M/s HMS Manufacturers Pvt. Ltd., Kolkata V. ITO, Ward-5(4),Kolkata, Kolkata

ITA 1644/KOL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4224 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 16-08-2016
• Court: TRIBUNAL
• Department Lawyers: P K CHAKRABORTYJCIT LD
• Assessee Lawyers: PANKAJ BAID LD
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 143(3); 50C; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL,B BENCH KOLKATA BEFORE : SHRI M.BALAGANESH, ACCOUNTANT MEMBER, AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 1644/KOL/2016 A.Y: 2008-09 M/S. HMS MANUFACTURE VS. I.T.O WARD 5(4), KOLKATA PVT. LTD PAN: AAACH-7193N [APPELLANT] [RESPONDENT] APPELLANT ASSESSEE BY : SHRI PANKAJ BAID , ADVOCATE, LD.AR RESPONDENT REVENUE BY : SHRI P.K. CHAK RABORTY, JCIT, LD. SR.DR DATE OF HEARING : 24-11-2016 DATE OF PRONOUNCEMENT : 30-11-2016 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 12.04.2016 BY THE COMMISSIONER OF INC OME TAX(APPEALS), 2, KOLKATA FOR THE ASSESSMENT YEAR 2 008-09. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING EFFECTIVE GROUND OF APPEAL:- 01. THAT THE LEARNED CIT (APPEALS)-2, KOLKATA, HAD ERRED IN LAW AS WELL AS IN FACTS OF THE CASE BY CONFIRMING T HE ADOPTION OF STAMP VALUE OF RS.12,76,000/- AS FULL VALUE OF CONS IDERATION U/S. 50C OF THE INCOME TAX ACT, 1961, WHILE COMPUTI NG LONG TERM CAPITAL GAINS, IN PLACE OF VALUE DETERMINED B Y THE DVO, WHICH SHOULD HAVE BEEN ACCEPTED BY THE LD. CIT(APPE ALS). 3. THE ONLY ISSUE TO BE DECIDED IS AS TO WHETHER TH E CIT-A JUSTIFIED IN CONFIRMING THE ORDER OF THE AO IN RESP ECT OF LONG TERM CAPITAL GAIN WITHOUT CONSIDERING THE VALUE AS DETER MINED BY THE DVO U/S. 50C OF THE ACT IN THE FACTS AND CIRCUMSTAN CES OF THE CASE. ITA NO. 1644/KOL/2016 M/S. HMS MANUFACTURE P.LTD 2 4. THE ASSESSEE IS A COMPANY DEALING IN THE BUSINES S IN TRADING OF HESSIAN CLOTHS. THE ASSESSEE FILED ITS RETURN TH ROUGH ONLINE DECLARING BUSINESS LOSS AT RS.2,08,259/- CLAIMING L ONG TERM CAPITAL LOSS AT RS.67,544/-. UNDER SCRUTINY, NOTICE U/S. 143(2) AND THEREAFTER, U/S. 142(1) WERE ISSUED. IN COMPLIA NCE, THE ASSESSEE PRODUCED BOOKS OF ACCOUNT AND VARIOUS OTHE R DETAILS AS REQUIRED UNDER THE SAID NOTICES. THE AO OBSERVED TH AT THE ASSESSEE HAS SOLD A PROPERTY, WHEREIN A SHOWROOM NO . 56A MEASURING 176 SQ.FT SITUATED AT BUILDING NO.16A, S HAKESPEARE SARANI, KOLKATA TO M/S. KARANJAI DEVELOPERS P.LTD O N 18.07.2007 FOR A SALE CONSIDERATION OF RS.2,50,000/-. THE AO F URTHER FOUND THAT THE VALUE OF SUCH PROPERTY DETERMINED BY THE S TAMP VALUATION AUTHORITY AT RS. 12,76,000/- AND EXPRESSE D WHY SUCH VALUE SHOULD NOT BE TAKEN AS LONG TERM CAPITAL GAIN . IN EXPLANATION, THE ASSESSEE SUBMITTED THAT THE PROPER TY LOCATED IN BIKRAM CHAND MARKET, WHICH IS LESS VISITED BY THE C USTOMERS AND THE BUSINESS THEREIN WAS NOT DOING WELL. BASING ON THE REGISTERED DEED, THE AO COMPUTED THE LONG TERM CAPITAL GAIN A T RS.9,55,046/- DEDUCTING THE INDEXED COST OF ACQUI SITION AT RS.3,17,954/- [ RS.1,76,00 X 551/305] FROM THE VAL UE OF RS.12,76,000/- DETERMINED BY THE STAMP VALUATION AU THORITY AGAINST THE LOSS AS CLAIMED BY THE ASSESSEE IN THE RETURN. 5. DURING THE FIRST APPELLATE PROCEEDINGS BEFORE TH E CIT-A THE ASSESSEE REITERATED SAME SUBMISSIONS WITH REGARD TO MARKETAB ILITY OF SUCH PROPERTY AND ALSO CONTENDED THAT THE AO DID NOT CONSIDER THE VALUATION OF THE SAID PROPERTY AT RS.8,48,100/- AS DETERMINED BY THE DIST RICT VALUATION OFFICER VIDE HIS REPORT DATED 04-01-2011 IN PURSUANCE OF SE CTION 50C(2) OF THE ACT. THE ASSESSEE HAS ALSO RELIED ON THE ORDER OF ITAT, KOLKATA IN THE CASE OF JALAN CHEMICAL INDUSTRIES P.LTD VS. ITO IN ITA NO. 1306/KOL/2012 FOR THE AY 2009-10. THE CIT-A HELD THAT THE DECISION AS RELI ED ON BY THE ASSESSEE IS NOT APPLICABLE TO THE CASE ON HAND AND DID NOT TAKE INTO CONSIDERATION SUCH ITA NO. 1644/KOL/2016 M/S. HMS MANUFACTURE P.LTD 3 PLEA OF VALUE AS DETERMINED BY THE DVO. ACCORDINGLY , HE CONFIRMED THE IMPUGNED ADDITION AS MADE BY THE AO. 6. BEFORE US THE LD.AR SUBMITS THAT THE ASSESSEE PU RCHASED THE PROPERTY AT RS.1,76,000/- ON 22-07-1997 AND SOLD THE SAME AT RS.2,50,000/- ON 18- 07-2007. HE FURTHER SUBMITS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN EXPLANATION THE ASSESSEE RAISED ITS OBJECTION TO THE AO IN COMPUTING LONG TERM CAPITAL GAIN IN TERMS OF VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY AND URGED THE AO TO REFER TO TH E DVO FOR DETERMINATION OF MARKET VALUE OF SUCH PROPERTY U/S. 50C OF THE AC T. IN PURSUANCE OF THE SAME, THE AO REFERRED THE ISSUE TO THE DVO AND WITH OUT AWAITING THE SAME, HE COMPUTED THE ASSESSMENT BY ADDING THE IMPUGNED A DDITION IN THE ORDER PASSED U/S. 143(3) OF THE ACT ON 31-12-2010. THE LD . AR FURTHER SUBMITS THAT DURING FIRST APPELLATE PROCEEDINGS THE SAME FA CT WAS BROUGHT TO THE NOTICE OF THE CIT-A. THE CIT-A WITHOUT CONSIDERING THE REPORT DT. 04-01- 2011 OF THE DISTRICT VALUATION OFFICER CONFIRMED THE IMPUGNED ADDITION AS MADE BY THE AO ON THIS ISSUE. THE LD. AR REFERRED T O PAGE NO.21 OF THE PAPER BOOK AND SUBMITTED THAT THE AO REFERRED THE I SSUE TO THE VALUATION OFFICER, VALUATION CELL, KOLKATA TO DETERMINE THE V ALUE OF SUCH PROPERTY. HE ALSO REFERRED TO PAGE NO.22 OF THE PB AND ARGUED TH AT THE DVO [DISTRICT VALUATION OFFICER, INCOME TAX DEPARTMENT] VIDE HIS REPORT DATED 04/01/2011 DETERMINED THE VALUE OF SUCH PROPERTY AT RS. 8,48, 100/- AS STANDING ON 23.07.2007 AND COMMUNICATED THE SAME TO THE AO VIDE HIS SAID REPORT DATED 04-01-2011 AND URGED BEFORE US TO ADOPT THE S AME AS VALUE OF SAID PROPERTY. 7. ON THE CONTRARY, THE LD.DR SUBMITS THAT THE AO R ECEIVED SUCH REPORT AFTER PASSING THE ASSESSMENT ORDER. THE SAID VALUAT ION REPORT OF THE DISTRICT VALUATION OFFICER WAS NOT BEFORE THE AO FOR CONSI DERATION OF THE SAME. 8. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD INCLUDING THE DETAILS AVAILABLE IN THE PAPER BOOK A S FILED BY THE ASSESSEE ITA NO. 1644/KOL/2016 M/S. HMS MANUFACTURE P.LTD 4 BEFORE US. WE FIND THAT THE AO REFERRED THE ISSUE T O THE DVO FOR DETERMINING THE MARKET VALUE OF SAID PROPERTY AS EVIDENT FROM P AGE NO. 21 OF PAPER BOOK. WE ALSO FIND THAT THE ASSESSMENT ORDER WAS PA SSED MUCH PRIOR TO THE RECEIPT OF REPORT DTD. 04-01-2011 OF THE DISTRICT V ALUATION OFFICER. ADMITTEDLY, THIS REPORT WAS NOT BEFORE THE AO FOR H IS CONSIDERATION AS IS EVIDENT FROM THE ORDER OF THE CIT-A WHICH HAS BEE N RIGHTLY POINTED OUT BY THE LD.DR. THESE FACTS ARE NOT DISPUTED. WE FIND TH AT CLAUSE (A) OF SUB- SECTION (2) OF SECTION 50C PROVIDES THAT THE DUTY C ASTS ON THE AO TO REFER THE ISSUE TO THE VALUATION OFFICER FOR VALUATION OF CAPITAL ASSET IF THE ASSESSEE CLAIMS THE VALUE ADOPTED BY THE STAMP VALUATION AUT HORITY EXCEEDS FAIR MARKET VALUE. WE ALSO FIND THAT THE AO DID NOT AWAI T SUCH REPORT AND PASSED THE ASSESSMENT ORDER. IN ABSENCE OF SUCH REPORT, T HE AO MADE THE IMPUGNED ADDITION AND PASSED THE SAID ASSESSMENT OR DER U/S. 143(3) ON 31/12/2010, WHICH IS NOT MAINTAINABLE. IN THIS REGA RD, WE MAY REFER TO THE ORDER OF ITAT, KOLKATA IN THE CASE OF JALAN CHEMICA L INDUSTRIES P.LTD SUPRA, WHEREIN IT HAS BEEN HELD:- THE VALUE DETERMINED BY THE DISTRICT VALUATION OFFI CER IS LOWER THAN THE VALUE DETERMINED BY THE STAMP DUTY AUTHORI TY, THEN FOR THE PURPOSE OF COMPUTING CAPITAL GAIN, THE VALU E DETERMINED BY THE DISTRICT VALUATION OFFICER SHALL BE CONSIDERED AS FULL VALUE OF CONSIDERATION. EXCEPT OBSERVING 9. IN VIEW OF THE SAME AND AS WE NOTICED THAT THE R EPORT OF THE DVO[DISTRICT VALUATION OFFICER] WAS NOT BEFORE THE AO, THEREFORE, WE DIRECT THE AO TO CONSIDER THE VALUE AS DETERMINED BY THE DVO VIDE HIS REPORT DATED 04/01/2011 AND ADOPT THE SAME FOR THE PURPOS E OF CALCULATION OF LONG TERM CAPITAL GAIN IN PURSUANCE OF DECISION IN THE C ASE OF SUPRA . THEREFORE, IN THE INTEREST OF JUSTICE, WE REMAND THE ISSUE TO THE FILE OF THE AO TO CONSIDER THE SAME AS MENTIONED ABOVE AND TO PASS AN ORDER IN ACCORDANCE WITH LAW. THE ASSESSEE SHALL BE AT LIBERTY TO FILE REQUISITE EVIDENCES, IF ANY, TO SUBSTANTIATE ITS CLAIM. ITA NO. 1644/KOL/2016 M/S. HMS MANUFACTURE P.LTD 5 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE AS STATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT AS DICTATED ON 30-11-2016 SD/- SD/- M. BALAGANESH S.S.VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 30-11-2016 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/ASSESSEE: M/S. HMS MANUFCTURERS PVT. LTD 4 RAJA WOODMUNT STREET, KOLKATA-700 001. 2 RESPONDENT/DEPARTMENT : THE INCOME TAX OFFICER, WAR D 5(4), AAYKAR BHAWAN P-7 CHOWRINGHEE SQUARE, KOLKATA -700 069. 3. CIT, 4. CIT(A), 5. DR, KOLKATA BENCHES, KOLKATA **PP/SPS [ TRUE COPY] BY ORDER, ASSTT REGISTRAR