The ITO, Ward-7(3), Surat V. Param NICU & Children Hospital, Surat

ITA 149/AHD/2012

• Counselvise Citation: 14920514 RSA 2012
• Duration Of Justice: 3 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Income from undisclosed sources
• Section: 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA NO. 149/AHD/2012 / ASSESSMENT YEAR: 2008-09 INCOME-TAX OFFICER, WARD-7(3), SURAT VS. PARAM NICU & CHILDREN HOSPITAL 801/802, PARAM DOCTOR HOUSE, OPP. AYURVEDIC COLLEGE, LAL DARWAJA, SURAT PAN : AAJFP 7569 G / // / (APPELLANT) / // / (RESPONDENT) REVENUE BY : SHRI ROOPCHAND, SR. DR ASSESSEE(S) BY : NONE ! '#$ ! '#$ ! '#$ ! '#$ / DATE OF HEARING : 22/04/2015 %& ! '#$ / // / DATE OF PRONOUNCEMENT: 24/04/2015 '( '( '( '(/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIREC TED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, SURAT DATED 12.09.2011 PERTAINING TO THE ASSESSMENT YEAR 2008-0 9. 2. NOTICE OF HEARING WAS SENT TO THE ASSESSEE BY RE GISTERED POST WITH ACKNOWLEDGEMENT DUE ON 31.03.2015 FIXING THE DATE O F HEARING ON 22.04.2015. THE SAID NOTICE HAS NOT BEEN RETURNED BACK BY THE POSTAL AUTHORITIES UNSERVED. WHEN THE CASE WAS CALLED FOR HEARING, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE AND NEITHER ANY A DJOURNMENT APPLICATION WAS FILED. THEREFORE, WE PROCEEDED TO HEAR THE APP EAL EX-PARTE QUA THE RESPONDENT-ASSESSEE AND TO DECIDE THE APPEAL AFTER TAKING INTO CONSIDERATION ITA NO.149/AHD/2012 ITO VS. PARAM NICU & CHILDREN HOSPITAL AY: 2008-09 2 THE SUBMISSIONS OF THE DEPARTMENTAL REPRESENTATIVE AND THE MATERIAL AVAILABLE ON RECORD. 3. THE GROUND NO.1 OF THE REVENUES APPEAL READS AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.9,75,926/- MADE BY THE A.O. IN RESPECT OF DIFFERENCE OCCURRED DUE TO PURCHASE CONS IDERATION BY THE ASSESSEE AND VALUATION MADE BY SUB REGISTRAR AS PER JANTRI R ATE AND TREATING THE SAME AS UNDISCLOSED INVESTMENT MADE BY THE ASSESSEE FROM UNACCOUNTED INCOME. 4. AT THE TIME OF HEARING BEFORE US, THE LD. DEPART MENTAL REPRESENTATIVE SUBMITTED THAT DURING THE ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAD PURCHASED PRO PERTY AT 801-802, 8 TH FLOOR, PARAM DOCTOR HOUSE, SURAT ADMEASURING 324. 72 SQ. MTRS. AT THE COST OF RS.22,75,000/- AND PAID RS.2,00,000/- AS STAMP D UTY (TOTAL COST RS.24,75,000/). HOWEVER, THE ASSESSING OFFICER, WH ILE VERIFYING THE SAME FROM SUB-REGISTRAR, SURAT, IT WAS FOUND THAT THE VA LUATION OF THE PROPERTY FOR STAMP DUTY (JANTRI VALUE) WAS AT RS.32,89,725/- AND THE ASSESSEE, AS A BUYER OF THE PROPERTY, HAS PAID THE STAMP DUTY ON T HE ABOVE VALUE. HE, THEREFORE, SUBMITTED THAT THE ACTUAL PURCHASE PRICE CAN NEVER BE LESS THAN THE STAMP DUTY VALUATION AND THEREFORE, THE ASSESSI NG OFFICER RIGHTLY TREATED THE DIFFERENCE BETWEEN THE STAMP DUTY VALUA TION AND SALE PRICE SHOWN BY THE ASSESSEE AS UNEXPLAINED INVESTMENT U/S 69B OF THE ACT. THE CIT(A) DELETED THE ADDITION WITHOUT PROPERLY CONSID ERING THE FACTS OF THE CASE. HE, THEREFORE, SUBMITTED THAT THE ORDER OF T HE CIT(A) SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER SHOULD B E SUSTAINED. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF LD . DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL PLACED BEFO RE US. THE ASSESSING ITA NO.149/AHD/2012 ITO VS. PARAM NICU & CHILDREN HOSPITAL AY: 2008-09 3 OFFICER MADE THE ADDITION FOR THE DIFFERENCE BETWEE N THE STAMP DUTY VALUATION AND ACTUAL PRICE CONSIDERATION AS UNEXPLA INED INVESTMENT U/S 69B. HOWEVER, THE ACTUAL SALE PRICE AND THE STAMP DUTY VALUATION CAN BE DIFFERENT FOR VARIETY OF REASONS. THAT IF THE PURCH ASE PRICE PAID BY THE ASSESSEE IS LESS THAN THE STAMP DUTY VALUATION, IT MAY BE GOOD AND SUFFICIENT CAUSE FOR MAKING NECESSARY INQUIRY BY THE ASSESSING OFFICER SO AS TO FIND OUT WHETHER THE ASSESSEE MADE ANY PAYMENT OVER AND ABOVE THE DISCLOSED SALE CONSIDERATION; BUT, IT BY ITSELF IS NOT SUFFIC IENT TO PRESUME THAT THE ASSESSEE MADE THE INVESTMENT WHICH WAS NOT DISCLOSE D BY THE ASSESSEE SO AS TO INVOKE THE PROVISIONS OF SECTION 69B. ADMITTEDL Y, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE THAT THE ACT UAL PURCHASE CONSIDERATION PAID BY THE ASSESSEE WAS OVER AND ABO VE THE SUM OF RS.24,75,000/- RECORDED IN THE SALE DEED. THE DEEMI NG PROVISION OF SECTION 50C WHEREIN THE STAMP DUTY VALUATION IS CONSIDERED ACTUAL SALE CONSIDERATION FOR THE PURPOSE OF CAPITAL GAIN IS AP PLICABLE ONLY IN THE CASE OF SELLER AND NOT IN THE CASE OF BUYER FOR THE RELEVAN T ASSESSMENT YEAR. WHILE TAKING THIS VIEW, WE DERIVE SUPPORT FROM THE DECISI ON OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ME GHJIBHAI POPATBHAI VIRANI VIDE TAX APPEAL NO.46 OF 2013. IN VIEW OF ABOVE FA CTUAL AND LEGAL POSITION, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CIT(A) AND THE SAME IS SUSTAINED. THUS, THE GROUND NO.1 OF THE REVENUES APPEAL IS REJECTED. 6. GROUND NO.2 OF THE REVENUES APPEAL READS AS UND ER:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.18,96,903/ - MADE BY THE AO BY ATTRACTING THE SECTION 40(A)(IA) OF THE IT ACT, IN RESPECT OF PAYMENT MADE BY THE ASSESSEE TO THE CONTRACTORS AND ON WHICH, NO TD S HAS BEEN MADE. ITA NO.149/AHD/2012 ITO VS. PARAM NICU & CHILDREN HOSPITAL AY: 2008-09 4 7. WE HAVE HEARD LD. DEPARTMENTAL REPRESENTATIVE AN D PERUSED THE MATERIAL PLACED BEFORE US. THE CIT(A) HAS RECORDED THE FINDING THAT THE ASSESSEE HAS NOT CLAIMED THE EXPENDITURE IN RESPECT OF PAYMENT OF LABOUR CHARGES TO CONTRACTORS BECAUSE THE SAME HAS BEEN CA PITALIZED. THE RELEVANT FINDING OF THE LD. CIT(A) READS AS UNDER:- 5.3 I HAVE CAREFULLY GONE THROUGH THE REASONS MENTI ONED BY THE A.O. IN THE ASSESSMENT ORDER AS WELL AS THE ELABORATE ARGUMENTS MADE ON BEHALF OF THE APPELLANT. ADMITTEDLY, THE PAYMENTS OF LABOUR CHARG ES TO THESE CONTRACTORS WERE NEITHER DEBITED IN P&L A/C NOR ANY CLAIM FOR D EDUCTION OF THE SAME WAS MADE. THESE PAYMENTS WERE CAPITALIZED UNDER THE HEA DS FURNITURE & FIXTURE A/C AND INTERIOR WORK A/C. THE PROVISIONS OF S . 40 ARE THE DISALLOWANCE PROVISIONS. THE INITIAL WORDINGS OF S. 40 ARE REPRO DUCED BELOW:- '40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN S ECTION 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN CO MPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GA INS OF BUSINESS OR PROFESSION, (IA).............,........' FROM THE ABOVE WORDINGS, IT IS AMPLY CLEAR THAT THE PROVISIONS OF SECTION 40 ARE APPLICABLE ONLY WHEN A DEDUCTION IS CLAIMED WHI LE COMPUTING INCOME - CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS OR PROFESSIONS'. IF A PAYMENT IS NEITHER DEBITED TO P & L A/C NOT ANY CLA IM FOR DEDUCTION OF THE SAME HAS BEEN MADE, THEN THE PROVISIONS OF S. 40 AR E NOT APPLICABLE. THIS SECTION SHALL BE TRIGGERED ONLY WHEN A CLAIM OF DED UCTION IS MADE BY THE ASSESSEE. I, THEREFORE, AGREE WITH THE ARGUMENT OF LEARNED COUNSEL OF THE APPELLANT THE PROVISIONS OF S. 40(A) (IA) ARE ATTRA CTED ONLY IF THE EXPENDITURE IS EITHER DEBITED TO THE P & L A/C OR THE AMOUNT IS OTHERWISE CLAIMED FOR DEDUCTION. WHEN NEITHER THE PAYMENTS WERE DEBITED T O P & L A/C NOR ANY CLAIM OF DEDUCTION IN RESPECT OF THE SAME WAS MADE, THERE WAS NO QUESTION OF DISALLOWING THE SAME U/S. 40(A) (IA) OF THE ACT. IT IS TRUE THAT THE APPELLANT FIRM FAILED TO DEDUCT TDS ON THESE PAYMENTS. BUT TH E REMEDY FOR THIS FAILURE LIES SOMEWHERE ELSE IN OTHER PROVISIONS OF THE ACT AND NOT U/S. 40(A) (IA) OF THE ACT WHEN NO CLAIM OF DEDUCTION OF THE SAME WAS MADE. THE CASE LAW RELIED UPON BY THE AO IS ALSO DISTINGUISHED AS IN T HAT CASE THE DEDUCTION U/S. 35AB WAS CLAIMED AND IT WAS WITH REFERENCE TO THIS CLAIM OF DEDUCTION THAT THE DISALLOWANCE U/S. 40(A) (IA) WAS UPHELD. IN THE CASE ON HAND, THERE WAS NO CLAIM OF DEDUCTION AT ALL. IN VIEW OF ABOVE, I AM O F THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE AO OF RS.8,96,903/- BY WAY OF DISALLOWANCE U/S. ITA NO.149/AHD/2012 ITO VS. PARAM NICU & CHILDREN HOSPITAL AY: 2008-09 5 40(A) (IA) OF THE ACT IS WRONG IN LAW AND IS WITHOU T ANY LAWFUL BASIS AND THE SAME IS HEREBY DELETED. CONSEQUENTLY, THIS GROUND O F APPEAL IS ALSO ALLOWED. 8. AFTER CONSIDERING THE ARGUMENTS OF LD. DEPARTMEN TAL REPRESENTATIVE AND FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ABOVE FINDINGS OF THE LD. CIT(A). WHEN THE ASSESSEE HAS NOT CLAIMED THE EXPENDITURE, THE QUESTION OF DISALLOWING THE SAME DOES NOT ARISE. T HE LABOUR CHARGES PAID HAS BEEN CAPITALIZED BY THE ASSESSEE; THEREFORE, TH E SAME HAS NOT BEEN CLAIMED AS EXPENDITURE. ONCE EXPENDITURE IS NOT CL AIMED, THE SAME CANNOT BE DISALLOWED. WE, THEREFORE, DO NOT FIND ANY JUST IFICATION TO INTERFERE WITH THE ORDER OF THE CIT(A) IN THIS REGARD. ACCORDINGL Y, GROUND NO.2 OF THE APPEAL IS REJECTED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE COURT ON 24 TH APRIL, 2015 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 24/04/2015 BIJU T., PS '( ! ') '( ! ') '( ! ') '( ! ') *')' *')' *')' *')'/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ++ ' , / CONCERNED CIT 4. , ( ) / THE CIT(A) 5. )/0 ' , , / DR, ITAT, AHMEDABAD 6. 02 3 / GUARD FILE . '( '( '( '( / BY ORDER, TRUE COPY 4 44 4/ // / +5 +5 +5 +5 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD