Addl.CIT,Range-6, Hyderabad V. Sri N.Muralidhar, Hyderabad

ITA 495/HYD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6267 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 21-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2013
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 495/HYD/2013 ASSESSMENT YEAR: 2009-10 THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-6, HYDERABAD VS SRI N. MURALIDHAR, HYDERABAD [PAN: ADHPN3552G] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI K.J. RAO, DR FOR ASSESSEE : SHRI A.V. RAGHU RAM, AR DATE OF HEARING : 06-12-2016 DATE OF PRONOUNCEMENT : 11-01-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS REVENUE APPEAL AGAINST THE ORDER OF LD. COMMI SSIONER OF INCOME TAX (APPEALS)-IV, HYDERABAD DATED 30-01-2 013. THE ONLY ISSUE FOR CONSIDERATION IS WHETHER THE PROVISIONS OF S ECTION 50C OF THE INCOME TAX ACT [ACT] CAN BE INVOKED FOR TRANSFER OF ASSET UNDERTAKEN BY ASSESSEE? 2. BRIEFLY STATED, ASSESSEE FILED RETURN OF INCOME DEC LARING TAXABLE INCOME AT RS. 69,76,410/- WHICH INCLUDED LON G TERM CAPITAL GAIN OF RS. 59,65,867/-. ASSESSEE GOT PROPERT Y ON PARTITION BEING A MEMBER OF THE HUF WHOSE KARTA WAS SRI NADENDLA BHASKARA RAO. SRI NADENDLA BHASKARA RAO ALONG WITH ASSESSEE ITA NO. 495/HYD/2013 SRI N. MURALIDHAR :- 2 -: AND HIS BROTHER AND MOTHER HAS SOLD A PROPERTY AT JU BILEE HILLS FOR A TOTAL CONSIDERATION OF RS. 14.50 CRORES. AS THE PROP ERTY WAS IN THE NAME OF SRI NADENDLA BHASKARA RAO, ASSESSING OFF ICER (AO) IGNORING THE MEMORANDUM OF FAMILY SETTLEMENT AND PAR TITION BETWEEN THE MEMBERS OF THE HUF TREATED THE ENTIRE CAPITA L GAIN ARISING THEREON IN THE HANDS OF SRI NADENDLA BHASKARA RAO. THE CAPITAL GAIN ADMITTED BY ASSESSEE HOWEVER, WAS ASSESSE D AS A PROTECTIVE INCOME. IN ADDITION TO THAT, AO ALSO INVOKE D THE PROVISIONS OF SECTION 50C ON THE TRANSFER OF PROPERTY, AS THE MARKET VALUE AS PER THE SRO RECORDS ARE STATED TO BE AT RS. 16.50 CRORES AND PROPORTIONATE CAPITAL GAINS WERE ALSO BROUG HT TO TAX IN THE HANDS OF ASSESSEE. THE ISSUE WHETHER THE INCOME I S TO BE ASSESSED IN THE HANDS OF HUF OR IN THE RESPECTIVE HAND S OF THE MEMBERS WAS ADJUDICATED BY THE CIT(A) IN FAVOUR OF AS SESSEE AND REVENUE HAS NOT COME IN APPEAL ON THAT ISSUE. REVENU E IS AGGRIEVED ONLY ON THE ISSUE OF DECISION INVOKING SE CTION 50C WHICH CIT(A) HELD THAT THE SAME CANNOT BE INVOKED AS THERE WAS AN ORAL AGREEMENT PRIOR TO THE YEAR UNDER CONSIDERATION AND IN THOSE YEARS, SECTION 50C CANNOT BE INVOKED. LD.CIT(A) RELI ED ON THE CASE OF M. SIVA PARVATHI [7 ITR[TRT] 468 (VIZAG)] IN GIVING THE RELIEF. REVENUE IS AGGRIEVED AND RAISED THE FOLLOWING GROUND S: 2. THE LEARNED CIT(A) HAS WRONGLY PLACED RELIANCE IN THE CASE OF M. SIVA PARVATHI { 7 ITR[TRT] 468(VIZAG) } IN WHICH FA CTS ARE DIFFERENT FROM THE PRESENT CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) ERRED IN TAKING COGNIZANCE OF YEAR OF TRANSFER OF A SSET IN 2006 DURING WHICH ONLY PART PAYMENTS WERE RECEIVED. 4. THE LD.CIT(A) ERRED IN RECKONING DATE OF TRANSF ER BASED ON PART PAYMENTS ALBEIT BANK CHEQUES IN THE ABSENCE OF ANY AGREEMENT AND HANDLING OVER OF PSSESSIONG. ITA NO. 495/HYD/2013 SRI N. MURALIDHAR :- 3 -: 5. THE CIT(A) ERRED IN NOT UPHOLDING THE DATE OF R EGISTRATION AS THE DATE OF TRANSFER FOR THE PURPOSE OF PROVISIONS OF S ECTION 50C AS HELD BY THE ASSESSING OFFICER. GROUND NOS. 1 & 6 ARE GENERAL IN NATURE. 3. LD.DR HAS SUBMITTED THAT CIT(A) IS NOT CORRECT IN AC CEPTING THE ORAL AGREEMENT, EVIDENCES FURNISHED WITHOUT GIVING OPPORTUNITY TO AO AND THE MATTER SHOULD HAVE BEEN REFERRED TO DVO. 4. LD. COUNSEL HOWEVER, RELIED ON THE ORDERS OF THE C IT(A) TO SUBMIT THAT ASSESSEE HAS SUBMITTED NECESSARY EVIDENCES TH AT THERE WAS AN AGREEMENT FOR TRANSFER OF PROPERTY AND AMOUNTS WERE RECEIVED AS ADVANCE AND LD.CIT(A) HAS APPRECIATED TH E FACTS CORRECTLY AND THEREFORE, THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE AS THE PROPERTY WAS ENTERED INTO AGREEMENT MUCH PRIOR TO THE YEAR OF TRANSFER AND THE SRO, VALUE IN THAT YEAR WAS MORE THAN THE SALE VALUE DISCLOSED. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. WHILE APPRECIATING THE EFFORTS OF LD.CIT(A) IN ADJUDICATING THE ISSUE WHETHER CAPITAL GAINS HAS TO BE ASSESSED IN THE HANDS OF THE HUF OR IN THE HANDS OF THE INDIVIDUAL MEMBER, THE S TAND TAKEN BY THE CIT(A) WITH REFERENCE TO SECTION 50C CANNOT BE AP PRECIATED. FIRST OF ALL, THE GROUND RAISED BEFORE THE LD.CIT(A) IS AS UNDER: 6. THE AO ERRED IN ADOPTING THE SALE CONSIDERATIO N AS PER SRO VALUE BY INVOKING THE PROVISIONS OF SEC.50 C WITHOU T CALLING FOR OBJECTIONS OF THE APPELLANT AND IGNORING THE LEGAL PROVISION O F REFERENCE TO VALUATION CELL IN CASE OF OBJECTION TO ADOPTING SUCH VALUE. 5.1. THERE WAS NO CONTENTION THAT THE PROVISIONS OF SE CTION 50C ARE NOT APPLICABLE AS THE AGREEMENT WAS ENTERED MUCH E ARLIER. THE ITA NO. 495/HYD/2013 SRI N. MURALIDHAR :- 4 -: CONTENTION RAISED BEFORE THE LD.CIT(A) WAS ONLY WITH RE FERENCE TO NOT REFERRING TO VALUATION CELL IN CASE OF OBJECTION TO ADOPT VALUE U/S. 50C(1). AS SEEN FROM THE COPIES OF SUBMISSIONS ALSO MADE BEFORE THE CIT(A) PLACED IN PAPER BOOK, THERE WAS NO REFERENCE TO THE PRIOR ORAL AGREEMENT AND RECEIPT OF MONEYS ON THAT. MAY BE THESE ISSUES WERE EXAMINED BY THE LD.CIT(A) IN THE HU F HANDS OR IN OTHER APPEALS BUT AS FAR AS THIS APPEAL IS CONCERNE D, NEITHER THE GROUNDS NOR THE SUBMISSIONS BEFORE THE CIT(A) INDICA TE ANY SUCH CLAIM. IN VIEW OF THAT, WE ARE OF THE OPINION THAT LD. CIT(A) COULD HAVE REFERRED THE MATTER BACK TO THE FILE OF AO FOR EX AMINATION OF APPLICATION OF PROVISIONS OF SECTION 50C. CONSIDERIN G THE RIVAL CONTENTIONS AND PERUSING THE PAPER BOOK, WE ARE OF THE OPINION THAT THE ADOPTION OF VALUE AS PER THE PROVISIONS OF SECTI ON 50C ARE TO BE RE-EXAMINED BY THE AO ON THE BASIS OF THE FACTS . IT IS THE SUBMISSION OF ASSESSEE THAT CERTAIN ADVANCES HAVE BEEN RECEIVED PRIOR TO THE YEAR UNDER CONSIDERATION. LD. COUNSEL HAS PLACED ON RECORD THE COPY OF THE BANK ACCOUNT IN BANK OF BARODA STATED TO HAVE BEEN FILED BEFORE THE LD.CIT(A) IN SUPPORT OF THE RECEIPT OF ADVANCE MUCH PRIOR TO THE IMPUGNED ASSESSMENT YEAR. W E ARE UNABLE TO EXAMINE THIS ISSUE AS THE NOTINGS IN THE BANK ACCOUNT DO NOT SPECIFY WHETHER THE MONEYS WERE RECEIVED FROM THE B UYER M/S. APUROOPA OR FROM ANY OTHER PARTY. THESE TRANSACTIONS AT BEST COULD HAVE BEEN EXAMINED BY THE AO IF ASSESSEE HAD R AISED THE OBJECTIONS BEFORE THE AO. BE THAT AS IT MAY, SINCE THE AO ALSO HAS NOT FOLLOWED THE PROVISIONS OF SECTION 50C BY REFERRIN G TO DVO WHEN ASSESSEE RAISED OBJECTION, IN THE INTEREST OF JUST ICE, WE SET ASIDE THE ORDER OF THE CIT(A) TO THAT EXTENT AND RESTORE TH E ISSUE TO THE FILE OF THE AO TO EXAMINE THE PRINCIPLES ON THE ISSU E AND APPLICABILITY OF PROVISIONS OF SECTION 50C(2) AS CON TENDED BY ITA NO. 495/HYD/2013 SRI N. MURALIDHAR :- 5 -: ASSESSEE BEFORE THE LD.CIT(A). IN OUR VIEW, THE DECI SION OF M. SIVA PARVATHI [7 ITR[TRT] 468 (VIZAG)] (SUPRA) RELIED BY THE CIT(A) MAY NOT FULLY APPLY IN THE SENSE THAT THE TRANSACTION OF EVEN ORAL AGREEMENT HAS OCCURRED AFTER THE PROVISIONS OF SECTIO N 50C WERE INTRODUCED ON STATUTE W.E.F. 01-04-2003. AT BEST, THE I SSUE CAN BE EXAMINED WHETHER THE SRO VALUE AT THE TIME OF ENTERING I NTO AGREEMENT IS LESS OR MORE THAN THE VALUE REGISTERED. H OWEVER, SINCE THE RECEIPT OF MONEY PRIOR TO THE DATE OF AGREEM ENT/TRANSFER HAS NOT BEEN EXAMINED BY THE AO, AO IS DIRECTED TO CON SIDER THE ISSUE AFRESH, IN THE LIGHT OF THE FACTS AND ALSO TO F OLLOW THE PROVISIONS OF THE ACT AS PROVIDED. FOR THIS PURPOSE, THE ISSUE IS RESTORED TO THE FILE OF THE AO TO DO ACCORDINGLY. GROUN DS ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF REVENUE IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2017 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMB ER HYDERABAD, DATED 11 TH JANUARY, 2017 TNMM ITA NO. 495/HYD/2013 SRI N. MURALIDHAR :- 6 -: COPY TO : 1. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-6, HYDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6( 1), HYDERABAD. 3. SRI N. MURALIDHAR, 8-2-293/82/A/245, JUBILEE HIL LS, HYDERABAD. 4. CIT (APPEALS)-IV, HYDERABAD. 5. CIT-III, HYDERABAD. 6. D.R. ITAT, HYDERABAD. 7. GUARD FILE.