The ACIT, Indore V. Smt Savitri Khandelwal, Indore

ITA 291/IND/2010

• Counselvise Citation: 29122714 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 11-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: ANIL KHANDELWAL
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Set aside; Capital Gains
• Section: 143(3); 50C; 54F; 143(2)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.291/IND/2010 AY: 2004-05 ACIT-3(1), INDORE ..APPELLANT V/S. SMT. SAVITRI KHANDELWAL, INDORE PAN AHLPK 3692 E ..RESPONDENT DEPARTMENT BY : SHRI ARUN DEWAN, SR. DR ASSESSEE BY : SHRI ANIL KHANDELWAL, CA O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS IN APPEAL AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, IN DORE, DATED 9.2.2010 ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELL ATE AUTHORITY ERRED IN DIRECTING THE ASSESSING OFFICER TO ADOPT THE VALUE OF SALE CONSIDERATION AT 50% OF THE RATE 2 PRESCRIBED IN THE GUIDELINES ISSUED BY THE STATE GOVERNMENT AUTHORITIES FOR THE PURPOSE OF COMPUTATI ON OF LONG TERM CAPITAL GAIN ON THE GROUND THAT THE LA ND WAS NON-COMMERCIAL. 2. DURING THE HEARING OF THIS APPEAL, WE HAVE HEARD SHRI ARUN DEWAN, LD. SR. DR AND SHRI ANIL KHANDELWA L, LD. COUNSEL FOR ASSESSEE. THE LD. SR. DR RELIED UPO N THE ORDER OF THE ASSESSING OFFICER WHEREAS LD. COUNSEL FOR ASSESSEE SUBMITTED THAT THE ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN THE CROSS-APPEAL FILED B Y THE PRESENT ASSESSEE WHEREIN THE PRESENT ISSUE HAS BEEN REMANDED TO THE FILE OF THE LD. ASSESSING OFFICER. THE LD. SR. DR DID NOT CONTROVERT THE ASSERTION OF THE LD. COUNSEL FOR ASSESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE. WE FIND THA T THE PRESENT ISSUE HAS ALREADY BEEN DECIDED BY THIS TRIB UNAL IN THE CROSS-APPEAL BEARING ITA NO.190/IND/2010 FIL ED 3 BY THE PRESENT ASSESSEE VIDE ORDER DATED 28.2.2011. THE RELEVANT PORTION OF THE ORDER DATED 28.2.2011 (SUPR A) IS REPRODUCED HEREUNDER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DATED 9.2.2010 FOR THE ASSESSMENT YEAR 2004-05 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE ACT. 2. IN THE FIRST GROUND, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LEARNED COMMISSIONER O F INCOMETAX (APPEALS) IN REJECTING THE CONTENTION THA T SECOND NOTICE U/S 143(2) OF THE ACT WAS ACTUALLY TI ME BARRED. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW AND FIND FROM RECORD THAT THE NOTICE U/S 143( 2) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 29.7.2005. THIS NOTICE WAS SENT THROUGH POST WHICH IS CLAIMED TO BE RECEIVED BY THE ASSESSEE. HOWEVER, KEEPING I N VIEW THE FACT THAT LIMITATION WAS EXPIRING ON 31.7.2005, THE ASSESSING OFFICER TOOK ADDITIONAL CA RE AND SERVED ANOTHER NOTICE THROUGH NOTICE SERVER AND SUCH NOTICE WAS ACTUALLY SERVED ON THE ASSESSEE AS PER TOKEN OF SERVICE AVAILABLE ON SUCH NOTICE. THE NOTICE SERVER HAS ALSO PUT A SIGNATURE AND DATE REGARDING THE SERVICE OF NOTICE OF 31.7.2005. THER E WAS NO PURPOSE IN ISSUING ANOTHER NOTICE ON THE ASSESSEE AFTER 31.7.2005 ONCE A NOTICE BY DAK WAS ALREADY SENT EARLIER AND ALSO ACKNOWLEDGE BY THE ASSESSEE. SINCE THE SERVICE OF FIRST NOTICE IS NOT DISPUTED BY THE ASSESSEE, WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSEE AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS JUSTIFIED I N REJECTING THE ASSESSEES CONTENTION THAT SECOND NOT ICE U/S 143(2) OF THE ACT WAS ACTUALLY TIME BARRED. ACCORDINGLY, THE FIRST GROUND OF THE ASSESSEES APP EAL IS DISMISSED. 4. THE REMAINING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE WITH REGARD TO CAPITAL GAINS OFFERED B Y THE ASSESSEE IN RESPECT OF THE LAND SOLD BY HER AND POWER OF THE ACTION OF AUTHORITIES TO ATTRACT THE PROVISIONS OF SECTION 50-C OF THE ACT IN RESPECT OF SUCH TRANSACTION. IN THIS REGARD, THE FACTS ARE TH AT 4 DURING THE YEAR, UNDER CONSIDERATION, THE ASSESSEE HAD SHOWN CAPITAL GAINS ON SALE OF PLOT AMOUNTING T O RS.10.95 LACS. DURING THE YEAR THE ASSESSEE HAD TRANSFERRED PLOTS OF LAND BEARING DIFFERENT KHASRA NOS. IN REVENUE VILLAGE CHITAWAD, TEHSIL AND DISTRI CT INDORE DULY CONVERTED FOR RESIDENTIAL USE TO SUPARSHVANATH GRIH NIRMAN SAHAKARI SANSTHA MARYADIT THROUGH REGISTERED SALE DEED ON 20.11.03. SALE DEED WAS EXECUTED BY A GROUP OF 6 CO-OWNERS, INCLUDING THE ASSESSEE FOR TOTAL AREA OF LAND MEASURING 54965 SQ.FT. OR 5108 SQ.MT OF OPEN LAND. SALE DEED ALSO MENTIONED THE NAME OF 8 CONSENTERS AND THIRD PARTY IN RESPECT OF SUCH LAND SALE TRANSACTIONS. THE A.O. NOTED THAT THE ASSESSEE RECEIVED RS.17,43,000/- FOR HER SHARE OF LAND I.E. 16100 SQ.FT. AND THE RATE OF TRANSFER WORKED OUT TO ON THE BASIS OF GROSS SALES CONSIDERATION INCLUDING PAYMENT MADE TO 8 CONSENTORS AT RS.65,60,000 AT 233.24 PS PER SQ.FT. AND THE NET CONSIDERATION AFTE R REDUCING PAYMENTS MADE TO CONSENTORS WORKED OUT TO RS.108.27 PS PER SQ.FT. THE ASSESSING OFFICER FOUND THAT THE GROSS RATE ON WHICH THE LAND WAS TRANSFERRED AT RS.233.24 PS PER SQ.FT. CONSIDERING THE REAL ESTATE MARKET POSITION AND LOCATION OF THE PROPERTY UNDER CONSIDERATION. HE ACCORDINGLY APPROACHED SUB-REGISTRAR, INDORE, PER LETTER DATED 20.11.06 TO FURNISH INFORMATION ON THE FOLLOWING : A. MARKET RATE OF THE LANDS BEARING KHASRA NOS.46/1/3, 46/1/5, 52/2, 52/3, 55/1, 55/2, 50/2.51/3, 46/1/6 AT VILLAGE CHITAWAD, AB ROAD AS ON 1.4.1981. B. AND MARKET RATE AS ON 24.11.2003 FOR THE ABOVE QUOTED KHASRA NOS. SUB-REGISTRAR, INDORE, PER LETTER NO. 329/MP/IND/ DATED 12.9.06 STATED THAT IN VILLAGE CHITAWAD ON AB ROAD DURING F.Y. 2003-04 THE GUIDELINE RATES FOR RESIDENTIAL PLOT AT RS.8000 AND COMMERCIAL PLOT AT RS. 12,000/- WAS DETERMINED AND IN THE YEAR 1981, NO SUCH GUIDELINE RATES WERE AVAILABLE AND SALE DEE DS WERE REGISTERED ON THE BASIS OF PRICE STATED IN SUC H SALE DEEDS. THE ASSESSING OFFICER ON THE BASIS OF SUCH REPLY WORKED OUT THE RATE PER SQ.FT. AT RS. 74 2/- FOR RESIDENTIAL PLOT AND RS. 1113/- FOR COMMERCIAL PLOT AND HE FURTHER HELD THAT AS PER VALUATION REPO RT ENCLOSED WITH THE RETURN OF INCOME, THE PROPERTY WA S STATED COMMERCIAL-CUM-RESIDENTIAL AREA AND THEREFORE AVERAGE OF TWO RATES 742 AND 1113 I.E. RS . 928 PER SQ.FT WOULD BE APPROXIMATE FAIR MARKET VALUE FOR DETERMINING FULL VALUE OF SALE CONSIDERAT ION. 5 THE ASSESSING OFFICER ALSO REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE ASSESSEES CLAIM OF COST OF ACQUISITION AS ON 1.4.1981 AT RS. 8 PER SQ.FT. SHOU LD NOT BE REJECTED AND THE COST OF ACQUISITION SHOULD BE TAKEN AS RS. 3.44 PER SQ.FT. AND FURTHER CONFRONTIN G THE ASSESSEE WITH THE INFORMATION GATHERED FROM SUCH REGISTERS OFFICE ABOUT THE GUIDELINE RATES FO R AND TO EXPLAIN WHY SALE CONSIDERATION SHOULD NOT BE TAKEN AT RS.12000 PER SQ. MT. AFTER CONSIDERING TH E ASSESSEES CONTENTION WITH REGARD TO RATE OF SALE CONSIDERATION, THE ASSESSING OFFICER HELD THAT RS.8000 PER SQ.FT FOR RESIDENTIAL PROPERTY INDICATE D THAT SUCH PROPERTY WAS NOT SITUATED ON MAIN ROAD AND WAS NOT COMMERCIAL. HE ALSO REJECTED THE ASSESSEES CLAIM THAT SUCH PROPERTY WAS DISPUTED AS THE SAID DEED CLEARLY MENTIONED THE SELLERS TO BE T HE UNDISPUTED OWNERS TO THE PROPERTY ON THE DATE OF SALE AND HE INCORPORATED THE SCANNED IMAGE OF THE TABLE OF SALE DEED. THE ASSESSING OFFICER FINALLY HELD THAT SALE CONSIDERATION WAS TO BET TAKEN AT RS. 928 /- PER SQ.FT. THE ASSESSING OFFICER ALSO REJECTED THE ASSESSEES CONTENTION OF FAIR MARKET VALUE OF PROPE RTY AS ON 1.4.1981 AT RS.8/- PER SQ.FT. INSTEAD OF IT, HE HAS TAKEN THE RATE OF RS.4.27 PER SQ.FT. IN VIEW OF THE FACT THAT THE LAND WAS SITUATED AT AB ROAD. THE ASSESSING OFFICER ALSO REJECTED THE ASSESSES CLAIM FOR DEDUCTION U/S 54F FOR WANT OF DEFINITE EVIDENCE. TH E ASSESSING OFFICER ACCORDINGLY ARRIVED AT LTCG BY ADOPTING THE SALE VALUE AT RS. 928/- PER SQ.FT. AND ADOPTING THE COST OF ACQUISITION ON 1.4.81 AT RS. 4 .27 PER SQ.FT. ON WHICH FURTHER BENEFIT OF INDEXATION W AS GIVEN. THE ASSESSING OFFICER, HOWEVER, GRANTED THE DEDUCTION FOR PAYMENT MADE TO THE CONSENTING PARTIES @ RS. 125/- PER SQ.FT. REDUCING THE LTCG SO ARRIVED AT BY RS. 20,12,500/- AND FURTHER ACCEPTED THE CLAIM OF BROKERAGE PAID FOR THE SAME AT RS.17,420/- ARRIVED AT NET LTCG AT RS. 1,29,10,870/-. 5. BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THE ASSESSEE ALLEGED INVOCATION OF PROVISIONS OF SECTION 50C AND COMPUTATION OF LON G TERM CAPITAL GAINS BY THE ASSESSING OFFICER. BY TH E IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED BY THE SAME, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIE S 6 BELOW AND FIND FROM RECORD THAT THE ASSESSEE HAS SOLD THE LAND TO A COOPERATIVE SOCIETY. THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT THE PURCHASER BEING A COOPERATIVE SOCIETY WAS EXEMPT FROM PAYMENT OF STAMP DUTY AND THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITY FOR PURPOSE OF REGISTRATION OF SUCH LAND WOULD NOT BE APPLICABLE TO IT AND, THEREFORE, THE PROVISIONS OF SECTION 50C WERE NOT APPLICABLE. WE DO NOT FIND AN Y MERIT IN THIS CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. EVEN THOUGH THE COOPERATIVE SOCIETY TO WHOM SALE WAS MADE WAS EXEMPT FROM PAYMENT OF STAMP DUTY, BUT THE TITLE DEED WAS REQUIRED TO BE G OT REGISTERED. THE STAMP DUTY AUTHORITIES ARE HAVING THE RATE OF LAND PREVAILING AT A PARTICULAR POINT O F TIME WITH REGARD TO LAND/BUILDING FOR WHICH TITLE D EED IS BEING GOT REGISTERED. UNDER THE PROVISIONS OF SECTION 50C OF THE ACT, IF THE ASSESSING OFFICER FI NDS THAT THE TRANSACTION OF SALE HAS BEEN EFFECTED AT A RATE LOWER THAN THE RATE ADOPTED BY THE STAMP VALUATION AUTHORITY THEN THE VALUE SO ADOPTED BY TH E STAMP VALUATION AUTHORITY WILL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION. FOR PURPOSE OF INCOME TAX ACT, THE ASSESSING OFFICER IS EMPOWERED TO TAKE THE RATE APPLICABLE FOR STAMP VALUATION AND TO REOCMPUTE THE CAPITAL GAIN U/S 50C OF THE ACT. THU S, WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE L OWER AUTHORITIES FOR INVOKING PROVISIONS OF SECTION 50C FOR COMPUTATION OF CAPITAL GAINS ON SALE OF PLOTS. 7. FROM RECORD WE ALSO FIND THAT THE PLOT SO SOLD BY THE ASSESSEE WAS UNDER A CIVIL LITIGATION AND TH E SAME WAS ALSO STATED IN CLAUSE 2 OF SALE DEED THROUGH CIVIL SUIT NO. 56A/955. THUS, THE TITLE OF THE PROPERTY SO SOLD WAS NOT CLEAR. WE ALSO FIND THAT THE PLOT SO SOLD HAD NO DIRECT ACCESS TO THE MAIN ROAD. IT WAS THE CONTENTION OF THE ASSESSEE THAT ADOPTION OF GUIDELINE VALUE OF RS.928/- PER SQ. FT. FOR THE ASSESSEES AREA OF PLOT OF LAND SOLD WAS NOT CORREC T INSOFAR AS THESE GUIDELINE RATES ARE NORMALLY APPLICABLE TO PLOTS OF SMALLER SIZE, WHICH ARE FULL Y DEVELOPED AND THIS RATE CANNOT BE APPLIED TO A BIGG ER PLOT OF LAND AS IN THE CASE OF THE ASSESSEE WHICH W AS AROUND 55,000 SQ.FT. AND THAT TOO WITHOUT DEVELOPMENT. WE FIND SUFFICIENT FORCE IN THE ASSESSEES ARGUMENT THAT THE RATE OF PLOT APPLICABL E FOR SMALLER SIZE IN RESPECT OF FULLY DEVELOPMENT AR EA CANNOT BE APPLIED FOR BIG SIZE OF PLOT WITHOUT DEVELOPMENT BECAUSE INFRA STRUCTURE LIKE ROADS, ETC . ARE TO BE CUT OUT OF THESE BIGGER SIZE OF PLOTS AND 7 AFTER MAKING FULL DEVELOPMENT, THE SAME CAN BE BROUGHT AT PAR WITH THE DEVELOPED SMALLER SIZE OF PLOTS. WE ALSO FIND THAT THE SUB-REGISTRAR HAS ADOPTED THE RATE APPLICABLE TO WELL DEVELOPED RESIDENTIAL COLONIES WHICH HAVE ALL INFRA STRUCTURE AND FACILITIES SUCH AS ROADS, ELECTRICITY, DRAINAGE , GARDEN, ETC. IN THE INSTANT CASE, SUB-REGISTRAR HA S STATED THAT IN THE YEAR 2003-04 THE RATES WERE RS. 8,000/- PER SQ.FT. FOR RESIDENTIAL AND RS. 12,000/- PER SQ.FT. FOR COMMERCIAL PLOTS IN CHITWADA ON AB ROAD. REGARDING 1981 RATE IT WAS STATED BY THE SUB-REGISTRAR THAT THERE WAS NO GUIDELINE FOR THE YEAR 1981. UNDISPUTEDLY, THE LAND OF THE ASSESSEE WAS NOT DEVELOPED FOR WHICH APPLICABLE RATE IS TO B E APPLIED AFTER GIVING DUE REBATE FOR SUCH DEVELOPMEN T EXPENDITURE RATHER THAN APPLYING THE RATE PREVAILIN G FOR FULLY DEVELOPED LAND. AS PER OUR CONSIDERED VI EW, IN CASE OF REAL ESTATE PROPERTIES, THE SIZE AND DEVELOPMENT ARE IMPORTANT FACTORS IN DECIDING THE RATES OF ANY PROPERTY. IF A VERY BIG PLOT OF LAND IS UNDER CONSIDERATION, THE BUYER HAS TO CUT IT INTO SMALLER PLOTS AND FOR WHICH PURPOSE 40% OF LAND WIL L HAVE TO BE EAR-MARKED FOR ROAD, AMENITIES, ETC. THU S, THE SALEABLE AREA OF SUCH LAND REMAINS ONLY TO THE EXTENT OF 60% OF THE TOTAL AVAILABLE LAND. FURTHER COST IS ALSO INCURRED FOR OBTAINING VARIOUS APPROVA LS/ SANCTIONS LIKE POWER, WATER, DRAINAGE, ETC. WE FIN D THAT THE ASSESSING OFFICER HAS NOT CONSIDERED ALL THESE FACTS WHILE ADOPTING THE RATE SUGGESTED BY TH E SUB-REGISTRAR WITH REGARD TO FULLY DEVELOPED LAND. ACCORDINGLY, WE RESTORE THE ISSUE WITH REGARD TO COMPUTATION OF CAPITAL GAIN BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH AFTER CONSIDE RING THE ASSESSEES CONTENTION WITH REGARD TO EXACT LOCATION OF LAND, ITS STATE OF DEVELOPMENT AT THE T IME OF SALE AND THE REQUIRED INFRA-STRUCTURE WHICH IS REQUIRED TO BE DONE FOR SUCH LAND. FURTHERMORE, IF THE LAND IS UNDER DISPUTE, SUCH LITIGATION IS TO BE KEPT IN MIND FOR APPLYING THE FAIR MARKET VALUE OF SUCH LAND. THE ASSESSEE IS AT LIBERTY TO FILE AND SUBSTANTIATE HER CLAIM WITH REGARD TO THESE CONTENTIONS BEFORE THE ASSESSING OFFICER. WE DIREC T ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT 28 TH FEBRUARY, 2011. 8 IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ISSUE T O THE FILE OF THE LD. ASSESSING OFFICER WHO WILL DECIDE THE IS SUE AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF THE OBSERVATIONS MADE IN THE ORDER DATED 28.2.2011 (SUP RA). NEEDLESS TO MENTION HERE THAT SUFFICIENT OPPORTUNIT Y SHALL BE PROVIDED TO THE ASSESSEE AND ASSESSEE IS A LSO AT LIBERTY TO FURNISH ANY EVIDENCE, IF ANY, TO SUBSTAN TIATE HER CLAIM. FINALLY, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES AT THE CONCLUS ION OF THE HEARING ON 14 TH JULY, 2011. (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 TH JULY, 2011 COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE !VYS!