Dr. Kanwarjit Singh Chadha, New Delhi V. Addl. CIT, New Delhi

ITA 1476/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61756 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 29-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEVENDER SINGH
• Assessee Lawyers: SM MATHUR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `D : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.1476/DEL./2012 (ASSESSMENT YEAR : 2006-07) KANWARJIT SINGH CHADHA, VS. ADDL.CIT, RANGE 37, F-33, RAJOURI GARDEN, NEW DELHI. NEW DELHI. (PAN/GIR NO.AADPC8659C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.M. MATHUR, CA REVENUE BY : SHRI DEVENDER SINGH, SR.DR ORDER PER U.B.S. BEDI: JM THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A)- XXI, NEW DELHI DATED 30.11.2011 RELEVANT TO ASSESSM ENT YEAR 2006-07 WHEREBY CONFIRMATION OF ADDITION OF RS.9,41,391/- ADDED BA CK ON ACCOUNT OF LONG TERM CAPITAL GAIN, HAS BEEN CHALLENGED. 2. THE ASSESSING OFFICER MADE ADDITION OF RS.9,41,3 91/-BY MAKING DETAILED DISCUSSION IN THE ASSESSMENT ORDER AS UNDER: THE PERUSAL OF THE BANK ACCOUNT OF THE ASSESSEE WI TH ICICI BANK A/C 629301082830 SHOWS A DEPOSIT OF RS.16,28,000/-. TH E ASSESSEE WAS ASKED TO EXPLAIN THIS CREDIT. IN RESPONSE THERETO, IT WAS S UBMITTED BY HIM THAT THE DEPOSIT IS FROM THE SALE OF PROPERTY OF THE ASSESSEE AT 1623-P , SECTOR 46, MEASURING 302.5 SQ. MTRS. IN URBAN ESTATE, GURGAON. THE SAID PROPERTY HAS BEEN SOLD VIDE SALE DEED EXECUTED ON 23.06.2005. THE ABOVE PROPERTY WAS PUR CHASED BY THE ASSESSEE AT RS.13,88,000/- (INDEXED VALUE) AND WHEN ASKED ABOUT THE INCIDENCE OF CAPITAL GAIN OF THE SAME, THE ASSESSEE SUBMITTED THAT CAPIT AL GAIN OF APPROXIMATELY RS.2,40,000/- WAS DUE (RS.16,28,000-RS.13,88,000 (I NDEXED VALUE). REGARDING THIS CAPITAL GAIN, THE ASSESSEE SUBMITTED THAT HE HAD PURCHASED CAPITAL GAIN BONDS OF RS.2,50,000/- OF NATIONAL HIGHWAY AUTHORITY OF I NDIA. THEREFORE PROVISIONS OF SECTION AS PER THE PROVISIONS OF SECTION 54EC OF TH E I.T. ACT, 1961 THE CAPITAL GAIN WORKS OUT TO NIL AS INVESTMENT IN CAPITAL GAINS BON DS IS MORE THAN THE CAPITAL GAIN ON THE SALE TRANSACTION OF PROPERTY. HOWEVER, IT I S OBSERVED THAT THE BONDS WERE PURCHASED IN THE MONTH OF MARCH, 2006. I.T.A. NO.1476/DEL./2012 (A.Y. : 2006-07) 2 SUBSEQUENTLY, THE ASSESSEE WAS ASKED TO PRODUCE THE SALE DEED. THE PERUSAL OF THE SALE DEED SHOWS THAT STAMP DUTY OF RS.1,41,150/- HA S BEEN PAID. THE ASSESSEE CLAIMS THAT THIS STAMP DUTY HAS BEEN PAID BY THE PU RCHASER. HOWEVER, IT IS OBSERVED THAT THIS STAMP DUTY HAS BEEN COMPUTED ON THE VALUATION OF THE PROPERTY DONE BY THE STAMP VALUATION AUTHORITY AT RS.2351635 /-. THIS VALUE IS MORE THAN THE SALE VALUE REPORTED BY THE ASSESSEE. IN THIS S ITUATION, THE PROVISIONS OF SECTION 50C OF THE I.T. ACT, 1961 GET ATTRACTED. SECTION 5 0C PROVIDES WHERE THE CONSIDERATION RECEIVED ON ACCRUING AS A RESULT OF T HE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS L ESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (HE REAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURP OSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED O R ASSESSED SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF TH E CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. BECAUSE OF THIS SPECIAL PROVISION IN THE I.T. ACT, 1961, THE FULL VALUE OF CONSIDERATION RECEIVED BY THE ASSESSEE IN THIS PARTICULAR CASE HAS TO BE TAKEN AT RS.2351635/- AND THE CAPITAL GAIN HAS TO BE COMPUTED ACCORDINGLY. SALE CONSIDERATION OF THE PROPERTY RS.2351635/- COST OF ACQUISITION (INDEXED VALUE*) RS.1410244/- NET LONG TERM CAPITAL GAIN RS.941391/- (*THE INDEXING WAS SUBSEQUENTLY REVISED TO RS.14,10 ,244/- AS PER THE INSTALLMENTS PAID INSTEAD OF INDEXED VALUE OF RS.13,88,000/- SHO WN EARLIER) THE ASSESSEE CANNOT BE GIVEN THE BENEFIT OF SECTION 54EC. BECAUSE OF CAPITAL GAIN BOND OF RS.2,50,000/- OF NATIONAL HIGHWAY AUTHORITY OF INDIA HAVE BEEN PURCHASED AFTER THE EXPIRY OF SIX MONTHS FROM THE D ATE OF SALE OF PROPERTY. THEREFORE, AN AMOUNT OF RS.941391/- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FORM LONG TERM CAPITAL GAIN. 3. ASSESSEE CHALLENGED THIS ACTION OF THE ASSESSING OFFICER IN FIRST APPEAL AND DURING THE APPEAL PROCEEDINGS, ASSESSEE FILED DETAILS WHIC H WERE FORWARDED TO DEPARTMENTAL VALUER AND AFTER GETTING DEPARTMENTAL VALUERS REPO RT, A REMAND REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER, WHO SENT IT IN WHICH IT WAS SUBMITTED AS UNDER: IN THIS CONTEXT, I AM TO SUBMIT THAT THE MAIN ISSU E IN THIS CASE RELATES TO COMPUTATION OF LTCG U/S 50C OF I.T. ACT. IN FACT T HE ASSESSEE DID NOT REFLECT THE TRANSACTION REGARDING SALE OF HIS PLOT OF LAND AT 1 623P, SECTOR 46, MEASURING 302.5 SQ. MTR IN URBAN ESTATE, GURGAON IN THE RETURN OF I NCOME AND ACCORDINGLY DID NOT SHOW ANY LTCG ON ITS SALE. THIS TRANSACTION WAS UN EARTHED DURING THE ASSESSMENT PROCEEDINGS BY THE THEN ASSESSING OFFICE R WHILE EXAMINING BANK STATEMENT OF THE ASSESSEE IN RESPECT OF BANK A/C NO .629301082830 WITH ICICI BANK, IN WHICH A DEPOSIT OF RS.1628000/- WAS NOTICE D. WHEN ASKED TO EXPLAIN I.T.A. NO.1476/DEL./2012 (A.Y. : 2006-07) 3 THIS CREDIT THE ASSESSEE SUBMITTED THAT THE DEPOSIT FAME FROM SALE OF PROPERTY MENTIONED ABOVE. THIS PROPERTY WAS SOLD VIDE SALE DEED EXECUTED ON 23.06.2005. THE PURCHASE PRICE AND THE INDEXED VALUE OF THE ABO VE PROPERTY BEING RS.1078846/- AND RS.1410244/- RESPECTIVELY. THE SA LE DEED SHOWED PAYMENT OF STAMP DUTY OF RS.141150/- PAID BY THE VENDEE. THE STAMP DUTY WAS COMPUTED ON THE VALUATION OF THE PROPERTY BY THE STAMP VALUATIO N AUTHORITY AT RS.2351635/-. THIS VALUE BEING MORE THAN THE SALE VALUE REPORTED IN THE SALE DEED, THE ASSESSING OFFICER, HONORING THE SPECIAL PROVISION OF SECTION 50C IN RESPECT OF COMPUTING LTCG AT RS.941391/- ACCORDINGLY. ON ASSESSEES REQ UEST THE MATTER WAS REFERRED TO THE VALUATION OFFICER, INCOME TAX DEPARTMENT, RO HTAK, WHO HAS ALSO VALUED THE PROPERTY AT THE SAME FIGURE OF RS.2351635/- CON FIRMING THEREBY THE VIEW TAKEN BY THE ASSESSING OFFICER. THE CONCERNED REPO RT RECEIVED FORM ASSISTANT VALUATION OFFICER HAS ALREADY BEEN SENT TO YOUR OFF ICE THROUGH THE ADDL.CIT, RANGE 37, NEW DELHI VIDE THIS OFFICE LETTER DATED 1 0.5.2010. FROM THE ABOVE, IT CAN BE SEEN THAT THE ISSUE TAKEN BY THE APPELLANT DESERVES TO BE REJECTED AT THE OUTSET, AS IT IS UNA UTHENTIC AND DEVOID OF ANY SUBSTANCE. CONCERNING OTHER ISSUES RAISED BY THE APPELLANT BEF ORE YOUR HONOUR, I WOULD LIKE TO SUBMIT THAT THE THEN ASSESSING OFFICE R HAS ELABORATELY DISCUSSED THOSE ISSUES ONE BY ONE IN THE BODY OF THE ASSESSME NT ORDER. I ALSO SUPPORT THE VIEW TAKEN BY THE THEN ASSESSING OFFICER ON THESE I SSUES. ACCORDINGLY, I HAVE NO FURTHER COMMENTS TO OFFER ON THESE ISSUES. 4. IN THE VALUATION REPORT, THE DEPARTMENTAL VALUER HAS ASSESSED FAIR MARKET VALUE OF RS.23,51,635/-, A COPY OF WHICH WAS PROVIDED TO THE LD.AR OF THE ASSESSEE IN RESPONSE TO WHICH HE HAS FILED REPLY TAKING VARIOUS PLEAS , BUT CIT(A) CONCLUDED TO DISMISS THE PLEA RAISED BY THE ASSESSEE AS PER PARA.6.3 OF HIS ORDER WHICH READS AS UNDER: I HAVE GONE THROUGH THE FINDINGS OF THE DVO AND WR ITTEN SUBMISSIONS OF THE LD.AR OF THE APPELLANT. THE CASE RELIED BY THE LD. AR OF THE APPELLANT ARE DISTINGUISHABLE ON THE FACTS AND DEPARTMENTAL VALUE R HAS TAKEN AN OBJECTION OF THE APPELLANT DURING THE COURSE OF PREPARATION OF THE V ALUATION REPORT AND AFTER GETTING OBJECTION HE HAS DEALT WITH THE ISSUE VERY METICULO USLY. SO, IT IS FOUND THAT VALUATION OF RS.23,51,635/- IS THE SAME VALUE WHICH HAS BEEN TAKEN BY THE ASSESSING OFFICER FOR CALCULATION OF CAPITAL GAIN. SO, ACTION OF THE MAKING ADDITION OF RS.9,41,391/- DESERVES TO BE CONFIRMED AND THIS GROUND OF THE APPELLANT IS DISMISSED. 5. STILL AGGRIEVED, ASSESSEE HAS COME UP IN FURTHER APPEAL AND WHILE REITERATING THE SUBMISSIONS AS MADE BEFORE CIT(A), IT WAS SUBMITTED THAT SUB-SECTION (1) OF SECTION 50C OF THE I.T. ACT, 1961 PROVIDED THAT WHERE THE SALE CONSIDERATION DECLARED TO BE RECEIVED OR I.T.A. NO.1476/DEL./2012 (A.Y. : 2006-07) 4 ACCRUING AS A RESULT OF TRANSFER OF THE CAPITAL ASS ET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OR STATE GOVT. FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, VALUE SO ADOPTED OR ASSESSED SHALL BE DEEMED THE FULL VALUE OF CONSIDER ATION ON WHICH CAPITAL GAIN SHALL BE COMPUTED ACCORDINGLY, BUT SUB-SECTION (2) OF SECTIO N 50C CLEARLY PROVIDES THAT WHERE THE ASSESSEE CLAIMS THAT THE VALUE SO ADOPTED OR ASSESS ED FOR STAMP DUTY PURPOSES EXCEEDS THE FAIR MARKET VALUE SO ADOPTED OR ASSESSED HAS NOT BE EN DISPUTED IN ANY APPEAL OR REVISION OR REFERENCE BEFORE ANY AUTHORITY OR COURT, ON OBJE CTION OF THE ASSESSEE THE ASSESSING OFFICER MAY REFER TO THE DVO TO DETERMINE THE FAIR MARKET VALUE IN ACCORDANCE WITH SUB- SECTION (2) OF THIS SECTION. BUT THE ASSESSEE HAS A RIGHT TO CHALLENGE SUCH VALUATION BY FILING NECESSARY EVIDENCE IN THE SHAPE OF COMPARABL E CASES WHICH WAS DONE IN THIS CASE, BUT CIT(A) HAS IGNORED SUCH MATERIAL. SO, IT WAS P LEADED FOR SETTING ASIDE THE ORDER OF CIT(A) AND RESTORING THE MATER BACK ON HIS FILE WIT H THE DIRECTION TO RE-CONSIDER THE CASE OF THE ASSESSEE AND RELIANCE IN THIS REGARD WAS PLA CED ON HONBLE P&H HIGH COURT DECISION IN THE CASE OF CIT VS. CHANDANI BHUCHAR (2 010) 323 I.T.R. 510, CIT VS. RAJ KUMARI VIMLA DEVI (2005) 279 I.T.R. 360 (ALL.) AND CHANDRA BHAN AGARWAL VS. ADDL.CIT VIDE ORDER DATED 14 TH MARCH, 2012 OF ITAT, CALCUTTA BENCH TO PLEAD THAT VALYE OF PROPERTIES FOR STAMP DUTY PURPOSES CANNOT BE TRE ATED AS FAIR MARKET VALUE AND, THEREFORE, THE DIFFERENCE BETWEEN THE SAID AMOUNT O F THE SALE CONSIDERATION CANNOT BE CHARGED TO TAX. 6. LD.DR HAS BEEN HEARD, WHO RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW TO PLEAD FOR CONFIRMATION OF THE IMPUGNED ORDERS. 7. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MAT ERIAL ON RECORD AS WELL AS PRECEDENT RELIED UPON BY THE LD.AR OF THE ASSESSEE AND FIND THAT NO DOUBT CIT(A) HAS CALLED FOR VALUATION REPORT FROM THE DEPARTMENTAL V ALUER, COPY OF WHICH WAS PROVIDED TO THE LD.AR OF THE ASSESSEE, WHO FILED REPLY AND RELI ED UPON VARIOUS CASE LAWS IN HIS SUBMISSIONS MADE BEFORE CIT(A), WHO DID NOT CONSIDE R THOSE CASE LAWS OR OTHER MATERIAL SUBMITTED BEFORE HIM BY LD.AR OF THE ASSESSEE AND J UST MARKED THAT THESE ARE DISTINGUISHABLE ON FACTS AND DEPARTMENTAL VALUER HA S TAKEN OBJECTION OF THE ASSESSEE I.T.A. NO.1476/DEL./2012 (A.Y. : 2006-07) 5 DURING THE COURSE OF PREPARATION OF VALUATION REPOR T AFTER GETTING OBJECTION, BUT HE DID NOT DEAL WITH CONTENTIONS AS WELL AS CASE LAWS CITED. THEREFORE, IN THE INTEREST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER, WE FIND IT JUST AN D APPROPRIATE TO SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK ON HIS FILE WITH THE DIRECTION TO RE-CONSIDER THE APPEAL AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE AS WELL AS TO THE ASSESSING OFFICER AND DISPOSE OF THE APPEAL BY CONSIDERING EACH AND EVERY ASPECT OF THE MATTER IN THE LIGHT OF CASE LAWS CITED. WE HOLD AND DIRECT ACCORDINGLY. 8. AS A RESULT, THE APPEAL OF THE ASSESSEE GETS AC CEPTED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 18.07.2012. SD/- SD/- (K.G. BANSAL) (U.B.S. BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, JULY 18,2012 SKB COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXI, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR/ITAT