ITO, New Delhi V. Mrs Pinky Ganju, New Delhi

ITA 3778/DEL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1702 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 05-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 23-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Assessee Lawyers: S K CHATURVEDI
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.- 3778/DEL/2012 (ASSESSMENT YEA R-2009-10) ITO WARD 45 (1), ROOM NO. 308, 3 RD FLOOR, MAYUR BHAWAN, NEW DELHI (APPELLANT) VS PINKY GANJU 146, MUKHERJEE NAGAR, NEW DELHI AAJPG8569P (RESPONDENT) APPELLANT BY SH. V. R. SONBHADRA, SR. DR RESPONDENT BY SH. S.K. CHATURVEDI, C.A ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST ORDER D ATED 21/15/2012 PASSED BY LD. CIT(A)-XXX, NEW DELHI. THE GROUNDS O F APPEAL ARE AS FOLLOWS:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN: (VII) DELETING AN ADDITIONS OF RS.65,05,000/- MADE UP 69B OF THE IT ACT. ON THE ACCOUNT OF UNEXPLAINED INVESTMENT I N SHARE IN PROPERTY BY IGNORING THE MATERIAL FACT THAT THE PRO PERTY WAS REGISTERED AT A VALUE OF RS.1,71,00,000/- AS AGAINS T TOTAL PURCHASE CONSIDERATION OF PROPERTY DECLARED AT RS.40,90,000/ -. (VIII) BY WRONGLY INVOKING THE PROVISIONS OF SECTIO N 50-C IN DELETING THE ADDITION MADE U/S 69 B OF THE ACT. DATE OF HEARING 05.10.2015 DATE OF PRONOUNCEMENT 09 .10.2015 2. DURING THE PERIOD UNDER CONSIDERATION MRS. PINKI GANJU AND M/S DELIGHT REALTORS PVT. LTD. JOINTLY HAVE PURCHASED A COMMERCIAL SPACE BEARING NO. GF SR OF 2045 SQUARE FT. AT ANSAL PLAZA, VAISHA LI FOR TOTAL CONSIDERATION OF RS.40,90,000/- ONLY. HOWEVER, REGISTRAR OF PROPERTY HAD REGISTERED THIS PROPERTY AT RS.1,71,00,000/- AND ON WHICH REGISTRY CHARGE HAS BEEN PAID TO THE EXTENT OF RS.11,87,000/- BOTH THE PARTNERS HAVE INVESTED EQUAL SHARE OF MONEY TO THE EXTENT OF 50%. THE ASSESSEE WAS ASKED TO GIVE THE EXPLANATION AS TO WHY THE VALUE OF PROPERTY AT RS.1,71,00,000/- SH OULD NOT BE TAKEN AS COST OF PROPERTY PURCHASED INTEREST OF RS.40,90,000/- SHOWN BY THE ASSESSEE AND WHY NOT THE DIFFERENCE OF RS.65,05,000/- I.E 50% OF RS. 1,71,00,000/-(-) RS.40,90,000/- BEING HALF SHARE IN THE PURCHASED PR OPERTY SHOULD NOT BE TREATED AS INVESTMENT NOT FULLY DISCLOSED AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE GAVE THE REPLY THAT SECTION 50C WAS ENACTED TO DECIDE THE SALE CONSIDERATION OF AN IMMOVABLE PROPERTY FOR THE PURPOSE OF CAPITAL GAIN IN THE CASE OF SELLER OF AN IMMOVABLE PROPERTY AS H IS CAPITAL ASSET BELOW THE VALUE DETERMINED BY STAMP AUTHORITIES AND APPLIES T O THE HEAD OF INCOME UNDER INCOME UNDER THE HEAD CAPITAL GAIN. THE ASSESSEE SUBMITTED THAT SHE WAS BUYER OF THE PROPERTY FROM A BUILDER M/S ANSAL HOUS ING AND CONSTRUCTION LTD. TO PURCHASE THE PLOT AND CONSTRUCTED THE ENTIRE BUI LDING. THEREFORE, THE SELLER WAS HAVING THIS ACTIVITY AS HIS BUSINESS ACTIVITY A ND HE HAS SOLD PART OF BUILDING OUT OF HIS STOCK. THE ASSESSEE SUBMITTED THAT THE PROVISIONS OF SECTION 50C APPLY WHERE THE SALE OF IMMOVABLE PROPE RTY IS IN THE COURSE OF BUSINESS AND NOT CAPITAL GAIN AS DECIDED IN CIT VS. THIRUVENGADAM INVESTMENTS P. LTD 320 ITR 345 (MAD), ACIT VS. EXCE LLENT LAND DEVELOPERS P LTD. 1 ITR (TRIB.) 563 (DELHI) TO VS. VENU PROTEINS INDUSTRIES 4 ITR (TRIB.) 602. 3. THE ASSESSING OFFICER HAS REJECTED THE CONTENTIO N OF THE ASSESSEE AND ADDED RS.65,05,000/- TO THE INCOME OF THE ASSESSEE. THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A). 4. THE LD. CIT(A) HELD IN PARA 4 THAT : I HAVE CONSIDERED THE ASSESSMENT ORDER, WRITTEN SU BMISSIONS AND CASE LAWS, GROUNDS OF APPEAL OF THE AR. THE FACTS OF TH E CASE ARE NARRATED IN PARA 1,2 & 3 OF THE AR VERY CLEARLY IN PAGE 2 ABOVE . AFTER GOING THROUGH THE RECENT DELHI TRIBUNAL DECISIONS, I FIND IT CLE AR THAT SECTION 50C IS APPLICABLE TO SELLER OF THE IMMOVABLE PROPERTY FOR DETERMINATION OF CAPITAL GAIN U/S 48 OF THE I.T. ACT. THE DECISION OF JURISDICTIONAL IT AT IS BINDING ON AUTHORITIES BELOW. THE A O HAD TO PROVE ANY UNDER HAND DEALING OR ON MONEY PASSED FROM PURCHASER TO SELLER OF PROPERTY I N CASE OR ANY OTHER MODE OR KIND, THEN ONLY THE EXTRA MONEY PASSED CAN BE TREATED AS INVESTMENT FROM UNDISCLOSED SOURCES AND ADDITION CA N BE MADE U/S 68 OF THE I.T. ACT. THE AR GAVE ANOTHER REASON OF INTROD UCTION OF DELHI METRO TO ANAND VIHAR, VAISHALI FOR WHICH THE CIRCLE RATE FOR STAMP DUTY WAS ESCALATED BY STATE GOVT. AUTHORITY. THIS IS NOT TH E REASON THAT APPELLANT HAD TO PAY MORE INCOME TAX ON UNREASONABLE ADDITION S. THE APPELLANT IS A SCHOOL TEACHER AND KASMIR. LADY, SETTLED IN DELHI A FTER LOOSING THEIR PROPERTIES AT KASMIR. SHE HAD INVESTED THE ABOVE 40 .90 LAKHS TO EARN SOME INCOME FOR SURVIVAL. IT IS A DEEMED PROVISION FOR COMPUTATION OF CAPITAL GAINS. THE SECTION 50C IS NOT APPLICABLE T O THE PURCHASER OF IMMOVABLE PROPERTY. IN THE PRESENT CASE THE APPELLANT IS A PURCHASER OF THE PROPERTY FROM ANSAL PLAZA, VAISHALI, GHAZIABAD. THEREFORE, THE ACTION OF THE A O IN MAKING ADDITION U/S 68 TOWARDS UNEXPLAINED INVESTMENT IS NOT CORRECT. THE ASSESSING OFFICER I S DIRECTED TO DELETE THE ADDITION OF RS.65,05,000/- ACCORDINGLY. 5. THE DR RELIED ON THE ASSESSING OFFICERS ORDER A ND SUBMITTED THAT THE ASSESSING OFFICER WHILE REJECTING THE CONTENTION O F THE ASSESSEE, HAS RIGHTLY GIVEN A REASON THAT IF THE REGISTRAR OF THE PROPERT IES AGREES WITH THE VIEW OF THE PURCHASERS AND SELLER OF THE SAID PROPERTIES THEN R EGISTRY OF THE PROPERTY MUST HAVE BEEN REGISTERED AT THE VALUE OF RS. 40,90,000/ - AND NOT ON RS.1,71,00,000/-. 6. THE AR SUBMITTED THAT THE PROPERTY WAS PURCHASED IN A.Y 2008-09. THE AR FURTHER SUBMITTED THAT THE A O WITHOUT HAVING AN Y EVIDENCE OF EXCESS AMOUNT PAID BY THE BUYER, HAS IGNORED THE FACT THAT ASSESSEE PAID TOTAL AMOUNT OF RS. 40,90,000/- TO THE SELLER WHICH WAS C ONFIRMED BY THE SELLER IN FRONT OF THE REGISTRAR AT THE TIME OF REGISTRY. TH E AR SUBMITTED THAT AO HAS NOT VERIFIED THIS FACT FROM REGISTRY AND SIMPLY MADE AD DITION OF RS.65,05,000/-. 7. WE HAVE PERUSED ALL THE RECORDS AND THE SUBMISS IONS MADE BY BOTH THE PARTIES. THE AO NOT VERIFIED FROM THE REGISTRY AS TO WHETHER THE EXCESS PAYMENT WAS MADE BY THE ASSESSEE IN THIS ASSESSMENT YEAR OR NOT. IT IS OBSERVED THAT THE ASSESSEE ALONG WITH M/S DELIGHT R EALTORS PVT. LTD. HAS PURCHASED COMMERCIAL SPACE BEARING NO. GFSR 29 AT A NSAL PLAZA. THE SAME SPACE WAS ALREADY RENTED OUT BY ANSAL HOUSING AND C ONSTRUCTION LTD, THE BUILDER AND OWNER OF ANSAL PLAZA TO VISHAL RETAIL L TD FOR A TERM OF 9 YEARS ON 50:50 BASIS. THE TOTAL CONSIDERATION OF RS. 40,90, 000/- WAS PAID CONTRIBUTING EQUALLY BY BOTH INVESTORS IN JULY 2007 PERTAINING T O ASSESSMENT YEAR 2008-09. THE SOURCE OF INVESTMENT OF RS. 40,90,000/- WERE EX PLAINED TO THE SATISFACTION OF THE ASSESSING OFFICER BY THE ASSESSEE. SINCE THE SPACE WAS RENTED THE SALE CONSIDERATION WAS AGREED UPON ON THE BASIS OF RATE OF RETURN BASIS. THE SALE DEED WAS NOT EXECUTED AT THE TIME OF PURCHASE OF SP ACE. THE SAME WAS EXECUTED IN THE A.Y 2009-10. THE STAMP DUTY WAS PA ID AMOUNTING TO RS. 11,87,000/- AS PER VALUE ASSESSED BY STAMP VALUATIO N OFFICER AT RS.1,71,00,000 WHICH FURTHER REDUCED THE RATE OF RETURN OF THE REN TED SPACE. THEREFORE, THE TOTAL CONSIDERATION OF RS. 40,90,000/- WHICH WAS PA ID AT THE TIME OF PURCHASE OF THIS SPACE HAS BEEN MENTIONED IN THE SALE DEED. THESE FACTORS HAVE BEEN SUBMITTED BEFORE THE LD. CIT(A) AS WELL AS BEFORE T HE ASSESSING OFFICER BY THE ASSESSEE. BUT THE SAME WAS IGNORED BY THE ASSESSIN G OFFICER. REGARDING THE SALE DEED AT RS. 1,71,00,000/- THE PROVISIONS OF SE CTION 50C PROVIDES THAT IF ANY IMMOVABLE PROPERTY IS SOLD AT LESS THAN ITS VAL UE ASSESSED BY THE STAMP OFFICER OF THE STATE, THE VALUE ASSESSED BY THE STA MP OFFICER SHALL BE DEEMED TO BE THE SALE VALUE OF THE IMMOVABLE PROPERTY. IN TH IS CASE, THE PROPERTY WAS ALLOTTED BY ANSAL HOUSING AND CONSTRUCTION LTD. AT ITS MARKET VALUE BASED ON THE RATE OF RETURN FROM RENTALS AND IT WAS BUSINESS ASSET FOR THEM. THEREFORE, THE PROVISIONS OF SECTION 50C WILL NOT BE APPLICABL E IN THE CASE OF PURCHASER OF THE PROPERTY. THE SPACE WAS ALREADY RENTED, THERE FORE, THE FAIR MARKET VALUE OF THE PROPERTY IS DECIDED BY ITS RENTALS AND THE SAME WAS TRANSFERRED TO THE ASSESSEE IN THE ASSESSMENT YEAR 2008-09. IN THIS P ARTICULAR ASSESSMENT YEAR I.E. THE ASSESSMENT YEAR 2009-10, THE EXECUTION OF SALE DEED WAS EXECUTED. IT IS VERY PERTINENT TO MENTION THAT THE PROVISIONS OF SECTION 50C APPLIES IN CASE OF CALCULATION OF SALE CONSIDERATION FOR THE PURPOS E OF CAPITAL GAIN IN THE HANDS OF SELLER OF ANY CAPITAL ASSET. THIS ASPECT HAS BE EN RIGHTLY TAKEN INTO CONSIDERATION BY THE LD. CIT(A). THEREFORE, THE AC TION OF ASSESSING OFFICER IN MAKING ADDITION U/S 69B OF THE INCOME TAX ACT, 1941 TOWARDS UNEXPLAINED INVESTMENT WAS NOT CORRECT AND LD. CIT(A) HAS RIGHT LY DIRECTED THE ASSESSING OFFICER TO DELETE ADDITION OF RS.65,05,000/-. 8. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 TH OF OCTOBER, 2015. SD/- SD/- (R.S. SYAL) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09/10/2015 R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 05.10.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 05.10.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 08.10.2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 09 .10.2015 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 09 .10.2015 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.