GWL Properties Ltd., CHENNAI V. ITO, CHENNAI

ITA 409/CHNY/2013

• Counselvise Citation: 40921714 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: MANUEL THOMAS
• Keywords: Sale consideration of property below Jantri Value; Business income; Fair market value
• Section: 148; 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.409/MDS/2013 ' (' / ASSESSMENT YEAR : 2005-06 M/S GWL PROPERTIES LTD., 36, RAJAJI SALAI, CHENNAI - 600 001. PAN : AAACM 2338 A V. THE INCOME TAX OFFICER(OSD), COMPANY CIRCLE II(2), CHENNAI - 600 034. (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NO.79/MDS/2015 ' (' / ASSESSMENT YEAR : 2005-06 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(1), CHENNAI - 600 034. V. M/S GWL PROPERTIES LTD. (FORMERLY M/S GORDON WOODRAFFEE LIMITED), 36, RAJAJI SALAI, CHENNAI - 600 001. (*+/ APPELLANT) (,-*+/ RESPONDENT) ASSESSEE BY : SHRI MANUEL THOMAS, CA REVENUE BY : DR. S. MOHARANA, CIT . / 0$ / DATE OF HEARING : 22.04.2015 1!( / 0$ / DATE OF PRONOUNCEMENT : 15.05.2015 2 I.T.A. NO. 409/MDS/13 I.T.A. NO. 79/MDS/15 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH ASSESSEE AND REVENUE HAVE FILED THE APPEALS AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR ASSESSMENT YEAR 2005-06. SINCE BOTH ARE FOR TH E SAME ASSESSMENT YEAR, WE HEARD BOTH THE APPEALS TOGETHER AND DISPOSING OF BY THIS COMMON ORDER. 2. FIRST, LETS TAKE ASSESSEES APPEAL IN I.T.A. NO.409/MDS/2013. 3. SHRI MANUEL THOMAS, THE LD. REPRESENTATIVE FOR T HE ASSESSEE, SUBMITTED THAT THE ASSESSEE HAS SOLD TWO PLOTS AT MARAIMALAI NAGAR, KANCHIPURAM DISTRICT DURING THE A SSESSMENT YEAR UNDER CONSIDERATION. ACCORDING TO THE LD. REP RESENTATIVE, THE PROPERTY WAS SOLD FOR ` 5,58,25,000/-. HOWEVER, THE SUB-REGISTRAR HAS VALUED THE PROPERTY AT MUCH HIGHER AMOUNT FOR T HE PURPOSE OF STAMP DUTY. THE ASSESSEE OBJECTED TO THE VALUATION MADE BY THE REGISTERING AUTHORITY. THE ASSESSEE HAS REQUESTED THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICE R. HOWEVER, THE ASSESSING OFFICER IGNORED THE REQUEST OF THE ASSESS EE AND COMPLETED THE ASSESSMENT BY TAKING THE VALUE ADOPTE D BY THE 3 I.T.A. NO. 409/MDS/13 I.T.A. NO. 79/MDS/15 REGISTERING AUTHORITY FOR STAMP DUTY PURPOSE. REFE RRING TO SECTION 50C OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT' ), THE LD. REPRESENTATIVE SUBMITTED THAT WHEN THE VALUE ADOPTE D BY THE REGISTERING AUTHORITY IS HIGHER THAN THE FAIR MARKE T VALUE, THE MATTER OUGHT TO HAVE BEEN REFERRED TO THE VALUATION OFFICE R. IN THIS CASE, ACCORDING TO THE LD. REPRESENTATIVE, IT WAS NOT REF ERRED TO THE VALUATION OFFICER. THEREFORE, THE LD. REPRESENTATI VE SUBMITTED THAT UNLESS AND UNTIL THE MATTER IS REFERRED TO THE VALU ATION OFFICER, THE ASSESSING AUTHORITY CANNOT TAKE THE VALUATION MADE BY THE REGISTERING AUTHORITY FOR THE PURPOSE OF ASSESSMENT . THE LD. REPRESENTATIVE PLACED RELIANCE ON THE JUDGMENT OF M ADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF WEALTH-TAX V. PRASAD PRODUCTIONS (P) LTD. (259 ITR 88). 4. ON THE CONTRARY, DR. S. MOHARANA, THE LD. DEPART MENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS NOT RAISED ANY OBJECTION BEFORE THE ASSESSING OFFICER WITH REGARD TO ADOPTION OF THE VALUE TAKEN BY THE SUB-REGISTRAR FOR REGISTRATION O F PROPERTY. ACCORDING TO THE LD. D.R., THE SUB-REGISTRAR HAS TA KEN THE VALUE OF THE PROPERTY AT ` 9,73,58,800/-. HOWEVER, THE SALE CONSIDERATION SHOWN IN THE SALE DEED IS ONLY AT ` 5,58,25,000/-. SINCE THE VALUE TAKEN BY THE SUB-REGISTRAR FOR VALUATION OF THE PRO PERTY IS MORE THAN THE CONSIDERATION DISCLOSED IN THE SALE DEED, ACCOR DING TO THE LD. 4 I.T.A. NO. 409/MDS/13 I.T.A. NO. 79/MDS/15 D.R., THE ASSESSING OFFICER HAS RIGHTLY ADOPTED THE VALUE TAKEN BY THE SUB-REGISTRAR AT ` 9,73,58,800/- FOR THE PURPOSE OF CAPITAL GAINS UNDER SECTION 50C OF THE ACT. THEREFORE, THERE IS NO INFIRMITY IN THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD SOLD TWO PLOTS AT MARAIMALAI NAGAR, KA NCHIPURAM DISTRICT FOR A SALE CONSIDERATION OF ` 5,58,25,000/-. HOWEVER, THE SUB-REGISTRAR, FOR THE PURPOSE OF REGISTRATION, HAS TAKEN THE FAIR MARKET VALUE AT ` 9,73,58,800/- AND COLLECTED THE STAMP DUTY ACCORDINGLY. NOW THE ASSESSEE CLAIMS THAT IN VIEW OF SECTION 50C OF THE ACT, WHEN THE FAIR MARKET VALUE IS LESS THAN THE REGISTRATION VALUE ADOPTED BY THE REGISTERING AUTHORITY, THE MAT TER HAS TO BE REFERRED TO THE VALUATION OFFICER TO DETERMINE THE FAIR MARKET VALUE. 6. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 50C OF THE ACT. WHEN THE FAIR MARKET VALUE IS LESS THAN THE VALUE ADOPTED BY THE REGISTERING AUTHORITY, SECTION 50C O F THE ACT CLEARLY SAYS THAT THE MATTER HAS TO BE REFERRED TO THE VALU ATION OFFICER TO DETERMINE THE FAIR MARKET VALUE. IN THIS CASE, BOT H THE AUTHORITIES BELOW HAVE NOT REFERRED THE MATTER TO THE VALUATION OFFICER. WHEN THE ASSESSEE SHOWS THE SALE CONSIDERATION AT ` 5,58,25,000/- IN THE 5 I.T.A. NO. 409/MDS/13 I.T.A. NO. 79/MDS/15 SALE DEED, IT WOULD NOT BE CORRECT TO SAY THAT THE ASSESSEE DID NOT OBJECT TO THE VALUE ADOPTED BY THE ASSESSING OFFICE R AT ` 9,73,58,800/-. IN ORDER TO AVOID DISPUTE WITH REGI STERING AUTHORITY AND FOR EARLY REGISTRATION OF THE DOCUMENT, STAMP D UTY MIGHT HAVE BEEN PAID FOR THE VALUE DETERMINED BY THE REGISTERI NG AUTHORITY. HOWEVER, THE ACTUAL SALE CONSIDERATION SHOWN IN THE SALE DEED CANNOT BE DISREGARDED UNLESS AND UNTIL THE VALUATIO N REPORT OBTAINED BY THE ASSESSING OFFICER AS REQUIRED UNDER SECTION 50C OF THE ACT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE MATTER NEEDS TO BE REFERRED TO THE VALUATION OFFICER. ACC ORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND THE A SSESSING OFFICER IS DIRECTED TO REFER THE MATTER TO VALUATION OFFICER. ACCORDINGLY, THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSIN G OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE IN THE LIGHT OF THE REPORT THAT WOULD BE RECEIVED FROM THE VALUATION OFFICER A ND THEREAFTER, DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ALLO WABILITY OF TDS TO THE EXTENT OF ` 3,83,236/-. 8. SHRI MANUEL THOMAS, THE LD. REPRESENTATIVE FOR T HE ASSESSEE, SUBMITTED THAT THE ASSESSEE HAS FILED FIV E TDS 6 I.T.A. NO. 409/MDS/13 I.T.A. NO. 79/MDS/15 CERTIFICATES AGGREGATING TO ` 3,83,236/-. THE LD. REPRESENTATIVE SUBMITTED THAT THE SAME WAS NOT CLAIMED IN THE RETU RN OF INCOME. ACCORDING TO THE LD. REPRESENTATIVE, THE TDS CERTIF ICATES FILED BEFORE THE LOWER AUTHORITIES TO THE EXTENT OF ` 3,83,236/- HAVE TO BE CONSIDERED. 9. ON THE CONTRARY, DR. S. MOHARANA, THE LD. D.R. S UBMITTED THAT THE ASSESSEE HAD NOT FILED THE TDS CERTIFICATE S ALONG WITH RETURN OF INCOME AND NO CERTIFICATE WAS FILED BEFOR E THE CIT(APPEALS). THEREFORE, IT WAS NOT CONSIDERED BY THE ASSESSING OFFICER AND THE CIT(APPEALS) ALSO HAS NOT CONSIDERE D THE SAME. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. FROM THE GROUNDS OF APPEAL EXTRACTED BY THE CIT(APPEALS) IT APPEARS THA T THE ASSESSEE HAS RAISED THIS GROUND AS GROUND NO.10 IN THE GROUN DS OF APPEAL. HOWEVER, THE CIT(APPEALS) HAS NOT DISCUSSED THE SAM E IN THE APPELLATE ORDER. IN OTHER WORDS, THE GROUND RELATI NG TO TDS CERTIFICATES TO THE EXTENT OF ` 3,83,236/- WAS NOT DISPOSED OF BY THE CIT(APPEALS). THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT WHEN THE TAX WAS DEDUCED AT SOURCE AS PER THE SCHEME OF THE INCOME-TAX ACT, THE ASSESSING OFFICER IS BOUND TO GIVE CREDIT FOR THE TAX DEDUCTED AT SOURCE, OTHERWISE, THE VERY PURPOSE OF DEDUCTING TAX 7 I.T.A. NO. 409/MDS/13 I.T.A. NO. 79/MDS/15 WOULD BE DEFEATED. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFTER VERIFYING THE TDS CERTIFICATES THAT WERE SAID TO BE FILED BY THE ASSESSEE. ACCORDINGLY, THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL VER IFY ALL THE TDS CERTIFICATES FILED BY THE ASSESSEE AND GIVE CREDIT IN RESPECT OF THE TAX DEDUCTED AT SOURCE. 11. NOW COMING TO THE REVENUES APPEAL, THE ONLY IS SUE ARISES FOR CONSIDERATION IS ASSESSABILITY OF SURPLUS ON TH E SALE OF LAND. 12. DR. S. MOHARANA, THE LD. D.R. SUBMITTED THAT TH E ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING NOTICE U NDER SECTION 148 OF THE ACT. ACCORDING TO THE LD. D.R., THE ASS ESSEE CLAIMS THE PROFIT ON SALE OF THE LAND UNDER THE HEAD CAPITAL GAINS. HOWEVER, THIS ISSUE HAD NOT BEEN DECIDED IN THE ORIGINAL ASS ESSMENT. THEREFORE, THE ASSESSING OFFICER REOPENED THE ASSES SMENT AND TREATED THE PROFIT ON SALE OF THE LAND AS BUSINESS INCOME. HOWEVER, THE CIT(APPEALS) BY FOLLOWING THE ORDER OF THIS TRI BUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2004-05, DI RECTED THE ASSESSING OFFICER TO ASSESS THE SURPLUS ON SALE OF THE LAND UNDER THE HEAD CAPITAL GAINS. ACCORDING TO THE LD. D.R ., THE REVENUE HAS ALREADY FILED AN APPEAL BEFORE THE HIGH COURT A GAINST THE ORDER 8 I.T.A. NO. 409/MDS/13 I.T.A. NO. 79/MDS/15 OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2004-05 IN THE ASSESSEE'S OWN CASE. THEREFORE, THE CIT(APPEALS) IS NOT RIGHT IN ALLOWING THE CLAIM OF THE ASSESSEE. 13. ON THE CONTRARY, SHRI MANUEL THOMAS, THE LD. RE PRESENTATIVE SUBMITTED THAT FOR THE ASSESSMENT YEAR 2004-05, THE ASSESSING OFFICER HAD TREATED THE PROFIT ON SALE OF LAND AS B USINESS INCOME. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CONSIDE RED THE SAME AS CAPITAL GAIN AND THAT WAS CONFIRMED BY THIS TRIB UNAL. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE PROFIT ON SALE OF LANDS HAS TO BE ASSESSED ONLY AS CAPITAL GAIN AND NOT AS BUSINES S INCOME. MERE PENDING OF APPEAL BEFORE THE HIGH COURT CANNOT BE A REASON TO TAKE DIFFERENT VIEW ON THE ISSUE. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE OR IGINAL ASSESSMENT, THE ASSESSEES CLAIM OF CAPITAL GAIN WAS ACCEPTED B Y THE ASSESSING OFFICER WITHOUT ANY DISCUSSION. THE ASSESSEE ALSO FILED APPEAL BEFORE THE CIT(APPEALS) AGAINST THE ORDER OF THE OR IGINAL ASSESSMENT. DURING THE PENDENCY OF DISPOSAL OF THE APPEAL, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUIN G NOTICE UNDER SECTION 148 AND TREATED THE PROFIT ON SALE OF THE L AND AS BUSINESS INCOME. THE CIT(APPEALS), BY FOLLOWING HIS OWN ORD ER FOR 9 I.T.A. NO. 409/MDS/13 I.T.A. NO. 79/MDS/15 ASSESSMENT YEAR 2004-05 IN THE ASSESSEE'S OWN CASE, DIRECTED THE ASSESSING OFFICER TO TREAT THE PROFIT ON SALE OF TH E LANDS AS CAPITAL GAIN. THE TRIBUNAL ALSO CONFIRMED THE ORDER OF THE CIT(APPEALS) FOR ASSESSMENT YEAR 2004-05 TO ASSESSE THE SURPLUS ON T HE SALE OF THE LANDS UNDER THE HEAD CAPITAL GAINS. THE ONLY OBJ ECTION OF THE REVENUE BEFORE THIS TRIBUNAL IS THAT AN APPEAL WAS FILED AGAINST THE ORDER OF THE TRIBUNAL BEFORE THE HIGH COURT. IT IS NOT THE CASE OF THE REVENUE THAT THE ORDER OF THE TRIBUNAL WAS STAYED B Y THE HIGH COURT FOR ASSESSMENT YEAR 2004-05. IN THOSE CIRCUM STANCES, THE MERE PENDENCY OF APPEAL BEFORE THE HIGH COURT CANNO T BE A REASON TO TAKE A DIFFERENT VIEW. THEREFORE, BY FOLLOWING THE ORDER OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2004-05 IN THE ASSESSE E'S OWN CASE IN I.T.A. NO. 1155/MDS/2010 DATED 8.12.2010, THE CI T(APPEALS) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO ASSESS TH E SURPLUS ON THE SALE OF LANDS UNDER THE HEAD CAPITAL GAINS. WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(APPEALS) AND ACCO RDINGLY CONFIRM THE SAME. 15. IN THE RESULT, ASSESSEES APPEAL IN I.T.A. NO.4 09/MDS/2013 IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVENUE IN I.T.A. NO.79/MDS/2015 IS DISMISSED. 10 I.T.A. NO. 409/MDS/13 I.T.A. NO. 79/MDS/15 ORDER PRONOUNCED ON 15 TH MAY, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !' ) ( . . . ) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 3 /DATED, THE 15 TH MAY, 2015. KRI. / ,045 65(0 /COPY TO: 1. ASSESSEE 2. ASSESSING OFFICER 3. . 70 () /CIT(A)-I, COIMBATORE 4. . 70 () /CIT(A)-II, CHENNAI 5. . 70 /CIT-I(JUDL.), COIMBATORE 6. . 70 /CIT-II, CHENNAI 7. 58 ,0 /DR 8. 9' : /GF.