K. Umamahesh, CHENNAI V. ITO, CHENNAI

ITA 233/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81175 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 27-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB ADDITIONAL
• Assessee Lawyers: V RAVICHANDRANC
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Valuation report
• Section: 143(3); 50C; 234B; 37; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . !' , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A.NO.233/MDS/2014 ( / ASSESSMENT YEAR :2004-05) SHRI K. UMAMAHESH , ID SEASHELLS APARTMENTS, NO.31,BEACH ROAD, KALAKSHETRA COLONY, CHENNAI 600 090. VS. THE INCOME TAX OFFICER, BUSINESS WARD V(4), CHENNAI 600 034. PAN AAAPU 2783 L ( %& / APPELLANT ) ( '(%& / RESPONDENT ) / APPELLANT BY : MR.V.RAVICHANDRAN,C. / RESPONDENT BY : MR.SHAJI P JACOB, ADDITIONAL CIT ,D.R / DATE OF HEARING : 04.08.2014 ! /DATE OF PRONOUNCEMENT : 19.09.2014 ) / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI DATED 01.11.2013 IN ITA NO.79/10-11(A)-V PASSED UN DER SECTION 143(3) READ WITH SECTIONS 250 & 254 OF THE INCOME- TAX ACT, 1961. ITA NO.233 /MDS/14 MR.K.UMAMAHESH 2 2. THE ASSESSEE HAS RAISED FIVE GROUNDS IN ITS APP EAL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGRI EVED BY THE ORDER OF THE LD. CIT (A) WHO HAD ENDORSED THE ORDER OF THE L D. ASSESSING OFFICER FOR HAVING ADOPTED THE VALUE ASSESSED BY TH E STATE GOVERNMENTS STAMP VALUATION AUTHORITY INVOKING SEC .50C OF THE ACT INSTEAD OF ADOPTING THE VALUE DETERMINED BY VALUATI ON OFFICER IN ACCORDANCE WITH THE PROVISIONS OF SECTION 50C(2) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSE E IS AN INDIVIDUAL, EARNING INCOME FROM BUSINESS SOLD A PIECE OF LAND A T INJAMBAKKAM VILLAGE ON 21.11.2003 FOR ` 47,57,958/-. THIS PROPERTY WAS ACQUIRED BY THE ASSESSEE BY A SETTLEMENT DEED DATED 16.06.2003 EXECUTED IN HIS FAVOUR BY HIS TWO DAUGHTERS. THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2004-05 ON 29.03.2005 CLAIMING THE GAINS ARISING OUT OF THE SALE OF PROPE RTY AS LONG TERM CAPITAL GAIN AND DEDUCTION U/S. 54EC OF THE ACT FOR INVESTING THE SALE PROCEEDS IN NOTIFIED BONDS. THE LD. ASSESSING OFFI CER ON SCRUTINY ASSESSMENT TREATED THE CAPITAL GAIN AS SHORT TERM C APITAL GAIN FOR VARIOUS REASONS MENTIONED IN HIS ORDER DATED 19.12. 2006. THIS ORDER WAS SET ASIDE BY THE LD. CIT U/S. 263 OF THE ACT SI NCE THE LD. ITA NO.233 /MDS/14 MR.K.UMAMAHESH 3 ASSESSING OFFICER HAD NOT INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT. SUBSEQUENTLY THE LD. ASSESSING OFFICER REC TIFIED HIS ORDER BY ADOPTING THE SALE VALUE ASSESSED BY THE STAMP VALUA TION AUTHORITY. ON APPEAL, THE LD. CIT (A) HELD THE GAIN TO BE LONG TERM CAPITAL GAIN . THEREAFTER ON REVENUES APPEAL BEFORE THE TRIBUN AL, THE MATTER WAS SET ASIDE VIDE ORDER DATED 24.09.2009 AND REMIT TED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATI ON BUT WITH CERTAIN DIRECTIONS. THUS THE MATTER CAME UP BEFORE THE LD. ASSESSING OFFICER ONCE AGAIN WHEREIN THE LD. ASSESSING OFFICER VIDE O RDER DT 31.12.2010 ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE GAIN HAS TO BE COMPUTED UNDER THE HEAD LONG TERM CAPITAL GAIN , HOWEVER INVOKED THE PROVISIONS OF SECTION 50C OF THE ACT AN D DETERMINED THE SALE CONSIDERATION AT ` 68,00,640/-(19,320 SQ FT @ ` 352 SQ. FT) BEING THE ASSESSED VALUE BY THE STAMP VALUATION AUTHORITY DISREGARDING THE VALUE DETERMINED BY THE VALUATION OFFICER U/S. 50C (2) OF THE ACT VIDE VALUATION REPORT DT 31.03.2008. ON APPEAL, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER. FOR REFEREN CE THE RELEVANT PORTION OF THE ORDER IS REPRODUCED BELOW:- ITA NO.233 /MDS/14 MR.K.UMAMAHESH 4 4. THE ASSESSEE HAS FILED A RECTIFICATION PETI TION ON 17.01.2011 TO THE ASSESSING OFFICER ON 17.01.2011 REGARDING TWO ISSUE S (1) ADOPTION OF FAIR MARKET VALUE, (2) CALCULATION MISTAKE IN COMPU TING THE TAX, REGARDING THE FIRST ISSUE THE ASSESSEE STATED THAT THE ORDER U/S. 263 OF CIT VI HAS NOT BEEN CONSIDERED WHEREIN THE FAIR MA RKET VALUE OF THE PROPERTY WAS ADOPTED AT RS.48,47,000/-. THE CONTEN TION OF THE ASSESSEE CANNOT BE ACCEPTED BY THE ASSESSING OFFICER STATING THAT THIS IS NOT A MISTAKE APPARENT FROM RECORDS AND ALSO STATED THAT THE ASSESSEE HAD PREFERRED AN APPEAL WITH THE LD. CIT (A) AND ALSO A PETITION/S 263 WITH THE CIT V AFTER COMPLETION OF THE ORIGINAL ASSESSMENT. THE ASSESSING OFFICER HAS FURTHER STATED IN HER RECTIFICATION LET TER STATING THAT THE ASSESSEE REPRESENTATIVE DID NOT PUT FORTH THE DETAI LS ABOUT OF THE ORDER U/S. 263 OF CIT VI EITHER TO THE CIT (A) OR TO THE ITAT OR THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEED INGS U/S. 143(3) R.W. 254. MOREOVER, THE ORDER U/S. 263 DOES NOT EXPLAIN THE BASIS OF HOW THE VALUE OF THE PROPERTY WAS FIXED AT RS.48,47,000/-. HOWEVER IN THE PRESENT ORDER U/S. 143(3) RW 254 THE SALE VALUE OF THE PROP ERTY HAS BEEN FIXED BASED ON THE GUIDELINE VALUE MENTIONING BY THE STAM P VALUATION AUTHORITY OF STATE GOVERNMENT I.E THE SUB REGISTRAR AS REQUIRED U/S. 50C(1) AND THIS VALUE WAS ADOPTED AS THE VALUE OF C ONSIDERATION RECEIVED AS A RESULT OF SUCH TRANSFER. BASED ON THE ABOVE EXPLANATION, IT IS CLEARLY POINTED OUT THAT THERE IS NO MISTAKE APP ARENT FROM RECORD IN THE ITA NO.233 /MDS/14 MR.K.UMAMAHESH 5 ORDER AND THEREFORE ASSESSEES REQUEST FOR RECTIFIC ATION ON THIS ISSUE CANNOT BE CONSIDERED. 4.1. REGARDING CALCULATION MISTAKE IN COMPUTING THE TAX, THE ASSESSING OFFICER HAS REDUCED INTEREST U/S. 234A AT RS.5,915/ - AND 234B AT RS.56,195/- AND ACCORDINGLY COMPUTED THE DEMAND AT RS.3,71,787/- BY REDUCING THE AMOUNT OF RS.5,43,546/- FROM THE ORIGI NAL DEMAND AT RS.9,15,333/-. DURING THE COURSE OF HEARING, THE AUTHORIZED REPRE SENTATIVE OF ASSESSEE FILED A COPY OF THE ORDER OF HONBLE CIT U/S.263 DATED 11.09.2007, ORDER OF THE DEPARTMENTAL VALUATION OFFICER U/S. 50C DATE D 31.03.2008 AND VARIOUS CASE LAWS IN SUPPORT OF THE CLAIM OF THE AS SESSEE AND REQUESTED TO CONSIDER THE SAME AND RENDER JUSTICE. 5. ON VERIFYING THE SUBMISSIONS, GROUNDS OF APPEAL AS WELL AS ASSESSMENT ORDER, THE ASSESSING OFFICER IN HER SET ASIDE THE ASSESSMENT PROCEEDINGS PASSED ORDER U/S. 143(3) R.W.S.254, THE SALE VALUE OF THE PROPERTY HAS BEEN FIXED BASED ON THE GUIDELINE VALU E MENTIONED BY THE VALUATION AUTHORITY OF THE STATE GOVERNMENT I.E. SU B REGISTRAR AS REQUIRED U/S. 50C(1) AND ADOPTED THE SAME VALUE OF CONSIDERATION AS A RESULT OF TRANSFER. ACCORDINGLY, THE ASSESSING OFFI CER HAS REJECTED THE APPLICATION OF SEC.154 OF THE APPELLANT ON THE GROU ND THAT THERE IS NO MISTAKE APPARENT FROM THE RECORD, HENCE THE ASSESSI NG OFFICER HAS DETERMINED THE VALUE OF THE PROPERTY AS PER THE PRO VISIONS OF SECTION ITA NO.233 /MDS/14 MR.K.UMAMAHESH 6 50C(1). I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE ASSESSING OFFICER, THEREFORE THE STAND TAKEN BY THE ASSESSING OFFICER IS CONFIRMED REJECTING THE GROUNDS OF FILED BY THE APPELLANT ON THIS ISSUE . 4. LD. A.R. ARGUED BEFORE US STATING THAT THE AS SESSING OFFICER HAD DISREGARDED THE PROVISIONS OF SECTION 50C(2) OF THE ACT WHEREIN IT IS CLEARLY PROVIDED THAT IF THE VALUATION IS REFERR ED TO VALUATION OFFICER AT THE REQUEST OF THE ASSESSEE, THEN THE VALUE DETE RMINED BY THE VALUATION OFFICER HAS TO BE ADOPTED AS AGAINST THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY. THE LD. A.R., TO SU PPORT HIS ARGUMENT RELIED IN THE FOLLOWING DECISIONS:- I) ITO VS. GITA ROY ITA 440/KOT/201 II) NANDITA KHOSAL VS. ITO 46 SOT 90(MUM) III) ITO VS. KUMUDHINI VENGOPAL 5 ITR (TRIB) 145 IV) BHARTI JAYESH SANGANI VS. ITO 128 ITD 345(MUM.) LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER OF T HE LD. CIT (A) AND ARGUED IN SUPPORT OF THE SAME. 5.1 WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY P ERUSED THE MATERIALS AVAILABLE ON RECORD. THE RELEVANT SEC. 50C (1), (2) & (3) IS RE PRODUCED HEREIN BELOW FOR REFERENCE:- ITA NO.233 /MDS/14 MR.K.UMAMAHESH 7 50C. SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION I N CERTAIN CASES. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BU ILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSED OR A SSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAY MENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR A SSESSED **OR ASSESSED OR ASSESSABLE SHALL, FOR THE PURPOSES OF SECTION 48, B E DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFIC ER THAT THE VALUE ADOPTED OR ASSESSED **OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MA RKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER ; (B) THE VALUE SO ADOPTED OR ASSESSED **OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISION S OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SU B-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPL Y IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THA T ACT. ITA NO.233 /MDS/14 MR.K.UMAMAHESH 8 EXPLANATION 1.FOR THE PURPOSES OF THIS SECTION, V ALUATION OFFICER SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, T HE EXPRESSION ASSESSABLE MEANS THE PRICE WHICH THE STAMP VALUAT ION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONT AINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, I F IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY. (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB -SECTION (1), THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE TAKE N AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER. 5.2. FROM THE PROVISIONS OF SEC.50C OF THE ACT, IT IS EVIDENT THAT WHEN AT THE REQUEST OF THE ASSESSEE, VALUATION IS R EFERRED TO THE VALUATION OFFICER, THE VALUE, SO DETERMINED BY THE VALUATION OFFICER, HAS TO BE ADOPTED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS U/S. 48 OF THE ACT IF SUCH VALUE IS LESS THAN THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY. IN THE PRESENT CASE BEFO RE US, THE VALUATION OFFICER DETERMINED THE VALUE OF THE PROPE RTY AT ` 47,57,958/- VIDE HIS VALUATION REPORT NO.VO-II/MDS/CGT(2)/2008- 09 DATED 31.03.2008 WHICH IS LESS THAN THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED ITA NO.233 /MDS/14 MR.K.UMAMAHESH 9 VIEW AND ACCORDINGLY HOLD THAT THE ASSESSING OFFIC ER IS BOUND TO ADOPT THE VALUE DETERMINED BY THE VALUATION OFFICER I.E. ` 47,57,958/- INSTEAD OF THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AT ` 68,00,640/-. IN ARRIVING AT THE ABOVE DECISION WE H AVE ALSO DRAWN STRENGTH FROM THE DECISION OF THE CASES CITED BY TH E LD. A.R. THUS, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON 19 TH SEPTEMBER,2014. SD/- SD/- (V. DURGA RAO) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 19 TH SEPTEMBER,2014. K S SUNDARAM. '# $%&% /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. '() /CIT(A) 4. ' /CIT 5. %*+ , /DR 6. +-. /GF