Shri Shantilal Jadavjibhai Chhaniara, GONDAL V. The Income Tax Officer, Ward 5 (2), RAJKOT-GUJARAT

ITA 30/RJT/2011

• Counselvise Citation: 3024914 RSA 2011
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-11-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 05-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: RUSHIT SHETH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.30/RJT/2011 (ASSESSMENT YEAR 2003-04) SHANTILAL JADAVJIBHAI CHHANIARA VS ITO, WD.5(2) C/O M/S CHHANIARA MACHINE PRODUCTS RAJKOT GONDAL ROAD, OPP SBI, GON PAN : ABWPC8400D (APPELLANT) (RESPONDENT) DATE OF HEARING : 02-11-2011 DATE OF PRONOUNCEMENT : 04-11-2011 APPELLANT BY : SHRI RUSHIT SHETH RESPONDENT BY : SHRI AVINASH KUMAR O R D E R PER AL GEHLOT (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-IV, RAJKOT DATED 03-12-2010 FOR THE ASSESSMENT YEAR 200 3-04. 2. THE EFFECTIVE GROUND RAISED IN THE APPEAL PERTAI NS TO CALCULATION OF CAPITAL GAIN ON THE BASIS OF SALE CONSIDERATION ADOPTED BY THE STAMP DUTY AUTHORITIES AND APPLICABILITY OF SECTION 50C OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED LOSS OF RS.1,44,409 ON SALE OF IMMOVABLE PROPERTY, BEING BUILDING AT CI TY SURVEY WARD NO.1, CITY SURVEY NO.186 TO 190 ON CHANDULAL MARG ON THE DISCL OSED SALE PRICE OF ITA NO.115/RJT/2011 2 RS.7,50,000 AS PER SALE DEED. THE ASSESSING OFFICE R MADE ENQUIRY FROM STAMP DUTY OFFICER U/S 133(6) AND NOTICED THAT THE MARKET VALUE OF THE SAID PROPERTY WAS RS.25,26,002. THE ASSESSING OFFICER THEREFORE REFE RRED THE MATTER TO THE DVO U/S 55A OF THE ACT WHO HAS VALUED THE FAIR MARKET VALUE OF THE PROPERTY AT RS.24,27,795. THE ASSESSING OFFICER TAKEN THE SALE CONSIDERATION AT RS.24,27,795. THE ASSESSING OFFICER, THEREFORE, RE CALCULATED THE LONG TERM CAPITAL GAIN AT RS.15,33,795. THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER, AS UNDER: 3.7 IN VIEW OF ABOVE LEGAL POSITION AND THE CASE-L AWS DISCUSSED IN PRECEDING PARAS, IT IS HELD THAT THE ACTION OF T HE ASSESSING OFFICER IN TAKING THE VALUE DETERMINED BY THE AVO AT RS.24, 27,795/- AS AGAINST THE FAIR MARKET VALUE SHOWN BY THE APPELLAN T AT RS.7,50,000/- IS HELD TO BE VALID AND LEGALLY CONSI STENCE WITH THE PROVISIONS OF SECTION 50C(2) &(3) OF THE ACT. ACCO RDINGLY, THE ACTION OF ASSESSING OFFICER IN COMPUTING THE LONG TERM CAP ITAL GAIN BY TAKING THE FAIR MARKET VALUE DETERMINED BY THE AVO AND THEREBY WORKING OUT LONG TERM CAPITAL GAIN AT RS.15,33,795/ - IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. 4. THE LD.AR REITERATED THE SUBMISSIONS WHICH WERE MADE BEFORE THE CIT(A) POINTING OUT VARIOUS DEFECTS IN THE ESTIMATION MADE BY THE DVO APART FROM VARIOUS OTHER SUBMISSIONS WHICH WERE RECORDED BY TH E CIT(A) IN HIS ORDER FROM PAGES 6 TO 28. THE ASSESSEE HAS ALSO CHALLENGED TH E REFERENCE TO THE VALUATION OFFICER WHICH IS NOT IN ACCORDANCE WITH LAW. APART FROM ALL THESE SUBMISSIONS IT IS THE SUBMISSION OF THE LD.AR THAT THE FINAL VALUE DE CLARED IN THE DOCUMENT HAS BEEN ACCEPTED BY THE STAMP DUTY OFFICER BUT THE ASS ESSING OFFICER AND CIT(A) HAVE IGNORED THIS VERY IMPORTANT FACT. THE LD.AR S UBMITTED THAT THIS FACT CAN BE VERIFIED FROM LAST PAGE OF THE SALE DEED WHEREIN TH E DEPUTY COLLECTOR HAS ITA NO.115/RJT/2011 3 SPECIFICALLY ACCEPTED THE AMOUNT OF RS.7,50,000 AS PROPER FOR THE PURPOSE OF 32K OF THE STAMP ACT. THE LD.AR DREW OUR ATTENTION AT PAGE 6 OF ASSESSING OFFICERS ORDER AND SUBMITTED THAT THIS IMPORTANT F ACT HAS BEEN CONVENIENTLY IGNORED BY THE ASSESSING OFFICER. THE RELEVANT POR TION OF THE ASSESSING OFFICERS ORDER FROM PAGE 6 IS REPRODUCED BELOW: ..THE ASSESSEE HAS CONTENDED THAT THE DEPUTY COL LECTOR (STAMP DUTY VALUATION), RAJKOT HAS ACCEPTED THE VAL UE DISCLOSED BY HIM AND CLEARED THE STAMP DUTY VALUE ORGANIZATIO N. SINCE, THE VALUE OF THE SUBJECT PROPERTY ESTIMATED AT RS. 24,2 7,795/- BY THE AVO AS PER HIS REPORT DATED 23/03/2006 WHICH IS MOS T RELIABLE AND BASED ON SCIENTIFIC METHOD DESCRIBING VARIOUS RATE OF DIFFERENT AREA OF PROPERTY. 5. THE LD.AR SUBMITTED THAT ON IDENTICAL SET OF FAC TS THE ITAT, AHMEDABAD BENCH IN THE CASE OF ITO VS CHANDRAKANT R PATEL & O RS (2011) 56 DTR 449 (AHD) CLEARLY HELD THAT SECTION 55A IS MEANT ONLY T O ASCERTAIN THE FAIR MARKET VALUE OF A CAPITAL ASSET BUT NOT TO DETERMINE FULL VALUE OF THE CONSIDERATION RECEIVED AS A RESULT OF THE TRANSFER. THEREFORE, S ECTION 55A HAS ITS OWN LIMITATION IN ITS OPERATION. 6. THE LD.DR, ON THE OTHER HAND, RELIED UPON THE OR DER OF CIT(A) 7. WE HAVE HEARD THE LD.REPRESENTATIVES OF THE PART IES, RECORD PERUSED. AFTER CONSIDERING VARIOUS SUBMISSIONS OF THE ASSESSE WE F IND THAT THE CRUCIAL IMPORTANT FACT AS POINTED OUT BY THE LD.AR THAT THE STAMP DUT Y AUTHORITY HAS ACCEPTED THE VALUE DECLARED IN THE SALE DEED. WHEN THE BASIS ON WHICH THE ASSESSING OFFICER ITA NO.115/RJT/2011 4 HAS STARTED PROCESSING ITSELF IS NOT IN EXISTENCE, THERE IS NO QUESTION FOR FURTHER PROCEEDINGS AS ALL THE SUBSEQUENT PROCEEDINGS BECOM E ACADEMIC. IN THE LIGHT OF THE FACT THAT THE DEPUTY COLLECTOR, STAMP DUTY, RAJ KOT HAS ACCEPTED THE VALUE DISCLOSED BY THE ASSESSEE IN THE DOCUMENT AND THERE IS NO OTHER COGENT MATERIAL BASED ON WHICH IT CAN BE HELD THAT THE ASSESSEE HAS RECEIVED THE CONSIDERATION OTHER THAN DECLARED IN THE DOCUMENT. WE ARE NOT IN AGREEMENT WITH THE VIEW OF THE ASSESSING OFFICER THAT THE MARKET VALUE ESTIMAT ED BY THE DEPARTMENTAL VALUER IS MOST RELIABLE. IT IS MERELY AN OPINION AND, THE REFORE, WITHOUT OTHER CORROBORATING MATERIAL, THE RECOMPUTATION OF CAPITA L GAIN UNDER THE PROVISIONS OF THE ACT IS NOT PERMISSIBLE. APPLICATION OF SECTION 50C TO THE FACTS OF THE CASE ALSO BECOMES ACADEMIC. IN THE LIGHT OF ABOVE DISCUSSION , THE ASSESSING OFFICER IS DIRECTED TO ACCEPT THE CALCULATION OF CAPITAL GAIN AS DECLARED BY THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 04-11-2011. SD/- SD/- (T.K. SHARMA) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT, DT : 04 TH NOVEMBER, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-IV, RAJKOT 4. THE CIT-III, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT