Kanayalal Kotumal Achhara, Pune V. Income-tax Officer, Ward - 8 (1), Pune

ITA 1801/PUN/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2520 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 26-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWLI
• Assessee Lawyers: AKASH RAMNANI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Retrospective amendment
• Section: 50C

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , #, % BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1801/PUN/2017 ' ' / ASSESSMENT YEAR : 2009-10 KANAYALAL KOTUMAL ACHHARA, A-10 AND 11, RENTED QUARTERS, NEAR SAI CHOWK, PIMPRI, PUNE 411 017 PAN : AAYPA0192P ....... / APPELLANT / V/S. ITO, WARD-8(1), PUNE / RESPONDENT APPELLANT BY : SHRI AKASH RAMNANI RESPONDENT BY : SHRI RAJESH GAWLI / DATE OF HEARING : 21.08.2018 / DATE OF PRONOUNCEMENT : 24.08.2018 / ORDER PER D. KARUNAKARA RAO, AM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-9, PUNE, DATED 27-04-2017 FOR THE A.Y. 2009-10. 2. GROUNDS RAISED BY THE ASSESSEE ARE EXTRACTED BELOW : 1. THE LD.CIT(A)-9 ERRED IN DISMISSING THE APPEAL AGAINST THE ASSESSMENT ORDER BY THE LD. AO ASSESSING THE TOTAL INCOME AT RS.8,13,040/- AS AGAINST THE RETURNED INCOME OF RS. 3,07,440/- BY INCORRECT APPLICATION OF PROVISIONS SEC.50C OF THE INCOME TAX ACT. 2 ITA NO.1801/PUN/2017 KANAYALAL KOTUMAL ACHHARA 2. THE LD. CIT(A)-9 HAS NOT CONSIDERED THE AMENDMEN T AS INSERTION OF PROVISO TO SUB-SECTION (1) OF SECTION 50C OF THE IN COME TAX ACT, 1961 MADE BY THE FINANCE ACT, 2016. 3. THE LD. AO HAS WRONGLY APPLIED THE PROVISIONS OF SEC 50C OF THE INCOME TAX ACT AND CONCLUDED THE PROCEEDINGS ON HIS OWN WITHOUT CONSIDERING THE WRITTEN SUBMISSION FILED BY THE APP ELLANT. 4. THE LD. AO ERRED IN ADOPTING THE VALUE OF THE PR OPERTY SOLD AS PER THE VALUE OF THE STAMP VALUATION AUTHORITY EVEN THO UGH THE SAME HAS BEEN OBJECTED DURING THE COURSE OF ASSESSMENT WITH SUFFICIENT REASONS. 5. THE LD. AO ERRED IN DECIDING THE ISSUE WITHOUT F OLLOWING THE PRINCIPAL OF NATURAL JUSTICE. 6. THE APPELLANT PRAYS THAT THE ADDITION OF RS.5,05 ,600/- MADE IN RESPECT OF SHORT TERM CAPITAL GAIN SHALL BE DELETED . 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSE E IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF TRADING IN PLYWO OD IN THE NAME OF SATNAM FURNITURE IN PIMPRI AREA OF PUNE. ASSESS EE FILED THE RETURN OF INCOME DECLARING INCOME OF RS.3,07,440/-. THERE WA S SURVEY ACTION U/S.133A OF THE ACT ON THE ASSESSEE ON 04-03-20 10. ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT DETERMINING THE TOTAL IN COME OF RS.8,13,040/-. AO MADE AN ADDITION U/S.50C OF THE ACT ON A CCOUNT OF SHORT TERM CAPITAL GAINS IN CONNECTION WITH TRANSFER OF FLAT NO.3, JOINTLY OWNED BY THE ASSESSEE AND HIS WIFE AND SON. 4. DETAILS REGARDING THIS ISSUE INCLUDE THAT THE ASSESSEE IS 50% OWNER OF THE FLAT. BALANCE 50% IS OWNED WIFE AND SON EQUALL Y. THERE WAS AN AGREEMENT 10-11-2007 WITH THE PURCHASER FOR S ALE OF THE FLAT FOR RS.13 LAKHS (GOVT. VALUE RS.14 LAKHS). BY THE END OF MARCH, 2008, THE PURCHASER PAID A SUM OF RS.9,95,000/- AND THE BALANCE AM OUNT WAS PAID IN THE MONTH OF MAY 2008. COPY OF THE AGREEMENT EV IDENCES THESE FACTS. HOWEVER, THERE IS NO REGISTRATION OF THIS AGREEMENT AT THE SUB REGISTRARS OFFICE TILL MAY 2008. BY THE DATE OF REGISTRATION , THE SUB REGISTRARS OFFICE VALUE WAS HIKED FROM THE EXISTING RS.14 LAK HS TO RS.23,11,200/-. 3 ITA NO.1801/PUN/2017 KANAYALAL KOTUMAL ACHHARA 5. DURING THE ASSESSMENT PROCEEDINGS, AO CONSIDERED THE DATE OF REGISTRATION AS SACROSANCT IN MATTERS OF COMPUTATION AN D TAXATION OF THE CAPITAL GAINS ON THIS FLAT AND INVOKED THE PROVISIONS OF SECT ION 50C OF THE ACT. ACCORDINGLY, THE AO CONSIDERED THE SAID SUM OF RS.2 3,11,200/-. 50% OF THE SAID SUM COMES TO RS.11,55,600/- AND THE SAME IS CONSIDERED AS ASSESSEES SHARE FOR THE PURPOSE OF COMP UTING THE SHORT TERM CAPITAL GAINS. THE SHORT TERM CAPITAL GAINS DETAILS OF T HIS TRANSACTION ARE WORKED OUT BY THE AO AT RS.7,41,400/-. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE RELIED ON THE AMENDED PROVISIONS OF SECTION 50C BY THE FINANCE ACT, 2016 W.E.F. 01-04-2017 AND SUBMITTED THAT THE SAID PROVISIONS HAS RETROSPECTIVE EFFECT FROM THE DATE OF INTRODUCTION OF THE SAID SECTION 50C OF THE ACT. THIS SECT ION WAS INCORPORATED W.E.F. 01-04-2003. AO REJECTED THE SAME AS PER THE DISCUSSION IN PARA NO.4 OF THE ASSESSMENT ORDER. ACCORDIN G TO THE AO, THE AMENDMENT IS NOT RETROSPECTIVE. CIT(A) CONFIRMED THE C ONCLUSIONS OF THE AO. CIT(A) CONSIDERED THE ASSESSEES WRITTEN SUBMISS IONS WHICH ARE EXTRACTED IN PARA NO.4 OF HIS ORDER. AGGRIEVED WITH THE S AME, THE ASSESSEE IS IN APPEAL BEFORE US WITH THE GROUNDS EXTRACTED ABOVE. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE EXPLAINED THE AB OVE FACTS OF THE CASE AND SUBMITTED THAT THE CASE OF THE ASSESSEE STANDS CO VERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF AHMEDABAD BENC H OF THE TRIBUNAL IN THE CASE OF DHARAMSHIBHAI SONAMI IN ITA NO.1237/AHD/2013, DATED 30-09-2016 WHERE THE AMENDED PROVISO TO SECTION 50C OF THE ACT IS APPLICABLE FROM THE TIME THE PRO VISIONS OF SECTION 50C ARE BROUGHT INTO THE STATUTE. HE ALSO RELIED ON THE DECISION OF VISAKHAPATNAM BENCH OF THE TRIBUNAL IN THE CASE OF CHAL ASANI NAGA VS. ITO REPORTED IN 48 CCH 0349 (VISAKHAPATNAM). 4 ITA NO.1801/PUN/2017 KANAYALAL KOTUMAL ACHHARA 7. LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDERS OF THE AO AND THE CIT(A). 8. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE SAID ORDERS OF THE TRIBUNAL (SUPRA), WE ARE OF THE OPINION THAT IT IS A D ECIDED ISSUE THAT THE AMENDED PROVISO OF THE PROVISIONS OF SECTION 50C HAVE RETROSPECTIVE APPLICATION RIGHT FROM THE INCEPTION OF THE SAID SECTION 50C OF THE ACT. FURTHER, WE PERUSED THE PROVISIONS OF THE IST PROVISO OF SECTION 50C OF THE ACT AND FIND THE SAME READS AS UNDER : PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXI NG THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESS ED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGREEM ENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATI ON FOR SUCH TRANSFER. FROM THE ABOVE, IT IS EVIDENT THAT THE VALUE TO BE ADOPT ED OR ASSESSABLE ON THE DATE OF AGREEMENT ON THE DATE OF AGR EEMENT MAY BE TAKEN FOR THE PURPOSE OF COMPUTING THE FULL VALUE OF CONSID ERATION IN CASES WHERE DATES OF AGREEMENT IS NOT THE SAME AS THA T OF DATE OF REGISTRATION FOR THE TRANSFER OF A CAPITAL ASSET. THESE PROVISIONS WERE BROUGHT INTO STATUTE BY THE FINANCE ACT, 2016 W.E.F. 01-0 4-2017. HOWEVER, THE SAME ARE INTERPRETED TO HAVE BEEN EFFECTIVE FROM 01-04-2003 THE DATE OF INCEPTION OF SECTION 50C OF THE ACT. 9. IN THIS REGARD, WE PERUSED THE OPERATIONAL PARAS OF TH E ORDER OF THE TRIBUNAL IN THE CASE OF DHARAMSHIBHAI SONAMI (SUPRA) AND THE SAME READS AS UNDER : [9] SO FAR AS THE AMENDMENT TO SECTION 50C BEING RETROSPECTIVE IN EFFECT IS CONCERNED, THERE IS NO DOUBT ABOUT THE LE GAL POSITION. I HOLD THE PROVISOS TO SECTION 50C BEING EFFECTIVE FROM 1ST AP RIL 2003. THIS IS PRECISELY WHAT THE LEARNED COUNSEL HAS PRAYED FOR. IN HIS DETAILED WRITTEN SUBMISSIONS, HE HAS MADE OUT OF A STRONG CASE FOR THE AMENDMENT TO SECTION 50C BEING TREATED AS RETROSPECTIVE AND WITH EFFECT FROM 1ST APRIL 2003. THE PLEA OF THE ASSESSEE IS INDEED WELL TAKEN AND DESERVES 5 ITA NO.1801/PUN/2017 KANAYALAL KOTUMAL ACHHARA ACCEPTANCE. WHAT FOLLOWS IS THIS. THE MATTER WILL N OW GO BACK TO THE ASSESSING OFFICER. IN CASE HE FINDS THAT A REGISTER ED AGREEMENT TO SELL, AS CLAIMED BY THE ASSESSEE, WAS ACTUALLY EXECUTED ON 2 9.6.2005 AND THE PARTIAL SALE CONSIDERATION WAS RECEIVED THROUGH BAN KING CHANNELS, THE ASSESSING OFFICER, SO FAR AS COMPUTATION OF CAPITAL GAINS IS CONCERNED, WILL ADOPT STAMP DUTY VALUATION, AS ON 29.6.2005, OF THE PROPERTY SOLD AS IT EXISTED AT THAT POINT OF TIME. IN CASE THE ASSESSEE IS NOT CONTENT WITH THIS VALUE BEING ADOPTED UNDER SECTION 50C, HE WILL BE A T LIBERTY TO SEEK THE MATTER BEING REFERRED TO THE DVO FOR VALUATION, AGA IN AS ON 29.6.2005, OF THE SAID PROPERTY. AS A COROLLARY THERETO, THE SUBS EQUENT DEVELOPMENTS IN RESPECT OF THE PROPERTY SOLD (E.G. THE CONVERSION O F USE OF LAND) ARE TO BE IGNORED. IT IS ON THIS BASIS THAT THE CAPITAL GAINS WILL BE RECOMPUTED. WITH THESE DIRECTIONS, THE MATTER STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION DE NOVO, AFTER GIVING AN O PPORTUNITY OF HEARING TO THE ASSESSEE AND BY WAY OF A SPEAKING ORDER. I ORDE R SO. CONSIDERING THE SAME, WE ARE OF THE OPINION THAT THE ISSUE IN CONTROVERSY STANDS COVERED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 24 TH DAY OF AUGUST, 2018. SD/- SD/- ( # /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 24 TH AUGUST, 2018. SATISH + - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-9, PUNE 4. THE PR. CIT-5, PUNE 5. , , - ' , / DR, ITAT, SMC BENCH, PUNE. 6. % / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE