Shri Nikunjkumar H.Jariwala, Surat V. The Income tax Officer,Ward-1(4), Surat

ITA 2404/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85775 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DIVYAKANT PARIKH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C; 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .. , , BEFORE SHRI BEFORE SHRI G.D. AGARWAL,VICE PRESIDEN T (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO. 2404/AHD/2011 ( / ASSESSMENT YEAR : 2008-09) SHRI NIKUNJKUMAR H.JARIWALA PROP.OF HARIHAR TEXTILES 3/2246-A, SALABATPURA BALABHAI-NI-SHERI SURAT - 395 003 / VS. THE ITO WARD-1(4) SURAT ! '# ./ ./ PAN/GIR NO. : AAQPJ 6781 R ( !% / APPELLANT ) .. ( &'!% / RESPONDENT ) !%(' / APPELLANT BY : SHRI DIVYAKANT PARIKH, AR &'!%)(' / RESPONDENT BY : SHRI M.K. SINGH, SR.DR * +) ,# / DATE OF HEARING 17/03/2015 -./0 ) ,# / DATE OF PRONOUNCEMENT 19/03/2015 '/ O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-I, SURAT (CIT(A) IN SHORT) DATED 28/06/2011 PERTAINING TO ASSESSMENT YEAR (AY) 2008-09. ITA NO.2404/AHD /2011 SHRI NIKUNJKUMAR H. JARIWALA VS. ITO ASST.YEAR 2008-09 - 2 - 2. AT THE OUTSET, DURING THE COURSE OF HEARING, THE ASSESSEE HAS RESTRICTED THE ARGUMENTS ONLY ON THE ADDITIONAL GRO UND. ADDITIONAL GROUND RAISED BY THE ASSESSEE READS AS UNDER:- APPELLANT CRAVES LEAVE TO RAISE THIS ADDITIONAL GR OUND OF APPEAL BEFORE THE HONBLE ITAT AS ATTACHED HEREWITH. THIS GROUND IS TO REFER THE MATTER TO DVO AS AGAINS T THE ADOPTION OF STAMP DUTY VALUATION U/S.50C BY THE APPELLANT BEFOR E THE LD.AO IN ITS LETTER DATED 10/12/2010 (AO PAGE 3 PARA 6). THUS T HE FACTS ABOUT SUCH REQUEST MADE TO THE AO IS ON RECORD. ON IDENTICAL FACTS IN THE CASER OF ANOTHER JOINT HO LDER (SELLER OF SAID PROPERTY ALONGWITH APPELLANT) NAMELY SHRI NILESHKUM AR H.JARIWALA, THE VALUATION IS REFERRED TO THE DVO AND THE DVO HAS AR RIVED AT FAIR MARKET VALUE AS PER COPY ATTACHED. THE GROUND HAS REMAINED TO BE TAKEN IN THE MEMO OF APPEAL INADVERTENTLY BUT IS A LEGALLY ALLOWABLE CLAIM AND IS RAISED AS SUCH BEING MANDATORY IN LAW ONCE THE OBJECTION TAKEN IN TERMS OF SEC.50C(2) AND IN THE BEST INTEREST OF JUSTICE. THE HONBLE ITAT BE PLEASED TO ADMIT THE SAME SINCE AS PER THE JUDGEMENT OF RAJASTHAN HIGH COURT IN THE CASE OF SH ILPA ASSOCIATES (263 ITR 317), IT CAN BE RAISED BEFORE THE HONBLE ITAT. 3. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 14/12/2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT) COMPUTED THE LONG TERM CAPITAL GAIN (LTCG) AMOUNTING TO RS.9 ,76,210/- AS AGAINST THE LONG TERM CAPITAL LOSS (LTCL) AMOUNTING TO RS.1,83,713/-. ITA NO.2404/AHD /2011 SHRI NIKUNJKUMAR H. JARIWALA VS. ITO ASST.YEAR 2008-09 - 3 - AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, DISMISSED THE APPEAL. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL B EFORE US. 4. THE LD.COUNSEL FOR THE ASSESSEE POINTED OUT THAT IN VIEW OF THE PROVISIONS OF SECTION 50C(2) OF THE ACT, THE AO SHO ULD HAVE REFERRED TO THE DVO FOR ARRIVING AT A FAIR MARKET VALUE OF THE PROPERTY. HE SUBMITTED THAT IN THE CASE OF ANOTHER JOINT-HOLDER OF THE PRO PERTY; NAMELY, SHRI NILESHKUMAR H.JARIWALA, THE VALUATION WAS REFERRED TO THE DVO AND THE DVO HAS ARRIVED AT A FAIR MARKET VALUE. HE SUBMITT ED THAT ON THE BASIS OF THE FAIR MARKET VALUE, AS ASSESSED BY DVO, THE AO O UGHT TO HAVE COMPUTED THE CAPITAL GAIN ACCORDINGLY. 4.1. ON THE CONTRARY, THE LD.SR.DR HAS SUPPORTED TH E ORDER OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IN THE INSTANT CASE, THE AO HAS MADE A DDITION ON THE BASIS OF THE DIFFERENCE IN THE VALUE OF THE PROPERTY DECLARE D BY THE ASSESSEE AS SALE CONSIDERATION AND ADOPTED BY THE STAMP VALUATION AU THORITY. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS TH AT IN TERMS OF THE PROVISIONS OF SECTION 50C(1) OF THE ACT, WHERE THE AO FINDS THAT THE ITA NO.2404/AHD /2011 SHRI NIKUNJKUMAR H. JARIWALA VS. ITO ASST.YEAR 2008-09 - 4 - CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDI NG OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED (OR ASSESSABLE) BY A NY AUTHORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED (OR ASSE SSABLE) SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VA LUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO A DOPTED THE FULL VALUE OF THE CONSIDERATION AS ADOPTED BY THE STAMP VALUA TION AUTHORITY. HOWEVER, THE AO FAILED TO TAKE NOTE OF THE MANDATE OF SUB-SECTION(2) OF SECTION 50C OF THE ACT. AT THIS JUNCTURE, IT WOUL D BE APPROPRIATE TO REPRODUCE HEREUNDER THE SECTION 50C(2) OF THE ACT F OR THE BETTER APPRECIATION OF THE SUBMISSION OF LD.COUNSEL FOR TH E ASSESSEE. SECTION 50C(2) :- WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICE R THAT THE VALUE ADOPTED [OR ASSESSED OR ASSESSABLE] BY THE STAMP VALUATION AUTHORI TY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED [OR ASSESSED OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTE D 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 TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE P ROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF S UB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTIO N 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE A S THEY APPLY IN RELATION TO A ITA NO.2404/AHD /2011 SHRI NIKUNJKUMAR H. JARIWALA VS. ITO ASST.YEAR 2008-09 - 5 - REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-S ECTION (1) OF SECTION 16A OF THAT ACT. EXPLANATION. : [1] FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFF ICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF TH E WEALTH-TAX ACT, 1957 (27 OF 1957). [ EXPLANATION 2 : FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'ASSES SABLE' MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED I N ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERR ED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY.] 5.1. THE LD.COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TOWARDS PARA-6 OF THE ASSESSMENT ORDER IN SUPPORT OF THE CO NTENTION THAT BEFORE THE AO A REQUEST WAS MADE TO REFER THE CASE TO DVO FOR SEEKING HIS REPORT ON THE FAIR MARKET VALUE OF THE PROPERTY. PARA-6 O F THE ASSESSMENT ORDER IS REPRODUCED HEREINBELOW:- 6. THE REPLY OF THE ASSESSEE DATED 10.12.2010 IS REPRODUCED AS UNDER:- WE JUST COME TO KNOW THAT ONE OPEN LAND IN THE SAM E LOCALITY WAS SOLD AT 5,000/- PER SQ.MT. BEFORE ONE YEAR AGO, WE ARE IN THE OPINION THAT WHAT WE GOT AMOUNT @ 10,000/- PER SQ.MT. IS TRUE & FAIR MARKET VALUE. SECONDLY, WE ARE OF THE OPINION TO REFER THE CASE T O THE D.V.O., SURAT TO JUSTIFY THE CASE. THERE ARE CASES OF JUDGEMENT OF : NEW KALINDI KAMAVATI CO-OP. HOUSING SOCIETY LTD. VS . STATE OF GUJARAT & ORS. 2006(2) GUJ.L.R.VOL.XL VII(2). DINESHKUMAR MITTAL VS. ITO 193 ITR 770 (ALL.) HINDUSTAN MOTORS LTD. VS. MEMBERS APPROPRIATE AUTHO RITY (2001) 249 ITR 424 (MAD.) K.R. PALANISAMY VS. UOI 306 ITR 61 (MAD.). ITA NO.2404/AHD /2011 SHRI NIKUNJKUMAR H. JARIWALA VS. ITO ASST.YEAR 2008-09 - 6 - IN WHICH THE JUNTRY VALUE IS A GUIDELINE & NOT INST RUMENT TO LAY DOWN ON THE ASSESSEE. 5.2. THEREFORE, IN VIEW OF THE PROVISIONS OF SECTIO N 50C(2) OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS NOT J USTIFIED IN ADOPTING THE VALUE OF THE PROPERTY AS ADOPTED BY THE STAMP VALUATION AUTHORITY WITHOUT REFERRING TO THE DVO FOR ASCERTAINING THE F AIR MARKET VALUE OF THE PROPERTY. THEREFORE, THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE ARE HEREBY SET ASIDE AND THE ADDITIONAL GROUND RAISED B Y THE ASSESSEE IS RESTORED BACK TO THE FILE OF AO TO DECIDE THE SAME IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT THE AO WOULD AFFORD REAS ONABLE OPPORTUNITY OF BEAING HEARD TO THE ASSESSEE BEFORE PASSING THE ORD ER. THUS, ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 19 TH DAY OF MARCH, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 19/ 03 /2015 4,..* , .*../ T.C. NAIR, SR. PS ITA NO.2404/AHD /2011 SHRI NIKUNJKUMAR H. JARIWALA VS. ITO ASST.YEAR 2008-09 - 7 - !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. !% / THE APPELLANT 2. &'!% / THE RESPONDENT. 3. 567 8 / CONCERNED CIT 4. 8 ( ) / THE CIT(A)-I, SURAT 5. 9 :&*67 , ,670 , 5 / DR, ITAT, AHMEDABAD 6. : <= + / GUARD FILE. ! / BY ORDER, ' 9& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 17.3.15 (DICTATION-PAD 8 +PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 17.3.2015 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.19.3.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 19.3.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER