THAN THE GUIDELINE VALUE, SECTION 50C OPERATES IN AND TH E GUIDELINE VALUE HAS TO BE TAKEN AS THE CONSIDERATION. THE GR IEVANCE AN ASSESSEE MAY FEEL IN THIS CONTEXT HAS TWO OPTIONS T O BE REDRESSED. THE FIRST WAY IS THAT THE ASSESSEE MAY REQUEST THE ASSESSING OFFICER TO REFER THE MATTER TO THE DVO FO R THE PURPOSE - - ITA 1303 OF 2011 4 OF MAKING A VALUATION OF THE PROPERTY SOLD TO ARRIV E AT THE FAIR CONSIDERATION. ONCE THE DVO FURNISHES THE VALUE TO THE ASSESSING AUTHORITY, THE ASSESSEE MAY MAKE ITS POIN TS BEFORE THE ASSESSING AUTHORITY ON THE MERITS OF THE VALUAT ION. AFTER HEARING THE ASSESSEE ON THE MERITS OF THE VALUATION , THE ASSESSING OFFICER MAY DETERMINE THE CONSIDERATION F OR WORKING OUT THE CAPITAL GAINS AND THEREAFTER IF ANY GRIEVAN CE IS LEFT, THE ASSESSEE HAS GOT USUAL APPELLATE REMEDIES. 7. THE OTHER OPTION IS THAT THE ASSESSEE MAY APPRO ACH THE STATE APPELLATE AUTHORITIES TO FIX THE VALUE OF THE PROPERTY FAIRLY. ONCE THE APPELLATE AUTHORITY DECIDES THERE ON, THE ASSESSING OFFICER HAS TO ADOPT THAT VALUE AND COMPU TE THE CAPITAL GAINS. ANY INTERFERENCE BY THE APPELLATE A UTHORITIES UNDER THE INCOME-TAX ACT ON MATTER OF GUIDELINE VALUE OF THE ACTUAL CONSIDERATION IS PERMISSIBLE ONLY IF THE ABOVE STAT ED COURSE OF ACTION IS FOLLOWED. 8. IN THE PRESENT CASE, ON THE OTHER HAND, THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS DIRECTLY IN TERFERED IN FIXING THE CONSIDERATION AND WORKED OUT THE CAPITAL GAINS. THIS IS AGAINST LAW BECAUSE THE COMMISSIONER OF INCOME-TAX( APPEALS) - - ITA 1303 OF 2011 5 IS IGNORING THE DEEMING MANDATORY PROVISIONS CONTAI NED IN SECTION 50C. ON THIS GROUND THE ORDER OF THE COMMI SSIONER OF INCOME-TAX(APPEALS) IS SET ASIDE. THE ISSUE IS REM ITTED BACK TO THE ASSESSING OFFICER SO THAT THE ASSESSEE MAY RAIS E ITS OBJECTIONS AGAINST THE REPORT OF THE DVO ON MERITS. THE ASSESSING OFFICER AFTER HEARING THE ASSESSEE ON THO SE OBJECTIONS, SHALL DECIDE AFRESH AS TO WHAT SHOULD B E THE CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. 6. IN RESULT, THIS APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 13 TH OF MARCH, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 13 TH MARCH, 2012. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.