ITO, New Delhi V. Sh. Varinder Singh, Delhi

ITA 2470/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74307 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 05-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 26-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SAMEER SHARMA
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value
• Section: 143(3); 50C

Judgement Text

ITA NO. 2470/DEL/2013 ASSTT.YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.2470/DEL/2013 ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER, VS SHRI VARINDER SINGH, WARD 34(2), ROOM NO.318, C-41, CHAJJU PUR, BLOCK D, VIKAS BHAWAN, SHAHDARA, I.P. ESTATE, NEW DELHI. DELHI-110032 (PAN: AAPPS0052H) (APPELLANT) (RESPON DENT) APPELLANT BY: NONE RESPONDENT BY : SHRI SAMEER SHARMA, SR.DR O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF COMMISSIONER OF INCOME TAX(A)-XXVII, NEW DELHI DATE D 11.01.2013 IN APPEAL NO. 113/11-12 FOR AY 2009-10. 2. GROUND NOS.1 & 3 OF THE REVENUE ARE GENERAL IN N ATURE WHICH NEED NO ADJUDICATION. SOLE REMAINING GROUND OF THE REVENUE READS AS UNDER:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS HAD ERRED IN GI VING DIRECTION TO THE A.O. ( IN PARA 9 OF ITS APPELLATE ORDER) TO REFER THE PROPERTY TO THE VALUATION OFFICER FOR DETERMINATION OF FAIR MARKET VALUE ON THE DATE OF T HE SALE AND AFTER GETTING THE REPORT FROM THE VALUATIO N OFFICER, DECIDE THE CASE AS PER THE PROVISIONS OF S EC. 50C ITA NO. 2470/DEL/2013 ASSTT.YEAR: 2009-10 2 (3), ACCORDINGLY, AS IT AMOUNTS TO SETTING ASIDE TH E ORDER OF A.O. WHICH IS NOT PERMITTED U/S 251 (1)(A) OF TH E INCOME TAX ACT. 3. BRIEFLY STATED THE FACTS GIVING RISE TO THIS AP PEAL ARE THAT THE ASSESSEE FILED A RETURN ON 03.10.2009 DECLARING AN INCOME OF RS.3,36,730. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSED U/ S 143(3) OF THE INCOME TAX ACT, 1961 DETERMINED THE INCOME OF THE ASSESSEE AT RS.53,36,730 AFTER MAKING AN ADDITION OF RS.50 LAKH ON ACCOUNT OF CAPI TAL GAINS ON THE SALE OF PROPERTY. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCO ME TAX(A) WHICH WAS ALLOWED BY DIRECTING THE ASSESSING OFFICER TO REFER THE ISSUE OF PROPERTY VALUATION TO THE DISTRICT VALUATION OFFICER FOR DET ERMINATION OF ITS FAIR MARKET VALUE ON THE DATE OF SALE. THE COMMISSIONER OF INCOME TAX(A) FURTHER DIRECTED THAT AFTER GETTING VALUATION OFFIC ERS REPORT, THE ASSESSING OFFICER SHOULD TAKE FULL VALUE OF CONSIDERATION AS PER THE PROVISIONS OF SECTION 50C(3) OF THE ACT AND THEN CALCULATE THE LO NG TERM CAPITAL GAINS RESULTING FROM THE SALE OF PROPERTY AFTER ALLOWING THE INDEXED COST OF ACQUISITION OF THE PROPERTY. THE RELEVANT OPERATIV E OBSERVATIONS AND FINDINGS OF THE COMMISSIONER OF INCOME TAX(A) IN PARA 9 OF T HE ORDER READS AS UNDER:- ITA NO. 2470/DEL/2013 ASSTT.YEAR: 2009-10 3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE OBSERVATIONS MADE BY THE A.O. IN THE ASSESSMENT ORDER AND THE FACTS OF THE CASE. THE APPELLANT HAD SOLD A PROPERTY ON 06.06.2008 FOR A S ALE CONSIDERATION OF RS. 50,00,000/-. BUT THE VALUE IN RESPECT OF THIS PROPERTY AS ADOPTED BY