Shri Shankarbhai H.Bardiwala, Surat V. The Income tax Officer,OSD-II,Range-2, Surat

ITA 3/AHD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51023 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 17-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R N VEPARI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Fair market value
• Section: 50C; 37; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI MUKUL KUAMR SHRAWAT , JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.03 / AHD/2010 (ASSESSMENT YEAR 2006-07) SHRI SHANKARBHAI H BARDIWALA, 2/4605, MIAN RAOD, SAGRAMPURA, SURAT VS. ITO, OSD II, RANGE 2, SURAT PAN/GIR NO. : AAWPB9854F (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI R N VEPARI, AR RESPONDENT BY: SHRI VINOD TANWANI, SR. DR DATE OF HEARING: 17.11.2011 DATE OF PRONOUNCEMENT: 21.12.2011 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) II, SURAT DATED 02.09.2009 FOR THE ASSESSMENT YEAR 2006-07. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: (I) CAPITAL GAIN ON THE BASIS OF SECTION 50 C OF THE ACT:- (1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN TAKING FULL VALUE AT CONSIDERATION OF RS.31,59,000/ - INSTEAD OF RS.15,00,000/- WHEN THE PROPERTY WAS SOLD TO HIS SO N. (2) THE APPELLANT SUBMITS THAT THE LEARNED COMMISSI ONER OF INCOME-TAX (APPEALS) HAS NOT APPRECIATED THE ELEMEN T OF GIFT IN THE TRANSACTION AS EVIDENCED BY THE AFFIDAVIT. (3) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ALSO NOT DEALT. WITH THE JUDGEMENTS OF GUJARAT HIGH COURT IN RESPEC T OF VALUATION DONE BY STAMP VALUATION AUTHORITY. I.T.A.NO. 03 /AHD/2010 2 (4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE VALUE SHOWN AS PER THE SALE DOCUMENT AT RS.15 LACS OUGHT TO HAVE B EEN ACCEPTED. 2. THE BRIEF FACTS OF THE CASE TILL THE ASSESSMENT STAGE ARE NOTED BY THE LD. CIT(A) IN PARA 4 OF HIS ORDER, WHICH IS REPRODU CED BELOW: SURVEY NO. 156/1 AT MAJURA, BHATAR, SURAT TO HIS S ON SHRI JANAKBHAI JAYDEVBHAI S BHARDIWALA FOR A CONSIDERATI ON OF RS 15,00,000. THE DETAILS OF PAYMENT TOWARDS THE AFORE SAID TRANSACTIONS WERE AS UNDER: SR. NO. CHEQUE NO & DATE BANK DETAILS AMOUNT 1. 080708 14-10-2005 PRIME CO-OP BANK LTD, BHATTAR BRANCH, SURAT. 5,00,000 2, 080709 14-10-2005 PRIME CO-OP BANK LTD, BHATTAR BRANCH, SURAT. 5,00,000 3. 080710 14-10-2005 PRIME CO-OP BANK LTD, BHATTAR BRANCH, SURAT. 5,00,000 TOTAL 15,00,000 THE AO FURTHER NOTED THAT THE SAID DEED WAS PREPARE D ON A STAMP PAPER OF RS 1,26,000 AND THE VALUE OF THE PROPERTY HAD BEEN SHOWN AT RS 15,00,000, WHEREAS, THE SUB-REGISTRAR, SURAT CITY-1, SURAT HAD ASSESSED THE FAIR MARKET VALUE OF THE SAID PROPERTY AS PER THE PROVISIONS OF THE MUMBAI STAMP DUTY ACT, 1958 AND A CCORDINGLY CHARGED ADDITIONAL STAMP DUTY OF RS 1,39,356. THE A O MADE INQUIRIES WITH THE SUB-REGISTRAR, SURAT CITY-1, SUR AT THROUGH A NOTICE U/S 133(6), WHO IN TURN PROVIDED DOCUMENTARY EVIDENCES ADOPTING THE ACTUAL VALUE OF THE PROPERTY AT RS 31, 59,000 INSTEAD OF RS 15,00,000. THE AO ISSUED A SHOW-CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN WHY THE VALUE ADOPTED BY THE STAMP VALUA TION AUTHORITY (SVA) SHOULD NOT BE TREATED AS THE FULL V ALUE OF THE CONSIDERATION, AND THE LTCG ARISING ON THE TRANSFER OF THE AFORESAID LAND BE RECALCULATED. IN REPLY, THE ASSES SEE MADE A SUBMISSION VIDE LETTER DATED 02-09-2008, RELEVANT P ORTIONS OF WHICH HAVE BEEN REPRODUCED BY THE AO IN THE BODY OF THE I.T.A.NO. 03 /AHD/2010 3 ASSESSMENT ORDER. THE AO REJECTED THE ASSESSEE'S SU BMISSIONS ON THE GROUND THAT THEY WERE NOT TENABLE IN THE EYES O F LAW, AS THE REGISTRATION OF THE DOCUMENT WAS MADE WAY BACK ON 1 4 TH , MAY, 2005 AND THE ASSESSEE HAS FILED HIS RETURN OF INCOM E FOR THE RELEVANT PERIOD ON 14 TH , MARCH, 2007. THE AO TOOK THE VIEW THAT THE ASSESSEE CAME UP WITH THE FABRICATED STORY OF G IFTING HIS SON, ONLY AFTER RELEVANT INQUIRIES HAVE BEEN MADE WITH T HE SVA AND THIS FACT WAS EVIDENT FROM THE EXECUTION OF AFFIDAVIT BY THE ASSESSEE ON 30 TH , AUGUST, 2008, AS REGARDS THE ASSESSEE'S CONTENTIO N OF PAYMENT OF ON-MONEY BY A SON TO HIS FATHER, THE AO REJECTED THE SAME AS ACCORDING TO HIM, THE ISSUE OF ON-MONEY WAS NEVER A T STAKE. THE ADDITION WAS PROPOSED UNDER THE PROVISIONS OF SECTI ON 50C OF THE ACT AND IT COULD NOT BE LINKED TO ANY PAYMENT OF ON -MONEY. ACCORDING TO THE AO, THE SVA ADOPTS A SCIENTIFIC ME THOD AND DUE PROCEDURE TO VALUE PROPERTIES. THE VALUATION OF THE SVA CONSTITUTED SUFFICIENT MATERIAL EVIDENCE ON RECORD. EVEN THOUGH, SECTION 50C MAY BE A DEEMING PROVISION FOR THE PURP OSE OF COMPUTING CAPITAL GAIN YET, IT LAYS DOWN A VERY IMP ORTANT PRINCIPLE WHICH IS THAT, ANY TRANSACTION WITHIN A PARTICULAR AREA WILL HAVE TO MATCH THE JANTRI PRICE FIXED FOR THAT AREA AND THE SALE CONSIDERATION WOULD BE THE RATE AT WHICH THE PROPERTY IS EXPECTED TO BE SOLD IN A GIVEN AREA. BASING HIMSELF ON SUCH FINDINGS AND OBS ERVATIONS, AND ON THE PROVISIONS OF SECTION 50C OF THE IT ACT, THE AO RECOMPUTED THE ASSESSEE'S SHARE OF TAXABLE LTCG AT RS.16,59,00 0/-, AND ADDED THE SAME TO THE HIS TOTAL INCOME. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSE E IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD. A.R. THAT NO OWN MONE Y WAS RECEIVED BY THE ASSESSEE AND THE ASSESSEE IS THE FATHER OF THE BUYER OF THIS PROPERTY AND BOTH WERE LIVING TOGETHER AND HENCE, IT IS A CA SE WHERE GIFT ELEMENT IS ALSO INCLUDED AND, THEREFORE, SECTION 50C SHOULD NO T BE APPLIED. RELIANCE WAS ALSO PLACED ON THE TRIBUNAL DECISION RENDERED I N THE CASE OF RAMAKANT AS REPORTED IN 110 TTJ 297. I.T.A.NO. 03 /AHD/2010 4 5. AS AGAINST THIS, LD. D.R. SUPPORTED THE ORDERS O F AUTHORITIES BELOW AND RELIANCE WAS PLACED BY HIM ON THE TRIBUNAL DECI SION RENDERED IN THE CASE OF SHARAD DINESH PHOTOGRAPHER VS ITO AS REPORT ED IN 43 SOT 452 (MUM) AND ALSO ON THE DECISION OF THE TRIBUNAL REND ERED IN THE CASE OF SANJAYBHAI Z PATEL VS ACIT AS REPORTED IN 15 TAXMAN .COM 103. 6. IN THE REJOINDER, IT WAS SUBMITTED BY THE LD. A. R. THAT ON PAGE 8 OF THE PAPER BOOK IS A LETTER DATED 02.09.2008 ADDRESS ED TO THE A.O. AS PER WHICH IT WAS SUBMITTED THAT THE LAND HAS BEEN TRANS FERRED TO HIS SON BY THE ASSESSEE AT A CONSIDERATION KEEPING IN MIND THE GIF T ELEMENT TO HIS OWN SON. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGMENTS CITED BY BOTH THE SIDES. WE FIND THAT TH ERE IS NO DISPUTE REGARDING THE FACT THAT THE ASSESSEE HAS SOLD A PLO T MEASURING 526.50 SQ. MTRS. TO HIS SON FOR A CONSIDERATION OF RS.15 LACS AND AS PER THE STAMP DUTY VALUATION, THIS PROPERTY IS VALUED AT RS.31.59 LACS. NOW, THE DISPUTE IS ONLY REGARDING APPLICABILITY OF THE PROVISIONS O F SECTION 50C, WHICH READS AS UNDER: 5OC. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED 91 [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AU THORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. THE VALUE SO ADOPTED OR ASSESSED 91 [OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48 BE DEEMED TO BE THE FULL VAL UE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICE R THAT THE VALUE ADOPTED OR ASSESSED 91 [OR ASSESSABLE] BY THE STAMP VALUATION I.T.A.NO. 03 /AHD/2010 5 AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MA RKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED 91 [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (L)HAS NOT BE EN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MAD E BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE P ROVISIONS OF SUB-SECTION (2), ( 3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTION (6) AND (7) OF SECT ION 23A, SUB- SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WI TH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFIC ER UNDER SUB- SECTION (1) OF SECTION 16A OF THAT ACT. 92 [EXPLANATION 1]. FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICER SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH-TAX ACT 1957 (27 OF 1957). [EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION ASSESSABLE MEANS THE PRICE WHICH THE STAMP VALUAT ION AUTHORITY WOULD HAVE NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY. (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED (OR ASSESSABLE) BY THE STAMP VA LUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED 93 [OR ASSESSABLE] BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF THE TRANSFER.] 8. WHEN WE GO THROUGH THE PROVISIONS OF SECANT 50C, WE FIND THAT THERE IS NO EXCEPTION IN THE PROVISION TO THIS SECT ION THAT IN A GIVEN CASE, WHERE THE TRANSFER OF LAND OR BUILDING OR BOTH IS A T A LESSER VALUE AS COMPARED TO THE VALUE ADOPTED AND ASSESSED OR ASSES SABLE BY ANY AUTHORITY OF A STATE GOVERNMENT I.E. STAMP VALUATIO N AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THEN THE I.T.A.NO. 03 /AHD/2010 6 VALUE SO ADOPTED BY THE SAID AUTHORITY SHOULD NOT B E CONSIDERED FOR WORKING OUT THE CAPITAL GAIN. THE ONLY ARGUMENT OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND EVEN BEFORE US IS THIS TH AT SINCE THE SELLER AND THE BUYER ARE RELATED AS FATHER AND SON AND BOTH WE RE LIVING TOGETHER, THERE IS A GIFT ELEMENT INVOLVED IN THE SALE AND, T HEREFORE, SECTION 50C SHOULD NOT BE INVOKED. WE DO NOT FIND ANY MERIT IN THIS CONTENTION BECAUSE THIS IS NOT SUPPORTED BY THE PROVISIONS OF SECTION 50C IN WHICH NO EXCEPTION HAS BEEN CARVED OUT FOR ANY SUCH SITUA TION. REGARDING THE TRIBUNAL DECISION CITED BY THE LD. A.R. RENDERED IN THE CASE OF SHARAD DINESH PHOTOGRAPHER (SUPRA), WE FIND THAT THE RELE VANT PORTION OF THIS TRIBUNAL DECISION IS REPRODUCED BY THE ASSESSEE IN THE WRITTEN SUBMISSION SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND THE SAME IS AVAILABLE ON PAGE 3 OF THE PAPER BOOK. AS PER THE SAME, WE F IND THAT THIS TRIBUNAL DECISION IS NOT APPLICABLE IN THE PRESENT CASE BECA USE IN THAT CASE, IT WAS THE CLAIM OF THE ASSESSEE THAT IT IS NOT UNCOMMON T HAT WHILE FIXING THE CIRCLE RATE, THE AUTHORITY MAY ERR ON THE SIDE OF E XCESSIVE VALUATION BY HIGHER RATE OF LAND IN A PARTICULAR AREA AT THE CIR CLE RATE AND HENCE, ASSESSEE SHOULD BE ALLOWED AN OPPORTUNITY TO REBUT AND ESTABLISH THAT SUCH VALUATION BY THE STAMP DUTY AUTHORITY IS HIGHER THA N THE ACTUAL MARKET VALUE. IN THE PRESENT CASE, THIS IS NOT THE CLAIM OF THE ASSESSEE THAT THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY IS HIGHER THAN THE MARKET VALUE BUT THE CASE OF THE ASSESSEE IS THIS THAT GIFT ELEM ENT IS INVOLVED IN THE SALE AND, THEREFORE, SECTION 50C SHOULD NOT BE INVOKED I N THE FACTS OF THE CASE AND, THEREFORE, THIS TRIBUNAL DECISION IS NOT APPLI CABLE IN THE PRESENT CASE. SINCE, THE LD. A.R. COLD NOT POINT OUT ANY VALID BA SIS AS PER WHICH SECTION 50C IS NOT APPLICABLE IN THE PRESENT CASE A ND THE ONLY ARGUMENT ADVANCED BY HIM IS NOT FOUND TO BE ACCEPTABLE, WE F EEL THAT NO I.T.A.NO. 03 /AHD/2010 7 INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT( A) BECAUSE THERE IS NO EXCEPTION IN THE PROVISIONS OF SECTION 50C EXCEPT T HAT IF THE ASSESSEE MAKES A REQUEST THAT THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY IS HIGHER THAN THE MARKET VALUE, THEN THE MATTER MAY B E REFERRED TO DVO. BUT IN THE PRESENT CASE, THERE IS NO SUCH REQUEST B EFORE THE AUTHORITIES BELOW AND EVEN BEFORE US AND NO CASE HAS BEEN MADE OUT TO SHOW THAT THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY IS ON HIG HER SIDE AND THE ONLY REQUEST IS THIS THAT THERE IS GIFT ELEMENT INVOLVED IN THE PRESENT CASE, BECAUSE OF RELATIONSHIP OF FATHER AND SON BETWEEN T HE SELLER AND THE BUYER, SECTION 50C SHOULD NOT BE INVOKED BUT THIS IS WITHO UT ANY BASIS IN THE ABSENCE OF ANY SUCH EXCEPTION IN SECTION 50C OF THE ACT AND, THEREFORE, WE DECLINE TO INTERFERE IN THE ORDER OF LD. CIT(A). 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO. 03 /AHD/2010 8 1. DATE OF DICTATION 16/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19/12.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.20/12 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 21/12 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.21/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21/12/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..