SURESH C. MEHTA, MUMBAI V. ITO 13(2)(1), MUMBAI

ITA 33/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3359 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2003-2004
• Appeal Filed On: 04-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRR PARMINDER
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 143(3); 50C

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . .. . . .. . , ,, , ! ! ! ! , ' ' ' ' # $% # $% # $% # $% , ,, , & ! & ! & ! & ! ' ' ' ' BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER . / ITA NO. 33/MUM./2011 ( &( ) '*) / ASSESSMENT YEAR : 200304 ) MR. SURESH C. MEHTA 327/28, VYAPAR BHAVAN 49, P.DMELLO ROAD MUMBAI 400 009 .. +, / APPELLANT ( V/S INCOME TAX OFFICER WARD13(2)(1), MUMBAI .... -.+, / RESPONDENT !+ . / PERMANENT ACCOUNT NUMBER AAHPM3642H &( )0 1 2 / ASSESSEE BY : MR. VIMAL PUNMIYA !' 1 2 / REVENUE BY : MRR. PARMINDER (' 1 / DATE OF HEARING 22.04.2013 $ 34* 1 / DATE OF ORDER 17.05.2013 $ $ $ $ / ORDER # $% # $% # $% # $% , ,, , & ! & ! & ! & ! 5 5 5 5 / PER AMIT SHUKLA, J.M. THE PRESENT APPEAL IS PREFERRED BY THE ASSESSEE CHA LLENGING THE IMPUGNED ORDER DATED 30 TH SEPTEMBER 2010, PASSED BY THE LEARNED COMMISSIONER (APPEALS)XXIV, MUMBAI, FOR THE QUANTU M OF ASSESSMENT MR. SURESH C. MEHTA 2 PASSED UNDER SECTION 143(3) R/W 254 OF THE INCOME T AX ACT, 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 200304. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS THAT THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN ADOPTING THE FAIR MARKET VAL UE OF THE PROPERTY AT ` 13,79,913, INSTEAD OF ` 12,00,000, SHOWN BY THE ASSESSEE, AS VALUED BY THE DEPARTMENTAL VALUATION OFFICER AND THEREBY CONFIRMI NG THE LONG TERM CAPITAL GAIN OF ` 11,38,020. 3. FACTS IN BRIEF : IN THE PRESENT CASE, THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) VIDE ORDER DATED 21 ST MARCH 2006, DETERMINING THE TOTAL INCOME OF ` 15,28,250, AS AGAINST RETURNED INCOME OF ` 6,03,286, WHICH ALSO INCLUDED CAPITAL GAIN ON SALE OF PROPERTY OF ` 10,05,783, AFTER ADJUSTING BROUGHT FORWARD LOSSES A ND CURRENT YEARS LOSS. THE ASSESSEE HAS SOLD HIS OFFICE SITUATED AT NARASA I NATHA STREET, KOHA BAZAR, MUMBAI, FOR A TOTAL CONSIDERATION OF ` 12,00,000 ON 27 TH MARCH 2003. HOWEVER, FOR THE PURPOSE OF STAMP DUTY, THE STAMP V ALUATION AUTHORITY HAS DETERMINED THE FAIR MARKET VALUE AT ` 20,57,500. ACCORDINGLY, THE ASSESSING OFFICER, DURING THE FIRST ROUND OF PROCEEDINGS, HAS ADOPTED THE SALE VALUE OF ` 20,57,500, WHILE COMPUTING THE CAPITAL GAINS IN TER MS OF PROVISIONS OF SECTION 50C. THE ASSESSEE HAD OBJECTED TO SUCH A VA LUATION AND HAD MADE A REQUEST TO THE ASSESSING OFFICER TO REFER THE VALUA TION OF THE PROPERTY TO THE VALUATION OFFICER (FOR SHORT THE V.O ) OF THE DEPARTMENT ON THE GROUND THAT FAIR MARKET VALUE WAS MUCH LESS. HOWEVER, THE ASSES SEES REQUEST WAS NOT ACCEDED TO. EVEN THE LEARNED COMMISSIONER (APPEALS) HAD CONFIRMED THE ACTION OF THE ASSESSING OFFICER. THE TRIBUNAL SET A SIDE THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) AND RESTORED THE MAT TER TO THE FILE OF THE ASSESSING OFFICER FOR REFERRING THE VALUATION OF TH E PROPERTY TO THE V.O. ACCORDINGLY, IN THE SET ASIDE PROCEEDINGS, THE ASSE SSING OFFICER REFERRED THE VALUATION TO THE V.O. ON 9 TH JULY 2009. IN PURSUANCE THEREOF, THE V.O. SUBMITTED HIS REPORT DATED 30 TH OCTOBER 2009 BEFORE THE ASSESSING OFFICER, WHEREIN HE HAS TAKEN THE SALE VALUE OF THE PROPERTY AT ` 13,79,913 INSTEAD MR. SURESH C. MEHTA 3 OF ` 12,00,000 FOR WHICH THE ASSESSEE HAD SOLD THE PROP ERTY. BEFORE THE ASSESSING OFFICER, THE ASSESSEE OBJECTED TO THE VAL UE ADOPTED BY THE V.O. AND RAISED VARIOUS OBJECTIONS. THE ASSESSING OFFICE R REJECTED THE SAID CONTENTIONS OF THE ASSESSEE WITHOUT ASSIGNING ANY R EASON AND TOOK THE SALE VALUE AT ` 13,79,913 AND WORKED OUT THE LONG TERM CAPITAL GAI NS AT ` 11,38,020 INSTEAD OF ` 10,05,783 SHOWN BY THE ASSESSEE. 4. BEFORE THE LEARNED COMMISSIONER (APPEALS), BESIDES OTHER OBJECTIONS, THE MAIN CONTENTIONS OF THE ASSESSEE WAS THAT THE V ALUATION DONE BY THE V.O. IS VERY CLOSE TO THE VALUE OF SALE CONSIDERATI ON RECEIVED BY THE ASSESSEE. RELIANCE WAS PLACED ON VARIOUS DECISIONS , THE LIST OF WHICH HAS BEEN INCORPORATED BY THE LEARNED COMMISSIONER (APPE ALS) AT PAGES2 AND 3. IT WAS SUBMITTED BY THE ASSESSEE THAT EVEN THOUGH T HE DIFFERENCE BETWEEN THE FAIR MARKET VALUE DETERMINED BY THE V.O. AT ` 13,79,913 AND ACTUAL SALE CONSIDERATION OF ` 12,00,000, RECEIVED BY THE ASSESSEE IS NOT MORE TH AN 15%, HOWEVER, SUCH A DIFFERENCE CAN BE IGNORED IN V IEW OF VARIOUS OBJECTIONS. THE MAIN REASON GIVEN BY THE LEARNED CO MMISSIONER (APPEALS) FOR REJECTING THE ASSESSEES CONTENTION WAS THAT IN VIEW OF SUBSECTION (3) OF SECTION 50C, ONLY WHEN THE VALUE DETERMINED BY THE V.O. EXCEEDS THE STAMP VALUATION, THEN THE VALUE ASSESSED BY THE STAMP VAL UATION AUTHORITY SHOULD BE TAKEN AS A SALE VALUE. IT CANNOT BE VICEVERSA T HAT IS, WHEN THE VALUATION DONE BY THE V.O. IS LESS THAN THE STAMP VALUATION A UTHORITY. IN THAT CASE, THE VALUATION OF THE V.O. ITSELF WILL BECOME THE FAIR M ARKET VALUE. ACCORDINGLY, HE REJECTED THE ASSESSEES CONTENTION. 5. BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT, IN T HE PRESENT CASE, THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE OF THE PRO PERTY DETERMINED BY THE V.O. AND THE ACTUAL SALE CONSIDERATION RECEIVED BY THE ASSESSEE IS LESS THAN 15% AND SUCH DIFFERENCE AMOUNT IS ` 1,79,913. HE ALSO SUBMITTED THAT PROVISIONS OF SECTION 55A ALSO PROVIDES THAT WHERE THE FAIR MARKET VALUE EXCEEDS THE VALUE OF ASSET, AS CLAIMED BY THE ASSES SEE BY MORE THAN 15%, THEN THE ASSESSING OFFICER MAY REFER SUCH VALUATION TO THE DVO. THIS CAN BE MR. SURESH C. MEHTA 4 INTERPRETED IN A MANNER THAT DIFFERENCE FOR LESS TH AN 15% CAN BE IGNORED. HE ALSO RELIED UPON THE DECISION OF BIMLA SINGH V/S CI T, [2009] 18 DTR 283 (PATNA) AND PREM NARAYAN & CO. V/S CIT, [2006] 287 ITR 56, IN SUPPORT OF THE CONTENTIONS THAT IF THE DIFFERENCE BETWEEN THE VALUE ASSESSED BY THE V.O. AND THE VALUE SHOWN BY THE ASSESSEE IS LESS THAN 15 %, THE SAME SHOULD BE IGNORED BECAUSE GENERALLY WHILE VALUING THE PROPERT Y, IT IS A MATTER OF ESTIMATE ONLY AND SOME GUESS WORK IS DONE FOR ESTIM ATING THE PROPERTY. THUS, A DIFFERENCE OF 15% CANNOT BE RULED OUT AND B ENEFIT SHOULD BE GIVEN TO THE ASSESSEE. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESE NTATIVE, STRONGLY RELIED UPON THE FINDINGS OF THE LEARNED COMMISSIONE R (APPEALS) AND SUBMITTED THAT THERE IS NO PROVISION UNDER SECTION 50C TO IGNORE THE V.OS REPORT WHEN REFERENCE HAS BEEN MADE UNDER SECTION 5 0C(2), JUST BECAUSE THE DIFFERENCE BETWEEN THE VALUE SHOWN BY THE ASSES SEE IS LESS THAN 15% . THERE CANNOT BE ANY YARD STICK OF SUCH PERCENTAGE. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT FINDINGS OF THE LEARNED COMMISSIONER (APPE ALS) AS WELL AS THE ASSESSING OFFICER. THE ASSESSEE HAS SOLD THE PROPER TY FOR A SUM OF ` 12,00,000, AND HAS COMPUTED THE LONG TERM CAPITAL G AIN AT ` 10,05,783, WHEREAS THE V.O. TO WHOM REFERENCE WAS MADE UNDER S ECTION 50C, HAS ESTIMATED THE FAIR MARKET VALUE AT ` 13,79,913. FOR THE PURPOSE OF SECTION 50C, THE ASSESSING OFFICER HAS ADOPTED THE VALUE DE TERMINED BY THE V.O. AND HAS COMPUTED THE LONG TERM CAPITAL GAIN AT ` 11,38,020. SECTION 50C IS A DEEMING PROVISION WHEREIN THE FAIR MARKET VALUE F OR SALE CONSIDERATION RECEIVED ON AN ASSET IS DEEMED TO BE TAKEN AS PER T HE VALUE ASSESSED OR ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PU RPOSE OF STAMP DUTY. SUBSECTION (2) OF SECTION 50C FURTHER PROVIDES THA T IF THE ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT VALUATION ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY HAS EXCEEDED THE FAIR MARKET VA LUE OF THE PROPERTY ON THE DATE OF TRANSFER, THE ASSESSING OFFICER MAY REF ERRED THE VALUATION OF THE MR. SURESH C. MEHTA 5 CAPITAL ASSET TO THE V.O. AND ON SUCH A REFERENCE, PROVISIONS OF SECTION 16A OF WEALTH ACT, 1957, WILL APPLY. SUBSECTION (2) FU RTHER PROVIDES THAT IF SUCH A REFERENCE IS MADE THEN CERTAIN PROVISIONS OF SECT ION 16A, 23A, 24, 34AA, 35 AND 37 OF THE WEALTH TAX ACT, 1957, SHALL APPLY WITH NECESSARY MODIFICATION. SECTION 16A OF THE WEALTH TAX ACT, 19 57, PROVIDES POWER TO MAKE REFERENCE TO THE V.O. FOR DETERMINING THE FAIR MARKET VALUE AND THE FUNCTIONS OF THE V.O. SUBSECTION (6) OF SECTION 16 A, MAKES IT OBLIGATORY TO THE ASSESSING OFFICER TO ADOPT THE VALUE AS REPORTE D BY THE V.O. PROVISIONS OF SECTION 23A GIVES SCOPE OF FIRST APPEAL AND THE SUB JECT MATTER WHICH CAN BE APPEALED BEFORE THE LEARNED COMMISSIONER (APPEALS) INCLUDING THAT OF ANY ORDER OF THE V.O. AND THE POWERS OF THE LEARNED COM MISSIONER (APPEALS) IN RELATION TO SUCH VALUATION. SECTION 24 DEALS WITH T HE APPEAL TO THE APPELLATE TRIBUNAL AND SECTION 34AA DEALS WITH THE APPEARANCE OF THE ASSESSEE THROUGH REGISTERED VALUERS BEFORE THE LEARNED COMMI SSIONER (APPEALS) AND THE TRIBUNAL AND SECTION 35 DEALS WITH RECTIFICATIO N OF MISTAKES. A COMBINED READING OF THESE SECTIONS PROVIDE THAT INSOFAR AS T HE ASSESSING OFFICER IS CONCERNED, HE IS BOUND BY THE VALUATION ADOPTED BY THE V.O. WHEREAS THE LEARNED COMMISSIONER (APPEALS) AND THE TRIBUNAL CAN ENTERTAIN OBJECTIONS RELATING TO SUCH VALUATION AND V.OS VALUATION IS N OT BINDING UPON THEM. SUBSECTION (3) OF SECTION 50C PROVIDES THAT IF THE VALUE ASCERTAINED BY THE V.O. EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE S TAMP VALUATION AUTHORITY THEN SUCH VALUATION ADOPTED OR ASSESSED B Y THE STAMP VALUATION AUTHORITY SHALL BE TAKEN, THAT IS, IF THE V.OS VAL UE EXCEEDS THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, THE SAME SHOULD B E IGNORED BY THE ASSESSING OFFICER. FROM THE CONJOINED READING OF SU BSECTION (1), (2) AND (3) OF SECTION 50C ALONG WITH THE RELEVANT PROVISIONS O F WEALTH TAX ACT AS HAVE BEEN REFERRED TO IN SUBSECTION (2), IT IS EVIDENT THAT THOUGH THE ASSESSING OFFICER IS BOUND BY THE V.OS REPORT IN CASE IT IS LOWER THAN THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY, HOWEVER, THE SAME IS NOT BINDING UPON THE LEARNED COMMISSIONER (APPEALS) OR THE TRIB UNAL WHEREIN THE ASSESSEE CAN FURTHER RAISE OBJECTION TO SUCH VALUAT ION. IF THAT IS SO, THEN THE LEARNED COMMISSIONER (APPEALS) AND THE TRIBUNAL CAN ALSO EXAMINE INTO THE MR. SURESH C. MEHTA 6 FACT WHETHER THE DIFFERENCE OF LESS THAN 15% BETWEE N THE ACTUAL SALE CONSIDERATION AND THE VALUE ADOPTED BY THE V.O. CAN BE IGNORED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE PRESENT CASE, THE ASSESSEE HAS OBJECTED TO THE FAIR MARKET VALUE ADOPTED BY THE V. O. VIDE LETTER DATED 13 TH NOVEMBER 2009. NEITHER THE ASSESSING OFFICER NOR TH E LEARNED COMMISSIONER (APPEALS) ENTERTAINED ANY SUCH OBJECTION OR HAS GIV EN ANY COGENT REASONS. IF THE ASSESSEE HAS MADE VARIOUS OBJECTIONS TO THE V.O S REPORT, THE LEARNED COMMISSIONER (APPEALS) WAS BOUND TO LOOK INTO THESE OBJECTIONS SO AS TO ARRIVE AT PROPER FAIR MARKET VALUE. HE WAS ALSO BOU ND TO CONSIDER THE CONTENTIONS OF THE ASSESSEE THAT IN CASE OF DIFFERE NCE OF LESS THAN 15% BETWEEN THE VALUE SHOWN BY THE ASSESSEE AND THE VAL UE ESTIMATED BY THE V.O., THE BENEFIT SHOULD BE GIVEN TO THE ASSESSEE A ND SUCH A DIFFERENCE CAN BE IGNORED. WE, THEREFORE, SET ASIDE THE IMPUGNED O RDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND REMIT THE MATTER BACK TO HIM TO DECIDE THE SAME AFRESH AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE TO V.OS ESTIMATE AS WELL AS HIS CLAIM FOR BENEFIT WHEN THE DIFFERENCE IS LESS THAN 15%. CONSEQUENTLY, THE APPEAL OF THE ASSESSEE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. 8. 0 6 &( )0 1 71 89: # !' ; ( <= > 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLO WED FOR STATISTICAL PURPOSES. $ 1 4* ? @ (6 17 TH MAY 2013 4 1 > ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MAY 2013 SD/- . .. . . .. . ! ! ! ! P.M. JAGTAP ACCOUNTANT MEMBER SD/- # # # # $% $% $% $% & ! & ! & ! & ! AMIT SHUKLA JUDICIAL MEMBER MUMBAI, @ ( @ ( @ ( @ ( DATED: 17 TH MAY 2013 MR. SURESH C. MEHTA 7 $ 1 -&#A BA* / COPY OF THE ORDER FORWARDED TO : (1) &( )0 / THE ASSESSEE; (2) !' / THE REVENUE; (3) C () / THE CIT(A); (4) C / THE CIT, MUMBAI CITY CONCERNED; (5) A'F -&&( , , / THE DR, ITAT, MUMBAI; (6) G) H / GUARD FILE. .A -& / TRUE COPY $( / BY ORDER - . IJ / PRADEEP J. CHOWDHURY '0K &( I' / SR. PRIVATE SECRETARY 8 / < / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI