Priti Jayesh Shah, Ahmedabad V. The Dy. Commissioner of Income Tax, Central Circle-2(3), Ahmedabad

ITA 1741/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2419 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 29-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AP O ORVA BHADWAJ
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Cost of acquisition; Fair market value; Assessment record
• Section: 50C

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA.NO.1741/AHD/2016 / ASSTT. YEAR: 2011-2012 PRITI JAYESH SHAH 26, ELORA PARK SOCIETY NARANPURA, AHMEDABAD. PAN : AINPS 3952 L VS DCIT, CENT.CIR.2(3) AHMEDABAD. ./ ITA.NO.1742/AHD/2016 / ASSTT. YEAR: 2011-2012 KAUSHA JINESH SHAH 10, DEVANSH BUNGLOWS NR. SURDHARA CIRCLE THALTEJ, AHMEDABAD. PAN : AFLPS 9005 H VS DCIT, CENT.CIR.2(3) AHMEDABAD. ./ ITA.NO.1743/AHD/2016 / ASSTT. YEAR: 2011-2012 KILLOLI R. SHAH 32, ELORA PARK SOCIETY NARANPURA, AHMEDABAD. PAN : AQOPS 0384 F VS DCIT, CENT.CIR.2(3) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI HARDIK VORA, AR REVENUE BY : MS.AP O ORVA BHADWAJ, SR.DR / DATE OF HEARING : 07/08/2018 / DATE OF PRONOUNCEMENT: 04/09/2018 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT THREE APPEALS ARE DIRECTED AT THE INSTANCE OF THREE ASSESSEES AGAINST ORDERS OF THE LD.CIT(A)-12, AHMEDABAD OF EV EN DATED I.E. ITA NO.1741/AHD/2015 AND TWO OTHERS 2 28.3.2016 PASSED ON THE RESPECTIVE APPEALS OF APPEL LANTS IN ASSESSMENT YEARS 2011-12. SINCE COMMON ISSUE IS INVOLVED IN A LL THESE APPEALS, THEREFORE, WE HEARD THEM TOGETHER AND DEEM IT APPRO PRIATE TO DISPOSE OF BY THIS COMMON ORDER. 2. COMMON GRIEVANCE OF THE ASSESSEE IN ALL THESE AP PEALS IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF R S.11,35,783/- IN EACH HAND OF THE ASSESSEE ON ACCOUNT OF CAPITAL GAIN ACC RUED TO THEM. FACTS ON ALL VITAL POINTS ARE COMMON. THEREFORE, FOR THE FACILITY OF REFERENCE, WE TAKE UP THE FACTS FROM THE APPEAL OF SMT.PRITI J AYESH SHAH. 3. THE FACTS EMERGE OUT FROM THE ASSESSMENT RECORD ARE THAT ON 17.12.2008 APPELLANTS HAVE ENTERED INTO AN AGREEMEN T FOR SALE WITH SHRI MUKESHBHAI BHOLABHAI PATEL FOR SALE OF AGRICULTURE LAND COMPRISED AT SURVEY NO.881/1+2 ADMEASURING 10,522 SQ.METERS SITU ATED AT CHANDKHEDA, DIST. GANDHINAGAR. THE SALE CONSIDERAT ION WAS SETTLED BETWEEN THE PARTIES AT RS.3 CRORES. ULTIMATELY, TH E SALE DEED WAS REGISTERED ON 30.4.2010. THE AO GOT INFORMATION FR OM ANNUAL INFORMATION REPORT WING THAT THE AMOUNT OF STAMP DU TY PAID BY THE ASSESSEE ON THE TRANSACTION WOULD DEMONSTRATE THE V ALUE OF SUCH PROPERTY AT RS.3.50 CRORES WHEREAS THE ASSESSEE HAS SHOWN TH E VALUE AT RS.3.00 CRORES. THUS, TAKING INTO CONSIDERATION FULL SALE VALUE OF RS.3.5 CRORES, THE LD.AO HAS ADDED RS.50.00 LAKHS WHILE COMPUTING THE CAPITAL GAIN. SINCE EACH ASSESSEE WAS HAVING 1/3 RD SHARE IN THE TOTAL TRANSACTION, HE DIVIDED RS.50 LAKHS IN EQUAL SHARE AND MADE ADDITIO N OF RS.16,66,766/- IN EACH HAND OF THE APPELLANTS. DISSATISFIED WITH THIS WORKING, THE ITA NO.1741/AHD/2015 AND TWO OTHERS 3 ASSESSEES WENT IN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT(A) IN PRINCIPLE CONCURRED WITH THE AO BUT FOUND THAT A RE FERENCE WAS MADE TO THE DVO UNDER SECTION (2) OF SECTION 50C AND THE DV O HAS DETERMINED FAIR MARKET VALUE OF THE PROPERTY AT RS.3,34,07,350 . THUS, ACCORDING TO THE LD.CIT(A) DIFFERENTIAL AMOUNT OF RS.34,07,350/- DESERVES TO BE ADDED IN THE HANDS OF THE ASSESSEE INSTEAD OF RS.50.00LAK HS. (AMOUNT DISCLOSED BY THE ASSESSEE RS.3.00 CRORES; DVO DETERMINED RS.3 .34 CORES, DIFFERENCE OF RS.34,07,350/- CONSIDERED FOR ADDITIO N). THE LD.CIT(A) HAS DIVIDED THIS AMOUNT IN EQUAL SHARE AND IN THIS WAY AN ADDITION OF RS.11,35,783/- IN EACH HAND OF THE ASSESSEE INSTEAD OF RS.16,66,666/- HAS BEEN CONFIRMED BY THE LEARNED CIT(A). 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. THE LD.COUNSEL FOR T HE ASSESSEE HAS PLACED ON RECORD COPY OF THE AGREEMENT DATED 17.12.2008. THE ASSESSEES HAVE RECEIVED PART PAYMENT ON EXECUTION OF THIS AGREEMEN T. THEY HAVE RECEIVED A SUM OF RS.50.00 LAKHS AT THE TIME OF EXE CUTION OF THE AGREEMENT AND THIS SUM WAS RECEIVED BY WAY OF ACCOU NT PAYEE CHEQUE. THE DETAILS OF CHEQUE HAVE BEEN MENTIONED IN THE AG REEMENT ITSELF. THE DETAILS HAVE BEEN PLACED ON PAGE NO.25 TO 27 OF THE PAPER BOOK WHICH IS TRANSLATED COPY OF THE AGREEMENT. FOR EXAMPLE, SMT . PRITIBEN J. SHAH RECEIVED A SUM OF RS.2,08,333/- VIDE CHEQUE NO.1185 66 DATED 10.9.2008 OF THE NAVNIRMAN CO-OP. BANK. SIMILARLY, DETAILS O F OTHER CHEQUES HAVE BEEN MENTIONED IN THE AGREEMENT ITSELF. EACH ASSES SEE RECEIVED A SUM OF RS.16.66 LAKHS. THE LD.COUNSEL FOR THE ASSESSEE CO NTENDED THAT THE AO ITA NO.1741/AHD/2015 AND TWO OTHERS 4 FAILED TO CONSIDER JANTRI RATE I.E. RATE ON WHICH STAMP DUTY WAS TO BE PAID WHILE GETTING THE SALE DEED REGISTERED ON THE DATE OF AGREEMENT I.E. 17.12.2008. HE ALSO POINTED OUT THAT OTHERWISE ALS O ON THE DATE OF SALE CIRCLE RATE FOR THIS AREA WAS RS.2300 PER SQ.METER. HE PLACED ON RECORD COPY OF THE NOTIFICATION ISSUED BY THE STATE GOVERN MENT SHOWING CIRCLE RATE OF THIS AREA AT THE RELEVANT TIME. CALCULATIO N OF VALUE OF THE PROPERTY OUGHT TO BE MADE BY THE AO ON THE BASIS OF THIS RAT E. HE PLACED ON RECORD COPY OF A CERTIFICATE GIVEN BY SHRI GAURANG K. PATEL, ADVOCATE CALCULATING THE VALUE OF THE LAND AT RS.2,42,00,600 /-. 5. ON THE OTHER HAND, THE LD.DR RELIED UPON ORDER O F THE AO. HE CONTENDED THAT THE AO HAS CALCULATED VALUE OF PROPE RTY ACCORDING TO THE TOTAL AMOUNT PAID AS A STAMP DUTY. THIS HAS BEEN F URTHER RE-VERIFIED BY THE DVO UNDER SECTION 50C(2) OF THE ACT AND THE VAL UE HAS BEEN SUBSTANTIALLY REDUCED. THE LD.CIT(A) HAS ACCEPTED THE SAID REPORT OF THE DVO. 6. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIRC UMSTANCES, WE ARE OF THE VIEW THAT SECTION 48 OF THE INCOME TAX ACT P ROVIDES MODE OF COMPUTATION OF CAPITAL GAIN. IT CONTEMPLATES THAT I NCOME ARISING UNDER THE HEAD 'CAPITAL GAINS' SHALL BE COMPUTED BY DEDUC TING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING, AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSETS THE FOLLOWING AMOUNTS, VIZ. ( A) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRAN SFER; AND (B) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMP ROVEMENT THERETO. ITA NO.1741/AHD/2015 AND TWO OTHERS 5 7. SECTION 50C FURTHER PROVIDES THAT WHERE THE CON SIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE AD OPTED OR ASSESSED BY ANY AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP D UTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHA LL FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE C ONSIDERATION. IN OTHER WORDS, FULL CONSIDERATION MENTIONED IN SECTION 48 I S TO BE REPLACED BY THE CONSIDERATION ON WHICH VALUE OF THE PROPERTY WA S ADOPTED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. 8. IT IS PERTINENT TO NOTE THAT THE ASSESSEES HAVE ENTERED INTO AN AGREEMENT FOR SALE OF THEIR LAND ON 17.12.2008. TH EY HAVE RECEIVED PART PAYMENT THROUGH ACCOUNT PAYEE CHEQUE. THE TIME LIM IT FOR FILING A SUIT FOR SPECIFIC PERFORMANCE UNDER SPECIFIC RELIEF ACT HAS BEEN PROVIDED IN THE INDIAN LIMITATION ACT, AND THIS LIMITATION IS T HREE YEARS FROM THE DATE OF AGREEMENT. IN CASE THE VENDEE REFUSED TO GET SA LE DEED REGISTERED, THEN THE ASSESSEE CAN ONLY SUE FOR SPECIFIC PERFORM ANCE, PERSUADING VENDEE TO PURCHASE LAND. IN THAT SITUATION, THE AS SESSEE WOULD NOT GET ANYTHING MORE THAN THE AMOUNT AGREED IN THE AGREEME NT. SIMILARLY, THERE CAN BE A TIME GAP BETWEEN DATE OF AGREEMENT V IS--VIS ULTIMATE REGISTRATION OF SALE DEED. THERE CAN BE AN APPRECI ATION OR DEPRECIATION IN THE VALUE OF PROPERTY. IN OTHER WORDS, AT THE TIM E OF EXECUTION OF AGREEMENT IN RESPECT OF AN IMMOVABLE PROPERTY, THE RIGHT IN PERSONA IS CREATED IN FAVOUR OF THE TRANSFEREE/VENDEE. WHEN S UCH RIGHT HAS BEEN CREATED IN FAVOUR OF THE VENDEE, VENDOR IS RESTRAIN ED FROM SELLING THE SAID PROPERTY TO SOMEONE-ELSE, BECAUSE VENDEE IN WHOSE F AVOUR THE RIGHT IN ITA NO.1741/AHD/2015 AND TWO OTHERS 6 PERSONA IS CREATED HAS LEGITIMATE RIGHT TO ENFORCE SPECIFI C PERFORMANCE OF THE AGREEMENT, IF VENDOR FOR SOME REASON IS NOT EXE CUTING THE SALE DEED. UNDER THESE CIRCUMSTANCES THE VALUE OF THE PROPERTY TRANSACTED OUGHT TO BE KEPT IN MIND ON THE DATE OF AGREEMENT ALSO. APA RT FROM ALL THESE FACTORS, WE HAVE TAKEN COGNIZANCE OF THE NOTIFICATI ON ISSUED BY THE STATE GOVERNMENT FIXING THE RATE AT WHICH STAMP DUTY WOUL D BE LEVIED ON REGISTRATION SALE DEED IN PARTICULAR AREA. FOR THE LAND SOLD BY THE ASSESSEE, IT WAS A RATE OF RS.2300 PER SQ.METER. T HE SURVEY NUMBER OF THE ASSESSEES LAND WAS 881 AND FOR THIS LAND CIRCL E RATE WAS FIXED AT RS.2300 PER SQ.METER. IF AT THIS RATE THE VALUE OF THE PROPERTY IS BEING DETERMINED, THEN THE VALUE OF THE PROPERTY WOULD BE RS.2,42,600/- WHEREAS THE ASSESSEES HAVE DISCLOSED THE SALES CONS IDERATION AT RS.3.00 CRORES. IT CANNOT BE ENHANCED UNDER SECTION 50C BY A SUM OF RS.50 LAKHS CONSIDERED BY THE AO AND REDUCED BY THE LD.CI T(A). IN OTHER WORDS, TRUE VALUE FOR THE PURPOSE OF CALCULATING TH E FULL VALUE OF CONSIDERATION REQUIRED UNDER SECTION 48 OF THE INCO ME TAX ACT FOR COMPUTING CAPITAL GAIN SHOULD NOT BE MORE THAN RS.3 .00 CORES IN THE PRESENT CASE. WE, THEREFORE, ALLOW ALL THREE APPEA LS AND DELETE IMPUGNED ADDITIONS. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 4 TH SEPTEMBER, 2018 AT AHMEDABAD. SD/- SD/- ( WASEEM AHMED ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 04/09/2018 ITA NO.1741/AHD/2015 AND TWO OTHERS 7 $% & ''() *$)' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A) 5. $%& '' , / DR, ITAT, 6. &)* + / GUARD FILE. $% + / BY ORDER, TRUE COPY ,/ - ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD