Sh. Sunil Jain, New Delhi V. ITO, New Delhi

ITA 2545/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2639 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 12-06-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR SENIOR
• Assessee Lawyers: SM MATHUR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Tangible material; Fair market value; Competent authority
• Section: 50C; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO.2545/DEL/2012 (ASSESSMENT YEAR : 2009-10) SHRI SUNIL JAIN, VS. ITO, WARD 28 (4), PROP. M/S. JAINA SALES CORPORATION, NEW DELHI. 2198, KUCHA AKIL KHAN, BAZAR SITA RAM, CHAWRI BAZAR, DELHI 110 006. (PAN : AAEPJ6651Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.M. MATHUR, ADVOCATE REVENUE BY : MS. Y. KAKKAR, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF CIT (APPEALS)-XXV, NEW DELHI DATED 24.04.2012. 2. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUS INESS OF PRINTERS AND STATIONERY SUPPLIERS. DURING THE YEAR, TWO PROPERTI ES WERE SOLD IN WHICH THE ASSESSEE WAS HAVING 25% SHARE. THE SALE CONSIDERATI ON IN RESPECT OF ONE PROPERTY WAS DECLARED AT RS.7 LACS BUT THE STAMP VA LUATION AUTHORITY VALUED IT AT RS.9,70,000/-. THE OTHER PROPERTY WAS SHOWN TO B E SOLD AT RS.38 LACS BUT IT WAS VALUED AT RS.65,65,000/- BY STAMP VALUATION AUT HORITY. THE ASSESSING ITA NO.2545/DEL/2012 2 OFFICER INVOKED THE PROVISIONS OF SECTION 50C(1) AN D WORKED OUT THE CAPITAL GAIN OF 25% OF THE SHARE OF BOTH THESE PROPERTIES A ND MADE AN ADDITION OF RS.4,55,450/-. THE CIT (A) CONFIRMED THE ADDITION B Y HOLDING AS UNDER :- 3.4 I HAVE CONSIDERED THE ORDER OF THE AO AND THE SUBMISSION OF THE ASSESSEE AND I DO NOT FIND ANY MERIT IN THE SUBMISS ION OF THE ASSESSEE AS THE A.O. HAS INVOKED THE DEEMING PROVISIONS OF SECTION 50C AND THE PROVISIONS OF THE SECTION FOR THE COMPUTATION OF CAPITAL GAIN AS PROVIDED U/S 50C READS AS UNDER:- '(1) WHERE THE CONSIDERATION RECEIVED 01' ACCRUING AS A RESULT OF THE 'TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET BEING L AND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED [OR ASSESSA BLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRE D TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] 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 SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE- (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICE R THAT THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VA LUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF TH E 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 B EEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BE FORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING. OFFICER MAY REFER THE VALUATION OF T HE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS M ADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB- SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA. SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATI ONS, APPLY IN RELATION TO SUCH REFERENCE TO SUCH REFERENCE AS THEY APPLY IN R ELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF ACT. 3. NOW, THE ASSESSEE IS IN APPEAL BEFORE US BY TAKI NG THE FOLLOWING GROUNDS :- ITA NO.2545/DEL/2012 3 1. THAT THE HON'BLE COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN LAW AS MUCH AS ON THE FACTS OF THE CASE IN CONFI RMING THE ADDITION OF RS.4,55,450/-WHICH WAS ERRONEOUSLY MADE BY THE LEAR NED ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 50C(L) OF THE INCOME TAX ACT, 1961. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) WHILE CONFIRMI NG THE AFORESAID ADDITION OF RS.4,55,450/- HAD NOT APPRECIATED THAT THE LEARNED ASSESSING OFFICER HAD NOT BROUGHT ANY TANGIBLE MATERIAL ON RE CORD TO SUBSTANTIAL THAT THE APPELLANT HAD RECEIVED SALE CONSIDERATION MORE THAN THE SALE CONSIDERATION MENTIONED IN THE SALE DEED IN RESPECT OF PORTIONS OF PROPERTY SOLD DURING THE YEAR UNDER APPEAL. 3. THAT HON'BLE COMMISSIONER OF INCOME TAX (APPEALS )-XXV, HAS SUSTAINED THE ADDITION OF RS.4,55,450/-IN CONJECTUR E AND SURMISE WITHOUT GIVING ANY COGNIGENCE TO THE LEGAL DECISIONS CITED BY THE APPELLANT BEFORE HIM. IT IS, THEREFORE, KINDLY PRAYED THAT THE ADDITION O F RSA,55,450/- WHICH WAS ERRONEOUSLY MADE BY THE LEARNED ASSESSING OFFICER A ND ALSO ERRONEOUSLY SUSTAINED BY THE HON'BLE COMMISSIONER OF INCOME TAX MAY KINDLY BE DELETED AFTER PROVIDING AN OPPORTUNITY OF BEING HEA RD TO THE APPELLANT. 4. IN ALL THESE THREE GROUNDS, THE ONLY ISSUE INVOL VED IS AGAINST CONFIRMING THE ADDITION OF RS.4,55,450/- BY INVOKING THE PROVI SIONS OF SECTION 50C(1) OF THE INCOME-TAX ACT, 1961. 5. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. WE H AVE ALSO CONSIDERED THE CASE LAWS RELIED UPON BY BOTH THE SIDES. WE FIN D THAT THE CASE LAWS RELIED BY THE LEARNED COUNSEL FOR THE ASSESSEE IS NOT ON T HE SAME FACTS AS OF THE ASSESSEES CASE. IN THESE CASES, THE ADDITION WAS M ADE IN THE HANDS OF THE PURCHASERS. WHILE THE PROVISIONS OF SECTION 50C ARE SPECIAL PROVISIONS FOR WORKING OUT THE CAPITAL GAIN IN THE HANDS OF SELLER TO ARRIVE AT THE FULL VALUE OF CONSIDERATION ON THE TRANSFER OF CAPITAL ASSET BEIN G LAND AND BUILDING OR BOTH WHEN LESS THAN THE VALUE ADOPTED OR ASSESSED BY AN AUTHORITY OF STATE ITA NO.2545/DEL/2012 4 GOVERNMENT FOR THE PURPOSE OF STAMP DUTY VALUATION. IN SUCH CASE, THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF SECTION 4 8 SHALL BE DEEMED TO THE FULL VALUE OF CONSIDERATION AS ADOPTED BY THE STAMP VALUATION AUTHORITY. THERE IS A PROVISION IN THIS SECTION WHERE ASSESSEE CAN C LAIM BEFORE THE ASSESSING OFFICER THAT VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER THEN THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO THE VALUATION OFFICER. THE ASSESSEE DISPUTED THE VALUAT ION AS PER STAMP DUTY VALUATION AUTHORITY BEFORE ASSESSING OFFICER THEN A SSESSING OFFICER WAS BOUND TO REFER TO DVO. THE ASSESSING OFFICER HAD NO T REFERRED THE ISSUE TO THE VALUATION OFFICER AS PER PROVISIONS OF SECTION 50C(2) OF THE ACT. CIT (A) HAD CONFIRMED THE ADDITION BY HOLDING THAT THE ASSE SSEE HAS NOT BROUGHT ANY SUBSTANTIAL MATERIAL TO CONTROVERT THE FINDING OF T HE AUTHORITIES BELOW. THE REVENUES RELIANCE ON THE DECISION OF HON'BLE BOMBA Y HIGH COURT IN CASE OF BHATIA NAGAR PREMISES COOPERATIVE SOCIETY LTD. VS. UOI 334 ITR 145 IS OF NO HELP. THE HON'BLE HIGH COURT HAS HELD AS UNDER : - SECTION 50C OF THE INCOME-TAX ACT, 1961, HAS BEEN SPECIFICALLY INTRODUCED WITH A VIEW TO PREVENT EVASION OF TAX AND UNDERVALU ATION OF THE TRANSACTION. IT IS IN THAT CONTEXT THAT SECTION 45, SECTION 48 A ND SECTION 50C MUST BE READ. THE CLASSIFICATION IS IN RESPECT OF AN IDENTI FIABLE GROUP OF ASSESSEES. BOTH CLASSES HAVE TO PAY CAPITAL GAINS TAX. IN SO F AR AS SECTION 50C IS CONCERNED, IT PERTAINS TO A CLASS OF CAPITAL ASSETS BEING LAND OR BUILDING. THEREFORE, THE CLASSIFICATION IS NOT UNREASONABLE A ND CONSEQUENTLY NOT DISCRIMINATORY CONSIDERING THE OBJECT BEING TO TAX THE INCOME ARISING FROM CAPITAL GAINS. THE PETITIONER-SOCIETY ENTERED INTO A DEVELOPMENT A GREEMENT TO DEVELOP AND SELL ITS PROPERTY. THE DEVELOPER SOUGHT A REFER ENCE AND IN TERMS OF ITA NO.2545/DEL/2012 5 ARTICLE 5(GA) OF THE FIRST SCHEDULE TO THE BOMBAY S TAMP ACT, 1958, THE COLLECTOR OF STAMPS DETERMINED AN AMOUNT OF RS.15,5 0,030 AS STAMP DUTY AS ALSO A PENALTY IN THE SUM OF RS.1,55,010. THE DE VELOPER PAID THE STAMP DUTY ALONG WITH THE PENALTY. ON A WRIT PETITION: HELD, J DISMISSING THE PETITION, (I) THAT SECTION 5 0C IS NOT BEYOND THE LEGISLATIVE COMPETENCE AND IT IS NOT VIOLATIVE OF A RTICLE 14 OF THE CONSTITUTION. K. R. PALANISAMY V. UNION OF INDIA [2008] 306 ITR 6 1 (MAD) FOLLOWED. UNION OF INDIA V. SANYASI RAO (A.) [1996] 219 ITR 3 30 (SC) APPLIED. (II) THAT THE DEVELOPER HAD SOUGHT A REFERENCE ON W HICH THE COMPETENT AUTHORITY UNDER THE STAMP ACT HAD GIVEN THE VALUATI ON AND PURSUANT THERETO PAID THE DUTY AS ALSO THE PENALTY IMPOSED. THEREFOR E, THAT CHALLENGE WOULD NOT BE AVAILABLE TO THE PETITIONER IN THE WRIT PETI TION AS THERE WAS NO LONGER A DEMAND NOTICE TO BE COMPLIED WITH. EVEN THOUGH IF AN APPEAL HAD NOT BEEN PREFERRED, REFERENCE WAS SOUGHT BY THE DEVELOP ER AND NOT THE PETITIONER, THE PETITIONER HAD A REMEDY OF CALLING ON THE ASSESSING OFFICER TO APPOINT THE VALUER FOR THE PURPOSE OF DETERMININ G THE FAIR MARKET VALUE. UNDER SECTION 50C, THE VALUE SO ADOPTED OR ASSESSED BY ANY AUTHORITY OF THE STATE GOVERNMENT IS ONLY A MEASURE OF TAX AND NOT T HE SUBJECT-MATTER OF TAX. IN THE CASE OF MRS. MANJULA SINGHAL VS. ITO 141 T TJ (JD) 511, ITAT, JODHPUR BENCH HAD HELD AS UNDER :- THE MAIN ISSUE FOR CONSIDERATION IS THAT IF THE AS SESSEE DISPUTES THE VALUATION AS PER STAMP VALUATION AUTHORITY BEFO RE THE ASSESSING OFFICER THEN WHETHER THE ASSESSING OFFICE R IS BOUND TO REFER THE MATTER TO THE DVO OR NOT, IMPLIEDLY WH ETHER THE TERM USED MAY IS TO BE READ AS SHALL OR NOT. IN SUB-S. (2) OF S. 50C, AN EXCEPTION HAS BEEN CARVED OUT TO THE ADOPTI ON OF VALUATION AS PER STAMP VALUATION AUTHORITY AND IF T HE CONDITIONS LAID DOWN IN THE SUB-SECTION ARE FULFILLED, THEN TH E CLAIM OF THE ASSESSEE THAT THE VALUATION AS PER STAMP VALUATION AUTHORITY IS MORE THAN THE FAIR MARKET VALUE, CANNOT BE REJECTED BY THE AO WITHOUT COMPLYING WITH THE PROCEDURE LAID DOWN IN T HE SAID SUB- SECTION. THE DISCRETION OF THE AO IS CIRCUMSCRIBED BY THE FULFILLMENT OF THE CONDITIONS AS CONTEMPLATED IN SU B-S. (2). EVERY QUASI-JUDICIAL AUTHORITY HAS TO EXERCISE ITS DISCRE TION JUDICIOUSLY AND NOT ARBITRARILY. THE DISCRETION HAS BEEN CONTRO LLED BY THE CONDITIONS CONTEMPLATED IN THE SECTION ITSELF. THER EFORE, THE TERM ITA NO.2545/DEL/2012 6 MAY USED IN SUB-S. (2) IS TO BE READ AS SHALL A ND IF THE STAMP VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY IS DISPUTED BEFORE THE ASSESSING OFFICER, THEN HE HAS TO REFER THE MATTER TO THE DVO FOR DETERMINING THE FAIR MARKET VALUE OF TH E PROPERTY. CONTENTION THAT SINCE THE AO DID NOT REFER THE MATT ER TO THE DVO, THEREFORE, HE WAS BOUND TO ACCEPT THE REGISTER ED VALUERS REPORT SUBMITTED BY THE ASSESSEE IS NOT SUSTAINABLE FOR THE SIMPLE REASON THAT NOWHERE IN S. 50C, SUCH A CONDITION HAS BEEN CONTEMPLATED. THE MATTER IS RESTORED TO THE AO WITH THE DIRECTION TO REFER THE VALUATION OF THE PROPERTY TO DVO FOR DETERMINING THE FAIR MARKET VALUE AND THEREAFTER DE CIDING THE ISSUE DE NOVO IN ACCORDANCE WITH LAW. CONSIDERING ALL RELEVANT FACTS AND CASE LAWS RELIED UPON BY BOTH SIDES, WE FIND IT APPROPRIATE TO REMAND THE ISSUE TO THE FILE OF A SSESSING OFFICER FOR REFERENCE TO THE VALUATION OFFICER IN VIEW OF THE PROVISIONS OF SECTION 50C(2) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF JULY, 2013. SD/- SD/- (C.M. GARG) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 11 TH DAY OF JULY, 2013 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXV, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.