M/s Ema India Limited, Kanpur V. DY. Commissioner of Income Tax-6, Kanpur

ITA 179/LKW/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1117 (ITAT-LUCKNOW)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 09-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 179/LKW/2017 ASSESSMENT YEAR: 2012 - 13 M/S EMA INDIA LIMITED C - 37, PANKI INDUSTRIAL AREA KANPUR V. DY. CIT - 6 KANPUR T AN /PAN : AAACF4129K (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI AMIT NIGAM, D.R. DATE OF HEARING: 01 02 201 8 DATE OF PRONOUNCEMENT: 05 0 2 201 8 O R D E R PER P ARTHA SARATH I CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - II, KANPUR DATED 7/12/2016. 2 . THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IN THE GROUNDS OF APPEAL IS THAT THE REQUEST MADE BY THE ASSESSEE TO THE DEPARTMENT TO REFER THE VALUATION OF THE PROPERTY TO THE VALUATION CELL OF THE DEPARTMENT UNDER SECTION 50C(2) OF THE ACT WAS NOT ACCEPTED AND THE ORDER PASSED BY THE AUTHORITIES I.E. ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) ADDING AN AMOUNT OF RS.1,45,95,000/ - TO THE INCOME OF THE ASSESSEE. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF INDUCTION HEATING AND HARDENING EQUIPMENTS AS WELL AS TOOLS AND SPARES. THE ASSESSEE ALSO ITA NO.179/LKW/2017 PAGE 2 OF 7 PROVIDES TECHNICAL ASSISTANCE AND PROCESS SUPPORT SERVICES TO ITS CUSTOMERS. THE BUSINESS ACTIVITIES OF THE ASSESSEE WERE THE SAME IN THE PRECEDING YEARS ALSO. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE HAS SOLD ITS PROPERTY SITUATED AT VILLAGE MAHARAJ PUR, POST TATIAGANJ, G.T. ROAD, MADHANA, KANPUR . THE ASSESSEE WAS SPECIFICALLY REQUIRED BY THE ASSESSING OFFICER VIDE ORDER SHEET ENTRY DATED 5/9/2014 TO PRODUCE COMPLETE DETAILS OF SALE OF LAND AND BUILDING DURING THE YEAR UNDER CONSIDERATION. IN RESPON SE, ASSESSEE VIDE WRITTEN SUBMISSION FURNISHED COMPLETE DETAILS ALONG WITH SALE DEED OF THE PROPERTY. THE RELEVANT PORTION OF THE ASSESSEES SUBMISSION BEFORE THE ASSESSING OFFICER IS AS UNDER: - 'THE ASSESSEE SOLD LAND AND BUILDING LOCATED AT ITS PLANT II , 19TH KM SOTNE, VILLAGE MAHARAJPUR, P.O. TATIAGANJ, G.T. ROAD, MANDHANA, KANPUR DURING THE YEAR. THE UNIT WAS CLOSED ON 16.11.2006 DUE TO DISPUTE WITH THEIR FOREIGN COLLABORATE OR AND THE ASSESSEE DISPOSED OFF THE AFORESAID VACANT AND UNUTILIZED LAND AND BUILDING ON 02.02.2012 AT THE BEST AVAILABLE MARKET PRICE OF RS. 361 LAC. AS PER THE REGISTERED VALUER'S REPORT DATED 19.03.2012 \ (COPY ENCLOSED) THE VALUATION WAS RS. 340.70 LAC. HOWEVER, THE STAMP DUTY VALUE OF THE SAID PROPERTY WAS 506.95 LAC WHICH WAS SIGNIFICANTLY HIGHER THAN THAT VALUED BY THE REGISTERED VALUER. IRREGULAR SHAPE OF LAND, LACK OF ROUTINE MAINTENANCE DUE TO LOSSES IN THE COMPANY, BROKEN FLOORING, DAMAGED TIN SHEETS AND CRACKS IN WALLS WERE CERTAIN MAJOR FACTORS WHICH WERE RESPONSIBLE FOR LOW VALUATION OF THE PROPERTY. ACCORDINGLY, THE ASSESSEE HAS ADOPTED ONLY THE ACTUAL CONSIDERATION RECEIVED AND NOT THE STAMP DUTY VALUE. VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY EXCEEDS FAIR MARKET VALUE OF THE ACTUAL CONSIDERATION RECEIVED ON THE DATE OF TRANSFER AND THE VALUE SO ADOPTED FOR LEVY OF STAMP DUTY HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION, ETC, BEFORE ANY OTHER AUTHORITY, COURT OR HIGH COURT. IN VIEW OF THE ABOVE IT IS REQUESTED TO REFER ITA NO.179/LKW/2017 PAGE 3 OF 7 THE VALUATION OF THE SAID ASSETS TO THE DE PARTMENTAL VALUATION OFFICER U/S 50 C(2).' 4 . THE SUBMISSION OF THE ASSESSEE WAS EXAMINED BY THE ASSESSING OFFICER ON THE BASIS OF FACTS AND MATERIAL AVAILABLE ON RECORD AND IT WAS GATHERED BY THE ASSESSING OFFICER THAT ASSESSEE SOLD ITS PROPERTY , WHICH INCLU DES LAND AND BUILDING , FOR A CONSIDERATION OF RS.3,61,00,000/ - AGAINST CIRCLE RATE ADOPTED BY THE STAMP VALUATION AU THORITY AT RS.5,06,95,000/ - . THE ASSESSEE ALSO PAID STAMP DUTY OF RS.25,35,000/ - ON CIRCLE RATE , WHICH IS EVIDENT FROM THE SALE DEED. FURT HER, THE ASSESSING OFFICER MADE A SPORT VERIFICATION THROUGH INCOME TAX INSPECTOR TO MAKE THE SITUATION CLEAR AND THE INSPECTOR HAS STATED IN HIS REPORT AS UNDER: - 'AS PER DIRECTION, I HAVE VISITED, FACTORY PREMISES OF M/S ETNA INDIA LTD., SITUATED AT VILL AGE MAHARAJPUR, P.O. TATIAGANJ, G.T. ROAD, MANDHANA, KANPURFOR SPOT INQUIRY REGARDING SHAPE OF THE LAND AND THEIR MARKET VALUE. IN THIS CONNECTION, IT IS SUBMITTED THAT THE LAND COMPRISES BOTH LAND AND BUILDING, BUILDING IS CONSTRUCTED FRONTAGE ON THE G.T . ROAD SIDE WHICH IS IN GOOD CONDITION AND LAND IS ALSO VERY GOOD CONDITION BUT SHAPE OF THE LAND IS IRREGULAR SOME SNAPS OF THE LAND IS ENCLOSED HEREWITH AS EVIDENT. DURING THE COURSE OF INQUIRY IT HAS BEEN GATHERED THAT MARKET VALUE OF THE AREA/LAND MAIN LY SITUATED BESIDE THE G.T. ROAD IS AROUND 70 TO 80 LACKS PER BIGHA. 5 . THE ASSESSING OFFICER , ON THE BASIS OF THE REPORT OF THE INSPECTOR , CONCLUDED THAT THE REASONS FURNISHED BY THE ASSESSEE FOR LOW SALE CONSIDERATION OF PROPERTY DUE TO DAMAGE IN BUILDING AND IRREGULAR SHAPE , ARE NOT FACTUALLY CORRECT. HENCE , IT IS NOT A FIT CASE TO REFER THE MATTER FOR VALUATION UNDER SECTION 50C(2) OF THE ACT TO THE VALUATION OFFICER AS REQUESTED BY THE ASSESSEE AND ACCORDINGLY BY INVOKING THE PROVISIONS OF SECTION 50C(1 ) OF THE ACT, THE DIFFERENCE BETWEEN THE C IRCLE ITA NO.179/LKW/2017 PAGE 4 OF 7 R ATE ADOPTED BY THE STAMP VALUATION AUTHORITY AND THE SALE CONSIDERATION OF THE PROPERTY , WHICH COMES TO RS.1,45,95,000/ - , WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 6 . THE LD. CIT(A) IN HIS ORDER HAS E LABORATELY DISCUSSED THE MATTER AND THEREAFTER UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. 7 . BEING FURTHER AGGRIEVED, ASSESSEE HAS PREFERRED THIS APPEAL BEFORE US AND AT THE TIME OF HEARING, THE LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE ONLY PR AYER THAT WAS MADE BEFORE THE AUTHORITIES BELOW WAS THAT THE VALUATION OF THE PROPERTY UNDER CONSIDERATION MAY BE REFERRED TO THE VALUATION CELL OF THE DEPARTMENT UNDER SECTION 50C(2) OF THE ACT. THE LD. A.R. OF THE ASSESSEE FURTHER STATED THAT THERE A RE PLETHORA OF JUDICIAL DECISIONS OF VARIOUS HIGH COURTS AND TRIBUNAL WHEREIN IT HAS BEEN STATED THAT THE WORD MAY INCORPORATED IN SECTION 50C(2) HAVE TO BE READ AS SHALL, OTHERWISE THE PURPOSE OF THE PROVISION WOULD BE REDUNDANT. SINCE THE ASSESSING OFFICER IS NOT EXPERT FOR VALUATION PURPOSE AND IF THE ASSESSEE IS NOT SATISFIED WITH THE VALUATION ADOPTED BY THE ASSESSING OFFICER, THEN THE MATTER CAN BE REFERRED TO THE DVO WHO IS AN EXPERT IN VALUATION. HE ACCORDINGLY PRAYED THAT THE MATTER MAY BE RE STORED BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO REFER THE VALUATION OF THE PROPERTY UNDER CONSIDERATION TO THE VALUATION CELL OF THE DEPARTMENT UNDER SECTION 50C(2) OF THE ACT. 8 . THE LD. D.R., ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW . 9 . WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVAL CONTENTIONS AND ANALYSED THE FACTS & CIRCUMSTANCES OF THE C ASE AND WE FIND THAT ITA NO.179/LKW/2017 PAGE 5 OF 7 INDEED A R EQUEST WAS MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALU ATION CELL OF THE DEPARTMENT UNDER SECTION 50C(2) OF THE ACT, WHICH IS EVIDENT FROM THE ORDER OF THE ASSESSING OFFICER. SIMILARLY , IN THE LD. CIT(A)S ORDER HE H AS ALSO ACCEPTED THAT A REQUEST WAS MADE BY THE ASSESSEE FOR REFERRING THE MATTER FOR VALUATIO N UNDER SECTION 50C(2) OF THE ACT TO THE VALUATION OFFICER. TO ADJUDICATE UPON THE ISSUE, W E TAKE GUIDANCE FROM THE JUDICIAL PRONOUNCEMENTS IN THE CASES OF MRS NANDIDTA KHOSLA [2011] TAXMANN.COM 344 (MUMBAI TRIBUNAL); MEGHRAJ BAID VS. ITO [2008] 23 SOT 25 (JODHPUR TRIBUNAL) AND ITO VS. SMT. MANJU RANI JAIN [2008] 24 SOT 24 (DELHI TRIBUNAL). IN ALL THESE CASES , IT HAS BEEN OBSERVED AND HELD THAT WHENEVER ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT HE HAS NOT CHALLENGED THE STAMP DUTY VALUATION AND SA LE CONSIDERATION IS DIFFERENT BECAUSE OF VALID REASON, THEN THE ASSESSING OFFICER IS REQUIRED TO REFER THE MATTER TO THE VALUATION OFFICER. WITHOUT GOING INTO THE INTERPRETATION OF THE WORD MAY WHETHER IT SHOULD BE TAKEN ONLY AS MANDATORY OR NOT, THE LO GIC SEEMS TO BE THAT THE ASSESSING OFFICER IS NOT EXPERT ON VALUATION AND THAT IS WHY THE LEGISLA TURE HAS MANDATED THAT IF THERE IS STRONG OBJECTION FROM THE ASSESSEES SIDE WITHOUT CHALLENGING THE S TAMP DUTY VALUATION, THEN VALUATION SHOULD BE REFERRED TO VALUATION OFFICER, WHO IS AN EXPERT AND WHO CAN DO THE CORRECT VALUATION. IF THE PROVISIONS OF SECTION 50C(2) IS READ IN THE SENSE THAT THE ASSESSING OFFICER IS NOT SATISFIED WITH THE E XPLANATION OF THE ASSESSEE, THEN HE MAY OR MAY NOT SEND THE MATTE R FOR VALUATION TO THE DVO, THEN IN THAT CASE THIS PROVISION WOULD BE RENDERED REDUNDANT. THE WORD MAY USED IN THIS SUB - SECTION SIGNIFIES THAT IN CASE THE ASSESSING OFFICER IS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, HE SHOULD REFER THE MAT TER TO THE DVO FOR THE MENTIONED PURPOSE . ITA NO.179/LKW/2017 PAGE 6 OF 7 10 . THE HON'BLE MADRAS HIGH COURT IN THE CASE OF S. MUTHURAJA VS. CIT [2013] (8) TMI 40 HELD THAT ONCE THE ASSESSEE APPLIES TO THE ASSESSING OFFICER FOR MAKING REFERENCE TO THE DVO UNDER SECTION 50C(2) OF THE ACT, M AY BECOMES SHALL. IT WAS FURTHER HELD THAT THE PROVISION AIMS TO PROTECT THE INTEREST OF THE ASSESSEE AGAINST ARBITRARINESS WHICH MAY CREEP IN WHILE FIXING THE VALUE OF CAPITAL GAIN AND IT IS THE SAFEGUARD GIVEN TO THE ASSESSEE. IN OUR HUMBLE U NDERSTA NDING, THE TAX LEGISLATION AIMS FOR THE WELFARE OF THE CITIZEN AND TAX PAYERS AT LARGE AND IN LARGER PERSPECTIVE WHEN THE JUDICIAL PRONOUNCEMENTS HAVE INTERPRETED A PROVISION TO REMOVE THE AMBIGUITY AND TO MAKE IT CLEAR IN FAVOUR OF THE ASSESSEE, IT IS DON E IN THE SPIRIT OF WELFARE LEGISLATION. WE, THEREFORE, IN OUR CONSIDERED VIEW , FIND IT APPROPRIATE AND PROPER, IN THE INTEREST OF JUSTICE AND ON THE BASIS OF JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, THAT THE MATTER OF VALUATION AS REQUESTED BY THE A SSESSEE SHOULD BE REFERRED TO THE DVO. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO REFER THE VALUATION OF THE PROPERTY OF THE ASSESSEE UNDER CONSIDERATION TO THE VALU ATION CELL OF THE DEPARTMENT UNDER SECTION 50C(2) OF THE ACT AND TO DECIDE THE MATTER AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN T HE OPEN COURT ON 05 / 0 2 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5 TH FEBR UARY , 201 8 JJ: 0102 ITA NO.179/LKW/2017 PAGE 7 OF 7 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR