S.P. Mittal (HUF), V. ITO Ward-2 (3), Meerut

ITA 2532/DEL/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5724 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 30-03-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 17-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K RAO
• Assessee Lawyers: O P SAPRA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Fair market value; Valuation report
• Section: 50C

Judgement Text

ITA NO. 2532/DEL/2008 A.Y. 2003-04 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 2532/DEL/2008 A.Y. : 2003-04 DR. S.P. MITTAL (HUF), VS. INCOME TAX OFFICER , C/O O.P. SAPRA & ASSOCIATES, WARD 2(3), MEERUT C-763, NEW FRIENDS COLONY, NEW DELHI 110 025 (PAN: AADHSD-8901-B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI O.P. SAPRA, ADV. DEPARTMENT BY : SHRI B.K. RAO, SR. DR O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A) DATED 24.6.2008 FOR THE ASSESSMENT YEAR 2003-04. 2. THE ISSUE RAISED IS THAT THE AO HAS ERRED IN IN VOKING PROVISION OF SECTION 50C OF THE IT ACT THEREBY COMPUTING THE LONG TERM C APITAL GAIN AT RS. 74,15,381/-. THE LD. CIT(A) IS ALSO NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE AO. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER:- THE ASSESSEE IS A HUF WHICH HAS FILED ITS RETURN O F INCOME DECLARING INCOME OF RS. 1,48,171/- ON 30.5.2003, ON ACCOUNT O F HOUSE PROPERTY ITA NO. 2532/DEL/2008 A.Y. 2003-04 2 INCOME AND LONG TERM GAIN. DURING SCRUTINY PROCEED INGS, THE AO FOUND THAT ASSESSEE SOLD LAND IN VILLAGE MALIYANA FOR A CONSI DERATION OF RS. 41,61,000/- AND AVAILED THE DEDUCTION OF RS. 41,61,000/- BUT TH E SALE VALUE FOR THE PURPOSE OF STAMP DUTY WAS RS. 59,55,000/-. THE AO S HOW CAUSED THE ASSESSEE TO INVOKE PROVISIONS OF SECTION 50C. THE ASSESSEE SUBMITTED THAT THE VALUE OF THE LAND WAS DISPUTED IN THE COURT OF LAW, WHICH WAS STILL PENDING. THE AO REJECTED THE CONTENTION AS THE A SSESSEE HAD NOT FILED ANY VALUATION REPORT, WHICH COULD SHOW THAT THE FAIR MA RKET VALUE OF LAND WAS LESS THAN THE VALUE AS PER STAMP DUTY PURPOSES. F URTHER, THE AO FOUND THAT THE ADM(F) HAD, VIDE ORDER UNDER SECTION 47A O F STAMP ACT, HAD ENHANCED THE VALUE OF CONSIDERATION OF IMPUGNED LAN D AND BUILDING TO RS. 1,46,02,000/-. CORRESPONDING VALUE OF THE LAND BELO NGING TO THE ASSESSEE, FOR STAMP DUTY PURPOSES WAS WORKED OUT TO BE RS. 1, 16,27,000/- AND THEREBY AO RECOMPUTED THE LONG TERM CAPITAL GAIN. 4. UPON ASSESSEES APPEAL LD. CIT(A) CONFIRMED THE AOS ACTION. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 6. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THOUG H IN THIS CASE THE AO HAS INVOKED THE PROVISION OF SECTION 50C. HE HAS NOT PR OPERLY FOLLOWED THE PROVISIONS OF THE ACT. ASSESSEE HAS DULY STATED BEFORE THE A O VIDE HIS LETTER DATED 17.8.2005 THAT THE SALE CONSIDERATION RECEIVED ON S ALE OF LAND WAS TAKEN AS FULL VALUE OF CONSIDERATION BY THE ASSESSEE FOR CAPITAL GAIN PURPOSES INSTEAD OF ITA NO. 2532/DEL/2008 A.Y. 2003-04 3 AMOUNT ON WHICH THE STAMP DUTY WAS PAID BY THE BUY ER, BECAUSE THAT VALUE WAS MUCH ABOVE THE FAIR MARKET VALUE OF THE LAND SOLD D UE TO THE REASONS MAINLY THAT THE LAND WAS NOT IN POSSESSION OF THE ASSESSEE BEI NG LET ON IN 72-73 AND THE RENT OF THE SAME WAS RECEIVED SINCE 73-74 AND THE DISPU TE WAS IN THE COURT OF LAW. SECONDLY OWNERSHIP OF THE ASSESSEE ON THE LAND SOLD WAS ALSO CHALLENGED AND THE CASE IS STILL PENDING IN THE CIVIL COURT, TO OVERCO ME FROM ALL THESE PROBLEMS ASSESSEE HAD SOLD THE LAND ON AS IS WHERE IS BASIS AND AT THE BEST PRICE THIS DISPUTED LAND COULD FETCH. 6.1 AO HAD SUMMARILY DISMISSED THE ABOVE SUBMISSION S HOLDING THAT THE REPLY OF THE ASSESSEE WAS NOT TENABLE, AS ASSESSEE HAD NO T FILED ANY VALUATION REPORT. NOW IN THIS REGARD LD. COUNSEL OF THE ASSESSEE REFE RRED TO THE PROVISIONS OF SECTION 50C OF THE ACT WHEREIN VIDE CLAUSE (2) OF SECTION 50C MANDATES AS UNDER:- (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION (1) WHERE - A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED (OR ASSESSABLE) BY THE STAMP VA LUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; ITA NO. 2532/DEL/2008 A.Y. 2003-04 4 B) THE VALUE SO ADOPTED OR ASSESSED 9OR ASSESSABLE) BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT B EEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MA DE 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 6.2 IN VIEW OF THE ABOVE PROVISIONS LD. COUNSEL OF THE ASSESSEE CONTENDED THAT THE MATTER IN THIS REGARD NEEDS TO BE REMITTED TO THE FILES OF THE AO TO ENABLE THE AO TO FOLLOW THE PROVISION OF ACT AS ABOVE BY SUI TABLY REFERRING THE MATTER TO THE VALUATION OFFICER. 6.3 LD. DR ON THE OTHER HAND PLACED RELIANCE OF THE ORDERS OF THE AUTHORITIES BELOW. 6.4 WE HAVE CAREFULLY CONSIDERED THE SUBMISSION AND PERUSED THE RECORDS. A READING OF CLAUSE (2) OF SECTION 50C MAKES IT CLEA R THAT AS PER THE MANDATE OF THE ACT WHEN THE ASSESSEE DISPUTES THAT THE VALUE ADOPT ED BY THE STAMP VALUATION AUTHORITY, IS HIGHER THAN THE FAIR MARKET VALUE, T HE AO MAY REFER THE CASE TO THE VALUATION OFFICER. NOW IN THIS CASE THE ASSESSEE HA S DISPUTED THE VALUE ADOPTED BY STAMPING AUTHORITIES AS EXCESSIVE, BUT AO HAS NO T FOLLOWED THE PROVISIONS OF ITA NO. 2532/DEL/2008 A.Y. 2003-04 5 SECTION 50C(2). ACCORDINGLY, WE FIND THAT THERE IS A CONSIDERABLE COGENCY IN THE SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE. HEN CE IN THE INTEREST OF JUSTICE, WE REMIT THIS ISSUE TO THE FILES OF THE AO TO CONSIDER THE SAME AFRESH IN THE LIGHT OF THE DISCUSSION IN THE PRECEDING PARAGRAPH. NEEDLE SS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD . 7. IN THE RESULT, THE ASSESSEES APPEAL STANDS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30/3/2010 UPO N CONCLUSION OF THE HEARING. SD/- SD/- [C.L. SETHI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 30/03/ 2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES