Smt. Devindraben I.Barot, Ahmedabad V. The Income tax Officer,Ward-9(2), Ahmedabad

ITA 2220/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1650 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 05-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: M J SHAH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Deemed to accrue or arise in india
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA. NO: 2220/AHD/2012 (ASSESSMENT YEAR: 2006-07) SMT. DEVINDRABEN I. BAROT 246, KARNAV NR. JYOTI PLAZA, SHYAMAL CROSS ROAD, SATELLITE, AHMEDABAD-380015 V/S INCOME TAX OFFICER, WARD- 9 (2), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ACQPB 2955H APPELLANT BY : SHRI M. J. SHAH, AR RESPONDENT BY : SHRI NARENDRA SINGH, SR. D.R . ( )/ ORDER DATE OF HEARING : 13 -04-201 6 DATE OF PRONOUNCEMENT : 06 -05-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)- XV, AHMEDABAD DATED 13.08.2012 PERTAINING TO A.Y. 2 006-07. ITA NO2220/A HD/2012 . A.Y. 2006-0 7 2 2. THE SUBSTANTIVE GRIEVANCE OF THE ASSESSEE READ AS U NDER:- 1. THE C.I.T.(APPEALS) ERRED IN UPHOLDING THE ADDITION OF RS. 7,66,666/- AS DEEMED INCOME U/S. 50C OF THE I.T. ACT. 1.1 THE C.I.T.(APPEALS) FAILED TO APPRECIATE THAT SEC.5 0C OF THE ACT DOES NOT APPLY IN THE CASE OF THE ASSESSEE. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE ENTERED INTO BANAKHAT FOR LAND AT VILLAGE VADAJ HAVING AREA OF 4 89 SQUARE METERS AT THE RATE OF 605 PER SQUARE METER ON 24.09.1993. THI S BANAKHAT WAS REGISTERED WITHOUT POSSESSION OF THE LAND ON 27.10. 1993. ON 22.11.1993, ASSESSEE ENTERED INTO ANOTHER BANAKHAT OF THE AFOREMENTIONED LAND WITH SHRI VIMAL R. AMBANI AND I NDRAVADAN BAROT @ 1000 PER SQUARE METER. THIS BANAKHAT WAS REGISTER ED ON 19.03.1994 WITHOUT GIVING ANY POSSESSION OF THE LAN D. ON 19.04.2005, SHRI PRAFULCHANDRA P. PATEL (HUF) FROM WHOM THE ASS ESSEE ENTERED INTO BANAKHAT ON 24.09.1993 (SUPRA) ENTERED INTO A SALE TRANSACTION WITH SHRI VIMAL R. AMBANI AND INDRAVADAN BAROT TO W HOM THE ASSESSEE HAD ENTERED INTO BANAKHAT ON 22.11.1993 (S UPRA). THIS SALE DEED WAS REGISTERED. 4. THE A.O WAS OF THE FIRM BELIEF THAT IT IS THE ASSES SEE WHO HAS SOLD THE PROPERTY AND, THEREFORE, TAKING A LEAF OUT OF THE P ROVISIONS OF SECTION 50C OF THE ACT, THE A.O ADOPTED THE STAMP DUTY VALU E OF THE REGISTERED SALE DEED AS THE FULL VALUE OF CONSIDERA TION AND RE-COMPUTED THE CAPITAL GAINS. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. BEFORE US, THE LD. COUNSEL FOR THE ASSESSE E VEHEMENTLY STATED THAT WHAT HAS BEEN TRANSFERRED IS A RIGHT AND, THER EFORE, PROVISIONS OF SECTION 50C OF THE ACT ARE NOT AT ALL APPLICABLE. I T IS THE SAY OF THE LD. ITA NO2220/A HD/2012 . A.Y. 2006-0 7 3 COUNSEL THAT EVEN IN THE IMPUGNED TRANSACTION THE S ELLER IS SHRI PRAFULCHANDRA P. PATEL (HUF) AND THE ASSESSEE IS ON LY A CONSENTING PARTY AND BY GIVING CONSENT, THE ASSESSEE HAS ONLY TRANSFERRED HIS RIGHTS. THE LD. D.R STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 6. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTUA L MATRIX AS MENTIONED ELSEWHERE. THERE IS NO DENYING THAT THE P URCHASE AND SALE TRANSACTION TOOK PLACE BETWEEN SHRI PRAFULCHANDRA P . PATEL AND SHRI VIMAL R. AMBANI/ INDRAVADAN BAROT. IT IS ALSO AN UN DISPUTED FACT THAT FOR THE IMPUGNED LAND, ASSESSEE HAD ENTERED INTO A BANAKHAT ON 24.09.1993 WITH SHRI PRAFULCHANDRA PATEL SOLD THE L AND, ASSESSEE HAD ONLY RELINQUISHED HIS RIGHT IN PROPERTY. 7. FROM THE READING OF SECTION 50C, IT IS EVIDENT THAT SECTION 50C IS A DEEMING PROVISION AND IT EXTENDS ONLY TO LAND OR BU ILDING OR BOTH. SECTION 50C CAN COME INTO PLAY ONLY IN A SITUATION WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER BY AN APPELLANT OF A CAPITAL ASSET, BEING LAND OR BUILDIN G OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. IT IS SETTLED LEGAL PROPOSITION THAT DEEMING PROVISION CAN BE APPLIED O NLY IN RESPECT OF THE SITUATION SPECIFICALLY GIVEN AND, HENCE, CANNOT GO BEYOND THE EXPLICIT MANDATE OF THE SECTION. CLEARLY, THEREFORE , IT IS ESSENTIAL FOR APPLICATION OF SECTION 50C THAT THE TRANSFER MUST B E OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH. IF THE CAPITAL ASSE T UNDER TRANSFER CANNOT BE DESCRIBED AS LAND OR BUILDING OR BOTH, THEN SECTION 50C WILL CEASE TO APPLY. ITA NO2220/A HD/2012 . A.Y. 2006-0 7 4 8. FROM THE FACTS OF THE CASE AS MENTIONED ELSEWHERE, IT IS SEEN THAT THE ASSESSEE HAS TRANSFERRED ONLY RIGHTS IN THE IMPUGNE D LAND WHICH CANNOT BE EQUATED TO LAND OR BUILDING OR BOTH. THER EFORE, IN OUR UNDERSTANDING OF THE FACT QUA THE PROVISIONS OF SEC TION 50C, THE ACTION OF THE REVENUE AUTHORITIES IS ERRONEOUS. WE, THEREF ORE, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O TO DE LETE THE ADDITION OF RS. 7,66,666/- AD DEEMED INCOME U/S. 50C OF THE ACT . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 9. BEFORE PARTING, IT WAS BROUGHT TO THE NOTICE THAT T HE CBDT HAS ISSUED CIRCULAR NO. 549, DATED 31.10.1989 BY WHICH IT HAS ISSUED DIRECTIONS THAT TOTAL INCOME OF THE ASSESSEE CANNOT BE LESS TH AN THE RETURNED INCOME. THE HONBLE HIGH COURT OF GUJARAT IN THE CA SE OF GUJARAT GAS CO. LTD. 245 ITR 84 HAS HELD THAT THE ASSESSING OFF ICER IS NOT BOUND BY THE SAID CIRCULAR AS THE CBDT CANNOT ISSUE INSTRUCT IONS TO THE INCOME TAX AUTHORITY TO MAKE A PARTICULAR ASSESSMENT OR TO DISPOSE OF A PARTICULAR CASE IN A PARTICULAR MANNER AS WELL AS N OT TO INTERFERE WITH THE DISCRETION OF THE COMMISSIONER IN EXERCISE OF H IS APPELLATE FUNCTIONS. ACCORDINGLY, THE CIRCULAR WAS HELD TO BE ULTRA VIRES. WE ORDER ACCORDINGLY. ORDER PRONOUNCED IN OPEN COURT ON 06 - 05 - 2016. SD/- SD/- (KUL BHARAT) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: -