ITO, New Delhi V. Sh. Prem Chand Mittal, New Delhi

ITA 2389/DEL/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8917 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 11-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: RANO JAIN S
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NO.2389/DEL/2011 ASSESSMENT YEAR : 2005-06 ITO, WARD 27(4), NEW DELHI. VS. PREM CHAND MITTAL, 6/52, PUNJABI BAGH (WEST), NEW DELHI. PAN: AAMPM1160H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, & SMT. RANO JAIN, ADVOCATES DEPARTMENT BY : SHRI VIKRAM SAHAY, SR. DR DATE OF HEARING : 11.03.2015. DATE OF PRONOUNCEMENT : 12 .03.2015. ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 18.2.2011 IN RELATION TO THE ASSESSME NT YEAR 2005-06. ITA NO.2389/DEL/2011 2 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE DIRECTION TO ADOPT SALE CONSIDERATION AT RS.12.50 LAC INSTEAD OF A HIG HER VALUE COMPUTED BY THE DEPARTMENTAL VALUATION OFFICER (HEREINAFTER CAL LED THE DVO). 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE SOLD CERTAIN PROPERTIES DURING THE YEAR IN QUESTION. ONE OF THE PROPERTIES SOLD WAS B- 1/455, JANAK PURI, NEW DELHI, IN WHICH THE ASSESSEE HAD HALF SHARE. LONG-TERM CAPITAL GAIN OF RS.9,90,294/- WAS DECLARE D FROM THE TRANSFER OF THIS PROPERTY. SUCH PROPERTY WAS SOLD FOR A SUM OF RS. 25 LAC AND THE FULL VALUE OF CONSIDERATION IN RELATION TO THE ASSE SSEES HALF SHARE WAS TAKEN AT RS.12.50 LAC. THE AO WAS NOT SATISFIED WI TH THE AMOUNT OF SALE CONSIDERATION AT THIS LEVEL. HE DEPUTED AN INCOME- TAX INSPECTOR TO MAKE A FAIR ESTIMATE OF THE MARKET VALUE OF THE PROPERTY , WHO GAVE THE APPROXIMATE VALUE AT RS.1.25 CRORE. THEREAFTER, TH E MATTER WAS REFERRED BY THE AO TO THE DVO, WHO DETERMINED THE FAIR MARKE T VALUE OF THE PROPERTY AT RS.76,46,300/-. BY CONSIDERING THIS VA LUATION OF THE DVO, THE AO ADOPTED THE SALE PRICE AT RS.38,23,150/-, B EING HALF SHARE IN THE PROPERTY AND RE-COMPUTED THE AMOUNT OF LONG-TERM CA PITAL GAIN. THE LD. ITA NO.2389/DEL/2011 3 CIT(A) OVERTURNED THE ASSESSMENT ORDER ON THIS ISSU E. THE REVENUE IS AGGRIEVED AGAINST THE REDUCTION IN THE AMOUNT OF FU LL VALUE OF CONSIDERATION OF THIS PROPERTY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD. IT CAN BE OBSERVED THAT THE ON LY POINT AGITATED BY THE REVENUE BEFORE US IS THE COMPUTATION OF THE FULL VA LUE OF CONSIDERATION OF THE PROPERTY. SECTION 45(1) PROVIDES THAT ANY PR OFIT OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET EFFECTED IN TH E PREVIOUS YEAR SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD CAPITAL GA INS. SECTION 48 IS THE `MODE OF COMPUTATION OF INCOME. THIS SECTION P ROVIDES THAT THE INCOME UNDER THE HEAD CAPITAL GAINS SHALL BE COMP UTED BY DEDUCTING: (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF PROPERTY AND (II) THE COST OF ACQUISI TION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO; FROM ` THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF THE CAPITAL ASSET . ITA NO.2389/DEL/2011 4 5. COMING BACK TO THE FACTUAL MATRIX OF THE CASE , IT CAN BE SEEN THAT THE PROPERTY WAS APPARENTLY TRANSFERRED FOR A SUM OF RS .25 LAC. NOW, THE QUESTION ARISES AS TO WHETHER THE AO WAS RIGHT IN S UBSTITUTING `THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET WITH THE FAIR MARKET VALUE DETERMINED BY THE DVO. THE ANSWER TO THIS QUESTION HAS TO BE GIV EN IN THE NEGATIVE ALONE. THE OBVIOUS REASON IS THAT WHEN THE LEGISLA TURE HAS PROVIDED TO CONSIDER THE FULL VALUE OF THE CONSIDERATION RECEIV ED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET, THERE CAN BE NO QUESTION OF THE AO SUBSTITUTING IT WITH THE FAIR MARKET VALUE AS DE TERMINED BY THE DVO. OF COURSE, THE AO IS ENTITLED TO CARRY OUT INVESTIG ATION AND CONCLUSIVELY PROVE WITH SOME CLINCHING EVIDENCE THAT THE FULL V ALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF A CAPITAL ASSET WAS, IN FACT, ANY AMOUNT HIGHER THAN THE ONE DEPICTED IN THE SALE DEED. IN THE ABSENCE OF ANY SUCH AN EVIDENCE, THER E CAN BE NO SCOPE FOR FRUSTRATING THE PRESCRIPTION OF SECTION 48, WHICH M ANDATES THAT THE COMPUTATION OF CAPITAL GAINS SHOULD BE DONE BY CON SIDERING THE FULL ITA NO.2389/DEL/2011 5 VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF A CAPITAL ASSET. 6. THE HONBLE SUPREME COURT IN THE CASE OF K.P. VARGHESE VS. ITO (1981) 131 ITR 597 (SC ) HAS HELD THAT THE ONUS OF ESTABLISHING THAT THE CONDITIONS OF TAXABILITY ARE FULFILLED, IS ALWAYS O N THE REVENUE. IT IS FOR THE REVENUE TO SHOW THAT THERE IS AN UNDERSTATEMENT OF THE CONSIDERATION. IT HAS FURTHER BEEN LAID DOWN THAT T O THROW THE BURDEN OF SHOWING THAT THERE IS NO UNDERSTATEMENT OF THE CONS IDERATION ON THE ASSESSEE, WOULD BE TO CAST AN ALMOST IMPOSSIBLE BUR DEN UPON HIM TO ESTABLISH A NEGATIVE. SIMILAR VIEW HAS BEEN REITER ATED IN CIT VS. SHIVAKAMI CO. P. LTD. (1986) 159 ITR 71 (SC). IN THIS CASE, THEIR LORDSHIPS HAVE LAID DOWN THAT NO ADDITION CAN BE MA DE UNLESS THERE IS EVIDENCE THAT MORE CONSIDERATION THAN WHAT WAS STAT ED IN THE DOCUMENT, WAS RECEIVED. IN THE LIGHT OF THE ABOVE DECISIONS, IT IS MANIFEST THAT NO ADDITION CAN BE MADE UNLESS THE REVENUE PROVES UNDE RSTATEMENT OF CONSIDERATION WITH SOME COGENT EVIDENCE. A MERE REP ORT OF THE DVO ESTIMATING HIGHER VALUE OF THE PROPERTY CANNOT BE C ONSIDERED AS AN ITA NO.2389/DEL/2011 6 EVIDENCE OF THE ACTUAL FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF CAPITAL ASSET. 7. TO CURB THE PRACTICE OF UNDERSTATEMENT OF SALE C ONSIDERATION IN TRANSACTIONS OF SALE OF PROPERTY AND THE RESULTANT LOSS OF TAXES, THE LEGISLATURE STEPPED IN BY INSERTING A DEEMING PROVI SION IN TERMS OF SECTION 50C W.E.F. 1.4.2003 CONTAINING A SPECIAL PR OVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES. SUB-SECTION (1) OF SECTION 50C PROVIDES THAT : `WHERE THE CONSIDERATION RECEIVED O R ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOP TED 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. A BARE PERUSAL OF THIS PROVISION INDICA TES THAT WHERE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RE SULT OF TRANSFER OF A ITA NO.2389/DEL/2011 7 CAPITAL ASSET IS LESS THAN THE STAMP VALUE, THEN, SUCH STAMP VALUE IS TO BE SUBSTITUTED WITH THE FULL VALUE OF CONSIDERATION. REVERTING TO THE FACTS OBTAINING IN THIS CASE, IT IS MANIFEST FROM A COPY OF THE REGISTERED SALE DEED THAT THE STAMP VALUE OF THE PROPERTY IS THE SA ME FIGURE, WHICH IS THE VALUE OF CONSIDERATION RECEIVED AT RS.25 LAC. IN T HAT VIEW OF THE MATTER, THE PROVISIONS OF SECTION 50C ARE ALSO OF NO HELP T O THE REVENUE. 8. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE OF T HE CONSIDERED OPINION THAT THE LD. CIT(A) WAS JUSTIFIED IN DIRECT ING TO TAKE FULL VALUE OF CONSIDERATION OF THE PROPERTY TRANSFERRED AT RS.12. 50 LAC. 9. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.03.201 5. SD- SD- [A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 12 TH MARCH, 2015. DK ITA NO.2389/DEL/2011 8 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.