Sri Prafulla Kumar Bhose, Kolkata V. ITO, WD-38(3), KOLKATA, Kolkata

ITA 316/KOL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100106 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 30-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK NAG
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Fair market value; Valuation report
• Section: 50C

Judgement Text

I.T.A. NO. 316/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 316/KOL/ 2015 ASSESSMENT YEAR : 2007-2008 SRI PRAFULLA KUMAR BHOSE,.......................... ........................APPELLANT 24A, ROY BAGAN STREET, KOLLKATA-700 006 [PAN : AEEPB 5569 D] -VS.- INCOME TAX OFFICER,................................ ............................RESPONDENT WARD-38(3), KOLKATA, AAYAKAR BHAWAN, 3, GOVT. PLACE (WEST), KOLKATA-700 001 APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE , FOR THE ASSESSEE SHRI ALOK NAG, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : OCTOBER 09, 2015 DATE OF PRONOUNCING THE ORDER : NOVEMBER 18, 2015 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, KOLKATA DA TED 16.02.2015 FOR THE ASSESSMENT YEAR 2007-08 AND THE SOLITARY ISSUE RAISED THEREIN RELATES TO THE ADDITION MADE BY THE ASSESSING OFFICER AND C ONFIRMED BY THE LD. CIT(APPEALS) TO THE TOTAL INCOME OF THE ASSESSEE UN DER THE HEAD LONG- TERM CAPITAL GAIN BY TAKING THE DEEMED SALE OF CON SIDERATION OF THE PROPERTY AT RS.2,46,63,105/- ON THE BASIS OF DVOS REPORT. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L. DURING THE YEAR UNDER CONSIDERATION, HE SOLD THE HOUSE PROPERTY AT 5A, ROYD STREET, KOLKATA-700 016 TO M/S. REFERRAL SOFTWARE PVT. LTD. ON 23.09.2006 FOR A I.T.A. NO. 316/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 2 OF 6 CONSIDERATION OF RS.1,30,00,000/- AND ACCORDINGLY T HE CAPITAL GAIN ARISING FROM THE SAID SALE WAS OFFERED BY HIM IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION ON 29.06.2007 DECLARING TO TAL INCOME OF RS.4,11,012/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER FROM THE CROSS VER IFICATION MADE FROM REGISTRAR OF ASSURANCE THAT THE MARKET VALUE OF THE PROPERTY SOLD BY THE ASSESSEE AS ASCERTAINED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY WAS RS.3,17,90,300/-. ACCORDING TO THE ASSESSING OFFICE R, THE CAPITAL GAIN ARISING FROM THE SALE OF HIS PROPERTY WAS LIABLE TO BE COMPUTED BY ADOPTING THE STAMP DUTY VALUE AS PER THE PROVISION OF SECTION 50C OF THE ACT. HE, THEREFORE, REQUIRED THE ASSESSEE TO OFFER HIS EXPLANATION IN THIS REGARD. IN REPLY, THE FOLLOWING EXPLANATION WAS OFF ERED BY THE ASSESSEE:- (I) THAT I HAVE SUBMITTED A VALUATION REPORT BEFOR E YOU BY WHICH YOU WILL FIND MY WHOLE OF THE SAID PROPERT Y WAS TENANT, AT THESE TENANTS ARE MORE THAN 20 YEARS OLD AND THAT I WAS GETTING ONLY RS.1440/-PER MONTH OUT OF T HE WHOLE OF THE PROPERTY. I AM AN OLD MAN OF 82 YEARS AND COULD NOT BE ABLE T O MANAGE THE SAME. (II) THAT THE VALUE OF THE TENANTED PROPERTY AND FU LL VACATED PROPERTY IS DIFFERENT. (III) THAT I HAVE HIGH OBJECTION ON THE VALUATION O F THE REGISTRAR OF ASSURANCE AND DRAW YOUR ATTENTION THAT ACTUAL VALUE OF TENANT PROPERTY AS PER INCOME TAX A ND WEALTH TAX IS MUCH MORE LESS THAN RS.1,30,00,000/- FOR WHICH I SOLD THE PREMISES. (IV) THAT THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY HAS BEEN EXCEEDING EVEN THE FAIR MARKET V ALUE OF THE PROPERTY, WHEREAS IN PRESENT CASE THE MARKET VALUATION SHOULD BE TAKEN AS FULLY TENANTED PROPERT Y. (V) THAT I HAVE VERY HIGH OBJECTION ON YOUR PRECLUD ED MIND TO TAKE THE VALUE AS THE REGISTRAR OF ASSURANC E HAS TAKEN IN SOME OTHER FINANCIAL YEAR OTHER THAN THE FINANCIAL YEAR IN WHICH THE PROPERTY WAS SOLD. (VI) THAT YOU ARE REQUESTED TO CONSIDER THE MATTER SERIOUSLY AND APPLY YOUR MIND TO TAKE THE PROPER VALUATION AS PER INCOME TAX AND WEALTH TAX ACT AND RULES. I.T.A. NO. 316/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 3 OF 6 (VII) THAT I HAVE FULL FAITH THAT I, A SENIOR CITIZ EN OF INDIA HAVING AN AGE OF 82 YEARS OLD WILL GET NATURA L JUSTICE FROM THE AUTHORITIES OF INDIA. THE ABOVE EXPLANATION OFFERED BY THE ASSESSEE WAS N OT FOUND ACCEPTABLE BY THE ASSESSING OFFICER AND BY INVOKING THE PROVIS ION OF SECTION 50C, HE RECOMPUTED THE CAPITAL GAIN ARISING FROM THE SALE O F PROPERTY AS CHARGEABLE TO TAX BY ADOPTING THE SALE CONSIDERATIO N OF RS.3,17,90,300/- AS AGAINST RS.1,30,00,000/- SHOWN BY THE ASSESSEE. 3. THE ACTION OF THE ASSESSING OFFICER IN ADOPTING THE HIGHER SALE CONSIDERATION AS PER THE MARKET VALUE DETERMINED FO R STAMP DUTY PURPOSE FOR INVOKING THE PROVISION OF SECTION 50C WAS CHALL ENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE REL EVANT MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) UPHELD TH E ACTION OF THE ASSESSING OFFICER ON THIS ISSUE AND CONFIRMED THE A DDITION MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESS EE UNDER THE HEAD CAPITAL GAIN BY INVOKING THE PROVISION OF SECTION 50C VIDE HIS APPELLATE ORDER DATED 15.03.2012. AGAINST THE SAID ORDER OF T HE LD. CIT(APPEALS), THE ASSESSEE WENT IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 08.08.2012 PASSED IN ITA NO. 705/KOL/20 12 REMITTED THE MATTER BACK TO THE CIT(APPEALS) FOR GIVING THE ASSE SSEE A REASONABLE OPPORTUNITY OF BEING HEARD. AS PER THE DIRECTION OF THE TRIBUNAL, THE LD. CIT(APPEALS) CONSIDERED THE ISSUE AFRESH AND REMAND ED THE MATTER TO THE ASSESSING OFFICER, WHO, IN TURN, FORWARDED THE OBJE CTIONS RAISED BY THE ASSESSEE TO THE DVO FOR HIS CONSIDERATION. AFTER CO NSIDERING THE OBJECTIONS OF THE ASSESSEE, THE DVO DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF SALE AT RS.2,46,63,1 05/-. AFTER RECEIPT OF THE REMAND REPORT FROM THE ASSESSING OFFICER ALONG WITH THE DVOS REVISED REPORT, THE SUBMISSIONS MADE BY THE ASSESSE E AND THE RELEVANT MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEALS) UPHELD THE ACTION OF THE ASSESSING OFFICER IN INVOKING THE PROVISION OF SECT ION 50C AND DIRECTED I.T.A. NO. 316/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 4 OF 6 THE ASSESSING OFFICER TO SUBSTITUTE THE FIGURE OF D EEMED SALE CONSIDERATION AS ADOPTED ON THE BASIS OF DVOS REPO RT AT RS.2,46,63,105/- BEING THE ESTIMATED FAIR MARKET VALUE OF THE ASSESS EES PROPERTY ON THE DATE OF SALE. AGGRIEVED BY THE ORDER OF THE LD. CIT (APPEALS), THE ASSESSEE HAS COME IN APPEAL BEFORE THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US RAISED ONLY ONE CONTENTION THAT WHILE DETERMINING T HE FAIR MARKET VALUE OF THE ASSESSEES PROPERTY, THE PORTION OCCUPIED BY THE TENANT IS VALUED BY THE DVO BY ADOPTING THE RENT CAPITALISATION METH OD AND TAKING THE FAIR MARKET RENT OF RS.1,83,590/- AS AGAINST THE ACTUAL RENT OF RS.1,400/- ONLY RECEIVED BY THE ASSESSEE. HE CONTENDED THAT WHAT IS REQUIRED TO BE TAKEN FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPER TY BY APPLYING THE RENT CAPITALIZATION METHOD IS THE ACTUAL RENT RECEIVED B Y THE ASSESSEE AND NOT THE RENT PREVAILING AT THE CURRENT MARKET RATE. HE ALSO POINTED OUT THAT THE ASSESSING OFFICER AS WELL AS THE DVO WAS AWARE OF THE ACTUAL RENT RECEIVED BY THE ASSESSEE AND STILL THE SAME WAS IGN ORED AND FAIR MARKET RENT WAS ADOPTED BY HIM TO DETERMINE THE FAIR MARKE T VALUE OF THE ASSESSEES PROPERTY. RELYING ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS.- SMT. ASHA DEVI AGARW AL, LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THIS BASIS ADOPTED BY THE A UTHORITIES BELOW IS TOTALLY WRONG AND WHAT SHOULD BE TAKEN INTO CONSIDE RATION FOR DETERMINING THE VALUE OF PROPERTY OCCUPIED BY TENAN T IS THE ACTUAL RENT RECEIVED. 5. LD. D.R., ON THE OTHER HAND, STRONGLY RELIED ON THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE. HE CONTENDED THAT ALL THE OBJECTIONS RAISED BY THE ASS ESSEE AS REGARDS THE DETERMINATION OF FAIR MARKET VALUE OF THE PROPERTY HAVING BEEN DULY CONSIDERED BY THE DVO, NOTHING MORE SURVIVES. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE TIME OF HEARIN G BEFORE US, LD. COUNSEL I.T.A. NO. 316/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 5 OF 6 FOR THE ASSESSEE HAS RAISED A LIMITED ISSUE THAT WH ILE DETERMINING THE FAIR MARKET VALUE OF THE ASSESSEES PROPERTY, THE VALUAT ION OF THE PORTION OCCUPIED BY TENANT SHOULD BE DETERMINED BY APPLYING THE RENT CAPITALIZATION METHOD TAKING THE RENT ACTUALLY RECE IVED BY THE ASSESSEE AND NOT THE FAIR MARKET RENT AS DONE BY THE DVO. IT IS OBSERVED THAT THIS CLAIM OF THE ASSESSEE IS DULY SUPPORTED BY THE DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASHA DEVI AGARWAL (SUPRA), WHEREIN IT WAS HELD BY THEIR LORDSHIPS THAT WHILE E STIMATING THE VALUE OF A PROPERTY ON RENTAL BASIS, ONLY THE RENT, WHICH IS ACTUALLY PAYABLE BY THE TENANTS TO THE OWNERS OF THE PROPERTY, AS THE LANDL ORDS SHOULD BE TAKEN INTO ACCOUNT. IT WAS HELD THAT WHEN THE PROPERTY IS A TENANTED PROPERTY, THE OWNER IS ENTITLED TO COLLECT ONLY THE RENT PAYA BLE BY THE TENANTS AND A PURCHASER OF SUCH TENANTED PROPERTY WOULD BE IN THE SAME POSITION AS THE VENDOR, I.E. ORIGINAL OWNER. IT WAS HELD THAT A PUR CHASER, THEREFORE, WOULD BE RESTRICTED TO COLLECTION OF RENT ONLY FROM THE T ENANTS AND THE VALUE OF SUCH PROPERTY IN THE HANDS OF THE OWNER OR TRANSFER EE, IF CALCULATED ON THE RENTAL BASIS, WOULD HAVE TO BE DETERMINED BY THE RE NT, WHICH IS AVAILABLE TO THEM FOR COLLECTION. AT THE TIME OF HEARING BEFO RE US, NO AUTHORITY HAS CITED ON BEHALF OF THE DEPARTMENT TAKING A CONTRARY VIEW ON THIS ISSUE. WE, THEREFORE, RESPECTFULLY FOLLOW THE RATIO OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASHA DEVI AGARWAL AND DIRECT THE ASSESSING OFFICER/DEPARTMENTAL VALUATION OFFICER TO COMPUTE THE FAIR MARKET VALUE OF THE LET OUT PORTION OF THE ASSESSEE S PROPERTY BY TAKING INTO CONSIDERATION THE RENT ACTUALLY RECEIVABLE BY THE ASSESSEE FROM THE TENANTS. LD. COUNSEL FOR THE ASSESSEE HAS ALSO CONT ENDED THAT IF THE VALUATION OF THE LET OUT PORTION OF THE ASSESSEES PROPERTY IS DONE BY TAKING INTO CONSIDERATION, THE ACTUAL RENT RECEIVAB LE BY THE ASSESSEE FROM THE TENANTS, THE TOTAL FAIR MARKET VALUE OF THE PRO PERTY OF THE ASSESSEE AS PER SUCH REVISED ESTIMATION WOULD BE LESS THAN THE SALE CONSIDERATION OF RS.1,30,00,000/- SHOWN BY THE ASSESSEE AND THERE WO ULD BE NO CASE OF MAKING ADDITION ON ACCOUNT OF CAPITAL GAIN. WE DIRE CT THE ASSESSING OFFICER TO VERIFY THIS CONTENTION OF THE LD. COUNSE L FOR THE ASSESSEE AND IF IT IS FOUND AFTER RECOMPUTATION OF THE VALUATION OF THE ASSESSEES PROPERTY I.T.A. NO. 316/KOL./2015 ASSESSMENT YEAR: 2007-2008 PAGE 6 OF 6 THAT THE FAIR MARKET VALUE IS LESS THAN THE SALE CO NSIDERATION SHOWN BY THE ASSESSEE, NO ADDITION SHALL BE REQUIRED TO BE MADE ON THIS ISSUE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 18, 2015. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 18 TH DAY OF NOVEMBER, 2015 COPIES TO : (1) SRI PRAFULLA KUMAR BHOSE, 24A, ROY BAGAN STREET, KOLLKATA-700 006 (2) INCOME TAX OFFICER, WARD-38(3), KOLKATA, AAYAKAR BHAWAN, 3, GOVT. PLACE (WEST), KOLKATA-700 001 (3) COMMISSIONER OF INCOME-TAX (APPEALS)- II, KOL KATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.