The ITO-Ward- 1(5), V. Shri Devilal Kanhaiyalal (HUF),

ITA 262/IND/2001

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1468 (ITAT-INDORE)
• Duration Of Justice: 8 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-11-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 26-07-2001
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: S S DESH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Retrospective amendment; Capital Gains
• Section: 50C

Judgement Text

- 1 - IN THE INCOME TAX APPELATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH AND SHRI V.K. GUPTA, AM ITA NO. 262/IND/2001 A.Y. 1998-99 INCOME TAX OFFICER WARD 1(5) INDORE APPELLANT VS M/S DEVILAL KANHAIYALAL (HUF) THROUGH KARTA SHRI MOHANLAL KIMTEE INDORE RESPONDENT PAN 18-117-HQ-9782 APPELLANT BY SHRI K.K. SINGH, CIT DR RESPONDENT BY SHRI S.S. DESHPANDE O R D E R PER JOGINDER SINGH, JM THIS APPEAL IS BY THE REVENUE CHALLENGING THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DATED 3 0 TH MAY, 2001 ON THE GROUND THAT ON THE FACTS AND CIRCUMSTAN CES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE E NTIRE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CAPITAL GAIN BY - 2 - HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIE D IN DETERMINING THE CAPITAL GAIN AT RS. 4,12,05,160/- BY ADOPTING T HE SALE CONSIDERATION AT RS. 4,70,44,000/- IN PLACE OF RS. 49,00,000/- SHOWED BY THE ASSESSEE. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHRI K.K. SINGH, LEARNED CIT DR AND SHRI S.S. DESHPANDE, LEARNED COUNSEL FOR THE ASSESSEE. THE CRUX OF ARGUM ENTS ON BEHALF OF THE REVENUE IS THAT PALASIA IS A POSH LOCALITY, CONSEQUENTLY, ADOPTION OF RATE BY THE ASSESSING OFF ICER IS QUITE JUSTIFIED. IT WAS CONTENDED THAT THE ASSE SSEE WAS HAVING 39,204 SQ. FT. OF LAND WHICH WAS SOLD FOR A CONSIDERATION OF RS. 48,00,500/- AND THE AMOUNT WAS RECEIVED AT THE TIME OF REGISTRATION OF DOCUMENT. OUR ATTENTION WAS INVITED TO THE WEALTHTAX ASSESSMENT A ND GIFT-TAX ASSESSMENT WAS ALSO MADE AT THE RATES AS P ER THE REPORT OF THE DVO. THE ASSESSMENT ORDER WAS SUPPORTED. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT THE STAMP DUTY WAS NOT PAID BY THE - 3 - ASSESSEE AND THE PROVISION OF SECTION 50C WAS BROUG HT IN WITH EFFECT FROM 1.4.2004. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. BRIEF FACTS ARE T HAT THE ASSESSEE HUF WAS DOING BUSINESS OF MONEY-LENDING, SOLD AGRICULTURAL LAND MEASURING 39,204 SQ. FT SITU ATED AT PALASIA HANA, INDORE, WHICH WAS TRANSFERRED BY FOUR CO- PARCENERS BY SALE DEED DATED 5.5.1997 AND WAS REGISTERED WITH THE SUB-REGISTRAR, INDORE. THE ASSE SSEE ENTERED INTO AN AGREEMENT FOR SALE OF THE SAID PLOT TO ABHISHEK HOUSING SOCIETY FOR A CONSIDERATION OF RS.49,00,500/- AND CONSEQUENTLY RECEIVED THE PAYMEN TS OF RS.25,000/- ON 21.9.1985 AND RS. 75,000/- ON 11.3.1985 WHICH WAS CREDITED IN THE BOOKS OF ACCOUN TS OF THE ASSESSEE. THE REMAINING AMOUNT OF RS.48,00,500 /- WAS RECEIVED AT THE TIME OF REGISTRATION OF DOCUMEN T. ORIGINALLY, THERE WERE DISPUTES ABOUT THE OWNERSHIP OF THIS LAND AND BY THE DECISION OF THE COURT IN THE Y EAR 1979, THE ASSESSEE BECAME THE OWNER OF THE SAID PROPERTY. THE PROPERTY WAS IN OCCUPATION OF ONE MO HD. - 4 - ISMILE WHO WANTED TO GET THE LAND MUTATED IN HIS NA ME ON ACCOUNT OF ADVERSE POSSESSION. THE LEARNED CIVI L JUDGE REFUSED TO GIVE ANY INJUNCTION. AFTER CROSSI NG ALL THESE HURDLES, THE PROPERTY WAS REGISTERED IN 1997 AS AGRICULTURAL LAND. IT IS PERTINENT TO MENTION HERE THAT THE LAND USE WAS GOT CHANGED BY THE PURCHASERS BY ORDER DATED 8.8.1997. AFTER THE SALE OF THE SAID PROPERT Y, THE COLLECTOR, INDORE, ISSUED NOTICE FOR CHARGING ADDIT IONAL STAMP DUTY ON THE SAID SALE. 4. WHILE FRAMING THE ASSESSMENT, THE LEARNED ASSESSING OFFICER REPLACED THE CONSIDERATION OF RS. 49 LACS T O RS. 470.44 LACS ON THE GROUND THAT THE COLLECTOR ISSUED NOTICE FOR CHARGING OF ADDITIONAL STAMP DUTY ON THE VALUATION OF RS. 470.44 LACS. IN ONE LINE HE HAS MENTIONED THAT AFTER DETERMINING THE LIABILITY OF C APITAL GAINS TAX, THE VALUE, AS TAKEN IN THE WEALTH-TAX, W OULD BE TAKEN AS SALE CONSIDERATION AND ON THAT BASIS THE ASSESSMENT WAS FRAMED. THE STAND OF THE ASSESSEE IS THAT THE SALE CONSIDERATION CANNOT BE SUBSTITUTED U NDER THE PROVISIONS OF THE ACT. IT IS SEEN THAT THE ASS ESSING - 5 - OFFICER HAS NOT ADDUCED ANY REASONING IN CHANGING T HE SALE CONSIDERATION EXCEPT SAYING THAT WEALTHTAX WOU LD BE THE BASIC CRITERIA FOR DETERMINING CAPITAL GAINS. T HE PROVISIONS OF SECTION 52, WHICH EXISTED UPTO THE ASSESSMENT YEAR 1987-88 PROVIDING FOR SUBSTITUTION OF SALE CONSIDERATION, IF THE CONSIDERATION FOR TRANSF ER IS UNDERSTATED BY NOT LESS THAN 15%, WAS DELETED WITH EFFECT FROM 1.4.1988. ADMITTEDLY, THE HONBLE APEX COURT IN THE CASE OF K.P. VARGHESE V. ITO; 131 ITR 597 CL EARLY HELD THAT THE BURDEN IS ON THE DEPARTMENT TO CONCLU SIVELY PROVE THAT THE ASSESSEE HAS RECEIVED SOMETHING EXTR A THAN DECLARED IN THE INSTRUMENT. THE HONBLE COURT OBSERVED WHAT IN FACT NEVER ACCRUED OR WAS NEVER RECEIVED CANNOT BE COMPUTED AS CAPITAL GAINS UNDER SECTION 48 (RELEVANT PAGE 618) THIS CASE WAS SUBSEQUENTLY FOLLOWED IN CIT VS. SHIVAKAMI COMPANY PRIVATE LIMITED; 159 ITR 71. EVEN OTHERWISE, NOTHIN G IS ON RECORD THAT ANY EXTRA MONEY WAS RECEIVED BY THE ASSESSEE OR ANY ENHANCED CONSIDERATION WAS RECEIVED BY THE ASSESSEE. - 6 - 5. IF THIS ISSUE IS ANALYSED IN THE LIGHT OF SECTION 5 0C OF THE ACT AS PER WHICH SPECIAL PROVISION FOR FULL VALUE O F CONSIDERATION IN CERTAIN CASES HAS BEEN MADE, WHERE IN AS PER SUB-CLAUSE (I) WHERE THE CONSIDERATION RECEI VED OR ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS L ESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT/STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RE CEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. THE ASSES SING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSE T TO THE VALUATION OFFICER. HOWEVER, WE HAVE FOUND THAT THI S SECTION WAS INSERTED BY THE FINANCE ACT, 2002 WITH EFFECT FROM 1.4.2003 AND NOT WITH RETROSPECTIVE EFFECT. I N THE PRESENT CASE, THE ASSESSEE ENTERED INTO AN AGREEMEN T FOR SALE OF THE SAID PLOT ON 21.9.1985. CONSEQUENT LY, WE ARE OF THE VIEW THAT SECTION 50C IS NOT APPLICABLE TO THE - 7 - PRESENT CASE. IN VIEW OF THESE FACTS, WE HAVE NOT FOUND ANY INFIRMITY IN THE IMPUGNED ORDER, CONSEQUENTLY I T IS UPHELD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 24 TH NOVEMBER, 2009. SD/- SD/- (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER NOVEMBER 24 , 2009 COPY TO APPELLANT, RESPONDENT, CIT, CIT (A), DR *DN/