ACIT, New Delhi V. Ms. Paramjeet Kochar, New Delhi

ITA 2897/DEL/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1292 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 08-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK K SEHGAL
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C; 142(1)

Judgement Text

ITA NO.2897/DEL/2011 ASSTT.YEAR: 2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 2897/DEL/2011 ASSESSMENT Y EAR: 2007-08 ASSTT.COMMISSIONER OF INCOME TAX, VS MS PARAMJE ET KOCHER CIRCLE 23(1), NEW DELHI. 11/154. 1 ST FLOOR, MALAVIYA NAGAR, NEW DELHI. (PAN: AIJPK6594N) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI DEEPAK K. SEHGAL, SR.DR RESPONDENT BY: SHRI ANIL SHARMA O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX(A)-XXIII, NEW DELHI DATE D 31.3.2011 FOR AY 2007-08. 2. THE ONLY GROUND RAISED IN THIS APPEAL READS AS U NDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICE R TO DEDUCT RS.1,11,74,271/- FROM THE TOTAL SALE CONSIDERATION. ITA NO.2897/DEL/2011 ASSTT.YEAR: 2007-08 2 3. BRIEFLY STATED, THE FACTS OF THE CASE GIVING RIS E TO THIS APPEAL ARE THAT THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND A NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) WAS ISSUED ON 24.09.2008 AND ANOTHER NOTICE U/S 142(1) OF THE ACT ALONG WITH DET AILED QUESTIONNAIRE WAS ALSO ISSUED ON 18.06.2009. 4. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOT ED THAT THE ASSESSEE HAS SOLD THE PROPERTY VIDE A CONSOLIDATED SALE DEED FOR A SALE CONSIDERATION OF RS.3,20,00,000 BUT THERE WAS NO DETAIL IN THE SA LE DEED AS TO WHAT WAS THE CONSIDERATION FOR THE PIECE OF LAND AND CONSIDERATI ON FOR COST OF CONSTRUCTION THEREON. THE ASSESSING OFFICER FURTHER OBSERVED TH AT AS PER THE VALUERS REPORT, THE VALUE OF THE LAND AS PER SUB-REGISTRAR RATE WAS @ RS.2800 SQ YD. FOR THE TOTAL AREA OF LAND I.E. 4326 SQ. YD. WAS AM OUNTING TO RS.1,21,12,800/-. THE ASSESSING OFFICER ALSO NOTED THAT THE VALUER HA S VALUED THE COVERED AREA AS PER SANCTIONED DRAWING OF APPROXIMATELY 55784 SQ . FT. APPLYING THE COST OF CONSTRUCTION AS PER SUB-REGISTRAR RATE @RS.300 P ER SQ. FT. AMOUNTING TO RS.1,67,35,200. THE ASSESSING OFFICER HELD THAT A S THE ASSESSEE HAS SOLD THE PROPERTY FOR A TOTAL CONSIDERATION OF RS.3,20,00,00 0 IN A CONSOLIDATED MANNER AND VIDE A CONSOLIDATED SALE DEED AND ACCORDINGLY T HE CONSIDERATION FOR LAND AND CONSTRUCTION IS TO BE DISTRIBUTED TOWARDS LAND AND CONSTRUCTION. HE ADOPTED THE FAIR MARKET VALUE/SALE CONSIDERATION FO R THE CONSTRUCTED PART OF ITA NO.2897/DEL/2011 ASSTT.YEAR: 2007-08 3 BUILDING AT RS.1,67,35,200 AND ALSO CONSIDERED THE REMAINING AMOUNT OF RS.1,52,64,800 TOWARDS THE SALE CONSIDERATION OF LA ND IN ACCORDANCE WITH SECTION 50C OF THE ACT. THE ASSESSING OFFICER FINA LIZED THE ASSESSMENT WITH SHORT TERM CAPITAL GAIN OF RS.99,78,978 AND LONG TE RM CAPITAL GAIN OF RS.1,50,60,228 TO BE TAXED IN THE HANDS OF THE ASSE SSEE. 5. THE AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE TH E COMMISSIONER OF INCOME TAX(A)-XXIII, NEW DELHI, WHICH WAS ALLOWED O N THIS ISSUE WITH THE FOLLOWING OBSERVATIONS:- 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND BA SIS OF CONCLUSION ARRIVED AT BY THE ASSESSING OFFICER TO R EJECT ASSESSEES CONTENTION OF HAVING SPENT RS.1,11,74,27 1/- ON CONSTRUCTION OF THE BUILDING SOLD. THE CONFUSIO N IN THIS REGARD HAS ARISEN PRIMARILY BECAUSE OF AVAILAB ILITY OF LAND, BUILDING IN THE BALANCE SHEET OF M/S. G.S. KOCHAR & CO. AND ALSO IN THE PERSONAL BALANCE SHEET OF SHRI G.S. KOCHAR. THE LAND AND BUILDING APPEARING I N THE BALANCE SHEET OF MIS. G.S. KOCHAR & CO. HAS BEE N WRITTEN OFF BY THE ASSESSEE AS AFTER THE DEATH OF S HRI G.S. KOCHAR, HIS LEGAL HEIR COULD NOT LOCATE THE CORRESPONDING PHYSICAL ASSETS. THIS FACT THOUGH A L ITTLE ABNORMAL CANNOT COME IN THE WAY OF CLAIM BY THE APPELLANT THAT MR. G.S. KOCHAR HAD SPENT A TOTAL AMOUNT OF RS. 1,11,74,271/- OVER NUMBER OF YEARS OF THE CONSTRUCTION OF THE BUILDING AS THE SAME IS BACKED BY DOCUMENTARY EVIDENCE IN THE FORM OF BALANCE SHEETS FILED BY LATE SHRI G.S. KOCHAR WITH THE INCOME TAX DEPARTMENT. THE ASSESSING OFFICER CANNOT WITH AWAY THIS FACT ON THE GROUND THAT THERE WAS ANOTHER PIEC E OF LAND/BUILDING WITH A TOTAL WDV OF RS. 2,57,693/-, W HICH HAS BEEN WRITTEN OFF BY THE APPELLANT. IN VIEW OF T HE ABOVE, I HAVE NO DOUBT IN MY MIND THAT THE AMOUNT SPENT ON THE CONSTRUCTION OF THE BUILDING BY LATE S HRI ITA NO.2897/DEL/2011 ASSTT.YEAR: 2007-08 4 G.S. KOCHAR HAS TO BE ALLOWED AS DEDUCTION FROM THE SALE CONSIDERATION RECEIVED FROM THE TRANSACTION. A S SUCH, THE ASSESSING OFFICER IS DIRECTED TO ALLOW TH E SAME AND RE-WORK THE CAPITAL GAIN. 6. NOW, THE REVENUE IS IN APPEAL BEFORE THIS TRIBUN AL BEING AGGRIEVED BY THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX (A) TO ASSESSING OFFICER ALLOWING THE EXPENDITURE ON CONSTRUCTION AM OUNTING TO RS.1,11,74,271. 7. WE HAVE HEARD RIVAL SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY PERUSED THE ENTIRE RECORD PLACED BEFORE US BY BOTH THE PARTIES. LD. DR SUBMITTED THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO DEDUCT RS.1,11,74,271 FROM THE TOTAL SALE CONSIDERATION ON ACCOUNT OF COST OF CONSTRUCTION. THE DR FURTHER SUBMITTED THAT THE AO RIGHTLY ALLOCATED THE CONSOLIDATED SALE CONSIDERATION FOLLOWING THE SUB-R EGISTRAR RATE BECAUSE THE FAIR MARKET VALUE OR SALE CONSIDERATION FOR A CONST RUCTED BUILDING CONSISTS OF VALUE OF LAND AND COST OF CONSTRUCTION WHICH ARE TH E MAIN LIMBS OF SALE CONSIDERATION RECEIVED ON SALE OF BUILDING. 8. LD. DR FURTHER SUBMITTED THAT THE COMMISSIONER O F INCOME TAX(A) WAS NOT JUSTIFIED IN ACCEPTING THE CONTENTION OF TH E ASSESSEE THAT THE ASSESSEE ITA NO.2897/DEL/2011 ASSTT.YEAR: 2007-08 5 SPENT RS.1,11,74,271 AS COST OF CONSTRUCTION OF BUI LDING SOLD. THE DR SUPPORTED THE ASSESSMENT ORDER AND ACTION OF THE AS SESSING OFFICER. 9. ON CONSIDERATION OF THE FACTS OF THIS CASE, WE O BSERVE THAT THE CONFUSION HAS ARISEN BECAUSE THE LAND AND BUILDING SOLD WAS SHOWN IN THE BALANCE SHEET OF M/S G.S. KOCHAR & CO. AND ALSO IN THE PERSONAL BALANCE SHEET OF SHRI G.S. KOCHAR SIMULTANEOUSLY. FROM THE PAPER BOOK, WE ALSO OBSERVE THAT THE LAND AND BUILDING APPEARING IN THE BALANCE SHEET OF M/S G.S. KOCHAR & CO. HAS BEEN WRITTEN OFF BY THE ASSESSEE A FTER THE DEATH OF SHRI G.S. KOCHAR BECAUSE HIS LEGAL HEIRS COULD NOT FIND THE PHYSICAL EXISTENCE OF CORRESPONDING ASSET. WE ALSO OBSERVE THAT IT IS NO T IN DISPUTE THAT SHRI G.S. KOCHAR HAD SPENT A TOTAL AMOUNT OF RS. 1,11,74,271/ - ON CONSTRUCTION OF THE BUILDING SOLD OVER A NUMBER OF YEARS AND IT IS CLEA RLY REFLECTING FROM THE BALANCE SHEET OF SHRI G.S. KOCHAR AND THE SAME HAS BEEN FILED WITH THE REVENUE AUTHORITIES DURING THE INCOME TAX PROCEEDIN GS. IN THIS SITUATION, IN OUR CONSIDERED OPINION, WE ARE INCLINED TO HOLD THA T THE LD. COMMISSIONER OF INCOME TAX(A) RIGHTLY ALLOWED THE COST OF CONSTRUCT ION INCURRED BY SHRI G.S. KOCHAR AND DIRECTED THE ASSESSING OFFICER TO A LLOW THE SAME AND REWORK THE CAPITAL GAIN. 10. IN VIEW OF ABOVE, THERE IS NO REASON BEFORE US TO INTERFERE WITH THE FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX(A). ACCORDINGLY, WE HOLD ITA NO.2897/DEL/2011 ASSTT.YEAR: 2007-08 6 THAT THIS APPEAL OF THE REVENUE IS DEVOID OF MERITS AND DESERVES TO BE DISMISSED AND WE DISMISS THE SAME. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.01.2013. SD/- SD/- ( G.D. AGRAWAL ) (CHANDRA MOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 4 TH JANUARY 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR TRUE CO PY BY ORDER ASSTT. REGISTRAR