DCIT, New Delhi V. M/s. Jindal Pipes Ltd., New Delhi

ITA 4924/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4808 (ITAT-DELHI)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 31-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: ASHISH CHADHA
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report; Reassessment proceedings
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI. N. K. SAINI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.4924/DEL/2015 ASSESSMENT YEAR:2005 - 06 D CIT, CIRCLE - 13(2), NEW DELHI. VS M/S JINDAL PIPES LTD. PLOT NO.5, 2 ND FLOOR, PUSA ROAD, NEW DELHI. PAN: AA ACJ2055K (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.S. RANA, CIT DR RESPONDENT BY: S/SHRI VED JAIN & ASHISH CHADHA, CA S DATE OF HEARING: 01.08.2018 DATE OF PRONOUNCEMENT: 01.08.2018 O R D E R PER K. NARASIMHA CHARY, JM THIS IS AN APPEAL BY THE REVENUE CHALLENGING THE ORD ER DATED 07/05/2015 IN APPEAL NO. 150/2012-13 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-V (IN SHORT LD. CIT(A)) D ELETING THE ADDITION OF RS.4,39,77,238/- MADE BY THE LEARNED ASSESSING OFFICER (LD. AO) UNDER THE HEAD CAPITAL GAIN ON THE BASIS OF DIFFERENCE BETWE EN SALE PROCEEDS DECLARED 2 BY THE ASSESSEE AND THE SALE PROCEEDS TAKEN BY THE LD . AO ON THE BASIS OF VALUATION REPORT OF DVO. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUB LIC LTD COMPANY ENGAGED IN THE MANUFACTURE OF ERW PIPES. THEY HAVE F ILED THEIR RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 29/10/2005 SHOWING AN INCOME OF RS.16,39,15,323/- FROM BUSINESS AND PROFESSION, HOUSE PROPERTY, CAPITAL GAIN AND OTHER SOURCES. LD. AO CONCLUDED REASSESSMENT AT T HE TOTAL INCOME OF RS.16,39,15,320/- ON 31/12/2007. SUBSEQUENTLY, ASSES SMENT WAS REOPENED ON THE GROUND THAT THERE WAS UNDERSTATEMENT OF THE PURCH ASE CONSIDERATION IN RESPECT OF PROPERTY. LD. AO FURNISHED THE COPY OF TH E VALUATION REPORT TO THE ASSESSEE. ASSESSEE SUBMITTED BEFORE THE LD. AO THAT EX CEPT FOR THE VALUATION REPORT, THE LD. AO COULD NOT BRING ANY MATERIAL ON RECORD, TO PROVE THAT THE PURCHASER IN THE CASE HAD UNDERSTATED THE PURCHASE CONS IDERATION, WHICH IS THE BASIS OF INITIATION OF REASSESSMENT PROCEEDINGS. ASSE SSEE ALSO SUBMITTED THE COPIES OF SALE DEEDS. HOWEVER, LD. AO BRUSHED ASI DE THE SUBMISSIONS AND DOCUMENTS FILED ON BEHALF OF THE ASSESSEE AND MADE AN ADDITION OF RS.4,39,77,238/- BY CALCULATING THE CAPITAL GAIN ON RESIDENTIAL PROPERTY/LAND IN THE HANDS OF THE ASSESSEE BY TAKING RS.5,39,77,238/- A S THE SALE CONSIDERATION INSTEAD OF RS.1,00,00,000/-. 3. ASSESSEE PREFERRED APPEAL AGAINST THIS ADDITION AND THE LD. CIT(A), WHILE NOTICING THE DECISION OF THE HONBLE JURISDICTIONAL H IGH COURT IN CIT VS. MAHESH KUMAR 196 TAXMAN 415 (DEL) WHICH WAS RENDERED FOLLOW ING THE DECISION OF THE HONBLE APEX COURT IN KP VERGHESE VS. ITO 131 ITR 59 7, HELD THAT THE ADDITION ON THE BASIS OF VALUATION REPORT OF DVO WAS NOT JUSTI FIED AND CONSEQUENTLY DELETED THE ADDITION OF RS.4,39,77,238/- BASED ON VAL UATION REPORT OF DVO. 3 4. CHALLENGING THE IMPUGNED ORDER ASSESSEE PREFERRED THIS APPEAL BEFORE US STATING THAT THE FOUR SALE INSTANCES OF THE ENTIRE PROPERTY WHICH WAS SOLD IN PARTS BY THE ASSESSEE COMPANY AND M/S. JINDAL ALUMINIUM TO THE OTHER PURCHASERS AT ABOUT THE SAME TIME, AND THE SALE RATE VA RIES FROM RS. 9500/-TO RS. 13,000/-APPROXIMATELY PER SQUARE YARD WHICH IS MU CH HIGHER THAN THE SALE RATE DECLARED BY THE ASSESSEE AND THE LD. CIT(A) ERRED IN HOLDING THAT THE REPORT OF THE DVO WAS ON ASSUMPTION DESPITE THE FAC T THAT THE DVO HAD SCIENTIFICALLY DETERMINED THE FAIR MARKET VALUE OF P ROPERTY CONSIDERING ALL THE FACTORS BY WHICH THE VALUE OF PROPERTY IS AFFECTED. LD. DR HEAVILY RELIED UPON THE ORDERS OF THE LD. AO. 5. PER CONTRA, IT IS THE ARGUMENT OF THE LD. AR THAT INASMUCH AS THE LD. CIT(A) DELETED THE ADDITION BY FOLLOWING THE DECISIO N OF THE HONBLE APEX COURT, IT IS NOT OPEN FOR THE REVENUE TO CHALLENGE THE SAME UNLESS AND UNTIL THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF KP VERGHESE (SUPRA) IS NO LONGER A GOOD LAW. HE FURTHER SUBMITTED THAT RECENTL Y IN ARJUN MALHOTRA VS. CIT (2018) 403 ITR 354 (DELHI) THE HONBLE JURISDICTION AL HIGH COURT WHILE REFERRING TO THE DECISION OF THE APEX COURT IN KP VERGHESE (SU PRA) HELD THAT WHEN SECTION 52 OF THE ACT ITSELF IS NOT APPLICABLE, THE A SSESSING OFFICER COULD NOT HAVE SUBSTITUTED THE ACTUAL SALE CONSIDERATION RECEI VED BY THE ASSESSEE WITH ANOTHER FIGURE STATING THAT THIS WAS THE FAIR MARKET VALUE. HE ALSO PLACED RELIANCE ON SEVERAL OTHER RELATIONS INCLUDING THE DEC ISION IN VS. GILLANDERS ARBUTHNOT (1973) 87 ITR 407 (SC), CIT VS. SMT. NILOF ER I . SINGH (2009) 309 ITR 233 (DELHI), AND CIT VS. M/S. GUJARAT NRE COKE LTD IT A NO. 193/2013 DATED 06/03/2014 (CALCUTTA HIGH COURT) FOR THE PRINCIPLE THAT UNDER SECTION 48 OF THE INCOME TAX ACT, TAX CHARGEABLE UNDER THE HEAD CAPI TAL GAINS HAS TO BE COMPUTED TAKING INTO CONSIDERATION THE FULL VALUE RE CEIVED OR ACCRUED, AND ANY OTHER VALUATION IS NOT PERMISSIBLE UNDER SECTION 48; A ND WHEN THE LEGISLATURE 4 WANTED TO MAKE A DEPARTURE A SPECIFIC PROVISION WAS I NTRODUCED. IN THIS RESPECT, THE HONBLE COURT MADE REFERENCE TO SECTIO N 50C OF THE ACT. 6. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. LD. CIT(A) MADE AN ELABORATE DISCUSSI ON ON THE ISSUE OF CAPITAL GAINS AND IN THE LIGHT OF THE JUDGEMENT OF THE HONB LE JURISDICTIONAL HIGH COURT IN MAHESH KUMARS CASE (SUPRA) WHEREIN THE HONBLE JU RISDICTIONAL HIGH COURT REFERRED TO THE DECISION OF THE HONBLE APEX COURT I N KP VERGHESES CASE, LD. CIT(A) REACHED A CONCLUSION THAT THE ADDITION ON TH E BASIS OF VALUATION REPORT OF DVO IS NOT JUSTIFIED. 7. FURTHER, IN THE CASE OF ARJUN MALHOTRA (SUPRA) TH E HONBLE JUDICIAL HIGH COURT VERY RECENTLY IN (2018) 403 ITR 354 (DELHI) M AKING REFERENCE TO THE DECISION OF THE HONBLE APEX COURT IN KP VERGHESES CASE (SUPRA) OBSERVED THAT THE ASSESSING OFFICER COULD NOT HAVE SUBSTITUTED THE ACTUAL SALE CONSIDERATION RECEIVED BY THE ASSESSEE WITH ANOTHER FIGURE STATING THAT THIS WAS THE FAIR MARKET VALUE. IN THE CASE OF SMT. NILOFER (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT AFTER REFERRING TO THE CASE LAW ON THIS A SPECT STATED THAT IN A CASE INVOLVING THE SALES SIMPLICITOR, WHEN THE FULL VALUE O F THE CONSIDERATIONS ARE THE SALE PRICES, FOR THE PURPOSE OF COMPUTING CAPITAL GAI NS, THERE IS NO NECESSITY FOR COMPUTING THE FAIR MARKET VALUE AND, THEREFORE, THE ASSESSING OFFICER COULD NOT HAVE REFERRED THE MATTER TO THE VALUATION OFFICER. 8. WE ARE CONVINCED WITH THE ARGUMENTS OF LD. AR, BA SING ON THE DECISIONS REPORTED IN CIT VS. PUNEET SABHERWAL (2011) 338 ITR 485 (DELHI), CIT VS. ABHINAV KUMAR MITTAL (2013) 351 ITR 20 (DELHI), DEV KUMAR JAIN VS. ITO (2009) 309 ITR 240 (DELHI), CIT VS. SHAKUNTALA DEVI (2009) 316 ITR 46 (DELHI), CIT VS. SMT. SURAJ DEVI (2010) 328 ITR 604 (DELHI) AND CIT VS. PREM NATH NAGPAL (2007) 214 CTR 51 (DELHI), THAT NO ADDITION CAN BE MADE ME RELY ON THE BASIS OF 5 VALUATION REPORT AND FAIR MARKET VALUE CANNOT BE SUB STITUTED FOR ACTUAL CONSIDERATION RECEIVED. 9. IN THESE CIRCUMSTANCES, LEARNED COMMISSIONER OF IN COME TAX (APPEALS) RIGHTLY FOLLOWED THE BINDING PRECEDENTS. INASMUCH A S THE LD. CIT(A) BASIS IS A DECISION ON THE BINDING PRECEDENT, WHICH BINDS THIS TRIBUNAL EQUALLY, WE FIND IT DIFFICULT TO HOLD THAT THE IMPUGNED ORDER IS EITHER ILLEGAL OR REGULAR. BY NO STRETCH OF IMAGINATION COULD IT BE SAID THAT SUCH FIND INGS OF THE LD. CIT(A) ARE PERVERSE OR LIABLE TO BE SET-ASIDE. WE, THEREFORE, DO NOT FIND ANY MERITS IN THIS APPEAL AND THE APPEAL IS LIABLE TO BE DISMISSED. APP EAL IS ACCORDINGLY DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D ORDER PRONOUNCED IN THE OPEN COURT ON 01/08/2018. SD/- SD/- ( N. K. SAINI ) ( K. NARASIMHA CHARY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 ST AUGUST, 2018 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR 6 DRAFT DICTATED ON 0 1 .0 8 .2018 DRAFT PLACED BEFORE AUTHOR 0 1 .0 8 .2018 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 01.08.2018 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 01.08.2018 APPROVED DRAFT COMES TO THE SR.PS/PS 01.08.2018 KEPT FOR PRONOUNCEMENT ON 01.08.2018 DATE OF UPLOADING ORDER ON THE WEBSITE 0 2 .08.2018 FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.