Shri Mahesh A. Vora, Ahmedabad V. The Income Tax Officer, Ward-3(1)(3), Ahmedabad

ITA 2217/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8344 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 29-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKIT CHOKSI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C

Judgement Text

, ,L ,L,L ,L- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO. 2217/AHD/2016 / ASSESSMENT YEAR: 2012-13 MAHESH A. VORA, 203, AKSHAR ARCADE, OPP. MEMNAGAR FIRE STATION, NARANPURA, AHMEDABAD 380 052 VS INCOME TAX OFFICER, WARD 3(1)(3), AHMEDABAD. ./ ./ PAN/GIR NO. : AAUPV 5856 H ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI ANKIT CHOKSI, CA ASSESSEE BY : SHRI UMA SHANKAR PRASAD, SR. D.R !' / DATE OF HEARING : 11/04/2018 #$%& !' /DATE OF PRONOUNCEMENT : 16/05/2018 ORDER THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-9, AHMEDABAD DATED 08.07.2016 PASSED FOR ASSESSMENT YEAR 2012-13 . 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT L D. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.19,19,440/- AS CAP ITAL GAIN. ITA NO.2217/AHD/2016 MAHESH A. VORA VS. ITO A.Y. 2012-13 - 2 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL, HE HAS FILED HIS RETURN OF INCOME ON 31.07.2012 DECLARING TOTAL INCOME OF RS.19,05,293/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT AND A NOTICE U/S 143(2) OF THE INCOME TA X ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. THE LEARNED ASSESSING OFFICER HAD RECEIVED INFORMATION FROM AIR WING EXHIBITING THE F ACT THAT ASSESSEE HAS SOLD IMMOVABLE PROPERTY OF RS.7,50,000/- WHOSE VALU E FOR THE PURPOSE OF PAYMENT OF STAMP DUTY WAS DETERMINED BY THE STAM P DUTY VALUATION AUTHORITIES AT RS.19,19,440/-. THE STAMP DUTY WAS P AID AT RS.95,000/-. THE ASSESSING OFFICER HAS CONFRONTED THE ASSESSEE A S TO WHY FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN, SALE CONSIDE RATION OF THE IMMOVABLE PROPERTY BE NOT DEEMED EQUAL TO THE VALUE ON WHICH STAMP DUTY WAS PAID AS CONTEMPLATED IN SECTION 50C OF THE INCOME TAX ACT. IN RESPONSE TO THE QUARRY OF ASSESSING OFFICER, IT WAS CONTENDED BY THE ASSESSEE THAT SINCE 19.02.1983 HE IS PARTNER WITH S HARE OF PROFIT/LOSS OF 51% IN A PARTNERSHIP FIRM SHAKTI PAINTS MANUFACTUR ING COMPANY. SMT JASHODABEN D DANI WAS HAVING PROFIT OF SHARE AT 49%. SHE EXPIRED AND THERE IS NO KNOWLEDGE OF WHERE ABOUT OF LEGAL REPRE SENTATIVE OF SMT. JASHODABEN D. DANI. THE ERSTWHILE PARTNERS OF THE FI RM FORMED IT ON 01.04.1962. THE ERSTWHILE PARTNERS ACQUIRED THE PRO PERTY UNDER CONSIDERATION ON 98 YEARS LEASE PERIOD. THROUGH AGR EEMENT DTD. 20.09.1975, THE PROPERTY WAS GIVEN ON RENT BY THE F IRM AND THE POSSESSIONS OF THE SAID PROPERTY WERE WITH THE LESS EE. SINCE, IT WAS A RENTED PROPERTY THEREFORE, THERE WAS NO INDEPENDENT BUYER AND ASSESSEE ITA NO.2217/AHD/2016 MAHESH A. VORA VS. ITO A.Y. 2012-13 - 3 HAS SOLD IT TO THE LESSEE. ON ACCOUNT OF THIS ENCUM BRANCE, THE VALUE OF THE PROPERTY WAS FOR LESS AND THAT IS WHY ASSESSEE HAS SOLD IT FOR RS.7,50,000/-. THE ASSESSEE MADE A PRAYER THAT VALU ATION OF THE PROPERTY BE DONE FROM DVO AND THEREAFTER, CAPITAL GAIN BE CO MPUTED. LD. ASSESSING OFFICER DID NOT MAKE A REFERENCE TO THE D VO AND ADOPTED THE VALUE OF THE PROPERTY EQUIVALENT TO THE ONE DETERMI NED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. IN OTHER WORDS, HE TOOK T HE VALUE AT RS.19,19,440/- AND ON THIS VALUE, HE COMPUTED THE L ONG TERM CAPITAL GAIN ASSESSABLE IN THE HANDS OF THE ASSESSEE. 4. ON APPEAL, LD. CIT(A) CONCUR WITH THE ASSESSING OFFICER. HOWEVER, LEARNED FIRST APPELLANT AUTHORITY HAS ADMI TTED IN PARAGRAPH NO.4.3 THAT ASSESSEE REQUESTED THE ASSESSING OFFICE R TO GET THE VALUATION OF PROPERTY DONE BEFORE ADOPTING STAMP DUTY VALUATI ON AS THE SALE CONSIDERATION OF THE PROPERTY. LD. CIT(A) HAS OBSER VED THAT THERE IS NO CHOICE WITH THE ASSESSING OFFICER EXCEPT TO ADOPT T HE VALUATION ON WHICH STAMP DUTY WAS PAID. 5. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 50C PROVIDES THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY FOR THE PURPOS E OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O ADOPTED OR ASSESSED ITA NO.2217/AHD/2016 MAHESH A. VORA VS. ITO A.Y. 2012-13 - 4 SHALL FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION. IN OTHER WORDS, FULL CONSIDERATION M ENTIONED IN SECTION 48 IS TO BE REPLACED BY THE CONSIDERATION ON WHICH VAL UE OF THE PROPERTY WAS ADOPTED FOR THE PURPOSE OF PAYMENT OF STAMP DUT Y. HOWEVER, SUB- SECTION (2) OF SECTION 50C PROVIDES THAT WHERE (A) THE ASSESSEE CLAIMS BEFORE AO THAT VALUE ADOPTED OR ASSESSED OR ASSESSA BLE BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS T HE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; OR SUCH VALUE HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION BEFORE ANY AUTHO RITY OR COURT, THE AO MAY REFER THE VALUATION OF THE CAPITAL ASSETS TO A VALUATION OFFICER. IT IS PERTINENT TO OBSERVE THAT THE LD.AO OUGHT TO HAVE G IVEN AN OPPORTUNITY TO THE ASSESSEE FOR MAKING AN APPLICATION FOR THE P URPOSE OF SECTION 50C(2) OF THE ACT. WHEN THE ASSESSEE HAS DISPUTED A DOPTION OF VALUE EQUIVALENT TO THE AMOUNT ON WHICH STAMP DUTY WAS PA ID, THEN THE LD.CIT(A) ITSELF OUGHT TO HAVE CALLED FOR A REPORT UNDER SECTION 50C(2) OF THE ACT. THE FAILURE OF THE LD. REVENUE AUTHORITIES FOR NOT PROVIDING ASSESSEE AN OPPORTUNITY FOR GETTING THE VALUE OF TH E CAPITAL ASSET DETERMINED BY THE DVO IS AN IRREGULARITY WHICH DESE RVES TO BE RECTIFIED. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE; SET ASIDE BOTH THE ORDERS AND RESTORE THIS ISSUE TO THE FILE OF THE AO FOR RE -ADJUDICATION. THE LD.AO SHALL MAKE REFERENCE UNDER SECTION 50C(2) TO THE DV O AND OBTAIN REPORT OF THE DVO FOR DECIDING THE VALUE REQUIRED TO BE DEEMED AS FULL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTIC AL PURPOSE. ITA NO.2217/AHD/2016 MAHESH A. VORA VS. ITO A.Y. 2012-13 - 5 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 16 TH MAY 2018 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 16/05/2018 PRITI YADAV, SR.PS $% & ''() *$)' / COPY OF THE ORDER FORWARDED TO : 1. ' ( / THE APPELLANT 2. )* ( / THE RESPONDENT. 3. +,-! .! / CONCERNED CIT 4. .! (' ) / THE CIT(A) 5. 123 )!,- , ' ' ',-& , / DR, ITAT, AHMEDABAD. 6. 34 5 / GUARD FILE. $% + / BY ORDER, ,/ - (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION- 15/05/2018 (DICTATION-PAD 2 PAGES ATTACHED AT THE END OF THI S FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 15/05/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.-. 16/05/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 16/05/2018 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER