ACIT, Meerut V. Sh. Kulbushan Gupta, Meerut

ITA 2269/DEL/2010

• Counselvise Citation: 226920114 RSA 2010
• Duration Of Justice: 5 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 14-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C

Judgement Text

ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 2269/DEL/2010 A.Y. : 2005 - 06 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 1, MEERUT VS. SH. KULBHUSHAN GUPTA, C/O MAXWELL EXPORTERS, B - 5, SPORTS GOODS COMPLEX, DELHI ROAD, MEERUT (PAN: AEMPG1076N) AND C.O. NO. 247/DEL/2010 A.Y. : 2005 - 06 SH. KULBHUSHAN GUPTA, C/O MAXWELL EXPORTERS, B - 5, SPORTS GOODS COMPLEX, DELHI ROAD, MEERUT (PAN: AEMPG1076N) VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 1, MEERUT (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. J.P. CHANDRAKAR, SR. DR ASSESSEE BY : SH. SANDEEP SAPRA, ADV. DATE OF HEARING : 14 - 0 8 - 201 5 DATE OF ORDER : 2 8 - 0 9 - 201 5 ORDER PER H.S. SIDHU : J M TH E REVENUE HAS FILED THE APPEAL AND ASSESEE HAS FILED THE CROSS OBJECTION WHICH ARE EMANATE FROM THE IMPUGNED O RDER DATED ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 2 1 6 /2/20 10 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , MEERUT . 2. THE GROUNDS RAISED IN THE REVENUE S APPEAL READ AS UNDER: - I. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW IN DEL ETING THE ADDITION MADE BY THE AO ON ACCOUNT OF LONG TERM CAPITAL GAINS HOLDING 'THAT THE LAND IS AGRICULTURAI AND TRANSFERRED WITHOUT SALE DEED AND IGNORING THE VITAL FACTS PROVING CONTRARY STAND. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E COMMISSIONER OF INCOME - TAX(APPEALS) WAS JUSTIFIED IN HOLDING THE LAND IN QUESTION AS AGRICULTURAL WHILE THE - ASSESSEE HIMSELF DECLARED THAT OUT OF THE TOTAL LAND, 625 SQ.M. LAND WAS COMMERCIAL AND 5104 SQ.M. WAS AGRICULTURAL ONE, MORE SO WHEN THE ASSESSEE HIMSELF INTENDED TO COMMERCIALLY DEVELOP THAT LAND AND ALREADY SUBMITTED A PROPOSED MAP TO MDA FOR THE SAME. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE COMMISSIONER OF INCOME - TAX (APPEALS) WAS JUSTIFIED IN HOLDING THAT THE LAND WAS UNDER DEVELOPED, AGRICULTURAL AND PROVISIONS OF SECTION 50C OF THE IT ACT, 1961 WERE IN - APPLICABLE WHILE THE FACTS ON RECORD PROVED OTHERWISE. ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 3 4. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF LNCOME - TAX (APPEALS) HAS ERRED IN DELET ING THE ADDITI9P OF RS.2 9,580/ - MADE ON ACCOUNT OF RUNNI NG EXPE NSES INSPITE OF THE FACT THAT THE ASSESSEES HAD NOT MAINTAINED ANY LOG BOOK FOR THE PURPOSE OF CAR RUNNING EXPENSES TO DISTINGUISH BETWEEN THE PERSONAL USE AND BUSINESS USE OF CAR? 5. WHETHER IN THE FACTS AND. CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME - TAX HAS ERRED IN DELETING THE ADDITION OF RS. 23,916/ - MADE ON ACCOUNT OF TELEPHONE EXPENSES INSPITE OF THE FACT THAT THE ASSESSEE HAD NOT MAINTAINED ANY CALL REGISTERS? 6. IN TH E FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. THE GROUNDS RAISED IN THE ASSESSEE S CROSS OBJECTION READ AS UNDER: - 1. THAT THE AO AS WELL AS LD. CIT(A) IS IN ERROR IN INVOKI NG PROVISION OF SECTION 50C OF THE INCOME TAX ACT BY IGNORING THE FACT THAT CIRCLE RATE ON THE TRANSFER OF 1 ST LAND AND WAS RS. 2000/ - PER SQ.METER. HOWEVER, PURCHASER HAS WRONGLY PAID RS. 3800/ - PER METER. ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 4 2. THAT THE ASSESSEE HAS RIGHT TO ADD/ DELETE OR MODIFY ANY GROUNDS OF APPEAL. REVENUE S APPEAL NO. 2269/DEL/2010 4 . THE FACTS IN BRIEF ARE THAT T HE ASSESSEE FILED RETURN OF INCOME DATED 28.10.2005 OF RS. 38,96,057/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE IT ACT DATED 14.6.2007 WAS DULY SERVED ON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AND SALES OF CAROM BOARDS AN D ATHELETIC ITEMS. IN RESPONSE TO THE STATUTORY NOTICE SH. TL MAHAJAN APPEARED ON BEHALF OF THE ASSESSEE AND FILED REPLY FROM TIME TO TIME. BOOKS OF ACCOUNTS WERE PRODUCED AND PUT TO RANDOM TEST CHECK. DURING THE YEAR THE ASSESSEE HAS SOLD TWO ARICULTU RAL LANDS AT KHASRA NO. 204 TO 207 MEASURING 625 MTRS. (748.61 YDS) AND 5104 SQTRS. (6104.39 YDS) RESPECTIVELY. FIRST SALE DEED WAS EXECUTED ON 19.7.2004 FOR A PIECE OF LAND MEASURING 748.61 YDS. FOR RS. 15,00,000/ - THE CIRCLE RATE OF WHICH AS PER SALE DEE D IS RS. 23,78,498/ - . FOR THE SECOND PIECE OF LAND MEASURING 6104.39 SQ.YDS. AGREEMENT WAS ENTERED INTO ON 23.8.2004. HOWEVER, NO CIRCLE RATE WAS MENTIONED BUT SINCE THE LAND IS SITUATED ON SAME KHASRA NO. OF THE SAME VILLAGE, THE CIRCLE RATE CAN BE DERIV ED FROM THE FIRST SALE DEED WHICH THEN COMES TO RS. 1,93,94,984/ - . THEREFORE, TOTAL SALE CONSIDERATION COMES TO RS. 2,17,73,182/ - . AFTER DEDUCTING THE COST OF THE LAND WHICH HAS BEEN SUBMITTED BY THE ASSESSEE ITSELF THAT IS RS. 36,31,059/ - , THE LONG TE RM CAPITAL GAIN COMES TO RS. 1,81,42,423/ - . ASSESSEE HAS SHOWN A SHORT TERM LOSS OF RS. 1,34,020/ - ON SALE OF LAND SITUATED AT KHASRA NO. 400, VILLAGE SHERKHAN / JAINPUR, DISTT. MEERUT. ASSESSEE HAD INVESTED RS. 18,00,000/ - IN THE PURCHASE OF THIS LAN D AT RS. 31,00,000/ - AND AFTER ADDING SALE CHARGES, STAMPS CHARGES ETC. (AS GIVEN BY THE ASSESSEE), HIS SHARE COMES AT RS. 21,34,020/ - . IN THE SAME RATIO, ASSESSEE S SHARE COMES AT RS. 20,32,258/ - IN THE TOTAL ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 5 SALE CONSIDERATION OF RS. 35,00,000/ - RECEIVE D FOR THIS LAND. THEREFORE, THE SHORT TERM CAPITAL LOSS IN THE HANDS OF THE ASSESSEE COMES AT RS. 1,01,762/ - . AFTER ADJUSTING THIS LOSS AGAINST THE LONG TERM CAPITAL GAIN AS MENTIONED ABOVE, ASSESSEE IS IN NET LONG TERM CAPITAL GAIN OF RS. 1,80,40,661/ - , IN PLACE OF RS. 32,34,921/ - . THEREFORE, THE DIFFERENCE OF RS. 1,48,05, 740/ - IS BEING ADDED UNDER THIS HEAD OF INCOME. 4 .1 THE ASSESSEE HAS DEBITED RS. 1,77,475.54 AS REPAIR, RUNNING AND MAINTENANCE OF VEHICLE. SINCE NO LOGBOOK IS BEING MAINTAINED BY TH E ASSESSEE, PERSONAL USE CANNOT BE RULED OUT THEREFORE, 1/6 TH OF THE SAME HAS BEEN DISALLOWED I.E. RS. 29,580/ - BY AO. ASSESSEE HAS ALSO DEBITED TELEPHONE EXPENSES FOR RS. 1,43,494.13. 1/6 TH OF THE SAME HA S ALSO DISALLOWED AS PERSONAL USE WHICH CANNOT BE RULE D OUT THEREOF I.E. RS. 23,916/ - . THE AO ASSESSED THE TOTAL INCOME OF RS. 1,87,66,173/ - VIDE HIS ORDER DATED 28.12.2007 PASSED U/S. 143(3) OF THE I.T. ACT, 1961. 5 . AGAINST THE ASSESSMENT ORDER , ASSESSEE FILED AN APPEAL BEFORE THE ID. FIRST APPEL LATE AUTHORITY WHO VIDE IMPUGNED ORDER DATED 16 / 2 /20 10 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6 . AT THE TIME OF HEARING LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL. 7 . ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY. IN ADDITION TO THAT, HE HAS FILED THE SYNOPSIS ALONGWITH ITS ANNEXURES. FOR THE SAKE OF CLARITY, THE SYNOPSIS IS REPRODUCED HEREUNDER: - ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 6 1) THE ASSESSEE SOLD THE FOLLOWING TWO AGRICULTURAL LANDS SITUATED IN KHASRA NO. 204 TO 207 IN A VILLAGE NAMELY HAFIZABAD MEWLA, DISTRICT MEERUT BY DECLARING LONG TERM CAPITAL GAIN OF RS.33,68,941/ - AS PER COPY OF COMPUTATION OF TOTAL INCOME PLACED AT PAGES 12 - 13 OF THE PAPER BOOK: B) AGRICULTURAL LAND SITUATED ON THE MAIN MEERUT - DELHI ROAD, NEAR AMAR UJALA NEWSPAPER OFFIC E, MEERUT (KHASRA NO. 207) MEASURING 625.92 SQ. MTRS WAS SOLD FOR RS.15,OO,000 VIDE REGISTERED SALE DEED DATED 20/07/2004, COPY PLACED AT PAGES 14 - 32 OF THE PAPER BOOK. FROM SUCH SALE DEED, IT IS EVIDENT THAT STAMP DUT Y WAS PAID ON CIRCLE AREA RATE OF RS.2 3,78,498/ - WHICH WORKS OUT TO RS.3,800/ - PER SQ. MTR . B) AGRICULTURAL LAND SITUATED AT THE BACK SIDE OF THE ABOVE MENTIONED LAND (KHASRA NO. 204 AND PART OF KHASRA NO. 207) MEASURING 5104 SQ. MTR WAS SOLD FOR RS.55,OO,OOO VIDE AGREEMENT TO SELL (UNREGISTE RED) DATED 16/08/2004, COPY PLACED AT PAGES 33 - 36 OF THE PAPER BOOK. IT IS PERTINENT TO POINT OUT HERE THAT NO STAMP DUTY WAS PAID ON SUCH LAND AS IT WAS SOLD THROUGH AGREEMENT TO SELL AND NOT THROUGH REGISTERED S ALE DEED. 2) THE A O ACCEPTED INDEXED COST SHOWN BY THE ASSESSEE FOR WORKING OUT LONG TERM CAPITAL GAINS. HOWEVER, THE A O WORKED OUT THE LONG TERM CAPITAL GAINS FOR BOTH THE ABOVE MENTIONED AGRICULTURAL LANDS BY ESTIMATING SALES ON THE BASIS OF CIRCLE AREA RATE I.E. RS.3,800/ - PER SQ. MTR. MENTIONE D IN THE REGISTERED SALE DEED AS UNDER: AREA OF AGRICULTURAL LAND SOLD SALE CONSIDERATION BY THE ASSESSEE SALE CONSIDERATION ESTIMATED BY THE AO (RS.) ADDITION MADE BY AO (RS.) TREATMENT BY CIT(A) ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 7 (RS.) 625.92 (SQ.MTR.) 15,00,000 23,78,498 ON THE BASIS OF CIRCLE AREA RATE AS PER REGISTERED SALE DEED DT. 20.7.04 I.E. @ RS. 3,800 PER SQ.MTR. 8,78,498 CONFIRMED THE ADDITION 5104 (SQ.MTR.) 55,00,000 1,93,94,984 ON THE BASIS OF CIRCLE AREA RATE AS PER THE ABOVE MENTIONED REGISTERED S ALE DEED DATED 20.7.04 I.E. @RS. 3,800 PER SQ.MTRS. 1,38,94,984/ - DELETED THE ADDITION TOTAL 1,47,73,482 GROUND NO. 1 TO 3: 1. WRITTEN SUBMISSIONS FILED BEFORE THE LD. CIT(A) PLACED AT PAGES 1 - 12 OF THE PA PER BOOK. 2. AGRICULTURAL LAND SITUATED AT KHASRA NO. 204 AND PART OF KHASRA NO. 207 MEASURING 5104 SQ. MTR WAS SOLD FOR RS.55,00,000 VIDE AGREEMENT TO SELL (UNREGISTERED) DATED 16/08/2004, COPY PLACED AT PAGES 33 - 36 OF THE PAPER BOOK. IT IS PERTINENT TO POINT OUT HERE THAT NO STAMP DUTY WAS PAID ON SUCH LAND AS IT WAS SOLD THROUGH AGREEMENT TO SELL AND NOT THROUGH REGISTERED SALE DEED. THE SAID LAND WAS NOT TOUCHING THE MAIN DELHI - MEERUT ROAD. 3. COPY OF KHATAUNI TO PROVE OWNERSHIP OF THE ABOVE MENTIONED A G RICULTURAL LAND SOLD BY THE ASSESSEE AT PAGES ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 8 37 - 38 OF THE PAPER BOOK. 4. COPY OF SANCTIONED PLAN DATED 28/09/2004. FOR PROPOSED RESIDENTIAL COLONY I.E. SHYAM ENCLAVE, MEERUT IS PLACED AT PAGES 47 OF THE PAPER BOOK FROM WHICH IT IS EVIDENT THAT PART OF KHASRA NO. 2 07 IS TOUCHING THE MAIN MEERUT - DELHI ROAD. 5. AGRICULTURAL LAND MEASURING 625.92 SQ. MTR. WHICH WAS TOUCHING THE MAIN DELHI - MEERUT ROAD, NEAR AMAR UJALA NEWSPAPER OFFICE, MEERUT (PART OF KHASRA NO. 20 7 ) WAS SOLD FOR RS.15,00,000 VIDE REGISTERED SALE DEED DATED 20 / 07/2004, COPY PLACED AT PAGES 14 - 32 OF THE PAPER BOOK. FROM SUCH SALE DEED, IT IS EVIDENT THAT STAMP DUTY WAS PAID ON CIRCLE AREA RATE OF RS.23,78,498/ - WHICH WORKS OUT TO RS.3,8001 - PER SQ. MTR. 6. THE PRICE OF AGRICULTURAL LAND MEASURING 5 104 SQ. MTR SITUATED AT THE BACK SIDE OF AGRICULTURAL LAND MEASURING 625.92 SQ. MTR (TOUCHING THE MAIN DELHI - MEERUT ROAD) COULD NOT BE THE SAME AS THAT OF LAND TOUCHING THE MAIN ROAD AS EXPLAINED BEFORE THE LD. CIT(A) AND ALSO REPRODUCED IN THE APPELLATE O RDER: (I) AGRICULTURAL LAND SITUATED AT KHASRA NO. 204 AND PART OF KHASRA NO. 207 MEASURING 5104 SQ. MTR WAS SITUATED AT THE BACK SIDE OF THE OTHER AGRICULTURAL LAND ME ASURIN G 625.92 SQ. MTR. IN OTHER WORDS, IT WAS NOT TOUCHING THE MAIN DELHI - MEERUT ROA D AND THEREFORE HAD NO COMMERCIAL VALUE. IN FACT, THE BUYERS OF SUCH LAND MADE A RESIDENTIAL COLONY I.E. SHYAM ENCLAVE BY MAKING ROADS, DRAINS AND PARKS ETC. DUE TO WHICH AREA OF LAND REDUCED BY APPROX. 42.16% AND THEREAFTER PLOTS WERE SOLD @ RS.2,005 / PER SQ. MTR AS IS EVIDENT FROM COPY OF REGISTERED ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 9 SALE DEED DATED 07/06/2005 PLACED AT PAGES 39 - 46 OF THE PAPER BOOK IN WHICH CIRCLE AREA RATE WAS RS. 2,000 / - PER SQ. MTR. (II) MOREOVER, SUCH AGRICULTURAL LAND (BACK SIDE) HAD MANY DRAWBACKS AS IT WAS LIKE J UNGLE WHERE MAVESHIES USED TO THROUGH CARCASSES OF DEAD ANIMALS, THEREFORE, THE VALUE OF SUCH LAND COULD NOT BE EQUATED WITH THE VALUE OF LAND MEASURING 625.92 SQ. MTR. WHICH WAS TOUCHING THE MAIN DELHI - MEERUT ROAD AND HAD COMMERCIAL VALUE. 7. THEREFORE, THE LD. AO WAS NOT JUSTIFIED IN ESTIMATING SALE PRICE @RS.3,8001 - PER SQ. MTR FOR SALE OF 5104 SQ. MTR OF AGRICULTURAL LAND INSTEAD OF RS.1077.58 PER SQ. MTR. AS SHOWN BY THE ASSESSEE AS PER THE AGREEMENT TO SELL. 8. WITHOUT PREJUDICE TO ABOVE, NO ADDITION U/S 50C OF I.T. ACT COULD BE MADE ON AGRICULTURAL LAND SOLD AS PER UNREGISTERED SALE DEED FOR WHICH RELIANCE IS PLACED ON THE CASE LAWS ATTACHED AS ANNEXURE I. HENCE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADD ITION. GROUND NO. 4 & 5: ARE AGAINST THE DELETION OF ADDITIONS OF RS.29,580 / - ON ACCOUNT OF CAR RUNNING EXPENSES AND RS.23,916/ - ON ACCOUNT OF TELEPHONE EXPENSES. THE ASSESSEE RELIES ON THE FINDINGS RECORDED BY THE L.D. CIT(A) VIDE PARA 7 TO 7.3 AT PAGE 18 OF THE APPELLATE ORDER WHILE DELETING THE ABOVE ADDITIONS. ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 10 CONSEQUENTLY, THE APPEAL FILED BY THE REVENUE DESERVES TO BE DISMISSED. CO NO. 247/DEL/2010 AS REGARDS CROSS OBJECTION, THE SAME IS HEREBY WITHDRAWN. 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORD AVAILABLE WITH US SPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES AND THE SYNOPSIS FILED BY THE LD. COUNSEL FOR THE ASSESSEE. WITH REGARD TO GROUND NO. 1, 2 & 3 RAISED IN THE REVENUE S APPEAL, WE FIND THAT THE LD. CIT(A) HAS ELABORATELY DISCUSSED THE ISSUES AND ADJUDICATED THE SAME IN HIS ORDER. FOR THE SAKE OF CONVENIENCE, THE RELEVANT FINDINGS VIDE PARA NO. 6.7 AT PAGES 13 TO 18 ARE REPRODUCED HEREUNDER: - 6.7. DECISION & REASONS THEREFOR: I HAVE GONE THROUGH THE RELEVANT FACTS EMANATING FROM THE ASSESSMENT ORDER, THE REMAND REPORT & THE REJOINDER TO THE REMAND REPORT CAREFULLY. REGARDING THE 2ND PIECE OF LAND, THE BASIC REASONS FOR HOLDING THE VIEW AS THE A.O. HAS DONE ARE AS UNDER: I) THE TWO PLOT S CONTAINED IN KHASRA NO. 204 AND 207 CONSTITUTE ONE SINGLE PIECE OF LAND & THE ASSESSEE'S CONTENTIONS THAT THE PLOT AT THE FRONT WHICH WAS TRANSFERRED BY A REGISTERED DEED WAS COMMERCIAL WHILE THE PLOT AT THE BACK WHICH WAS TRANSFERRED BY UNREGISTERED AGR EEMENT WAS AGRICULTURAL & HAD NO COMMERCIAL VALUE ARE NOT CORRECT. THE A.O. HAS STATED THAT AN ON - THE - SPOT ENQUIRY BY THE INSPECTOR SHOWED NO SIGN OF AGRICULTURE. ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 11 II) THE CASE OF JODHPUR BENCH AS WELL AS THE ALLAHABAD HIGH COURT RELIED UPON BY THE A.R. DON'T APPLY TO THE ASSESSEE'S CASE AS REGARDS PROVISIONS OF SECTION 50C. III) THE A.O. FELT THAT BOTH THE BUYER AND THE SELLER HAVE EVADED TAX IN TWO WAYS, ONE BY SELLING A PROPERTY WHOSE VALUE HAS BEEN DETERMINED BY STAMP VALUATION AUTHORITY AS PER CIRCLE RATES VI DE AN UNREGISTERED AGREEMENT TO SELL AND SECONDLY BY DECLARING A LOWER FULL VALUE OF CONSIDERATION WHICH IS NOT IN CONSONANCE WITH THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961. THE A.R.' S SPECIFIC REPLIES TO THE THREE POINTS AS ABOVE ARE AS UNDER: I) REGARDING CONTENTION OF THE AO THAT IT IS A SINGLE PIECE OF LAND, IT HAS BEEN SUBMITTED THAT THE LAND WAS PURCHASED THROUGH TWO DIFFERENT BAINAMAS AND FROM TWO DIFFERENT PERSONS. MOREOVER, IT IS NEVER POSSIBLE TO COMPARE THE RATES OF LAND WHICH IS ADJACENT TO THE MAIN ROAD IN THE INSTANT CASE AND, THUS COMPRISES THE FRONT PORTION AND THE REAR (BACK) PORTION OF THE LAND WHICH HAS BEEN USED FOR RESIDENTIAL PURPOSES AFTER BEING DEVELO PED. THUS THE COMMENTS OF THE A.O. THAT IT IS A SINGLE PIECE OF LAND IS DEVOID OF FACTS AND HAVE NO MERIT, AS STATED BY THE AR. IT WAS ALSO POINTED OUT THAT THE BACK PORTION OF THE LAND MAINLY COMPRISING OF KHASRA NO.204 WAS DEVELOPED AS A RESIDENTIAL COL ONY BY THE PURCHASER AFTER THE SAME BEING P U RCHASED THROUGH A UNREGISTERED AGREEMENT WHICH WAS PASSED AS SHYAM NAGAR ENCLAVE B Y THE MEERUT DEVE LOPMENT AUTHORITY. THE CIRCLE RATE OF THE ABOVE SAID LAND IS ITSELF FIXED AT RS.2000/ - SQ. YARD BY THE DISTRICT AUTHORITIES AFTER BEING ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 12 DEVELOPED. THE ABOVE LAND CUT INTO DIFFERENT RESIDENTIAL PLOTS HAVE BEEN SOLD BY THE DEVELOPER ON WHICH CIRCLE RATE OF RS.2000/ - PER SQ.YARD HAS BEEN APPLIED BY THE STAMP VALUATION AUTHORITY. THUS, THE COMMENTS OF THE A.O. THAT IT I S THE SAME LAND AND SHOULD HAVE THE SAME COMMERCIAL V ALUE IS DEVOID OF FACTUAL D LEGAL MERITS, AS ARGUED. IT WAS FURTHER POINTED OUT BY THE AR THAT THE LAND IN QUESTION IS AGRICULTURAL LAND IN THE REVENUE RECORDS AND THE INSPECTOR'S REPORT REFERRED TO BY THE AO HAD NO SIGNIFICANCE. IT WAS ARGUED THAT WHAT WAS MATERIAL WAS THE STATUS OF THE LAND IN REVENUE RECORDS. IT WAS POSSIBLE THAT THERE MAY NOT BE ANY AGRICULTURAL ACTIVITY GOING ON AN AGRICULTURAL LAND AT A PARTICULAR POINT OF TIME. II) ACCORDING TO THE AR, SECTION 5 OC HAS NO APPLIC A TION UNLESS AND UNTIL THE SALE REGIST ER ED WITH THE REGISTRAR OF DOCUMENT AND REGISTRAR OF STAMP DUTY. AS NO REGISTERED SALE TOOK PLACE, SECTION 50C IS NOT APPLICABLE AND EVEN IF APPLIED, IT CANNOT EXCEED RS.1150/ - PER SQ. YARD AS EXPLAINED. IN THIS REGARD A RECENT DECISION OF THE JODHPUR BENCH IN THE CASE OF NAVNEET KUMAR THAKKAR V S. I.T.O. WARD - 4 WAS RELIED UPON AND IT WAS ARGUED THAT IT IS CLEARLY APPLICABLE IN THE APPELLANT S CASE WITH REFERENCE TO THE SECOND LAND S OLD THROUGH AN UNREGISTERED AGREEMEN T WHEREIN IT HAS BEEN HELD THAT SECTION 50C OF INCOME TAX ACT WOULD NOT COME INTO OPERATION UNLESS PROPERTY TRANS FERRED HAS BEEN REGISTERED BY SALE DEED AND FOR THAT PURPOSE VALUE HAS BEEN ASSESSED AND STAMP DUTY HAS BEE N PAID BY PARTIES . IT WAS FURTHER HELD BY THE COURT THAT IN SUCH A SITUATION POSITION EXISTING PRIOR TO SECTION 50C WOULD A PPLY AND ONUS ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 13 WOULD HE UPON REVENUE TO ESTABLISH THAT SALE CONSIDERATION DECLARED BY THE ASSESSEE WAS UNDERSTATED WITH SOME CLINCHI NG EVIDENCE. AS RULED BY THE TRIBUNAL IN THE INSTANT CASE, THE ASSESSEE TRANSFERRED THE PROPERTY IN QUESTION BY EXECUTING AN AGREEMENT WHICH WAS NOT REGISTERED WITH THE REGISTERING AUTHORITY. IN SUCH A CASE, SECTION 50C COULD NOT HAVE COME INTO OPERATION AND THE RESULTANT APPLICATION OF SECTION 55A, BY WHICH THE ASSESSING OFFICER G O T THE PROPERTY VALUED AND ADOPTED THE REPORT OF THE VALUATION OFFICER AS THE SOLE BASIS FOR MAKING THE IMPUGNED ADDITION, WAS WHOLLY INVALID. AS THE ASSESSING OFFICER HAD NOT EM BARKED UPON MAKING ENQUIRIES FROM THE PURCHASER ABOUT THE ACTUAL SALE CONSIDERATION, AND HAD NOT BROUGHT ON RECORD ANY OTHER MATERIAL WORTH THE NAME TO SHOW THAT THE SALE CONSIDERATION DECLARED BY THE ASSESSEE WAS UNDERSTATED, THE ADDITION WAS WRONGLY MADE AND SUSTAINED. THEREFORE, THE ADDITION WAS TO BE DELETED.' THE AR ARGUED THAT IN THE APPELLANT'S CASE JUST BECAUSE THE A.O. HAS NOT GOT T HE P ROPERTY VALUED FROM THE VALUATION OFFICER WOULD IN NO WAY MAKE THE ESSENCE OF THE ORDER DIFFERENT THAN THAT OF THE CASE OF THE ASSESSEE AND IS A CLEAR VIOLATION OF THE DECIDED LAWS. AS ARGUED, IN THE INSTANT CASE THE COURTS EVEN DECLARED THE ACTION OF THE A.O. TO VALUE THE PROPERTY FROM A REGISTERED VALUER U/S 55A AND ADOPTING SUCH VALUATION AS SOLE BASIS FOR M AKING THE IMPUGNED ADDITION AS WHOLLY INVALID. UNDER SUCH CIRCUMSTANCES HOW COULD THE A.O. STATE THE CASE OF THE ASSESSEE TO BE DIFFERENT UNDER THE GIVEN FACTS WHEN THE A.O. DID NOT EVEN BOTHER TO GET THE VALUATION OF THE PROPERTY DONE FROM AN APPROVED VAL UER. ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 14 THUS AS ARGUED, THE FACTS OF THE CASE ARE VERY MUCH SIMILAR AND PROVISIONS OF SECTION 50C ARE NOT APPLICABLE TO THE SECOND AGRICULTURAL LAND SOLD THROUGH AN UNREGISTERED AGREEMENT. III. REGARDING THE OBSERVATION OF THE AO THAT THE ASSESSEE HAS NOT MADE SALE DEED IN FAVOUR OF PURCHASER TO AVOID STAMP DUTY AND ALSO TO SAVE HIMSELF FROM SECTION 50C OF INCOME TAX ACT, THE AR SUBMITTED AS UNDER: A. SALE THROUGH AGREEMENT: - AS PER INSTRUCTION 2(47) OF INCOME TAX ACT READ WITH SECTION 53A OF TRANSFER OF PROPERTY ACT, SALE THROUGH AGREEMENT IS A VALID TRANSFER. THEREFORE THE ASSESSEE TRANSFERRED THE LAND AS PER TRANSFER OF PROPERTY ACT. REGARDING STAMP DUTY ACT, STAMP IS PAID BY THE PURCHASER. IF ANY WRONG IS COMMITTED BY THE PURCHASER THEN ACTION CAN BE T AKEN AGAINST THE PURCHASER ONLY. SELLER CANNOT BE HELD RESPONSIBLE FOR THIS ACT BECAUSE SELLER HAS RIGHT TO GET THE SALE CONSIDERATION AS PER SALE AGREEMENT. B . APPLICABILITY OF SECTION 50C: - SECTION 50C IS APPLICABLE ONLY IF SALE IS MADE AT LESSER VALUE THAN THE STAMP VALUE. THE ASSESSEE HAS SOLD THE SECOND AGRICULTURAL LAND FOR RS. 55 LAC. AS THE ASSESSEE HAS SOLD THE AGRICULTURAL LAND ON AGREEMENT BASIS THE CIRCLE RATE IS NOT APPLICABLE AS SECTION 50C IS NOT APPLICABLE . WITHOUT PREJUDICE TO THE FACTS M ENTIONED ABOVE, CIRCLE RATE OF THE AGRICULTURAL LAND AT THAT TIME WAS RS. 50 LAC PER HECTARE. THEREFORE SECTION 50C IS NOT APPLICABLE ON THIS ISSUE. THE A.O. TRIED TO COMPARE FIRST LAND WHICH IS INDUSTRIAL PLOT JUST ADJACENT TO THE MAIN ROAD. HOWEVER, THIS AGRICULTURAL LAND IS APPROXIMATELY AT RS.1100 / - PER SQ. METER BEHIN D THE ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 15 MAIN ROAD. THEREFORE, THE CIRCLE RAT E OF THE REAR PORTION CANNOT BE EQUATED TO THE MAIN ROAD VALUE. IN SUPPORT OF HIS CONTENTIONS, THE A.R. HA S ADDUCED FOLLOWING EVIDENCES: I. COPY OF DIFFERENT BAINAMAS (PURCHASE DEEDS) II. COPY OF KHATAUNI SHOWI NG THE LAND AS AGRICULTURAL IN REVENUE RECORDS IN FEBRUARY' 2008 III. COPY OF KHASRA SHOWING THE CROP GROWN ON THE ABOVE LAND AS ON MARCH' 2008 IV. COPY OF CIRCLE RATE APPLICABLE TO THE SECOND LAND IN ANNEXURE - 7 ISSUED BY THE DISTRICT AUTHORITIES. IN T HE LIGHT OF THE ABOVE FACTS AND EVIDENCES ON RECORD; I HOLD AS UNDER: - (I) REGARDING THE AO'S OBSERVATION THAT BY TRANSFERRING THE LAND WITHOUT A REGISTERED DEED FOR EVADING STAMP DUTY, I HOLD NO MERIT IN THE COMMENTS OF THE A.O. THE APPELLANT WAS NOT UNDER A NY OBLIGATION TO PRESS THE BUYER FOR ENTERING INTO A SALE DEED AND NO BENEFIT HAS PASSED TO HIM BY NOT MAKING A SALE DEED. SECONDLY, THE PROVISIONS OF SECTION 50C, AS HELD BELOW, ARE NOT ATTRACTED IN HIS (II) REGARDING THE SPIRIT OF SECTION 50C(3) EMANATING FROM THE WORD 'ASSESSABLE' THEREIN, AS ARGUED BY THE A O THROUGH ORAL SUBMISSIONS, I FIND THAT EVEN IF THE SVA HAD TO ASSESS ITS VALUE OF REQUIRED, IT COULD HAVE ASSESSED IT ONLY @ 50,00,000 / - PER HECTARE WHICH WAS THE RATE AS FIXED BY THE MEERUT DEVELOPMEN T AUTHORITY, PREVAILING ON THE DATE OF TRANSFER. THE ASSESSEE'S ACTUAL SALE CONSIDERATION IS MUCH MORE THAN THAT. IN ANY CASE AND THE AMENDMENT ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 16 REFERRED TO COMES INTO EFFECT 1E.F. 1.10.2009 AND IS THUS IRRELEVANT FOR THE ISSUE UNDER APPEAL. (III) FACTUA LLY, ON THE BASIS OF EVIDENCES WHICH ARE UNMISTAKABLE, IT WOULD NOT BE CORRECT TO SAY THAT JUST BECAUSE THE FRONT PORTION OF A LONG STRETCH OF LAND IS SOLD AT A PARTICULAR PRICE, THE REAR PORTION ALSO WOULD FETCH THE SAME PRICE. A LARGE PIECE OF LAND CAN B E SOLD/TRANSFERRED IN ANY NUMBER OF PARTS DEPENDING ON THE OWNER'S WISDOM AND CHOICE. IN THE INSTANT CASE, I DO NOT FIND AN IOTA OF LOGIC IN THE AO S OBSERVATIONS ON THIS POINT. AS PER REVENUE RECORDS THE RATE OF THE BACK PORTION OF LAND TRANSFERRED BY THE ASSESSEE BY WAY OF AN UNWRITTEN AGREEMENT WAS RS.50,00,000 / - PER HECTARE AND ITS USE AS PER GOVERNMENT RECORDS WAS AGRICULTURAL. ITS CIRCLE RATE WAS FIXED AT RS.2000 / - PER SQ. YARD BY THE GOVERNMENT AUTHORITY AFTER ITS DEVELOPMENT WHICH HAPPENED AFTER I TS TRANSFER BY THE ASSESSEE. IT IS COMMON KNOWLEDGE TOO THAT A PIECE OF LAND ON THE MAIN ROAD AND ONE AT THE BACK SIDE, FAR FROM THE MAIN ROAD CANNOT BE SOLD AT THE SAME PRICE. IN VIEW OF THESE REASONS, IT IS DIFFICULT TO AGREE WITH THE A O ON THE UNDERSTA NDING OF THE FACTS OF THE CASE. (IV) LEGALLY, REGARDING THE APPLICABILITY OF PROVISION OF SECTION 50C, I HAVE CARE F ULLY CONSIDERED T HE CASE LAWS CITED BY THE A.R. IN MY OPINION THE CASE LAW OF IT AT JODHPUR BENCH (2008) 110 ITD 525 JODHPUR QUOTED BY TH E ASSESSEE IS CLEARLY APPLICABLE ON THE SALE OF SECOND LAND WHEREIN IT HAS BEEN HELD BY THE COURT THE UNLESS PROPERTY TRANSFERRED HAS BEEN REGISTERED BY SALE DEED AND FOR THAT PURPOSE VALUE HAS BEE N ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 17 ASSESSED AND STAMP DUTY HAS BEEN PAID BY PARTIES SEC. 5 OC INSERTED BY FINANCE ACT, 2002 WITH EFFE CT FROM 1 - 4 - 2003, CANNOT COME INTO OPERATION. IT HAS BEEN FURTHER HELD - BY THE HON'BLE C OURT THAT IN SUC H A SITUATION, POSITION EXISTING PRIOR TO SEC. 5 OC WOULD APPLY AND ON WOULD BE UPON REVENUE TO ESTABLISH THAT SALE CONSIDERATION DECLARED BY THE ASSESSEE WAS UNDERSTATED WITH CLI NCHING EVIDENCE. I WAS FURTHER HELD BY THE HON'BLE COURT THAT WHERE THE ASSESSEE TRANSFERRED PROPERTY IN QUESTION EXECUTING AN AGREEMENT WHICH WAS NOT REGISTERED WITH REGISTERING AUTHORIT Y, SEC. 5 OC COULD NOT HAVE COME INTO OPERATION. THEREFORE, ADDITION MADE ON THE BASIS OF DEEMED SALE VALUE IS UNCALLED FOR. IT IS HELD THAT SECTION 50C IS NOT APPLICABLE IN RESPECT OF THE TRANSFER OF SECOND LAND ( 61 03.39 SQ.YARDS) AND THE ADDITION IS DELET ED. 8 . 1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW ALONGWITH THE WRITTEN SYNOPSIS FILED BY THE LD. COUNSEL FOR THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS THOROUGHLY GONE THROUGH THE ASSESSMENT ORDER ALONGWITH THE REMAND REPORT AND REJOINDER TO THE REMAND REPORT AS WELL AS THE OTHER EVIDENCES FILED BY THE ASSESSEE. LD. CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY RESPECTFULLY FOLL OWING THE ORDER OF THE ITAT, JODHPUR BENCH REPORTED IN (2008) 110 ITD 525 (JODHPUR) WHICH IS CLEARLY SIMILAR TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE ITAT, JODHPUR BENCH HAS HELD THAT UNLESS PROPERTY TRANSFERRED HAS BEEN REGISTERED BY SALE DEED AND FOR THAT PURPOSE VALUE HAS BEEN ASSESSED AND STAMP DUTY HAS BEEN PAID BY PARTIES SEC.5OC INSERTED BY FINANCE ACT, 2002 WITH EFFECT FROM 1 - 4 - 2003, CANNOT COME INTO OPERATION. IT HAS BEEN FURTHER HELD BY THE HON'BLE COURT THAT IN SUCH A SITUATION, POSITION EXISTING PRIOR TO ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 18 SEC. 5OC WOULD APPLY AND ON U S WOULD BE UPON REVENUE TO ESTABLISH THAT SALE CONSIDERATION DECLARED BY THE ASSESSEE WAS UNDERSTATED WITH CLINCHING EVIDENCE. THE PROPERTY IN QUESTION HAS BEEN TRANSFERRED BY EXECUTING AN AGREEMENT WHI CH WAS NOT REGISTERED WITH REGISTERING AUTHORITY, THEREFORE, IN OUR VIEW SEC. 5OC COULD NOT HAVE COME INTO OPERATION AND THE ADDITION IN DISPUTE HAS RIGHTLY BEEN DELETED BY THE LD. CIT(A BY RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT, JODHPUR BENCH REPO RTED IN (2008) 110 ITD 525 (JODHPUR). KEEPI NG IN VIEW OF THE FACTS AND CIRCUMSTANCES AND PRECEDENT, WE FIND THAT LD. CIT(A) HAS PASSED A WELL REASONABLE ORDER ON THE ISSUES IN DISPUTE BY DELETING THE ADDITION IN DISPUTE, WHICH DOES NOT NEED ANY INTERFERE NCE ON OUR PART, HENCE, WE UPHOLD THE SAME BY DISMISSING THE GROUND NO. 1, 2 & 3 RAISED BY THE REVENUE. 9. WITH REGARD TO GROUND NO. 4 & 5 RELATING TO DELETION OF ADDITION OF RS. 29,580/ - AND RS. 23,916/ - MADE ON ACCOUNT OF CAR RUNNING EXPENSES & TELEPHONE EXPENSES RESPECTIVELY , WE FIND THAT LD. CIT(A) WITH REGARD TO CAR RUNNING EXPENSES, HAS RIGHTLY OBSERVED THAT THE CAR RUNNING FOR PERSONAL USE IS TOTALLY AGAINST THE PROVISION OF INCOME TAX ACT BECAUSE IT IS MADE ON THE BASIS OF ASSUMPTION AN D PRESUMPTION. SIMILARLY, FOR TELEPHONE EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT ARE ONLY IN RESPECT OF THE TELEPHONE WHICH IS SITUATED AT THE BUSINESS PREMISES OF THE ASSESSEE. THE ASSESSEE FURNISHED FULL DETAILS OF TELEPHONE BILLS AND THIS ADDIT ION WAS ALSO MADE ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS ONLY. WE ALSO FIND THAT THE AO EXAMINED THE COMPLETE BOOKS OF ACCOUNT AND FOUND NO DEFECT IN THE SAME, HENCE, THE ACTION OF THE CIT(A) FOR ESTIMATION OF DISALLOWANCES ARE AGAINST THE PRINCIP LES OF INCOME TAX ACT. THE ASSESSEE HAS FURNISHED ALL THE DETAILS BEFORE THE AO AND THE AO HAS NOT GIVEN SOUND REASON FOR OBSERVING PERSON USE . THEREFORE, BOTH THE ADDITIONS WERE RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT ITA NO. 2269/ DEL/ 2010 & CO NO. 247/DEL/2010 19 NEED ANY INTERFERENCE O N OUR PART, HENCE, WE UPHOLD THE SAME. ACCORDINGLY, WE DISMISS THE GROUND NOS. 4 & 5 RAISED BY THE REVENUE. ASSESSEE S CROSS OBJECTION 11. WITH REGARD TO ASSESSEE S CROSS OBJECTION IS CONCERNED, LD. COUNSEL OF THE ASSESSEE DURING THE HEARING BEFORE US H AS WITHDRAW N THE CROSS OBJECTION, HENCE, THE CROSS OBJECTION IS DISMISSED AS WITHDRAWN. IN THE RESULT, REVENUE S APPEAL AS WELL AS THE ASSESSEE S CROSS OBJECTION STAND DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 2 8 / 0 9 /20 1 5 . S D / - S D / - [ N.K. SAINI ] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 2 8 / 0 9 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES