GOENKA ATRADING COMPANY, MUMBAI V. ITO WD 16(3)(1), MUMBAI

ITA 51/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48935 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 24-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 05-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Fair market value
• Section: 50C; 154

Judgement Text

1 ITA 51 /M/2009 M/S GOENKA TRADING CO. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G BEFORE SHRI D.K. AGARWAL, J.M. AND SHRI R.K. PANDA, A.M. ITA NO. 51/MUM/2009 ASSESSMENT YEAR 2004-05 M/S GOENKA TRADING COMPANY, C/O KARNAVAT & CO., 2A KITAB MAHAL, IST FLOOR, 192 DR. D.N. ROAD, MUMBAI 400 001. PAN AAAFGO225H VS. THE INCOME TAX OFFICER, WARD 16(3)(1). MUMBAI. APPLICANT RESPONDENT APPELLANT BY SHRI VIJAY MEHTA RESPONDENT BY SHRI T.T. JACOB ORDER PER R.K. PANDA A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)- XVII, MUMBAI DATED 26.09.2008 RELATING TO A.Y. 2004-05. 2. G ROUND NO. 1 BY THE ASSESSEE READS AS UNDER:- 1. ON THE FACTS AND IN LAW, THE LEARNED CIT(A) HAD ERRED IN NOT APPRECIATING THE FACT THAT THE CASE OF THE APPELLAN T FALLS U./S 50C OF THE INCOME TAX ACT, 1961. UNDER THE FACTS AND CIRC UMSTANCES OF THE MATTER, HE SOUGHT NOT TO HAVE HELD SO. 2.1 THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET , SUBMITTED THAT THE ABOVE GROUND IS DECIDED AGAINST THE ASSESSEE BY THE DECIS ION OF THE TRIBUNAL IN THE CASE OF UNITED MARINE ACADEMY VIDE ITA NO. 968/MUM/ 07 ORDER DATED 25.4.2011. IN VIEW OF THE ABOVE SUBMISSION BY THE LD. COUNSEL FOR THE ASSESSEE 2 ITA 51 /M/2009 M/S GOENKA TRADING CO. AND IN ABSENCE OF ANY OBJECTION FROM LD. D.R, THIS GROUND RAISED BY THE ASSESSEE IS DISMISSED. 3. GROUND NO. 2 BY THE ASSESSEE READS AS UNDER:- 2. ON FACTS AND IN LAW, THE LEARNED CIT(A) HAD ERRE D IN HOLDING THAT THE FAIR MARKET VALUE DETERMINED BY THE DISTRI CT VALUATION OFFICER IS LESS THAN THE VALUE DETERMINED BY THE ST ATE STAMP AUTHORITIES, THEREFORE THE VALUE ADOPTED BY THE ST AMP DUTY AUTHORITY WHICH IS ALSO TAKEN AS THE FULL VALUE OF CONSIDERATION BY THE A.O. BECOMES FINAL. UNDER THE FACTS AND CIRCUMSTA NCES OF THE MATTER, HE OUGHT NOT TO HAVE HELD SO. 3.1 THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE A SSESSEE IS A PARTNERSHIP FIRM AND IN THE RETURN OF INCOME FILED HAS DECLARED SHOR T TERM CAPITAL GAIN ON SALE OF GALA NOS. 10, 11 & 12 AT SARAF KASKAR INDUSTRIAL ES TATE B, OSHIWARA BRIDGE, JOGESHWARI (W), MUMBAI AT ` 22,65,147/-. THESE THREE GALAS WERE SHOWN AS DEPRECIABLE FIXED ASSETS IN THE DEPRECIATION CHART FOR THE A.Y. 2004-05. THESE 3 GALAS WERE SOLD FOR A TOTAL CONSIDERATION OF ` 22,65,147/- THE STAMP DUTY AUTHORITY HAD VALUED THE GALAS FOR REGISTRATION AT ` 38,52,547/-. THE A.O. WANTED TO INVOKE THE PROVISIONS OF SECTION 50C SINC E THE VALUE ADOPTED BY STAMP DUTY AUTHORITY WERE MORE THAN THE SALE CONSID ERATION. SINCE THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S OBJECTED TO SUCH VALUATION ON THE GROUND THAT THE VALUE ADOPTED BY T HE STAMP DUTY AUTHORITY WAS FAR IN EXCESS OF THE FAIR MARKET VALUE OF THE P ROPERTY AS ON THE DATE OF TRANSFER, THE A.O. MADE REFERENCE TO THE DEPARTMENT AL VALUATION OFFICER TO MAKE A VALUATION OF THE SAID PROPERTIES AS ON THE D ATE OF TRANSFER. HOWEVER, SINCE NO SUCH REPORT WAS OBTAINED FROM THE DVO, THE A.O. COMPLETED THE ASSESSMENT BY ADOPTING THE VALUE ADOPTED BY THE STA MP VALUATION AUTHORITY. HOWEVER, HE MADE AN OBSERVATION THAT IF THE VALUE G IVEN BY THE DVO IS LESS THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHO RITY, THE SAME WILL BE RECTIFIED U/S 154 OF THE ACT. 3 ITA 51 /M/2009 M/S GOENKA TRADING CO. 3.2 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD . CIT(A). ALTHOUGH THE A.O. HAS MADE A REFERENCE TO THE VALUATION OFFICER FOR D ETERMINING THE FAIR MARKET VALUE OF THE ASSET AND ALTHOUGH THE REPORT OF THE D VO DETERMINING THE FAIR MARKET VALUE AT ` 27,52,360/- WAS AVAILABLE BEFORE THE LD. CIT(A) ST ILL THE LD. CIT(A) IGNORED THE SAME ON THE GROUND THAT THE VALU E ADOPTED BY STAMP DUTY AUTHORITY IS FINAL. 3.3 AGGRIEVED BY SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION MADE B Y BOTH THE SIDES, PERUSED THE ORDERS OF A.O. AND THE CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY QUESTION TO BE DECIDED IN THE IMPUGNED GRO UND IS AS TO WHETHER THE VALUE ADOPTED BY THE DVO HAS TO BE ACCEPTED OR THE VALUE ADOPTED BY STAMP DUTY AUTHORITY HAS TO BE ADOPTED SINCE BOTH THE VAL UES ARE MORE THAN SALE CONSIDERATION. WE FIND THE CO-ORDINATE BENCH OF TH E TRIBUNAL IN THE CASE OF SMT. BHARTI JAYESH SANGANI VS. I.T.O. REPORTED IN [ 2011] 128 ITD 345 HAS HELD THAT IF THE VALUE DETERMINED BY THE DVO UNDER SUB-S ECTION (2) OF SECTION 50C IS LOWER THAN THAT OF THE VALUE ADOPTED, ASSESSED OR A SSESSABLE BY STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1), THE VALU E SO ESTIMATED UNDER SUB- SECTION (2) SHALL BE BINDING ON THE A.O. AND ASSESS MENT SHALL BE MADE ACCORDINGLY. SINCE IN THE INSTANT CASE, THE VALUE ARRIVED AT BY THE DVO AT ` 27,52,360/- IS LESS THAN THE VALUE ADOPTED BY STAMP DUTY AUTHORITY AT ` 38,52,547/-, THEREFORE, IN VIEW OF THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SMT. BHARTI JAYESH SANGANI (SUPRA) AND IN ABSENCE OF ANY CONTRARY DECISION BROUGHT TO OUR NOTICE, THE A. O. IS BOUND TO ADOPT THE VALUE ARRIVED AT BY THE DVO. THIS GROUND BY THE AS SESSEE IS ACCORDINGLY ALLOWED. 4 ITA 51 /M/2009 M/S GOENKA TRADING CO. 5. GROUND NO. 3 BY THE ASSESSEE READS AS UNDER:- ON FACTS AND IN LAW, THE LEARNED CIT(A) HAD FAILED TO APPRECIATE THAT THE CAPITAL GAIN DETERMINED IN THE CASE OF THE APPE LLANT OUGHT TO BE ASSESSED AS LONG TERM CAPITAL GAIN @ 20% AS THE PER IOD OF HOLDING OF THE ASSETS WHICH IS MORE THAN THREE YEARS. 5.1 AFTER HEARING BOTH THE SIDES, WE FIND THIS ISSU E WAS NEVER RAISED BEFORE THE A.O. OR THE LD. CIT(A). HOWEVER, CONSIDERING T HE ARGUMENTS BY THE LD. COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARI NG REGARDING THE RATE OF TAX AND IN THE ABSENCE OF ANY OBJECTION BY THE LD. D.R. , WE ADMIT THIS GROUND FOR ADJUDICATION CONSIDERING THE SAME TO BE A LEGAL GRO UND AS NECESSARY FACTS ARE ON RECORD AND IT DOES NOT REQUIRE ANY FURTHER INVES TIGATION. SINCE THE LD. CIT(A) HAS NOT DECIDED THIS ISSUE, THEREFORE, WE IN THE IN TEREST OF JUSTICE, DEEM IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF LD. CIT (A) FOR ADJUDICATION. THIS GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWE D FOR STATISTICAL PURPOSE. 6. THE ASSESSEE HAS ALSO TAKEN TWO ADDITIONAL GROUN DS. HOWEVER, AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE DI D NOT PRESS FOR THE ADDITIONAL GROUNDS FOR WHICH THE LD. D.R. HAS NO OBJECTION. A CCORDINGLY, THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 31.5.2011. SD/- SD/- (D.K. AGARWAL) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 31 ST MAY, 2011. 5 ITA 51 /M/2009 M/S GOENKA TRADING CO. RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XVII, MUMBAI 4. THE CIT- 16, MUMBAI 5. THE DR BENCH, G 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 6 ITA 51 /M/2009 M/S GOENKA TRADING CO. DATE INITIALS 1 DRAFT DICTATED ON 25.5.11, SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 26.5.11 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER