Shri Vijay Vasudevan, CHENNAI V. ITO, CHENNAI

ITA 2241/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8222 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 27-07-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: G BASKAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 143(3); 50C; 234B; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , !.. # $% , & '( ) [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER ] ./ I.T.A.NO.2241/MDS/2016 / ASSESSMENT YEAR : 2003-04 SHRI VIJAY VASUDEVAN ASWINI NO.46, ELDAMS ROAD TEYNAMPET CHENNAI 600 018 VS. THE INCOME TAX O FFICER (OSD) COMPANY CIRCLE I(4) CHENNAI [PAN AADPV 6240 L] ( *+ / APPELLANT) ( ,-*+ /RESPONDENT) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE /RESPONDENT BY : SHRI SUPRIYO PAL, JCIT / DATE OF HEARING : 19 - 10 - 2016 ! / DATE OF PRONOUNCEMENT : 28 - 10 - 2016 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-1, CHENNA I, DATED 30.5.2016 FOR ASSESSMENT YEAR 2003-04. 2. GROUND NO.(I) AND (VII) ARE GENERAL IN NATURE WHICH DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. ITA NO. 2241/16 :- 2 -: 3. GROUND NO.(II) IS RELATED TO THE ISSUE OF NOTICE U/ S 147.THE ASSESSEE HAS CHALLENGED NOTICE ISSUED U/S 148 AND T HE CONSEQUENT ASSESSMENT MADE U/S 147 R.W.S 143(3) DATED 28/11/20 08. ON PERUSAL OF THE INFORMATION FILED BY THE ASSESSEE IN THE PAP ER BOOK, THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 148 FOR ESC APEMENT OF INCOME WITH RESPECT TO COMPUTATION OF INCOME ADOPTING THE GUIDE LINE VALUE AS PER SECTION 50C OF INCOME TAX ACT. THE REASONS RECO RDED FOR REOPENING OF THE ASSESSMENT WAS COMMUNICATED TO THE ASSESSEE BY THE ASSESSING OFFICER VIDE LETTER DATED 29 TH FEB.2008. THE ASSESSEE HAS NOT DEMONSTRATED HOW THE ASSESSMENT IS BAD IN LAW A PPLYING THE RATIO OF THE HONBLE APEX COURTS DECISION IN THE CASE OF GKN DRIVESHAFTS(INDIA) LTD REPORTED IN 259 ITR 19. NO O RAL OR WRITTEN SUBMISSIONS ARE MADE BY THE LD.A.R DURING THE APPEA L. THEREFORE THE GROUND RELATING TO JURISDICTION IN RESPECT OF NOTIC E U/S 148 IS DISMISSED. 4. GROUNDS NO.(III) TO (V) OF APPEAL ARE RELATED TO THE ADOPTION OF FAIR MARKET VALUE FOR THE PURPOSE OF COMPUTING C APITAL GAINS U/S 50C OF THE INCOME-TAX ACT, 1961[IN SHORT THE ACT] 5. THE ASSESSEE SOLD A FLAT MEASURING 1900 SQ FT SIT UATED AT OAKLAND COURT, NO.82, CHAMIERS ROAD, CHENNAI -18 TO GETHER WITH 12.46% OF UDS OF LAND FOR A CONSIDERATION OF ` 32,50,000/- TO SHRI M.E. DORAISWASMY AND SMT. GAYATHRI. AS PER THE DOC UMENT, THE ITA NO. 2241/16 :- 3 -: MARKET VALUE OF THE PROPERTY WAS STATED TO BE ` 32,50,000/- AND THE ASSESSEE HAS TAKEN THE SAME CONSIDERATION OF ` 32,50,000/- FOR THE PURPOSE OF CAPITAL GAINS FOR THE YEAR ENDED 31.3.20 03, ON VERIFICATION, IT WAS FOUND THAT THE AMOUNT OF ` 32,50,000/- WAS LESS THAN THE GUIDELINE VALUE FIXED BY THE REGISTERING AUTHORITY AND THE DOCUMENT WAS REFERRED TO SPECIAL DEPUTY COLLECTOR(STAMPS) AN D ACCORDINGLY, ADDITIONAL STAMP DUTY OF ` 73,437/- AND ` 5,650/- WERE COLLECTED O 4.10.2002 AND 11.10.2002 RESPECTIVELY. THEREFORE, FOR THE DIFFERENCE AMOUNT OF GUIDELINE VALUE, THE ASSESSING OFFICER IS SUED NOTICE U/S 148 OF THE ACT AND BROUGHT TO TAX THE DIFFERENCE AMOUNT OF ` 5,64,858/- UNDER SHORT TERM CAPITAL GAINS. 6. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) WHO HAS C ONFIRMED THE ORDER OF THE ASSESSING OFFICER. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. THE LD. AR ARGUED THAT SEC. 50C CANNOT BE APPLIED IN THIS CASE BECAUSE THE ASSESSEE ENTERED INTO THE SALE AGREEMENT VIDE AGREEMENT DATED 10.12.2001 FOR THE S ALE OF THE PROPERTY AT ` 32,50,000/- AND AT THAT TIME THE PARTIES TO THE TRANSACTION ARE TO GET A NO OBJECTION CERTIFICATE F ROM THE APPROPRIATE AUTHORITY AS PER CHAPTER XX-C OF INCOME TAX ACT. T HE APPROPRIATE ITA NO. 2241/16 :- 4 -: AUTHORITY HAS ISSUED NOC FOR REGISTRATION ON 28.2. 2002. THE SALE AGREEMENT WAS ENTERED ON 10.12.2001 AND THE ENTIR E SALE PROCEEDS WERE PAID TO THE ASSESSEE BEFORE 22/04/2002 ON VARI OUS DATES AS PER THE SALE DEED 15/07/2002 AND THE REGISTRATION WAS M ADE ON 15.7.2002. THE SALE AGREEMENT AND FORM NO 37-I WAS FURNISHED BEFORE THE APPROPRIATE AUTHORITY AND HAS ACCEPTED T HE FAIR MARKET VALUE AND ISSUED NOC ON 28/02/2002. THE A.R OF THE ASSESSEE ARGUED THAT BY VIRTUE OF AGREEMENT FOR SALE ENTERED INTO ON 10.12.2001, THE ASSESSEE HAS NO POWER TO INCREASE THE SALE PRICE WI THOUT INVITING THE COURTS ACTION OR DAMAGES. THE PROVISIONS OF SEC. 50C HAVE BEEN INTRODUCED BY THE FINANCE ACT 2002 WITH EFFECT FROM 1.4.2003 BY SUPERSEDING THE PROVISIONS OF CHAPTER XX-C AND SIM ULTANEOUSLY, THE PROVISIONS OF CHAPTER XX-C WERE MADE INAPPLICABLE FOR SALE OF PROPERTY EFFECTIVE FROM ON OR AFTER 1.7.2002. IN TH E INTERREGNUM THE PROVISIONS OF CHAPTER XX-C AND SEC. 50C OPERATED FO R WHICH THE NECESSARY GUARD HAS NOT BEEN TAKEN BY THE LEGISLATU RE. THE A.R ARGUED THAT SALE WAS EFFECTED AS PER THE AGREEMENT DATED 10/12/2001 AND THE PROPERTY WAS REGISTERED IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF AGREEMENT FOR WHICH THE NOC WAS OBTAI NED. HAVING ENTERED IN TO AN AGREEMENT THE ASSESSEE HAD NO OPTI ON EXCEPT TO HONOUR THE AGREEMENT. HAVING ISSUED NOC THE DEPARTM ENT ALSO HAS NO REASON TO DISPUTE THE FAIR MARKET VALUE AND THE SEC TION 50C HAS NO ITA NO. 2241/16 :- 5 -: APPLICATION IN THIS CASE. THE ASSESSEE RELIED ON T HE DECISION OF ITAT KOLKATA BENCH IN THE CASE OF NEVILLE DE NORANHA VS ACIT, 115 TTJ 390. 8. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES BELOW. 9. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL PLACED BEFORE US. THE ASSESSEE HAS ENTERED INTO T HE AGREEMENT FOR SALE OF PROPERTY ON 10.12.2001 AND OBTAINED NOC FRO M THE APPROPRIATE AUTHORITY AS REQUIRED IN CHAPTER XX-C OF THE ACT. A S PER SECTION 269UC THE PARTIES TO TRANSFER OF THE IMMOVABLE PROPERTY H AVE TO SUBMIT THE COPY OF AGREEMENT OF SALE TO THE APPROPRIATE AUTHOR ITY AT LEAST FOUR MONTHS IN ADVANCE AND ONLY AFTER OBTAINING THE NOC FOR THE SALE CONSIDERATION FROM THE APPROPRIATE AUTHORITY THE DE ED CAN BE EXECUTED AND IN CASE OF NON-COMPLIANCE THE REGISTERING AUTHO RITY IS BARRED FROM REGISTERING SUCH IMMOVABLE PROPERTY TRANSACTIONS. A CCORDINGLY THE ASSESSEE HAS ENTERED IN TO AN AGREEMENT FOR SALE OF PROPERTY FOR A CONSIDERATION OF ` .32,50,000/- AND SUBMITTED THE SAME TO THE INCOME TAX DEPARTMENT AND OBTAINED NOC FROM APPROPRIATE AU THORITY. NOW THE QUESTION BEFORE US IS WHETHER TO INVOKE THE PRO VISIONS OF SEC. 50C WITH RELEVANCE TO THE DATE OF AGREEMENT OR WITH REL EVANT TO THE DATE OF REGISTRATION. ACCORDING TO THE ASSESSEE, THE ENTIR E SALE CONSIDERATION WAS RECEIVED BEFORE 22.4.2002 AND ONLY THE REGISTR ATION WAS PENDING ITA NO. 2241/16 :- 6 -: IN THIS CASE. THE ACTUAL RECEIPT OF THE PAYMENT IS EVIDENCED FROM THE SALE DEED SUBMITTED BY THE ASSESSEE IN THE PAPER B OOK. AS PER THE SALE DEED, THE ENTIRE SALE CONSIDERATION WAS PAID B EFORE 22.4.2002 ON VARIOUS DATES. CHAPTER XX-C WAS DELETED WITH EFFEC T FROM 1.4.2002 AND 50C WAS INTRODUCED FOR THE PROPERTIES SOLD ON O R AFTER 1.7.2002. THE PROVISIONS OF SECTION 50C ARE APPLICABLE FOR TH E TRANSACTIONS MADE EFFECTIVE FROM 01/07/2002. IN NORMAL COURSE THE ASS ESSEES TRANSACTION ATTRACTS THE PROVISIONS OF SECTION 50C OF THE ACT. THE CIT(A) HAS DISTINGUISHED THE DECISION OF KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF NEVILLE DE NORANHA(SUPRA) STATING THAT ITAT HAS TAKEN A VIEW SINCE IT IS A PECULIAR CASE WHERE THE ASSESSEE, FOR REAS ONS NOT ATTRIBUTABLE TO HIM, SUFFERED ACTIONS BY THE DEPARTMENT ON THE S AME GROUND OF INADEQUACY OF CONSIDERATION FOR TRANSFER OF CAPITAL ASSET FROM TWO DIFFERENT ANGLES, VIZ. ACQUISITION PROCEEDINGS BY THE APPROPRIATE AUTHORITY AND THEN AGAIN THE APPLICATION OF THE DEE MING PROVISIONS OF SECTION 50C OF THE ACT. BUT STILL FACTS OF THE CASE OF NEVILLE DE NORANHA(SUPRA) ITAT, KOLKATA ARE APPLICABLE IN VIEW OF THE PECULIA R CIRCUMSTANCES OF THE CASE HAVING ENTERED INTO AGREE MENT OF SALE BEFORE THE INTRODUCTION OF SECTION 50C OF THE ACT. 10. FURTHER, IN THE CASE OF MOHD IMRAN BAIG & ORS VS IT O REPORTED IN (2016) 130 DTR(HYD)(TRIB) ITAT-A BE NCH HYDERABAD ITA NO. 2241/16 :- 7 -: RELYING ON HONBLE APEX COURTS DECISION IN THE C ASE OF SANJEEV LAL & SHANTI MOTILAL V CIT REPORTED IN 269 CTR1(SC) HELD THAT THE SRO VALUE AS ON THE DATE OF AGREEMENT OF SALE HAS TO BE CONSI DERED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. THE HONBL E SUPREME COURT IN THE CASE OF SANJEEV LAL & SHANTI MOTILAL V CIT REPO RTED IN 269 CTR1(SC) HELD THAT IN NORMAL CIRCUMSTANCES BY EXECUTING AN AGREEMENT TO SELL IN RESPECT OF AN IMMOVABLE PROPER TY, A RIGHT IN PERSONAM IS CREATED IN FAVOUR OF THE TRANSFEREE/VEN DEE. WHEN SUCH A RIGHT IS CREATED IN FAVOUR OF THE VENDEE, THE VENDO R IS RESTRAINED FROM SELLING THE SAID PROPERTY TO SOMEONE ELSE BECAUSE T HE VENDEE, IN WHOSE FAVOUR THE RIGHT IN PERSONAM IS CREATED, HAS A LEGITIMATE RIGHT TO ENFORCE SPECIFIC PERFORMANCE OF THE AGREEMENT, IF T HE VENDOR, FOR SOME REASON IS NOT EXECUTING THE SALE DEED. THUS, BY VIR TUE OF THE AGREEMENT TO SELL SOME RIGHT IS GIVEN BY THE VENDOR TO THE VENDEE. THE COORDINATE BENCH OF VISAKHAPATNAM IN THE CASE OF LA HIRI PROMOTERS VS ACIT(ITA NO.12/VIZAG/2009 DATED 22 ND JUNE 2010 HAS ALSO TAKEN THE SIMILAR VIEW OF DATE OF AGREEMENT FOR SRO VALUE FOR THE PURPOSE OF 50C OF THE ACT. 11. THEREFORE, HAVING REGARD TO THE CIRCUMSTANCES OF TH E CASE WE HOLD THAT THE DATE OF AGREEMENT FOR SALE HAS TO BE CONSIDERED FOR THE PURPOSE OF 50C IN THE ASSESSEES CASE. SINCE TH E ASSESSEE HAS ITA NO. 2241/16 :- 8 -: OBTAINED NOC FOR FAIR MARKET VALUE OF ` 32,50,000/- FROM APPROPRIATE AUTHORITY AS PER THE PREVAILING TAX LAWS AS PER CHA PTER XX-C WE HOLD THAT IN THE SAME SHOULD BE ADOPTED FOR THE PURPOSE OF CAPITAL GAINS AS FAIR MARKET VALUE AND ACCORDINGLY THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED AND THE GROUNDS OF THE APPEAL O F THE ASSESSEE ARE ALLOWED. 12. GROUND NO.(VI) IS REFERENCE TO VALUATION CELL UNDER SEC. 50C(2) OF THE ACT. SINCE WE DIRECTED THE ASSESSING OFFICER TO ADOPT THE FAIR MARKET VALUE AS PER NOC GIVEN BY THE APPRO PRIATE AUTHORITY THIS GROUND BECAME INFRUCTUOUS AND HENCE, DISMISSE D. 13. THE NEXT GROUND IS RELATED TO THE LEVY OF INTEREST U/S 234B OF THE ACT WHICH IS CONSEQUENTIAL NATURE. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON 28 TH OCTOBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . . # $% ) (D.S. SUNDER SINGH) & / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 28 TH OCTOBER, 2016 RD &' ()*) / COPY TO: ITA NO. 2241/16 :- 9 -: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF