Al- Barkat Frozen Foods Pvt. Ltd., Meerut V. ITO, Ward 1(1), Meerut

ITA 4247/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3483 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 27-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K GOEL
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.4247/DEL/2017 ASSESSMENT YEAR : 2008-09 AI-BARKAT FROZEN PVT. LTD., C/O MOHAMMAD JAHID (DIRECTOR), H.NO.328, SARI BEHLEEM, SHORAB GATE, MEERUT. VS. ITO, WARD- 1(1), MEERUT. PAN : AAFCA4096G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. K. GOEL, ADV. DEPARTMENT BY : SHRI AMIT JAIN, SR.DR DATE OF HEARING : 25-10-2017 DATE OF PRONOUNCEMENT : 30-10-2017 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 30.05.2017 OF CIT(A), MEERUT RELATING TO ASSESSMENT YEAR 2008-09. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT IN RESPONS E TO NOTICE U/S 148, THE ASSESSEE FILED ITS INCOME TAX RETURN ON 04.02.2016 DECLARING LOSS OF RS.6,85,000/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY SOLD A PROP ERTY HAVING KHASRA NO.483, AREA 0.0630 HECTARE, SITUATED AT VILLAGE NANGLI ESA , PARGANA, TEHSIL MAWANA, DISTRICT- MEERUT VIDE SALE DEED DATED 18.02.2008 FO R CONSIDERATION OF RS.50,00,000/-. THE STAMP VALUATION AUTHORITY HAD VALUED THE SAID PROPERTY AT RS.1,19,27,000/-. THE ASSESSEE HAD FILED COMPUTATI ON OF CAPITAL GAIN IN HIS 2 ITA NO.4247/DEL/2017 SUBMISSION DECLARING LOSS ON SALE OF ASSETS AT RS.6 ,85,000/-, AFTER CONSIDERING THE COST OF ACQUISITION AT RS.16,85,000/- AND COST OF IMPROVEMENT AT RS.40,00,000/-. HE, THEREFORE, ASKED THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF SUCH LOSS ON SALE OF ASSETS AT RS.6,85,000/-. IT W AS ARGUED BY THE ASSESSEE THAT PROPERTY WAS PURCHASED AT RS.15.60 LAKHS. THEREAFT ER, CONSTRUCTION OF BUILDING WAS DONE WITH PLANNING TO START A MEAT PLANT OVER T HERE. DUE TO OBSTRUCTION CREATED BY THE LOCAL PEOPLE, THE ASSESSEE COULD NOT START HIS BUSINESS AND NOC WAS CANCELLED BY THE DISTRICT MAGISTRATE AND, THERE FORE, THE VALUE OF LAND WAS DEVALUED. THE ASSESSEE OBJECTED TO THE FAIR MARKET VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY. THEREFORE, THE ASSESSIN G OFFICER REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER (DVO) FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY WHO ASSESSED THE VALUE OF THE PROPERTY AT RS.1,00,37,000/-. THE ASSESSEE OBJECTED TO THE SAI D VALUATION STATING THAT THE VALUE ADOPTED BY THE DVO AT RS.600/- PER SQ.FT. IS HIGHLY EXCESSIVE AND ARBITRARY. HOWEVER, THE ASSESSING OFFICER REJECTED THE ARGUMENTS ADVANCED BY THE ASSESSEE AND DETERMINED THE SHORT TERM CAPITAL GAIN AT RS.43,52,000/-. WHILE DOING SO, HE HOWEVER ALLOWED THE COST OF ACQU ISITION AT RS.16,85,000/- AND COST OF IMPROVEMENT AT RS.40,00,000/- AS STATED BY THE ASSESSEE IN THE COMPUTATION OF INCOME. 3. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF T HE ASSESSING OFFICER. 3 ITA NO.4247/DEL/2017 4. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS :- 1. THAT THERE IS HUGE DIFFERENCE BETWEEN COST OF L AND AND COST OF CONSTRUCTION AS DETERMINE BY THE OVO AND GOVERNMENT APPROVED VALUER , WHO IGNORED THE FACTS THAT LAND IS BUSINESS PROPERTY ON WHICH PROVISION OF SEC TION 50C IS NOT APPLICABLE. THE DVO HAS NOT TAKEN INTO ACCOUNT THE DIFFERENCE, EVEN HE IS UNABLE TO CONSIDER THE COST OF THE LAND AND CONSTRUCTION TAKEN BY GOVERNMENT AP PROVED VALUER. HENCE, A.O. FAILS TO DETERMINE CORRECT VALUATION WHICH IS GIVEN BY DV O AND GOVERNMENT APPROVED VALUER, WHO IGNORED THE CONCEPT OF SLUMP SALE AND C IT(A) ALSO IN ERROR IN CONFIRMING THE SAME. 2. THAT A.O. HAS ALLOWED COST OF CONSTRUCTION OF RS . 40,00,000/- AS CLAIMED BY THE ASSESSEE BUT COST OF THE LAND WAS TAKEN AS TAKE N BY ASSESSEE AND DVO. HE MUST PROVIDE THE REASON THAT HOW THE COST OF CONSTRUCTIO N IS HIGHER BETWEEN TWO YEARS OF CONSTRUCTION AND SALE DATE OF PROPERTY, THEREFORE, DIFFERENCE OF COST AND VALUE OF THE PROPERTY AS PER CIRCLE RATE AND DVO IS ERRONEOUS. T HEREFORE, A.O. HAS NOT JUSTIFIED THE DIFFERENCE OF SHORT TERM CAPITAL GAIN AS INCOME OF THE ASSESSEE AND CIT(A) IS ALSO IN ERROR IN CONFIRMING THE SAME. 3. THAT A.O. HAS NOT JUSTIFIED IN IGNORING THE LOSS SHOWN BY THE ASSESSEE OF RS. 6,85,000/- AND TAKEN AT ZERO, NO REASON TO DISALLOW ANCE OF LOSS IS GIVEN IN THE COMPUTATION OF INCOME AND CIT(A) IS IN ERROR IN CON FIRMING THE SAME. 4. THAT THE ASSESSEE HAS RIGHT TO ADD, DELETE OR MO DIFY ANY GROUNDS DURING THE APPEAL PROCEEDING. 5. LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMI TTED THAT THE DVO HAS GIVEN HIS REPORT DATED 29.03.2016 AND THE ASSESSING OFFICER HAS PASSED THE ORDER ON 31.03.2016. THIS OTHERWISE INDICATES THAT THE ASSESSEE WAS NOT GIVEN SUFFICIENT OPPORTUNITY TO RAISE THE OBJECTIONS TO T HE REPORT GIVEN BY THE DVO. HE SUBMITTED THAT IN THE INTEREST OF JUSTICE THE MA TTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER TO GIVE SUFFICIENT OPPORTU NITY TO THE ASSESSEE TO FILE HIS OBJECTIONS TO THE REPORT OF THE DVO AND DECIDE THE ISSUE AFRESH. 6. LD. DR WHILE SUPPORTING THE ORDER OF THE LD. CIT (A) HOWEVER, SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION OF THE ISSUE. 4 ITA NO.4247/DEL/2017 7. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE ORDER OF THE ASSESSING OFFICER AT PAGE 3 SHOWS THAT THE ASSESSING OFFICER RECEIVED THE REPORT OF THE DVO ON 29.03.2016 AND CONFRONTED THE SAME TO THE ASSESSEE ON 29.03.2016 ITSELF ASKING THE ASSESSEE TO EXPLAIN AS TO WHY THE FAIR MARKET V ALUE OF THE PROPERTY BE NOT TAKEN AT RS.1,00,37,000/-. IT IS ALSO AN ADMITTED FACT THAT THE ORDER HAS BEEN PASSED ON 31.03.2016 MEANING THEREBY THE ASSESSEE W AS NOT GIVEN SUFFICIENT OPPORTUNITY TO COUNTER THE REPORT OF THE DVO. CONS IDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, I DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A D IRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE HIS CAS E TO THE SATISFACTION OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL DEC IDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING THE DUE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDINGLY. THE GROU NDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCTOBER, 2017. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 30-10-2017. SUJEET 5 ITA NO.4247/DEL/2017 COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI