Upendra Maheshwari, CHENNAI V. ITO, CHENNAI

ITA 1900/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8143 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 15-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MURALI MOHAN
• Assessee Lawyers: G BASKAR
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C; 54F; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO. 1900/MDS/2016 / ASSESSMENT YEAR : 2009 - 10 SHRI UPENDRA MAHESHWARI, NO.3, 1 ST MAIN ROAD, CIT COLONY, MYLAPORE, CHENNAI 4. PAN : AADPV3404E V. INCOME TAX OFFICER, NON-CORPORATE WARD 2(1), CHENNAI 34. ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI G. BASKAR, ADVOCATE /RESPONDENT BY : SHRI MURALI MOHAN, JCIT /DATE OF HEARING : 15.12.2016 /DATE OF PRONOUNCEMENT : 05.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNA I DATED 04.03.2016 AND PERTAINS TO THE ASSESSING OFFICER 20 09-10. 2 I.T.A. NO.1900/MDS/2016 2. SHRI G. BASKAR, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERATION IS COM PUTATION OF CAPITAL GAIN. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE ENTERED INTO AN AGREEMENT FOR SALE OF LAND ON 10.02.2007. THE SAL E CONSIDERATION FIXED IN THE AGREEMENT WAS 80,15,000/-. SINCE, THERE WAS A MISTAKE IN THE PARENT DOCUMENT, THE PROPOSED BUYER REFUSED TO GO AHEAD THEREAFTER. THE ASSESSEE GAVE AN UNDERTAKIN G THAT HE WILL RECTIFY THE PARENT DOCUMENT BY A REGISTERED DEED . THEREFORE THE ASSESSEE PERSUADED THE ORIGINAL VENDOR TO RECTIFY T HE ERROR IN THE SALE DEED. IN FACT, A RECTIFICATION DEED WAS EXEC UTED BY THE ORIGINAL BUYER OF THE PROPERTY AND A SALE DEED DATED 06.05.2 008 WAS ALSO REGISTERED. IN THE MEAN TIME, THE STATE GOVERNMEN T REVISED THE GUIDELINE VALUE OF THE LAND W.E.F. 01.08.2007. INF ACT, THE GUIDELINE VALUE OF THE LAND AT THE TIME OF REGISTRATION OF PR OPERTY WAS 1,20,00,000/-. THE PURCHASER THOUGH PAID THE STAMP DUTY ON THE REVISED GUIDELINE VALUE, THE SALE CONSIDERATION REM AINS TO BE 80,15,000/- . ACCORDING TO THE LD. COUNSEL, THE AS SESSEE HAS INVESTED A SUM OF 78,06,426/- IN A FLAT FROM AMOUNT OUT OF SALE CONSIDERATION. THE ASSESSING OFFICER REFERRED THE VALUATION OF THE LAND TO THE VALUATION OFFICER. THE VALUATION OFFI CER FIXED THE VALUE 3 I.T.A. NO.1900/MDS/2016 OF THE LAND AT 91,50,000/- AS AGAINST THE SALE CONSIDERATION OF 80,15,000/-. THE ASSESSING OFFICER ADOPTED THE EN TIRE VALUE ESTIMATED BY THE VALUATION OFFICER AS CONSIDERATION OF THE PROPERTY AND ALLOWED EXEMPTION ONLY TO THE EXTENT OF 37,90,879/- BEING THE AMOUNT PAID BY THE ASSESSEE TILL 30.09.2009 BEING T HE DUE DATE FOR FILING THE RETURN OF INCOME. 3. ACCORDING TO THE LD. COUNSEL, THE AGREEMENT FOR SALE OF PROPERTY WAS EXECUTED ON 10.02.2007 AND THE SALE CO ULD NOT BE COMPLETED IMMEDIATELY BECAUSE THERE WAS A DEFECT IN THE PARENT DOCUMENT WHICH NEEDS TO BE RECTIFIED. IN FACT, THE SALE DEED WAS EXECUTED ON 06.05.2008 AFTER GREAT PERSUASION. AC CORDING TO THE LD. COUNSEL, THE GUIDELINE VALUE OR MARKET VALUE WH ICH EXISTS ON THE DATE OF AGREEMENT ALONE COULD BE TAKEN AND NOT THE VALUE AS ON DATE OF EXECUTION OF SALE DEED. 4. REFERRING TO SECTION 54/54F OF THE INCOME TAX AC T, 1961, (IN SHORT THE ACT) THE LD. COUNSEL SUBMITTED THAT THE ACTUAL CONSIDERATION RECEIVED ALONE CAN BE CONSIDERED AND NOT THE NOTIONAL VALUE. PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN ITA NO.402/MDS/2015 DATED 29.05.2015, THE LD. COUNSEL F OR THE 4 I.T.A. NO.1900/MDS/2016 ASSESSEE SUBMITTED THAT THE NOTIONAL VALUE CANNOT B E CONSIDERED FOR THE PURPOSE OF DETERMINING THE CAPITAL GAIN. REFE RRING TO SECTION 54F OF THE ACT, THE LD. COUNSEL SUBMITTED THAT THE ASSESSING OFFICER HAS TAKEN THE PAYMENT MADE UP TO THE DATE OF FILING OF THE RETURN OF INCOME UNDER SECTION 139 (1) OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE DUE DATE FOR FILING OF RETURN OF INCOM E UNDER SECTION 139(4) OF THE ACT OUGHT TO HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER. THE LD. COUNSEL FURTHER SUBMITTED THAT T HE AMOUNT INVESTED UP TO DUE DATE FOR FILING RETURN OF INCOME UNDER SE CTION 139(4) HAS TO BE CONSIDERED FOR ALLOWING DEDUCTION. 5. ON THE CONTRARY, SHRI MURALI MOHAN, THE LD. DEPA RTMENTAL REPRESENTATIVE SUBMITTED THAT FOR THE PURPOSE OF CO MPUTING CAPITAL GAIN, THE DATE ON WHICH THE SALE DEED WAS REGISTERE D HAS TO BE TAKEN IN TO CONSIDERATION AND NOT THE DATE OF AGREE MENT. THE ASSESSEE MAY ENTER IN TO AN AGREEMENT FOR SALE OF T HE PROPERTY. HOWEVER, IT MAY NOT BE COMPLETED ALWAYS. THERE MA Y BE A POSSIBILITY OF CANCELLATION OF AGREEMENT FOR VARIOU S REASONS. THEREFORE FOR ALL PRACTICAL PURCHASE, THE DATE OF E XECUTION OF THE SALE DEED HAS TO BE TAKEN IN TO CONSIDERATION FOR DETERM INING THE VALUE OF THE PROPERTY. ADMITTEDLY, THE SALE DEED WAS EXECU TED ON 5 I.T.A. NO.1900/MDS/2016 06.05.2008. THEREFORE THE VALUATION OFFICER HAS RI GHTLY CONSIDERED THE GUIDELINE VALUE WHICH EXISTS ON THE DATE OF EXE CUTION OF THE SALE DEED. 6. REFERRING TO THE CLAIM UNDER SECTION 54F OF THE ACT, THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE WAS EXPECTED TO UTILIZE THE SALE PROCEEDING BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME UNDER SECTION 139 (1) OF THE A CT. ACCORDING TO THE LD. D.R. DUE DATE MEANS THE DATE PRESCRIBED UND ER SECTION 139(1) AND NOT UNDER 139 (4). THEREFORE THE ASSES SING OFFICER HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE TO THE EX TENT OF THE INVESTMENT MADE TILL THE DUE DATE OF FILING THE RET URN OF INCOME UNDER SECTION 139 (1) OF THE ACT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTE DLY, THE ASSESSEE ENTERED INTO AN AGREEMENT FOR SALE OF LAND ON 10.02 .2007. WHEN THE ASSESSEE ENTERED INTO AN AGREEMENT FOR SALE OF PROPERTY, EVEN THOUGH IT MAY NOT ALWAYS GO TO ITS LOGICAL CONCLUSI ON OF EXECUTION OF SALE DEED, THE PARTIES TO THE AGREEMENT HAS A RIGHT TO ENFORCE THE AGREEMENT BEFORE THE COURT OF LAW. IN THE CASE BE FORE US, 6 I.T.A. NO.1900/MDS/2016 CONSEQUENT TO THE AGREEMENT DATED 10.02.2007, THE S ALE DEED WAS EXECUTED ON 06.05.2008. DELAY FOR EXECUTION OF SAL E DEED WAS ADMITTEDLY THERE WAS AN ERROR IN THE PARENT DOCUMEN T WHICH NEEDS TO BE RECTIFIED. THEREFORE, THIS TRIBUNAL IS OF C ONSIDERED OPINION THAT WHEN THE ASSESSEE AGREED TO SELL A PROPERTY AND ENT ERED INTO AN AGREEMENT FOR SALE, HE CANNOT GO BACK FROM THE SALE CONSIDERATION REFERRED IN THE AGREEMENT FOR SALE. SUBSEQUENT RE VISION OF GUIDELINE VALUE OR INCREASE IN MARKET VALUE MAY NOT AFFECT THE AGREEMENT ENTERED IN TO BETWEEN THE PARTIES. THE FAIR MARKET VALUE IS NOT A CONSTANT FIGURE. SUB-REGISTRAR OF THE RE GISTRATION DEPARTMENT WAS EXPECTED TO DETERMINE THE MARKET VAL UE OF THE PROPERTY BY TAKING IN TO CONSIDERATION OF VARIOUS F ACTORS INCLUDING THE GUIDELINE VALUE. THE GUIDELINE VALUE IS ONLY TO G UIDE THE SUB- REGISTRAR TO DETERMINE THE MARKET VALUE OF THE PROP ERTY FOR THE PURPOSE OF LEVYING STAMP DUTY. GUIDELINE VALUE MA Y NOT REFLECT THE MARKET VALUE IN ALL CASES. 8. IN THIS CASE AS ON 10.02.2007, THE GUIDELINE VAL UE OF THE PROPERTY WAS NOT MORE THAN 80,15,000/-, THE PRICE AGREED BETWEEN THE PARTIES. ON 01.08.2007 THE GUIDELINE VALUE WA S REVISED TO 1,20,00,000/-. SINCE THE ASSESSEE AGREED TO SELL THE PROPERTY FOR 7 I.T.A. NO.1900/MDS/2016 80,15,000/- ON 10.02.2007 WHICH IS MUCH MORE THAN T HE GUIDELINE VALUE WHICH EXISTED ON 10.02.2007, THIS TRIBUNAL IS OF CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS TO ACCEPT TH E SALE CONSIDERATION OF 80,15,000/- UNDER SECTION 50C OF THE ACT. IN OTHER WORDS, THE GUIDELINE VALUE WHICH EXISTS ON TH E DATE OF AGREEMENT FOR SALE, HAS TO BE TAKEN IN TO CONSIDERA TION FOR THE PURPOSE OF DETERMINING THE FAIR MARKET VALUE UNDER SECTION 50C OF THE ACT. THEREFORE THIS TRIBUNAL IS UNABLE TO UPHO LD THE ORDERS OF THE LOWER AUTHORITIES. 9. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THE SALE CONSIDERATION AT 80,15,000/- AS AGREED BETWEEN THE PARTIES IN THE AGREEMENT FOR SALE DATED 10.02.2007. 10. NOW COMING TO THE CLAIM OF EXEMPTION UNDER SECT ION 54F OF THE ACT. THE PARLIAMENT IN THEIR WISDOM THOUGHT IT FIT TO GRANT EXEMPTION IN RESPECT OF THE CAPITAL GAIN WHICH WAS USED FOR CONSTRUCTION OR PURCHASE OF PROPERTY TILL THE DUE D ATE FOR FILING OF RETURN OF INCOME UNDER SECTION 139 (1) OF THE ACT. THE ASSESSEE COULD NOT USE THE SALE CONSIDERATION WITHIN THE DUE DATE UNDER 8 I.T.A. NO.1900/MDS/2016 SECTION 139 (1) OF THE ACT, THE SAME SHALL BE DEPOS ITED IN ANY ONE OF THE CAPITAL GAIN ACCOUNT. THE APEX COURT WHILE CONSIDERING THE DUE DATE HELD THAT THE DUE DATE MEANS, THE DATE P RESCRIBED UNDER SECTION 139 (1) OF THE ACT. THE APEX COURT IN THE CASE OF PRAKASH NATH KHANNA AND ANOTHER V CIT (2004), 266 ITR 1 (S C) HAS EXAMINED THESE ISSUE AND FOUND THAT THE DUE DATE ME ANS THE DATE UNDER SECTION 139 (1) OF THE ACT AND NOT THE DATE UNDER SECTION 139 (4) OF THE ACT. 11. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF CONSI DERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE WITH REGARD TO THE CAPITAL GAIN UTILIZED F OR PURCHASING THE FLAT TILL THE DUE DATE FOR FILING THE RETURN OF INC OME UNDER SECTION 139 (1) OF THE ACT. THEREFORE THIS TRIBUNA L DID NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AU THORITIES. ACCORDINGLY, THE SAME IS CONFIRMED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. 9 I.T.A. NO.1900/MDS/2016 ORDER PRONOUNCED ON 5 TH JANUARY, 2017 AT CHENNAI. SD/- SD/- ( . . ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, /DATED, THE 5 TH JANUARY, 2017. JR. /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A)-2, CHENNAI 4. /CIT 5. /DR 6. ! /GF.