ITO, New Delhi V. Sh. Hanuman Prashad Ganeriwala, Delhi

ITA 4115/DEL/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1262 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 06-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: RAJESH BHATIA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Fair market value; Valuation report
• Section: 50C

Judgement Text

ITA NO. 4115/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4115/DEL/2010 A.Y. : 2007-08 INCOME TAX OFFICER, WARD 20(2), ROOM NO. F-307, VIKAS BHAVAN, NEW DELHI VS. SH. HANUMAN PRASHAD GANERIWALA, 16, SHRI RAM ROAD, CIVIL LINES, DELHI 54 (PAN: AAUPG9676N) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. RAJESH BHATIA, ADV. DEPARTMENT BY : SH. S ATPAL SINGH, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXII, NEW DEL HI DATED 30.6.2010 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED READ AS UNDER:- 1. THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION MADE BY T HE ASSESSING OFFICER OF ` 54,66,400/- BEING DIFFERENC E IN SALE PRICE OF PLOTS AS UNDISCLOSED PROFIT. 2. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ALL OR ANY OF THE AFORESAID GROUNDS OF APPEAL AND ADD ANY OTHE R GROUND OF APPEAL. ITA NO. 4115/DEL/2010 2 3. BRIEFLY STATED FACTS OF THE CASE ARE AS UNDER: I) THE ASSESSEE HAD DECLARED BUSINESS PROFITS FROM SALE OF PLOTS AT VILLAGE BEHTA HAZIPUR, LONI PARGANA, DISTRI CT GHAZIABAD AS PER DETAILS BELOW: PLOT NO. 83 22 - KHASRANO. 2022 1963 2025 AREA- SQ.M 840.46 765.86 1748.18 DATE OF PURCHASE 16.06.05 17.02.06 25.11.05 COST-RS. 5,64,800 6,01,000 10,05,000 DATE OF SALE 23.03.07 23.03.07 23.03.07 SALE PRICE AS PER SALE 6,00,000 6,00,000 11,00,00 0 DEED RS. PROFIT DECLARED - RS. 35,200 (-) 1,800 95,000 TOTAL PROFIT - RS. 1,28,400 II) THE ASSESSING OFFICER DURING THE COURSE OF ASSE SSMENT PROCEEDINGS ASKED THE ASSESSEE TO FURNISH THE COMPLE TE DETAILS OF THE TRANSACTIONS. THE ASSESSEE FURNISHED THE RELEVANT DETAILS. ASSESSING OFFICER OBSERVED THAT AS THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE WAS LESS THA N THE GUIDELINE VALUE FIXED BY THE STATE GOVERNMENT FOR S TAMP DUTY FOR REGISTRATION OF SALE DEEDS. ASSESSING OFF ICER ASKED AS TO WHY THE BUSINESS PROFIT SHOULD NOT BE WORKED OUT ON ITA NO. 4115/DEL/2010 3 THE BASIS OF VALUE DETERMINED FOR THE STAMP DUTY PURP OSES AS IN SECTION 50C OF THE ACT. III) THE ASSESSEE WHILE STATING THAT SECTION 50C OF THE ACT IS NOT APPLICABLE TO BUSINESS PROFITS SUBMITTED THAT TH E SALES WERE MADE AT THE FAIR MARKET VALUE, FURNISHED VALUAT ION REPORTS BY A REGISTERED VALUER AND ALSO PROVIDED VA RIOUS COMPARABLE SALE INSTANCES OF SAME LOCALITY OF AROUND THE SAME PERIOD TOGETHER WITH RELEVANT SALE-DEEDS OF TH ESE COMPARATIVE SALE INSTANCES. IV) ASSESSING OFFICER DID NOT ACCEPT THE CONTENT ION OF THE ASSESSEE. HE MADE THE ADDITION OF ` 54,66,400/-. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT ASSESSING OFFICER HAS MADE THE ADDITION ON THE BASIS OF CIRCLE RATES DECLARED BY THE STATE GOVT. FOR THE P URPOSES OF PAYMENT OF STAMP DUTY. LD. COMMISSIONER OF INCOME TAX (A) OB SERVED THAT THE VALUE DETERMINED BY THE VALUATION AUTHORITY IS A GEN ERAL VALUE NOT GOING INTO SPECIFIC PROPERTIES OF THE PARTICULAR CAPITAL ASSET. HE OBSERVED THAT THE VALUE OF A PARTICULAR ASSETS IS B ASED ON NUMEROUS FACTORS. HE OBSERVED THAT IN THE INCOME TAX P ROCEEDINGS ONE HAS TO BE SPECIFIC AND GENERALIZATION IS NOT PERMITTED. THAT GUIDELINE VALUE IS A GENERAL VALUE AND IT IS ONLY THE COMPARATIVE S ALE INSTANCES THAT COULD INDICATE A SPECIFIC VALUE. THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY INSTANCES OF SALE IN ADJO INING AREA AROUND ITA NO. 4115/DEL/2010 4 THAT PERIOD. ON THE CONTRARY THE ASSESSEE HAS FU RNISHED NOT ONE BUT TEN COMPARATIVE SALE INSTANCES THAT HAS BEEN ACCEPTE D BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER STATING T HAT THE VALUE OF COMPARATIVE SALE INSTANCES PROVIDED BY THE ASSESSEE WERE ABOUT THE SAME RATE AS DECLARED BY THE ASSESSEE IN THE AFORES AID SALE TRANSACTIONS. LD. COMMISSIONER OF INCOME TAX (A) FUR THER OBSERVED THAT THERE IS NO MATERIAL OR EVIDENCE ON RECORD TO S HOW THAT THE ASSESSEE HAS RECEIVED EXCESS SALES CONSIDERATION. T HE SALES WERE TO UNRELATED PARTIES. HE OBSERVED THAT THE ADDITION C OULD NOT BE SUSTAINED MERELY ON THE BASIS OF CONJECTURES AND SUS PICIOUS. HE FURTHER NOTED THAT SECTION 50C IS ALSO NOT APPLIC ABLE TO BUSINESS PROFITS. LD. COMMISSIONER OF INCOME TAX (A) FURTHER OBSERVED THAT THE ASSESSEES CASE WAS FULLY COVERED BY THE DECISION O F THE ITAT, MUMBAI IN THE MATTER OF INDERLOK HOTELS PRIVATE LIMITED VS. I.T.O. (2009) 122 TTJ 145. IN THIS CASE IN A SIMILAR MATTER, IT WAS HELD THAT THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITIES CAN BE ADOPT ED ONLY FOR COMPUTING CAPITAL GAINS BUT CANNOT BE APPLIED FOR DE TERMINING THE INCOME UNDER ANY OTHER HEADS. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT ASSESSEE HAS ITA NO. 4115/DEL/2010 5 RETURNED BUSINESS INCOME FROM SALE OF PLOTS. AS THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE WAS LESS THAN THE GUIDELI NES VALUE FIXED BY THE STATE GOVT. FOR STAMP DUTY FOR REGISTRATION OF SALE DEEDS. ASSESSING OFFICER HAS ADOPTED THE SAID RATES AND C OMPUTED THE ADDITION OF ` 54,66,400/-. IN THIS REGARD, WE FIND OURSELVES IN AGREEMENT WITH THE LD. COMMISSIONER OF INCOME TAX (A) T HAT SECTION 50C IS NOT APPLICABLE TO BUSINESS PROFITS. WE FUR THER FIND THAT ASSESSING OFFICER HAS NOT FOUND ANY MISTAKE IN THE BOOKS OF ACCOUNTS SUBMITTED BY THE ASSESSEE. ASSESSEE HAS FURTHE R SUBMITTED THAT A NUMBER OF COMPARATIVE SALES INSTANCES AND THE ASSESSE ES RETURNED RATE IS IN THE SAME RANGE. ASSESSEE HAS ALSO SUBMITT ED VALUATION REPORT BY THE REGISTERED VALUER. WE FURTHER FIND THAT ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY INSTANCES OF COMPARATI VE SALES WHEREBY THE SALE CONSIDERATION RECEIVED WAS MORE THAN THAT R EFLECTED BY THE ASSESSEE. IN THIS REGARD, ASSESSEES COUNSEL RELIA NCE UPON THE FOLLOWING CASE LAWS IS ALSO GERMANE. - 320 ITR 345 C.I.T. VS. THIRUVENGADAM INVESTMENT P LTD. - 208 TAXMAN 478 C.I.T. VS. KAN CONSTRUCTION & COLO NIZERS P LTD. 6.1 IN THE CASE OF C.I.T. VS. THIRUVENGADAM INVESTMEN T P LTD. (SUPRA), IT WAS HELD BY THE HONBLE MADRAS HIGH COURT THAT W HEN THE PROPERTY ITA NO. 4115/DEL/2010 6 WAS TREATED AS BUSINESS ASSET AND NOT CAPITAL ASSET THERE WAS NO QUESTION OF INVOKING SECTION 50C. 6.2 IN THE CASE OF C.I.T. VS. KAN CONSTRUCTION & CO LONIZERS P LTD. (SUPRA), HONBLE ALLAHABAD HIGH COURT HAS HELD THAT SECTION 50C WOULD HAVE NO APPLICATION WHEN IT WAS A CASE OF TRANSFER OF PLOT WHICH WAS STOCK IN TRADE AND THE INCOME FROM SUCH TRANSACTION W AS TREATED AS BUSINESS INCOME. 6.3 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A). ACCORDINGLY, WE UPHOLD THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/2/2013. SD/- SD/- [ [[ [RAJPAL YADAV] RAJPAL YADAV] RAJPAL YADAV] RAJPAL YADAV] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 15/2/2013 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 4115/DEL/2010 7