GOLCHA MINERALS P LTD., Jaipur V. DCIT, Jaipur

ITA 400/JPR/2011

• Counselvise Citation: 40023114 RSA 2011
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 03-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Assessee Lawyers: A B DANGAYACH
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Fair market value; Valuation report
• Section: 50C; 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L. KALRA) ITA NO.400/JP/2011 ASSESSMENT YEAR : 2007-2008 GOLCHA MINERALS PVT. LTD., VS. THE DY.C.I.T., JAIPUR. CIRCLE-2, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.B. DANGAYACH RESPONDENT BY : SHRI VINOD JOHARI DATE OF HEARING: 22.09.2011 DATE OF PRONOUNCEMENT : 30.09.2011 ORDER PER SHRI N.L. KALRA, A.M. THE ASSESSEE HAS FILED AN APPEAL AGAINST ORDER OF LD. CIT (A)-I JAIPUR DATED 14.03.2011. THE GROUNDS OF APPEAL ARE AS UNDER: ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE L EARNED CIT (A) WAS NOT JUSTIFIED IN SUSTAINING THE VALUATION ADOPTED BY TH E A.O. IN ASSESSING LONG TERM CAPITAL GAIN IN HANDS OF APPELLANT. THE VALUE OF LAND SUSTAINED BY THE LEARNED CIT (A) IS WITHOUT ANY BASIS, BAD IN LAW AN D DESERVES TO BE QUASHED. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE L EARNED CIT (A) WAS NOT JUSTIFIED IN IGNORING THE VALUATION OF THE LAND IN QUESTION AS DETERMINED BY REGD. VALUER ON THE BASIS OF LOCATION AND QUALITY O F THE LAND FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN IN HANDS OF APPELLANT COMPANY. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE L EARNED CIT (A) WAS NOT JUSTIFIED IN DISPOSING OF THE CASE WITHOUT OBTAININ G/CONSIDERING THE VALUATION REPORT OF THE REGISTERED VALUER U/S 50C(2 ) OF THE I.T. ACT. 2. THE COMPANY WAS HAVING 3.6237 HECTARES OF LAND IN V ILLAGE SIROLI KHURD, DISTT. UDHAM SINGH NAGAR. THE APPELLANT COMPANY SOLD LAND AT RS.883075/- PER HECTARE WITH TOTAL MARKET CONSIDERATION OF RS.32 LACS. HOWEVER, THE RATE ADOPTED BY THE STAMP 2 VALUATION AUTHORITY WAS RS.30 LACS PER HECTARE AND HENCE THE AO FOUND SALE CONSIDERATION SHOWN BY THE APPELLANT MUCH BELOW THE DLC RATE. THE AO, THEREFORE, INVOKED PROVISIONS OF SECTION 50C. THE EXCESS VALUE, AS PER STAMP VALU ATION AUTHORITY OVER SALE CONSIDERATION SHOWN WAS ADDED TO THE INCOME OF THE APPELLANT AND AN ADDITION OF RS.7671100/- WAS MADE UNDER THE HEAD LONG TERM CAPITAL GAIN. 3. BEFORE THE LD. CIT (A) IT WAS SUBMITTED AS UNDER AS PER ORDER OF LD. CIT (A) CONTENTION OF THE AR IS THAT THE LAND UNDER QUESTIO N WAS NEITHER FIT FOR AGRICULTURAL OPERATION AS IT WAS FULL OF WATER NOR FOR RESIDENTIAL AND INDUSTRIAL PURPOSES AND, THEREFORE, IT WAS A LIABIL ITY WHICH WAS SOLD ON 20.9.06 @ RS.883075.30 PER HECTARE AT THE THEN PREV AILING MARKET RATE. THE STAMP VALUATION AUTHORITY OBSERVED THAT THE LAN D WAS IN PROXIMITY OF THE MAIN ROAD AND HAD COMMERCIAL VALUE AND ACCORDIN GLY DLC RATE OF RS.30 LACS PER HECTARE WAS TAKEN FOR THE PURPOSE OF STAMP DUTY. DURING THE ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED THAT T HE LAND WAS FAR OFF FROM ANY ROAD AND WAS IN THE INTERIOR AREA AND AS S UCH HAD NOT COMMERCIAL VALUE. THE DLC RATE APPLIED WAS TOO MUCH HIGH. THE AO HAS INVOKED PROVISIONS OF SECTION 50 C WHICH WAS INTROD UCED W.E.F. 1.4.03 AND PROVIDES THAT WHERE CONSIDERATION RECEIVED IS LESS THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AND THE ASSESSEE C ONTESTED BEFORE THE AO THAT THE AO MAY REFER THE VALUATION OF THE RELEVANT ASSET TO THE VO IN ACCORDANCE WITH SECTION 55A. THE AO WAS REQUESTED T O VERIFY THE GENUINENESS OF CONSIDERATION AND SUMMON THE PURCHAS ERS OF THE LAND WHOSE ADDRESSES WERE FURNISHED. ACCORDINGLY, THE AO MADE REFERENCE U/S 50C TO THE VO OF THE DEPARTMENT FOR DETERMINATION O F FAIR MARKET VALUE OF THE LAND. THE DOCUMENTS WERE FORWARDED TO THE VO AL ONGWITH COPY OF REGISTERED VALUER REPORT WHO HAS VALUED THE LAND AT RS.2808000/-. THE REGISTERED VALUERS REPORTS WERE ALSO FORWARDED TO THE AO WHO HAS SPECIFIED THE DEFECTS OF LAND. TILL 29.12.09 I.E. T HE DATE OF PASSING ASSESSMENT ORDER THE VALUATION REPORT OF THE VO WAS NOT RECEIVED BY THE AO. THE AO HOWEVER, PASSED AN ASSESSMENT ORDER AND BY APPLYING PROVISIONS OF SECTION 50C AND DETERMINED THE SALE C ONSIDERATION OF LAND AT RS.1087100/-. AFTER DEDUCTING THE DECLARED SALE CON SIDERATION OF RS.32 LACS ADDITION OF RS.7671100/- WAS MADE. THE AO HAS IGNORED THE REPORT OF REGISTERED VALUER. IN TERMS OF SECTION 50C(2) THE APPELLANT CLAIMED BEFORE THE AO THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY EXCEEDED THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER AND THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY HAS NOT BEEN DISPUTED IN APPEAL OR REVISI ON OR REFERENCE BEFORE ANY COURT. THE AO, THEREFORE, WAS REQUIRED TO REFER THE VALUATION OF THE RELEVANT ASSET TO THE VO IN ACCORDANCE WITH SECTION 50C. IT WAS INCUMBENT ON THE AO TO CONSIDER THE VALUATION AS DETERMINED B Y THE VO BUT SHE 3 FAILED TO DO SO AND HAS ARBITRARILY ADOPTED THE VAL UATION OF LAND AT DLC RATE. THERE IS GREAT VARIATION IN THE REPORT OF REG ISTERED VALUER AND THE STAMP VALUATION AUTHORITY AND, THEREFORE, DLC RATE ADOPTED BY THE STAMP VALUATION AUTHORITY IS NOT JUSTIFIED. WITH THIS, IT WAS SUBMITTED THAT THE ADDITION OF RS.7671100/- MADE BY AO MAY BE DELETED. AS THE ASSESSMENT WAS FINALIZED BY APPLYING PROVISI ONS OF SECTION 50C WITHOUT WAITING FOR THE REPORT OF DVO THE AO WAS AS KED TO FORWARD COPY OF DVO REPORT DURING THE APPELLATE PROCEEDINGS. INS PITE OF REMINDER SENT TO THE AO, DVOS REPORT WAS NOT RECEIVED. THE GROUN D OF APPEAL IS DECIDED ON MERIT AFTER CONSIDERING SUBMISSION OF TH E AR. 4. THE LD. CIT (A) ASKED THE A.O. TO SEND THE REPOR T OF DVO BUT IN SPITE OF REMINDERS, THE A.O. DID NOT SEND THE REPORT. THE LD . CIT (A) UPHELD THE ADDITION AFTER OBSERVING AS UNDER: CONTENTION OF THE AR IS CONSIDERED. AS THERE WAS HU GE VARIATION IN THE SALE CONSIDERATION OF LAND SHOWN BY THE APPELLANT A ND THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF STAMP DUTY, THE AO INVOKED PROVISIONS OF SECTION 50C. A REFERENCE AS R EQUIRED UNDER SUB SECTION (2) WAS MADE TO THE DVO BUT AS THE ASSESSME NT WAS GETTING BARRED BY LIMITATION, THE ASSESSMENT ORDER WAS FINALIZED O N 29.12.09 WITHOUT FURTHER WAITING FOR THE DVOS VALUATION REPORT. THE AR IS AGGRIEVED ON TWO GROUNDS: THE AO IGNORED THE REGISTERED VALUERS REPORT WHICH GIVES THE FAIR MARKET VALUE EVEN LESS THAN THE SALE CONSIDERATION SHOWN B Y THE APPELLANT AND THE AO WITHOUT WAITING FOR THE REPORT OF DVO ADOPTE D ARBITRARILY THE VALUATION OF LAND AT DLC RATE AS DETERMINED BY THE STATE STAMP AUTHORITY. SO FAR AS NOT CONSIDERING THE REGISTERED VALUER REP ORT, THE AR HIMSELF HAS ADMITTED THAT THE REGISTERED VALUER REPORT WAS AT G REAT VARIATION TO THE REPORT OF STAMP DUTY AUTHORITY. THE STATE STAMP VAL UER AUTHORITY HAS OBSERVED THAT THE LAND WAS IN THE PROXIMITY OF THE MAIN LAND AND HAD COMMERCIAL VALUE WHEREAS THE REGISTERED VALUER HAS STATED THAT PHYSICAL SITUATION OF THE LAND WAS NOT APPROPRIATE FOR AGRIC ULTURE, RESIDENTIAL AND INDUSTRIAL PURPOSES. IT IS NOT THE CASE OF APPELLAN T THAT THE OBSERVATION OF THE STATE STAMP VALUATION AUTHORITY WAS CONTESTED I N APPEAL OR REVISION. ONCE THE OBSERVATION OF THE STAMP VALUATION AUTHORI TY WAS NOT CONTESTED WHICH IS INDIRECT ADMISSION, UNDER THE CIRCUMSTANCE S THE REGISTERED VALUERS REPORT LOOSES ITS IMPORTANCE. FURTHER, THE SALE CONSIDERATION OF RS.32 LACS DECLARED BY THE APPELLANT IS ALSO SIGNIF ICANTLY HIGHER THAN THE VALUE ADOPTED BY THE REGISTERED VALUER. THIS FACT A LSO INDICATES THAT THE REGISTERED VALUERS REPORT CANNOT BE RELIED UPON. R EGARDING FURTHER OBJECTION OF THE AR ON THE ACTION OF AO PASSING ORD ER WITHOUT CONSIDERING DVOS REPORT, FROM THE FACTS OF THE CASE THIS IS OB VIOUS THAT THE ASSESSMENT WAS GETTING TIME BARRED AND THE AO PASSED THE ORDER AT THE FAG END OF THE LIMITATION. THE AO COULD NOT IGNORE THE LIMITATION PROVISIONS AND WAIT 4 INDEFINITELY FOR THE DVOS REPORT. SECTION 50C(1) P ROVIDES THAT WHETHER THE CONSIDERATION RECEIVED BY AN ASSESSEE IS LESS T HAN THE VALUE ADOPTED OR ASSESSED BY STAMP VALUATION AUTHORITY, THE VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSE OF SECTION 48 BE DEEMED TO B E THE FULL VALUE OF CONSIDERATION RECEIVED. THUS, SUB SECTION (1) MAKES THE ASSESSEE LIABLE FOR CONSIDERING THE DLC RATE/RATE ADOPTED BY THE STAMP VALUATION AUTHORITY AS THE DEEMED SALE CONSIDERATION RECEIVED BY THE APPEL LANT. THE APPELLANT, THEREFORE, CANNOT ESCAPE FROM ITS LIABILITY. SUB SE CTION (2) IS WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (1) WHER E THE APPELLANT MAKES CLAIM BEFORE THE AO THAT THE VALUE ADOPTED BY THE S TAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE BUT AT THE SAME TIME THE VALUE SO ADOPTED WAS NOT DISPUTED IN APPEAL OR REVISION BEFO RE ANY COURT THEN THE AO MAY REFER THE VALUATION OF CAPITAL ASSET TO THE VO. IN THE PRESENT CASE, THE AO HAS MADE REFERENCE TO THE VO AND THUS THE NE CESSARY REQUIREMENT OF SUB SECTION (2) HAS BEEN MET WITH. FURTHER, PROV ISIONS OF WEALTH TAX ACT OR SECTION 55A OF IT ACT WILL BE APPLICABLE ONCE TH E VALUATION OFFICERS REPORT IS RECEIVED. THE AO HAS DISCHARGED HER DUTY CAST UPON HIM UNDER SECTION 50C (2) AND, THEREFORE, IT CANNOT BE SAID THAT THE AO HAS ADOPTED THE DLC RATE ARBITRARILY. ACTION OF THE AO IS WELL WITHIN THE FOUR CORNERS OF LAW. THE AO HAS RIGHTLY REPLACED THE SALE CONSID ERATION SHOWN BY THE APPELLANT BY THE VALUE DETERMINED BY THE STATE STAM P AUTHORITY AND, THEREFORE, ADDITION OF RS.7671100/- MADE BY AO IS H EREBY CONFIRMED. 5. WE HAVE HEARD BOTH THE PARTIES. IT WILL BE USEFU L TO REPRODUCE SECTION 50 C(2) OF THE I.T. ACT. WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTIO N (1), WHERE- (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFIC ER THAT THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VA LUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE ] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT B EEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BE FORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT. THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS M ADE, THE PROVISIONS OF SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB- SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATI ONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFER ENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. 6. THE ASSESSEE HAS FILED THE VALUERS REPORT AND T HE A.O. HAS REFERRED THE VALUATION TO THE VALUATION CELL AND SENT COPY OF THE REGISTER ED VALUER REPORT. THE VALUATION MADE BY 5 DVO IS BINDING ON A.O. SUBJECT TO PROVISION OF SECT ION 50C(3) I.E. IF THE VALUATION BY DVO IS MORE THAN THE VALUE ADOPTED BY STAMP VALUATI ON AUTHORITY THEN THE VALUE TAKEN BY STAMP VALUATION AUTHORITY IS TO BE ADOPTED. IN THIS CASE REFERENCE STANDS ALREADY MADE AND HENCE THE ISSUE OF CONSIDERATION TO BE ADOPTED FOR THE PURPOSE OF CAPITAL GAIN IS RESTORED BACK ON THE FILE OF THE A.O. THE ASSESSEE WILL GET AN OPPORTUNITY TO FILE OBJECTION AGAINST THE PROPOSED VALUATION DONE BY DVO AS PER PROVISION OF SECTION 16A OF WEALTH TAX ACT AS SUCH PROVISIONS HAVE BEEN INCORPORATED IN SECTIO N 50 C(2) HENCE THE ASSTT. IS SETASIDE TO BE MADE DE NOVO AS PER OUR ABOVE OBSERVATION. TH E APPEAL IS ALLOWED FOR STASTICAL PURPOSES. THE ORDER IS PRONOUNCED IN OPEN COURT ON 30.09.201 1 SD/- SD/- (R.K.GUPTA) (N.L.KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30.09.2011 *S.KUMAR* COPY FORWARDED TO:- 1. M/S. GOLCHA MINERALS PVT. LTD., JAIPUR. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. 3. THE CIT 4. THE CIT(A), 5. THE D/R, ITAT, JAIPUR 6. THE GUARD FILE IN ITA NO.400/JP/2011 BY ORDER A.R., I.T.A.T., JAIPUR