ACIT, CIR-22, KOLKATA, Kolkata V. Mrs Sheela Chopra, Kolkata

ITA 169/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9363 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 29-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T VARKEY JUDIC IA L M EMBER
• Assessee Lawyers: P K MONDAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Salary income; Additional evidence; Cost of acquisition
• Section: 50C; 54F; 133(6); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI ABY.T VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 169 / KOL / 2014 ASSESSMENT YEAR :2006-07 ACIT, CIRCLE-22, 169 A.J.C. BOSE ROAD, 8 TH FLOOR, KOLKATA-14 V/S . MRS. SHEELA CHOPRA, R-604, THE RESIDENCY, CITY CENTRE, BLOCK DC, SECTOR-1, SALT LAKE CITY, KOLKATA-700 064 [ PAN NO.ABWPC 6131 D ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI P.K. MONDAL, ADDL. CIT-DR /BY RESPONDENT SHRI R.P. AGARWAL, SENIOR ADVOCATE & SHRI NIRA SETH, ACA /DATE OF HEARING 31-01-2017 /DATE OF PRONOUNCEMENT 23-02-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XIV, KOLKATA D ATED 28.10.2013. ASSESSMENT WAS FRAMED BY ITO WARD-22(1), KOLKATA U/ S 143(3)/147) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 30.12.2011 FOR ASSESSMENT YEAR 2006-07. SHRI P.K. MONDAL, LD. DEPARTMENTAL REPRESENTATIVE R EPRESENTED ON BEHALF OF REVENUE AND SHRI R.P. AGARWAL, LD. SENIOR ADVOCATE AND SHRI NIRA SETH, LD. AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF ASS ESSEE. ITA NO.169/KOL/2014 A.Y. 2006-07 ACIT, CIR-22, KOL. VS. MRS SHEELA CHOPRA PAGE 2 2. FIRST ISSUE RAISED BY THE REVENUE IN GROUND NUMB ER (I) TO (III) IS THAT LD CIT(A) ERRED IN DIRECTING THE AO TO TREAT THE CAPIT AL GAIN AS LONG TERM CAPITAL GAIN ALTHOUGH THE AO TREATED THE SAME AS SHORT TERM CAPITAL GAIN. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS AN INDIVIDUAL AND IS DERIVING HER INCOME FROM SALARY, BUSINESS, HOUSE PROPERTY AND OTHER SOURCES. THE ASSESSEE, IN THE YEAR UNDER CONSIDERATION HAS SOLD ITS FLAT LOCATED AT CALCUTTA GREEN WHICH WAS PURCHASED FROM WEST BENGAL HOUSING BOARD. THE ASSESSEE FAILED TO SHOW CAPITAL GAIN INCOME ON SUCH TRANSACTIONS IN THE RETURN OF INCOME. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS FOUND THAT THE IMPUGNED FLAT WAS PURCHASED DATED 14 TH MARCH 2005 IN TERMS OF ITS PURCHASE DEED. SIMILARL Y THE FLAT WAS SOLD ON 11 TH MAY 2005 IN TERMS OF ITS SALE DEED. THUS THE AO O BSERVED THAT THE SHORT TERM CAPITAL GAIN (STCG FOR SHORT) WAS TAXABLE IN T HE HANDS OF THE ASSESSEE. ON QUESTION BY THE AO FOR TREATING THE GAIN AS STCG , THE ASSESSEE SUBMITTED THAT THE FLAT WAS ACQUIRED IN SEPTEMBER 2000 IN TER MS OF THE PROVISIONS OF SECTION 53A OF TRANSFER OF PROPERTY ACT AND THE P ROVISIONS OF SECTION 2(47)(V) ON INCOME TAX ACT RECOGNIZES SUCH TRANSACTION FOR T HE PURPOSE OF TAXATION. THEREFORE, THE SAME SHOULD BE TREATED AS LONG TERM CAPITAL GAIN (LTCG FOR SHORT). THE ASSESSEE FURTHER SUBMITTED THAT THE POS SESSION OF THE PROPERTY WAS FIRST OWNED BY THE ASSESSEE DATED 14 TH MARCH 2005. HOWEVER, THE AO HAS TAKEN THE DAY OF 14 TH MARCH 2005 AS THE ACTUAL DATE OF TRANSFER FOR THE PURPOSE OF TAXATION. ACCORDINGLY THE AO WORKED OUT SHORT-TERM CAPITAL GAIN WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE . 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT THE I MPUGNED FLAT WAS PURCHASED IN SEPTEMBER 2000 AND THE SAME WAS SOLD I N MAY 2005. SO THE PERIOD OF HOLDING IS MORE THAN 36 MONTHS AND THEREF ORE THE SAME SHOULD BE TREATED AS LTCG. THE LD. CIT(A) AFTER CONSIDERING T HE SUBMISSION OF THE ASSESSEE HAS GRANTED THE RELIEF BY OBSERVING AS UND ER:- ITA NO.169/KOL/2014 A.Y. 2006-07 ACIT, CIR-22, KOL. VS. MRS SHEELA CHOPRA PAGE 3 8.3.4 THE AR OF THE APPELLANT HAS ALSO ARGUED THAT THE AO HAS ERRED IS CONSIDERING THE CAPITAL GAIN AS SHORT TERM IN NATUR E, INSTEAD OF LONG TERM. THE SAID FLAT HAS BEEN ALLOTTED TO THE APPELLANT ON 28. 09.2000 BY WEST BENGAL HOUSING BOARD , WHICH HAS BEEN LATER ON REGISTERED BY THE APPELL ANT ON 14.03.2005. THE AO HAS CONSIDERED 14.03.2005 AS DAT E OF PURCHASE AND COMPUTED CAPITAL GAIN ACCORDINGLY IN THE ASSESSMENT ORDER. IN THIS CONNECTION THE LD. A/R HAS CITED JUDGMENT IN THE CASE OF CIT VS. JINDAS PANCHAND GANDHI . I HAVE DULY CONSIDERED THE APPELLANTS SUBMISSION S, CITED CASE LAWS, AO OBSERVATION IN THE ASSESSMENT ORDER THE AO HAS N OT GIVEN ANY COMMENT ON THE ISSUE IN THE REMAND REPORT. THUS, I AM OF TH E OPINION THAT AS THE PROPERTY IN QUESTION HAS BEEN ALLOTTED TO THE APPEL LANT ON 28.09.2000, THE APPELLANT HAS RECEIVED ON RIGHTS ON THE FLAT ON THE DATE OF THE DATE OF ALLOTMENT. THUS, I ADMIT AND DIRECT ACCORDINGLY THA T DATE OF REGISTRATION OF THE FLAT IS NOT OF SIGNIFICANCE IN THE INSTANT CASE AND DATE OF ALLOTMENT IS TO BE CONSIDERED AS THE DATE OF PURCHASE WHICH COMPUTING CAPITAL GAIN ON SALE OF THE FLAT AT ALCUTTA GREEN. 8.3.5 DURING THE COURSE OF APPELLATE HEARING, THE A R OF THE APPELLANT HAS ALSO CONTENDED THAT INTEREST PAID IN AGGREGATE OF RS.5,1 5,010/- ON SUCH FLAT HAS NOT BEEN ALLOWED IN THE EARLIER ASSESSMENT YEARS. THE A O HAS BEEN GIVEN OPPORTUNITY TO SUBMIT HIS COMMENTS ON THE SAME THRO UGH REMAND REPORT. HOWEVER, THE AO HAS NOT MADE ANY COMMENTS. THUS, CO NSIDERING THE SUBMISSIONS MADE BY THE APPELLANT, I ADMIT THAT INT EREST PAID ON SUCH FLAT SHOULD FORM ART OF COST OF PURCHASE OF FLAT. THUS, I DIRECT AO TO CONSIDER PURCHASE PRICE OF FLAT AT RS.29,12,056/- (RS.23,97, 046/- + RS.5,15,010/-) AND COMPUTE LONG TERM CAPITAL GAIN ACCORDINGLY . BEING AGGRIEVED BY THE ORDER OF LD CIT(A) REVENUE CAME IN SECOND APPEAL BEFORE US. 5. BEFORE US LD DR SUBMITTED THAT THAT THE RELIEF H AS BEEN GIVEN TO THE ASSESSEE ON THE BASIS OF ADDITIONAL EVIDENCES WHICH WERE SUBMITTED BEFORE THE LD CIT(A). ACCORDINGLY, THE LD DR REQUESTED THE BENCH TO RESTORE THE ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION. ON THE OTHER HAND, LD AR BEFORE US FILED A PAPER BO OK CONTAINING PAGES FROM 1 TO 144 AND STATED THAT THE IMPUGNED FLAT WAS ALLOTT ED BY WEST BENGAL HOUSING BOARD DATED 28 TH SEPTEMBER 2000 AS EVIDENT FROM THE LETTER OF ALLOT MENT PLACED ON PAGE 23 OF THE PAPER BOOK. THE LD AR RELI ED ON THE ORDER OF LD CIT(A). ITA NO.169/KOL/2014 A.Y. 2006-07 ACIT, CIR-22, KOL. VS. MRS SHEELA CHOPRA PAGE 4 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INS TANT CASE RELATES TO THE PERIOD OF HOLDING OF THE CAPITAL ASSETS. THE AO HAS TAKEN THE DATE OF PURCHASE WHICH WAS IN THE PURCHASE DEED. HOWEVER, THE LD CIT (A) HAS TAKEN THE DATE OF PURCHASE WHICH IS BASED ON THE ALLOTMENT LETTER ISS UED BY THE WEST BENGAL HOUSING BOARD. ADMITTEDLY, THE FLAT WAS ALLOTTED TO THE ASSESSEE O N 28.09.2000, VIDE LETTER NO. 9114 AS EVIDENT FROM THE ALLOTMENT LETTER WHICH IS PLACED ON PAGE 23 OF THE PAPER BOOK. THE FIRST APPLICATION MONEY WAS PAID ON 28.09.2000, THEREBY CONFERRING A RIGHT UPON THE ASSESSEE TO HOLD A FLAT , WHICH WAS LATER IDENTIFIED AND POSSESSION DELIVERED ON A LATER DATE. THE MERE FACT THAT POSSESSION WAS DELIVERED LATER, DOES NOT DETRACT FROM THE FACT THA T THE ALLOTTEE WAS CONFERRED A RIGHT TO HOLD PROPERTY ON ISSUANCE OF AN ALLOTMENT LETTER. THE PAYMENT OF BALANCE INSTALLMENTS, IDENTIFICATION OF A PARTICULA R FLAT AND DELIVERY OF POSSESSION ARE CONSEQUENTIAL ACTS THAT RELATE BACK TO AND ARISE FROM THE RIGHTS CONFERRED BY THE ALLOTMENT LETTER. THUS, IN OUR VIE W THE DATE OF ALLOTMENT SHOULD BE TAKEN AS THE DATE OF PURCHASE OF THE IMPU GNED FLAT. WHILE HOLDING SO WE ALSO FIND GUIDANCE AND SUPPORT FROM THE FOLLO WING JUDGMENTS. 1) CIT, SALARY CIRCLE, CHENNAI V. S.R.JEYASHANKRA ( 2015) 53 TAXMANN.COM 107 (MAD) WHEREIN IT WAS HELD AS UNDER : 8. THE DELHI HIGH COURT HAS ALSO OBSERVED IN THE DECI SION, WHICH HAS BEEN EXTRACTED IN THE ORDER OF THE TRIBUNAL IN PARA GARPH 7.1 OF THE ORDER, HOLDING THAT THE DATE OF ALLOTMENT OF THE FLAT TO T HE ASSESSEE BY THE PROMOTOR SHOULD BE ADOPTED AS THE DATE OF ACQUISITI ON OF THE IMMOVABLE PROPERTY. IN THE PRESENT CASE, THE RIGHT TO THE PRO PERTY FLOWS FROM THE DATE OF AGREEMENT WITH THE BUILDER, VIZ., 22.2.2005. OVE R A PERIOD OF TIME PAYMENTS HAVE BEEN MADE AND THE TRANSACTION WAS CON CLUDED IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT BY REGIS TERING THE UNDIVIDED SHARE IN LAND AND HANDING OVER THE FLAT. THEREFORE, THE ASSESSEE HAD A RIGHT CONSEQUENT ON THE AGREEMENT DATED 22.2.2005 I N RESPECT OF THE PROPERTY SOLD BY THE ASSESSEE ON 10.4.2008. THEREFO RE, IT EXCEEDS THE PERIOD OF 36 MONTHS AND THE ASSESSEE HAS RIGHTLY CL AIMED THE BENEFIT OF LONG TERM CAPITAL GAINS. 9. CIRCULAR NO.471 DATED 15.10.1986 IS ALSO ON THE SA ME LINES. IT SPEAKS ABOUT THE RIGHT OF AN ALLOTTEE OVER A PROPERTY THAT HAS BEEN ALLOTTED. THE OTHER ISSUES LIKE PAYMENT OF BALANCE INSTALMENTS, D ELIVERY OF POSSESSION, ITA NO.169/KOL/2014 A.Y. 2006-07 ACIT, CIR-22, KOL. VS. MRS SHEELA CHOPRA PAGE 5 WHICH TAKES PLACE AFTER THE ALLOTMENT ONLY, RELATES BACK TO THE ORIGINAL ALLOTMENT, IN THE PRESENT CASE, AGREEMENT. THEREFOR E, THE PRINCIPLE ON WHICH LONG TERM CAPITAL GAINS SHOULD BE DETERMINED HAS BEEN CLEARLY INDICATED IN THE CIRCULAR. FOR BETTER CLARITY, CIRC ULAR NO.471 DATED 15.10.1986 READS AS FOLLOWS: ' CIRCULAR NO.471 CAPITAL GAINS TAX - WHETHER INVESTMENT IN A FLAT UN DER THE SELF-FINANCING SCHEME OF THE DELHI DEVELOPMENT AUTHORITY WOULD BE CONSTRUCTION FOR THE PURPOSE OF SS.54 AND 54F OF THE IT ACT, 1961 15/10/1986 CAPITAL GAINS SECTIONS 54, 54F, SECS. 54 AND 54F OF THE IT ACT, 1961, PROVIDE THAT CAPITAL GAINS ARISING ON TRANSFER OF A LONG TERM CAPITAL ASSET SHALL NOT BE CHARGED TO TAX TO THE EXTENT SPECIFIED THEREIN, WHERE THE AMOUNT OF CAPITAL GAIN IS INVESTED IN A RESIDENTIAL HOUSE. IN THE CASE OF PURCHASE OF A HOU SE, THE BENEFIT IS AVAILABLE IF THE INVESTMENT IS MADE WITHIN A PERIOD OF ONE YEAR BEFORE OR AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE AND IN CASE OF CONSTRUCTION OF A HOUSE, THE BENEFIT IS AVAILABLE IF THE INVESTMENT IS MADE WITHIN THREE YEARS FROM THE DATE OF THE TRANSFER. 2. THE BOARD HAD OCCASION TO EXAMINE AS TO WHETHER THE ACQUISITION OF A FLAT BY AN ALLOTTEE UNDER THE SELF-FINANCING SCHEME OF T HE DELHI DEVELOPMENT AUTHORITY AMOUNTS TO PURCHASE OR ITS CONSTRUCTION B Y THE DELHI DEVELOPMENT AUTHORITY ON BEHALF OF THE ALLOTTEE. UNDER THE SELF -FINANCING SCHEME OF THE DELHI DEVELOPMENT AUTHORITY THE ALLOTMENT LETTER IS ISSUED ON PAYMENT OF THE FIRST INSTALMENT OF THE COST OF CONSTRUCTION. THE A LLOTMENT IS FINAL UNLESS IT IS CANCELLED OR THE ALLOTTEE WITHDRAWS FROM THE SCHEME . THE ALLOTMENT IS CANCELLED ONLY UNDER EXCEPTIONAL CIRCUMSTANCES. THE ALLOTTEE GETS TITLE TO THE PROPERTY ON THE ISSUANCE OF THE ALLOTMENT LETTER AN D THE PAYMENT OF INSTALMENTS IS ONLY A FOLLOW-UP ACTION AND TAKING T HE DELIVERY OF POSSESSION IS ONLY A FORMALITY. IF THERE IS A FAILURE ON THE P ART OF THE DELHI DEVELOPMENT AUTHORITY TO DELIVER THE POSSESSION OF THE FLAT AFT ER COMPLETING THE CONSTRUCTION, THE REMEDY FOR THE ALLOTTEE IS TO FIL E A SUIT FOR RECOVERY OF POSSESSION. 3. THE BOARD HAVE BEEN ADVISED THAT UNDER THE ABOVE CIRCUMSTANCES, THE INFERENCE THAT CAN BE DRAWN IS THAT THE DELHI DEVEL OPMENT AUTHORITY TAKES UP THE CONSTRUCTION WORK ON BEHALF OF THE ALLOTTEE AND THAT THE TRANSACTION INVOLVED IS NOT A SALE. UNDER THE SCHEME, THE TENTA TIVE COST OF CONSTRUCTION IS ALREADY DETERMINED AND THE DELHI DEVELOPMENT AUT HORITY FACILITATES THE PAYMENT OF THE COST OF CONSTRUCTION IN INSTALMENTS SUBJECT TO THE CONDITIONS THAT THE ALLOTTEE HAS TO BEAR THE INCREASE, IF ANY, IN THE COST OF THE CONSTRUCTION. THEREFORE, FOR THE PURPOSE OF CAPITAL GAINS TAX, THE COST OF THE NEW ASSET IS TENTATIVE COST OF CONSTRUCTION AND THE FACT THAT THE AMOUNT WAS ALLOWED TO BE PAID IN INSTALMENTS DOES NOT AFFECT T HE LEGAL POSITION STATED ABOVE. IN VIEW OF THESE FACTS, IT HAS BEEN DECIDED THAT CASES OF ALLOTMENT OF ITA NO.169/KOL/2014 A.Y. 2006-07 ACIT, CIR-22, KOL. VS. MRS SHEELA CHOPRA PAGE 6 FLATS UNDER THE SELF-FINANCING SCHEME OF THE DELHI DEVELOPMENT AUTHORITY SHALL BE TREATED AS CASES OF CONSTRUCTION FOR THE P URPOSE OF CAPITAL GAINS.' 10. IN THE LIGHT OF THE ABOVE-SAID DECISIONS AND THE C IRCULAR, WE DO NOT FIND ANY REASON WHY THE SAME PRINCIPLE SHOULD NOT BE APP LIED TO ALL TRANSACTIONS BASED ON AGREEMENTS IN RESPECT OF CAPITAL ASSET. IT HAS BEEN CORRECTLY POINTED OUT BY THE COMMISSIONER OF INCOME TAX (APPE ALS) AS WELL AS THE TRIBUNAL FOLLOWING THE DECISION OF THE PUNJAB AND H ARYANA HIGH COURT THAT THE BREACH OF AGREEMENT WOULD ONLY GIVE RIGHT TO TH E BENEFICIARY FOR ENFORCING THE RIGHT OVER THE PROPERTY. WE FIND NO R EASON TO DIFFER WITH THE SAID REASONING. 2) MS. MADHU KAUL V. CIT (2014) 43 TAXMANN.COM 417 (P&H) WHEREIN IT WAS HELD AS UNDER : 7. WE FIND NO DISTINCTION BETWEEN THE OPINION RECORDE D IN THE AFORESAID JUDGMENT AND THE CONTROVERSY IN THE PRESENT CASE. A DMITTEDLY, THE FLAT WAS ALLOTTED TO THE APPELLANT ON 07.06.1986, VIDE LETTE R CONVEYED TO THE ASSESSEE ON 30.06.1986. THE ASSESSEE PAID THE FIRST INSTALLM ENT ON 04.07.1986, THEREBY CONFERRING A RIGHT UPON THE APPELLANT TO HOLD A FLA T, WHICH WAS LATER IDENTIFIED AND POSSESSION DELIVERED ON A LATER DATE. THE MERE FACT THAT POSSESSION WAS DELIVERED LATER, DOES NOT DETRACT FROM THE FACT THA T THE ALLOTTEE WAS CONFERRED A RIGHT TO HOLD PROPERTY ON ISSUANCE OF AN ALLOTMENT LETTER. THE PAYMENT OF BALANCE INSTALLMENTS, IDENTIFICATION OF A PARTICULA R FLAT AND DELIVERY OF POSSESSION ARE CONSEQUENTIAL ACTS, THAT RELATE BACK TO AND ARISE FROM THE RIGHTS CONFERRED BY THE ALLOTMENT LETTER. 8. IN VIEW OF WHAT HAS BEEN RECORDED HEREINABOVE, WE HAVE NO HESITATION IN HOLDING THAT THE INCOME TAX APPELLATE TRIBUNAL HAS ERRED IN HOLDING THAT THE TRANSACTION DOES NOT ENVISAGE A LONG TERM CAPITAL G AIN. CONSEQUENTLY, WE ALLOW THE APPEAL, SET ASIDE ORDER DATED 15.02.1999 AND ANSWER THE SUBSTANTIAL QUESTIONS OF LAW IN FAVOUR OF THE ASSES SEE. 3) VINOD KUMAR JAIN V. CIT (2010) 195 TAXMANN 174 ( P & H) WHEREIN IT WAS HELD AS UNDER : PARA 2 OF CIRCULAR NO. 471, DT. 15TH OCT., 1986 DES CRIBES THE NATURE OF RIGHT THAT AN ALLOTTEE ACQUIRES ON ALLOTMENT OF FLAT UNDE R SELF-FINANCING SCHEME. ACCORDING TO IT, THE ALLOTTEE GETS TITLE TO THE PRO PERTY ON THE ISSUANCE OF AN ALLOTMENT LETTER AND THE PAYMENT OF INSTALMENTS IS ONLY A CONSEQUENTIAL ACTION UPON WHICH THE DELIVERY OF POSSESSION FLOWS. THE AS SESSEE WAS ALLOTTED FLAT ON 27TH FEB., 1982 ON PAYMENT OF INSTALMENTS BY ISS UANCE OF AN ALLOTMENT LETTER AND HE HAD BEEN MAKING PAYMENT IN TERMS THER EOF BUT THE SPECIFIC NUMBER OF THE FLAT WAS ALLOCATED TO THE ASSESSEE AN D POSSESSION DELIVERED ON 15 TH MAY, 1986. THE RIGHT OF THE ASSESSEE PRIOR TO 15 TH MAY, 1986 WAS A RIGHT IN THE PROPERTY. IN SUCH A SITUATION, IT CANNOT BE HELD THAT PRIOR TO THE SAID DATE, THE ASSESSEE WAS NOT HOLDING THE FLAT. THEREFORE, T HE FLAT ALLOTTED TO THE APPELLANT VIDE ALLOTMENT LETTER DT. 27 TH FEB., 1982 WHICH WAS SOLD ON 6 TH JAN., 1989 WAS A LONG-TERM CAPITAL ASSET AND THE INVESTIN G OF SALE PROCEEDS THEREOF FOR THE PURCHASE OF ANOTHER HOUSE WAS EXEMPTED UNDE R S. 54.CIT VS. VED ITA NO.169/KOL/2014 A.Y. 2006-07 ACIT, CIR-22, KOL. VS. MRS SHEELA CHOPRA PAGE 7 PARKASH & SONS (HUF) (1993) 115 CTR (P&H) 63 : (199 4) 207 ITR 148 (P&H) FOLLOWED. TAKING A CONSISTENT VIEW AND RELYING ON THE AFORESA ID JUDGMENTS OF HON'BLE HIGH COURTS AND FACTS OF THE PRESENT CASE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A). IN THE INSTANT CASE LETTER OF ALLOTMENT IS ON 28.09.2000 AND ACCORDINGLY THE RIGHT WAS ACQUIRED ON THAT DATE. TH E ASSESSEE SOLD THE PROPERTY WHICH WAS ACQUIRED BY WAY OF LETTER OF ALL OTMENT DATED ON 11.05.2005. ACCORDINGLY, THE PERIOD OF HOLDING EXCE EDS 36 MONTHS IN THE PRESENT CASE. SO THE PERIOD OF HOLDING IN THE INSTA NT CASE EXCEEDS 36 MONTHS AND INCOME ARISING ON THE SALE OF SAID PROPERTY WIL L BE TREATED AS LTCG. HOWEVER, ADMITTEDLY THE CASE LAW CITED BY THE LD. D R I.E GULSHAN MALIK (SUPRA) IS IN FAVOUR OF REVENUE BUT WE FIND THAT THE HONB LE APEX COURT DIRECTS THAT IN CASE TWO DIFFERENT ORDERS ON THE GR OUNDS OF APPEAL FAVORING AND AGAINST TO THE ASSESSEE ARE THERE THEN THE VIEW FAV ORABLE TO THE ASSESSEE SHOULD BE TAKEN. THE PRINCIPAL WAS LAID DOWN BY THE APEX COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD . (1973) 88 ITR 192 (SC). THE RELEVANT EXTRACT IS REPRODUCED BELOW : ON THE OTHER HAND, IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSES SEE MUST BE ADOPTED. THIS IS A WELL-ACCEPTED RULE OF CONSTRUCTION RECOGNISED BY THIS COURT IN SEVERAL OF ITS DECISIONS. HENCE, ALL THAT WE HAVE TO SEE IS, W HAT IS THE TRUE EFFECT OF THE LANGUAGE EMPLOYED IN S. 271(1)(A)(I). IF WE FIND TH AT LANGUAGE TO BE AMBIGUOUS OR CAPABLE OF MORE MEANINGS THAN ONE, THE N WE HAVE TO ADOPT THAT INTERPRETATION WHICH FAVOURS THE ASSESSEE, MOR E PARTICULARLY SO BECAUSE THE PROVISION RELATES TO IMPOSITION OF PENALTY. IN VIEW OF ABOVE, WE FIND NO REASON TO INTERFERE WI TH THE FINDINGS ARRIVED BY THE LD. CIT(A). UNDER THE CIRCUMSTANCES, THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 7. NEXT ISSUE RAISED BY REVENUE IN GROUND NUMBER (I V) TO (VII) HAS CHALLENGED THE VALUE DETERMINED BY THE LD CIT(A) UN DER THE PROVISIONS OF SECTION 50C OF THE ACT. ITA NO.169/KOL/2014 A.Y. 2006-07 ACIT, CIR-22, KOL. VS. MRS SHEELA CHOPRA PAGE 8 8. THE ASSESSEE, IN THE YEAR UNDER CONSIDERATION HA S SOLD HER FLAT LOCATED AT CALCUTTA GREEN WHICH WAS PURCHASED FROM WEST BEN GAL HOUSING BOARD. THE ASSESSEE CLAIMED TO HAVE SOLD THE IMPUGNED FLAT FOR RS. 33 LACS IN TERMS OF ITS SALE DEED EXECUTED DATED 11 TH MAY 2005. HOWEVER, THE AO OBSERVED THAT THE ADSR HAS VALUED THE IMPUGNED FLAT FOR RS. 59.28 LAKH AS ON 2 ND MAY 2005. ACCORDINGLY, THE AO HAS ADOPTED THE SALE VALU E FOR RS.59.28 LAKH FOR THE PURPOSE OF CAPITAL GAINS IN TERMS OF THE PROVIS IONS OF SECTION 50C OF THE ACT. ACCORDINGLY, THE CAPITAL GAINS WORKED OUT BY T HE AO WHICH WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 9. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LD . CIT(A). THE ASSESSEE BEFORE THE LD CIT(A) SUBMITTED TO THE BEST OF HIS KNOWLEDGE THAT THE IMPUGNED FLAT WAS VALUED AT RS. 33 LACS FOR THE PUR POSE OF STAMP VALUATION AND AT THE SAME VALUE THE IMPUGNED PROPERTY WAS TRA NSFERRED. HOWEVER, THE ASSESSEE EXPRESSED HER INABILITY TO SUBMIT THE PAPE RS (SALE DEED) AS IT WAS NOT AVAILABLE WITH HER. THE ASSESSEE FURTHER SUBMIT TED THAT AS PER THE PROVISIONS OF SECTION 50C OF THE ACT, THE STAMP VAL UE SHOULD BE ADOPTED FOR THE CAPITAL GAIN PURPOSES. THE LD. CIT(A) CALLED FOR REMAND REPORT FROM THE AO BUT HE FAILED TO RESPOND. HOWEVER, THE LD CIT(A) AFTER CONSIDERING THE SUBMIS SION OF THE ASSESSEE HAS GIVEN RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER: - 8.3.2 THE FIRST ISSUE IN THIS GROUND IS THAT THE AO HAS ERRED IN APPLYING SECTION 50C OF INCOME TAX ACT. WHILE PASSING ORDER THE AO HAS CONSIDERED VALUATION MADE BY THE ADSR, SEALDAH, BEING RS.59,28 ,000/- AS SALES CONSIDERATION. HOWEVER, THE LD. A/R HAS SUBMITTED T HAT SECTION 50C HAS THE CONCEPT OF ADOPTING VALUATION MADE BY STAMP DUTY AUTHORITIES AS SALES CONSIDERATION AND THERE IS NO CONCEPT OF MARKET VALUE IN SECTION 50C OF INCOME TAX ACT. I HAVE GONE THROUGH THE SECTION 50C OF THE INCOME TAX ACT AND AGREE WITH THE ASSESSEES CONTENTION THAT FOR C OMPUTING CAPITAL GAIN A PER SECTION 50C OF THE INCOME TAX ACT, VALUATION MADE B Y STAMP DUTY AUTHORITIES IS TO BE TAKEN AS SALES CONSIDERATION AND THERE I S NO CONCEPT OF TAKING MARKET VALUE AS THE SALES CONSIDERATION. EV EN OTHERWISE, DURING THE COURSE OF APPELLATE PROCEEDING, THE LD. A/R HAS SUB MITTED LETTER FROM REGISTRAR OF ASSURANCES CONFIRMING MARKET VALUE OF THE FLAT A T CALCUTTA GREEN AT RS.33,00,000/- (RECEIVED THROUGH INFORMATION SOUGHT UNDER THE RTI ACT, 2005). CONSIDERING THE AFORESAID LETTER FROM REGIST RAR OF ASSURANCES AND NO COMMENT MADE BY THE AO ON THE SAME IN REMAND REPORT I DIRECT THE AO TO ITA NO.169/KOL/2014 A.Y. 2006-07 ACIT, CIR-22, KOL. VS. MRS SHEELA CHOPRA PAGE 9 CONSIDER SALES CONSIDERATION AT RS.33,00,000/- FOR COMPUTATION OF CAPITAL GAIN U/S. 50C OF THE INCOME TAX ACT. BEING AGGRIEVED BY THE ORDER OF LD CIT(A) REVENUE C AME IN SECOND APPEAL BEFORE US. 10. BEFORE US LD. DR VEHEMENTLY RELIED ON THE ORDER OF ASSESSING OFFICER AND HE LEFT THE ISSUE TO THE DISCRETION OF THE BENC H. ON THE OTHER HAND THE LD. AR DREW OUR ATTENTION ON PAGE 93 OF THE PAPER BOOK WHERE THE LETTER FROM THE OFFICE OF THE REGISTRAR O F ASSURANCES, KOLKATA WAS PLACED. AS PER THIS LETTER THE MARKET VALUE OF THE IMPUGNED PROPERTY IS OF RS.33 LACS IN THE YEAR 2005 AND WHICH IS THE SALE P RICE OF THE PROPERTY AS PER SALE DEED. HE RELIED ON THE ORDER OF LD CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INS TANT CASE RELATES TO THE DETERMINATION OF THE VALUATION OF THE PROPERTY AS P ER THE STAMP VALUATION. THE AO HAS ADOPTED THE VALUATION FOR RS.59.28 LACS WHER EAS THE LD. CIT(A) DETERMINED THE SAME AT RS.33 LACS. 11.1 AT THIS JUNCTURE WE FIND IMPORTANT TO REPRODU CE THE PROVISIONS OF SECTION 50C OF THE ACT WHICH READS AS UNDER: SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION I N CERTAIN CASES. 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE STAM P VALUATION AUTHORITY) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSES OF SECT ION 48 , BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF SUCH TRANSFER. FROM THE READING OF SECTION 50C, IT IS EVIDENT THAT SECTION 50C IS A DEEMING PROVISION AND IT EXTENDS ONLY TO LAND OR BUILDING O R BOTH. SECTION 50C CAN COME INTO PLAY ONLY IN A SITUATION WHERE THE CONSID ERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAP ITAL ASSET, BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE FOR ITA NO.169/KOL/2014 A.Y. 2006-07 ACIT, CIR-22, KOL. VS. MRS SHEELA CHOPRA PAGE 10 THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. IT IS SETTLED LEGAL PROPOSITION THAT DEEMING PROVISION CAN BE APP LIED ONLY IN RESPECT OF THE SITUATION SPECIFICALLY GIVEN AND, HENCE, CANNOT GO BEYOND THE EXPLICIT MANDATE OF THE SECTION. IN THE INSTANT CASE, WE FIND THAT BOTH THE LOWER AU THORITIES HAVE TAKEN A DIFFERENT DEEMED SALE CONSIDERATION AS PROVIDED UND ER SECTION 50C OF THE ACT. NONE OF THE LOWER AUTHORITIES HAS CONFIRMED THE SAM E BY ISSUING A NOTICE U/S 133(6) OF THE ACT TO STAMP VALUATION AUTHORITIES TO DETERMINE THE ACTUAL STAMP VALUATION. IN THE ABSENCE OF ANY CONFIRMATION FROM THE STAMP VALUATION AUTHORITIES, WE ARE INCLINED TO RESTORE THIS ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AND IN THE LIGH T OF ABOVE STATED DISCUSSION. HENCE, THIS GROUND OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 12. NEXT ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS THAT LD CIT(A) ERRED IN ALLOWING INTEREST OF RS. 5,15,010/- PERTAINING T O EARLIER FINANCIAL YEARS AS PART OF THE COST OF ACQUISITION UNDER THE HEAD CAPI TAL GAIN. 13. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. REGARDING T HE ISSUE OF CAPITAL GAINS, IT TRANSPIRES THAT THERE IS NO DISPUTE THAT THE ASSESS EE HAD AVAILED THE LOAN FOR PURCHASING THE PROPERTY IN QUESTION. AFTER THE PROP ERTY WAS SOLD, THE ASSESSEE ALSO CHOSE TO INCLUDE THE INTEREST AMOUNT WHILE COM PUTING CAPITAL GAINS UNDER SECTION 48 OF THE 'ACT', WHICH READS AS UNDER: '48. THE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATI ON RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOL LOWING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST O F ANY IMPROVEMENT THERETO:' ITA NO.169/KOL/2014 A.Y. 2006-07 ACIT, CIR-22, KOL. VS. MRS SHEELA CHOPRA PAGE 11 AFTER PERUSING THE ABOVE SAID PROVISIONS, WE ARE OF THE OPINION THERE IS NO DOUBT THAT THE INTEREST IN QUESTION IS INDEED A EXP ENDITURE IN ACQUIRING THE ASSET. THEREFORE, THE ASSESSEE IN THE INSTANT CASE IS CERTAINLY ENTITLED TO INCLUDE THE INTEREST AMOUNT AT THE TIME OF COMPUTIN G CAPITAL GAINS U/S 48 OF THE ACT. THEREFORE, THE LD CIT(A) HAS RIGHTLY ACCEPTED THE ASSESSEE'S CONTENTION AND DELETED THE ADDITION MADE BY THE AO. HENCE, QUA THIS GROUND, WE UPHOLD THE ORDER OF THE LD. CIT(A). 14. IN THE RESULT, REVENUES APPEAL STANDS ALLOWED PART LY FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 23/ 02/2017 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 23 / 02 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ACIT, CIRCLE-22, 169, AJ.C. BOSE ROAD, 8 TH FLOOR, KOLKATA-14 2. /RESPONDENT-MRS SHEELA CHOPRA, R-604, THE RESIDENCY , CITY CENTRE, BLOCK DC, SECTOR-1, S ALT LAKE CITY, KOLKATA-700 064 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,