ABBAS T. RESHAMWALA, NAVI MUMBAI V. ITO 22(3)(1), MUMBAI

ITA 3093/MUM/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1558 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2009
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 12-05-2009
• Court: TRIBUNAL
• Department Lawyers: VIKRAM GAUR
• Assessee Lawyers: AJAY R SINGH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Valuation report
• Section: 50C; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI N.V. VASUDEVAN, JM & SHRI R.K. PANDA, A M I.T.A. NO. 3093/MUM/09 (ASSESSMENT YEAR 2006-07) SHRI ABBAS T. RESHAMWALA (PROP. DYNAMIC IMPRESSION) 280, TTC INDS. AREA TURBHE, NAVI MUMBAI PAN: AACPR3673E VS. I.T.O. WARD 22(3)(1) MUMBAI APPELLANT RESPONDENT APPELLANT BY: SHRI AJAY R. SINGH RESPONDENT BY: SHRI VIKRAM GAUR O R D E R DATE OF HEARING: 05.11.2009 DATE OF ORDER: 30.11.2009 PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 24 TH MARCH, 2009 OF THE CIT(A)-XXII, MUMBAI RELATING TO ASSESSMENT YEAR 2006-07. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN TAKEN IN THE GROUNDS OF APPEAL THEY ALL RELATE TO THE ORDER OF THE CIT(A) I N CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN COMPUTING SHORT TERM CAPIT AL GAIN AT R.45,88,700 AS AGAINST RS.18,73,270 DECLARED BY THE ASSESSEE BY INVOKING PROVISIONS OF SECTION 50C OF THE INCOME-TAX ACT, 1961 (THE ACT ). 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR HAS SOLD AN INDUSTRIAL GAL A FOR A CONSIDERATION OF RS. 20 LAKHS. THE ASSESSING OFFICER OBSERVED TH AT THE STAMP DUTY AUTHORITIES HAVE VALUED SUCH PROPERTY AT RS.44,62,0 00. HOWEVER, THE ASSESSEE HAS COMPUTED THE CAPITAL GAIN AT RS.18,73, 270 AFTER DEDUCTING COST OF GALA AT RS.1,04,000 AND STAMP DUTY OF RS.22 ,700. THE ASSESSING I.T.A. NO. 3093/MUM/09 SHRI ABBAS T. RESHAMWALA ================== 2 OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE SALE VALUE OF GALA SHOULD NOT BE CONSIDERED AT RS.44,62,000 AS PER SEC TION 50C OF THE ACT SINCE THE STAMP DUTY AUTHORITIES HAVE ADOPTED THE V ALUE AT RS.44,62,000. THE ASSESSEE SUBMITTED THAT IT HAS RECEIVED ONLY TH E MARKET PRICE WHICH WAS PREVALENT AT THAT TIME AND THE BUYER HAS PAID T HE STAMP DUTY ON THE PRICE FIXED BY THE AUTHORITY AS PER THEIR STANDARD READY RECKONER WHICH DO NOT TAKE INTO ACCOUNT THE INDIVIDUAL PREMISES HAVIN G MANY DISADVANTAGES AND EVEN NOT HAVING THE BASIC AMENITIES. THE VAR IOUS NEGATIVE FACTORS WERE BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER WHICH ARE ENUMERATED AT PAGE 4 OF THE ASSESSMENT ORDER. THE ASSESSEE AL SO ENCLOSED A VALUATION REPORT OF THE REGISTERED VALUER DATED 6.12.2008 ACC ORDING TO WHICH THE VALUE OF THE SAID PREMISES ON 28 TH DECEMBER, 2005 WAS VALUED AT RS.18,66,000. THE ASSESSEE TOOK OBJECTION FOR SUBS TITUTING THE MARKET VALUE ASSIGNED BY THE AUTHORITIES AS SALE CONSIDERA TION. HE ALSO REQUESTED THE ASSESSING OFFICER IF THE VALUATION REPORT IS NO T ACCEPTED THEN THE SAME MAY BE REFERRED TO THE DVO U/S. 50(C) OF THE ACT. 4. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE C ONTENTION OF THE ASSESSEE. HE WAS OF THE OPINION THAT SINCE THE ASS ESSEE HAS NOT TAKEN OBJECTION BEFORE THE REGISTRAR IN THE INITIAL STAGE S WHEN THE PROPERTY WAS SOLD AND IT WAS ONLY DURING THE STAGE WHEN OBJECTIO N WAS RAISED ASSESSEE FILED A VALUATION REPORT OF REGISTERED VALUER AFTER GIVING SECOND THOUGHT. THERE FORE, HE IS NOT UNDER OBLIGATION TO REFER THE MATTER TO THE DVO. HE ACCORDINGLY ADOPTED THE VALUE DETERMINED BY THE STA MP DUTY AUTHORITIES AT RS.44,62,000 U/S. 50C AND MADE THE ADDITION OF R S.25,88,700 AS SHORT TERM CAPITAL GAIN BEING THE DIFFERENCE BETWEEN THE AMOUNT DECLARED BY THE ASSESSEE AND THE AMOUNT FINALLY DETERMINED BY H IM. 5. IN APPEAL THE LEARNED CIT(A) UPHELD THE ACTION OF T HE ASSESSING OFFICER. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. I.T.A. NO. 3093/MUM/09 SHRI ABBAS T. RESHAMWALA ================== 3 6. AFTER HEARING BOTH THE SIDES, WE FIND THERE IS NO D ISPUTE TO THE FACT THAT THE ASSESSEE HAS SOLD THE INDUSTRIAL GALA AT R S. 20 LAKHS AS PER AGREEMENT DATED 28 TH DECEMBER, 2005. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE VALUE ADOPTED BY THE STAMP DUTY AUTHO RITIES FOR REGISTRATION OF THE ABOVE GALA WAS RS.44,62,000. THERE IS ALSO NO DISPUTE TO THE FACT THAT WHEN THE ASSESSING OFFICER CONFRONTED THE ASSE SSEE FOR SUBSTITUTION OF THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITI ES U/S. 50C OF THE ACT, THE ASSESSEE HAS OBJECTED FOR SUBSTITUTING THE SAME WHICH IS MENTIONED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE ASSESSEE HAS ALSO FILED A VALUATION REPORT FROM REGISTERED VALUER VALUING T HE PROPERTY AT RS.18,66,000. 7. WE FIND THE PROVISIONS OF SECTION 50C READ AS UNDER : 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEI NG LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED [ OR ASSESSABLE ] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURPOS E OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED [ OR ASSESSABLE ] SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RE CEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFIC ER THAT THE VALUE ADOPTED OR ASSESSED [ OR ASSESSABLE ] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS T HE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRAN SFER; (B) THE VALUE SO ADOPTED OR ASSESSED [ OR ASSESSABLE ] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF T HE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS M ADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND ( 6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, S ECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957) , SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESS ING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. I.T.A. NO. 3093/MUM/09 SHRI ABBAS T. RESHAMWALA ================== 4 [ 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, TH E EXPRESSION ASSESSABLE MEANS THE PRICE WHICH THE STAMP VALUAT ION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRAR Y CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR A SSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY. ] 8. IT IS THE SUBMISSION OF THE LEARNED DR THAT THE ASS ESSING OFFICER CAN REFER THE MATTER TO THE DVO ONLY IF THE ASSESSE E CLAIMS THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORIT Y EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF TRANSFE R AND THE VALUE WAS ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORIT Y HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY AUTHORITY. ACCORDING TO HIM THE TWIN CONDITIO NS AS PER CLAUSES (A) AND (B) SUBSECTION (2) OF SECTION 50C ARE TO BE FUL FILLED FOR REFERRING THE MATTER TO THE DVO. SINCE THERE IS NO WORD OR BET WEEN SUB CLAUSE (A) AND (B) OF SUBSECTION (2) OF SECTION 50C, THEREFORE, TH E ASSESSING OFFICER WAS JUSTIFIED IN NOT REFERRING THE MATTER TO THE DVO. HOWEVER, WE DO NOT FIND MUCH FORCE IN THE ABOVE ARGUMENT OF THE LEARNED DR. IT HAS BEEN HELD BY THE VARIOUS DECISIONS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL THAT THE WORD MAY USED IN SUB-SECTION (2) OF SECTION 50 HA S TO BE READ AS SHOULD AND THE ASSESSING OFFICER HAS NO DISCRETIO N BUT TO REFER THE MATTER TO THE DVO FOR THE VALUATION OF THE PROPERTY WHEN THE ASSESSEE HAS RAISED AN OBJECTION THAT THE VALUE ADOPTED OR ASSES SED BY THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE O F THE PROPERTY. SINCE THE ASSESSEE IN THE INSTANT CASE HAS OBJECTED BEFOR E THE ASSESSING OFFICER IN WRITING FOR SUBSTITUTING THE VALUE ADOPTED BY TH E STAMP VALUATION AUTHORITY, THEREFORE, IN OUR OPINION THE ASSESSING OFFICER SHOULD HAVE REFERRED THE MATTER TO THE DVO AS PER THE PROVISION S OF SUBSECTION (2) OF SECTION 50C OF THE ACT. WE, THEREFORE, DEEM IT PRO PER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WI TH A DIRECTION TO REFER THE MATTER TO THE DVO AND DECIDE THE ISSUE AFRESH AS PE R LAW. THE ASSESSING I.T.A. NO. 3093/MUM/09 SHRI ABBAS T. RESHAMWALA ================== 5 OFFICER SHALL GIVE ADEQUATE OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE WHILE DECIDING THE ISSUE. WE HOLD AND DIRECT ACCOR DINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL FILED BY THE SE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 30 TH NOVEMBER, 2009. SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 30 TH NOVEMBER, 2009 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT(A)-XXII, MUMBAI, (4) THE CIT-22, MUMBAI, (5) THE DR, A BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO