Sri Haranjit Singh, Kolkata V. ACIT, C.C. XXIII, Kolkata

ITA 1525/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7956 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2010
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 28-08-2009
• Court: TRIBUNAL
• Assessee Lawyers: B R PURKAYASTHA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value; Onus to prove; Capital Gains
• Section: 50C; 37

Judgement Text

INCOME TAX APPELLATE TRIBUNAL C BENCH, KOLKA TA (BEFORE HONBLE SMT. DIVA SINGH, JM & SHRI B.K.HALD AR,AM) I.T.A.NO.1525/KOL/2009 ASSESSMENT YEAR : 2007-08 SHRI HARANJIT SINGH -VS- A.C.I.T., CENTRAL CIRCLE-X XIII KOLKATA PAN : AJVPS 5035 P KOLKATA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.R.PURKAYASTHA RESPONDENT BY : SHRI R.K.SINGH (OFFICE ATTENDANT PRESENT IN SUPPORT OF ADJOURNMENT PETITION) O R D E R PER SMT. DIVA SINGH, JUDICIAL MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 29.07.2009 OF THE CIT-(A)-CENTRAL-III, KOLKATA RELATING TO ASSESSMENT YEAR 2007-08 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. FOR THAT THE APPELLANT HAVING CONTENDED AND OBJ ECTED TO THE ADOPTION OF VALUE OF THE PROPERTY SOLD BY THE APPELLANT AS PER THE VALUE ADOPTED BY THE REGISTERING AUTHORITY, THE LD. ASSESSING OFFICER OU GHT TO HAVE REFERRED THE MATTER TO THE VALUATION OFFICER. 2. FOR THAT THE LD. CIT(A) HAS MADE OBSERVATIONS IN PARA 2.1 WHICH ARE TOTALLY WRONG & UNCALLED FOR. 3. FOR THAT THE LD. CIT(A) OUGHT TO HAVE DIRECTED T HE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICER FOR DETERMINATI ON OF VALUE OF THE PROPERTY. 4. FOR THAT FURTHER GROUNDS OF APPEAL MAY KINDLY BE ALLOWED TO BE TAKEN AT THE TIME OF HEARING OF THE APPEAL. 2. AT THE TIME OF HEARING AN ADJOURNMENT PETIT ION WAS MOVED ON BEHALF OF THE ASSESSEE BY THE LD. AR STATING THAT HE IS OUT OF ST ATION. AS SUCH TIME IS SOUGHT. ON A PERUSAL OF THE GROUNDS AGITATED ON BEHALF OF THE AS SESSEE AND THE MATERIAL AVAILABLE ON RECORD IT WAS CONSIDERED APPROPRIATE TO REJECT THE ADJOURNMENT PETITION AND DECIDE THE ASSESEES APPEAL ON MERIT. 3. THE RELEVANT FACTS OF THE CASE AS APPEARIN G IN THE IMPUGNED ORDER ARE AS UNDER :- AS AGAINST AN AMOUNT OF RS.5,00,000/-, THE ASSESSI NG OFFICER HAD ASSESSED AN AMOUNT OF RS.26,41,000/- AS SHORT TERM CAPITAL GAIN S ARISING FROM THE 2 APPELLANTS TRANSFER OF HIS SHARE OF LAND AND BUILD ING SITUATED AT SHYAM BAZAR, KOLKATA BY A DEED OF CONVEYANCE DATED 04.09.2006. T HE APPELLANT HAD ADMITTED THE SALE CONSIDERATION AT RS.15,00,000/- A ND COST OF ACQUISITION AT RS.10,00,000/-. THE ASSESSING OFFICER FOUND FROM TH E DEED CONVEYANCE, THAT THE REGISTERING AUTHORITY, FOR THE PURPOSES OF STAM P DUTY, ADOPTED THE MARKET VALUE OF THE PROPERTY UNDER SALE AT RS.36,41,000/-. THE ASSESSING OFFICER, AFTER CALLING FOR THE OBJECTION OF THE APPELLANT, WHO OBJ ECTED TO ADOPTION OF THE STAMP DUTY VALUE, INVOKED THE PROVISIONS OF SEC.50C(1) OF THE IT ACT, 1961, AND ADOPTED THE SAID MARKET VALUE FOR STAMP DUTY PURPOS ES AS THE DEEMED FULL VALUE OF CONSIDERATION RECEIVED BY THE APPELLANT AN D ASSESSED THE SHORT TERM CAPITAL GAINS AT RS.26,41,000/- AFTER ALLOWING DEDU CTION OF COST OF ACQUISITION OF RS.10,00,000/-. 3.1. IN APPEAL BEFORE THE FIRST APPELLATE AUTH ORITY IT WAS CONTENDED THAT THE AO AS PER SECTION 50(C) (2)OF THE IT ACT OUGHT TO HAVE RE FERRED THE MATTER TO THE VALUATION OFFICER. A PRAYER WAS MADE THAT THE AO MAY BE DIREC TED TO REFER THE SAME. HOWEVER THE SAID PRAYER WAS NOT ACCEPTED BY THE CIT(A) 4. WE HAVE HEARD THE LD. DR AND PERUSED THE M ATERIAL AVAILABLE ON RECORD QUA THE ISSUE AGITATED BEFORE THE BENCH VIDE GROUND NO.3. I T IS SEEN THAT GROUND NO.1 AND 2 ARE IN SUPPORT OF THE SAID GROUND. IN ORDER TO ADDRESS THE ISSUE IT IS NECESSARY TO CONSIDER THE RELEVANT PROVISION OF THE ACT NAMELY SECTION 5 0(C) OF THE IT ACT WHICH READS AS UNDER :- 50C. SPECIAL PROVISION FOR FULL VALUE OF CONSID ERATION IN CERTAIN CASES (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF 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 PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR A SSESSED SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE C ONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1) WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICE R THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB -SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRAN SFER ; (B) THE VALUE SO ADOPTED OR ASSESSED BY THE STAMP V ALUATION AUTHORITY UNDER SUB- SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF T HE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE P ROVISIONS OF SUB-SECTIONS 3 (2),(3),(4),(5) AND (6) OF SECTION 16A, CLAUSE(I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 37 OF THE WEALTH-TAX ACT, 1957 ( 27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-S ECTION (1) OF SECTION 16A OF THAT ACT. EXPLANATION FOR THE PURPOSES OF THIS SECTION, VA LUATION OFFICER SHALL HAVE THE SAME MEANING AS IN CLAUSE OF SECTION 2 OF THE WEA LTH-TAX ACT, 1057 (27 OF 1957). (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE C ONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER. 4.1.. ON A CAREFUL READING THE SAID SECTION WHICH I NCORPORATES THE SCHEME OF THE ACT IT IS CLEAR THAT THE SAID SEC. 50C OF THE IT ACT, W AS INTRODUCED BY THE FINANCE ACT,2002 W.E.F. 1 ST APRIL, 2003, CONTAINS SPECIAL PROVISIONS FOR VALUA TION OF THE CONSIDERATION IN CERTAIN CASES. SEC. 50C(1) PROVIDES THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAP ITAL ASSET, CONSISTING OF LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (REFERRED TO AS STAMP VALUATION AUTHORIT Y) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY FOR SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSES OF S.48, BE DEEMED TO BE THE FULL VALUE OF CONSIDERATI ON RECEIVED OR ACCRUING AS A RESULT OF SUCH A TRANSFER. MEANING THEREBY THAT WHEN THE TATE D SALES CONSIDERATION OF A LAND OR HOUSE PROPERTY IS LESS THAN THE STAMP DUTY VALUATIO N OF THE SAID PROPERTY, IT IS THE STAMP DUTY VALUATION WHICH SHALL PREVAIL FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAINS UNDER S.48. 4.2. FURTHER A READING OF SUB-SECTION (2) AND (3) O F SECTION 50C WOULD BEAR AND THAT SECTION 50C IS SUBJECT TO AN IMPORTANT EXCEPTI ON CARVED OUT IN THE SCHEME. SUB- SECTION. (2) AND (3) OF SECTION.50C PROVIDES THAT W HERE ASSESSEE PUTS A CLAIM BEFORE THE AO THAT THE VALUE ADOPTED BY THE STAMP VALUATIO N AUTHORITY, UNDER S.50C(1), EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, AND UNLESS SUCH VALUATION IS A SUBJECT-MATTER OF LITIGATION BEFORE ANY AUTHORITY OR COURT, THE AO MAY REFER THE MATTER OF DETERMINATION OF FAIR MARKET VA LUE OF THE PROPERTY IN QUESTION TO THE DVO AND THE SAME SHALL BE TAKEN INTO ACCOUNT FOR CO MPUTATION OF CAPITAL GAINS. SEC. 4 50C(3), HOWEVER, PROVIDES THAT WHEN FAIR MARKET VAL UATION SO DETERMINED BY THE DVO IS HIGHER THAN THE VALUATION OR ASSESSMENT AS PER T HE STAMP VALUATION AUTHORITY, THE COMPUTATION OF CAPITAL GAINS IS TO BE DONE WITH REF ERENCE TO THE VALUATION OR ASSESSMENT AS PER THE STAMP VALUATION AUTHORITY. TH IS WOULD MEAN THAT THE LEGISLATURE WAS CAREFUL TO ENSURE THAT THE VALUATION OF PROPERT Y BY THE DVO WOULD NOT ACT TO THE DETRIMENT TO THE ASSESSEE; THE RATIONALE BEING THAT THE ASSESSEE CANNOT BE PUT TO ANY DISADVANTAGE IN CASE THE MATTER IS REFERRED TO THE DVO. 4.3. THE SAID SCHEME MAY BE SUMMARIZED IN THE FOLLO WING MANNER NAMELY (A)THE NORMAL RULE IS THAT WHERE STAMP DUTY VALUATI ON IS HIGHER THAN THE STATED CONSIDERATION ON TRANSFER, THE SAME IS TO BE ADOPTE D FOR THE PURPOSES OF COMPUTING CAPITAL GAINS; (B)EXCEPTION TO THE NORMAL RULE IS THAT IN CASE THE ASSESSEE CAN DEMONSTRATE THAT THE FAIR MARKET VALUATION IS LESS THAN THE STAMP DU TY VALUATION, THE FAIR MARKET VALUE IS TO BE ADOPTED; (C)THE SAFEGUARD IS THAT ASSESSEES CHALLENGE TO THE STAMP DUTY VALUATION BEFORE THE TAX AUTHORITIES CANNOT PUT THE ASSESSEE TO A WO RSE POSITION. IN EFFECT THUS, WHEN STAMP DUTY VALUATION OF A PROPERTY IS HIGHER T HAN STATED VALUE OF SALE CONSIDERATION, THE ONUS TO PROVE THE FAIR MARKET VA LUE SHIFTS TO THE ASSESSEE. AS LONG AS ASSESSEE CAN REASONABLY DISCHARGE THIS ONUS , EVEN UNDER THE SCHEME OF S.50C, THE CONSIDERATION STATED BY THE ASSESSEE CAN NOT BE DISTURBED. 5. ACCORDINGLY IN THE LIGHT OF THE ADMITTED FACTS THAT THE ASSESSEE OBJECTED BEFORE THE AO TO THE ADOPTION OF THE STAMP DUTY VALUE. THE SPECIFIC GRIEVANCE WAS BEFORE THE CIT(A) ALSO AND HAS BEEN AGITATED BEFORE THE BENCH ALSO VIDE THE GROUNDS RAISED. WE CONSIDER IT APPROPRIATE TO RESTORE THE ISSUE BACK T O THE FILE OF THE AO WITH THE DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH LAW OBTAINING U/S 50C(2) THE DVOS REPORT. NEEDLESS TO SAY THAT THE ASSESSEE SHALL BE AFFORDED A REASONABLE OPPORTUNITY OF BEING HEARD. 6. THE LD. DR THOUGH HAD RELIED UPON THE IMPUG NED ORDER HOWEVER IT WAS FAIRLY SUBMITTED BY HIM THAT HE WOULD HAVE NO OBJECTION I F THE ISSUE IS RESTORED FOR FULFILLING 5 THE REQUIREMENTS OF SECTION 50C(2) AND REFERENCE MA DE TO THE DVO AS PER SECTION 50(C) OF THE ACT. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS PER THE PRONOUNCEMENT MADE IN THE OPEN COURT ON THE DAT E OF HEARING ITSELF I.E. 26.03.2010. . SD/- SD/- (B.K.HALDAR) (DIVA SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26.03.2010. COPY OF THE ORDER IS FORWARDED TO :- 1. SHRI HARANJIT SINGH, C/O S.L.KOCHAR, ADVOCATE, 8 6, CANNING STREET, KOLKATA-1. 2. A.C.I.T., CENTRAL-CIRCLE-XXIII, KOLKATA 3. C.I.T.(APPEALS)-CENTRAL-III, KOLKATA 4) C.I.T. KOLKATA 5. D.R., ITAT, KOLKATA BY ORDER ASSISTANT REGISTRAR I.T.A.T., KOLKATA R.G./P.S. TRUE COPY