Jayshriben Bharatbhai Patel, Vadodara V. The ITO, Ward-1(3)(2), Vadodara

ITA 449/AHD/2020

AI Insights

The case involves an appeal by Jayshriben Bharatbhai Patel against the order of the Commissioner of Income Tax (Appeals)-5, Vadodara, which pertained to the assessment year 2011-12. The primary issues in the appeal were the computation of capital gains on the sale of agricultural land and the denial of deduction under section 54F of the Income Tax Act, 1961. The Assessing Officer had substituted the sale consideration with the stamp duty value as per section 50C and denied the deduction claimed under section 54F. The Tribunal found merit in the assessee's argument regarding the application of the third proviso to section 50C, which allows for the consideration received to be taken as the full value if the variation is less than 10%. The Tribunal also noted the lack of opportunity given to the assessee regarding the deduction under section 54F and remanded the issue back to the Assessing Officer.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 133657 (ITAT-AHMEDABAD)
• Duration Of Justice: 14 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-09-2022
• Assessment Year: misc
• Appeal Filed On: 08-05-2008
• Other Referred Cases: Joseph Mudaliar Vs. DCIT, Maria Fernandes Cheryl Vs. ITO, Amrapali Cinema Vs. ACIT, Chandra Prakash Jhunjhunwala Vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Capital Gains
• Section: 148; 50C; 54F; 113

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘SMC’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.449/Ahd/2020 Asstt.Year :2011-12 Jayshriben Bharatbhai Patel Village :Garadi Taluka :Sinor Vadodara 391 210 PAN : BJUPP 1758 E Vs ITO, Ward-1(3)(2) Vadodara. (Applicant) (Responent) Assesseeby : Shri Sanjay R. Shah Revenue by : Shri Mukesh Thakwani, DR स ु नवाई क तार ख/D a t e o f H e a r i n g : 0 5 / 0 9 / 2 0 2 2 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 0 2 / 1 2 / 2 0 2 2 आदेश/O R D E R The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeals)-5, Vadodara in short referred to as ld.CIT(A)) under section 250(6) of the Income Tax Act, 1961 ("the Act" for short), dated 17.2.2020 pertaining to Asst.Year2011-12. 2. Brief facts of the case are that the Assessing Officer(AO) had information that the assessee had sold property and earned capital gains out of such transaction. Accordingly notice under section 148 of the Act was issued to the assessee, in response to which, the assessee filed return declaring total income of Rs.4,42,900/- including capital gain of Rs.4,40,276/- on sale of agriculture land and claimed deduction on account of investment in house under section 54F of the Act amounting to Rs.2,75,939/-. The AO, while ITA No.449/Ahd/2020 2 framing assessment, computed the capital gains by substituting the sale consideration received by the assessee with the stamp duty value of the property as per section 50C of the Act, and also took the value of cost of acquisition based on fair market value of the property sold as on 1.4.1981 as per valuation of Departmental Valuation Officer (DVO) . The capital gain was accordingly computed at Rs.11,27,062/-, as against Rs.4,40,276/- declared by the assessee and the difference thereof of Rs.6,86,786/- accordingly added to the income of the assessee. Further the AO denied claim of deduction under section 54F ofthe Act to the assessee. 3. Aggrieved, the assessee carried the matter in appeal before the ld.CIT(A) who upheld the substitution of the sale consideration received by the assessee by stamp duty value as per section 50C of the Act, but at the same time, rejected valuation of cost of acquisition of the property adopted by the AO on the basis of valuation done by the DVO, and directed the AO to adopt the value of cost of acquisition taken by the assessee. He further upheld the denial of claim of deduction under section 54F of the Act by the AO. Against this order of the Ld.CIT(A) the assessee has come up in appeal before us. 4. Vide letter dated 3.8.2022 the assessee filed revised grounds of appeal substituting the original grounds raised in Form No.36 of the appeal filed before us and the said revised grounds read as under: “1. The learned C.I.T.(Appeals) erred in law as well as on facts by confirming addition of Rs.1,51,552/- (remaining after giving effect of the order of C.I.T.(Appeals)). It is submitted that the said addition cannot be sustained in view of the fact that the ultimate variation with the sale consideration disclosed by the Appellant is less than 10% as compared to ultimate valuation done by the learned DVO and accepted by the Learned Assessing Officer. It is submitted that it be so held now and the addition so sustained be deleted. ITA No.449/Ahd/2020 3 2. The learned C.I.T.(Appeals) erred in law as well as on facts by disallowing the claim of the Appellant for deduction u/s.54F for a sum of Rs.2,75,939/-, which was thereafter revised to Rs.3,99,656/-. It is submitted that the Appellant is entitled to said claim of deduction u/s.54F and the same be directed to be allowed.” 5. Taking up ground no.1, the ld.counsel for the assessee contended that difference between the sale consideration received by the assessee, and that computed as per section 50C of the Act, requiring substitution of the same with the stamp duty value was, less than 10% and as per the third proviso to section 50C of the Act, where such difference did not exceed 10% of the actual consideration then actual consideration received was to be taken as full consideration received. In this regard, he drew our attention to a chart reflecting reconciliation between returned capital gain and assessed capital gain placed before us in PB page No.71. Referring to the same, he pointed out that the assessee had shown sale consideration of Rs.17,52,000/- while as per section 50C of the Act on substitution of the same with the stamp duty value it had come to Rs.19,03,552/-. The difference between the two, it was pointed out, was Rs.1,51,552/- which was less than 10% of the sale consideration actually received by the assessee. He thereafter drew our attention to the third proviso to section 50C of the Act which reads as under: 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer : .... ..... ..... ..... Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and [ten] per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration.” ITA No.449/Ahd/2020 4 6. He stated that though the proviso was inserted by the FinanceAct, 2018 w.e.f. 1-4-2019, the same has been held to be retrospective in nature in a series of decisions of courts. In this regard he drew our attention to the decisions of Mumbai Tribunal in the case of Joseph Mudaliar Vs. DCIT, (2021) 130 taxmann.com 250; Maria Fernandes Cheryl Vs. ITO, (2021) 123 taxmann.com 252; Amrapali Cinema Vs. ACIT, (2021) 127 taxsmann.com 376 (Delhi- Trib); Chandra Prakash Jhunjhunwala Vs. DCIT, (2020) 113 taxamnn.com 246 (Kol-Trib). The ld.counsel for the assessee contended, therefore, that in view of the above decisions of the ITAT, since variation in the sale consideration actually received, and that deemed to have received as per section 50C of the Act was less than 10%, the actual consideration received was to be treated as full consideration received by the assessee, and was not required to be substituted with the stamp duty value. Therefore, the addition sustained by THE Ld.CIT(A) by upholding substitution of the sale consideration received with the stamp duty value, needed tobe deleted. 7. The ld.DR was unable to controvert factual contentions of the assessee that variation between actual receipt and deemed consideration under section 50C of the Act was less than 10% of the consideration receivednor was he able to bring to our notice any contrary decision either of the ITAT or any higher Courts to those relied upon by the ld.counsel for the assessee before us. In view of the above, we find merit in the contentions of the ld.counsel for the assessee that actual consideration received by the assessee was to be considered for computing capital gain as opposed to its substitution by the stamp duty value as per section 50C of the Act, on account of the third proviso tosection 50C whichthough ITA No.449/Ahd/2020 5 brought on the statute w.e.f. 1.4.2019, has been held in series of decision by the ITAT as cited before us by the ld.counel for the assessee, to be retrospective in nature. Ground no.1 raised by the assessee is, therefore, allowed. 8. Taking up ground no.2, relating to the denial of claim of deduction under section 54F of the Act, the ld.counsel for the assessee pointed out that thatthe same was upheld by the Ld.CIT(A) in the absence of any documents furnished by the assessee to substantiate its claim of having reconstructed his residential house for Rs.6,75,000/-. He drew our attention to para 4.3 of the Ld. CIT(A)’s order in this regard. Ld.counsel for the assessee contended that he had not been given any opportunity before denying the claim of deduction, and that all necessary evidences to prove his claim of reconstruction of house were available. He pointed out that the AO had denied his claim without giving any show cause notice and before the Ld.CIT(A) when necessary evidences substantiating his claim were filed by way of letter from Gardi Gram Panchayat and bills and vouchers of expenses ,the same were not admitted by the Ld.CIT(A) for considering his claim of deduction. He pleaded that in the interest of justice, therefore, the matter be restored back to the AO to verify the claim of the assessee and allow the same in accordance with law. The ld.DR objected to the same. 9. We have noted from the assessment order that there isno mention that the assessee had been put to notice before denial of this claim of deduction under section 54F of the Act. Further, the ld.CIT(A) noted that the assessee had furnished evidence by way of certificate of Talati of the village and vouchers & bills supporting the claim of reconstruction of house to the extent of Rs.6,75,000/- on which he claimed deduction under section 54F of the Act. But the ITA No.449/Ahd/2020 6 Ld.CIT(A) refused to admit these evidences since they were not produced before the AO. In this backdrop of facts the denial of claim of deduction u/s 54F of the Act for want of evidence appears unjustified. In all fairness and in the interest of justice therefore, we consider it fit to send the issue back to the file of the AO to verify the claim of the assessee, and thereafter adjudicate the issue in accordance with law. Needless to add the assessee be granted due opportunity of hearing by the AO. Ground no.2 is allowed for statistical purposes. 10. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the Court on 2 nd December, 2022 at Ahmedabad. Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 02/12/2022