Jalan Chemical Industries(P)Ltd, Kolkata V. ITO, Ward-11(2), Kolkata, Kolkata

ITA 1306/KOL/2012

• Counselvise Citation: 130623514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 11-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V N PUROHIT
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 37; 15; 50C

Judgement Text

I.T.A. NO.: 1306/KOL./20 12 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA CORAM : SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO.: 1306/KOL./ 2012 ASSESSMENT YEAR : 2009-2010 JALAN CHEMICAL INDUSTRIES (P) LTD.,............ .APPELLANT GROUND FLOOR, ABHINANDAN, 27A/B, ROYD STREET, KOLKATA-700 016 [PAN : AAACJ 8304M] -VS.- INCOME TAX OFFICER,............................... ...............RESPONDENT WARD-11(2), KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI V.N. PUROHIT, A.R., FOR THE ASSESSEE SMT. SUCHETA CHATTOPADHYAY, JCIT, SR. D.R, FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JANUARY 31, 2014 DATE OF PRONOUNCING THE ORDER : FEBRUARY 06, 2014 O R D E R PER ABRAHAM P. GEROGE : 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST AN ORDER DATED 31.07.2012 OF LD. COMMISSIONER OF INCOME TAX (APPEA LS)-XII, KOLKATA. ITS GRIEVANCE IN GROUNDS 1 TO 6 IS THAT VALUE FIXED BY THE DEPARTMENTAL VALUER BASED ON A REFERENCE MADE UNDER SECTION 50C( 2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS NOT ADOPTED BY T HE ASSESSING OFFICER. 2. FACTS APROPOS ARE THAT ASSESSEE, A COMPANY DEALI NG IN SHARES AND SECURITIES, HAD FILED RETURN FOR THE IMPUGNED ASSES SMENT YEAR DECLARING INCOME OF RS.1,16,200/-. DURING THE RELEVANT PREVIO US YEAR, ASSESSEE HAD EFFECTED SALE OF A PROPERTY LOCATED AT 12, GOVT. PL ACE, HEMANTA BASU SARANI, KOLKATA FOR A CONSIDERATION OF RS.85,00,000 /-. LONG-TERM CAPITAL I.T.A. NO.: 1306/KOL./20 12 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 2 GAINS COMPUTED BY ASSESSEE ON SUCH SALE WAS RS.59,8 2,457/-. ASSESSING OFFICER WAS OF THE OPINION THAT PROPER SALE CONSIDE RATION WAS NOT DISCLOSED BY ASSESSEE. HE, THEREFORE, MADE A REFERE NCE TO REGISTRAR OF ASSURANCE, KOLKATA, WHO BY HIS LETTER DATED 25.07.2 011, ASSESSED THE VALUE OF THE PROPERTY AT RS.2,89,32,575/-. WHEN THI S WAS PUT TO THE ASSESSEE, IT SOUGHT A REFERENCE TO VALUATION OFFICE R, IN ACCORDANCE WITH SUB-SECTION (2) OF SECTION 50C OF THE ACT. ACCORDIN GLY THE MATTER WAS REFERRED TO THE VALUATION CELL OF THE DEPARTMENT. N EVERTHELESS AFTER REFERRING THE VALUATION TO THE DEPARTMENTAL VALUER, ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT, SUBSTITUTING THE SALE CONSIDERATION DECLARED BY THE ASSESSEE ON THE SALE OF PROPERTY WITH THAT FIXED BY THE REGISTRAR OF ASSURANCE, VIZ. RS.2,89,3 2,575/-. EFFECTIVELY THE CAPITAL GAINS WAS WORKED OUT AT RS.2,64,15,032/- AG AINST RS.59,82,457/- RETURNED BY THE ASSESSEE. 3. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. C IT(APPEALS). AS PER ASSESSEE, THE VALUATION OFFICER OF VALUATION CELL H AD VALUED THE PROPERTY AT RS.1,80,08,000/- ON THE REFERENCE MADE TO HIM UN DER SECTION 50C(2) OF THE ACT. THEREFORE, AS PER ASSESSEE, SUCH VALUATION ALONE SHOULD HAVE BEEN CONSIDERED AND NOT THE HIGHER VALUE ESTIMATED BY THE REGISTRAR. HOWEVER, LD. CIT(APPEALS) WAS NOT IMPRESSED. ACCORD ING TO HIM, VIDE SECTION 50C(3) OF THE ACT VALUE DETERMINED BY STAMP VALUATION AUTHORITY ALONE WAS TO BE CONSIDERED. TAKING THIS VIEW OF THE MATTER, HE DISMISSED THE APPEAL FILED BY THE ASSESSEE. 4. NOW BEFORE US, LD. A.R. STRONGLY ASSAILING THE O RDER OF LOWER AUTHORITIES SUBMITTED THAT AS PER SUB-SECTION 3 OF SECTION 50C, VALUE FIXED BY STAMP VALUATION AUTHORITY COULD BE CONSIDERED AS FULL VALUE CONSIDERATION RECEIVED AS A RESULT OF TRANSFER, ONL Y WHERE IT EXCEEDED THE VALUE DETERMINED BY THE DEPARTMENTAL VALUER. THEREF ORE, ACCORDING TO HIM SERIOUS ERROR OF LAW WAS COMMITTED BY THE LOWER AUTHORITIES. I.T.A. NO.: 1306/KOL./20 12 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 3 5. PER CONTRA, LD. D.R. STRONGLY SUPPORTED THE ORDE R OF AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE IN THIS CA SE THAT THE VALUE FIXED BY THE REGISTRATION AUTHORITY WAS RS.2,89,32,575/-. THERE IS ALSO NO DISPUTE THAT THERE WAS A REFERENCE MADE TO THE DEPA RTMENTAL VALUER ON THE REQUEST OF ASSESSEE IN TERMS OF SECTION 50C(2) OF THE ACT. DEPARTMENTAL VALUER HAD FIXED WITH THE VALUE AT RS. 1,80,08,000/-. THIS ALSO HAS NOT BEEN DISPUTED BY THE DEPARTMENT. A LOO K AT SECTION 50C IS REQUIRED AT THIS JUNCTURE. SECTION 50C OF THE ACT I S REPRODUCED HEREUNDER:- (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING A S 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 A S THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAY MENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O ADOPTED OR ASSESSED OR ASSESSABLE SHALL, FOR THE PURPOSES O F SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERA TION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE- (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICE R 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 TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REF ERENCE IS MADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND S UB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECT ION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEAL TH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIF ICATIONS, I.T.A. NO.: 1306/KOL./20 12 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 4 APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY I N RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB- SECTION (1) OF SECTION 16A OF THIS ACT. EXPLANATION 1 : FOR THE PURPOSES 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 PURPOSE OF THIS SECTION, TH E EXPRESSION ASSESSABLE MEANS THE PRICE WHICH THE S TAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANY THING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIM E 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 PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) E XCEEDS THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE BY SUCH AUTHOR ITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION REC EIVED OR ACCRUING AS A RESULT OF THE TRANSFER. SUB-SECTION (2) CLEARLY STATES THAT ONCE ASSESSING OFFICER REFERS THE VALUATION OF A CAPITAL ASSET TO A VALUATION OFFICER , THEN RELEVANT PROVISIONS OF WEALTH TAX ACT, NAMELY SUB-SECTIONS ( 2) TO (6) OF SECTION 16A AND SUB-SECTIONS 1, 6 & 7 OF SECTION 23A, SUB-S ECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF WEAL TH TAX ACT APPLY WITH NECESSARY MODIFICATIONS. 7. SECTION 16A OF THE WEALTH TAX ACT, 1956 IS REPRO DUCED HEREUNDER :- 16A. (1) FOR THE PURPOSE OF MAKING AN ASSESSMENT (INCLUDING AN ASSESSMENT IN RESPECT OF ANY ASSESSME NT YEAR COMMENCING BEFORE THE DATE OF COMING INTO FORCE OF THIS SECTION) UNDER THIS ACT, WHERE UNDER THE PROVISIONS OF SECTION 7 READ WITH THE RULES MADE UNDER THIS ACT, OR, AS THE CASE MAY BE, THE RULES IN SCHEDULE III, THE MAR KET VALUE OF ANY ASSET IS TO BE TAKEN INTO ACCOUNT IN SUCH AS SESSMENT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF AN Y ASSET TO A VALUATION OFFICER- (A) IN A CASE WHERE THE VALUE OF THE ASSET AS RETURNED IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER, IF THE ASSESSING OFFICER IS OF OPINION THAT THE VALUE SO RETURNED IS LESS THAN ITS FAIR MARKET VALUE; I.T.A. NO.: 1306/KOL./20 12 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 5 (B) IN ANY OTHER CASE, IF THE ASSESSING OFFICER IS OF OPINION- (I) THAT THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF THE ASSET AS RETURNED BY MORE THAN SUCH PERCENTAGE OF THE VALUE OF THE ASSET AS RETURNED OR BY MORE THAN SUCH AMOUNT AS MAY BE PRESCRIBED IN THIS BEHALF; OR (II) THAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT IS NECESSARY SO TO DO. (2) FOR THE PURPOSE OF ESTIMATING THE VALUE OF ANY ASSET IN PURSUANCE OF A REFERENCE UNDER SUB-SECTION (1), THE VALUATION OFFICER MAY SERVE ON THE ASSESSEE A NOTIC E REQUIRING HIM TO PRODUCE OR CAUSE TO BE PRODUCED ON A DATE SPECIFIED IN THE NOTICE SUCH ACCOUNTS, RECORDS OR OTHER DOCUMENTS AS THE VALUATION OFFICER MAY REQUIRE. (3) WHERE THE VALUATION OFFICER IS OF OPINION THAT THE VALUE OF THE ASSET HAS BEEN CORRECTLY DECLARED IN T HE RETURN MADE BY THE ASSESSEE UNDER SECTION 14 OR SECTION 15 , HE SHALL PASS AN ORDER IN WRITING TO THAT EFFECT AND S END A COPY OF HIS ORDER TO THE ASSESSING OFFICER AND TO T HE ASSESSEE. (4) WHERE THE VALUATION OFFICER IS OF OPINION THAT THE VALUE OF THE ASSET IS HIGHER THAN THE VALUE DECLARE D IN THE RETURN MADE BY THE ASSESSEE UNDER SECTION 14 OR SEC TION 15, OR WHERE THE ASSET IS NOT DISCLOSED OR THE VALU E OF THE ASSET IS NOT DECLARED IN SUCH RETURN OR WHERE NO SU CH RETURN HAS BEEN MADE, THE VALUATION OFFICER SHALL S ERVE A NOTICE ON THE ASSESSEE INTIMATING THE VALUE WHICH H E PROPOSES TO ESTIMATE AND GIVING THE ASSESSEE AN OPPORTUNITY TO STATE ON A DATE TO BE SPECIFIED IN T HE NOTICE, HIS OBJECTIONS EITHER IN PERSON OR IN WRITING BEFOR E THE VALUATION OFFICER AND TO PRODUCE OR CAUSE TO BE PRO DUCED ON THAT DATE SUCH EVIDENCE AS THE ASSESSEE MAY RELY IN SUPPORT OF HIS OBJECTIONS. (5) ON THE DATE SPECIFIED IN THE NOTICE UNDER SUB-S ECTION (4), OR AS SOON THEREAFTER AS MAY BE, AFTER HEARING SUCH EVIDENCE AS THE ASSESSEE MAY PRODUCE AND AFTER CONSIDERING SUCH EVIDENCE AS THE VALUATION OFFICER MAY REQUIRE ON ANY SPECIFIED POINTS AND AFTER TAKING IN TO ACCOUNT ALL RELEVANT MATERIAL WHICH HE HAS GATHERED , THE VALUATION OFFICER SHALL, BY ORDER IN WRITING, ESTIM ATE THE I.T.A. NO.: 1306/KOL./20 12 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 6 VALUE OF THE ASSET AND SEND A COPY OF HIS ORDER TO THE ASSESSING OFFICER AND TO THE ASSESSEE. (6) ON RECEIPT OF THE ORDER UNDER SUB-SECTION (3) O R SUB- SECTION (5) FROM THE VALUATION OFFICER, THE ASSESSI NG OFFICER, SHALL SO FAR AS THE VALUATION OF THE ASSET IN QUESTION IS CONCERNED, PROCEED TO COMPLETE THE ASSE SSMENT IN CONFORMITY WITH THE ESTIMATE OF THE VALUATION OF FICER. SUB-SECTION (6) CLEARLY STATES THAT ONCE VALUATION OFFICER HAS GIVEN THE VALUATION, ASSESSING OFFICER HAS TO PROCEED WITH TH E ASSESSMENT IN CONFORMITY WITH THE ESTIMATE GIVEN BY THE VALUATION OFFICER. IF THE ABOVE IS READ IN CONJECTURE WITH SUB-SECTION (3) OF SECTI ON 50C, IT IS CLEAR THAT SECTION 50C(3) WILL HAVE APPLICABILITY ONLY WHERE V ALUE FIXED BY THE VALUATION OFFICER IS HIGHER THAN THAT FIXED BY THE REGISTRATION AUTHORITY. IT HAS GOT NOTHING TO DO WITH A CASE WHERE DEPARTME NT VALUATION OFFICER HAS FIXED A PRICE LOWER THAN THAT OF THE REGISTRATI ON AUTHORITY. IN SUCH AN EVENT FULL EFFECT HAS TO BE GIVEN TO SUB-SECTION 2 OF SECTION 50C. WHEN FULL EFFECT IS GIVEN TO SUB-SECTION (2) OF SECTION 50C, EFFECT OF SUB-SECTION (6) OF SECTION 16A OF THE WEALTH TAX ACT CANNOT BE OVER LOOKED. APPLYING THE ABOVE PRINCIPLES TO THE CASE BEFORE US, CONSIDERATI ON SHOWN BY ASSESSEE WAS RS.85,00,000/-. VALUE FIXED BY THE REGISTRAR WA S RS.2,89,32,575/-. VALUE FIXED BY THE DEPARTMENTAL VALUATION OFFICER W AS RS.1,80,08,000/-. HENCE, CAPITAL GAINS OUGHT HAVE BEEN COMPUTED CONSI DERING THE SALE CONSIDERATION AS RS.1,80,08,000/-. ORDERED ACCORDIN GLY. GROUNDS 1 TO 6 OF THE ASSESSEE ARE, THEREFORE, ALLOWED. 8. VIDE ITS GROUND NO. 7, GRIEVANCE OF ASSESSEE IS THAT IT WAS NOT GIVEN STATUTORY DEDUCTION OF 30% ON INCOME FROM HOUSE PRO PERTY. 9. FACTS APROPOS ARE THAT ASSESSEE HAD RECEIVED REN T, SERVICE CHARGES AND HIRE CHARGES FOR FURNITURE TOTALLING RS.1,21,37 6/- AND CLAIMED DEDUCTION OF 30% THEREON UNDER SECTION 24(A) OF THE ACT. ASSESSING OFFICER, HOWEVER, WAS OF THE OPINION THAT RENTAL AM OUNT CAME TO RS.58,840/- ONLY. HE, THEREFORE, RESTRICTED THE STA TUTORY DEDUCTION UNDER I.T.A. NO.: 1306/KOL./20 12 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 7 SECTION 24(A) TO SUCH RENT AMOUNT. RESULTANTLY THER E WAS AN ADDITION OF RS.54,322/-. ASSESSEES APPEAL BEFORE LD. CIT(APPEA LS) DID NOT MEET WITH ANY SUCCESS. 10. NOW BEFORE US, LD. A.R. SUBMITTED THAT ENTIRE R ECEIPT FROM THE TENANT WAS ON ACCOUNT OF RENT AND BASED ON A SINGLE AGREEMENT. THEREFORE, ACCORDING TO HIM, ARTIFICIAL DEMARCATION OF THE RENTAL AMOUNT OUGHT NOT HAVE BEEN MADE. 11. PER CONTRA, LD. D.R. SUPPORTED THE ORDER OF AUT HORITIES BELOW. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ASSESSING OFFICER HAS NOT SPEC IFIED ON WHAT BASIS HE HAD BIFURCATED THE RENTAL INCOME OF RS.1,21,372/- S HOWN BY THE ASSESSEE. IF IT WAS RENT AND NOT ASSIGNABLE TO ANY SPECIFIC S ERVICES THEN, IN OUR OPINION, DIVISION OF SUCH RENT OUGHT NOT HAVE BEEN DONE. HOWEVER, IF IT WAS NOT A COMPOSITE RENT BUT ASSIGNABLE SEPARATELY TO SERVICES, THEN, OF COURSE, THAT PART WHICH RELATED TO SERVICES SHOULD HAVE GONE UNDER THE HEAD INCOME FROM OTHER SOURCES. LOWER AUTHORITIES , IN OUR OPINION, HAS NOT PROPERLY CONSIDERED THIS ISSUE. WE ARE, THEREFO RE, OF THE OPINION THAT THIS ASPECT REQUIRES FRESH LOOK BY THE ASSESSING OF FICER. WE, THEREFORE, SET ASIDE THE ORDERS OF AUTHORITIES BELOW VIS-A-VIS THE TREATMENT OF RENT RECEIVED FROM HOUSE PROPERTY AND REMIT IT BACK TO T HE FILE OF ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. GROUND NO. 7 IS, THEREFORE, TREATED AS ALLOWED FOR STATISTICAL PURPO SES. 13. GROUNDS NO. 8 & 9 OF THE ASSESSEE ARE GENERAL, NEEDING NO ADJUDICATION. 14. IN THE RESULT, APPEAL OF THE ASSESEE IS ALLOWED PRO-TANTO. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DAY OF FEBRUARY, 2014. SD/- SD/- GEORGE MATHAN ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 6 TH DAY OF FEBRUARY, 2014 I.T.A. NO.: 1306/KOL./20 12 ASSESSMENT YEAR : 2009-201 0 PAGE 1 TO 8 8 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT(APPEALS) (4) CIT (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.