Shashikant Birmal, Pune V. Income tax Officer,

ITA 2959/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1603 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-08-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 28-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 143(3); 50C

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 2 959 /P U N/201 6 / ASSESS MENT YEAR : 20 06 - 07 SHRI SHASHIKANT BIRMAL, SURYODAY, SHRI NAVVINAYAK, SAHAKARI SANSHTA, KOTHRUD, PUNE 411038 . / APPELLANT PAN: A AVPB4855F VS. THE INCOME TAX OFFICER , WARD 3 (4) , PUNE . / RESPONDENT / APPELLANT BY : S/SHRI NIKHIL PATHAK AND P.D.KUDVA / RESPONDENT BY : S HRI SUDHENDU DAS / DATE OF HEARING : 1 1 . 1 0 .201 8 / DATE OF PRONOUNCEMENT: 26 . 1 1 .201 8 / ORDER PER SU SHMA CHOWLA, J M : TH E APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 3 , PUNE , DATED 14 . 06 .20 1 6 RELATING TO ASSESSMENT YEAR 20 06 - 07 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HON CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER: - 1 . HOLDING THAT SALE CONSIDERATION OF IMMOVABLE PROPERTY AT PLOT NO.6B, CTC NO.88 (FINAL P LOT NO.428/13), GULTEKDI, PUNE WAS TO BE ADOPTED UNDER SECTION 50C AT RS.72,72,000/ - TO DETERMINE CAPITAL GAIN ARISING FROM SALE IN PLACE OF RS.55 LACS AS PER SALE DEED DATED 21.04.2005. WITHOUT PREJUDICE ITA NO. 2959 /P U N/20 1 7 SHRI SHASHIKANT BIRMAL 2 THE AO ERRED IN BIFURCATING CONSIDERATION U/S 50C RS.72,72,000/ - AT RS.44,88,979/ - FOR RESIDENTIAL PORTION AND RS.27,83,021/ - FOR NON - RESIDENTIAL PORTION OF THE SUBJECT PROPERTY IN PLACE OF RS.2,46,675/ - AND RS.70,25,325/ - RESPECTIVELY AS PER CAPITALIZED VALUE OF THE RENT. THE APPELLANT PLEADS THAT THE A O'S ACTION IS NOT JUSTIFIED AND VALID. 2 . HOLDING THAT THE FAIR MARKET VALUE OF LAND AS ON 01.04.1981 RS.3,99,102/ - WAS TO BE ALLOCATED ON SHOPS AND RESIDENTIAL PROPERTY AT RS.87,384/ - AND RS.3,12,447/ - RESPECTIVELY WHEN THE CORRECT ALLOCATION AS PER THE REG ISTERED VALUERS REPORT IS RS.2,24,497/ - AND RS.1,74,604/ - RESPECTIVELY. 3 . HOLDING THAT ENTIRE CAPITAL GAIN ON SALE OF IMMOVABLE AT GULTEKDI WAS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE. THE APPELLANT PLEADS THAT ONLY HIS SHARE OF 73% WAS ASSESSABLE IN HIS CASE. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET, DID NOT PRESS GROUNDS OF APPEAL NO.2 AND 3, HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 4 . THE ISSUE RAISED VIDE GROUND OF APPEAL NO.1 IS AGAINST ADOPTION OF SALE CONSID ERATION FOR WORKING OUT INCOME FROM LONG TERM CAPITAL GAINS. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF 1,04,350/ - . THE CASE OF ASSESSEE WAS PICKED UP FOR SCRUTINY. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE DURING THE YEAR HAD SOLD IMMOVABLE PROPERTY AT GULTEKDI, PUNE ON 20.04.2005. THE ASSESSEE HAD NOT DECLARED ANY INCOME FROM CAPITAL GAIN. HOWEVE R, ON THE BASIS OF ANNUAL INFORMATION RETURN, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD ENTERED INTO SALE TRANSACTION FOR TOTAL CONSIDERATION OF 55 LAKHS. THE ASSESSEE EXPLAINED THAT THE SAID PROPERTY WAS INHERITED BY HIM AND HE HAD GOT 73% SHAR E IN THE SAID PROPERTY. THE ASSESSEE HAD ENTERED INTO A DEVELOPMENT AGREEMENT. HOWEVER, THE DEVELOPER FAILED TO PAY AGREED CONSIDERATION AND THE AGREEMENT WAS CANCELLED ON 11.03.2004 . THE PROPERTY WAS SOLD VIDE SALE AGREEMENT DATED 21.04.2005 AT CONSIDE RATION OF 55 LAKHS. HOWEVER, THE STAMP VALUATION AUTHORITY HAD ASSESSED THE VALUE OF PROPERTY AT 72,72,000/ - . THE ASSESSEE EXPLAINED THAT HE HAD PURCHASED A PLOT AT ITA NO. 2959 /P U N/20 1 7 SHRI SHASHIKANT BIRMAL 3 KOTHRUD AND CONSTRUCTION ACTIVITY WAS CARRIED OUT FOR RESIDENTIAL BUNGALOW AND THE SAME WAS COM P LETED ON 15.03.2006. THE VALUER HAD ESTIMATED THE COST OF CONSTRUCTION AT 34,66,811/ - AND THE COST OF LAND AT 7,21,832/ - . THUS, TOTAL INVESTMENT IN THE HOUSE PROPERTY WAS CLAIMED AT 44,88,643/ - . THE ASSESSEE ALSO POINTED OUT THAT THOUGH THE SALE VALUE WAS ASSESSED AS 72,72,000/ - FOR STAMP DUTY PURPOSE, BUT THE ACTUAL SALE CONSIDERATION SHOULD BE TREATED AT 55 LAKHS AS THE PURCHASER OF PROPERTY PAID THE TENANCY CHARGES OF 17 LAKHS IN RESPECT OF TWO SHOPS TO THE TENANT. THE ASSESSEE THUS, COM PUTED CAPITAL GAIN TAX LIABILITY AT NIL. THE ASSESSING OFFICER DID NOT ACCEPT THE PLEA OF ASSESSEE AS THE SALE AGREEMENT DID NOT SPEAK ABOUT CONSIDERATION OF TENANCY CHARGES TO BE PAID IN FUTURE, AT THE TIME OF SALE. CONSEQUENTLY, THE ASSESSING OFFICER A DOPTED SALE CONSIDERATION AT 72,72,000/ - . THE PROPERTY SOLD COMPRISED OF COMMERCIAL PROPERTY AND TOTAL VALUE OF COMMERCIAL PROPERTY WAS TAKEN AT 27,83,021/ - AND THE BALANCE OF 44,88,979/ - WAS TAKEN AS VALUE OF RESIDENTIAL PROPERTY BY THE ASSESSING OFFICER. THE ASSESSING OFFIC ER ALSO RE - WORKED THE DEDUCTION TO BE ALLOWED UNDER SECTION 54/54F OF THE ACT. 6. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER. 7. THE ASSESSEE IS IN APPEAL AGAINST ADOPTION OF SALE VALUE UNDER SECTION 50C OF THE ACT AT 72,72,000/ - . 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAD FILED REPORT OF DVO BEFORE THE ASSESSING OFFICER, WHICH IS PLACED AT PAGES 81 TO 92 OF PAPER BOOK, UNDER WHICH THE VALUE OF PROPERTY HAS BEEN DETERMINED AT 56,17,316/ - . HE FUR THER POINTED OUT THAT THE ASSESSING OFFICER HAS ADOPTED THE VALUE FOR NON - RESIDENTIAL AREA AND RESIDENTIAL AREA WITHOUT ANY BASIS AND THE SAID COMPUTATION IS ALSO NOT CORRECT. HE STRESSED THAT, BEFORE THE ASSESSING OFFICER A REQUEST WAS MADE TO REFER TO T HE VALUATION ITA NO. 2959 /P U N/20 1 7 SHRI SHASHIKANT BIRMAL 4 OF PROPERTY AS ON THE DATE OF SALE TO THE VALUER AND ALSO SIMILAR PLEA RAISED BEFORE THE CIT(A). ATTENTION WAS DRAWN TO WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A) WITH SPECIAL REFERENCE TO PARA 1.12 AT PAGE 96 OF PAPER BOOK. THE LEARNED AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO REFERRED TO SALE DEED WHICH IS PLACED AT PAGES 43 TO 69 OF PAPER BOOK, IN WHICH VIDE PARA 6 AT PAGE 54 OF PAPER BOOK, THE ASSESSEE HAD DECLARED THAT THERE WERE THREE TENANTS IN THE SAID BUILDING AND THE RIGHTS O F SAID TENANTS WERE ATTORNED IN FAVOUR OF PURCHASER. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REQUESTED THAT IN VIEW OF PROVISIONS OF SECTION 50C OF THE ACT, THE VALUATION OF PROPERTY MAY BE REFERRED TO DVO AND THE SALE CONSIDERAT ION BE ADOPTED ACCORDINGLY. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 10. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES, THE LIMITED ISSUE WHICH ARI SES IN THE PRESENT APPEAL IS IN RELATION TO THE ASSESSABILITY OF CAPITAL GAIN IN THE HANDS OF ASSESSEE, IN VIEW OF PROVISIONS OF SECTION 50C OF THE ACT. THE ASSESSEE HAD SOLD THE PROPERTY WITH AGREED CONSIDERATION OF 55 LAKHS. HOWEVER, THE STATE VALUAT ION AUTHORITIES HAD ADOPTED VALUATION OF PROPERTY AT 72,72,000/ - . THE CASE OF ASSESSEE BEFORE THE TRIBUNAL IS THAT PART OF SAID PROPERTY WAS TENANTED AND THE VALUE OF PROPERTY WAS THUS, DEPRESSED. HE STATED THAT IN ORDER TO MEET HIS CLAIM THE ASSESSEE HAD FURNISHED VALUATION REPORT OF SAID PROPERTY FROM REGISTERED VALUER, WHO HAD VALUED THE SAME AT 56,17,316/ - . A REQUEST WAS MADE TO THE ASSESSING OFFICER TO REFER TO THE DVO FOR VALUATION OF PROPERTY AS PER PROVISIONS OF SECTION 50C(2) OF THE ACT. HO WEVER, NO SUCH REFERENCE WAS MADE BY THE ASSESSING OFFICER AND HE PROCEEDED TO ADOPT THE SALE CONSIDERATION AT THE STAMP DUTY VALUATION OF 72,72,000/ - . EVEN BEFORE THE CIT(A), SAME PLEA WAS ITA NO. 2959 /P U N/20 1 7 SHRI SHASHIKANT BIRMAL 5 RAISED. THE ASSESSEE HAS ALSO POINTED OUT THAT THE FACTUM OF T ENANTS IN THE PROPERTY IS ALSO MENTIONED IN SALE DEED WHICH HAS NOT BEEN CONSIDERED BY ANY OF THE AUTHORITIES. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, IT IS DEEM ED FIT TO RESTORE THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH DIRE CTION TO ASSESSING OFFICER TO REFER THE VALUATION OF PROPERTY AS ON THE DATE OF SALE TO THE DVO , IN VIEW OF PROVISIONS OF SECTION 50C OF THE ACT AND THEREAFTER, COMPUTE INCOME FROM CAPITAL GAIN IN THE HANDS OF ASSESSEE. ACCORDINGLY, THE ISSUE IS SET ASIDE TO THE FILE OF ASSESSING OFFICER. THE ASSESSING OFFICER/DVO SHALL AFFORD REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE GROUND OF APPEAL NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. THE GROUNDS OF APPEAL NO.2 AND 3 ARE NOT PRESSED HENCE THE SAME A RE DISMISSED AS NOT PRESSED. 1 1 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 26 TH DAY OF NOVEMBER , 201 8 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 26 TH NOVEMBER , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 3 , PUNE ; 4. THE PR. CI T - 2 , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE