SMT.SHYAMALI DAS, Kolkata V. ACIT, Kolkata

ITA 211/KOL/2023

AI Insights

Smt. Shyamali Das appealed against the order of the Commissioner of Income Tax (Appeals), which upheld the Assessing Officer's decision to treat the capital gains from the sale of four flats as short-term capital gains. The flats were sold in the financial year 2012-13, and the land on which they were built was purchased in 2009. The Assessing Officer added Rs. 17,90,550 to the assessee's income, treating it as short-term capital gain, based on the difference between the declared sale consideration and the stamp duty valuation. The Tribunal, however, directed that the gains should be treated as long-term capital gains, given the holding period of the land.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129045 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 26-04-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 14-03-2023
• Other Referred Cases: Smt. Sita Bai Khetan \/vs.- ITO, Shri Sunil Kumar Agarwal \/vs.- CIT, Siliguri
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 50C; 234B; 143(2)

Judgement Text

ITA No. 211/KOL/2023 Assessment Year : 2013-2014 Smt. Shyamali Das 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, KOLKATA Before Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member I.T.A. No. 211/KOL/2023 Assessment Year: 2013-2014 Smt. Shyamali Das,................................Appellant 8A, Lake Road, Kolkata-700029 [PAN: ADEPD4524H] -Vs.- Assistant Commissioner of Income Tax,....Respondent Circle-30, Kolkata, 2, Gariahat Road (South), Dhakuria, Kolkata-700068 Appearances by: Shri Soumitra Choudhury, Advocate, appeared on behalf of the assesseee Shri P.P. Barman, Addl. CIT, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing : April 27, 2023 Date of pronouncing the order : May 23 rd , 2023 O R D E R Per Shri Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi ITA No. 211/KOL/2023 Assessment Year : 2013-2014 Smt. Shyamali Das 2 dated 6 th February, 2023 passed for assessment year 2013-14. 2. The assessee has taken seven grounds of appeal, which read as under:- (1) For that on the facts of the case, the order passed by the Ld. C.I.T.(A) dated 06.02.2023 which is completely arbitrary, unjustified and illegal. (2) For that on the facts of the case, the Ld. C.I.T.(A) was wrong in not justified computing the sale consideration of long term capital gain Rs.1,56,77,990/-, but the actual sale consideration is Rs.1,38,87,440/-, as such his finding is completely arbitrary, unjustified and illegal. (3) For that on the facts and in the circumstances of the case, the Ld. CIT(A] was wrong in not justified in making additions of Rs.17,90,550/- u/s. 50C of the I.T. Act which is completely arbitrary, unjustified and illegal. (4) For that on the facts of the case, that valuation is a matter of estimation and some degree of difference is bound to be there, and the difference between FMV and the declared sale consideration is less than 10%, so the Ld. CIT(A) cannot be sustained the addition. (5) For that on the facts of the case, the Ld. CIT(A) was wrong in not considering the facts that the assessee has sold 4 properties and difference between purchase value and registering authority value of Rs.17,90,550/-, therefore, the A.O. should referred the matter to Departmental Valuation Officer' Cell for valuation report as per section 50C(2) of the I.T. Act covered by various Court’s Judgment. (6) For that the interest charged u/s. 234B and 234C are mechanically wrong & illegal. (7) For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal. 3. Brief facts of the case are that the assessee has filed her return of income on 04.12.2013 declaring net taxable income of Rs.1,49,08,060/-. The case of the assessee was ITA No. 211/KOL/2023 Assessment Year : 2013-2014 Smt. Shyamali Das 3 selected for scrutiny assessment and a notice under section 143(2) was issued and served on 05.09.2014. On scrutiny of the accounts, it revealed to the ld. Assessing Officer that assessee has taxable capital gain income. In paragraph 3 of the assessment order, he observed that the assessee has sold four flats for a consideration of Rs.2,37,00,000/-. However, for the purpose of stamp duty valuation, its value has been determined at Rs.2,55,90,550/-. According to the ld. Assessing Officer, the assessee has two-third shares. He worked out an amount of Rs.17,90,550/- being taxable in the hands of the assessee on this account. His discussion reads as under:- “Cost of Purchase of these Flats being 2/3 rd Share had been taken to Rs.99,12,560/-; Hence total capital gain would be -( Rs.2.55.90.550/- - Rs.99,12,560/-) Rs. 1,56.77.990/-. Since, assessee has already shown capital gain of Rs. 1.38,87.440/-; hence; remaining amount of capital gain of Rs.17,90,550/- (Rs..1,56,77,990/- - Rs.1,38,87,440/-) is to be added to the total income of the assessee: treating it as short term capital gain. Accordingly, addition of Rs.l7,90,550/- is being hereby made to the total income of the assessee. Further, the land on which constructions of Flats were made was purchased through indentured sale deed dated 16.06.2009 (i.e. during the F.Y.-2009-10) and all the four flats were sold and registered before the registering authorities through indentured agreement of Sale during the F.Y. - 2012-13. Hence, there has arisen a short term capital gain. [Addition: Rs.17,90,550/-“ 4. Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee. ITA No. 211/KOL/2023 Assessment Year : 2013-2014 Smt. Shyamali Das 4 5. Before us, ld. Counsel for the assessee has filed written submission running into 8 pages. A perusal of this submission would reveal that basically he has raised two-fold of contentions. In the first-fold of contention, he submitted that the ld. Assessing Officer has observed that this income is to be assessed as a short-term capital gain. He pointed out that in paragraph 3 of the assessment order, ld. Assessing Officer has himself observed that the land on which these flats have been constructed was purchased on 16.06.2009 and these flats were sold in F.Y. 2012-13 i.e. A.Y. 2013-14. 6. We have duly considered this fold of contention. We have extracted the finding of the ld. Assessing Officer. In the finding, ld. Assessing Officer himself admitted that the land was purchased on 16.06.2019. He has nowhere recorded any finding as to when the flats are constructed for considering the gain taxable as a short-term capital gain. Since the land was retained by the assessee from 2009 to F.Y. 2012-13, it is more than three years. Hence on its transfer, the capital gain tax is assessable under the head “long-term capital gain”. The ld. Assessing Officer has not segregated the construction portion and has not calculated the gain in that manner, therefore, it is difficult to bifurcate the amount for taxability under the head “short-term capital gain” or “long-term capital ITA No. 211/KOL/2023 Assessment Year : 2013-2014 Smt. Shyamali Das 5 gain”. We direct the ld. Assessing Officer to treat the gain on sale of four flats as a long-term capital gain. 7. In the next fold of submission, ld. Counsel for the assessee contended that sale consideration disclosed by the assessee in the sale deed is of Rs.2,37,00,000/-, whereas stamp duty valuation authorities have determined the value at Rs.2,55,90,550/-. The variation between the sale consideration disclosed by the assessee, vis-a-vis adopted by the stamp duty valuation authorities is less than 10% and hence stamp duty valuation authorities value ought not to be taken by the ld. Assessing Officer. For this proposition, he relied upon the judgment of ITAT in the case of Smt. Sita Bai Khetan –vs.- ITO in ITA No. 826/JP/2013. He also made reference to other decision particularly of Hon’ble Calcutta High Court in the case of Shri Sunil Kumar Agarwal –vs.- CIT, Siliguri reported in (2014) 225 taxman 211 (Cal.). However, all these decisions are on the point, where a reference to the valuation authority under section 50C, sub-section (2) has been made and in the valuation, if there is difference of less than 10% between the value determined by the DVO, vis-a-vis one disclosed by the assessee in its sale consideration, then sale consideration disclosed by the assessee is not to be disturbed, but no such reference was sent in the present case. When we put it to the Ld. Counsel for the assessee, ITA No. 211/KOL/2023 Assessment Year : 2013-2014 Smt. Shyamali Das 6 then he expressed that it be not remitted back to the ld. Assessing Officer for making a reference to the DVO under section 50C(2), because that will be very cumbersome exercise upon the assessee considering the smallness of the amount, if any, to be taxable under the head “long-term capital gain”. 8. In view of the above discussion, we do not find any merit in any other alternative ground raised by the assessee. The appeal of the assessee is partly allowed with a direction to the ld. Assessing Officer that capital gain, if any, arises to the assessee, then such gain be taxed under the head “long-term capital gain”. 9. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on May 23 rd , 2023. Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President(KZ) Kolkata, the 23 rd day of May, 2023 Copies to : (1) Smt. Shyamali Das, 8A, Lake Road, Kolkata-700029 ITA No. 211/KOL/2023 Assessment Year : 2013-2014 Smt. Shyamali Das 7 (2) Assistant Commissioner of Income Tax, Circle-30, Kolkata, 2, Gariahat Road (South), Dhakuria, Kolkata-700068 (3) Commissioner of Income Tax (Appeals), Income Tax Department, National Faceless Appeal Centre (NFAC), Delhi (4) Commissioner of Income Tax , (5) The Departmental Representative (6) Guard File TRUE COPY By order Assistant Registrar Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.