T.S. Palanisamy, Erode V. ITO, Erode

ITA 2904/CHNY/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9154 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 10-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: N C RAVIKRISHNAN
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Principle of natural justice

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , $% & , ) BEFORE SHRI GEORGE MATHAN , JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ./ ITA NO.2904/CHNY/2016 /ASSESSMENT YEAR: 2009-10 SHRI T.S.PALANISAMY, 45, VANIPUDUR, THOOKKANICKEN PALAYAM, GOBICHETTIPALAYAM, ERODE DISTRICT. VS. THE INCOME TAX OFFICER, WARD-2(1), ERODE. [PAN: AXFPP 8382 A ] ( + /APPELLANT) ( ,-+ /RESPONDENT) + . / APPELLANT BY : MR.N.C.RAVIKRISHNAN, ADV. ,-+ . /RESPONDENT BY : MR.SRIDHAR DORA, JCIT . /DATE OF HEARING : 04.07.2019 . /DATE OF PRONOUNCEMENT : 04.07.2019 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, COIMBATORE, IN IT APPEAL NO.108/15-16 DATED 14.07.2016 FOR THE AY 2009-10. 2. MR. SRIDHAR DORA, JCIT, REPRESENTED ON BEHALF OF T HE REVENUE AND MR.N.C.RAVIKRISHNAN, ADV., REPRESENTED ON BEHALF OF THE ASSESSEE. ITA NO.2904/CHNY/2016 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE WA S RUNNING A MOVIE THEATRE UNDER THE NAME AND STYLE OF SANTHI TH EATRE. IT CONSISTED OF LAND MEASURING 0.65 ACRES AND BUILDING OF ABOUT 204 2 SQ.FT. AND ASBESTOS ROOF BUILDING OF ABOUT 5900 SQ.FT. THE ASSESSEE HA D ENTERED INTO AN AGREEMENT FOR THE SALE OF THE SAID PROPERTY ON 17.0 3.2004 FOR AN AMOUNT OF RS.40.00 LAKHS AND HAD RECEIVED AN ADVANCE OF RS .10.00 LAKHS. IT WAS A SUBMISSION THAT THE SAID PROPERTY HAD BEEN ATTACH ED BY THE STATE GOVERNMENT FOR FAILURE TO PAY THE VARIOUS STATUTORY DUTIES BEING ENTERTAINMENT TAX RIGHT FROM THE AY 1982-83. IT WA S A SUBMISSION THAT THE ASSESSEE HAD SUBSEQUENTLY SOLD THE PROPERTY THR OUGH A SALE DEED DATED 27.06.2008 FOR AN AMOUNT OF RS.20,25,000/-. IT WAS A SUBMISSION THAT THE AO HAD APPLIED THE PROVISIONS OF SEC.50C A ND HAD ADOPTED THE GUIDELINE VALUE AS ON THE DATE OF SALE AT RS.1,30,1 6,600/- AND HAD COMPUTED THE LONG TERM CAPITAL GAINS ON THE SAME. IT WAS A SUBMISSION THAT THE AGREEMENT HAVING BEEN ENTERED INTO ON 17. 03.2004, THE PROVISO TO SEC.50C APPLIED THE GUIDELINE VALUE AS ON THE D ATE OF SALE, COULD NOT BE CONSIDERED. IT WAS A SUBMISSION THAT IN THE COURSE OF THE ASSESSMENT, THE ASSESSEE HAD CATEGORICALLY INTIMATED THE AO THAT TH E PROVISIONS OF SEC.50C WAS NOT LIABLE TO BE APPLIED IN THE CASE OF THE ASS ESSEE IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF M/S.THIRUVENGADAM INVESTMENT (P) LTD., REPORTED IN 320 ITR 745 (MAD). IT WAS A SUBMISSION THAT HE HAD NO OBJECTION IF THE ISSUES IN THIS APPEAL ARE RESTORED TO THE FILE OF THE AO FOR RE-COMPUTATI ON OF THE CAPITAL GAINS AFTER OBTAINING THE NECESSARY VALUATION FROM THE DV O. ITA NO.2904/CHNY/2016 :- 3 -: 4. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD.CIT(A). IT WAS A SUBMISSION THAT THE LD.CIT (A) HAD CATEGORICALLY GIVEN FINDINGS THAT THE ASSESSEE HAD ENTERED INTO A SALE AGREEMENT AND AS PER THE SALE AGREEMENT, THE PURCHASERS HAD ADMITTED THAT THE TAX PAYABLE TO THE STATE AND CENTRAL GOVERNMENT PAYABLE BY THE FILM DIVISION SANTHI THEATRE, WILL BE PAID BY THE PURCHASER. IT WAS A F URTHER SUBMISSION THAT THE POSSESSION OF THE PROPERTY HAD NOT TRANSFERRED AS ON 17.03.2004 BUT HAD TRANSFERRED ONLY IN 2008 AND CONSEQUENTLY, WHAT WAS TRANSFERRED WAS A BUSINESS ASSET AND THE CAPITAL GAINS WAS LIABLE T O BE DETERMINED IN RESPECT OF THE LAND IN LONG TERM CAPITAL GAINS AND THE BUILDING IN SHORT TERM CAPITAL GAINS. IT WAS A SUBMISSION THAT THE I SSUE WAS LIABLE TO BE RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AND COMPUTATION OF THE CORRECT CAPITAL GAINS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 6. A PERUSAL OF THE FACTS IN THE PRESENT CASE CLEARLY SHOWS THAT THE LD.CIT(A) HAS BROUGHT OUT SUBSTANTIAL FACTS TO SHOW THAT THE PROPERTY SOLD BY THE ASSESSEE IS CLEARLY A BUSINESS ASSET AND SUB STANTIAL PORTION OF THE PAYMENT HAVE ALSO BEEN MADE TO THE STATE GOVERNMENT . IT IS ALSO NOTICED THAT THE LD.CIT(A) HAS TAKEN A STAND THAT THE ASSES SEE HAS NOT TAKEN RECOURSE TO THE REMEDIES AVAILABLE IN THE STATUTE L IKE REQUESTING FOR VALUATION AGAINST THE ADOPTION OF THE STAMP DUTY VA LUE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. HERE, ADMITTEDLY, T HE ASSESSEE HAS OBJECTED TO THE APPLICABILITY OF SEC.50C OF THE ACT . THIS BEING SO, IN THE ITA NO.2904/CHNY/2016 :- 4 -: INTEREST OF NATURAL JUSTICE, THE ISSUE OF THE VALUA TION OF THE CAPITAL GAINS IS RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. THE AO SHALL RE-ASSESS THE COMPUTATION OF THE CAPITAL GAINS WHETHER SHORT TERM OR LONG TERM AFTER HAVING THE SAME VALUED BY THE DVO. THE AO SHALL AL SO KEEP IN MIND THAT THE ASSET SOLD IS A BUSINESS ASSET ON WHICH DEPRECI ATION HAS BEEN CLAIMED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 04 TH DAY OF JULY, 2019 IN CHENNAI. SD/- SD/- ( $% & ) ( VIKRAM SINGH YADAV ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 5 /DATED: 04 TH JULY, 2019. TLN . ,&$ 6$ /COPY TO: 1. + /APPELLANT 4. 7 /CIT 2. ,-+ /RESPONDENT 5. $ , /DR 3. 7 ( ) /CIT(A) 6. /GF