Uthrakumari, Coimbatore V. ITO, Coimbatore

ITA 1748/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8013 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: K RAGHU
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Fair market value; Reason to believe
• Section: 143(3); 50C; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' # . $ , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NO.1748/MDS/2016 ( / ASSESSMENT YEAR: 2009-10) MRS. UTHRAKUMARI, 40, G.K.D NAGAR, NEHRU NAGAR WEST, KALAPATTI ROAD, COIMBATORE-641 014. VS THE INCOME TAX OFFICER, WARD-III(5), COIMBATORE. PAN: AAHPU2321B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. K.RAGHU, C.A. /RESPONDENT BY : MR. PATHLAVATH PEERYA, CIT /DATE OF HEARING : 6 TH SEPTEMBER, 2016 /DATE OF PRONOUNCEMENT : 25 TH NOVEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 2, COIMBATORE DATED 30.03.2016 IN ITA NO. 199/14-15 PASSED UNDER SECTION 143(3) R.W.S. 263 & 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPEAL, HOWEVER, THE CRUX OF THE ISSUE IS AS FOLLOW S:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE ORDER OF THE LEARNED ASSESSING OFFICER WHO HAD ADOPTED THE VALUE DETERMINED BY THE DRO(STAMPS) AS SALE CONSIDERATION UNDER THE PROVISIONS OF SECTION 2 ITA NO. 1748/MDS/2016 50C OF THE ACT FOR COMPUTING LONG TERM CAPITAL GAINS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HER RETURN OF INCOME FOR THE ASSES SMENT YEAR 2009-10 ON 24.06.2009 ADMITTING TOTAL INCOME OF RS.2,31,680/- WHICH COMPRISES OF PROFITS & GAINS O F BUSINESS OR PROFESSION RS.27,968/- AND LONG TERM CAPITAL GAI NS RS.2,03,713/-. THE ASSESSEE HAD ALSO OFFERED RS.65 ,000/- AS AGRICULTURAL INCOME. THE CASE WAS SELECTED FOR SCRU TINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED ON 03.09.201 0 AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) O F THE ACT ON 22.12.2011, WHEREIN THE LEARNED ASSESSING OF FICER INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT BE CAUSE THE GUIDELINE VALUE OF THE PROPERTY WAS STATED AS RS. 7 8,48,200/- BUT THE SALE CONSIDERATION WAS SHOWN AS RS.6.00 LAK HS. THEREAFTER THE LD.A.O IN COMPLIANCE WITH THE PROVIS IONS OF SECTION 50C(2) OF THE ACT, OBTAINED A REPORT FROM T HE LD. DVO, WHO ALSO SUGGESTED THE VALUE OF THE PROPERTY A S RS.6.00 LAKHS AS STATED BY THE ASSESSEE AND ACCORDI NGLY ADOPTED THE VALUE OF THE PROPERTY AT RS.6.00 LAKHS FOR 3 ITA NO. 1748/MDS/2016 DETERMINING THE LONG TERM CAPITAL GAIN OF THE ASSES SEE. SUBSEQUENTLY, THE ABOVE SAID ASSESSMENT ORDER WAS S ET ASIDE BY THE LEARNED COMMISSIONER OF INCOME TAX BY INVOKING THE POWERS UNDER SECTION 263 OF THE ACT A ND DIRECTED THE LEARNED ASSESSING OFFICER TO REDO THE ASSESSMENT AFRESH AFTER VERIFYING THE CLAIM OF THE ASSESSEE INCLUDING ENQUIRY WITH RELEVANT STATE AUTHORITIES. WHILE DOING SO, HE WAS OF THE VIEW THAT ONCE THE REGISTRANT DIS PUTES AND DECLINES TO ADOPT THE VALUE ADOPTED BY ANY AUTHORIT Y OF THE STATE GOVERNMENT (STAMP VALUATION AUTHORITY), THE D OCUMENT IS REFERRED TO THE SPECIAL DEPUTY COLLECTOR (STAMPS ) / DRO (STAMPS) FOR DETERMINING THE MARKET VALUE OF THE PR OPERTY WHO INTERN INSPECTS THE PROPERTY AND DETERMINES THE MARKET VALUE OF THE PROPERTY, THEN THE CONDITION LAID DOWN UNDER SECTION 50C(2)(B) WILL NOT FULFILLED. THEREAFTER TH E LEARNED ASSESSING OFFICER REFRAMED THE ASSESSMENT UNDER SEC TION 143(3) R.W.S. 263 OF THE ACT BY ADOPTING THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY AT RS.78,48,200/- FOLLOWING THE DIRECTIONS OF THE LEARNED COMMISSIONER OF INCOM E TAX 4 ITA NO. 1748/MDS/2016 AND COMPUTED THE LONG TERM CAPITAL GAINS OF THE ASS ESSEE AT RS.74,79,881/- . 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- 4.5 AS MENTIONED ABOVE, IN GROUND NO. 5 THE APPELLANT ALSO QUESTIONED THE ORDER PASSED BY THE A O CONSEQUENT TO 263 ON MERITS. IN GROUND NO.9 THE APPELLANT PLEADED FOR DELETION OF ADDITION MADE TO THE RETURNED INCOME. TURNING TO THE MERITS OF THE CASE, THE PRINCIPAL QUESTION TO BE ADDRESSED IS WHETHER THE CONDITION LAID DOWN IN SECTION 50C(2)(B) IS SATISFI ED OR NOT. AS PER PROVISIONS OF SECTION 50C(2), REFERENCE TO VALUATION OFFICER CAN BE MADE WHEN TWO CONDITIONS A RE SATISFIED. ONE IS THAT THE ASSESSEE SHOULD CLAIM BE FORE THE AO THAT THE VALUE ADOPTED BY THE STAMP VALUATIO N AUTHORITY EXCEEDED FAIR MARKET VALUE (FMV) AS ON TH E DATE OF TRANSFER THIS CONDITION HAS BEEN SATISFIED, SINCE THE APPELLANT HEREIN MADE SUCH CLAIM BEFORE THE A0. THE OTHER CONDITION IS THAT THE VALUE ADOPTED BY TH E STAMP VALUATION AUTHORITY HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR REFERENCE MAD E BEFORE ANY AUTHORITY, COURT OR THE HIGH COURT. HOWE VER IN THIS CONDITION, NOWHERE IT IS STATED THAT SUCH VALU E SHOULD HAVE BEEN DISPUTED ONLY BY THE SELLER. NORMALLY, TH E STAMP DUTY IS PAID BY THE PURCHASER OF THE PROPERTY , WHO MIGHT BE AGGRIEVED BY THE VALUE FIXED BY THE STAMP VALUATION AUTHORITY IF IT DOES NOT MATCH WITH THE F MV AND THE PURCHASER WOULD DISPUTE IT IN SUCH CIRCUMSTANCE S. IN ANY CASE, THERE IS NO SPECIFIC MENTION IN THE CLAUS E ABOUT WHO, WHETHER PURCHASER OR SELLER, SHOULD HAVE DISPUTED THE VALUE FIXED BY THE STAMP VALUATION AUT HORITY. WHEN THAT BE SO, IT CANNOT BE INTERPRETED TO MEAN T HAT IF THE SELLER WHO IS LIABLE TO TAX ON THE BASIS OF 50C VALUE HAD NOT DISPUTED, THE SECOND CONDITION IS SATISFIED . ONCE THE DISPUTE HAS BEEN RAISED EITHER BY THE BUYER OR THE SELLER, THE SECOND CONDITION IS NOT SATISFIED. THER EFORE, I DO NOT AGREE WITH THE AR'S ARGUMENT THAT SINCE THE APPELLANT, WHO IS A SELLER, HAD NOT RAISED ANY DISP UTE WITH 5 ITA NO. 1748/MDS/2016 REGARD TO VALUATION BEFORE ANY AUTHORITY, THE SECON D CONDITION IN THE APPELLANT'S CASE HAS BEEN SATISFIE D. 4.6 IN THE WRITTEN SUBMISSIONS, THE AR RELIED ON TH E DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CHANDNI BHUCHAR (SUPRA) TO SUPPORT HIS ARGUMENT THAT VALUATION DONE FOR THE PURPOSE OF STAMP DUTY CANNOT BE TAKEN AS ACTUAL SALE CONSIDERATION PAID TO THE SELL ER BY THE PURCHASER IN THE ABSENCE OF ANY ADMISSIBLE EVIDENCE. IT IS FOUND THAT THIS DECISION WAS RENDER ED IN A CASE WHERE THE DIFFERENCE BETWEEN THE VALUE ADOPTED FOR STAMP DUTY PURPOSE AND THE SALE CONSIDERATION MENTIONED IN THE SALE DEED WAS TAXED AS INCOME FROM UNEXPLAINED SOURCES IN THE HANDS OF THE PURCHASER. IT WAS IN THAT CONTEXT, THE COURT HELD THAT THERE SHOU LD BE SOME ADMISSIBLE EVIDENCE FOR TAXING THAT DIFFERENCE . HOWEVER, IT IS NOWHERE HELD THAT THE VALUATION DONE FOR THE PURPOSE OF STAMP DUTY SHOULD NOT BE ADOPTED AS SALE CONSIDERATION U/S. 50C FOR CORNPUTING CAPITAL GAINS IN THE HANDS OF THE SELLER. IN FACT, THIS IS THE PURPOSE O F 50C PROVISIONS. THEREFORE, I AM OF THE VIEW THAT THIS D ECISION WOULD NOT BE OF ANY HELP TO THE APPELLANT. 4.7 THE CLAIM MADE BEFORE THE CIT, DURING REVISION PROCEEDINGS, WAS THAT THE DISTRICT COLLECTOR (STAMPS)/DRO (STAMPS) IS THE STAMP VALUATION AUTHOR ITY AND NO DISPUTE HAD BEEN RAISED AGAINST THE VALUATIO N MADE BY THIS AUTHORITY. FOLLOWING THE DIRECTIONS OF THE CIT, THE AO WROTE TO THE SUB-REGISTRAR, GANAPATI, COIMBATORE, FOR A CLARIFICATION ON WHETHER THERE WA S ANY DISPUTE FROM THE APPELLANT'S SIDE OR FROM ANY OTHER S REGARDING THE VALUE FIXED BY THE STAMP VALUATION AUTHORITY. THE SUB-REGISTRAR CLARIFIED THAT WHEN TH E DOCUMENT IS REGISTERED FOR THE GUIDELINE VALUE AS F IXED BY THE STATE OF TAMILNADU, THE DOCUMENT SHALL BE REGIS TERED AS SUCH BY THE REGISTRAR CONCERNED. HOWEVER, IF THE DOCUMENT IS NOT REGISTERED FOR THE GUIDELINE VALUE THEN IT IS MANDATORY FOR THE REGISTRAR TO SEND THE DOCUMENT TO DRO (STAMPS) TO ASCERTAIN THE CORRECT STAMP DUTY AS PER THE PROVISIONS OF REGISTRATION ACT. IN THIS CASE, S INCE THERE WAS A DIFFERENCE BETWEEN THE DOCUMENTED VALUE AND GUIDE LINE VALUE, THE DOCUMENT WAS SENT TO DRO (STAMPS) TO ASCERTAIN THE CORRECT STAMP DUTY BY THE DISTRICT COLLECTOR (STAMPS). IT WAS ON THE BASIS OF THIS REPLY, THE AO INFERRED THAT THE REFERENCE MADE TO D RO (STAMPS) ON A DISPUTE OF VALUATION WAS A REFERENCE TO ANY AUTHORITY SPECIFIED IN THE CONDITION IN THE SEC TION 50C(2)(B) AND ACCORDINGLY HELD THAT THE SAID CONDIT ION WAS NOT SATISFIED. I AGREE WITH THE CONCLUSION OF T HE AO. IN THIS CONNECTION, A USEFUL REFERENCE IS MADE TO T HE 6 ITA NO. 1748/MDS/2016 PROVISIONS OF THE INDIAN STAMP ACT, 1899 (AS IN FOR CE IN THE STATE OF TAMILNADU). UNDER SECTION 47 AA OF THI S ACT, THE VALUATION COMMITTEE CONSTITUTED BY THE STATE GOVERNMENT BY A NOTIFICATION SHALL BE THE AUTHORITY FOR FIXING THE MARKET VALUE GUIDELINES IN THE STATE FOR THE PURPOSE OF SECTION 47 A AND BASED ON SUCH GUIDELINE S, THE STAMP DUTY IS PAID ON INSTRUMENTS OF CONVEYANCE . AS PER PROVISIONS OF SECTION 47 A THEREOF, IF THE REGI STERING OFFICER APPOINTED UNDER THE INDIAN REGISTRATION ACT , HAS REASON TO BELIEVE THAT THE MARKET VALUE OF THE PROP ERTY HAS NOT BEEN TRULY SET FORTH IN THE INSTRUMENT, HE MAY, AFTER REGISTERING SUCH INSTRUMENT, REFER THE SAME T O THE COLLECTOR FOR DETERMINATION OF THE MARKET VALUE. FR OM THE ABOVE PROVISIONS, IT IS CLEAR THAT FOR SOME REASON OR THE OTHER, WHEN THE MARKET VALUE OF A PROPERTY IS NOT S ET FORTH IN A SALE DEED AS PER THE MARKET VALUE GUIDELINES I SSUED BY THE VALUATION COMMITTEE, THEN BY IMPLICATION, TH E PARTIES ARE DIFFERING FROM AND DISPUTING THE VALUE FIXED BY THE STAMP VALUATION AUTHORITY. IT IS TO MEET SUCH S ITUATION OF UNDER VALUATION, PROVISIONS OF SECTION 47 A ARE MEANT FOR AND REFERENCE TO THE COLLECTOR BY THE REGISTERI NG OFFICER IS ALLOWED UNDER THIS SECTION. ANY PERSON AGGRIEVED BY THE VALUATION OF THE COLLECTOR MAY FURTHER APPEAL T O SUCH AUTHORITY AS MAY BE PRESCRIBED. THIS PROCEDURE OF REFERENCE AND APPEAL ON VALUATION OF ANY PROPERTY F OR STAMP DUTY PURPOSE HAS BEEN CLEARLY LAID DOWN IN TH E ABOVE PROVISIONS OF THIS ACT. AS THESE WORDS APPEAR IN SECTION 50C(2)(B), THEIR MEANING HAVE TO BE IMPORTE D FROM THE STAMP ACT. IN VIEW OF THE ABOVE, THE STAMP VALUATION AUTHORITY IS THE SUB-REGISTRAR, WHO DETER MINES THE MARKET VALUE OF THE PROPERTY BASED ON GUIDELINE S ISSUED BY THE VALUATION COMMITTEE. THE DRO (STAMPS) IS NOT A PRIMARY STAMP VALUATION AUTHORITY. HE DECIDES THE MARKET VALUE OF ANY PROPERTY ONLY WHEN THERE IS ANY DISPUTE 'AND THE MATTER IS REFERRED TO HIM. FURTHER , THE REFERENCE TO THIS AUTHORITY SHOULD BE UNDERSTOOD AS A REFERENCE MENTIONED IN SECTION 50C(2)(B). ACCORDING LY, THE CONDITION MENTIONED IN THOSE PROVISIONS HAS NOT BEEN SATISFIED. IN THE LIGHT OF ABOVE DISCUSSION, I UPHOLD THE AO'S ACTION OF ADOPTING VALUE DETERMINED BY ORO (STAMPS) AS SALE CONSIDERATION UNDER PROVISIONS OF SECTION 50C FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GAINS. THEREFORE, GROUND NOS. 5 AND 9 ARE DISMISSED. 7 ITA NO. 1748/MDS/2016 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE LEARNED ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT UNDER SECTION 143(3) OF THE ACT HAD INVOKED THE PROVISIONS OF SECTION 50C AND WHEN THE ASSESSEE OBJECTED FOR THE SAME HE OBTAINED THE VALU ATION REPORT FROM THE DVO AS PER THE PROVISIONS OF SECTIO N 50C(2) OF THE ACT AND SINCE THE LEARNED DVO HAD VALUED THE PROPERTY AT RS.6.00 LAKHS AS CLAIMED BY THE ASSESSEE HE ADOP TED THE SAME FOR THE PURPOSE OF COMPUTING CAPITAL GAINS, WH ICH IS IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. HE THERE FORE PLEADED THAT THE ORIGINAL ORDER OF THE LEARNED ASSE SSING OFFICER UNDER SECTION 143(3) OF THE ACT MAY BE REIN STATED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE, WE FIND MERIT IN THE ARGUMENTS ADVANCED BY THE LEAR NED 8 ITA NO. 1748/MDS/2016 AUTHORIZED REPRESENTATIVE. AT THE TIME OF ORIGINAL ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE LEA RNED ASSESSING OFFICER HAD INVOKED THE PROVISIONS OF SEC TION 50C OF THE ACT AND SINCE THE ASSESSEE HAD OBJECTED FOR ADOPTING THE GUIDELINE VALUE HE HAD REFERRED THE MATTER TO T HE DVO. THE ASSESSEES CONTENTION BEFORE THE REVENUE IN SUP PORT OF THE MARKET VALUE OF THE PROPERTY WAS AS UNDER:- THE LAND IS SITUATED NEAR THE SANGANUR DITCH CANAL AND THERE IS NO BUYER FOR THE LAND. EVEN THOUGH IT IS WRITTEN AS 20 CENTS IN THE SALE DEED, ALREADY 3-3.5 CENT HAS TURNED INTO AND SUBMERGED WITH THE SANGANUR CANAL. ALL THE NEARBY LANDS ARE WASTE LAND OF GOVERNMENT. THE SAID CLAIMS CAN BE VERIFIED FROM TH E PRINTOUT ENCLOSED BY US FROM TAMILNADU GOVERNMENT REGISTRATION DEPARTMENT WEBSITE ITSELF. WHEN ALL TH E NEARBY LANDS ARE WASTE HOW THIS LAND ALONE COULD WO RTH LAKHS OF RUPEES. MOREOVER, THE CANAL TURNED DITCH W AS DAY BY DAY SUBMERGING WITH THE LAND. FURTHER TO ADD TILL 31.07.2007, THE GUIDELINE VALUE WAS RS.99 PER ACRE FOR THE LAND IN QUESTION. FROM 01.08.2007 THIS WAS CHANGED AS RS.1400 PER ACRE CONVERTING ITS CLASSIFICATION TO COMMERCIAL AREA CLASS-1 FROM AGRICULTURAL LAND YOU ARE REQUESTED TO SEND THE C ASE FOR VALUATION UNDER SECTION 50C(2)(A) TO DETERMINE THE FAIR MARKET VALUE AS ON THE DATE OF SALE AND RENDER JUSTICE THEREBY. 8. CONSIDERING THE DRAWBACKS OF THE PROPERTY, THE L EARNED DVO HAD ACCEPTED THE VALUE ADOPTED BY THE ASSESSEE AS THE 9 ITA NO. 1748/MDS/2016 MARKET VALUE. THUS, THE LEARNED AO HAD COMPLIED WIT H THE PROVISIONS OF THE ACT. FURTHER WE DO NOT FIND ANY J USTIFICATION ON THE FINDINGS OF THE LD.CIT, CIT(A) & THE LD.A.O IN THEIR RESPECTIVE ORDERS WITH RESPECT TO THEIR OBSERVATION S ON THE PROVISIONS OF SECTION 50C(2)(B) OF THE ACT. THEREFO RE, WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) WHO HAD UPHELD THE ORDER OF TH E LEARNED ASSESSING OFFICER PASSED SUBSEQUENT TO THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX UNDER SECTIO N 263 OF THE ACT. IT IS ALSO PERTINENT TO MENTION THAT TH E INTERNAL PROCEEDINGS BEFORE THE DVO ARE QUITE DISTINCT FROM THE PROCEEDINGS BEFORE THE DRO (STAMPS) AND DISTRICT CO LLECTOR (STAMPS) OF THE STATE GOVERNMENT AUTHORITIES AND TH ERE ARE NO PROVISIONS IN THE ACT TO INTERMINGLE OR SUBSTITU TE THE VALUATION OF THOSE TWO DISTINCT AUTHORITIES. FOR T HE ABOVE STATED REASONS WE HEREBY DIRECT THE LEARNED ASSESSI NG OFFICER TO REINSTATE THE ORIGINAL ORDER PASSED BY T HE LEARNED ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT D ATED 22.12.2011. ACCORDINGLY THE GROUND RAISED BY THE AS SESSEE IS HELD IN HER FAVOUR. 10 ITA NO. 1748/MDS/2016 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 25 TH NOVEMBER, 2016 SD/- SD/- ( ' # . $ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 25 TH NOVEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF