MRS. DAMODARAN JAYALAKSHMI, CHENNAI V. ITO, NCW - 15 (2), CHENNAI

ITA 316/CHNY/2020

AI Insights

The case involves Mrs. Damodaran Jayalakshmi, who appealed against the orders of the Income Tax Officer and the Commissioner of Income Tax (Appeals) regarding the assessment of capital gains tax on the sale of agricultural land. The primary contention was the application of Section 50C of the Income Tax Act, which pertains to the adoption of stamp duty valuation as the sale consideration for tax purposes. The assessee argued that the value adopted by the stamp duty authority was arbitrary and did not reflect the actual sale consideration. Additionally, the assessee contested the denial of exemption under Section 54F, which allows for tax exemption on reinvestment in property, claiming that substantial investment was made in a new property within the required timeframe.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134732 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 16-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 09-02-2020
• Other Referred Cases: Ms. S. Rajalakshmi vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Valuation report
• Section: 54; 143(3); 50C; 54F; 139(1)

Judgement Text

आयकर अपीलीय अिधकरण, ‘ए’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI ी महावीर सह, उपा य एवं ी मंजुनाथ. जी, लेखा सद य के सम BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANJUNATHA. G, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.316/Chny/2020 िनधा रण वष /Assessment Year: 2011-12 Mrs. Damodaran Jayalakshmi, No.56, East Coast Road, Kudumiyandi Thoppu, Sholinganallur, Chennai – 600 119. [PAN: AFXPJ-5332-C] Vs. The Income Tax Officer, Non Corporate Ward-15(2), Chennai. ( अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क! ओर से/ Appellant by : Shri K. Balasubramanian, Advocate यथ क! ओर से /Respondent by : Shri ARV Sreenivasan, Addl. CIT सुनवाई क! तारीख/Date of Hearing : 17.08.2023 घोषणा क! तारीख /Date of Pronouncement : 23.08.2023 आदेश / O R D E R Per Mahavir Singh, Vice President : This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-15, Chennai, in ITA No.193/2018-19/CIT(A)-15 dated 13.12.2019 for the Assessment Year 2011-12. The Assessment was framed Income Tax Officer, Non Corporate Ward-15(2), Chennai u/s. 143(3) r.w.s 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order dated 26.12.2018. ITA No.316/Chny/2020 :- 2 -: 2. At the outset, the Ld. counsel for the assessee drew our attention to grounds No.1.1 & 1.2 and stated that he has instructions that assessee is not interested in prosecuting the issue of reopening and hence did not argue this issue. As the assessee is not interested in prosecuting the issue of reopening, we dismiss the same as withdrawn. 3. The second issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the A.O in invoking the provisions of Section 50C of the Act and also not allowing the rebate in view of remission of stamp duty by the Tamil Nadu Government vide notification by Commercial Taxes and Registration Department dated 31.10.2011. For this, the assessee has raised following grounds No.2.1 to 2.3: “2.1 Without prejudice, application of Sec.50C also is incorrect because in the EC issued on 17-10-2019, Value of consideration is mentioned as Rs.1,59,00,000 and after taking into A/c Samadhan Scheme, market value is indicated at Rs. 1,59,00,000 as against Rs.2,77,29,600 adopted by AO u/s 50C(1). Since the market value is equal to sale consideration application of sec.50C is uncalled for. 2.2 There is no rule of law to the effect that the value determined for the purpose of stamp duty is the actual consideration passed between the parties to the sale. Apart from the stamp duty valuation, there is nothing on record to suggest that appellant received extra sale consideration over and above fixed in the sale deed. 2.3 Authorities below having been appraised of the fact that the land sold is (1) agricultural (2) there was no proper approach to the impugned lands and (3) that there will always be water logging in the land and hence they erred in applying same yard stick of guideline value in toto to the lands sold by appellant. In fact the DVO in his report, taking into account factors affecting the land, has given a ITA No.316/Chny/2020 :- 3 -: reduction of 52% which the learned AO failed to apply to the GV adopted by her.” 4. The brief facts of the case are that the assessee filed her e- return of income for the relevant A.Y 2011-12 on 24.12.2011. The assessee’s case was selected for scrutiny assessment. The A.O during the course of assessment proceedings, on verification of sale deed dated 15.09.2010 vide Document No.4837/2010 available on record noted that the assessee has sold a vacant land ad-measuring 159 cents (69,260 sq. ft.) situated at Sholinganallur Village and Taluk, Kanchipuram District for a consideration of Rs. 1.59 crore. In the return of income, the assessee had claimed deduction u/s. 54F of the Act as the assessee had purchased a vacant land ad-measuring 7200 sq. ft. at Sholinganallur Village and Taluk, Kanchipuram District on 24.01.2011 vide Document No.342/2011 for a consideration of Rs. 1.35 crore. The A.O further noted that as per sale deed dated 15.09.2010, the value of land sold as per stamp duty valuation is Rs.2,77,29,600/- as against the sale consideration recorded in the sale deed at Rs. 1.59 Crore. According to A.O, as per the provisions of Section 50C of the Act, the value fixed by Stamp Duty Authority is to be adopted and hence, he required assessee to explain as to why value adopted by stamp valuation authority for the purpose of collection of stamp duty at Rs. 2,77,29,600/- be not adopted as against the sale consideration disclosed in the return of income at Rs.1.59 ITA No.316/Chny/2020 :- 4 -: Crore and computed long term capital gain accordingly. The assessee vide letter dated 18.06.2018 reiterated that the sale consideration received by her is only Rs. 1.59 Crore and not the value fixed by stamp valuation authority for Rs. 2,77,29,600/- and stated that the proposed value by the Sub Registrar for the purpose of stamp duty is arbitrary and has not accepted. She requested the A.O to refer the case to the DVO u/s. 50C(2) of the Act. Before receipt of the DVO’s report as referred to him u/s. 50C(2) of the Act by the A.O, assessment was completed adopting the sale consideration as adopted by Sub Registrar, stamp valuation authority u/s. 50C(1) of the Act at Rs. 2,77,29,600/- and computed the capital gain accordingly. Aggrieved, the assessee preferred an appeal before the CIT(A). 5. The CIT(A) adjudicated the issue and noted that even the DVO’s report has determined the value of the report i.e., fair market value report in term of Section 50C(2) of the Act at Rs. 3,22,06,100/- and therefore, he affirmed the action of the A.O in adopting the lesser value i.e., value fixed by stamp valuation authority at Rs. 2,77,29,600/- and computed the capital gain accordingly by observing in para 7.2 & 7.3 as under: “7.2. Issue - Adoption of sale consideration as per Sec 50C of the Act: The appellant sold a vacant land on 15.09.2010. The consideration as per the Sale Deed is Rs. 1,59,00,000. The stamp duty value of the capital asset transferred is Rs.2,77,29,600. The appellant contested ITA No.316/Chny/2020 :- 5 -: the said value before the Assessing Officer while the Assessing Officer proposed to adopt Rs.2,77,29,600 instead of the apparent sale consideration of Rs.1,59,00,000. The appellant requested the Assessing Officer to refer the case to the Valuation Officer under 50C(2) of the, Act. The Assessing Officer made a reference to the Valuation Officer vide letter dated 23.07.2018. Since the Valuation report was not received before the limitation date for completing the assessment, the Assessing Officer adopted the stamp duty value as sale consideration which has been fixed by the stamp duty authorities. The Valuation Officer, after perusing the appellant's contentions determined the value at Rs.3,22,06, 100. The said report was received by the AO on 08.1.2019. The appellant once again contested the value determined as per Valuation Report and prayed that the value as mentioned in the Sale Deed be accepted. 7.3. The appellant's contention as part of written submission on the acceptability of the valuation report has been examined. The valuation report has been gone through. The Valuation Cell has given the reason as to why the 'sale consideration method' is to be adopted for arriving at the value of the capital asset transferred. The appellant's transaction has taken place on 15.09.2010. The Valuation Officer(V. O.) has collected the data in relation to transactions taken place on four different dates viz., 5th May, 17 th June, 2nd July and 6th October. Even though the transactions referred to are in relation to housing sites and the value per sq ft is Rs.1000 plus per sq. ft, the V.O. on due consideration of the fact that the appellant's land is not having access to road, open space and storm water drain, sewer line, street light and the fact that the appellant has sold a set of land which has very few buyers has given a reduction of 50% from each of the comparable transactions and arrived at a simple average rate of Rs.465 per Sq.ft. Therefore, the Valuation Report does not suffer from any infirmity and it is in accordance with the professional requirement. Therefore, the same does not call any interference in the absence of any other objective factor which were brought on record by the appellant. Nevertheless, since the provisions of the Act require adoption of value for stamp duty purposes as deemed sale consideration in the event of value determined by the V.O. more than the value for stamp duty purposes and since the AO has adopted value as per stamp duty purposes for computing the capital gain, the appellant is not entitled to any relief. In the result, the action of the Assessing Officer is upheld and this ground is dismissed.” Aggrieved, the assessee came in appeal before the Tribunal. 6. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the assessee has sold his vacant land ad-measuring 159 cents i.e., equivalent to 69,260 sq. ITA No.316/Chny/2020 :- 6 -: ft. situated at Sholinganallur Village and Taluk, Kanchipuram District for a consideration recorded in the sale deed at Rs. 1.59 Crore. But, the fact is that the Sub Registrar while registering document adopted the fair market value as per stamp valuation authority at Rs.2,79,29,600/-. The matter is referred to DVO on the request of assessee and the DVO vide report dated 08.11.2019 determined the value of the market property at Rs. 3,22,06,100/-. Since, the lower of the value i.e., of the valuation done by DVO and value adopted by stamp valuation authority for the purpose of collecting the stamp duty is to be adopted. The A.O has rightly adopted the same. Now before us, the Ld. counsel for the assessee filed one copy of notification issued by Secretariat Departments of Commercial Taxes and Registration Department by virtue of which, according to Ld. counsel, there is remission in the stamp duty qua reduction in value of properties. This notification is dated 31.10.2011 and assessee’s sale deed is registered on 15.09.2010. According to Ld. counsel, the Sub Registrar has already taken into consideration and reduced this stamp duty. The relevant portion of notification, which reads as under: COMMERCIAL TAXES AND REGISTRATION DEPARTMENT REMISSION OF 1/3rd OF DIFFERENCE OF DUTY CHARGEABLE ON THE VALUE OF PROPERTIES AS PROPOSED BY THE REGISTERING OFFICER AND THE DUTY ALREADY PAID UNDER THE INDIAN STAMP ACT. [G.O. Ms. No. 132, Commercial Taxes and Registration (J1), 31st October 2011.] No. II(2)/CTR/437(d)/2011. In exercise of the powers conferred by clause (a) of sub-section (1) of Section 9 of the Indian Stamp Act, 1899 (Central Act II of 1899), the Governor of Tamil Nadu hereby remits one-third of the difference of stamp duty between the duty already paid and what is chargeable on the value of the ITA No.316/Chny/2020 :- 7 -: properties (both for land and buildings including chargeable assets) as proposed by the registering officer with reference to the Guideline Register referred to in sub-rule (4) of rule 3 of the Tamil Nadu Stamp (Prevention of Under-valuation of Instruments) Rules, 1968 and the Schedule of Rates prescribed by the Public works Department,— (i) in respect of instruments which have been referred to under sub-section (1) of Section 47-A of the said Act and are pending with the Collector for determination of market value as on the 31st July 2011; (ii) on the instruments on which Suo Motu action has been taken by the Collector under sub-section (3) of the said Section 47-A of the said Act and are pending with him as on the 31st July 2011; (iii) on the instruments in respect of which appeals have been preferred to the Chief Controlling Revenue Authority under sub-section (5) of the said Section 47-A of the said Act and are pending with him as on the 31st July 2011; (iv) on the instruments on which Suo Motu action has been taken by the Chief Controlling Revenue Authority under sub-section (6) of the said Section 47- A of the said Act and are pending with him as on the 31st July 2011; (v) on the instruments in respect of which appeals have been preferred to the High Court under sub-section (10) of the said Section 47-A of the said Act and are pending in the High Court as on the 31st July 2011; (vi) on the instruments referred to in sub-section (4) of Section 19-B of the said Act, which are pending with the Collector as on the 31st July 2011; and (vii) in respect of instruments registered and pending with the registering officer as on the 31st July 2011 for referring the same to the Collector under sub-sections (1) and (3) of Section 47-A or under sub-section (4) of Section 19-B of the said Act for determination of market value. 2. The above remission will be in force for three months only from the date of this Notification. SUNIL PALIWAL, Secretary to Government. 7. The Ld. counsel for the assessee produced a certificate issued by SRO, Neelangarai dated 28.01.2012, wherein Document No.4837 of 2010 registered by Sub Registrar, Neelangarai, the value of stamp duty is reduced. The relevant certificate reads as under: CERTIFICATE Document No.4837/2010 Value admitted in document 1,59,00,000 SRO Value 2,77,26,600 Stamp Duty to be paid 22,18,368 Stamp Duty paid 12,72,040 Difference in stamp duty 9,46,328 2/3 of difference in stamp duty 6,30,895 Regn. charges to be paid 2,77,300 Difference in Regn. Charges 1,59,000 2/3 rd of Difference in Regn charges 78,870 ITA No.316/Chny/2020 :- 8 -: Certified that for this document as per GO MS No.82(sic)/1-10-2011 of Commercial Tax and Registration Dept., as above, Stamp duty of Rs.6,30,895 (Rupees Six lakhs thirty thousand eight hundred and ninety five) 2/3 of Stamp duty Rs.78,870 (Rupees Seventy eight thousand eight hundred and seventy only) was paid. SRO Office, Neelangarai Sd/- SRO Neelangarai 28/01/2012 Seal of SRO Document No.4837 of 2010 of Book I contains 14 sheets 3 sheets Sd/- SRO Seal of SRO 8. We have gone through the notification issued by Commercial Taxes and Registration Department, Tamil Nadu Government, whereby Government of Tamil Nadu remits 1/3 rd of the difference of stamp duty between the duty already paid and what is chargeable on the value of the properties (both for land and building including chargeable assets) as proposed by Registering Officer with reference to the guideline register referred to in sub-rule (4) of Rule 3 of the Tamil Nadu Stamp (Prevention of Under-valuation of Instruments) Rules, 1968 and the Schedule of Rates prescribed by the Public Works Department. According to our understanding, this notification has reduced the guideline value of the properties and thereby, remitted 1/3 rd of the difference of stamp duty between the duty already paid and what is chargeable on the value of the properties during a specified period. The assessee’s case clearly falls under this notification and hence, we are of the opinion that the A.O has to consider this notification and accordingly, allow reduction in the value of the ITA No.316/Chny/2020 :- 9 -: property for the purpose of computation of LTCG. This view of ours is also supported by the decision of Co-ordinate Bench of this Tribunal in the case of Ms. S. Rajalakshmi vs. ITO in ITA No.2408/Chny/2017 dated 06.04.2018, which reads as under: “12. We heard Shri AR.V.Sreenivasan, the Ld. Departmental Representative also. The State Government announced a Samadhan Scheme for collection of stamp duty in respect of the pending documents with Sub-Registrar. Taking advantage of this Samadhan scheme announced by the State Government, the assessee claims 40% remission given by the State Government which shall be taken into consideration for the purpose of determining the sale consideration under Section 50C of the Act. The assessee has filed a copy of the order of this Tribunal in I.T.A. No.1196/Mds/2010 in B. Sivaprakash (HUF) in support of her contention. Apparently, this order of the Tribunal was not available either before the CIT(Appeals) or before the Assessing Officer. Moreover, the Government Order allowing remission of 40% on stamp duty was not available before the Assessing Officer. In those circumstances, this Tribunal is of the considered opinion that the matter needs to be re-considered by the Assessing Officer. Accordingly, orders of both the authorities below are set aside the issue of determination of sale consideration under Section 50C of the Act for computation of capital gain is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter after considering the Government Order issued by the State Government for remission of stamp duty and the order of this Tribunal in the case of B. Sivaprakash (HUF) (supra) and thereafter decide the issue afresh, in accordance with law, after giving a reasonable opportunity to the assessee.” 9. In view of the above, we direct the A.O to reduce the value of property accordingly and re-compute the capital gain. This issue of the assessee’s appeal is partly allowed. 10. The next issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the A.O in not allowing or denying the claim of exemption u/s. 54F of the Act as the construction ITA No.316/Chny/2020 :- 10 -: of the property was not completed within the time allowed under the provisions of Section 54 of the Act. Against this, the assessee has raised the following ground No.3: “3. The impugned lands having been sold for Rs. 1,59,00,000 and even before the due date for filing ROI appellant having invested substantial amount in the purchase of another land viz., at Rs. 1,47,15,190 (ie., 92.54%) and started construction of a residential house [which is evidenced by way of bills for purchase of sand, bricks etc., copies of which were filed before AO] authorities below erred in denying exemption u/s 54F, a beneficial provision.” 11. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the assessee has sold a vacant land admeasuring 159 cents (69,260 sq. ft.) situated at Sholinganallur Village and Taluk, Kanchipuram District for a consideration of Rs. 1.59 crore. In the return of income the assessee had claimed exemption u/s. 54F of the Act. The assessee had purchased a vacant land ad-measuring 7200 sq. ft. at Sholinganallur Village and Taluk, Kanchipuram Dist., on 24.01.2011 vide Document No.342/2011 for a consideration of Rs. 1.35 crore. Admittedly, the assessee has sold this property on 15.09.2010 for a consideration of Rs. 1.59 Crore and purchased one vacant land at Sholinganallur on 24.01.2011 for a consideration of Rs. 1.35 Crore. The assessee claimed to have invested a sum of Rs. 1,47,15,190/- i.e., (Cost + other charges including stamp duty) in purchase of land and had started construction in 2012. As the assessee could not produce any evidence ITA No.316/Chny/2020 :- 11 -: or has failed to file copy of any plan of construction of a residential house, any approval or sanction from appropriate Government authority or proof that they have started the construction or bills or vouchers for purchase of material. In absence of these documents, the A.O denied the claim of exemption u/s. 54F of the Act. The CIT(A) also confirmed the action of the A.O exactly on same reasoning by observing in para 7.4 as under: “ 7.4. Claim of deduction u/s. 54F: On the basis of written submission and documentary evidence made available during the appellate proceedings, the appellant claimed that reasonable opportunity of being heard was denied by the Assessing Officer for proving her claim of deduction u/s 54F, Therefore, the evidences furnished during the appellate proceedings were once again put across to the Assessing Officer to go through the same and submit her remand report. The Assessing Officer submitted her report on 18.10.2019 which was endorsed by the Range Head on 07.11.2019. On due consideration of the evidences, the Assessing Officer had observed that the assessee has merely purchased a land before filing of the return of income under Sec 139(1) and the construction of the residential building did not commence and got completed within the period of three years from the date of transfer of the immovable property as stipulated under Sec 54F of the Act. This fact also was not disputed by the appellant before the CIT(Appeals) as part of the written submission. Therefore, the appellant's claim of exemption for making an investment by merely purchasing a land for Rs.1,35,00,000 without completing the construction within the specified period of three years from the date of transfer is not in accordance with law. On due consideration of the remand report and taking into account the facts relevant in this case, the claim of deduction u/s 54F has been rightly denied by the Assessing Officer. The A0's disallowance is upheld and this ground is dismissed.” Aggrieved, now the assessee is in appeal before the Tribunal. 12. We noted that even now before us, the assessee could not produce that the assessee has constructed a building except the plan of the building, which is approved on 15/11/2017 that means at least ITA No.316/Chny/2020 :- 12 -: six years after the sale of the property. Even now the assessee could not produce any evidence that the assessee has started construction or completed the building. In the absence of these documents, we have no hesitation in confirming the action of the A.O and that of the CIT(A). Hence, this issue of the assessee’s appeal is dismissed. 13. In the result, the appeal of the assessee is partly allowed. Order pronounced on 23 rd August, 2023. Sd/- Sd/- (मंजुनाथ. जी) (Manjunatha. G) लेखा लेखालेखा लेखा सद य सद यसद य सद य /Accountant Member (महावीर िसंह) (Mahavir Singh) उपा / Vice President चे ई/Chennai, दनांक/Dated: 23 rd August, 2023. EDN/- आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकर आयु /CIT 4. िवभागीय ितिनिध/DR 5. गाड फाईल/GF