ITO, Vellore V. P.Ansar Ahmed, Ambur

ITA 528/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4576 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 03-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS R ILAVARASI
• Assessee Lawyers: VIJAY KUMAR PUNNA ADV
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Fair market value; Competent authority
• Section: 143(3); 50C; 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE , ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./I.T.A. NO. 528/MDS/2017 / ASSESSMENT YEAR : 2008-2009. INCOME TAX OFFICER, WARD-3, VELLORE VS. SHRI. P. ANSAR AHMED, NO.45A, JALAL ROAD, AMBUR 635 802. [PAN AFOPA 2704C] ( / APPELLANT) ( /RESPONDENT) ! / APPELLANT BY : MRS. R. ILAVARASI, ADDL. CIT '# ! /RESPONDENT BY : SHRI.VIJAY KUMAR PUNNA, ADV. $ %& /DATE OF HEARING : 01-05-2017 '( %& /DATE OF PRONOUNCEMENT : 03-05-2017 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANC E IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED ADOPT ION OF THE VALUATION AS PER THE REPORT OF THE DISTRICT VALUATI ON OFFICER WHICH WAS LOWER THAN THE VALUE FIXED BY THE STAMP/REGISTRATIO N AUTHORITIES, FOR COMPUTING THE CAPITAL GAINS PAYABLE BY THE ASSESSEE ON SALE OF A ITA NO.528/MDS/2017. :- 2 -: PROPERTY. AS PER THE REVENUE, LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT CONSIDERED THE BOARD CIRCULAR NO. 8/2002, DATED 27.08.2002, WHILE HOLDING SO. 2. FACTS APROPOS ARE THAT ASSESSEE HAD FILED HIS RETUR N OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSING BUSINESS INCOME OF @2,50,000/- AND LONG TERM CAPITAL GAINS OF @23,4 6,151/-. THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ASSESSING LONG TERM CAPITAL GAINS AT @44,48,980/- AND ACCEPTING BUSINESS INCOME OF @2,50,000/-. THER EAFTER LD. COMMISSIONER OF INCOME TAX (APPEALS) FOUND THE ORDE R OF THE LD. ASSESSING OFFICER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDING TO HIM, LD. ASSESSING OFFICER HAD FAILED TO ADOPT THE SALE CONSIDERATION BASED ON THE VALUATION BY TH E COMPETENT AUTHORITY FOR STAMP DUTY PURPOSE. AS PER LD. COMMI SSIONER OF INCOME TAX (APPEALS) REGISTRATION AND STAMP DUTY AUTHORITI ES HAD FIXED THE VALUE OF THE PROPERTY SOLD AT @1,00,29,971/- WHEREA S LD. ASSESSING OFFICER HAD ACCEPTED THE SALE CONSIDERATION OF @25 ,00,000/- SHOWN BY THE ASSESSEE WHILE COMPUTING THE CAPITAL GAINS. THE REAFTER LD. ASSESSING OFFICER BASED UPON THE DIRECTION OF THE L D. COMMISSIONER OF INCOME TAX (APPEALS) COMPLETED THE ASSESSMENT TAKIN G THE SALE ITA NO.528/MDS/2017. :- 3 -: CONSIDERATION AS @1,00,29,971/- FIXED BY THE STAMP DUTY AUTHORITIES AND RECOMPUTING THE LONG TERM CAPITAL GAINS. 3. ASSESSEE THEREUPON FILED AN APPEAL BEFORE LD. COMMI SSIONER OF INCOME TAX (APPEALS). CONTENTION OF THE ASSESSEE WAS THAT LONG TERM CAPITAL GAINS WHICH AROSE ON SALE OF 1.46 ACRE S OF LAND TO M/S. SHINGVI PAPER PRODUCTS PVT LTD WAS CORRECTLY SHOWN BY IT, BASED ON THE CONSIDERATION STATED IN THE SALE DEED. AS PER THE ASSESSEE, ADOPTION OF THE VALUE FIXED BY THE STAMP /REGISTRATION AUTH ORITIES COULD NOT BE DONE AUTOMATICALLY. BASED ON A REQUEST OF THE ASSE SSEE, LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE L D. ASSESSING OFFICER TO REFER THE VALUATION OF 1.46 ACRES OF LAN D IN QUESTION TO THE DISTRICT VALUATION OFFICER. DISTRICT VALUATION OFF ICER PASSED AN ORDER U/S.16A(5) OF THE WEALTH TAX ACT, 1957 R.W.S. 50C O F THE INCOME TAX ACT, ON 28.11.2016, WHEREBY THE FAIR MARKET VALUE O F THE PROPERTY WAS FIXED AT @31,48,000/-. LD. COMMISSIONER OF INCOME TAX (APPEALS) BASED ON THE VALUATION MADE BY THE DISTRICT VALUAT ION OFFICER DIRECTED LD. ASSESSING OFFICER TO CONSIDER THE SALE CONSIDE RATION AS @31,48,000/- AND RECOMPUTE LONG TERM CAPITAL GAINS. 4. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE REL YING ON SUB SECTION (2) TO SEC. 50C OF THE ACT SUBMITTED TH AT WHEN A VALUE ITA NO.528/MDS/2017. :- 4 -: LOWER THAN THE VALUE FIXED BY THE STAMP AUTHORITIES WAS FIXED BY THE DVO, THE LATTER VALUE ALONE HAD TO BE ADOPTED AND NOT THE FORMER. 5. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTING THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) SUBMITTED THAT ONCE THE REFERENCE WAS MADE TO A VALUATION OFF ICER U/S. 50C OF THE ACT, LD. ASSESSING OFFICER WAS BOUND TO FOLLOW THE VALUE FIXED BY SUCH AUTHORITY AND COULD NOT SAY THAT THE VALUE AS FIXED BY THE STAMP VALUATION AUTHORITIES WAS STILL BE ADOPTED. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE, THER E IS NO DISPUTE THAT VALUATION OF THE PROPERTY WHICH WAS SOLD BY THE ASS ESSEE ON WHICH LONG TERM CAPITAL GAINS WAS COMPUTED WAS REFERRED T O THE LD. DVO. IT MAY BE TRUE THAT SUCH REFERENCE WAS MADE BY THE LD. ASSESSING OFFICER ON THE DIRECTIONS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). BUT IT IS NOT DISPUTED BY THE REVENUE THAT VALUATION OF FICER HAD GIVEN A REPORT FIXING THE VALUE OF THE PROPERTY SOLD BY TH E ASSESSEE AT @31,48,000/-. THE VALUATION SHOWN BY THE ASSESSEE I N THE SALE DEED WAS @25,00,000/-. IT MAY BE TRUE THAT THE VALUE F IXED BY THE STAMP DUTY AUTHORITIES FOR THE PROPERTY WAS @1,00,29,971/ -. IN OUR OPINION ONCE A REFERENCE WAS MADE TO LD. DVO, INVOKING SEC TION 50C(2) OF THE ACT, THEN THE VALUE FIXED BY THE DVO ALONE HAS TO BE CONSIDERED ITA NO.528/MDS/2017. :- 5 -: IF IT IS LOWER THAN THE VALUE FIXED BY THE STAMP A UTHORITIES. A REFERENCE UNDER SECTION 50C(2) TO THE VALUATION IS ALWAYS MAD E ON THE BEHEST OF THE ASSESSEE AND AN ASSESSEE WILL MAKE A REQUEST F OR SUCH A REFERENCE, ONLY WHEN HE FEELS THAT VALUE FIXED BY THE STAMP VALUATION AUTHORITIES WAS ON THE HIGHER SIDE. IF AFTER SUCH R EFERENCE, THE VALUE FIXED BY THE STAMP VALUATION AUTHORITIES IS STILL TO ADOPTED, IGNORING THE LOWER VALUE FIXED BY THE DVO THEN THE PURPOSE O F REFERENCE TO THE DVO ITSELF IS LOST. IN SUCH CIRCUMSTANCES, NO CIRC ULAR OF THE CBDT CAN COME TO THE AID OF THE REVENUE. ONCE A VALUATION I S GIVEN BY THE VALUATION OFFICER IN ACCORDANCE WITH SEC. 50C OF TH E ACT, THEN SUCH VALUE ALONE CAN BE ADOPTED WHERE IT IS LOWER THAN THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITIES AS HELD BY HON BLE GUJARAT HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. RAVJIBHAI NAGJIBHAI THESIA, 388 ITR 358 . PARA 8 OF THE ABOVE JUDGMENT WHICH IS ON THIS ISSUE IS REPRODUCED HER EUNDER:- 8. THUS, SUB-SECTION (1) OF SECTION 50C OF THE AC T ENVISAGES A SITUATION WHERE THE CONSIDERATION RECEI VED OR ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAT THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF THE STATE GOVERNMENT (HEREAFTER REFERRED TO AS THE 'STAMP VAL UATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUT Y IN RESPECT OF SUCH TRANSFER. IN SUCH A SITUATION, THE VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSES OF SECT ION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. SUB-SECTI ON (2) OF SECTION 50C OF THE ACT, HOWEVER, WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (1) PROVIDES FOR A SITUAT ION WHERE ITA NO.528/MDS/2017. :- 6 -: THE ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER TH AT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AU THORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF THE TRANSFER ; AND WHERE THE VALUE SO ADOPTED OR ASSESSED HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BE FORE ANY OTHER AUTHORITY, COURT OR HIGH COURT, THEN IN S UCH A SITUATION THE ASSESSING OFFICER MAY REFER THE VALUA TION OF THE CAPITAL ASSET TO A VALUATION OFFICER. SUB-SECTION ( 2) OF SECTION 50C OF THE ACT FURTHER PROVIDES THAT WHERE ANY SUCH REFERENCE IS MADE, THE PROVISIONS 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-SE CTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957, SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESS ING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THA T ACT. AT THIS JUNCTURE IT MAY BE APPOSITE TO REFER TO THE PR OVISIONS OF SECTION 16A OF THE WEALTH-TAX ACT, 1957 TO THE EXTE NT THEY ARE RELEVANT FOR THE PRESENT PURPOSE. SUB-SECTION ( 1) OF SECTION 16A OF THE WEALTH-TAX ACT PROVIDES FOR MAKI NG REFERENCE TO THE VALUATION OFFICER. SUB-SECTIONS (2 ) TO (5) OF SECTION 16A PROVIDE FOR THE MODE AND MANNER IN WHIC H THE VALUE OF AN ASSET IS TO BE ESTIMATED. SUB-SECTION ( 6) OF SECTION 16A OF THE WEALTH-TAX ACT PROVIDES THAT ON RECEIPT OF AN ORDER UNDER SUB-SECTION (3) OR SUB-SECTION (5) F ROM THE VALUATION OFFICER, THE ASSESSING OFFICER SHALL, SO FAR AS VALUATION OF THE ASSET IN QUESTION IS CONCERNED, PR OCEED TO COMPLETE THE ASSESSMENT IN CONFORMITY WITH THE ESTI MATE OF THE VALUATION OFFICER. ACCORDINGLY, ONCE A REFERENC E IS MADE UNDER SECTION 50C OF THE ACT TO THE VALUATION OFFIC ER FOR VALUATION OF THE CAPITAL ASSET, THE ASSESSING OFFIC ER IS OBLIGED TO COMPLETE THE ASSESSMENT IN CONFORMITY WI TH THE ESTIMATE MADE BY THE VALUATION OFFICER PURSUANT TO SUCH REFERENCE MADE BY HIM. IN THE FACTS OF THE PRESENT CASE, THE VALUATION OFFICER HAS ESTIMATED THE VALUE OF THE CA PITAL ASSET AT A LOWER AMOUNT THAN THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY. IN TERMS OF SUB- SECTION (2) OF SECTION 50C OF THE ACT, IT IS SUCH V ALUATION WHICH IS REQUIRED TO BE TAKEN INTO CONSIDERATION FO R THE PURPOSES OF ASSESSMENT. IN THE LIGHT OF THE ABOVE DISCUSSION, WHILE NOT AGREEING FULLY WITH THE REASO NING ADOPTED BY THE COMMISSIONER (APPEALS), IN THE FACTS AND CIRCUMSTANCES OF THIS CASE, THIS COURT IS IN AGREEM ENT WITH ITA NO.528/MDS/2017. :- 7 -: THE FINAL CONCLUSION ARRIVED AT BY THE COMMISSIONER (APPEALS) AS WELL AS BY THE TRIBUNAL. THE SAME VIEW HAS BEN ADOPTED BY THIS TRIBUNAL IN T HE CASE OF B .N. PROPERTIES HOLDINGS (P) LTD VS. ACIT (2011) 9 TAXM ANN.COM 180. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS D ISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 3RD DAY OF MAY, 2017, AT CHENNAI. SD/- ( . ) (G. PAVAN KUMAR) $ %& / JUDICIAL MEMBER SD/- ( . ) (ABRAHAM P. GEORGE) ' %& / ACCOUNTANT MEMBER +$ / CHENNAI , / DATED: 3RD MAY, 2017. KV - '%./ 0/% / COPY TO: 1 . / APPELLANT 3. 1% () / CIT(A) 5. / 45 '%6 / DR 2. '# / RESPONDENT 4. 1% / CIT 6. 57 8$ / GF