ITO, New Delhi V. M/s. GBA Buildiers & Developers (P) Ltd., New Delhi

ITA 3976/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0691 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-01-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 26-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C

Judgement Text

I.T.A. NO. 3976 /DEL/2010 1/3 IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH C NEW DELHI, BENCH C NEW DELHI, BENCH C NEW DELHI, BENCH C BEFORE SHRI R. P. TOLANI, JUDICIAL MEMBER AND SHRI K. D. RANJAN, ACCOUTANT MEMBER ITA NO.3976 /DEL/2010 (ASSESSMENT YEAR 2006-07) I.T.O., WARD 12(12), VS. M/S. GBA BUILDERS & DEVELO PERS P.LTD., NEW DELHI F-22, MAIN WAZIRABAD ROAD, KHAJOORI KHAS, DELHI-94. (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AACCG2230P APPELLANT BY: SMT. MONA MOHANTY, SR. DR RESPONDENT BY: NONE ORDER ORDER ORDER ORDER PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: 1. THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YE AR 2006-07 ARISES OUT OF THE ORDER OF LD. CIT(A) XVIII, NEW D ELHI. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE REPRODUCED AS U NDER: 1) ON THE FACTS AND CIRCUMSTANCES OF THE SE NEW DELHI IN LAW THE ORDER OF THE CIT(A) IS WRONG, PERV ERSE, ILLEGAL AND AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, WHETHER THE LEARNED CIT(A) WAS JUSTIFIED IN DELETIN G THE DISALLOWANCE OF ` 6,09,584/- MADE BY THE A.O. WITHO UT APPRECIATING THAT THE PLOTS HAVE BEEN SOLD AT LOWER COST THAN THE MARKET RATE OR THE CIRCLE4 RATE FIXED BY T HE REGISTRAR FOR THE PURPOSES OF STAMP DUTY. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE A PPOINTED DATE OF HEARING. WE HAVE HEARD LD. D.R. FOR THE RE VENUE AND DECIDE THE APPEAL OF THE REVENUE EX-PARTE QUA THE A SSESSEE. 3. THE ONLY ISSUE FOR CONSIDERATION IN THIS APPEAL RELATES TO DELETING THE ADDITION OF ` 6,09,584/- ON ACCOUNT OF SALES MADE AT LOWER AMOUNT THAN THE MARKET COST. THE FACTS OF TH E CASE STATED IN BRIEF ARE THAT THE ASSESSEE HAD SOLD CERTAIN PLOTS FOR A VALUE, WHICH WAS LOWER THAN THE VALUE AS ASSESSED BY THE REGISTR AR FOR THE I.T.A. NO. 3976 /DEL/2010 2/3 PURPOSES OF CALCULATION OF STAMP DUTY FOR REGISTRAT ION OF PLOTS. THE DIFFERENCE IN THE RATES AMOUNTING TO ` 6,09,584/- W AS ADDED TO THE ASSESSEES INCOME SINCE THE SALE VALUE WAS LESS THA N THE CIRCLE RATES APPLICABLE FOR THE PURPOSE OF CALCULATION OF STAMP DUTY. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E LD. CIT(A), IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS OF ESTATE. THE COMPANY WAS FORMED WITH THE OBJECTS TO ACT AS IN DEVELOPERS AND BUILDERS AND WAS FILING ITS INCOME TAX RETURN IN RESPECT OF INCOME IS EARNED UNDER THE HEAD PROFITS & GAINS FROM BUSINESS AND P ROFESSION. SINCE INCORPORATION, THE SAME WAS BEING ASSESSED BY THE INCOME TAX DEPARTMENT UNDER THE HEAD BUSINESS & PROFESSIO N. IT WAS ALSO SUBMITTED THAT THE PROVISIONS OF SECTION 50C OF THE I. T. ACT, 1961 WERE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. THE PROVISIONS OF SECTION 50C HAVE LIMITED APPLICATION FOR COMPUTATION OF INCOME UNDER THE HEAD CAPITAL GAINS ON TRANSFE R OF CAPITAL ASSETS. IN THE CASE OF THE ASSESSEE, THE TRANSACTIO NS WERE NOT IN RESPECT OF SALE OF CAPITAL ASSET BUT TREATED AS STO CK IN TRADE AND PROFITS ARISING THEREFROM WERE INCLUDED AS INCOME U NDER THE HEAD PROFITS AND GAINS FORM BUSINESS AND PROFESSION. THEREFORE, DEEMING PROVISIONS OF SECTION 50C WOULD NOT BE APPL ICABLE TO THE FACTS OF THE ASSESSEES CASE. LD. CIT(A) AFTER CON SIDERING THE SUBMISSION MADE BY THE ASSESSEE AND RELYING ON VARI OUS DECISIONS, HELD THAT THE PROVISIONS OF SECTION 50C WILL NOT BE APPLICABLE IN THE CASE OF TRADING ACTIVITIES. THE OBSERVATION OF THE A.O. THAT SECTION 50C COULD BE USED IN THE CASE OF THE ASSESSEE WAS N OT BASED ON CORRECT APPRECIATION OF FACTS. SINCE THE ASSESSEE HAD NOT SOLD CAPITAL ASSETS, THE PROVISIONS OF SECTION 50C WOULD NOT BE APPLICABLE. HE ACCORDINGLY DELETED THE ADDITIONS. 5. WE HAVE HEARD LD. SR. D.R. AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT ASSE SSEE HAD SOLD THE PROPERTY AS BUILDERS AND DEVELOPERS. THESE PROPERT IES WERE HELD AS STOCK IN TRADE. THE PROVISIONS OF SECTION 50C ARE APPLICABLE IN THE I.T.A. NO. 3976 /DEL/2010 3/3 CASE OF CAPITAL GAINS AND NOT IN THE CASE OF BUSINE SS ASSETS HELD AS STOCK IN TRADE. THE ASSESSEE HAD BEEN FILING ITS R ETURN OF INCOME FROM SALE OF ASSETS UNDER THE HEAD INCOME FROM BUSI NESS AND PROFESSION. THEREFORE, THE PROVISIONS OF SECTION 5 0C HAVE NO APPLICABILITY TO THE FACTS OF THE ASSESSEES CASE. ACCORDINGLY, LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE A.O. BASED ON THE PROVISIONS O SECTION 50C OF THE ACT. ACCORD INGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY LD. CIT(A ) DELETING THE ADDITION. 6. IN THE RESULT THE APPEAL OF THE REVENUE STANDS D ISMISSED. 7. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 6 TH JANUARY 2011 AFTER CLOSE OF HEARING. SD./- SD./- (R. P. TOLANI) (K. D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06 TH JAN., 2011 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI