C.V.Kaleeswaran, Coimbatore V. ACIT Corporate Circle 2, Coimbatore

ITA 429/CHNY/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2066 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 20-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS D ROHINI
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Fair market value
• Section: 50C; 37; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , . , & BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.429/CHNY/2019 /ASSESSMENT YEAR: 2013-14 SHRI C.V.KALEESWARAN, NO.108/2, SARAVANAMPATTI MAIN ROAD, VELLAKINAR, COIMBATORE-641 029. [PAN: ABCPK 0101 D] VS. THE ASST. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2, COIMBATORE. ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : MR.SAROJ KUMAR PARIDA, ADV )*( + /RESPONDENT BY : MRS.D.ROHINI, JCIT + /DATE OF HEARING : 19.06.2019 + /DATE OF PRONOUNCEMENT : 19.06.2019 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, COIMBATORE, IN APPEAL NO.223/16-17 DATED 11.02.2019 FOR THE AY 2013-14. 2. MRS.D.ROHINI, JCIT, REPRESENTED ON BEHALF OF THE REVENUE AND MR.SAROJ KUMAR PARIDA, ADV., REPRESENTED ON BEHALF OF THE ASSESSEE. ITA NO429/CHNY/2019 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE IS A DIRECTOR IN M/S.SHIVAMANI & CO. THE ASSESSEE AND THE ASSESSEES COMPANY HAD ENTERED INTO AN AGREEMENT ON 02.01.2013 FOR THE SAL E OF ADJACENT PROPERTIES AT METTUPALAYAM ROAD, KAVUNDAMPALAYAM, C OIMBATORE. THE ADJACENT PROPERTIES CONSISTED OF 85 CENTS AND 79 CE NTS. THE 85 CENTS BELONGED TO THE COMPANY AND THE 79 CENTS BELONGED T O THE ASSESSEE. THE PRICE HAD BEEN FIXED AT RS.3,150/- PER SQ.FT. DURIN G THE MONTH OF JANUARY, 2013. AT THE TIME OF REGISTRATION, THE STAMP VALUA TION AUTHORITY AND THE SUB-REGISTRAR ADOPTED THE RATE RS.3,650/- PER SQ.FT . IT WAS A SUBMISSION THAT THE PURCHASER HAS DISPUTED THE GUIDELINE VALUE BEFORE THE FIRST APPELLATE AUTHORITY AND ACCORDINGLY, THE DRO (STAMP S) HAD RE-FIXED THE STAMP DUTY AT VALUE OF RS.3,600/- PER SQ.FT. IT WA S A SUBMISSION THAT THE DIFFERENCE BETWEEN THE RS.3,600/- PER SQ.FT. AND RS .3,150/- PER SQ.FT. WAS BROUGHT TO TAX UNDER THE HEAD LONG TERM CAPITAL GAI NS IN THE HANDS OF THE ASSESSEE BY APPLYING THE PROVISIONS OF SEC.50C OF T HE ACT. IT WAS A SUBMISSION THAT UNDER THE IDENTICAL CIRCUMSTANCES, THE CASE OF THE COMPANY HAD BEEN DISPOSED OFF BY THE DECISION OF TH E CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S.SHIVAMANI AND C O. PVT. LTD., IN ITA NOS.2925/CHNY/2018 DATED 07.02.2019, WHEREIN, THE D ECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL HAD HELD IN PARA NO .6 AS FOLLOWS: 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFUL LY AND ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE MAIN CRUX OF THE DEPA RTMENT GROUNDS IS THAT THE DRO (STAMPS) HAD REFIXED THE CIRCLE RATE AT RS.3,60 0/- PER SQ.FT AND THEREFORE ADOPTION OF RS.3,150/- PER SQ. FT BY THE ASSESSEE F OR WORKING OUT THE CAPITAL GAINS WAS NOT REASONABLE. ONE OTHER ARGUMENT TAKEN BY THE LD. DR IS THAT ASSESSEE COULD NOT TAKE REFUGE UNDER FIRST PROVISO TO SECTIO N 50C OF THE ACT, SINCE ON THE DATE OF THE AGREEMENT VIZ. 02.01.2013, THERE WAS NO PAYMENT OF ANY ITA NO429/CHNY/2019 :- 3 -: CONSIDERATION AT ALL. THUS, AS PER THE LD. DR, THE CLAIM OF THE ASSESSEE THAT THE GUIDELINE VALUE AS ON 02.01.2013 HAD TO BE ADOPTED COULD NOT BE ACCEPTED. AS AGAINST THIS, CONTENTION OF THE LD. AR IS THAT LD. CIT(A) WAS JUSTIFIED IN CONSIDERING THE LOCATION DEFICIENCIES OF THE PROPERTY AND ACCEP TING CAPITAL GAINS SHOWN BY THE ASSESSEE. BE THAT AS IT MAY BE, AS ALREADY NOTED BY US ASSESSEE HAD REQUIRED A REFERENCE TO VALUATION OFFICER IN ACCORDANCE WITH S UB SECTION (2) TO SECTION 50C OF THE ACT. ACCORDINGLY, LD. AO HAD MADE A REFERENC E. HOWEVER THE REPORT OF THE VALUATION OFFICER WAS NOT RECEIVED BY THE LD. AO AN D HE PROCEEDED TO COMPLETE THE ASSESSMENT TAKING THE GUIDELINE VALUE AS ON 22.03.2 013 AS THE FULL VALUE OF THE CONSIDERATION. THE ORDER OF THE LD. CIT(A) SPECIFIC ALLY STATES THAT REPORT OF THE VALUATION OFFICER WAS NOT RECEIVED. SECTION 50C OF THE ACT WHICH IS APPOSITE HERE IS REPRODUCED HEREUNDER:- 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRU ING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING L AND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSAB LE BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRE D TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUT Y IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSES SABLE SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VA LUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER: 84[PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FI XING THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATION FOR SUCH TRAN SFER: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION, OR A PART THEREOF, HAS BEE N RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT, ON OR BEFOR E THE DATE OF THE AGREEMENT FOR TRANSFER.] FOLLOWING THIRD PROVISO SHALL BE INSERTED AFTER THE SECOND PROVISO TO SUB-SECTION (1) OF SECTION 50C BY THE FINANCE ACT, 2018, W.E.F. 1-4-2019: PROVIDED ALSO THAT WHERE THE VALUE ADOPTED OR ASSES SED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY DOES NOT EXCEED ONE HUNDR ED AND FIVE PER CENT OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER, THE CONSIDERATION SO RECEIVED OR ACCRUING AS A RESULT O F THE TRANSFER SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VA LUE OF THE CONSIDERATION. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICE R THAT THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHO RITY 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 BEEN DISPUT ED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTH ORITY, 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 MADE, THE P ROVISIONS OF SUB-SECTIONS ITA NO429/CHNY/2019 :- 4 -: (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 A CT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELAT ION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESS ING OFFICER UNDER SUB- SECTION (1) OF SECTION 16A OF THAT ACT. EXPLANATION 1.FOR THE PURPOSES OF THIS SECTION, 'V ALUATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF T HE WEALTH-TAX ACT, 1957 (27 OF 1957). EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WER E REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY. (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2), WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY REFERRE D TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACC RUING AS A RESULT OF THE TRANSFER. IN OUR OPINION, ONCE SUB SECTION (2) IS INVOKED AND A REFERENCE MADE TO THE VALUATION OFFICER, THEN THERE CAN BE NO MORE AUTOMA TIC APPLICATION OF SUB SECTION (1). ONCE THE LD. AO MADE A REFERENCE TO THE VALUAT ION OFFICER, IT IS CLEAR FROM THE CLAUSE (B) SUB SECTION (2), THAT SUB SECTIONS 2, 3, 4, 5 AND 6 OF SECTION 16A OF WEALTH TAX ACT, 1957 APPLIED WITH NECESSARY MODIFIC ATION. SUB SECTION (6) OF SECTION 16A OF WEALTH TAX ACT, 1957 IS REPRODUCED H EREUNDER:- (6) ON RECEIPT OF THE ORDER UNDER SUB-SECTION (3) OR SUB-SECTION (5) FROM THE VALUATION OFFICER, THE [ASSESSING OFFICER] SHAL L, SO FAR AS THE VALUATION OF THE ASSET IN QUESTION IS CONCERNED, PROCEED TO C OMPLETE THE ASSESSMENT IN CONFORMITY WITH THE ESTIMATE OF THE VALUATION OF FICER.] THUS, IT IS CLEAR THAT LD. AO IS BOUND BY THE VALUA TION GIVEN BY THE VALUATION OFFICER, EXCEPT WHERE SUB SECTION (3) COMES INTO PL AY. LD. AO HAD NO POWERS TO GO BY THE VALUATION GIVEN BY THE VALUATION AUTHORIT Y AS SET OUT IN SUB SECTION (1) OF SECTION 50C OF THE ACT, ONCE A REFERENCE TO VALU ATION OFFICER WAS MADE UNDER SUB SECTION (2) OF THE ACT. THERE IS NO GROUND TAKE N BY THE REVENUE THAT LD. CIT(A) HAD IGNORED THE VALUATION GIVEN BY THE VALUA TION OFFICER WHILE DECIDING THE APPEAL OF THE ASSESSEE. IN FACT THERE IS NO GROUND RAISED BY THE REVENUE THAT THE VALUATION FIXED BY THE VALUATION OFFICER HAD TO BE CONSIDERED. THAT APART, LD. CIT(A) HAD POINTED OUT CERTAIN DRAWBACKS IN THE PRO PERTY ACCESS AND THE UNREASONABLE REVISION OF CIRCLE RATES FROM RS.3,150 /- PER SQ.FT TO RS.4,000/- PER SQ.FT ON 08.02.2013. LATTER RATE WAS SUBSEQUENTLY O N 09.06.2017 REDUCED TO RS.2,680/- PER SQ.FT. INDICATING THE ERROR IN FIXIN G THE GUIDELINE VALUE DURING THE INTERVENING PERIOD. IN SUCH CIRCUMSTANCES, WE ARE O F THE OPINION THAT LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE LD. AO TO ACCEPT THE CAPITAL GAINS RETURNED BY THE ASSESSEE AND DELETING THE ADDITIONS MADE BY THE LD. AO. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A ). ITA NO429/CHNY/2019 :- 5 -: 4. IT WAS A SUBMISSION THAT IN THE COMPANYS CASE, THE LD.CIT(A) HAD CONSIDERED THE FACT THAT THERE WAS A LOCATION DEFIC IENCY IN THE PROPERTIES. IT WAS A SUBMISSION THAT IN THE ASSESSEES CASE, TH E LD.CIT(A) DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND HAD BLIN DLY REITERATED THE ASSESSMENT ORDER. 5. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE ORD ER OF THE AO AND THE LD.CIT(A). IT WAS A SUBMISSION THAT THE ASSESS EE HAS NOT SHOWN ANY DEFICIENCY IN THE PROPERTY. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 7. A PERUSAL OF THE DECISION OF THE CO-ORDINATE BEN CH OF THIS TRIBUNAL IN THE CASE OF THE COMPANY, IN WHICH, THE ASSESSEE IS A DIRECTOR AND WHO WAS THE OWNER OF THE ADJACENT PROPERTIES, WHICH WAS SOL D, SHOWS THAT THE TRIBUNAL HAS TAKEN INTO CONSIDERATION THE FACT THAT THERE WAS UNREASONABLE REVISION OF CIRCLE RATES FROM RS.3,150/- PER SQ.FT. TO RS.4,000/- PER SQ.FT. ON 08.02.2013, WHICH WAS SUBSEQUENTLY REDUCED ON 09 .06.2017 TO RS.2,680/- PER SQ.FT. INDICATING THE ERROR IN FIXIN G THE GUIDELINE VALUE DURING THE INTERVENING PERIOD. THUS, CLEARLY AS TH E FACTS IN THE ASSESSEES CASE AND THAT OF THE COMPANY M/S.SHIVAMANI & CO., I S IDENTICAL AND THE PROPERTY SOLD IS ADJACENT BEING A FACT WHICH IS UND ISPUTED, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S.SHIVAMANI AND CO. PVT. LTD., REFERRED TO SUP RA, THE ADDITION AS ITA NO429/CHNY/2019 :- 6 -: MADE BY THE AO AND AS CONFIRMED BY THE LD.CIT(A) BY INVOKING THE PROVISIONS OF SEC.50C OF THE ACT STANDS DELETED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 19 TH DAY OF JUNE, 2019, IN CHENNAI. SD/- SD/- ( . ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED: 19 TH JUNE, 2019. TLN + )34 54 /COPY TO: 1. ( /APPELLANT 4. 6 /CIT 2. )*( /RESPONDENT 5. 4 ) /DR 3. 6 ( ) /CIT(A) 6. /GF