Shri Anirudha V.Patel, Baroda V. The ADIT.,Intn.Tax., Ahmedabad

ITA 349/AHD/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9724 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C MISHRA
• Assessee Lawyers: P B PARMAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Cost of acquisition
• Section: 148

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO.349/AHD/2012 /BLOCK ASSTT. YEAR: 2007-2008 ANIRUDHA V. PATEL 101, ANURAG COMMERCIAL CENTRE R.C. DUTT ROAD, ALKAPURI BARODA 390 007. PAN : ANVPP 5502 C VS ASSTT.DIRECTOR OF I.T., INTERNATIONAL TAXATION AHMEDABAD. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI P.B. PARMAR REVENUE BY : SHRI D.C. MISHRA, SR.DR / DATE OF HEARING : 15/07/2015 / DATE OF PRONOUNCEMENT: 17/07/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE LD.CIT(A), GANDHINAGAR DATED 29.12.2011 PASSED FOR THE ASSTT.YEAR 2007-08. 2. THOUGH THE ASSESSEE HAS TAKEN FOUR GROUNDS OF AP PEAL, BUT HIS GRIEVANCE REVEALS AROUND A SINGLE ISSUE, WHEREIN, H E HAS PLEADED THAT THE ASSESSEE WAS OWNER OF 45% SHARE OF THE PROPERTY AND ON ITS TRANSFER, CAPITAL GAIN TO THE EXTENT OF HIS SHARE ( 45%) IN THE SALE CONSIDERATION BE COMPUTED. ITA NO.349/AHD/2012 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 1 ST MAY, 2007 DECLARING TOTAL INCOME AT RS.22,72,270/- . THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE IN COME TAX, 1961 ON 13.2.2009. THEREAFTER, THE AO GOT INFORMATION AND RECORDED REASON FOR REOPENING OF THE ASSESSMENT. HE ISSUED A NOTICE UN DER SECTION 148 OF THE INCOME TAX ACT. ON SCRUTINY OF THE ACCOUNTS, I T REVEALED THAT THE ASSESSEE WAS OWNER OF A PROPERTY, JOINTLY ALONG WIT H SMT.SHARDABEN LAXMI MANUBHAI PATEL. THIS PROPERTY WAS SOLD DURIN G THE YEAR FOR A CONSIDERATION OF RS.4 CRORES. STAMP DUTY WAS PAID ON VALUE OF RS.4,10,31,000/-. ACCORDING TO THE AO, HE RECEIVED RS.1,80,00,000/- REPRESENTING 45% SHARES IN THE PROPERTY AND SMT.SHA RDABEN LAXMI MANUBHAI PATEL RECEIVED RS.2,20,00,000/- REPRESENTI NG 55% OF THE SHARE OF THE PROPERTY. IT WAS ALSO POINTED OUT THA T MRS.MAYA PATEL AND MR. SACHIN PATEL WERE OCCUPYING THE PROPERTY AS TEN ANT. A SUM OF RS.1,40,00,000/- WAS INCURRED FOR GETTING THE PROPE RTY VACATED. THE ASSESSEE AND HIS CO-OWNER HAD SPENT RS.1,00,00,00/- CRORE, WHEREAS RS.40,00,000/- LAKHS WAS PAID BY THE VENDEE. WHILE COMPUTING THE CAPITAL GAIN, THE ASSESSEE HAS SHOWN TOTAL SALE CON SIDERATION RECEIVED BY HIM OF RS.1,80,00,000/-. HOWEVER, WHILE TAKING INTO CONSIDERATION THE ACQUISITION COST AND COST OF IMPROVEMENT IN THE SHAPE OF PAYMENT MADE TO THE TENANT, HE TOOK 50%. THE LEARNED AO CO NFRONTED TO THE ASSESSEE THAT IF YOU ARE SHOWING CAPITAL GAIN AT RS .1,80,00,000/- REPRESENTING 45% SHARE OF THE TOTAL SALE CONSIDERAT ION, THEN, HOW THE COST OF ACQUISITION CAN BE CLAIMED AT 50%. THE ASS ESSEE FILED REPLY WHICH HAS BEEN REPRODUCED BY THE AO IN PARA-5 OF TH E ASSESSMENT ORDER AND ADMITTED THE ERROR. HE FURTHER CONTENDED THAT OTHER CO- OWNER, SMT.SHARDABEN LAXMI MANUBHAI PATEL HAS TAKEN THE COST OF ACQUISITION AT 55% OF THE INDEXED COST OF ACQUISITI ON. SHE HAS OFFERED CAPITAL GAIN REPRESENTING 55% SHARE OF THE SALE CON SIDERATION. THE LEARNED AO DID NOT ACCEPT THE CONTENTIONS OF THE AS SESSEE ON THE ITA NO.349/AHD/2012 3 GROUND THAT IF AFTER THE SALE, THE VENDORS ARE DIST RIBUTING THE SALE CONSIDERATION, AS PER THEIR CONVENIENCE, THEN, THAT WOULD NOT BE A GUIDING FACTOR FOR CAPITAL GAINS ASSESSABLE IN THE HANDS OF THE ASSESSEE. THE CAPITAL GAIN WOULD BE COMPUTED IN DIRECT PROPOR TION OF THE SHARE SOLD BY THE ASSESSEE. THE ASSESSEE FAILED TO PRODU CE ANY DOCUMENTARY EVIDENCE INDICATING THAT HE WAS POSSESSING ONLY 45% TITLE OF THE PROPERTY, AND HE RECEIVED THE CONSIDERATION IN THAT PROPORTION. ACCORDINGLY, THE LD. AO REJECTED THE CONTENTIONS OF THE ASSESSEE AND COMPUTED THE CAPITAL GAIN BY TAKING THE SALE CONSID ERATION OF RS.2 CRORES. HE, THEREAFTER, ALLOWED THE ASSESSEES CLA IM OF COST OF INDEXATION AND OTHER EXPENSES. 4. ON APPEAL, THE LD.CIT(A) HAS CONCURRED WITH THE AO, RATHER, ISSUED AN ENHANCEMENT NOTICE TO THE ASSESSEE ON THE GROUND THAT THE VALUE TAKEN FOR THE PURPOSE OF STAMP DUTY PAYMENT W AS OF RS.4,10,31,000/-. FOR THE PURPOSE OF COMPUTING CAP ITAL GAINS AS PER SECTION 50C, THIS VALUE IS TO BE DEEMED TO BE THE F ULL SALE CONSIDERATION. ACCORDINGLY, THE LD.CIT(A) HAD ADOPTED THE VALUE AT RS.4,10,31,000/- AND DIRECTED THE AO TO COMPUTE THE CAPITAL GAIN ACC ORDINGLY. 5. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ORDER OF THE CIT(A) CONTENDED THAT AS FAR AS ADOPTION OF SALE CO NSIDERATION OF RS.4,10,31,000/- IS CONCERNED, THE ASSESSEE IS NOT DISPUTING. HE FURTHER CONTENDED THAT COPY OF THE SALE DEED IS AVA ILABLE AT PAGE NO.10 OF THE PAPER BOOK. A PERUSAL OF THE SALE DEED WOUL D INDICATE THAT THIS PROPERTY WAS OWNED BY ONE SHRI AMBALAL KISHOREBHAI PATEL. IT WAS GIFTED VIDE GIFT DEED DATED 26.1.1959, WHICH WAS RE GISTERED WITH THE SUB-REGISTRAR OF ASSURANCE, BOMBAY ON 3.2.1959. TH IS PROPERTY IS MEASURING 762 SQUARE YARDS COMPRISING OF PLOT NO.5 (OF 723 SQUARE YARDS) AND PLOT NO.4 (PART) OF 39 SQUARE YARDS OF R AJABALLY TANK SCHEME, BEARING C.T.S.NO.H/316, SITUATE AT 88, CHAP EL ROAD, SANTACRUZ (WEST). THE SALE DEED THOUGH DOES NOT DEMARCATE TH E AREA OF ITA NO.349/AHD/2012 4 RESPECTIVE VENDORS, BUT IN A SCHEDULE OF RECEIPTS, IT HAS BEEN CLEARLY DEMARCATED BY THE VENDORS THEIR SHARES OF CONSIDERA TION. OTHER CO- OWNER, WHILE FILING HER RETURN OF INCOME DULY RECOG NIZED HER SHARE TO THE EXTENT OF 55% IN THE TOTAL SALE CONSIDERATION. SHE HAS COMPUTED THE CAPITAL GAIN ACCORDINGLY. THE AO ALSO DOES NOT POSSESS ANY EVIDENCE HOLDING THE ASSESSEE OWNER TO THE EXTENT O F 50% OF PROPERTY. THEREFORE, HE IS NOT JUSTIFIED TO CHARGE CAPITAL GA IN FROM THE ASSESSEE AT 50% OF THE TOTAL SALE CONSIDERATION, WHERE, ACTUALL Y THE ASSESSEE HAS RECEIVED THE SALE CONSIDERATION REPRESENTING 45% SH ARES. 7. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE AO AND CONTENDED THAT IT WAS FOR THE ASSESSEE TO DE MONSTRATE THE TITLE IN THE PROPERTY. ONCE HE FAILED, THEN, THE AO HAS RIGHTLY TAKEN THE SHARE OF THE ASSESSEE AT 50%. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH RECORD CAREFULLY. SECTION 48 OF THE INCOME TAX PROV IDE MODE OF COMPUTATION OF CAPITAL GAIN. THIS SECTION CONTEMPL ATES THAT INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF CAPITAL ASSET, FOLLO WING AMOUNTS, VIZ. (A) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER, AND (B) COST OF ACQUISITION OF THE ASSET AND COST OF ANY IMPROVEMENT THERETO. 9. THE ASSESSEE ALLEGED THAT HE HAS RECEIVED CAPITA L ASSETS BY WAY OF A GIFT EXECUTED ON 26.1.1959. THE BENEFICIARIE S OF THE GIFT DEEDS ARE RECOGNIZING THEMSELVES AS OWNERS OF THE PROPERTY EQ UIVALENT TO 55% OF SHARES AND 45% OF SHARE. IN THE SALE DEED, THEY HA VE RECEIVED SALE CONSIDERATION IN THIS VERY RATIO, AND ASSESSEE OFFE RED CAPITAL GAIN. HE HAS RECOGNIZED HIS SHARE OF CONSIDERATION REPRESENT ING 45% SHARE OF THE PROPERTY. ACCORDING TO THE ASSESSEE, THIS IS THE F ULL CONSIDERATION ITA NO.349/AHD/2012 5 RECEIVED ON RELINQUISHMENT OF HIS SHARES. THE AO H AS REPLACED THIS FULL CONSIDERATION BY ASSUMING THAT THE ASSESSEE WAS OWN ER TO THE EXTENT OF 50% OF THE SHARES. THIS ASSUMPTION HAS BEEN INFERR ED FROM THE FACT THAT WHILE COMPUTING THE CAPITAL GAIN, ASSESSEE HAS ADOPTED COST OF ACQUISITION AT 50% SHARE FROM THE SALE CONSIDERATIO N RECEIVED BY HIM. WHEN THIS FACT WAS BROUGHT TO THE NOTICE OF THE ASS ESSEE DURING THE ASSESSMENT PROCEEDINGS HE IMMEDIATELY ACCEPTED THAT THIS WAS BY MISTAKE. THE CONDUCT OF BOTH THE VENDORS INDICATES THAT THEY WERE CANDID IN RECOGNIZING THEIR SHARE. THERE IS NO CON FUSION AMONGST THEM. THE OTHER CO-OWNER HAS OFFERED CAPITAL GAIN BY TAKI NG INTO CONSIDERATION 55% OF THE TOTAL SALE CONSIDERATION. THE TOTAL SAL E CONSIDERATION ON TRANSFER OF THE PROPERTY HAS SUFFERED TAX IN THE HA NDS OF BOTH THESE ASSESSEE. BY ENHANCING THE SHARE OF THE ASSESSEE, THE REVENUE IS CHARGING THE CAPITAL GAIN TAX ON AN ASSUMED VALUE O F 5% MORE. THE AO WAS NOT POSSESSING ANY EVIDENCE, INDICATING THE FAC T THAT THE ASSESSEE HAS RECEIVED THE SUM MORE THAN RS.1,80,00,000/-. T HIS RS.1,80,00,000/- CAN ONLY BE REPLACED BY THE DEEMED SALE CONSIDERATION IN THE RATIO OF 45% OF THE TOTAL SALE CONSIDERATION UNDER SECTION 50C. IN OTHER WORDS, THE TOTAL SALE CONSID ERATION IS TO BE DEEMED RS.4,10,31,000/- AND 45% OF THIS SALE CONSID ERATION CAN ONLY BE ASSUMED IN THE HANDS OF THE ASSESSEE. THE AO CA NNOT ENHANCE OTHER THAN THIS BY ASSUMING MORE AREA IN THE HANDS OF THE ASSESSEE OR BY ASSUMING THAT THE ASSESSEE MUST HAVE RECEIVED SO METHING ELSE THAN THIS AMOUNT. THIS CALCULATION IS BASED ONLY ON INF ERENCE BASIS, WHICH WAS DEMONSTRATED BY THE ASSESSEE AS A MISTAKEN FACT . APART FROM DRAWING OF INFERENCE, THERE IS NO MATERIAL WITH THE AO. THEREFORE, WE ALLOW THIS APPEAL OF THE ASSESSEE, AND DIRECT THE A O TO COMPUTE THE CAPITAL GAIN AS PER THE DIRECTIONS OF LD.CIT(A), BU T BY TAKING TOTAL SALE CONSIDERATION OF RS.4,10,31,000/-. THE SHARE OF TH E ASSESSEE WILL BE TAKEN AT 45% OF THIS TOTAL SALE CONSIDERATION. OTH ER DEDUCTIONS FOR INDEXED COST ETC. WILL BE TAKEN UP IN ACCORDANCE WI TH THE FINDINGS OF THE ITA NO.349/AHD/2012 6 LD.CIT(A). THE LD.AO SHALL RE-COMPUTE THE CAPITAL GAIN AS PER THE ABOVE DIRECTIONS. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 17 TH JULY, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER