Tayebi Trust, Surat V. The Income tax Officer,Ward-7(4), Surat

ITA 2520/AHD/2008

• Counselvise Citation: 252020514 RSA 2008
• Duration Of Justice: 3 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 14-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 07-07-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Depreciation; Cost of acquisition; Valuation report; Capital Gains
• Section: 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. MOHAN A LANKAMONY, AM) ITA NO. 2520/AHD/2008 A. Y.: 2005-06 TAYEBI TRUST, NISRIN M. VASI, C/O. KAIL Z. VASI, MUCHHALA POLE, ZAMPA BAZAR, SURAT VS THE INCOME TAX OFFICER, WARD- -7(4), SURAT AAYAKAR BHAVAN, MAJURA GATE, SURAT PA NO. AAATT 2626 L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI KAMLESH BHATT, AR RESPONDENT BY SHRI B. L. YADAV, DR DATE OF HEARING: 14-12-2011 DATE OF PRONOUNCEMENT: 16-12-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV , SURAT DATED 11 TH FEBRUARY, 2008 FOR ASSESSMENT YEAR 2005-06, ON THE FOLLOWING GROUND: 1. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) OUGHT TO HAVE BEEN CONSIDERED THE ARGUMENTS OF THE APPELLANT AND HELD THAT THE CAPITAL GAIN RELATI NG TO LAND IS NOT COVERED BY S.50 C AND ACCORDINGLY THE SAME CAN NOT BE TREATED AS SHORT TERM CAPITAL GAIN AND HENCE YOUR APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) TO THIS EXTENT BE QUASHED AND IT BE HEL D THAT THE CAPITAL GAIN ATTRIBUTABLE TO THE LAND AS PER THE RATES ADOPTED BY THE VALUATION AUTHORITY BE TREATED AS PER THE RATES ADOPTED BY THE VALUATION ITA NO.2520/AHD/2008 TAYEBI TRUST VS ITO, W-7(4), SURAT 2 AUTHORITY BE TREATED AS LONG TERM CAPITAL GAIN AND THE BENEFIT OF COST INDEXATION BE ALLOWED ON IT . 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO O BSERVED THAT THE ASSESSEE HAD SOLD A BUILDING DURING THE YEAR AND HA D CLAIMED THE SALE CONSIDERATION AND PROFIT THERE FROM AS LONG TE RM CAPITAL GAIN. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE AGR EED FOR ADOPTION OF SALE CONSIDERATION OF THE BUILDING AT R S.18,57,700/- WHICH WAS THE VALUATION MADE BY THE SUB-REGISTRAR. THE AO HELD THAT AS PER PROVISIONS OF SECTION 50A OF THE IT ACT THE CAP ITAL GAIN SHOULD BE TREATED AS SHORT TERM CAPITAL GAIN SINCE THE ASSET WAS A DEPRECIABLE ONE. THE AO RELIED ON THE DECISION OF ITAT, AHMEDAB AD BENCH IN THE CASE OF CAMPHOR AND ALLIED PRODUCTS, 79 ITD 489, DE CISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF RAINAGAR GINNING AND MANUFACTURING CO., 99 ITR 264 AND THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF COMMON WEALTH TRUST, 2 18 ITR 1 IN SUPPORT OF HIS DECISION. THE SHORT TERM CAPITAL GAI N WAS WORKED OUT AT RS.17,13,611/- ON THIS ACCOUNT. IT WAS SUBMITTED BE FORE THE LEARNED CIT(A) THAT THE PROPERTY IN QUESTION WAS PURCHASED IN 1989 AND THE ASSESSEE WAS IN POSSESSION OF THE SAID PROPERTY FOR MORE THAN 16 YEARS AND THAT THE SALE COMPOSED OF THREE TYPES OF ASSETS BEING LAND, BUILDING AND ELECTRICAL INSTALLATION. THE LAND WAS NOT ENTITLED TO DEPRECIATION AND THE ENTIRE PROPERTY WAS SOLD FOR A COMPOSITE SALE PRICE AND THEREFORE, PROVISIONS OF SECTION 50 OF TH E IT ACT WERE NOT APPLICABLE. 3. THE LEARNED CIT(A) CONSIDERING THE SUBMISSION OF THE ASSESSEE IN THE LIGHT OF THE FINDINGS OF THE AO DISMISSED TH E APPEAL OF THE ITA NO.2520/AHD/2008 TAYEBI TRUST VS ITO, W-7(4), SURAT 3 ASSESSEE. HIS FINDINGS IN THE APPELLATE ORDER ARE R EPRODUCED AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS AND I AM NOT INC LINED TO AGREE WITH THE APPELLANT. SECTION -50A OF THE IT ACT IS A SPECIAL PROVISION FOR COST OF ACQUISITION IN CASE O F DEPRECIABLE ASSETS. IN THE INSTANT CASE, THE ASSET IS THE FACTORY BUILDING IN RESPECT OF WHICH DEPRECIATION W AS ALLOWED IN EARLIER YEARS. THE WDV OF THE BLOCK OF A SSETS AT THE BEGINNING OF THE YEAR WOULD THEREFORE BE THE COST OF ASSETS AND THE DIFFERENCE BETWEEN THE SALE PRICE AN D THE COST WOULD BE ASSESSED AS SHORT TERM CAPITAL GAIN O NLY. THIS VIEW HAS BEEN HELD IN VARIOUS JUDGMENTS AS POI NTED OUT BY THE AO ON PAGE-8 OF THE ASSESSMENT ORDER. IN VIEW OF CLEAR PROVISIONS OF LAW AND JUDICIAL PRONOUNCEME NTS, THE APPELLANTS CLAIM IS WITHOUT MERITS AND THE AO S ACTION IN TREATING THE INCOME AS SHORT TERM CAPITAL GAIN I S UPHELD. IN THE RESULT, THE APPEAL IS DISMISSED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PAGE1, PAGE 17, PAGE 18 AND PAGE 25 OF THE PAPER BOOK AND SUBM ITTED THAT THE ACTUAL AMOUNT OF SALE CONSIDERATION AS PER VALUATIO N REPORT FOR THE PURPOSE OF STAMP DUTY ADOPTED BY THE AO WAS LESSER WHICH WAS CORRECTED LATER ON BY THE STAMP VALUATION AUTHORITI ES. HE HAS SUBMITTED THAT THE AO HAS ADOPTED THE VALUATION O F THE PROPERTIES AT RS.9,59,200/- AND RS.8,98,500/- (TOTAL RS.18,57,700 /-), BUT IT WAS RS.6,05,600/- AND RS.5,69,700/-. COPY OF THE CORREC T CERTIFICATE IS PLACED AT PAGE 17 WITH ENGLISH TRANSLATION AT PAGE 25 OF THE PAPER BOOK. HE HAS SUBMITTED THAT THE AO COULD BE DIRECTE D TO TAKE THE CORRECT VALUATION ACCORDINGLY. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE LAND WAS NOT ENTITLED TO DE PRECIATION AND THE ENTIRE PROPERTY WAS SOLD FOR A COMPOSITE SALE PRICE AND LAND WAS NOT ITA NO.2520/AHD/2008 TAYEBI TRUST VS ITO, W-7(4), SURAT 4 PART OF WDV, THEREFORE, CALCULATION MADE BY THE AO WAS NOT JUSTIFIED. HE HAS SUBMITTED THAT WHOLE VALUE OF SALE CONSIDERA TION INCLUDING SALE CONSIDERATION OF THE LAND SHOULD NOT BE CONSID ERED FOR THE PURPOSE OF CAPITAL GAINS. HE WAS HOWEVER, UNABLE TO PRODUCE THE DETAILS OF LAST WDV BEING THE MATTER VERY OLD. 5. ON THE OTHER HAND, THE LEARNED DR RELIED UPON T HE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE CORRECTION IN THE VALUATION CERTIFICATE WAS NOT RAISED IN THE GROUNDS OF APPEAL BEFORE THE LEARNED CIT(A) AND IS NOT ARISING OUT OF THE IMPUGNED ORDER AND EVEN NO GROUND IS RAISED BEFORE THE TRIBUNAL. HE HAS SUBMIT TED THAT THE ASSESSEE HAS AGREED FOR ADOPTION OF SALE VALUE AT R S.18,57,700/- FOR BOTH THE PROPERTIES AND VALUATION IS NOT CHALLENGED BEFORE THE STAMP VALUATION AUTHORITIES, THEREFORE, NO INTERFERENCE I S CALLED FOR IN THE MATTER. AS REGARDS THE COMPOSITE SALE PRICE OF LAND AND BUILDING, THE LEARNED DR SUBMITTED THAT ASSET WAS OF FACTORY BUIL DING AND IN THE ABSENCE OF ANY BIFURCATION OF WRITTEN DOWN VALUE, N O INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LEARNED CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. THE ASSESSEE HAS NOT DISPUTED THE FACTS NOT ED BY THE AUTHORITIES BELOW. THE ASSESSEE RAISED THE CLAIM TH AT THE LAND WAS NOT SUBJECTED TO DEPRECIATION AND THE ENTIRE PROPER TY WAS SOLD FOR COMPOSITE SALE PRICE. BUT NO DETAILS OF LAST WDV WA S FILED AT ANY STAGE BEFORE THE AUTHORITIES BELOW AND EVEN DURING THE COURSE OF ARGUMENT IT WAS STATED THAT SINCE IT WAS OLD MATTER , THEREFORE, NO DETAILS HAVE BEEN FILED. THE LEARNED CIT(A) SPECIFI CALLY NOTED THAT THE ITA NO.2520/AHD/2008 TAYEBI TRUST VS ITO, W-7(4), SURAT 5 ASSETS IS A FACTORY BUILDING IN RESPECT OF WHICH DE PRECIATION WAS ALLOWED IN THE EARLIER YEARS. THE FINDINGS OF THE L EARNED CIT(A) HAVE NOT BEEN CHALLENGED THROUGH ANY EVIDENCE OR MATERIA L ON RECORD AND AS SUCH IN THE ABSENCE OF ANY EVIDENCED OR MATERIA L, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF T HE AUTHORITIES BELOW. 6.1 AS REGARDS THE VALUATION OF THE SALE CONSIDERAT ION OF THE PROPERTY IN QUESTION, THE AO GAVE OPPORTUNITY TO TH E ASSESSEE WITH REGARD TO VALUATION AS PER STAMP VALUATION AUTHORIT IES AND THE TOTAL AMOUNT WAS TAKEN AT RS.18,57,700/-, BIFURCATION OF WHICH IS NOTED ABOVE. THE ASSESSEE AGREED BEFORE THE AO FOR ADOPTI ON OF RS.18,57,700/- AS SALE CONSIDERATION OF THE BUILDI NG. THE AO ALSO NOTED THAT THE ASSESSEE HAS NOT CHALLENGED THE VALU ATION DONE BY THE SUB REGISTRAR AND AS SUCH VALUATION MADE BY STAMP V ALUATION AUTHORITY WAS CONSIDERED AS SALE CONSIDERATION. AFT ER GIVING BENEFITS ETC. TO THE ASSESSEE CAPITAL GAINS WAS COMPUTED BY THE AO. NOW, THE ASSESSEE CONTENDED THAT THE VALUATION REPORT IS COR RECTED BY THE STAMP VALUATION AUTHORITIES; THEREFORE, CORRECT VAL UATION MAY BE ADOPTED. HOWEVER, NO GROUND IS RAISED EITHER BEFOR E THE LEARNED CIT(A) OR BEFORE THE TRIBUNAL IN THIS REGARD. IT IS WELL SETTLED LAW THAT NO APPEAL LIES IF THE ASSESSEE AGREES TO THE ADDITI ON. WE RELY UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF JIVATLAL PURTAPSHI VS CIT, 65 ITR 261, WHEREIN THE HONBLE H IGH COURT HAS HELD AS UNDER: HELD, THAT THE DEPARTMENT, HAVING AGREED TO DELETE THE AMOUNT FROM THE ASSESSMENT AND HAVING CONCEDED THE DELETION BEFORE THE APPELLATE ASSISTAN T COMMISSIONER CANNOT BE HELD TO BE AGGRIEVED BY THIS ITA NO.2520/AHD/2008 TAYEBI TRUST VS ITO, W-7(4), SURAT 6 PART OF THE ORDER TO ENABLE IT TO FILE AN APPEAL TO THE TRIBUNAL; THE APPEAL OF THE DEPARTMENT REGARDING TH E DELETION OF THE AMOUNT WAS NEITHER COMPETENT NOR CAPABLE OF BEING ENTERTAINED. 6.2 THE HONBLE KERALA HIGH COURT IN THE CASE OF CI T VS VAMADEVAN BHANU, 330 ITR 559 HELD AS UNDER: HELD, ALLOWING THE APPEAL, THAT ASSESSMENT WAS MADE ON THE BASIS OF THE ASSESSEES AGREEMENT THAT INTEREST INCOME IN THE FINANCING BUSINESS COULD BE ADOPTED AT 27 PER CENT. AS AGAINST 20 PER CENT. BOR NE OUT BY THE ACCOUNTS. IN THE PRECEDING YEAR VIZ. FOR THE ASSESSMENT YEAR 1996-97, THE ASSESSEE AGREED FOR ASSESSMENT OF INTEREST INCOME IN THE FINANCING BUSINESS AT 27 PER CENT. AS AGAINST 20 PER CENT. TH E CHARTERED ACCOUNTANT HAD GIVEN THE COMMITMENT ON BEHALF OF THE ASSESSEE AGREEING FOR ASSESSMENT OF INTEREST INCOME AT 27 PER CENT. FOR BOTH THE ASSESSMENT YEARS 1997-98 AND 1998-99 SPECIFICALLY ON CONDITION THAT NO PENALTY PROCEEDINGS WOULD BE INITIATED UNDER SECTION 271 (1) ( C). HENCE IT WAS NOT OPEN TO THE ASSESSEE TO APPEAL AGAINST THE ASSESSMENT ORDERS. 6.3 THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF BANTA SINGH KARTAR SINGH, 125 ITR 239 HELD AS UNDER: AN ORDER ON AN AGREEMENT CANNOT GIVE RISE TO GRIEVANCES AND THE SAME CANNOT BE AGITATED IN APPEAL. HELD, THAT IT WAS ON THE AGREEMENT OF THE ASSESSEE , WHICH AGREEMENT MENTIONED THE RATE AS WELL AS THE FIGURE, THAT PENALTY HAD BEEN LEVIED. THE ASSESSEE HAD NO RIGHT TO AGITATE THIS QUESTION IN APPEAL. TH E TRIBUNAL WAS RIGHT IN LAW IN NOT GOING INTO THE QUESTION WHETHER THE PENALTY WAS IN LAW THE MINIMUM ITA NO.2520/AHD/2008 TAYEBI TRUST VS ITO, W-7(4), SURAT 7 PENALTY LEVIABLE UNDER S. 271(1) ( C ) OF THE I. T. ACT, 1961. 6.4 CONSIDERING THE ABOVE DISCUSSIONS AND PARTICULA RLY WHEN THE ASSESSEE AGREED FOR THE SALE CONSIDERATION BEFORE T HE AUTHORITIES BELOW, WE DO NOT FIND ANY JUSTIFICATION TO ISSUE AN Y DIRECTION TO THE AO IN THIS REGARD. IN VIEW OF THE ABOVE DISCUSSIONS, W E ARE OF THE VIEW NO INTERFERENCE IS CALLED FOR IN THE MATTER. ACCORDING LY, THE APPEAL OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD