Income Tax Officer -2(2), Kanpur V. Smt. Jaswant Kaur, Kanpur

ITA 367/LKW/2012

• Counselvise Citation: 36723714 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Valuation report
• Section: 50C; 2(14)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.367/LKW/2012 ASSESSMENT YEAR:2007 - 08 SMT. JASWANT KAUR, REPRESENTED THROUGH L/H & L/R 122/56, SAROJINI NAGAR, KANPUR. PAN:ALYPK1223A VS INCOME TAX OFFICER - 2(2), KANPUR. (RESPONDENT) (APPELLANT) SHRI P. K. DEY, D. R. APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY 10/02/2015 DATE OF HEARING 12 /03/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, KANPUR DATED 12/03/2012 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION TO RS.1,84,500 / - INSTEAD OF RS.22,71,000 / - ON ACCOUNT OF SHORT TERM CAPITAL GAIN ON SALE OF H.NO. 112 / 67, SAROJINI NAGAR, KANPUR, WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. T HAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE SALE WAS EFFEC TED BY THE 'LETTER OF SALE' AGREEMENT DATED 08.06.2006, IGNORING THE FACT THAT THE GENUINENESS OF THE SALE AGREEMENT ITSELF WAS NOT ESTABLISHED AND THAT, EVEN OTHERWISE, SUCH SALE AGREEMENT HAD NO VALIDITY UNDER THE INDIAN CONTRACT ACT. 2 3. THAT THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) - II , KANPUR HAS ERRED IN LAW AND ON FACTS IN IGNORING THE PROVISIONS OF SECTION 50C(1) OF THE INCOME TAX ACT, 1961, UNDER WHICH THE VALUE ADOPTED BY THE STATE GOVERNMENT AUTHORITY FOR THE PURPOSE OF STAMP DUTY, ON TRANSFE R OF ASSET, IS MANDATORILY TO BE ADOPTED FOR THE PURPOSES OF SECTION 48, IF THE CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF THE TRANSFER IS A LESSER AMOUNT. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT THE ASSESSEE HAD NOWHERE SPECIFICALLY CLAIMED, DURING THE ASSESSMENT PROCEEDINGS OR OTHERWISE, THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY EXCEEDED THE FAIR .MARKET VALUE OF THE PROPERTY ON THE DATE OF TRANSFER AND HE NCE IT WAS NOT OBLIGATORY FOR THE ASSESSING OFFICER TO HAVE REFERRED THE VALUATION OF THE PROPERTY TO A VALUATION OFFICER AS PER PROVISION OF SECTION 50C (2) . 5. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE REPORT PREPARED BY THE VALUATION CELL, WHEN THE REFERENCE FOR VALUATION WAS MADE BY THE AO ON DIRECTIONS OF THE CIT (A), WAS BINDING ON THE AO, DESPITE THE ARGUMENTS PRESENTED BY THE AO CHALLENGING THE CREDIBILITY OF THE VALUATION REPORT. 6. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4,93,086/ - ON ACCOUNT OF SHORT TERM CAPITAL GAIN ON SALE OF LAND AT VILLAGE, SANCHENDI, KANPUR WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 7. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION TO RS.32,850/ - INSTEAD OF RS.57,850/ - ON ACCOUNT OF LOW WI THDRAWALS WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 8. THAT THE ORDER OF THE LD. CIT (A) - II, KANPUR DATED 12.03.2012 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFF ICER DATED 09.11.2009 TO BE RESTORED. 3 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT THE REPORT OF D.V.O. IS BINDING AND IN THIS REGARD , HE PLACED RELIANCE ON A TRIBUNAL DECISION IN THE CASE OF DCIT VS. KAYSONS BUILDERS PVT. LTD. IN I.T.A. NO.290/LKW/2013 DATED 23/01/2015. HE SUBMITTED A COPY OF THIS TRIBUNAL DECISION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THERE IS DI SPUTE REGARDING CAPITAL GAIN IN RESPECT OF SALE OF TWO PROPERTIES. ONE PROPERTY IS HOUSE NO. 112/67, SAROJINI NAGAR, KANPUR AND WITH REGARD TO THIS PROPERTY, CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO REFER THE MATTER TO D.V.O. IN REMAND