M/s. M.M.Rubber Co. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 266/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4944 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R VIJAYAKUMAR
• Assessee Lawyers: THOMAS VELLAPALLY
• Keywords: Opportunity of being heard; Additional evidence; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI HARI OM MARATHA, J.M. AND SHRI N.S. SAINI, AM .. I.T.A. NO. 266/MDS/2011 M/S M.M. RUBBER CO. LTD 748, MOUNT ROAD CHENNAI 600 002. PAN : AAACM 2611E VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE -IV TRICHY (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI THOMAS VELLAPALLY DEPARTMENT BY : SHRI R. VIJAYAKUMAR O R D E R PER N.S. SAINI, A.M :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE CIT(A)-VI, CHENNAI DATED 19.11.2010. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED 13 EFFEC TIVE GROUNDS OF APPEAL AND THE GRIEVANCES OF THE ASSESSEE ARE AS UN DER: PAGE 2 OF 6 I.T.A. NO. 266/MDS/2011 (1) THE ASSESSING OFFICER, AFTER REFERRING THE MATT ER TO THE VALUATION OFFICER PROCEEDED TO ADOPT THE GUIDELINE VALUE OF RS. 783 LAKHS UNDER THE PROVISIONS OF SECTION 50 C OF THE INCOME-TAX ACT, 1961 [IN SHORT, THE ACT] FOR COMPUTING LONG TERM CAPITAL GAINS OF THE ASSESSEE O N SALE OF PROPERTY AS HE DID NOT RECEIVE THE VALUATION OFF ICERS REPORT BEFORE THE COMPLETION OF THE ASSESSMENT. (2) SUBSEQUENTLY, ON RECEIPT OF THE VALUATION OFFIC ERS REPORT, THE ASSESSEE FILED APPEAL BEFORE THE LD. CI T(A), OBJECTING, INTER ALIA, TO THE NON-DEDUCTION OF RS. 550 LAKHS FROM SALE PROCEEDS WHILE COMPUTING CAPITAL GA INS AND ALSO WRONGLY ADOPTING THE FAIR MARKET VALUE AT RS. 783 LAKHS AGAINST RS. 7,43,30,000/- FIXED BY THE VALUATION OFFICER. (3) THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ASSESSMENT HOLDING THAT THE SUM OF RS. 550 LAKHS S HOULD NOT BE DEDUCTED FROM THE SALE PROCEEDS RELYING ON T HE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. ATTILI N. RAO 252 ITR 880 WHEN THE FACTS OF THE SAID PAGE 3 OF 6 I.T.A. NO. 266/MDS/2011 DECISIONS ARE NOT SIMILAR TO THE FACTS OF THE CASE OF THE ASSESSEE. (4) THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT CONSIDE RING THE SUBMISSIONS OF THE ASSESSEE THAT REMOVING OF THE MORTGAGE WAS CONDITION PRECEDENT TO THE SALE AND T HAT THE TRANSFER COULD NOT HAVE TAKEN PLACE WITHOUT SUC H REMOVAL. 3. AT THE TIME OF HEARING, THE LD. A.R. OF THE ASSE SSEE FILED AN APPLICATION TOGETHER WITH AN AFFIDAVIT DATED 12.5.2 011 U/R 29 OF THE I.T. RULES, 1963 AND PRAYED THAT THE VALUATION REPO RT DATED 29.1.2010 OF THE DISTRICT VALUATION OFFICER, VALUAT ION CELL, I.T. DEPARTMENT, CHENNAI BE ADMITTED AS ADDITIONAL EVIDE NCE. 4. FURTHER, HE ALSO FILED AN APPLICATION TOGETHER W ITH AN AFFIDAVIT DATED 18.5.2011 SEEKING PERMISSION OF THE BENCH TO RAISE THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: PAGE 4 OF 6 I.T.A. NO. 266/MDS/2011 15. IN VIEW OF THE FACT THAT AN AMOUNT OF RS. . 5,50 ,00,000/- WAS PAID DIRECTLY TO THE BANK OUT OF TOTAL SALE CONS IDERATION BY THE PURCHASER OF THE PROPERTY, FOR CLEARING THE M ORTGAGE ON THE PROPERTY, THE LD. CIT(A) AS WELL AS THE ASSE SSING AUTHORITY HAVE ERRED IN COMPUTING CAPITAL GAINS BY TA KING INTO ACCOUNT THE ENTIRE SALE CONSIDERATION AS INCOME CHAR GEABLE TO CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. 16. BECAUSE ON ACCOUNT OF THE MORTGAGE OF THE PROPERT Y TO THE BANK THE PAYMENT OF A SUM OF RS. 5,50,00,000/- DIRECTLY TO THE BANK BY THE PURCHASER, AMOUNTED TO DIVERSION O F INCOME BY WAY OF OVERRIDING TITLE AND ACCORDINGLY T HE APPELLANT WAS ONLY LIABLE TO BE ASSESSED ON THE BAL ANCE PURCHASE PRICE OF RS. 1,63,00,000/- RECEIVED IN ITS HANDS FROM THE PURCHASER OF THE PROPERTY WHILE COMPUTING ITS CAP ITAL GAINS LIABILITY. 17. THAT THE LD. CIT(A) AS WELL AS THE ASSESSING AUT HORITY SHOULD HAVE HELD THAT ONLY THE AMOUNT ACTUALLY RECEIVE D BY THE APPELLANT FROM THE PURCHASER WAS INCOME RECEIVE D OR ACCRUING TO THE APPELLANT FOR THE PURPOSE OF COMPUTAT ION OF CAPITAL GAINS AND THE AMOUNTS PAID DIRECTLY TO THE B ANK BY THE PURCHASER FOR THE PURPOSE OF LIFTING THE MORTGAGE COUL D NOT BE ASSESSED IN THE HANDS OF THE APPELLANT FOR THE PURPO SE OF COMPUTATION OF CAPITAL GAINS. PAGE 5 OF 6 I.T.A. NO. 266/MDS/2011 5. THE LD. D.R. DID NOT OBJECT TO THE ADMISSION OF THE ABOVE ADDITIONAL EVIDENCE AS WELL AS THE ADDITIONAL GROUN DS OF APPEAL RAISED BY THE ASSESSEE. THEREFORE, THE BENCH ADMIT TED THE ADDITIONAL EVIDENCE AS WELL AS ADDITIONAL GROUNDS O F APPEAL AND THE PARTIES WERE ALLOWED TO MAKE THEIR SUBMISSIONS THER EON. 6. THE LD. A.R. OF THE ASSESSEE PRAYED THAT THE MAT TER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION OF THE ISSUE AFTER CONSIDERING THE DIS TRICT VALUATION OFFICERS REPORT DATED 29.1.2010. 7. THE LD. D.R. ALSO CONCEDED TO THE ABOVE SUBMISSI ONS OF THE LD. A.R. 8. THEREFORE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES BELOW AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION OF THE ISSUE AFTER CONSIDE RING THE DISTRICT VALUATION OFFICERS REPORT DATED 29.1.2010 AFTER AL LOWING REASONABLE AND PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. PAGE 6 OF 6 I.T.A. NO. 266/MDS/2011 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 10 TH JUNE 2011. SD/- SD/- ((HARI OM MARATHA ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 10 TH JUNE, 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE