INCOME TAX OFFICER-4, DURG(CG) V. SMT MADHURI JAISWAL, DURG(CG)

ITA 152/BIL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2285 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 31-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHITAL S VERMA
• Assessee Lawyers: R B DOSHI
• Keywords: Sale consideration of property below Jantri Value; Principle of natural justice; Fair market value
• Section: 143(3); 50C; 54F

Judgement Text

1 ITA NO .152 /BLPR /2012 C. O. NO.20/BLPR/2012 IN TH E INCOME TAX APPELLATE TRIBUNAL: RAI PUR BENCH: RAI PUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO .152 /BLPR/2012 ASSESSMENT YEAR : 2009 - 10 THE INCOME TAX OFFICER 4 , AAYAKAR BHAWAN, NEW CIVIC CEN TRE, BHILAI, DIST. DURG (CHHATTISGARH) VS SMT. MADHURI JAISWAL, C/O. M/S. JAISWAL UDYOG, CAMP - 2, BHILAI, DIST. D URG (CHHATTISGARH) PAN:AEQPJ1705B (APPELLANT) (RESPONDENT) C. O. NO.20/BLPR/2012 (IN I.T.A.NO.152/BLPR/2012 - AY: 2009 - 10) SMT. MADHURI JAISWAL, C/O. M/S. JAISWAL UDYOG, CAMP - 2, BHILAI, DIST. D URG (CHHATTISGARH) PAN:AEQPJ1705B VS THE INCOME TAX OFFICER 4, AAYAKAR BHAWAN, NEW CIVIC CENTRE, BHILAI, DIST. DURG (CHHATTISGARH) (CROSS OBJECTOR ) (RESPONDENT) REVENUE BY SMT. SHITAL S. V ERMA, DR ASSESSEE BY SHRI R. B. DOSHI, AR DATE OF HEARING: 1 6 - 10 - 2015 DATE OF PRONOUNCEMENT: 30 - 11 - 2015 O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF THE LEARNED CIT (A), RAIPUR DATED 2 6 - 06 - 2012 FOR ASSESSMENT YEAR 2009 - 10. THE SOLITARY GROUND RAISED BY THE REVENUE IS REPRODUCED BELOW: WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS), HA S ERRED IN DIRECTING THE 2 ITA NO .152 /BLPR /2012 C. O. NO.20/BLPR/2012 ASSESSING OFFICER TO ALLOW DEDUCTION OF RS.39,96,329/ - UNDER SECTION 54F(1)(B) OF THE INCOME - TAX ACT, 1961 INSTEAD OF RS.20,12,715/ - AS ALLOWED BY THE ASSESSING OFFICER. 3 . FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 143(3) OF THE IT ACT D ATED 30 TH DECEMBER, 2011 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY DERIVED INCOME FROM BUSINESS OF TRADING OF CLOTH AND FILED THE RETURN AT RS.1,71,850/ - . AS PER THE INFORMATION AVAILABLE BY WAY OF AIR IT WAS FOUND THAT THE ASSESSEE HAD SOLD IMMOVABLE PROPERTY FOR A SUM OF RS.43,00,000/ - . ON PERUSAL OF THE SALE DEED, IT WAS FOUND THAT THE ASSESSEE HAD SOLD ONE SEVENTH SHARE IN THE LAND AND HOUSE PROPERTY SITUATED AT PLOT NO.92/2, RAJNANDAN GAON (CHHATTISG ARH) FOR A CONSIDERATION OF RS .21,51,000/ - VIDE R EGISTERED SALE DEED DATED 30 - 06 - 2008. THE AO HAD MADE AN ENQUIRY WITH THE SUB - REGISTRY OFFICE AND THERE UPON CAME TO KNOW THAT FOR THE PURPOSE OF FEES FOR REGISTRATION, THE STAMP VALUATION OF THE PROPERTY WAS RS.43,00,000/ - . THE QUERY WAS RAISED AND IN COM PLIANCE IT WAS INFORMED TO THE AO THAT THE PROPERTY IN QUESTION WAS ANCESTRAL PROPERTY ACQUIRED PRIOR TO 1981 WHICH WAS OCCUPIED BY THE TENANTS. HENCE, THE CONSIDERATION RECEIVED WAS ADEQUATE WHICH WAS DULY DEPOSITED IN THE SAVINGS BANK ACCOUNT WITH DENA B ANK, BHILAI. THE AO HAS REPRODUCED SEVERAL DATES AND OTHER DETAILS ON WHICH THE CONSIDERATION OF RS.21,51,000/ - WAS DEPOSITED IN THE BANK ACCOUNT. THE AO WAS NOT CONVINCED AND BY REFERRING TO THE PROVISIONS OF SECTION 50C OF THE ACT ADOPTED THE FULL VALUE OF CONSIDERATION AS PER THE STAMP VALUATION AUTHORITY AT RS.43,00,000/ - . 4. THERE WAS ONE MORE ISSUE IN RESPECT OF THE INVESTMENT MADE IN RESIDENTIAL HOUSING PROPERTY AMOUNTING TO RS.20,12,715/ - . THE ASSESSEE HAS CLAIMED THAT THE SAID INVESTMENT WAS MADE T OWARDS CONSTRUCTION OF A RESIDENTIAL HOUSE ON THE PLOT OF LAND SITUATED AT BHILAI. THE ASSESSEE HAS ALSO INFORMED THAT TILL THE DUE DATE OF FILING OF RETURN I.E. 31 - 07 - 2009, THE SAID AMOUNT WAS INVESTED TOWARDS CONSTRUCTION. THE ASSESSEE HAS FURNISHED A DE TAILED ACCOUNT OF THE EXPENSES 3 ITA NO .152 /BLPR /2012 C. O. NO.20/BLPR/2012 INCURRED TOWARDS CONSTRUCTION. THE ASSESSEE HAS ALSO PRODUCED REGISTER MAINTAINED BY THE ASSESSEE FOR THE PURPOSE OF RECORDING THE EXPENDITURE TOWARDS CONSTRUCTION. THE ASSESSEE HAS ALSO MAINTAINED BILLS OF EXPENSES. IT WAS C LAIMED THAT THE SAID RESIDENTIAL PROPERTY WAS COMPLETED IN THE YEAR 2010. THE AO WAS NOT CONVINCED AND HELD THAT THE CLAIM OF DEDUCTION U/S 54F OF THE ACT WAS NOT ADMISSIBLE; HENCE, HE RE - COMPUTED THE LONG TERM CAPITAL GAIN AND ACCORDINGLY TAXED IN THE HAN DS OF THE ASSESSEE. 5. ON THE ISSUE OF CLAIM OF DEDUCTION U/S 54F OF THE ACT, WHEN THE MATTER REACHED BEFOR E THE FIRST APPELLATE AUTHORITY , THE LEARNED CIT (A) HAS GRANTED RELIEF IN RESPECT OF THE NEW HOUSE, HOWEVER, HE HAS NOT DISTURBED THE VALUATION ADOP TED BY THE AO BY INVOKING THE PROVISIONS OF SECTION 54F OF THE ACT AT RS.43,00,000 / - . THE LEARNED CIT (A) HAS COMPUTED THE CAPITAL GAIN IN THE FOLLOWING MANNER: - 4.5 HAVING DERIVED THE THREE INGREDIENTS OF THE EQUATION/FORMULA FOR CALCULATING THE AMOUNT O F DEDUCTION, THE DEDUCTION ALLOWABLE TO THE APPELLANT IS WORKED OUT AS UNDER: - DEDUCTION = CAPITAL GAIN X INVESTMENT IN NEW HOUSE NET CONSIDERATION DEDUCTION =42,70,900 / - X 20,12,715 X = RS.39,96,329/ - 21,51,000/ - THE ABOVE WORKING O F THE AMOUNT OF ALLOWABLE DEDUCTION IS IN ACCORDANCE WITH THE METHOD PRESCRIBED BY THE STATUTE. THERE IS NO REASON TO ADOPT ANY OTHER METHOD AND THE LETTER OF LAW HAS TO BE GIVEN FULL RESPECT. THE ABOVE WORKING CLEARLY GIVES THE AMOUNT OF ALLOWABLE DEDUCTI ON OF RS.39,96,329/ - . THERE IS ANOTHER ANGLE ALSO TO LOOK AT THE ISSUE. EVEN IF THERE WAS SOME AMBIGUITY, SEC. 54F BEING AN INCENTIVE PROVISION, IT HAS TO BE CONSTRUED LIBERALLY, AS HELD BY HONBLE SUPREME COURT HONBLE SUPREME COURT IN BAJAJ TEMPO LTD. VS CIT 196 ITR 188 . THEREFORE, I HOLD THAT THE DEDUCTION ALLOWABLE TO THE APPELLANT U/S 54(1) (B) IS RS.39,96,329/ - AND THE AO WAS NOT JUSTIFIED IN ALLOWING THE DEDUCTION AT RS.20,12,715/ - . THE AO IS, ACCORDINGLY, DIRECTED TO ALLOW 4 ITA NO .152 /BLPR /2012 C. O. NO.20/BLPR/2012 DEDUCTION OF RS.39,96,329/ - IN PLACE OF RS.20,12,715/ - AND CONSEQUENTLY, THE ASSESSED INCOME WOULD BE REDUCED BY RS.19,83,614/ - . THE APPELLANT GETS RELIEF, ACCORDINGLY. THIS GROUND OF APPEAL IS ALLOWED. 6 . ON THIS TRIFLE ISSUE, WE HAVE HEARD BOTH THE SIDES. FROM THE GROUND OF A PPEAL AS RAISED BY THE REVENUE AS ALSO ARGUED BEFORE US BY BOTH THE SIDES, WE HAVE FOUND THAT THE CONTROVERSY RAISED WAS ONLY IN RESPECT OF ALLOWANCE OF DEDUCTION U/S 54F OF THE ACT. THIS OBSERVATION IS BASED UPON THE FACT THAT THE LEARNED CIT (A) HAS NOT DISTURBED THE FINDING OF THE AO PERTAINING TO THE APPLICABILITY OF THE PROVISIONS OF SECTION 54F OF THE ACT. IN OTHER WORDS, THE LEARNED CIT (A) HAS COMPUTED THE CAPITAL GAIN AFTER TAKING INTO ACCOUNT THE VALUATION AS PER THE STAMP VALUATION AUTHORITY. THE REFORE, THE GRIEVANCE OF THE REVENUE DEPARTMENT WAS CONFINED TO T HE ALLOWANCE OF DEDUCTION U/S 54F OF THE ACT. TO RESOLVE THIS ISSUE, WE HAVE EXAMINED THE FACTS OF THE CASE AND THERE UPON CAME TO KNOW THAT A FINDING OF FACT WAS GIVEN THAT THE ASSESSEE HA D MAINTAINED ALL REQUISITE DETAILS TO ESTABLISH THE CORRECTNESS OF THE INVESTMENT MADE TOWARDS CONSTRUCTION OF RESIDENTIAL HOUSE SO AS TO CLAIM THE DEDUCTION U/S 54F OF THE ACT. IN OUR CONSIDERED OPINION, THE LEARNED CIT (A) HAS RIGHTLY APPRECIATED THE FAC TS OF THE CASE IN THE LIGHT OF THE PROVISIONS OF SECTION 54F (1) (B) OF THE ACT. WE FIND NO FALLACY IN SUCH FINDINGS OF THE LEARNED CIT (A). THEREFORE, WE HEREBY UPHOLD THE SAME. AS A RESULT THE GROUND RAISED BY THE REVENUE IS HEREBY DISMISSED. 7. SO FAR AS THE CROSS OBJECTION RAISED BY THE RESPONDENT ASSESSEE IS CONCERNED, THE ISSUE RAISED AS PER THE GROUND IS AS UNDER: - LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE AO IN SUBSTITUTING THE VALUE ADOPT ED BY STAMP VALUATION AUTHORITY IN PLACE OF THE ACT UAL SALE CONSIDERATION INVOKING THE PROVISIONS OF SEC. 50C. THE ADDITION OF RS.22,58,185/ - IS NOT JUSTIFIED. 8. ON THIS ISSUE, THE EXPLANATION OF THE ASSESSEE WAS THAT THE PROPERTY IN QUESTION WAS OCCUPIED BY TENANTS DUE TO WHICH THE ASSESSEE WAS NOT IN A 5 ITA NO .152 /BLPR /2012 C. O. NO.20/BLPR/2012 POSITION TO GET GOOD PRICE OF THE SAID PROPERTY. DUE TO LITIGATIONS, THE PRICE AS FIXED FOR STAMP VALUATION WAS NOT THE FAIR MARKET VALUE OF THE PROPERTY IN QUESTION. IT HAS ALSO BEEN INFORMED THAT THE ASSESSEE BEING MORE THAN SIXTY YEARS OLD, THEREFORE, WAS UNABLE TO GET THE PROPERTY VACATED FROM THE TENANTS. 9. FACTS IN THIS REGARD, AS PER THE ORDER OF THE LEARNED CIT (A) WERE AS UNDER: - 3.2 IN THE COURSE OF APPEAL PROCEEDINGS, IT WAS SUBMITTED BY THE APPELLANT AND HER LEARNED COUNSEL THAT THE PROPERTY SOLD BY THE APPELLANT & OTHER CO - OWNERS WAS A TENANTED PROPERTY AND THE MATTER WAS PENDING BEFORE THE CIVIL COURT FOR EVICTION OF THE TENANTS. THE BUILDING SOLD WAS MORE THAN 60 YEARS OLD AND THE TENANTS WERE OCCUPYING THE PREMISES FOR MORE THAN 30 YEARS. THE APPELLANTS BROTHER WAS TRYING TO SELL THE PROPERTY AND TO KEEP ENTIRE SALE CONSIDERATION WITH HIMSELF. ALL THESE ADVERSE FACTORS HAVE NOT BEEN CONSIDERED WHILE FIXING STAMP VALUATION RATES AND THEREFORE, CAPITAL GAIN COULD NOT HAVE BEEN COMPUTED WITH REFERENCE TO SUCH RATES. THE PURCHASER HAD PURCHASED THE PROPERTY FOR LESSER CONSIDERATION AS HE WOULD ALSO BE REQUIRED TO PAY SOME AMOUNT FOR EVICTION OF TENANTS. FOR ALL THESE REASONS, IT WAS ARGUED THAT THE VALUE AS PER SEC. 50C WAS NOT APPLICABLE. IT WAS ALSO ARGUED THAT THE DEDUCTION ALLOWED BY THE AO AT RS.20,12,715/ - ON ACCOUNT OF CONSTRUCTION IN NEW RESIDENTIAL HOUSE IS NOT CORRECT AND THEREBY, THE ADDITION OF RS.22,58,185/ - IS ALSO INCORRECT. 3.3 I HAVE GONE THROUGH THE OBSERVATION OF THE AO AND T HE SUBMISSIONS OF THE APPELLANT. IN MY CONSIDERED VIEW, THE PROVISIONS OF SEC. 50C ARE APPLICABLE IN THE PRESENT CASE AS THE APPELLANT DID NOT CALCULATE CAPITAL GAIN WITH REFERENCE TO SEC. 50C, WHICH IS A SPECIAL SECTION. THE CAPITAL GAIN WAS REQUIRED TO B E COMPUTED SUBSTITUTING THE RATE FIXED BY STAMP VALUATION AUTHORITY FOR THE ACTUAL SALE CONSIDERATION. THERE IS NO ROOM FOR THE ARGUMENTS TAKEN BY THE APPELLANT. HOWEVER, THE REQUEST OF THE APPELLANT FOR REFERRING THE MATTER TO DVO DESERVES TO BE CONSIDERE D F AVOURABLY AS THE RULES OF NATUR AL JUSTICE DEMAND, BUT IN VIEW OF MY FINDING GIVEN IN RESPECT OF GROUND NO.2 OF APPEAL, THE SAME DOES NOT SEEM NECESSARY PRESENTLY. IN VIEW OF THIS, THE ACTION OF THE AO IN ADOPTING THE AMOUNT OF RS.43,00,000/ - AS FULL VAL UE OF CONSIDERATION (AS ASSESSED BY THE STAMP VALUATION AUTHORITY) IS UPHELD. THIS GROUND OF APPEAL IS THUS DISMISSED. 6 ITA NO .152 /BLPR /2012 C. O. NO.20/BLPR/2012 10. FROM THE SIDE OF THE CROSS OBJECTOR, FEW EVIDENCES WERE FURNISHED AND RELIANCE WAS PLACED ON THE DECISION OF MANSUKHLAL GHELABHAI DO SHI VS ACIT (201 4) 39 CCH 0003 RAJKOT TRIBU. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE SIDES, WE ARE O F THE VIEW THAT THE LEARNED CIT (A) HAS DULY APPRECIATED THE SHORTCOMINGS OF THE PROPERTY IN QUESTION. ALTHOUGH, THE LEARNED CIT (A) WAS ALSO OF THE V IEW THAT THE MATTER COULD HAVE BEEN REFERRED TO THE DVO, BUT HE HAS ADOPTED THE CONSIDERATION OF THE PROPERTY AS ASSESSED FOR THE PURPOSE OF STAMP DUTY BY THE STAMP VALUATION AUTHORITY. H OWEVER, CONSIDERING ONE OF THE MOST SIGNIFICANT FACT ABOUT THE LITIGANT INVOLVED AND ALSO THAT THE PROPERTY HAD ALREADY BEEN SOLD IN THE YEAR 2008 SAID TO BE DURESS - SALE; WE DEEM IT JUSTIFIABLE AS WELL AS CONSIDERING THE DOCTRINE OF NATURAL JUSTICE THAT THE VALUATION FOR THE PURPOSE OF STAMP DUTY IS NOT TO BE APPLIED BY INVOKING DEEMING PROVISIONS. ONCE, THE UNDISPUTED FACT WAS THAT FAIR MARKET VALUE OF THE PROPERTY WAS ADVERSELY AFFECTED BY THE OCCUPATION OF THE TENANTS, THEN, IT IS REASONABLE TO HOLD THAT A FICTION AS CREATED U/S 50C OF THE ACT IS NOT APPLICABLE IN T HE CIRCUMSTANCES UNDER WHICH THE PROPERTY WAS SOLD. WE, THEREFORE, REVERSE THE FINDINGS OF THE LEARNED CIT (A) AND DIRECT THE REVENUE AUTHORITY TO RE - COMPUTE THE IMPUGNED CAPITAL GAIN BY ADOPTING THE AMOUNT OF SALE CONSIDERATION AS MENTIONED IN THE REGISTE RED SALE DEED. RESULTANTLY, THE CROSS OBJECTION FILED BY THE RESPONDENT ASSESSEE IS HEREBY ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE DEPARTMENT IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF NOV., 2015. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: NAGPUR, 30 TH NOV., 2015. LAKSHMIKANT DEKA/SR. PS 7 ITA NO .152 /BLPR /2012 C. O. NO.20/BLPR/2012 COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T., CONCERNED 4. CIT ( APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 23.11.2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26.11.2015 / 30.11.2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECON D MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUNCEMENT SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER