Sudesh Shankarrao Girme, Ahmednagar V. Income-tax Officer,

ITA 236/PUN/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9473 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 17-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHERSHAN SHEKHAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Valuation report
• Section: 50C

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 236 /P U N/201 6 / ASSESS MENT YEAR : 20 11 - 12 SUDESH SHANKARRAO GIRME, 1, YEOLA NAKA, NEAR KALUBAI MANDIR, KOPERGAON 423601 DIST. AHMEDNAGAR . / APPELLANT PAN: ASAPG9610L VS. THE INCOME TAX OFFICER , WARD 1, AHMEDNAGAR . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : S HRI SUDHERSHAN SHEKHAR , JCIT / DATE OF HEARING : 2 4 . 0 5 .201 7 / DATE OF PRONOUNCEMENT: 26 . 0 5 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 2 , PUNE , DATED 2 3 . 10 .201 5 RELATING TO ASSESSMENT YEAR 20 11 - 12 AGAINST ORDER PASSED UNDER SECTION 1 4 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 236 /P U N/20 1 6 SUDESH SHANKARRAO GIRME 2 2. THE ASSESSEE HAS RAI SED THE FOLLOWING GROUNDS OF APPEAL: - 1 . THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.14,67,500/ - M ADE BY THE LEARNED ASSESSING OFFICER UNDER THE HEAD LONG TERM CAPITAL GAIN. 2 . THE LEARNED CIT (A) ERRED IN UPHOLDING THE ORDER OF THE LEARNED ASSE SSING OFFICER IN COMPUTING THE LONG TERM CAPITAL GAIN ON THE SALE OF LAND AS PER THE PROVISION OF SECTION 50C OF THE INCOME TAX ACT 1961 WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE . 3 . THE LEARNED CIT (A) FAILED TO APPRECIATE THE UNDISPUTED FACT THAT THE AGRICULTURE LAND SOLD WAS SUBJECT TO JUNI SHART DUE TO WHICH A PE NALTY OF 50 % HAS MANDATO RI LY TO BE PAID TO THE STATE GOVERNMENT TO REA LIZE THE COMMERCIAL POTENTIAL OF THE PROPERTY BY NON - AGRICULTURE USE AND, THEREFORE, THE SAID LAND COULD FE TCH A PRICE OF ONLY ABOUT 50% OF THE MARKET VALUATION. 4 . THE LEARNED CIT (A) FAILED TO APPRECIATE THE FACT THAT THE SAID AGRICULTURE LAND WAS SOLD AS IT IS AND THEREFORE SUFFERED FROM AN INHERENT DE FECT OF A 50 % DEFICIT IN ITS REALIZABLE MARKET PRICE DUE TO JUNI SHART AND AS SUCH COULD NO T BE SOLD AT THE MARKET VALUATION AND SO, THE MECHANICAL AND RIGID APPLICATION OF SECTION 50C WAS NOT WARRANTED UNDER THESE FACTS AND CIRCUMSTANCES. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THA T THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST COMPUTATION OF LONG TERM CAPITAL GAINS IN THE HANDS OF ASSESSEE, WHEREIN THE PROVISIONS OF SECTION 50C OF THE ACT WERE APPLIED. HOWEVER, NO REFERENCE WAS MADE TO THE DVO, THOUGH THE ASSESSEE STATED BEFO RE THE ASSESSING OFFICER THAT THE SALE VALUE WAS LESSER THAN THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY BECAUSE OF PROPERTY BEING OLD AND SUBJECT TO JUNI SHART , UNDER WHICH THE SAID LAND FETCH ONLY ABOUT 50% OF THE MARKET VALUATION. HE REQUE STED THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER FOR MAKING REFERENCE TO THE DVO AS PER SECTION 50C(2) OF THE ACT. HE FURTHER PLACED RELIANCE ON THE ORDER OF TRIBUNAL IN MRS. ANJALI BHARAT KABRA VS. ITO (2016) 75 TAXMANN.COM 5 (PUNE - TRIB.) . 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. ITA NO. 236 /P U N/20 1 6 SUDESH SHANKARRAO GIRME 3 5. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES , THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS IN RELATION TO THE APPLICATION OF PROVISIONS OF SECTION 50C OF THE ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD AGRICULTURAL LAND AT SR. NO.179/3, ALONG WITH HIS BROTHER. THE ASSESSING OFFICER RECEIVED INFORMATION THROUGH AIR DATA THAT THE ASSESSEE HAD SOLD THE IMMOVABLE PROPERTY ON 31.12.2010 FOR RS.57,35,000/ - JOINTLY. THE ASSESSEE EXPLAINED THAT THE SAID LAND WAS THEIR ANCESTRAL PROPERTY AND WAS AGRICULTURAL LAND AND WAS EXEMPT BEING NOT CAPITAL ASSET. THE ASSESSEE BEFORE THE ASSESSING OFFICER EXPLAINED THAT HE WAS SO ADVISED AND ON THAT BASIS, HE DID NOT COMPUTE THE INCOME FROM LONG TERM CAPITAL GAINS IN HIS HANDS. HE ALSO ADMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE SAID AGRICULTURAL LAND AS PER THE DEFI NITION , WAS CAPITAL ASSET AND IS LIABLE TO CAPITAL GAIN TAX. THE ASSESSEE CLAIMS THAT THE AGRICULTURAL LAND WAS SUBJECT TO JUNI SHART . THE COPY OF MUTATION IN FORM NO.6 WAS FILED, AS PER WHICH THE SAID LAND COULD BE USED FOR AGRICULTURAL PURPOSE AND IF IT WAS USED FOR NON - AGRICULTURAL PURPOSES, THEN PENALTY OF 50% OF MARKET VALUE HAD TO BE PAID TO THE STATE GOVERNMENT. HE FURTHER EXPLAINED THAT BECAUSE OF THE SAID CONDITION, IT WAS DIFFICULT TO SELL THE LAND AT MARKET VALUE OF RS.57,35,000/ - . SINCE TH E SAID CONDITION BECAME APPLICABLE TO ANY PERSON WHO PURCHASES THE LAND AND HE WOULD HAVE TO PAY 50% FOR NA PURPOSE, DUE TO THESE CIRCUMSTANCES, THE ASSESSEE CLAIMED THAT HE COULD NOT REALIZE THE FULL MARKET VALUE OF THE PROPERTY AND BECAUSE OF NEED OF MON EY, HE HAD TO SELL THE LAND AT 50% OF THE MARKET VALUE UNDER COMPELLING CIRCUMSTANCES. THE ASSESSEE HAD SOLD THE LAND FOR RS.28 LAKHS AS AGAINST THE MARKET VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY AT RS.57,35,000/ - . THE ASSESSING OFFICER APPLIED T HE PROVISIONS OF SECTION 50C (1) OF THE ACT AND OBSERVED THAT THERE WAS NO ITA NO. 236 /P U N/20 1 6 SUDESH SHANKARRAO GIRME 4 EXEMPTION IN SECTION 50C (1) OF THE ACT FOR JUNI SHART WHICH WAS CERTAIN CONDITIONS OF THE STATE GOVERNMENT FOR TRANSACTION OF CERTAIN IMMOVABLE PROPERTIES. THE ASSESSING OFFICER A CKNOWLEDGED THE SAID CONDITION WAS APPLICABLE, HOWEVER, COMPUTED THE INCOME FROM LONG TERM CAPITAL GAINS BY TAKING THE SALE CONSIDERATION AT RS.57,35,000/ - , HALF SHARE AT RS.28,67,500/ - . 6. THE CIT(A) ALSO REJECTED THE PLEA OF ASSESSEE OBSERVING THAT THE TERM USED IN SECTION 50C (1) OF THE ACT IS SHALL AND HENCE, THE PROVISIONS OF SECTION 50C (1) OF THE ACT ARE TO BE COMPULSORILY APPLIED BY THE ASSESSING OFFICER. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A) AND POINTED OUT THAT THE CONDITION P RESCRIBED IN SECTION 50C(2) OF THE ACT HAS NOT BEEN APPLIED. THE TRIBUNAL IN MRS. ANJALI BHARAT KABRA VS. ITO (SUPRA) HAD DELIBERATED UPON THE PROVISIONS OF SECTION 50C OF THE ACT AND OBSERVED AS UNDER: - 11. UNDER THE PROVISIONS OF SECTION 50C OF THE AC T, IT IS PROVIDED THAT WHERE ANY IMMOVABLE PROPERTY BEING LAND OR BUILDING OR BOTH, IS SOLD BY A PERSON AND THE VALUE WHICH IS ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IS HIGHER THAN THE VALUE AS DECLARED BY THE ASS ESSEE IN THE DOCUMENTS OF TRANSFER, THEN SUCH VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY IS TO BE ADOPTED FOR WORKING OUT THE INCOME FROM LONG TERM CAPITAL GAINS. SECTION 50C(2) OF THE ACT FURTHER PROVIDES THAT IN CASE THE ASSESSEE RAISES ANY OBJEC TION AGAINST THE SAID VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY BEFORE THE ASSESSING OFFICER AND WHERE THE ASSESSEE HAS NOT FILED ANY APPEAL OR ANY PROCEEDINGS AGAINST THE VALUATION DETERMINED BY THE STAMP VALUATION AUTHORITY, THEN THE STATUTE REQ UIRES THAT THE ASSESSING OFFICER WAS TO REFER THE MATTER TO THE DVO TO DETERMINE THE MARKET VALUE OF PROPERTY AS ON DATE OF SALE. THE DUTY OF THE DVO IS TO PROVIDE AN OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE FINALIZING THE VALUATION OF PROPERTY. THE DVO IS ALSO TO CONSIDER THE VARIOUS ASPECTS OF THE SAID PROPERTY WHICH COULD HAVE BEARING ON ITS MARKET VALUE. THE PERUSAL OF ASSESSMENT REFLECTS THAT THOUGH THE DVO HAD ASKED THE ASSESSEE TO APPEAR AND FILE HER SUBMISSIONS, BUT PROCEEDINGS COULD NOT BE ATTENDED BY THE ASSESSEE BECAUSE OF CERTAIN CONSTRAINTS. THE VALUATION REPORT PREPARED BY THE DVO WAS APPLIED BY THE ASSESSING OFFICER. THE ASSESSEE FURTHER FILED OBJECTIONS BEFORE THE CIT(A) AND POINTED OUT THAT THE ISSUE AND DISPUTE BETWEEN THE PARTIE S WHICH HAD AFFECTED ITS MARKET VALUE; BUT ALL THESE ISSUES WERE NOT CONSIDERED BY ANY OF THE AUTHORITIES. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES AND FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE, WE DEEM IT FIT TO RESTORE THE ISSUE OF VA LUATION OF PROPERTY AS ON DATE OF SALE, BACK TO THE FILE OF ASSESSING OFFICER, WHO SHALL OBTAIN THE REPORT FROM THE DVO, WHO IN TURN, SHALL AFFORD REASONABLE OPPORTUNITY OF HEARING TO THE ITA NO. 236 /P U N/20 1 6 SUDESH SHANKARRAO GIRME 5 ASSESSEE BEFORE FINALIZING THE VALUATION OF AFORESAID PROPERTY. ACC ORDINGLY, THE MATTER IS SET - ASIDE TO THE FILE OF ASSESSING OFFICER TO COMPLETE THE PROCEEDINGS OF DETERMINATION OF VALUE OF PROPERTY AS ON THE DATE OF SALE BY OBTAINING THE REPORT FROM DVO DE NOVO ON THIS ACCOUNT. THE DVO IS DIRECTED TO CONSIDER VARIOUS I SSUES RAISED BY THE ASSESSEE BEFORE US AND DETERMINE THE MARKET VALUE IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER SHALL THEN COMPUTE INCOME FROM LONG TERM CAPITAL GAINS IN ACCORDANCE WITH LAW. 8. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS WHETHER WHERE THE MARKET VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY IS SACROSCANT AND HAS TO BE APPLIED BY THE ASSESSING OFFICER . B OTH THE AUTHORITIES BELOW HAVE FAILED TO CONSIDER THE PROVISIONS OF SUB - SECTION (2) TO SECTION 50C OF THE ACT, WHICH CLEARLY PROVIDES THAT WHERE THE ASSESSEE RAISES ANY OBJECTION AGAINST THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITIES BEFORE THE ASSESSING OFFICER AND WHERE NO APPEAL HAS BEEN FILED AGAINST THE VALUATION DETERMINED BY THE STAMP VALUATION AUTHORITIES, THE N THE STATUTE REQUIRES THE ASSESSING OFFICER TO REFER THE MATTER TO THE DVO TO DETERMINE THE MARKET VALUE OF THE PROPERTY AS ON THE DATE OF SALE. THE DVO IN THIS REGARD SHALL PROVIDE AN OPPORTUNITY OF HEARING TO THE ASSESSEE AND AFTER CONSIDERING VARIOUS ASPECTS AFFECTING THE MARKET VALUE OF THE PROPERTY, DETERMINE THE MARKET VALUE AS ON THE DATE OF SALE. THE ASSESSEE IN THE PRESENT CASE HAD FILED AN EXPLANATION BEFORE THE ASSESSING OFFICER JUSTIFYING THE VALUE AT WHICH IT HAD SOLD THE ASSET BECAUSE OF TH E EMBARGO OF LAND BEING ANCESTRAL LAND, WHEREIN A CONDITION WAS LAID BY THE AUTHORITIES OF PAYMENT OF 50% OF THE MARKET VALUE FOR CONVERSION OF AGRICULTURAL LAND TO NA LAND. 9. THE LIMITED PLEA WHICH HAS BEEN RAISED BEFORE THE TRIBUNAL IS THAT THE ASSESSI NG OFFICER SHOULD HAVE BEEN MADE A REFERENCE TO THE DVO TO DETERMNE THE MARKET VALUE OF LAND AS ON THE DATE OF SALE, AS PER PROVISIONS OF SECTION 50C(2) OF THE ACT. ALLOWING THE SAID PLEA OF THE ASSESSEE , THIS ISSUE IS REMITTED ITA NO. 236 /P U N/20 1 6 SUDESH SHANKARRAO GIRME 6 BACK TO THE FILE OF ASSESSI NG OFFICER WITH A DIRECTION TO MAKE REFERENCE TO THE DVO TO DETERMINE THE MARKET VALUE OF THE PROPERTY AS ON THE DATE OF SALE. THE DVO SHALL PROVIDE AN OPPORTUNITY OF HEARING TO THE ASSESSEE AND AFTER TAKING INTO CONSIDERATION THE VARIOUS CONDITIONS WHICH AFFECT THE MARKET VALUE OF THE PROPERTY, SHALL DETERMINE THE SAID VALUATION AS ON THE DATE OF SALE. THE ISSUE IS THUS, SET - ASIDE TO THE FILE OF ASSESSING OFFICER. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED FOR STATISTICAL PURPOSES. 1 0 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 26 TH DAY OF MAY , 201 7 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 26 TH MAY , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , PUNE ; 4. / THE PR. CIT - 1 , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE