Shri Nilesh Mansukhlal Doshi, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2(4), RAJKOT-GUJARAT

ITA 472/RJT/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5911 (ITAT-RAJKOT)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR J B JHAVERI DR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C; 37

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM AND SHRI B. R. JAIN, A M ITA NO. 471/RJT/2013 / ASSESSMENT YEAR : 2006-07 SHRI MANSUKHLAL GHELABHAI DOSHI CHANDULAL BUCH MARG, DHEBAR ROAD ONE WAY, GOKUL CHAMBERS, RAJKOT PAN : ABRPD 8761 B ( / APPELLANT) THE ACIT, CIRCLE-2, RAJKOT / RESPONDENT ITA NO. 472/RJT/2013 / ASSESSMENT YEAR : 2006-07 SHRI NILESH MANSUKHLAL DOSHI PAN : ABRPD 8763 D ( / APPELLANT) THE ITO, WARD 2(4), RAJKOT / RESPONDENT ITA NO. 473/RJT/2013 / ASSESSMENT YEAR : 2006-07 SHRI NILAY MANSUKHLAL DOSHI PAN : ABRPD 8762 C ( / APPELLANT) THE ITO, WARD 2(4), RAJKOT / RESPONDENT ! ' #$ / ASSESSEE BY SHRI KALPESH DOSHI, CA % ! ' #$ / REVENUE BY DR. J. B. JHAVERI, DR # & ' ! ( / DATE OF HEARING 31.12.2013 ) ! ( / DATE OF PRONOUNCEMENT 03.01.2014 / ORDER .. , / T. K. SHARMA, J. M.: THESE THREE APPEALS BY THE ASSESSEE ARE AGAINST THREE SEPARATE ORDERS OF LD. C IT(A)-III, RAJKOT, ALL DATED 11.09.2013 FOR THE ASSESSMENT YEAR 2006-07. 2. THE FACTS, IN BRIEF, ARE THAT IN THE ASSESSMENT ORDER OF ALL THE ABOVE CAPTIONED ASSESSEES, THE ASSESSING OFFICER MADE ADDITION OF R S.59,878/- BEING 1/3 RD SHARE OF THE ASSESSEE ON ACCOUNT OF SHORT TERM CAPITAL GAINS ARI SING OUT OF SALE OF PROPERTY VIDE SALE DEED NO.4915 OF 2005. AS PER REGISTRATION AUTH ORITY, THE MARKET VALUE ADOPTED TO COLLECT STAMP DUTY IN RESPECT OF THIS PROPERTY WAS AT RS.7,79,635/-, WHEREAS THE 471, 472, 473-RJT-2013 SH MANSUKHLAL GHELABHAI DOSHI+2 2 ASSESSEE HAS SHOWN SALE PRICE AT RS.6,00,000/-. THE ASSESSING OFFICER, THEREFORE, ADOPTED SALE VALUE OF THE PROPERTY AT RS.2,59,878/- BEING 1/3 RD SHARE OF RS.7,79,635/-. THE ASSESSING OFFICER ACCORDINGLY WORKED OUT CAPIT AL GAINS AT RS.59,878/- ON THE SALE VALUE OF THE PROPERTY AT RS.2,59,878/- BEING 1/3 RD SHARE OF RS.7,79,635/- AND INCLUDED THE SAME IN TAXABLE INCOME OF ALL THE THREE ASSESSE ES. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ADDITION. THE REASONING GIVEN BY THE LD. CIT(A) IS IDENTICAL IN ALL THE THREE CASES OF ASSESSEE; THERE FORE, FOR THE SAKE OF CONVENIENCE WE REPRODUCE PARAGRAPH NO.4 OF THE IMPUGNED ORDER IN T HE CASE OF SHRI MANSUKHLAL GHELABHAI DOSHI WHICH READS AS UNDER:- 4. I HAVE CONSIDERED CAREFULLY THE SUBMISSION MADE BY THE APPELLANT AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. A S THE VARIATION BETWEEN THE SALE PRICE SHOWN IN THE SALE DEED AND THE SALE VALU E ADOPTED BY THE STAMP REGISTRATION AUTHORITY TO COLLECT THE STAMP DUTY IS NOT SIGNIFICANT, IT DOES NOT SERVE ANY USEFUL PURPOSE TO REFER THE PROPERTY TO D.V.O. FOR VALUATION AT THIS STAGE. THEREFORE, NO INTERFERENCE IS CALLED FOR IN RESPECT OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. ADDITION MADE AT R S.59,878 ON ACCOUNT OF SHORT TERM CAPITAL GAINS FOR A.Y. 2006-07 STANDS CONFIRME D. AGGRIEVED WITH THE ORDER OF LD. CIT(A), ALL THE TH REE ASSESSEES ARE IN APPEAL BEFORE THIS TRIBUNAL. THE GROUNDS RAISED IN ALL THE THREE APPEALS ARE IDENTICAL; THEREFORE, FOR THE SAKE OF CONVENIENCE WE REPRODUCE THE GROUND S OF APPEAL RAISED BY THE ASSESSEE IN THE CASE OF SHRI MANSUKHLAL GHELABHAI D OSHI, WHICH READ AS UNDER:- 1. THAT, THE LEARNED CIT(A) HAS WRONGLY CONFIRMED THE ADDITION OF RS.59,878/- U/S 50C OF I.T. ACT ON ACCOUNT OF SALE OF IMMOVABLE PROPERTY. 2. THAT, THE LEARNED CIT(A) HAS WRONGLY ADAPTED THE STAMP DUTY VALUATION FOR COMPUTING CAPITAL GAIN WITHOUT REFERRING THE VALUAT ION OFFICER TO CONSIDER FAIR MARKET VALUE OF PROPERTY U/S 50(C)(2) OF THE I.T. A CT. 3. THAT, THE FINDINGS OF THE LEARNED CIT(A) ARE NOT JUSTIFIED AND BAD IN LAW. 3. AT THE TIME OF HEARING, ON BEHALF OF THE ASSESSE E, SHRI KALPESH DOSHI, CA APPEARED AND CONTENDED THAT BEFORE THE ASSESSING OF FICER THE ASSESSEE OBJECTED TO THE ADOPTION OF STAMP DUTY VALUATION OF RS.7,79,635/- ( RS.2,59,878 X 3) FOR THE PURPOSE OF COMPUTING CAPITAL GAINS, WHICH ARE REPRODUCED BY TH E ASSESSING OFFICER IN THE ASSESSMENT ORDER AND ARE AS UNDER:- WITH REFERENCE TO ABOVE I HAVE TO SAY THAT MANY SH EPHERDS ARE STAYING NEAR LOCATION OF THE PLOT SO COWS & BUFFALOES ARE ROAMIN G/STAYING AROUND BY & THE SIZE OF THE PLOT IS SO ODD (WAS IN DEPTH WITH LESS FRONT ) THAT THERE CANT BE ANY SUB 471, 472, 473-RJT-2013 SH MANSUKHLAL GHELABHAI DOSHI+2 3 PLOTINGS, ETC, HENCE AT THE TIME OF SELLING THE PLO T WE COULD NOT GET THE CONSIDERATION ACCORDING THE JANTRI VALUE. THE LEARNED COUNSEL OF THE ASSESSEE POINTED OUT TH AT KEEPING IN VIEW THE AFORESAID OBJECTION OF THE ASSESSEE EITHER THE ASSE SSING OFFICER SHOULD HAVE ACCEPTED THE ACTUAL CONSIDERATION RECEIVED FOR THE PURPOSE O F COMPUTING CAPITAL GAINS OR ELSE SHOULD HAVE REFERRED THE VALUATION U/S 50C(2) OF TH E INCOME-TAX ACT, 1961. SINCE THIS HAS NOT BEEN DONE, THE IMPUGNED ORDER OF LD. CIT(A) BE SET ASIDE AND THE MATTER BE REMANDED TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT HE SHOULD REFER THE VALUATION OF PROPERTY IN QUESTION TO VALUATION CELL OF INCOME-TAX DEPARTMENT AND, THEREAFTER, ADOPT THE VALUATION FOR WORKING OUT CAP ITAL GAINS. 4. AS AGAINST THE AFORESAID SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE, LD. DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT TH OUGH BEFORE THE ASSESSING OFFICER THE ASSESSEE OBJECTED BUT HE NEVER ASKED THE ASSESS ING OFFICER TO REFER THE VALUATION OF CAPITAL GAINS TO THE VALUATION OFFICER, THEREFORE, THE VIEW TAKEN BY THE LD. CIT(A) BE UPHELD. 5. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CONTEXT, WE WOULD LIKE TO REFER TO THE RELEVANT PROVISIONS OF SECTION 50C (1), (2) AND (3) OF THE INCOME-TAX ACT, WHICH READ AS UNDER:- SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES. 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUI NG AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BU ILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY ANY A UTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S 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 ASSESSABLE] S HALL, FOR THE PURPOSES OF SECTION 48 , BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATI ON RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1), WHERE ( A ) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AU THORITY UNDER SUB- SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PR OPERTY 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 O THER AUTHORITY, COURT OR THE HIGH COURT, 471, 472, 473-RJT-2013 SH MANSUKHLAL GHELABHAI DOSHI+2 4 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 (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 SECT ION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1 957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-S ECTION (1) OF SECTION 16A OF THAT ACT. [ EXPLANATION 1 ]. FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICE R' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( R ) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). [ EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'A SSESSABLE' 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 WERE REFERRED TO SUCH AU THORITY 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 REFERR ED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] BY SU CH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER.] ON THE READING OF AFORESAID PROVISIONS, IT IS CLEA R THAT FINANCE ACT, 2002, W.E.F. 1 ST APRIL 2013, HAS INSERTED A NEW SECTION 50C OF THE A CT TO MAKE A SPECIAL PROVISION FOR DETERMINING THE FULL VALUE OF CONSIDERATION IN CASE S OF TRANSFER IMMOVABLE PROPERTY. SECTION 50C(1) OF THE ACT PROVIDES THAT WHERE THE C ONSIDERATION DECLARED TO BE RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOV ERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDE RATION, AND CAPITAL GAINS SHALL BE COMPUTED ACCORDINGLY UNDER SECTION 48 OF THE INCOME -TAX ACT. SECTION 50C(2) OF THE ACT FURTHER PROVIDED THAT WHERE THE ASSESSEE CLAIMS THAT THE VALUE ADOPTED OR ASSESSEE FOR STAMP DUTY PURPOSES EXCEEDS THE FAIR MARKET VAL UE (FMV) OF THE PROPERTY AS ON THE DATE OF TRANSFER, AND HE HAS NOT DISPUTED VALUE SO ADOPTED OR ASSESSED IN ANY OTHER APPEAL OR PROVISION OR REFERENCE BEFORE ANY AUTHORI TY OR COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE RELEVANT ASSET TO A VALUATION OFFICER IN ACCORDANCE WITH SECTION 55A OF THE INCOME-TAX ACT. SUB-SECTION (3) OF SECTION 50C OF THE ACT FURTHER PROVIDED THAT IF THE FMV DETERMINED BY THE VALUATIO N OFFICER IS LESS THAN THE VALUE ADOPTED FOR STAMP DUTY PURPOSES, THE ASSESSING OFFI CER MAY ADOPT SUCH FMV TO BE FULL 471, 472, 473-RJT-2013 SH MANSUKHLAL GHELABHAI DOSHI+2 5 VALUE OF CONSIDERATION. HOWEVER, IF THE FMV DETERMI NED BY THE VALUATION OFFICER IS MORE THAN THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY P URPOSES, THE ASSESSING OFFICER SHALL NOT ADOPT SUCH FMV AND SHALL TAKE THE FULL VA LUE OF CONSIDERATION TO BE THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES. 6. IN THE CASE BEFORE US, THE ASSESSEE CLEARLY OBJE CTED BEFORE THE ASSESSING OFFICER AGAINST THE ADOPTION OF STAMP DUTY VALUATION; THERE FORE, WE ARE OF THE VIEW THAT IT WAS DUTY OF THE ASSESSING OFFICER TO REFER VALUATION OF THE PROPERTY TO THE VALUATION CELL OF THE INCOME-TAX DEPARTMENT. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A) AND REMAND THE ISSUE INVOLVED IN THESE APPEALS TO T HE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSESSING OFFER TO REFER THE PROPERTY TO THE VALUATION CELL OF THE INCOME-TAX DEPARTMENT FOR THE PURPOSE OF VALUATION OF PROPERTY AND, THEREAFTER, ADOPT THE VALUATION FOR WORKING OUT CAPITAL GAINS. 7. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSE SSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- SD/- (B. R. JAIN) (T. K. SHARMA) $( #*% / ACCOUNTANT MEMBER #*% /JUDICIAL MEMBER *$+ ,*-/ ORDER DATE 03.01.2014 /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- SHRI MANSUKHLAL GHELABHAI DOSHI, CHAND ULAL BUCH MARG, DHEBAR ROAD ONE WAY, GOKUL CHAMBERS, RAJKOT 2. /RESPONDENT- 1) THE ACIT,CIRCLE-2,RAJKOT & 2) THE I TO, WARD 2(4), RAJKOT 3. #-2- & 3 / CIT-II, RAJKOT 4. & 3 - / CIT (A)-III, RAJKOT 5 . 678 , , / DR, ITAT, RAJKOT 6 . 89 :; / GUARD FILE. *$+ #$ / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.