PROCEEDINGS AND IT IS NOTED BY HIM THAT AS PER THE D.V.O. REPORT, THE VALUE WAS DETERMINED AT RS.25,35,500/ - AS AGAINST RS.22.51 LAC AS PER SALE DEED. IT WAS HELD BY CIT(A) THAT THE D.V.O. REPORT IS BINDING AND HE DIRECTED THE ASSESSING OFFICER TO COMPUTE THE CAPITAL GA IN AS PER D.V.O. S REPORT. THE SECOND DISPUTE IS REGARDING CAPITAL GAIN RESPECT OF SALE OF LAND AT VILLAGE SACHENDI, KANPUR. IN RESPECT OF THIS PROPERTY, THIS IS THE DECISION OF CIT(A) THAT THE LAND IN QUESTION IS AGRICULTURAL LAND AND IS BEING USED FOR AGRICULTURAL PURPOSES AND THEREFORE, CAPITAL GAIN FOR SALE OF THIS PROPERTY IS NOT TAXABLE. WHILE DECIDING SO, THE CIT(A) HAS FOLLOWED THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT AND ANOTHER VS. SMT. K. LEELAVATHY [2012] 341 ITR 287 (KAR) . 5. FIRST WE DECIDE THE SECOND ISSUE I.E. REGARDING CAPITAL GAIN ON SALE OF LAND AT VILLAGE SACHENDI, KANPUR. AS PER CIT(A), THIS LAND FALLS WITHIN 8 KMS. OF MUNICIPAL LIMIT BUT AS PER HIM , THIS IS NOT IMPORTANT SINCE THE VILLAGE SACHENDI HAS A GRAM PANCHAYAT DULY ELECTED BY VILLAGE FOLKS AND VILLAGE SACHENDI DOES NOT FALL WITHIN THE JURISDICTION OF ANY MUNICIPALITY. AS PER CLAUSE (III) OF SUB SECTION (14) OF SECTION 2, AGRICULTURAL LAND IS NOT A CAPITAL ASSET BUT THIS EXCLUSION EXCLUDES SUCH AGRICULTURAL LAND, WHICH IS SITUATED IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY OR WITHIN 4 8 KMS . HENCE, WHEN THE LAND IN QUESTION FALLS WITHIN 8 KMS. OF MUNICIPAL LIMIT, SUCH AGRICULTURAL LAND IS TO BE CONSIDERED AS CAP ITAL ASSET AND IT DOES NOT FALL IN EXCLUSION PROVIDED IN SECTION 2(14) OF THE ACT. 6. NOW WE EXAMINE THE APPLICABILITY OF JUDGMENT OF HON'BLE KARNATAKA HIGH COUR T FOLLOWED BY LEARNED CIT(A). A S PER THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, WE FIND THAT IT WAS PLEADED B EFORE THE HIGH COURT THAT SINCE THE LAND IN QUESTION WAS SITUATED WITHIN THE DISTANCE OF 8 KMS. FROM MUNICIPAL LIMIT, IT WAS CAPITAL ASSET LIABLE TO CAPITAL GAIN TAX BUT THIS QUESTION WAS NEITHER EXAMINED NOR DECIDED BY HON'BLE HIGH CO URT. THIS JUDGMENT IS ON THE BASIS THAT WHEN THE SAME IS BEFORE THE CONVERSION OF AGRICULTURAL LAND INTO NON AGRICULTURAL LAND, THE SALE IS OF AGRICULTURAL LAND THE SALE WHICH IS AFTER SUCH CONVERSION, THE SALE IS OF NON AGRICULTURAL LAND. SINCE THIS AS PECT WAS NOT EXAMINED AND DECIDED BY HON'BLE HIGH COURT, THIS JUDGMENT CANNOT BE CONSIDERED AS A PRECEDENCE IN RESPECT OF THIS ISSUE REGARDING APPLICABILITY OF SECTION 2(14)(III). HENCE, THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT IS NOT APPLICABLE IN T HE FACTS OF THE PRESENT CASE. WHEN WE EXAMINE THE PROVISIONS OF SECTION 2(14)(III), IT COMES OUT THAT AS PER THESE PROVISIONS, IT IS NOT STATED THAT AGRICULTURAL LAND SITUATED WITHIN SPECIFIED LIMIT OF MUNICIPALITY IS NOT AGRICULTURAL LAND. WHAT IS STATE D IN THIS SECTION IS THAT THOSE AGRICULTURAL LANDS, WHICH ARE SITUATED WITHIN THE SPECIFIED MUNICIPAL LIMIT WILL NOT BE EXCLUDED FROM THE DEFINITION OF CAPITAL ASSET AND ONLY THOSE AGRICULTURAL LANDS, WHICH ARE SITUATED OUTSIDE MUNICIPAL LIMIT WILL BE EXCL UDED FROM THE DEFINITION OF CAPITAL ASSET. HENCE, ADMITTEDLY, AN AGRICULTURAL LAND EVEN IF SITUATED WITHIN THE PRESCRIBED LIMIT OF MUNICIPALITY, REMAINS AGRICULTURAL LAND IF IT IS BEING USED FOR AGRICULTURE BUT EVEN THEN , IT WILL FALL WITHIN THE AMBIT OF CAPITAL ASSET BECAUSE SUCH AGRICULTURAL LANDS ARE NOT EXCLUDED FROM THE AMBIT OF CAPITAL ASSET. SINCE IN THE PRESENT CASE, THIS IS NOT IN DISPUTE THAT THE SACHENDI LAND FALLS WITHIN THE 8 KMS. OF MUNICIPAL LIMIT, WE HOLD THAT THE ORDER OF CIT(A) IS NOT S USTAINABLE AND THEREFORE, WE REVERSE THE ORDER OF CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. 5 7. REGARDING THE DISPUTE IN RESPECT OF SALE OF PROPERTY NO. 112/67, SAROJINI NAGAR, KANPUR, WE FIND FORCE IN THE SUBMISSIONS OF LEARNED A.R. OF THE ASSESSEE BECAUSE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO MAKE REFERENCE TO D.V.O. U/S 50C(2) AND WHEN HE FOUND THAT THE VALUE AS PER D.V.O. REPORT IS LESSER THAN THE STAMP DUTY RATE, HE DIRECTED THE ASSESSING OFFICER TO COMPUTE CAPITAL GAIN ON THE BASIS OF SU CH REPORT OF THE D.V.O. AS PER THE TRIBUNAL DECISION RENDERED IN THE CASE OF DCIT VS. KAYSONS BUILDERS PVT. LTD. (SUPRA) , THE DISPUTE WAS THAT AS TO WHETHER THE CIT(A) CAN ISSUE DIRECTION TO THE ASSESSING OFFICER FOR REFERRING THE MATTER TO D.V.O. AND IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT THERE IS NO INFIRMITY OR ILLEGALITY IN THE DIRECTION OF CIT(A) ASK ING THE ASSESSING OFFICER TO REFER THE MATTER TO D.V.O. AND HENCE , ON THIS ASPECT, WE HOLD THAT THERE IS NO INFIRMITY IN THE ORDER OF CIT(A) IN DI RECTING THE ASSESSING OFFICER TO REFER THE MATTER TO D.V.O. BECAUSE AS PER HON'BLE CALCUTTA HIGH COURT, EVEN IF NO SPECIFIC REQUEST WAS MADE, THE ASSESSING OFFICER WAS DUTY BOUND TO REFER THE MATTER TO D.V.O. WHEN THE ASSESSEE IS NOT ACCEPTING THE STAMP DU TY VALUE AS MARKET VALUE BY DECLARING LESSER AMOUNT OF CAPITAL GAIN ON THE BASIS OF VALUE AS PER SALE DEED. THE SECOND ISSUE IN DISPUTE IS REGARDING THE VALUE ADOPTED BY D.V.O. ON THE BASIS OF STAMP DUTY RATE BEFORE MODIFICATION ON THE BASIS OF LETTER OF AGREEMENT DATED 08/06/2006 WHEREAS THE STAMP DUTY RATE W AS MODIFIED BETWEEN JUNE AND JULY 2006. REGARDING THE DOUBT EXPRESSED BY THE ASSESSING OFFICER ON THE GENUINENESS OF THE SAID SALE AGREEMENT, IT IS OBSERVED BY THE CIT(A) THAT IF THE ASSESSING OFFICE R HAD ANY DOUBT ABOUT THE GENUINENESS OF THE AGREEMENT , HE COULD HAVE MADE ENQUIRIES FROM THE PURCHASERS ALSO. IT IS ALSO OBSERVED THAT IF THE ASSESSING OFFICER HAD ANY DOUBT ABOUT THE SIGNATURE OF THE ASSESSEE, HE COULD HAVE REFERRED THE MATTER TO A HAND WRITING EXPERT AND OBTAIN HIS OPINION. HE ALSO COMMENTED THAT THE ASSESSING OFFICER CANNOT SIT IN JUDGMENT AND DOUBT THE GENUINENESS OF TRANSACTION MERELY ON SUSPICION AND SURMISES. BY MAKING THESE OBSERVATIONS AND BY REFERRING TO SECTION 16A OF THE WEA LTH TAX ACT, IT WAS HELD BY HIM THAT THE ASSESSING OFFICER SHOULD 6 ADOPT THE VALUE AS PER D.V.O. REPORT. CONSIDERING ALL THESE FACTS, AS DISCUSSED ABOVE AND IN THE ORDERS OF THE AUTHORITIES BELOW, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THIS ASPECT. HENCE, ON THIS ASPECT, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A). ACCORDINGLY, GROUND NOS. 1 TO 5 ARE REJECTED WHEREAS GROUND NO. 6 IS ALLOWED. 8. REGARDING GROUND NO. 7 I.E. REGARDING ALLEGED LOW HOUSE HOLD WITHDRAWALS, WE FIND THAT THE AS SESSING OFFICER ESTIMATED THE HOUSE HOLD WITHDRAWALS AT RS.60,000/ - AND MADE ADDITION OF RS.57,850/ - AND CIT(A) HAS RESTRICTED THE ADDITION TO RS.25,000/ - . THE DECISION OF CIT(A) IS IN THE LIGHT OF THE FACTS THAT THE ASSESSEE WAS AGED ABOUT 72 YEARS AND T HERE WAS NO LIABILITY ON HER AND SHE WAS LIVING WITH HER TWO SONS AND HER DAILY NEEDS WERE BEING TAKEN CARE OF BY HER TWO SONS. CONSIDERING ALL THESE FACTS, IN OUR CONSIDERED OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A) ON THIS ISSUE. GR OUND NO. 7 IS REJECTED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 /03/2015. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. 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