Nanjappa Lakshmana , Bangalore V. Income Tax Officer Ward-1(3)(4), Bangalore

ITA 3222/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7877 (ITAT-BANGALORE)
• Duration Of Justice: 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 03-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARUPPUSWAMY S R BENGAL URU
• Assessee Lawyers: R CHANDRASHEKAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Reassessment proceedings
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT ITA NO. 3222/BANG/2018 ASSESSMENT YEAR : 2014 - 15 SHRI NANJAPPA LAKSHMANA, NO.13, 12 TH CROSS, SHIVAJINAGAR, OPP. POWER HOUSE, BENGALURU 560 010. PAN: A LD PL 6092R VS. THE INCOME TAX OFFICER, WARD 1(3)(4), BANGALORE. APP ELLANT RESPONDENT APP ELLANT BY : SHRI R. CHANDRASHEKAR, ADVOCATE RESPONDENT BY : SHRI KARUPPUSWAMY S.R., ADDL.CIT(DR)(ITAT), BENGALU RU. DATE OF HEARI NG : 1 8 . 1 2 .2018 DATE OF PRONOUNCEMENT : 02 . 0 1 . 201 9 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER DATED 30.8.2018 OF CIT(APPEALS)-1, BENGALURU, RELATING TO ASSESSMENT YEAR 2014-15. 2. THE ASSESSEE IS AN INDIVIDUAL. DURING THE PREVI OUS YEAR RELEVANT TO AY 2014-15 HE SOLD A PROPERTY FOR A SALE CONSIDERAT ION OF RS.25,00,000/-. HOWEVER, THE VALUATION AS PER THE SUB-REGISTRARS G UIDELINE VALUES FOR THE PURPOSE OF STAMP DUTY AND REGISTRATION WAS A SUM OF RS.38,40,000/-. THE ASSESSEE DID NOT FILE RETURN OF INCOME ON THE DUE D ATE U/S.139(1) OF THE INCOME TAX ACT, 1961. THE AO ISSUED NOTICE DT. 29. 10.2015 U/S.148 OF THE ACT FOR MAKING AN ASSESSMENT U/S.147 OF THE ACT, OF INCOME CHARGEABLE TO ITA NO.3222/BANG/2018 PAGE 2 OF 4 TAX THAT HAD ESCAPED ASSESSMENT. PRIOR TO ISSUE OF NOTICE U/S.148 OF THE ACT, THE AO ON COMING TO KNOW ABOUT THE INFORMATION REGARDING SALE OF PROPERTY BY THE ASSESSEE FROM THE REGISTRAR OF ASSU RANCES ISSUED A NOTICE DATED 9.6.2015 U/S.133(6) OF THE ACT BRINGING TO TH E NOTICE OF THE ASSESSEE THAT HE HAD DERIVED LONG TERM CAPITAL GAIN (LTCG) O N SALE OF THE PROPERTY AND ITS QUANTUM HAD TO BE DETERMINED AS PER SEC.50C OF THE ACT. THE ASSESSEE IN REPLY THERETO EXPLAINED THAT HE HAD INV ESTED THE ENTIRE SALE CONSIDERATION RECEIVED ON TRANSFER IN PURCHASE OF A NOTHER PROPERTY FOR RS.25,11,465/- AND WAS ENTITLED TO CLAIM DEDUCTION IN RESPECT OF SUCH INVESTMENT U/S.54F OF THE ACT AND THERE IS NO DISPU TE ON THIS ASPECT. THE ASSESSEE IN THE SAID REPLY ALSO HIGHLIGHTED THAT TH E VALUE ADOPTED FOR THE PURPOSE OF REGISTRATION AND STAMP DUTY WAS NOT THE CORRECT MARKET VALUE DUE TO CERTAIN DISADVANTAGEOUS LOCATION OF THE PROP ERTY. IN VIEW OF THE PROVISIONS OF SEC.50C OF THE ACT, THE AO COMPUTED LTCG BY ADOPTING THE FULL VALUE OF CONSIDERATION RECEIVED ON TRANSFER AT A SUM OF RS.38,40,000/- AND ARRIVED AT TAXABLE CAPITAL GAIN OF RS.11,99,465 AFTER ALLOWING DEDUCTION U/S.54F OF THE ACT. THE ORDER OF THE AO WAS CONFIRM ED BY THE CIT(A). 3. THE ASSESSEE HAS IN THIS APPEAL CHALLENGED THE V ALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS AND ALSO THE CORRECTNES S AND VALIDITY OF DETERMINATION OF LTCG AND THE ACTION OF THE AO IN N OT MAKING A REFERENCE TO DISTRICT VALUATION OFFICER FOR DETERMINATION OF FAIR MARKET VALUE OF THE PROPERTY FOR THE PURPOSE OF DETERMINATION OF LTCG. 4. THE LD. AR RELIED ON A DECISION IN THE CASE OF GYAN CHAND BATRA V/S ITO (2010) 133 TTJ 482 (JP) , WHEREIN IT WAS HELD THAT ONCE THE FULL VALUE OF CONSIDERATION IS INVESTED IN PURCHASE OF NEW ASSET AND DEDUCTION IS TO BE ALLOWED U/S.54F OF THE ACT, THEN THERE CAN NO CAPIT AL GAIN TAX ON TRANSFER OF CAPITAL ASSET. THE LEARNED DR HOWEVER SUBMITTED TH AT PROVISIONS OF SEC.50C OF THE ACT WOULD THEN BECOME REDUNDANT IF S UCH INTERPRETATION IS ACCEPTED. ITA NO.3222/BANG/2018 PAGE 3 OF 4 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE JA IPUR BENCH OF ITAT IN THE CASE OF GYAN CHAND BATRA (SUPRA) HELD THAT THE DEEMING FICTION OF SUBSTITUTING FULL VALUE OF CONSIDERATION BY STAMP D UTY VALUE IN A CASE WHERE THE ACTUAL CONSIDERATION IS LESS THAN THE STAMP DUT Y VALUE, IS A FICTION WHICH HAS A LIMITED APPLICATION FOR THE PURPOSE OF SEC.48 OF THE ACT ALONE. HENCE, FOR ASCERTAINING THE FULL VALUE OF CONSIDERATION AS MENTIONED IN DIFFERENT PROVISIONS EXCEPT S. 48, CONSIDERATION SPECIFIED IN SALE DEED HAS TO BE CONSIDERED. THUS, MEANING OF FULL VALUE OF CONSIDE RATION AS REFERRED TO IN EXPLANATION TO S. 54F(1) IS NOT GOVERNED BY THE MEA NING OF THE WORDS 'FULL VALUE OF CONSIDERATION' AS MENTIONED IN S. 50C. I N A CASE WHERE THE COST OF NEW ASSET IS NOT LESS THAN THE NET CONSIDERATION , THE WHOLE OF THE CAPITAL GAIN IS NOT CHARGEABLE TO TAX EVEN IF THE CAPITAL G AIN IS COMPUTED BY TAKING THE VALUE ADOPTED BY THE STAMP REGISTRATION AUTHORI TY. HENCE, THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER S. 54F. IN CASE OF NANDLAL SHARMA V/S ITO (2015) 122 DTR 404 (JP) , IT WAS HELD THAT SEC. 50C IS DEEMING FICTION BY WHICH STAMP DUTY VALUE OF THE ASSET SOLD IS TO BE SUBSTITUTED FOR ACTUAL CONSIDERATION. THE SAME BEING PURELY A FICT ION, ITS SCOPE IS LIMITED TO S. 50C ONLY AND CANNOT BE ENLARGED WITHOUT A SPECIF IC REFERENCE. THEREFORE, WHILE COMPUTING EXEMPTION UNDER S. 54, T HE ACTUAL SALE CONSIDERATION IS TO BE TAKEN INTO CONSIDERATION AND NOT THE STAMP DUTY VALUATION UNDER S. 50C . 6. I AM BOUND BY THE DECISION OF A DIVISION BENCH A ND CANNOT EXPRESS ANY VIEW CONTRARY TO THE ONE EXPRESSED BY THE DIVIS ION BENCH. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS, I H OLD THAT SINCE THE ASSESSEE HAS INVESTED THE ENTIRE NET CONSIDERATION RECEIVED ON TRANSFER IN PURCHASE OF NEW ASSET, THERE CANNOT BE ANY INCIDENC E OF CAPITAL GAIN TAX. THE ADDITION MADE IN THIS REGARD IS DELETED. 7. IN VIEW OF THE DECISION ON MERITS, I AM NOT DECI DING THE OTHER CONTENTIONS RAISED BY THE AR. ITA NO.3222/BANG/2018 PAGE 4 OF 4 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 02 ND DAY OF JANUARY, 2019. SD/- ( N.V. VASUDEVAN ) VICE PRESIDENT BANGALORE, DATED, THE 02 ND JANUARY, 2019. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.