PRINCE MULTIPLAST PRIVATE LIMITED, MUMBAI V. ACIT, CIRCLE 7(3)(2), MUMBAI

ITA 5/MUM/2023

AI Insights

The case involves Prince Multiplast Private Limited, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2017-18. The primary issue was the addition of Rs.14,01,000 to the assessee's income, representing the difference between the sale consideration of a property and its stamp duty valuation. The Assessing Officer (A.O.) had referred the property valuation to the DVO, who assessed it at a higher value than the sale agreement. The Tribunal examined whether the addition was justified under Section 50C(1) of the Income Tax Act, which pertains to the consideration received from the transfer of capital assets and its valuation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130190 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-04-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 01-01-2023
• Other Referred Cases: DCIT-1(2)(2) Vs. M/s Mahalaxmi Rope Works Ltd., Shri Sandeep Patil Vs. ITO, Shri B.S. Sanjay (HUF) vs. ITO, Krishna Enterprises vs. ACIT, C.B. Gautam vs. SC
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHREEKALA PARDESHI
• Assessee Lawyers: MRUGANKSHI JOSHI
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 50C; 143(2)

Judgement Text

P a g e | 1 ITA No.5/Mum/2023 Prince Multiplast Private Limited Vs.ACIT, Circle 7(3)(2) IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No. 5/Mum/2023 (A.Y.2017-18) Prince Multiplast Private Limited, 21, 2 nd Floor Kalpataru Point, Kamani Marg Sion (East), Mumbai – 400022 Vs. ACIT, Circle 7(3)(2) Room No. 128A, 1 st Floor, Aaykar Bhavan, Maharishi Karve Road, Mumbai - 400020 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACP9106B Appellant .. Respondent Appellant by : Ms. Mrugankshi Joshi Respondent by : Ms. Shreekala Pardeshi Date of Hearing 13.04.2023 Date of Pronouncement 18.04.2023 आदेश / O R D E R Per Amarjit Singh (AM): The present appeal filed by the assesse is directed against the order passed by NFAC, Delhi dated 07.12.2022 for A.Y. 2017-18. The assesse has raised the following grounds before us: “Ground No. 1: Addition of Rs.14,01,000/- u/s. 50C 1. The learned CIT(A) erred in confirming the addition of Rs.14,01,000/- being the difference between the agreed consideration as per the agreement (i.e Rs. 3,24,00,000/-) and the valuation determined by the Departmental 2. Valuation Officer (DVO) (i.e. Rs. 3,38,01,000/-) 2. The learned CIT(A) failed to take into consideration that the valuation assessed by the DVO is less than 10% of actual sale consideration and hence the difference should be ignored. 3. The learned CIT(A) erred in holding that the amendment to section 50C is prospective from Finance Act, 2019, whereas it has been held by various courts that the amendment made is curative/clarificatory in nature and P a g e | 2 ITA No.5/Mum/2023 Prince Multiplast Private Limited Vs.ACIT, Circle 7(3)(2) accordingly held that the proviso shall apply since the date of insertion of sec, 50C of the Act. 4. The learned CIT(A) erred in holding that while computing the difference in the valuations, it is only the stamp duty valuation and not the DVO Valuation which should be taken into consideration. The Appellant craves leave to amend and alter grounds of appeal.” 2. Fact in brief is that return of income declaring total income of Rs.3,96,97,800/- was filed on 28.03.2018. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 09.08.2018. 3. During the course of assessment proceedings the A.O noticed that the assessee company has sold a flat of land on 05.11.2016 for a total consideration of Rs.3,24,00,000/-. However, the market price of the property as per the stamp duty value was Rs.4,30,43,000/-. The A.O found that assessee has not taken into account the stamp duty value of Rs.4,30,43,000/- for computing the long term capital gain arise on the sale of the property. The assessee revised the return of income after issue of notice u/s 143(2) and shown long term capital gain at Rs.3,01,35,372/-. 4. Further during the course of assessment the assessee has objected the value adopted by stamp duty authority and requested the assessing officer to refer the matter to the valuation officer of the department for valuing the sold property. Therefore, A.O has referred the matter of valuation of property to the department valuation officer as valued the property at Rs.3,38,01,000/-. Accordingly, the A.O has added the difference amount of Rs.14,01,000/- as per the sale value determined in the valuation report. 5. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. P a g e | 3 ITA No.5/Mum/2023 Prince Multiplast Private Limited Vs.ACIT, Circle 7(3)(2) 6. During the course of appellate proceedings before us the ld. Counsel contended that difference between the fair market value as per DVO and value as per agreement was around 4.32% only, therefore, as per third proviso of Sec. 50C(1) no any addition is required to be made in the case of the assesse. The ld. Counsel has placed reliance on the decision of ITAT, Mumbai in the case of DCIT-1(2)(2) Vs. M/s Mahalaxmi Rope Works Ltd. vide ITA No. 2954/Mum/2017, dated 14.03.2019 in the case of Shri Sandeep Patil Vs. ITO vide ITA No. 924/Bang/2019 dated 09.09.2020 of ITAT Banglore and Shri B.S. Sanjay (HUF) vs. ITO vide ITA No. 114/Bang/2018 dated 01.05.2018. On the other hand, the ld. D.R supported the order of lower authorities. 7. Heard both the sides and perused the material on record. Without reiterating the facts as elaborated above the fair market value as per DVO was Rs.3,38,01,000/- and the fair market value a per agreement was Rs.3,24,00,000/-. As per third proviso of Section 50C(1) of the Act, difference in stamp duty valuation and the actual sale consideration should be ignored if it is less than 5/10% . The relevant part of the decision in the case of M/s Mahalaxmi Rope Works Ltd. as referred supra is reproduced as under: “5. After hearing both the parties and perusing the material on record including the impugned order of Ld. CIT(A), we observe that in this case the assessee has disputed the fair market value of Rs.7,21,41,500/- as per AIR information and requested before Ld. CIT(A) to refer the valuation of the property to DVO to ascertain the FMV. The ld. CIT(A), accordingly, referred the matter to AO on 16.02.2016 and a final valuation report was received by the office of Ld. CIT(A) on 23.06.2016 dated 13.06.2016 according to which the FMV was Rs.5,15,29,600/-. The Ld. CIT(A) deleted the addition on the ground that difference between the fair market value as per DVO report and agreement value comes to around Rs.25,83,278/- which is 5.8% approximately and Ld. CIT(A) by relying on the decision of Hon’ble Supreme Court in the case of C.B. Gautam 65 taxmann 440 SC and decision of the Bombay Tribunal in the case of Krishna Enterprises vs. ACIT in ITA No.5402/M/2014 (supra) decided the issue in favour of the assessee by holding that the difference between the fair market value as per DVO and the value as per agreement is around 5.8% which P a g e | 4 ITA No.5/Mum/2023 Prince Multiplast Private Limited Vs.ACIT, Circle 7(3)(2) is not to be considered for making addition under section 50C and thus deleted the addition of Rs.2,31,95,180/-. We do not find any infirmity in the order of Ld. CIT(A) or any reason to deviate from the finding of the Ld. CIT(A). Accordingly, we uphold the order of Ld. CIT(A) by dismissing the appeal of the Revenue. In the case of the assessee difference between the fair market value as per DVO and the value as per agreement was around 4.32%, therefore following the decisions of the ITAT as referred supra we consider that decision of ld. CIT(A) in sustaining the addition is not justified. Therefore, ground no. 1 to 4 of the assessee are allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 18.04.2023 Sd/- Sd/- (Vikas Awasthy) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 18.04.2023 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.