Shri Kishanbhai Nathubhai Patel, Surat V. Income Tax Officer, Ward 3(2)(4), Surat

ITA 270/SRT/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4045 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 11-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: WIFE
• Keywords: Cost of acquisition; Revised return
• Section: 56(2)(vii)(b)

Judgement Text

(IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NO.270/SRT/2018 (AY 2014-15) (H EARING IN VIRTUAL COURT) (LATE) SHRI KISHANBHAI NATHUBHAI PATEL REPRESENTED BY WIFE & LEGAL HEIR SMT. SAVITABEN KISHANBHAI PATEL, 39, GUNATITNAGAR SOCIETY, NR. RETREAT HEIGHT APARTMENT, BEHIND BIG BAZAR, VESU, SURAT. PAN: ACVPP 4549 G VS. THE INCOME TAX OFFICER, WARD-(3)(2)(4), SURAT. APPLICANT RESPONDENT ASSESSEE BY SHRI DEEPAK D. VAKIL AR REVENUE BY MS. ANUPAMA SINGLA SR.DR DATE OF HEARING 07.09.2021 DATE OF PRONOUNCEMENT 20.09.2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-3, SURAT DATED 08.02.2018 FOR THE ASSESSMENT YEAR (AY) 2014-15. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD.C.I.T. (A)-3, SURAT HAS ERRED IN SUSTAINING THE ADDITION MADE BY THE LD. A.O. U/S 56(2)(VII)(B) OF THE I.T. ACT, WITHOUT APPRECIATING THAT YOUR HONOURS PETITIONER HAS PURCHASED THE RESIDENTIAL HOUSE AT JANTRI PRICE, ASSIGNING REASON THAT IT IS NOT ESTABLISHED FROM THE DOCUMENTS THAT THE RECORDED CONSIDERATION IS THE MARKET VALUE OF ACTUAL PLOT AS PER SV. (2) YOUR HONOURS PETITIONER CRAVES LEAVE TO ADD TO OR AMEND THE GROUNDS OF APPEAL AT THE TIME OF HEARING THE APPEAL. 2. INITIALLY THIS APPEAL WAS FILED BY THE ASSESSEE ON 11.04.2018. DURING THE PENDENCY OF APPEAL, THE ASSESSEE DIED ON 26.09.2018. THE LEGAL REPRESENTATIVE (LRS) OF THE ASSESSEE FURNISHED FRESH FORM-36 SUBSTITUTING THEM AS LRS OF ASSESSEE. FRESH FROM-36 IS TAKEN ON RECORD. ITA NO.270/SRT/2018 (AY 2014-15) SHRI KISHANBHAI NATHULAL PATEL(LATE), L/H SMT. SAVITABEN KISHANBHAI PATEL 2 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR (AR) 2014-15 ON 19.08.2014, DECLARING INCOME OF RS.14,57,476/-. THE CASE WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT, THE ASSESSING OFFICER (AO) NOTED THAT ASSESSEE PURCHASED IMMOVABLE PROPERTY IN BLOCK NO. 17 VILLAGE KASBE, SUB-DIVISION BARDOLI, DISTRICT SURAT FOR A CONSIDERATION OF RS.46 LAKHS EXCLUDING STAMP DUTY AND REGISTRATION FEE. WHILE CALCULATING THE STAMP DUTY, THE STAMP VALUATION AUTHORITY (SVA) WORKS OUT THE VALUE OF STAMP OF RS.2,71,500/-. THE AO TOOK HIS VIEW THAT THE ASSESSE PAID STAMP OF RS.2,71,500/-, AS AGAINST RS.2,25,200/- BEING 4.9%. THUS, THE VALUE OF SALE CONSIDERATION WOULD BE OF RS. 55,40,816/- INSTEAD OF RS.46,17,850/-, HENCE, THERE WAS A DIFFERENCE OF RS.9,40,816/-. ON CONFRONTING THIS FACT, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 04.11.2015 DECLARING SAME INCOME. HOWEVER, IN THE COMPUTATION OF INCOME, THE ASSESSEE ADOPTED ENHANCED VALUE OF DEEMED SALE CONSIDERATION FOR PURCHASE OF IMMOVABLE PROPERTY. THE AO ISSUED SHOW CAUSE NOTICE AS TO WHY DIFFERENCE OF VALUE WORKED OUT AS PER THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY(SVA) SHOULD NOT BE ADDED UNDER SECTION 56(2)(VII)(B) OF THE ACT. THE ASSESSEE FILED IS REPLY DATED 14.11.2016 AND STATED THAT SECTION 56(2)(VII)(B) OF THE ACT CANNOT BE INVOKED FOR FOUR REASONS: ITA NO.270/SRT/2018 (AY 2014-15) SHRI KISHANBHAI NATHULAL PATEL(LATE), L/H SMT. SAVITABEN KISHANBHAI PATEL 3 (I) FIRSTLY, DUE TO WEIGHTAGE ON THE REGISTRATION IMPOSED UPON THIS HOUSING SOCIETIES PLOTS ARE TO BE GIVEN AND CONSIDERED AS PER ACTUAL MARKET VALUE OF SUCH LAND HAS REDUCED BY THE WEIGHTAGE OF SUCH RESTRICTIONS FROM THE JANTRI PRICE. (II) SECONDLY, THE LAND PURCHASED BY THE ASSESSEE IS NOT IN BARDOLI VILLAGE BUT LOCATED ON OUTSKIRTS OF THE VILLAGE. SINCE THE ASSESSEE IS DEPRIVED OFF THE ESSENTIAL FACILITIES AS THE LAND PURCHASED IS FAR AWAY FROM THESE IMPORTANT LOCATIONS THAT HAS BEARING ON THE ACTUAL MARKET RATE TO BE PAID BY THE BUYER WHICH OBVIOUSLY VERY WITH THE JANTRI RATE. (III) THIRDLY, THE JANTRI RATES ARE DECIDED WITH AN UNDERSTANDING THAT AL LANDS HAVE ACCESS TO THE MAIN APPROACH ROAD DEVELOPED BY THE URBAN AUTHORITY WHICH IS NOT ALWAYS CORRECT AND (IV) FOURTHLY, SETTLEMENT OF PURCHASE COST IN CASH WITHOUT DISCLOSING THEM IN THE PURCHASE DOCUMENT ARISES ONLY WHEN THE BUYER HAS GOT WINDFALL SOURCE OF INCOME IN CASH OUTSIDE THE BOOKS OF ACCOUNTS WHICH HE NEEDS TO HAVE SAFE DISPOSAL WITHOUT COMING INTO THE SCANNER OF TAX AUTHORITY. 4. THE REPLY OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO BY TAKING VIEW THAT IF ANY IMMOVABLE PROPERTY FOR A CONSIDERATION WHICH IS LESS THAN THE STAMP VALUE OF PROPERTY EXCEEDING RS.50,000/-, THEN DIFFERENCE BETWEEN THE STAMP VALUE AND THE PURCHASE CONSIDERATION WILL BE TREATED AS INCOME UNDER THE HEAD OTHER SOURCES, ACCORDINGLY, THE AO MADE ADDITION OF RS.9,40,816/- AND TREATED THIS AS INCOME FROM OTHER SOURCES. ITA NO.270/SRT/2018 (AY 2014-15) SHRI KISHANBHAI NATHULAL PATEL(LATE), L/H SMT. SAVITABEN KISHANBHAI PATEL 4 5. AGGRIEVED BY THE ADDITIONS MADE BY THE AO, THE ASSESSE FILED THE APPEAL BEFORE THE LD.CIT(A). THE ASSESSEE FILED DETAILED WRITTEN SUBMISSIONS AND EXPLAINED THAT AS PER THE STATE GOVERNMENT REGULATIONS, THE STAMP DUTY OF COMMON PLOT, ROAD, AND SPACE LEFT FOR CIVIC AMENITIES ARE ALSO TO BE ADDED IN THE VALUE OF STAMP DUTY PAID AT THE TIME OF REGISTRATION. THE ASSESSEE ALSO FURNISHED COPY OF CIRCULAR ISSUED BY DISTRICT CONTROLLER OF REVENUE DATED 26.09.2007 AND EXPLAINED THAT ON PAGE NO.22 OF THE SALE DEED, THE DETAILS OF INTERNAL ROAD OF THE SOCIETIES ARE MENTIONED. ACCORDINGLY, IT WAS EXPLAINED THAT ADDITIONAL DUTY COLLECTED BY STAMP VALUATION AUTHORITY PERTAINS TO THE COMMON AMENITIES, WHICH CANNOT BE TREATED AS DEEMED CONSIDERATION OF VALUE OF PLOT / PROPERTY AS PER SECTION 56(2)(VII)(B) OF THE ACT. THE LD.CIT(A) DESPITE RECORDING THE SUBMISSION OF ASSESSEE, TOOK HIS VIEW THAT PROVISION OF SECTION 56(2)(VII)(B) OF THE ACT ARE DEEMING PROVISION AND HAS TO BE STRICTLY INTERPRETED. THOUGH, IT WAS ACCEPTED BY LD.CIT(A), THAT THERE IS SOME MERIT IN THE ARGUMENT, HOWEVER, THE LD.CIT(A) NOT AGREED WITH THE CONTENTION OF THE ASSESSEE AS NO SEPARATE BRAKE UP OF MARKET VALUE OF ACTUAL PLOT, ROAD, COMMON AREA IS GIVEN IN THE SALE DEED AND /OR IT IS NOT ESTABLISHED FROM THE DOCUMENT THAT THE RECORDED CONSIDERATION IS THE MARKET VALUE OF ACTUAL PLOT AS PER STAMP VALUATION AUTHORITY (SVA), AND, CONCURRED WITH THE FINDING OF THE AO. FURTHER AGGRIEVED, THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE THIS TRIBUNAL. ITA NO.270/SRT/2018 (AY 2014-15) SHRI KISHANBHAI NATHULAL PATEL(LATE), L/H SMT. SAVITABEN KISHANBHAI PATEL 5 6. WE HAVE HEARD THE SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. SENIOR DEPARTMENTAL REPRESENTATIVE (SR.DR) FOR THE REVENUE. THE LD.AR OF THE ASSESSEE SUBMITS THAT ASSESSEE PURCHASED THE RESIDENTIAL HOUSE AT BARDOLI DISTRICT OF SURAT FOR A CONSIDERATION OF RUPEES 46 LAKHS. THE ASSESSEE PAID REQUISITE STAMP DUTY @ 4.9% + ADDITIONAL 1% OF CONSIDERATION THEREBY TOTAL OF RS.2,71,500/- AS AGAINST RS.2,25,200/- BEING 4.9% PAID ON PURCHASE COST OF RS.46 LAKHS. THE PAYMENT OF ADDITIONAL STAMP DUTY IS NOT A PART OF MARKET VALUE OF THE PROPERTY. THE REQUISITE STAMP DUTY PAYABLE IS ONLY 4.9% OF THE MARKET VALUE. DURING THE ASSESSMENT, THE AO ERRONEOUSLY CONSIDERED THE MARKET VALUE OF PROPERTY AT RS.55,40,816/- INSTEAD OF RS.46 LAKHS. THE AO CALCULATED VALUE OF PROPERTY ON THE BASIS OF PAYMENT OF STAMP DUTY OF RS.2,71,500/-, ACCORDINGLY, DETERMINED DIFFERENCE OF SALE CONSIDERATION ON THE BASIS OF TOTAL STAMP DUTY PAID BY THE ASSESSEE AND INVOKED THE PROVISION OF SECTION 56(2)(VII)(B) OF THE ACT. THE LD.AR FOR ASSESSEE SUBMITS THAT PAYMENT OF ADDITIONAL STAMP DUTY OF RS.46,100/- BEING 1% OF MARKET COST IS MADE MANDATORY UNDER THE STAMP ACT, W.E.F 26.09.2007 ON THE SALE OF PLOT AND LAND IN A NEWLY FORMED SOCIETY. THE ADDITIONAL STAMP DUTY IS LEVIED TO RECOVER A LOSS OF REVENUE WHICH THE STATE GOVERNMENT HAS TO SUFFER ON PORTION OF LAND USED IN ROAD AND OTHER AMENITIES PROVIDED BY THE LAND ORGANISER, WHICH DOES NOT FORM PART OF SALE CONSIDERATION. THE PAYMENT OF ADDITIONAL STAMP DUTY IS OUTSIDE THE PURVIEW OF VALUATION OF ASSET, IT HAS NO ITA NO.270/SRT/2018 (AY 2014-15) SHRI KISHANBHAI NATHULAL PATEL(LATE), L/H SMT. SAVITABEN KISHANBHAI PATEL 6 BEARING OR IMPACT ON THE MARKET VALUE OF PROPERTY ASSESSED BY THE STAMP VALUATION AUTHORITY. THESE FACTS WERE CLEARLY EXPLAINED BEFORE THE AO. THE AO IGNORED ALL THE FACTS. THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE LD.CIT(A) DESPITE ACCEPTING THE SUBMISSIONS OF ASSESSEE, CONFIRMED THE ACTION OF THE AO BY TAKING VIEW THAT THE PROVISION OF SECTION 56(2)(B)(VII) IS TO BE COMPLIED STRICTLY. 7. ON THE OTHER HAND, THE LD.SR.DR FOR THE REVENUE RELIED UPON THE ORDER OF THE LD.CIT(A). THE LD.SR.DR FOR THE REVENUE SUBMITS THAT ALL THE SUBMISSIONS RAISED BY THE LD.AR FOR ASSESSEE HAS BEEN CONSIDERED BY THE LD.CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF BOTH THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT DURING THE ASSESSMENT THE AO NOTED THAT THE ASSESSEE HAS MADE THE PAYMENT OF ADDITIONAL STAMP VALUE OF RS. 2,71,500/- LAKHS INSTEAD OF RS. 2,25,00/-. THE AO ON THE BASIS OF THE PAID STAMP VALUE WORKED OUT THE VALUE OF THE PROPERTY AT RS. 55 LAKHS IN PLACE OF RS. 46 LAKHS SHOWN BY THE ASSESSEE. ON THE BASIS OF HIS RE- WORKED SALE VALUE, THE AO ISSUED SHOW CAUSE NOTICE AS TO WHY DIFFERENCE OF VALUE IS THE STAMP VALUATION WORKED OUT AS PER THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY(SVA) SHOULD NOT BE ADDED UNDER SECTION 56(2)(VII)(B) OF THE ACT. THE ASSESSEE FILED DETAILED WRITTEN SUBMISSIONS OBJECTING FOR ADOPTING THE VALUE THAN THE VALUE SHOWN BY THE ASSESSEE. WE FIND THAT THE ASSESSEE STATED THAT NO FURTHER SALE CONSIDERATION IS PAID. THE ITA NO.270/SRT/2018 (AY 2014-15) SHRI KISHANBHAI NATHULAL PATEL(LATE), L/H SMT. SAVITABEN KISHANBHAI PATEL 7 ADDITIONAL 1% OF STAMP DUTY IS PAID AS PER THE REGULATION OF THE STATE GOVERNMENT. THE AO NOT ACCEPTED THE EXPLANATION FURNISHED BY THE ASSESSEE BY TAKING VIEW THAT IF ANY IMMOVABLE PROPERTY FOR A CONSIDERATION WHICH IS LESS THAN THE STAMP VALUE OF PROPERTY EXCEEDING RS.50,000/-, THEN DIFFERENCE BETWEEN THE STAMP VALUE AND THE PURCHASE CONSIDERATION WILL BE TREATED AS INCOME UNDER THE HEAD, OTHER SOURCES, ACCORDINGLY, THE AO MADE ADDITION OF RS.9,40,816/- AND TREATED THIS AS INCOME FROM OTHER SOURCES. 9. THE LD. CIT (A) UPHELD THE ORDER OF AO BY HOLDING THAT PROVISION OF SECTION 56(2)(VII)(B) OF THE ACT OR DEEMING PROVISION AND HAS TO BE STRICTLY INTERPRETED. THE LD. CIT(A) NOT DISCARDED THE CONTENTION OF THE ASSESSEE BY TAKING VIEW THAT NO SEPARATE BRAKE UP OF MARKET VALUE OF ACTUAL PLOT, ROAD, COMMON AREA GIVEN IN THE SALE DEED IS NOT ESTABLISHED AND THAT THE RECORDED CONSIDERATION IS THE MARKET VALUE OF ACTUAL PLOT AS PER STAMP VALUATION AUTHORITY (SVA), THUS, CONCURRED WITH THE FINDING OF THE AO. WE FIND THAT THE AO MADE ADDITION WITHOUT VERIFYING THE FACTS EITHER FROM THE SELLER ABOUT THE RECEIPT OF EXCESS SALE CONSIDERATION. WE FURTHER FIND THAT THE ASSESSEE SPECIFICALLY STATED BEFORE THE LOWER AUTHORITIES THAT HE HAS PAID 1% ADDITIONAL STAMP DUTY ON IN ACCORDANCE WITH THE REGULATION OF STATE GOVERNMENT AND THE ADDITIONAL STAMP DUTY IS LEVIED TO RECOVER A LOSS OF REVENUE WHICH THE STATE GOVERNMENT HAS TO SUFFER ON PORTION OF LAND USED IN ROAD AND OTHER AMENITIES PROVIDED BY THE LAND ORGANISER, WHICH DOES NOT ITA NO.270/SRT/2018 (AY 2014-15) SHRI KISHANBHAI NATHULAL PATEL(LATE), L/H SMT. SAVITABEN KISHANBHAI PATEL 8 FORM PART OF SALE CONSIDERATION. THE PAYMENT OF ADDITIONAL STAMP DUTY IS OUTSIDE THE PURVIEW OF VALUATION OF ASSET, IT HAS NO BEARING OR IMPACT ON THE MARKET VALUE OF PROPERTY ASSESSED BY THE STAMP VALUATION AUTHORITY. THE AO AND THE LD. CIT(A) HAS NOT MADE ANY EFFORT TO VERIFY THE ASSERTION OF THE ASSESSEE. WE FURTHER FIND THAT THE AO MADE ADDITION ONLY ON THE BASIS OF ADDITIONAL STAMP DUTY. THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE ASSESSEE HAS SHOWN SALE CONSIDERATION ON THE LESSER VALUE OF PREVAILING JANTRI RATES. IN VIEW OF THE AFORESAID FACTUAL DISCUSSION, WE DO NOT FIND ANY JUSTIFIABLE REASON FOR MAKING THE ADDITION IN THE HAND OF ASSESSEE. HENCE, WE DIRECT THE AO TO DELETE THE ADDITIONS OF RS. 9,40,816/- MADE UNDER SECTION 56(2)(VII) (B) OF THE ACT. IN THE RESULT THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER ANNOUNCED ON 20 SEPTEMBER, 2021 AS PER RULE 34(5) OF INCOME TAX (APPELLATE TRIBUNAL) RULES-1963. SD/- SD/- (DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED: 20/09/2021 / SGR* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE BY ORDER / / TRUE COPY / / SR.PVT. SECRETARY, ITAT , SURAT