ACIT, Hubli V. M/S Ashwamedha Construction pvt. Ltd., Hubli

ITA 158/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9403 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-07-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 02-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Keywords: Sale consideration of property below Jantri Value; Business income; Capital Gains
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI K.K. GUPTA, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE, K, JUDICIAL MEMBER ITA NO.158(BANG)/2009 (ASSESSMENT YEAR:2005-06) ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), HUBLI. .... APPELLANT VS. M/S. ASHWAMEDHA CONSTRUCTION PVT. LTD. STADIUM ROAD, HUBLI. .... RESPONDENT APPELLANT BY : SMT. JACINTA ZIMIK VASHAI. RESPONDENT BY : SHRI S.PARTHASARATHI. O R D E R PER GEORGE GEORGE K, JM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE LD. CIT(A), HUBLI, DATED 24-10-2008. THE ASSESSMENT YE AR CONCERNED IS 2005-06. 2. THE SOLITARY ISSUE THAT IS RAISED IN THIS APPEAL IS WHETHER THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITIO N OF RS.7,29,000/- BEING DIFFERENCE BETWEEN SALE CONSIDERATION OF PLOT S/FLATS AND THE VALUE FOR THE PURPOSE OF STAMP DUTY. 3. BRIEF FACTS ARE AS FOLLOWS: THE ASSESSEE-COMPANY IS DOING BUSINESS OF DEVELOPMENT OF LAND AND CONSTRUCT ION OF FLATS. THE ASSESSEE IS ALSO IN THE BUSINESS OF HOTEL AND L ODGING. THE ASSESSEE FILED RETURN OF INCOME ON 30-10-2005 DECLA RING TOTAL ITA 158/B/2009 PAGE 2 OF 5 INCOME OF RS.5,63,640/.-. THE ASSESSMENT WAS COMPL ETED U/S 143(3) OF THE INCOME-TAX ACT, 1961 ['THE ACT' FOR S HORT] ON 17-9- 2007 WHEREIN THE ASSESSING AUTHORITY HAD MADE ADDIT ION OF RS.7,29,000/- BEING DIFFERENCE BETWEEN SALE CONSIDE RATION AS CONSIDERED BY THE SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY AND THE ACTUAL SALE CONSIDERATION RECEIVED AS ACCOUNTED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. 4. THE ASSESSEE, ON APPEAL BEFORE THE LD. CIT(A), C ONTENDED THAT THE ASSESSING AUTHORITY OUGHT TO HAVE APPRECI ATED THE TOTAL CONSIDERATION AS DECLARED BY THE ASSESSEE WAS CORRE CT AND OUGHT NOT TO HAVE ESTIMATED ASSESSEES INCOME BY MAKING A DDITION OF RS.7,29,000/- BEING DIFFERENCE BETWEEN ACTUAL SALE CONSIDERATION AND THE VALUE FOR THE PURPOSE OF STAMP DUTY. IT WA S FURTHER SUBMITTED, THE AO SHOULD NOT HAVE CONSIDERED THE DI FFERENCE BETWEEN THE ACTUAL SALE CONSIDERATION AND THE VALUE FOR THE PURPOSE OF PAYMENT OF STAMP DUTY TO THE INCOME ARRI VED AT UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION BY IN VOKING SEC.50C OF THE ACT. IT WAS SUBMITTED THAT SEC.50C OF THE A CT IS ADOPTED ONLY FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN S. THE ASSESSEE ALSO FILED WRITTEN SUBMISSIONS BEFORE THE LD. CIT(A ) TO BUTTRESS HIS ARGUMENTS. THE LD. CIT(A), ALLOWED THE APPEAL OF T HE ASSESSEE BY HOLDING THUS: IT IS SEEN BY ME THAT UNLESS AO PROVES ANY SUCH INSTANCE THAT APPELLANT HAS RECEIVED MORE CONSIDERATION THAN DECLARED BY HIM, IT IS NOT POSSI BLE TO MAKE ESTIMATION AND ADDITION, SIMPLY BECAUSE IT IS MATTER OF PROVING THE FACTS BY EVIDENTIAL SUPPORT E VEN ITA 158/B/2009 PAGE 3 OF 5 THOUGH ACTUAL SITUATION MAY BE DIFFERENT. THEREFORE I AM FORCED TO DIRECT AO TO DELETE ADDITION OF RS.7,29,000/-. REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 5. LEARNED DR SUBMITTED, THE LD. CIT(A) FAILED TO A PPRECIATE THAT THE VALUE ADOPTED BY THE STAMP AUTHORITIES ARE ACTUALLY BASED ON PREVAILING MARKET RATES WHICH ARE IN TURN BASED ON SALE INSTANCES OF THAT PARTICULAR AREA. HENCE, IT WAS SU BMITTED THE AO WAS RIGHT IN ADOPTING THE SAID VALUE FOR THE PURPOS E OF CONSIDERING THE SAME AS SALE VALUE OF FLATS/PLOTS. ON THE OTHER HAND, LEARNED COUNSEL FOR ASSESSEE REI TERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MATE RIAL ON RECORD. UNDISPUTEDLY, ASSESSEE IS IN THE BUSINE SS OF REAL ESTATE. THE INCOME ON SALE OF DEVELOPED PLOTS AND SALE OF FLATS CONSTRUCTED WAS IN THE COURSE OF ITS BUSINESS. ACC ORDINGLY SALE CONSIDERATION OF PLOT/FLAT WAS OFFERED UNDER THE HE AD BUSINESS AND WAS ASSESSED AS SUCH. WE ARE OF THE VIEW, NO A DDITION IS REQUIRED TO BE MADE WITH REFERENCE TO THE BUSINESS INCOME ON NOTIONAL BASIS UNLESS THE AO HAD ANY MATERIAL TO SH OW THAT ACTUAL CONSIDERATION WAS MORE THAN RS.67,10,000/-. IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS RECEIVED MORE THAN CON SIDERATION DECLARED OR TO THE EXTENT OF VALUE DETERMINED FOR T HE PURPOSE OF STAMP DUTY. IN THESE CIRCUMSTANCES, INCOME IS REQU IRED TO BE DETERMINED ONLY ON ACTUAL SALE CONSIDERATION RECEIV ED BY THE ITA 158/B/2009 PAGE 4 OF 5 ASSESSEE. UNDER THE ACT, THERE IS NO PROVISION TO RESORT TO ESTIMATE UNLESS CONSIDERATION RECEIVED IS STATED TO BE UNDERSTATED. APPLICATION OF SEC.50C OF THE ACT IS NOT AVAILABLE TO THE COMPUTATION OF INCOME UNDER THE HEAD BUSINESS. S EC.50C IS A DEEMING PROVISION AND IS AVAILABLE ONLY FOR THE PUR POSE OF COMPUTATION OF CAPITAL GAINS. IT IS EVIDENT FROM S EC.50C ITSELF THAT ADOPTING THE VALUE DETERMINED FOR STAMP DUTY FOR AC TUAL SALE CONSIDERATION IS ONLY FOR THE PURPOSE OF SEC.48 OF THE ACT. SECTION 48 IS FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAI NS. THUS PROVISIONS OF SEC.50C ARE TOTALLY INAPPLICABLE FOR DETERMINATION OF BUSINESS INCOME. THERE IS NO OTHER PROVISION UNDER THE ACT TO RESORT, TO ESTIMATE BUSINESS PROFITS IN THE MANNER AS DONE BY THE ASSESSING AUTHORITY. FOR THE AFORESAID REASONS, WE ARE OF THE VIEW THE ORDER OF THE LD. CIT(A) IS CORRECT AND IS IN AC CORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7TH AUGUST, 2009. SD/- SD/- (K.K. GUPTA) (GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE: D A T E D : 7TH AUGUST, 2009. EKS* ITA 158/B/2009 PAGE 5 OF 5 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A), HUBLI. 5 DR, ITAT, BANGALORE. 6 GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRA R, ITAT, BANGALORE.