THE STAMP VALUATION AUTHORITY WAS RS. 72,54,000/-. ON BEING ASKED BY TH E A.O. AS TO WHY THE PROVISIONS OF SECTION 50C SHOULD NOT BE APPLIED IN HIS CASE, THE APPELLANT SUBMITTED BEF ORE THE A.O. THAT AT THE TIME OF ITS SALE, THE PROPERTY WAS NOT WORTH MORE THAN RS. 50,00,000/- AND THE CIRCLE RATE HAD BEEN INCREASED IN EXCESS OF THE MARKET VALUE OF THE PROPERTY. THUS, THE APPELLANT HAD RAISED OBJECTION TO ADOPTION OF THE VALUE AS APPLIED BY THE STAMP VALUA TION AUTHORITY. IN VIEW OF THE DECISION OF THE BANGALORE ITAT RELIED UPON BY THE APPELLANT AS MENTIONED ABOVE AND ALSO IN VIEW OF THE SEVERAL DECISIONS OF OTHER BENCHES O F ITAT INCLUDING JURISDICTIONAL ITAT, DELHI ONCE THE ASSES SEE RAISES OBJECTION TO THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, THE A.O. IS DUTY BOUND TO REFE R THE PROPERTY TO THE VALUATION OFFICER FOR DETERMINATION OF ITS FAIR MARKET VALUE ON THE DATE OF ITS TRANSFER WHICH HAS NOT BEEN DONE IN THIS CASE. THE A.O. IS, THEREFORE, DIRECTED TO REFER THE PROPERTY TO THE VALUATION OFF ICER FOR DETERMINATION OF ITS FAIR MARKET VALUE ON THE DATE OF THE SALE. AFTER GETTING THE VALUATION OFFICER'S REPORT THE AO SHOULD TAKE THE FULL VALUE OF CONSIDERATION AS PER THE PROVISIONS OF SECTION 50C(3) AND THEN CALCULATE THE LONG TERMS CAPITAL GAINS RESULTING FROM THE SALE OF THE PROPERTY AFTER ALLOWING THE INDEXED COST OF ACQUISI TION OF THE PROPERTY. THE A.O. IS DIRECTED ACCORDINGLY. 4. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY PERUSED THE RECORD PLACED BEFORE US. 5. AT THE OUTSET, FROM THE ASSESSMENT ORDER, WE CLE ARLY OBSERVE THAT THE ASSESSING OFFICER HAS INVOKED PROVISIONS OF SECTION 50C OF THE ACT TREATING ITA NO. 2470/DEL/2013 ASSTT.YEAR: 2009-10 4 THE VALUE ADOPTED BY THE STAMP VALUATION OFFICER AS FULL VALUE OF CONSIDERATION BUT IN THE OPERATIVE PART, THE ASSESS ING OFFICER HAS TAKEN THE AMOUNT OF ACTUAL CONSIDERATION OF RS. 50 LAKH AS FU LL VALUE OF THE CONSIDERATION AND WITHOUT ALLOWING INDEXED COST OF THE ACQUISITION OF THE PROPERTY THE ASSESSING OFFICER HAS MADE ADDITION OF ENTIRE RS. 50 LAKH AS LONG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE . THE ASSESSMENT ORDER IS NOT ONLY FACTUALLY INCORRECT BUT PERVERSE AND THE C OMMISSIONER OF INCOME TAX(A) PROCEEDED TO CORRECT THE SAME BY PASSING IM PUGNED ORDER. 6. FROM BARE READING OF OPERATIVE PART OF IMPUGNED ORDER AS REPRODUCED HEREINABOVE, WE CLEARLY OBSERVE THAT THE COMMISSION ER OF INCOME TAX(A) HAS NOT ONLY POINTED OUT MISTAKES OF THE ASSESSING OFFICER BUT THE COMMISSIONER OF INCOME TAX(A) HAS RESTORED THE MATT ER TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS ABOUT COM PUTATION OF LONG TERM CAPITAL GAIN AS PER PROVISIONS OF SECTION 50C(3) OF THE ACT. AS PER WELL ACCEPTED LEGAL PROPOSITIONS, THE COMMISSIONER OF IN COME TAX(A) ENJOYS COTERMINOUS POWERS WITH THE ASSESSING OFFICER BUT T HE COMMISSIONER OF INCOME TAX(A) IS NOT EMPOWERED TO REMAND OR RESTORE THE CASE TO THE FILE OF ASSESSING OFFICER. IN VIEW OF ABOVE, IMPUGNED ORDE R IS NOT ONLY ERRONEOUS BUT ALSO WITHOUT JURISDICTION AND THE CONTENTIONS O F THE LD. DR IN THIS REGARD ARE ACCEPTED BY ALLOWING SOLE GROUND OF THE REVENUE . ITA NO. 2470/DEL/2013 ASSTT.YEAR: 2009-10 5 7. BEFORE WE PART WITH THE ORDER, WE ALSO OBSERVE T HAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED AND OBJECTED THAT THE CIRCLE RATE PREVAILING AT THE TIME OF SALE WAS EXCESSIVE I N COMPARISON TO THE MARKET VALUE OF THE PROPERTY, THEN THE ASSESSING OFFICER O UGHT TO HAVE REFERRED THE MATTER TO THE DVO FOR DETERMINATION OF FAIR MARKET VALUE AT THE TIME OF SALE AS PER SECTION 50C(2) OF THE ACT. THE ASSESSING OFF ICER ALSO OBSERVED THAT THE PROVISIONS OF SECTION 50C WERE APPLICABLE TO TH E ASSESSEES CASE AS THE SALE CONSIDERATION ADOPTED AND RECEIVED BY THE ASSE SSEE WAS LESS THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY. AT THE TIME OF COMPUTATION OF CAPITAL GAINS, THE ASSESSING OFFICER WAS MISTAKE N IN ADOPTING THE SALE CONSIDERATION OF RS. 50 LAKH ONLY AND NO BENEFIT WA S ALLOWED FOR THE ASSESSEE ON ACCOUNT OF INDEXED COST OF ACQUISITION OF THE PROPERTY. IN THIS SITUATION, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF THE WHOLE AMOUNT OF THE SALE CONSIDERATION I.E. RS. 50 LAKH TREATING THE SAME AS LONG TERM CAPITAL GAIN RESULTING FROM SALE OF PROPE RTY IN THE HANDS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, THAT TOO, WITHOUT ALLOWING BENEFIT OF INDEXED COST OF ACQUISITION OF THE PROPE RTY. 8. IN ABOVE SET OF FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE OF COMPUTATION OF LONG TERM CAPITAL GAIN WAS NOT ADJUDICATED PROPERLY AT THE END OF ASSESSING OFFICE R AND THE COMMISSIONER ITA NO. 2470/DEL/2013 ASSTT.YEAR: 2009-10 6 OF INCOME TAX(A) ALSO REMANDED THE MATTER TO THE FI LE OF THE ASSESSING OFFICER AGAINST THE PROVISIONS OF THE ACT. HOWEVER , IN THIS PECULIAR SITUATION WE FIND IT APPROPRIATE IN THE INTEREST OF JUSTICE T O DIRECT THE ASSESSING OFFICER TO DECIDE THE ISSUE OF LONG TERM CAPITAL GAIN DE NO VO BY AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE AND WITHOUT BEING PREJUDICED WITH THE EARLIER ASSESSMENT ORDER AND IMPUGNED ORDER. S INCE THE ASSESSEE HAS RAISED OBJECTIONS TO THE VALUE ADOPTED BY STAMP VAL UATION AUTHORITY, THE ASSESSING OFFICER IS DIRECTED TO REFER THE VALUATIO N TO THE VALUATION OFFICER FOR DETERMINATION OF FAIR MARKET VALUE ON THE DATE OF TRANSFER OF PROPERTY. THE ASSESSING OFFICER IS FURTHER DIRECTED THAT AFTE R GETTING THE VALUATION OFFICERS REPORT, THE ASSESSING OFFICER SHALL TAKE VALUE OF CONSIDERATION AS PER PROVISIONS OF SECTION 50C(3) OF THE ACT AND AFT ER ALLOWING THE BENEFIT OF THE INDEXED COST OF ACQUISITION OF THE PROPERTY, LO NG TERM CAPITAL GAINS IN THE HANDS OF ASSESSEE BE DETERMINED AS PER OTHER RELEVA NT PROVISIONS OF THE ACT. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DEEM ED TO BE ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AS INDICATED ABO VE. ORDER PRONOUNCED IN THE OPEN COURT ON 14.3.2014. SD/- SD/- (G.D. AGRAWAL) (CHANDRA MOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 14TH MARCH 2014 GS ITA NO. 2470/DEL/2013 ASSTT.YEAR: 2009-10 7 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR