ITO, Ward - 31(4), Kolkata , Kolkata V. Smt. Sancheta Adhikary, Kolkata

ITA 1483/KOL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6669 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 21-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: M D SHAH
• Keywords: Sale consideration of property below Jantri Value; Gift; Fair market value
• Section: 142(1); 56

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M.BALAGANESH, AM] I.T.A. NO. 1483/KOL/2017 ASSESSMENT YEARS: 2013-14 INCOME-TAX OFFICER, WD-31(4), KOLKATA. VS. SMT. SANCHETA ADHIKARY (PAN: AEZPA9067J) APPELLANT RESPONDENT DATE OF HEARING 21.06.2018 DATE OF PRONOUNCEMENT 29.06.2018 FOR THE APPELLANT SHRI A. BHATTACHARJEE, ADDL. CIT FOR THE RESPONDENT SHRI M. D. SHAH, AR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-9, KOLKATA DATED 31.03.2017 FOR ASSESSMENT YEAR 2013-1 4 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL OF REVENU E IS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION OF RS.1,69,81,700/- MADE B Y THE AO U/S. 56(2)(VII)(B) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) IN THE ASSESSMENT YEAR UNDER CONSIDERATION. 3. BRIEFLY STATED FACTS ARE THAT IN THE INSTANT CAS E THE ASSESSEE HAS FILED HER RETURN OF INCOME ON 04.04.2014 SHOWING TOTAL INCOME OF RS.5,1 5,770/-. LATER THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 03.09.2015 AND SERVED ON THE ASSESSEE. SUBSEQUENTLY, NOTICE U/S. 142(1) WAS ALSO ISSUED ON 03.09.2015. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE PURCHASED A FLAT OF SUPER BUILT UP AREA OF 2800 SQ. FT. ALONG WITH 135 SQ. FT. GARAGE FROM M/S. EUREKA MERCANTILES PVT. LTD. BY A DEED OF CONVEYANCE DATED 28.03.2013. THE ASSESSEE CLAIMED TO 2 ITA NO.1483/KOL/2017 SMT. SANCHETA ADHIKARY, AY 2013-14 2 HAVE PURCHASED THE SAID FLAT FOR A CONSIDERATION OF RS.30,00,000/-. AS PER THE ASSESSEE, THE SAID FLAT WAS PURCHASED ON CREDIT AND THUS THE SALE CONSIDERATION WAS PAID BY A BOOK ENTRY OF CREDIT BY THE SELLER COMPANY AND THE SELLER COMPANY DULY RECORDED THE CONSIDERATION OF RS. 30 LAKHS IN ITS BOOKS OF ACCOUNTS AND REFLECTED THE ASSESSEE AS A DEBTOR. HOWEVER, THE AO TOOK THE VIEW THAT THE FLAT WAS PURCHASED WITHOUT C ONSIDERATION AND HENCE, THE FAIR MARKET VALUE OF THE FLAT I.E. RS.1,69,81,700/- AS DETERMIN ED BY THE STAMP VALUATION AUTHORITY WAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES AS PER SECTION 56(2)(VII)(B) OF THE ACT AND ACCORDINGLY, THE AO ADDED THE SUM OF RS.1,69,81,800 /- AS INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE SUBMITTED THAT TH E AO HAS ERRED IN MAKING THE ADDITION ON THE GROUND THAT THE PROPERTY WAS ACQUIRED WITHOUT C ONSIDERATION. IT WAS URGED BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT AS PER THE CONV EYANCE DEED, THE SALE WAS FOR A CONSIDERATION OF RS. 30,00,000/- HENCE, IN SUCH A S CENARIO, THE PROVISIONS OF SECTION 56(2)(VII)(B) OF THE ACT HAD NO APPLICATION SINCE I T APPLIES TO CASES WHERE THERE IS NO CONSIDERATION AND, THAT THE ENTIRE SALE CONSIDERATI ON WAS PAID BY ACCOUNT PAYEE CHEQUE TO THE VENDOR BEFORE 17.05.2016 AND, THEREFORE, NO ADDITIO N COULD BE MADE ON THIS ACCOUNT. ASSESSEE ALSO SUBMITTED THAT THE PROVISIONS OF SECT ION 56(2)(VII)(B)(II) OF THE ACT WHICH APPLIED TO CASES OF INADEQUATE CONSIDERATION HAS CO ME INTO FORCE FROM AY 2014-15 I.E. WITH EFFECT FROM 01.04.2014 AND HENCE WAS NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. AY 2013-14. THEREFORE, THE ASSE SSEE SUBMITTED THAT NO ADDITION COULD BE MADE APPLYING THIS PROVISION OF LAW. AFTER CONSIDER ING THE DETAILED SUBMISSION OF THE ASSESSEE, THE LD. CIT(A) DELETED THE ADDITION OF RS .1,69,81,700/- BY OBSERVING AS UNDER: 4.........I FIND THAT THE APPELLANT ENTERED INTO A REGISTERED DEED OF CONVEYANCE DATED 26-03- 2013 WITH MS EURAKA MERCANTILES PRIVATE LIMITED (AK A RITRNAN MERCANTILES PVT LTD) AND THE APPELLANT HAD PURCHASED FLAT NO 4A AT PREMISES NO 2 1 CHAKRABERIA ROAD (S) FOR A CONSIDERATION OF RS.29,50,000 ALONG WITH A PARKING FOR RS.50,000 THUS THE TOTAL CONSIDERATION AS DECLARED IN THE DEED WAS RS.30,00, 000. THE VENDOR TREATED THE ENTIRE AMOUNT PAID EXECUTED THE DEED OF CONVEYANCE AND HAN DED OVER THE POSSESSION OF THE FLAT AND CAR PARKING TO THE APPELLANT. I FIND THAT THE VENDO R MS EURAKA MERCANTILES PRIVATE LIMITED (AKA RITMAN MCRCANTILES PVT LTD) IN ITS BOOKS OF AC COUNTS RECORDED SALE OF FLAT FOR AY 2013- 2014 AT RS.2,19,70,001 IN WHICH THE FLAT SOLD TO TH E APPELLANT AT RS.30,00,000 WAS DULY RECORDED. SIMILARLY THE APPELLANT HAS DISCLOSED THE A SUM OF RS.30,00,000 WAS RECORDED AS DEBT DUE TO THE SAID VENDOR IN HER BOOKS OF ACCOUNT S. THE APPELLANT PAID THE VENDOR A SUM OF RS.2,00,000 ON 21-05-2014 AND RS.28,00,000 WAS P AID BY 4 CHEQUES FROM 10-05-2016 TO 3 ITA NO.1483/KOL/2017 SMT. SANCHETA ADHIKARY, AY 2013-14 3 17-05-2016. I FIND THAT THE AO HAS HELD THAT THE RE GISTRATION OF THE FLAT WAS DONE WITHOUT ANY CONSIDERATION IS FACTUALLY INCORRECT. ON READING OF THE ENTIRE DEED OF CONVEYANCE I FIND THAT THE ASSESSEE PURCHASED THE FLAT ALONG WITH ONE CAR PARK FOR RS .30,00,000; HOWEVER THIS AMOUNT WAS UNPAID PURCHASE PRICE AND THE VENDOR HAD PROVIDED THE CREDIT TO THE APPELLANT TO PURCHASE THE FLAT. THE AO HIMSELF HAS RECORDED I N THE ASSESSMENT ORDER THAT THE APPELLANT AND THE VENDOR ARE CLOSELY ASSOCIATED (PARA 4.7). I THEREFORE FIND THAT DUE TO THE CLOSE RELATIONSHIP OF THE PARTIES THE GRANT OF CREDIT TO PURCHASE THE FLAT WAS NOT UNUSUAL. THE VENDOR TRANSFERRED THE FLAT ON THE BASIS OF UNPAID PURCHASE PRICE WHICH WAS TO BE REFLECTED AS A LOAN IN THE BOOKS OF THE VENDOR AND THE PURCHA SER. THIS WAS A COMMERCIAL DECISION OF THE VENDOR AND THE AO COULD NOT QUESTION THE SAME. THERE IS A MARK DIFFERENCE ON CREDIT SALE AND TRANSFER WITHOUT CONSIDERATION I.E. GIFT. SALE OF CREDIT IS A VERY NORMAL BUSINESS PRACTISE AND HAS BEEN PREVALENT FOR CENTURIES. THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE TRANSFER WAS WITHOUT CONSIDERATION. I HOLD THAT THE TRANSFER OF THE FLAT AND CAR PARK WAS FOR CONSIDERATION OF RS.30,00,000. IN VIEW OF THE ABOVE FINDING THAT THE SALE OF THE FLAT WAS FOR CONSIDERATION, THE PROVISIONS OF SECTION 56(2)(VII) (B) OF THE IT ACT 1961 WAS NOT APPLICABLE TO THE FACTS OF THE CASE. THE SAID SECTION WAS APPL ICABLE IN CASE OF SALE OF FLAT WITHOUT CONSIDERATION AND IN THIS CASE THE SALE WAS FOR CON SIDERATION OF RS.30,00,000. THE AO WAS NOT JUSTIFIED IN ADDING RS.1,69,81,700 BY INVOKING THE PROVISIONS OF SECTION 56(2)(VII)(B) OF THE IT ACT 1961. I THEREFORE DELETE THE ADDITION OF RS.1,69,81,700. 4.1. I ALSO FIND THAT THE FINANCE ACT 2013 HAD WIDE NED THE SCOPE OF ADDITION IN CASE OF TRANSACTION OF IMMOVABLE PROPERTY FOR INADEQUATE TR ANSACTION. I HAVE EXAMINED THE SAID PROVISIONS AND THE NOTES TO THE FINANCE ACT 2013. I FIND THAT IT IS CLEARLY RECORDED IN THE SAID ACT THAT THE CLAUSE FOR TAXING TRANSACTION OF IMMOV ABLE PROPERTY FOR INADEQUATE TRANSACTION WAS INTRODUCED FROM AY 2014-15 AND NOT AY 2013-14. I FIND THAT THE SAID PROVISIONS OF SECTION 56(2)(VII)(B)(II) OF THE ACT ARE NOT RETROS PECTIVE AND WOULD APPLY PROSPECTIVELY FROM AY 2014-15. THIS IS ENDORSED BY THE DECISION OF TH E LARGER BENCH OF THE APEX COURT IN THE CASE OF VATIKA TOWNSHIP PVT. LTD. (2014) 49 TAXMANN .COM 249. THEREFORE, THE AMENDMENT AND INSERTING OF PROVISIONS OF SECTION 56(2)(VII)(B )(II) OF THE ACT IS PROSPECTIVE AND WILL APPLY FROM AY 2014-15 AND WILL NOT COVER THE TRANSACTION OF THE APPELLANT AS THE SAME WAS CONCLUDED IN AY 2013-14. 4. AGGRIEVED BY THE AFORESAID ORDER OF THE LD CIT(A), THE REVENUE IS BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE HAD PRODUCED THE C ONVEYANCE DEED DATED 26.03.2013 WHEREIN THE SALE CONSIDERATION WAS SPECIFIED AS RS. 30,00,000/-. WE ALSO NOTE THAT THE ASSESSEE HAD MADE THE ENTIRE PAYMENT SUBSEQUENTLY T HROUGH ICICI BANK AND KOTAK MAHINDRA BANK AS FOLLOWS: PAYMENT REFERENCE PAYMENT DATE PAYMENT AMOUNT ICICI BANK CHQ. NO.731240, 21.05.14 23.05.2014 RS. 2,00,000 KOTAK MAHINDRA BANK RTGS: KKBKR52016051000729414 KKBKR52016051300867021 KKBKH516137630261 KKBKR52016051700686338 10.05.2016 13.05.2016 16.05.2016 17.05.2016 RS. 5,00,000 RS. 5,00,000 RS. 7,00,000 RS.11,00,000 ` TOTAL RS.30,00,000 4 ITA NO.1483/KOL/2017 SMT. SANCHETA ADHIKARY, AY 2013-14 4 6. WE ALSO NOTE THAT THE ASSESSEE HAD ALSO F ILED THE FOLLOWING DOCUMENTS TO CORROBORATE THE FACT OF PAYMENT OF THE CONSIDERATION TO THE VEN DOR. DOCUMENTS ANNEXURE PAGE NO. LEDGER ACCOUNTS OF THE ASSESSEE IN THE BOOKS OF SEL LER SHOWING RECEIPT OF SUBSEQUENT PAYMENT D 21-22 BANK STATEMENTS (ICICI BANK & KOTAK MAHINDRA BANK) OF ASSESSEE SHOWING SUBSEQUENT PAYMENT E 23-24 LEDGER OF RITMAN PVT. LTD. IN THE BOOKS OF S. ADHIK ARY F 25-25 MONEY RECEIPT & BANK STATEMENT OF RITMAN AND BALANC E CONFIRMATION STATEMENT OF RITMAN ON 18.05.16. F 26-28 7. WE ALSO NOTE THAT THE AO HAS MADE THE ADDITION B ASED ON THE PROVISIONS OF THE FINANCE ACT 2013 IN RESPECT OF SEC. 56(2)(VII) OF T HE ACT. THE OBJECTIVE OF THE AMENDMENT IS DISCERNIBLE FROM THE EXPLANATORY NOTE TO THE FINANC E ACT, 2013 WHICH IS AS FOLLOWS: 14. TAXABILITY OF IMMOVABLE PROPERTY RECEIVED FOR INADEQUATE CONSIDERATION 14.1 SUB CLAUSE (B) OF CLAUSE (VII) OF SUB-SECTION (2) OF SECTION 56 OF THE INCOME-TAX ACT, BEFORE ITS AMENDMENT BY THE ACT, INTER ALIA, P ROVIDED THAT WHERE AN IMMOVABLE PROPERTY IS RECEIVED BY AN INDIVIDUAL OR HUF WITHOU T CONSIDERATION, THE STAMP DUTY VALUE OF WHICH EXCEEDS FIFTY THOUSAND RUPEES, THE S TAMP DUTY VALUE OF SUCH PROPERTY WOULD BE CHARGED TO TAX IN THE HANDS OF THE INDIVID UAL OR HUF AS INCOME FROM OTHER SOURCES. 14.2 THE SAID PROVISION DOES NOT COVER A SITUATION WHERE THE IMMOVABLE PROPERTY HAS BEEN RECEIVED BY AN INDIVIDUAL OR HUF FOR (INAD EQUATE CONSIDERATION. ACCORDINGLY, THE PROVISIONS OF CLAUSE (VII) OF SUB- SECTION (2) OF SECTION 56 HAVE BEEN AMENDED SO AS TO PROVIDE THAT WHERE ANY IMMOVABLE P ROPERTY IS RECEIVED FOR A CONSIDERATION WHICH IS LESS THAN THE STAMP DUTY VAL UE OF THE PROPERTY BY AN AMOUNT EXCEEDING FIFTY THOUSAND RUPEES, THE DIFFERENCE BET WEEN THE STAMP DUTY VALUE OF SUCH PROPERTY AND THE CONSIDERATION, SHALL BE CHARGEABLE TO TAX IN THE HANDS OF THE INDIVIDUAL OR HUF AS INCOME FROM OTHER SOURCES. 14.3 CONSIDERING THE FACT THAT THERE MAY BE A TIME GAP BETWEEN THE DATE OF AGREEMENT AND THE DATE OF REGISTRATION, IT HAS BEEN PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION FOR TH E TRANSFER OF THE IMMOVABLE PROPERTY AND THE DATE OF REGISTRATION ARE NOT THE S AME, THE STAMP DUTY VALUE MAY BE TAKEN AS ON THE DATE OF THE AGREEMENT, INSTEAD OF THAT ON THE DATE OF REGISTRATION. THIS EXCEPTION SHALL, HOWEVER, APPLY ONLY IN A CASE WHER E THE AMOUNT OF CONSIDERATION, OR A PART THEREOF, HAS BEEN PAID BY PAGE 27 OF 56 ANY MODE OTHER THAN CASH ON OR BEFORE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONS IDERATION FOR THE TRANSFER OF SUCH IMMOVABLE PROPERTY. 14.4 APPLICABILITY: - THIS AMENDMENT TAKES EFFECT F ROM 1ST APRIL, 2014 AND ACCORDINGLY, APPLIES IN RELATION TO THE ASSESSMENT YEAR 2014-15 AND SUBSEQUENT ASSESSMENT YEARS. 5 ITA NO.1483/KOL/2017 SMT. SANCHETA ADHIKARY, AY 2013-14 5 8. WE NOTE THAT SINCE THE CONVEYANCE DEED HAS BEEN EXECUTED ON 26.03.2013, THE SALE TRANSACTION HAS HAPPENED IN THE AY 2013-14, SEC. 56 (2)(VII)(B)(II) OF THE ACT WAS NOT APPLICABLE BECAUSE FOR INADEQUATE CONSIDERATION THE AMENDED PROVISION IS APPLICABLE WITH EFFECT FROM 01.04.2014 THAT MEANS THE SAID PROVISIO N IS APPLICABLE FROM AY 2014-15. SINCE THE CONSIDERATION FOR PURCHASE OF PROPERTY WAS AGRE ED UPON BY THE VENDOR AND THE ASSESSEE AT RS. 30 LAKHS, NO ADDITION WAS POSSIBLE UNDER SEC . 56(2)(VII)(B) OF THE ACT AS THE LAW STOOD AT THAT TIME AND WE NOTE THAT LATER THE ENTIRE SALE CONSIDERATION HAS BEEN PAID BY ACCOUNT PAYEE CHEQUE BY THE ASSESSEE TO THE VENDOR, THEREFO RE, THE ADDITION WAS NOT SUSTAINABLE. HENCE, THE LD. CIT(A) HAS RIGHTLY ALLOWED THE APPEA L OF THE ASSESSEE AND WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND, THER EFORE, WE DISMISS THE REVENUES APPEAL. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 29/06/2018 SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :29TH JUNE, 2018 JD(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT ITO, WARD-31(4), KOLKATA. 2 RESPONDENT SMT. SANCHETA ADHIKARY, 10/B, PADDAP UKUR ROAD, KOLKATA- 700 020. 3. THE CIT(A) - 9, KOLKATA. (SENT THROUGH E-MAIL) 4. 5. CIT , KOLKATA. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY