Shri Jayshankar S. Vaid, Ahmedabad V. The DY.CIT.,(OSD)Circle-8, Ahmedabad

ITA 2869/AHD/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9129 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-09-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 04-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH SENIOR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Capital Gains
• Section: 50C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI P K BANSAL AND MAHAVIR SINGH) ITA NO.2869/AHD/2007 (ASSESSMENT YEAR:- 2004-05) SHRI JAYSHANKER S VAID, 29, RAMKUNJ SOCIETY, OPP. GALAXY CINEMA, NARODA, AHMEDABAD V/S THE DEPUTY COMMISSIONER OF INCOME-TAX (OSD) CIRCLE-8, AHMEDABAD [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI DHIREN SHAH, CA RESPONDENT BY:- SMT. NEETA SHAH, SENIOR DR O R D E R PER P K BANSAL (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A) DATED 17-04- 2007. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATE S TO LONG TERM CAPITAL LOSS OF RS.31,34,980/- CLAIMED BY THE ASSES SEE ON SALE OF BUNGALOW AT 6, PUJA BUNGALOWS, SATELLITE, AHMEDABAD . 2 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E PURCHASED BUNGALOW AT 6, PUJA BUNGALOWS, SATELLITE, AHMEDABAD ON 25-01-1999 FOR A CONSIDERATION OF RS.83.9 LAKHS AND THE SAME WAS CLAIMED TO HAVE BEEN SOLD ON 17-01-2004 AT A CO NSIDERATION OF RS.55 LAKHS. THE ASSESSEE HAD 50% SHARE IN THIS PROPERTY. THE AO DID NOT ACCEPT THE APPARENT CONSIDERATION AT WHI CH THE PROPERTY HAS BEEN SOLD BY THE ASSESSEE. HE MADE A R EFERENCE U/S 55A OF THE ACT TO THE DISTRICT VALUATION OFFICER [D VO] TO 2 DETERMINE THE FAIR MARKET VALUE AS ON 17-04-2004. T HE DVO DETERMINED THE FAIR MARKET VALUE AS ON THE DATE OF SALE AT RS.1,17,58,000/-. THE AO, THEREFORE, TOOK THE SALE PRICE AT RS.1,17,58,000/- AND DETERMINED THE LONG TERM CAPIT AL LOSS AT RS.5980/-. WHEN THE MATTER WENT IN APPEAL BEFORE TH E CIT(A), THE CIT(A) DISMISSED THE GROUND OF THE ASSESSEE BY OBSERVING AS UNDER:- 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS AS ADVANCED BY THE APPELLANT. I DO NOT AGREE WITH THE APPELLANTS CONTENTIONS. IT IS A FACT THAT THE VALUE OF PROPERT Y HAS ESCALATED IN EVERY CITY, AS ALSO IN AHMEDABAD DURING THE PERIOD FROM 1999-2004. HENCE IT CANNOT BE ACCEPTED THAT WHEN THE VALUE OF PROPERTY WAS RS.83.9 LACS IN THE YEAR 1999, THE ____ HAS DECLINE D IN AY 2004 AT RS.55 LACS ONLY. THE DEPTT. VALUATION OFFICER HAS V ALUED PROPERTY ON THE BASIS OF COMPARABLE SALE INSTANCES AVAILABLE IN THE VICINITY OF THIS BUNGLOW. THE VALUE OF LAND IS TAKEN AT RS.1,05,43,5 00/- BY APPLYING THE RATE OF RS.13,500/- PER SQ. M. THE SUBMISSION T HAT THE AREA IS LOW LYING HENCE ITS VALUE SHOULD BE TAKEN AT RS.55 LAKH S IS ALSO NOT ACCEPTABLE, BECAUSE THE AREA WAS ALSO LOW LYING IN THE YEAR 1999 AND AT THAT TIME ITS VALUE WAS RS.83.9 LACS. THEREFORE, IN MY VIEW, THE VALUE TAKEN BY THE DEPTT. VALUATION OFFICER IS QUITE REAS ONABLE AND ACTION OF AO IS JUSTIFIED. THIS GROUND OF THE APPELLANT IS RE JECTED. 3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. IN OUR OPINION, SECTION 45 OF THE ACT WHICH IS THE CHARGING PROVISION MAKES ANY PROFIT OR GAIN ARISING FROM THE TRANSFER OF CAPITAL ASSET EFFECTED IN THE PREVI OUS YEAR, CHARGEABLE TO INCOME TAX UNDER THE HEAD CAPITAL GA INS. SECTION 48 DETERMINES THE MODE OF COMPUTATION UNDER THE HEA D CAPITAL GAINS. IT PROVIDES THAT THE INCOME CHARGEABLE UNDE R THE HEAD CAPITAL GAINS SHALL BE COMPUTED, BY DEDUCTING FUL L VALUE OF THE 3 CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS, NAMELY:- (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST O F IMPROVEMENT THERETO: THE DISPUTE IN THIS CASE RELATES TO THE FULL VALUE OF THE CONSIDERATION. THE ASSESSEE HAS TAKEN THE APPARENT CONSIDERATION STATED IN THE SALE DEED TO BE THE FULL VALUE OF THE CONSIDERATION. WHILE THE AO DID NOT ACCEPT THE SAME BUT MADE A REF ERENCE U/S 55A OF THE ACT. THE QUESTION ARISES WHETHER SECTION 55A EMPOWERS THE AO TO REFER TO THE VALUATION OFFICER F OR DETERMINING THE FULL VALUE OF THE CONSIDERATION. WE HAVE GONE THROUGH THE PROVISIONS OF SECTION 55A. THIS SECTION EMPOWERS THE AO TO MAKE A REFERENCE TO THE VALUATION OFFICER FOR DETERMINING THE FAIR MARKET VALUE OF A CAPITAL ASSET FOR THE PU RPOSE OF COMPUTATION OF THE CAPITAL GAIN. FULL VALUE OF THE CONSIDERATION AND FAIR MARKET VALUE BOTH ARE DIFFERENT TERMS AND ARE HAVING DIFFERENT MEANINGS. SECTION 55A DOES NOT EMPOWER TH E AO, IN OUR OPINION, TO MAKE A REFERENCE TO THE VALUATION O FFICER FOR DETERMINING THE FULL VALUE OF CONSIDERATION. THEREF ORE, IN OUR OPINION, THE REFERENCE MADE BY THE AO TO THE VALUAT ION OFFICER IS ILLEGAL AND VOID AB INITIO. IT IS ONLY SECTION 50C WHICH EMPOWERS THE AO TO DISTURB THE FULL VALUE OF THE CONSIDERATI ON IN CERTAIN CASES. IT IS NOT THE CASE OF THE REVENUE THAT THE P ROVISIONS OF SECTION 50C ARE APPLICABLE IN THE CASE OF THE ASSES SEE. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE O F THE VIEW THAT 4 THE AUTHORITIES BELOW WERE NOT CORRECT IN LAW IN DI SALLOWING LONG TERM CAPITAL GAIN / LOSS AS HAS BEEN DETERMINED BY THE ASSESSEE BY TAKING THE FULL VALUE OF THE CONSIDERATION AT RS .55 LAKHS. WE ACCORDINGLY SET-ASIDE THE ORDER OF THE CIT(A) AND D IRECT THE AO TO RE-COMPUTE THE CAPITAL GAIN BY TAKING THE FULL V ALUE OF CONSIDERATION AT RS.55 LAKHS. 4 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 17-09-2 009 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (P K BANSAL) ACCOUNTANT MEMBER DATE : 17-09-2009 COPY OF THE ORDER FORWARDED TO : 1. SHRI JAYSHANKER S VAID, 29, RAMKUNJ SOCIETY, OPP . GALAXY CINEMA, NARODA, AHMEDABAD 2. THE DCIT (OSD) CIRCLE-8, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XIV, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABA