Sunil Narang, Hyderabad V. Dy.Commissioner of Income Tax, Circle14(1), Hyderabad

ITA 1506/Hyd/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0771 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 02-07-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 24-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPTA
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report; Capital Gains
• Section: 143(3); 50C; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1506/HYD/2017 ASSESSMENT YEAR: 2012 - 13 SUNIL NARANG, HYDERABAD. PAN: ABFPN 3762 L VS. DCIT, CIRCLE - 14(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI P. MURALI MOHAN RAO REVENUE BY: SMT. AMISHA S. GUPTA, DR DATE OF HEARING: 02/07/2019 DATE OF PRONOUNCEMENT: 21/ 0 8 /2019 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 12, HYDERABAD DATED 17/4/2017 IN APPEAL NO. 0139/2016 - 17 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE ASSESSMENT YEAR 2012 - 13. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS APPEAL HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LD. CIT (A) HAS ERRED BY HOLDING THAT THE VALUATION OFFICERS REPORT VALUING THE IMMOVABLE PROPERTY ADMEASURING 800 SQ YDS SITUATED AT GUTTALA BEGUMPET VILLAGE, 2 SERILINGAMPALLY , RR DISTRICT , PLOT NO.17, SURVEY NO. 10 [PART], NO.2 - 80/1[P] AT RS. 98,80,000/ - IS APPROPRIATE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN TRADING OF RAW FILM FILED HIS RETURN OF INCOME FOR THE AY 2012 - 13 ON 27/9/2012 ADMITTING HIS TOTAL INCOME AS RS. 70,41,050/ - . INITIALLY THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND SUBSEQUENTLY THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) VIDE ORDER DATED 23/3/2015 WHEREIN AMONGST OTHER ADDITIONS, THE LD. AO INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT AND MADE ADDITION OF R S. 26,80,000/ - TOWARDS LONG TERM CAPITAL GAINS WITH RESPECT TO THE SALE OF HIS PROPERTY LOCATED AT GUTTALA BEGUMPET VILLAGE, SERILINGAMPALLY, RR DISTRICT. 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LD. AO THAT THE ASSESSEE HAD SOLD HIS IMMOVABLE PROPERTY MENTIONED SUPRA FOR SALE CONSIDERATION OF RS.72 LAKHS HOWEVER, THE MARKET VALUE STATED IN THE SALE DEED WAS RS. 1 ,04, 60,000/. SINCE THERE WAS A DIFFERENCE IN THE SALE CONSIDERATION AND THE MARKET VALUE , THE LD. AO QUERIED AS TO WHY THE PROVISIONS OF SECTION 50C SHOULD NOT BE INVOKED. IN RESPONSE T HE ASSESSEE HAD MADE THE FOLLOWING SUBMISSIONS BEFORE THE AO: - NOW YOUR G OOD SELVES HAVE PROPOSED TO ADOPT THE SALES CONSIDERATION AT RS. 1,04,60,000/ - FOR THE PURPOSE OF CALCULATION OF CAPITAL GAINS BY INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT. IN THIS REGARD, I WOULD LIKE TO SUBMIT THAT THE VALUE OF PROPERTY IN QUEST ION IS RS. 72,00,000/ - 3 ONLY AND IT DOES NOT FETCH THE MARKET VALUE AS FIXED FOR THE STAMP DUTY PURPOSE FOR VARIOUS REASONS. I WOULD FURTHER LIKE TO SUBMIT THAT THE SAID PROPERTY HAS LITIGATION AND WAS OCCUPIED BY VARIOUS PERSONS FOR LONG TIME. I HAD APPROACHED THEM TO VACATE THE LAND BUT THEY HAVE NOT HONOUR THE REQUEST. IT WAS DIFFICULT FOR ME TO DO THE DISPOSAL AS UNAUTHORI SED PERSONS HAD THE POSSESSION OF LAND. A READING OF THE SECTION 50C MAKE IT CLEAR THAT THE SECTION IS APPLICABLE IN CASES WHERE STAMP DUTY HAS BEEN PAID FOR TRANSFER. MOREOVER, THIS SECTION ALSO POSTULATES THAT THE FAIR MARKET VALUE MAY BE DIFFER ENT FROM THE VALUE ADOPTED BY THE REGISTRATION AUTHORITY AND IN SUCH CASES, PROCEDURE FOR REFERENCE TO VALUATION CELL IS PROVIDED. HENCE, THIS SECTION 50C WAS NEITHER APPLICABLE NOR IT WAS THE CASE OF THE REVENUE THAT ANY REFERENCE TO VALUATION CELL HAD B EEN MADE OR THAT YOUR GOODSELVES HAS OBTAINED INDEPENDENT INSTANCES OF COMPARABLE SALES IN THAT PERIOD, OF THAT AREA. 5. HOWEVER, SINCE THE VALUATION OFFICER HAD VALUED THE PROPERTY AT RS. 98,80,000 AFTER CONSIDERING ALL THE DRAW BACK IN THE LAND , THE L D. AO ADOPTED THE VALUE DETERMINED BY THE VALUATION OFFICER AS THE SALE CONSIDERATION WHILE COMPUT ING THE CAPITAL GAINS OF THE ASSESSEE AND THERE BY MA DE ADDITION OF RS. 26,80,000/ - (RS. 98,80,000 RS. 72,00,000). 6. ON APPEAL, THE LD. CIT (A) UPHELD THE ORDER OF THE LD. AO AS THE VALUATION OFFICER HAD TAKEN INTO CONSIDERATION OF THE DRAWBACKS IN THE LAND. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE IS NOW ON APPEAL BEFORE US. 7. BEFORE US THE LD. AR SUBMITTED THAT THE SAID PROPER TY WAS UNDER LITIGATION AND OCCUPIED BY VARIOUS UNAUTHORISED PERSONS FOR QUITE NUMBER OF YEARS. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD FILED 4 A CASE IN THE COURT OF LAW HOWEVER HE DID NOT SUCCEED. THE LD. AR ALSO SUBMITTED THE COURT ORDER DATED 14 /11/2005 AND 09/4/2014 IN THE PAPER BOOK PAGE NO. 55 TO 92. THE LD. AR THEREAFTER ARGUED BY STATING THAT , WHEN THE LAND WAS UNDER LITIGATION THE AMOUNT OF RS. 72 LAKHS RECEIVED BY HIM WAS MORE THAN A FAIR SALE CONSIDERATION AND THEREFORE IN THESE CIRCUMSTANCES THE VALUATION REPORT OF THE VALUATION OFFICER DOES NOT HAVE MERITS. IT WAS THEREFORE PLEADED THAT T HE ACTUAL SALE VALUE MAY NOT BE DISTURBED WHILE COMPUTING THE LONG - TERM CAPITAL GAIN OF THE ASSESSEE. THE LD DR ON THE OTHER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE LD. REVENUE AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE MATERIALS ON RECORD. THE FACT THAT THE PROPERTY SOLD BY THE ASSESSEE SUFFERS FROM LITIGATION IS NOT DISPUTE D BY THE REVENUE BEFORE US . WHEN AN IMMOVABLE PROPERTY FALLS UNDER LITIGATION FOR QUITE A NUMBER OF YEARS THE MARKET VALUE OF THE PR OPERTY WILL BE CONSIDERABLY LESS THAN THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY BECAUSE NORMALLY VALUATION OF THE STATE STAMP AUTHORITY WOULD BE A PRE - DETERMINED VALUE BASED ON THE MARKET VALUE OF THE S URROUNDING LAND HAVING CLEAR TITLE. IN TH E CASE OF THE ASSESSEE THE REVENUE HAS ALSO ACCEPTED THAT THE LAND SOLD BY THE ASSESSEE IS A DISPUTED LAND . EVEN IN THESE CIRCUMSTANCES THE ASSESSEE WAS ABLE TO REALISE AN AMOUNT OF RS. 72 LAKHS ON THE SALE OF HIS LITIGATED PROPERTY THE VALUE OF WHICH WAS SCALED DOWN TO RS. 98,80,000 BY THE VALUATION OFFICER AS AGAINST THE VALUE OF RS. 5 1,04,60,000 DETERMINED BY THE STATE STAMP VALUATION OFFICER. THUS, THE SALE VALUE REALISED BY THE ASSESSEE IS APPROXIMATELY 73% (RS. 98,80,000 X 73% = RS.72,12,400) OF THE V ALUE DETERMINED BY THE VALUATION OFFICER AND THE VALUATION OFFICER HAS ADOPTED 94% (RS. 1,04,60,000 X 94 .5 % = RS. 98,32,400) OF THE MARKET VALUE DETERMINED BY THE STATE STAMP VALUATION OFFICER. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE FIRM VIEW THAT THE ALLOWANCE GRANTED BY THE VALUATION OFFICER IS TOO LOW CONSIDERING THE DRAWBACKS OF THE LAND SOLD BY THE ASSESSEE. WE ARE FURTHER OF THE FIRM VIEW THAT THE ASSESSEE HAS REALISED REASONABLE AMOUNT AS SALE CONSIDERATION FROM HIS LIT IGATED PROPERTY BEING 73% OF THE VALUE DETERMINED BY THE LD. VALUATION OFFICER AND THEREFORE THERE IS NO NECESSITY TO DISTURB THE SALE VALUE OF RS. 72 LAKHS AS THE SAME COULD BE TREATED AS THE MARKET VALUE OF THE PROPERTY CONSIDERING THE DRAWBACKS OF THE P ROPERTY. HENCE , WE HEREBY DIRECT THE LD. AO TO DELETE THE ADDITION OF RS. 26,80,000/ - MADE IN THE HANDS OF THE ASSESSEE WHILE COMPUTING HIS LONG - TERM CAPITAL GAINS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 21 ST AUGUST , 2019. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 21 ST AUGUST , 2019 6 OKK COPY TO: - 1) SUNIL NARANG, C/O. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD - 82. 2) DCIT, CIRCLE - 14(1), HYDERABAD. 3) THE CIT(A) - 12, HYDERABAD 4) THE PR. CIT - 12, HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE