Vinod Kumar Mehta, Gurgaon V. ITO, Gurgaon

ITA 5494/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6508 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 06-12-2016
• Assessment Year: 2013-2014
• Appeal Filed On: 24-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.5494/DEL/2016 ASSESSMENT YEAR : 2013-14 VINOD KUMAR MEHTA, K-3/20A, 1 ST FLOOR, DLF PHASE- II, GURGAON. VS. ITO, WARD- 4(4), GURGAON PAN : AJDPM 5579 Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G. N. GUPTA, ADV. RESPONDENT BY : SHRI F. R. MEENA, SR.DR DATE OF HEARING : 06-12-2016 DATE OF PRONOUNCEMENT : 23-12-2016 O R D E R PER S.V. MEHROTRA, A.M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 18.08.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, GURGAON, U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) RELATING TO ASSESSMENT YEAR 2013-14. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.11,48,640/-. THE ASSE SSING OFFICER NOTICED THAT ASSESSEE HAD SOLD A PROPERTY BEARING NO. K-10/ 40, DLF PHASE-II, GURGAON ADMEASURING 1657 SQ.FT. FOR A CONSIDERATION OF RS.28 LACS. THE ASSESSING OFFICER HAS OBSERVED IN PARA 2 AND 3 AS U NDER :- 2 ITA NO.5494/DEL/2016 2. A PERUSAL OF RECORDS SHOWS THAT THE ASSESSEE HA S SOLD A PROPERTY BEARING NO. K-I0/40, DLF PHASE-II, GURGAON MEASURING 1657 S QUARE FEET FOR A CONSIDERATION OF RS. 28 LAC. THE ASSESSEE SUBMITTED THAT HE EXECUTED A SALE OF FIRST FLOOR (WHICH WAS STATED TO BE SOLD ON 10.04.2006 TH ROUGH GPA AND AGREEMENT) OF SHOP NO.K-10/40, DLF PHASE-II, GURGAON AND THE BASE MENT WAS SOLD ON 10.01.2013. AS PER SALE DEED, THE TOTAL SALE CONSID ERATION WAS RECEIVED AT RS.28 LAC AND AFTER EXCLUDING THE COST OF FIRST FLOOR OF RS. 15,00,000/-, THE ASSESSEE HAS DECLARED THE VALUE OF GROUND FLOOR AT RS.13,00,000/ -. THE ASSESSEE SUBMITTED THAT AFTER INDEXING THE COST, LONG TERM CAPITAL GAIN HAS BEEN DECLARED AT RS. 13,223/. ON PERUSAL OF SALE DEED IT IS NOTICED THAT THE STAMP VALUATION AUTHORITY HAS TAKEN THE VALUE OF SAID PRO PERTY AT RS. 54,68,100/-. THE ASSESSEE WAS REQUIRED VIDE ORDER SHEET ENTRY DATED 26.10.2015 TO SHOW CAUSE AS TO WHY PROVISIONS OF SECTION 50 C BE NOT INVOKED FO R CALCULATION OF LONG TERM CAPITAL GAINS AND ALSO REQUIRED TO EXPLAIN AS TO WH Y ADDITION BE NOT MADE ON THE BASIS OF ADOPTING THE COST OF PROPERTY AS DETERMINE D BY THE STAMP VALUATION AUTHORITY. IN RESPONSE TO QUERY RAISED, THE ASSESSE E SUBMITTED THE WRITTEN REPLY. IN THE WRITTEN REPLY THE ASSESSEE HAS SUBMITTED THA T THE LONG TERM CAPITAL GAIN PROPOSED AT RS.41,81,523/- IS ABSOLUTELY WRONG AS T HE ASSESSEE HAD DEDUCTED AMOUNT OF CONSIDERATION OF RS. 15 LAC FOR THE FIRST FLOOR OUT OF RS. 28 LACS TOTAL CONSIDERATION SHOWN IN THE SALE DEED TO ARRIVE AT T HE CONSIDERATION OF RS. 13 LAC FOR THE BASEMENT. 3. AS PER SALE DEED DATED 11.01.2013, IT IS SEEN TH AT THE ASSESSEE HAS RECEIVED A CONSIDERATION OF RS. 15 LAC IN THE FINAN CIAL YEAR 2006-07 (RS.5 LAC ON 10.04.2006, RS. 5 LAC ON 12.04.2006 AND RS. 5 LAC O N 17.4.2006) AND RS. 13 LAC IN FINANCIAL YEAR 2012-13 (RS. 5 LAC ON 23.4.2012, RS. 5 LAC ON 19.5.2012 AND RS. 3 LACS ON 10.09.2012). IN THE SAID SALE DEED, THE STA MP VALUATION AUTHORITY HAS TAKEN THE COST OF PROPERTY AT RS. 54,68,100/- AND C HARGED A STAMP VALUE AT RS. 4,37,500/-. THE ASSESSEE HAS SUBMITTED THAT HE SOLD THE FIRST FLOOR OF THE SHOP ON 10.04.2006 FOR A CONSIDERATION OF RS.15 LAC AND NOW THE ASSESSEE HAS SOLD THE REMAINING PORTION OF THE SHOP FOR A TOTAL CONSIDERA TION OF RS. 28 LACS. THE PROVISIONS OF SECTION 50 C OF INCOME TAX ACT, 1 961 ARE SQUARELY APPLICABLE TO THIS CASE, BEING THE STAMP VALUATION AUTHORITY H AS TAKEN THE VALUE OF THE SAID PROPERTY AT RS. 54,68,100/-. AS PER PROVISIONS OF S ECTION 50C OF INCOME TAX ACT, 1961, IF THE CONSIDERATION DECLARED TO BE RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF LAND OR BUILDING IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE AUTHORITY OF A STATE GOVT. I.E. S TAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED T O BE THE FULL VALUE OF CONSIDERATION AND CAPITAL GAIN SHALL BE CO MPUTED ON THE BASIS OF SUCH CONSIDERATION UNDER SECTION 48 OF THE INCOME TAX AC T, 1961. IN VIEW OF PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT 1961, THE SALE VALUE OF THE PROPERTY IN QUESTION, IS TAKEN AT RS. 54,68,100/- AS ADOPTED BY THE REGISTRATION AUTHORITY FOR STAMP VALUATION PURPOSES AND AFTER EXCLUDING THE AM OUNT OF RS. 15 LAC WHICH WAS RECEIVED BY THE ASSESSEE IN THE YEAR 2006 , THE LONG TERM CAPITAL GAINS IS CALCULATED AS UNDER: SALE CONSIDERATION (RS. 54,68,100 - 15,00,000) RS. 39,68,100/ 3 ITA NO.5494/DEL/2016 INDEXED COST RS. 12,86,677/- LONG TERM CAPITAL GAINS RS.26,81,423/- 3. HE, ACCORDINGLY, MADE AN ADDITION OF RS.26,68,20 0/- UNDER THE HEAD LONG TERM CAPITAL GAINS. BEFORE LD. CIT(A), IT W AS SUBMITTED THAT THE ASSESSING OFFICER HAD A CHOICE UNDER SUB-SECTION 50 C(1) TO REFER THE MATTER BEFORE THE VALUATION OFFICER AND, THEREFORE, HE SHO ULD HAVE DONE THAT SINCE THE CIRCLE RATE FIXED WAS NOT FINAL. LD. CIT(A) PO INTED OUT THAT FOR THE PURPOSES OF REFERENCE TO THE VALUATION OFFICER, THE CONDITIONS PRESCRIBED U/S 50C(2)(A)(B) HAVE TO BE FULFILLED. HE POINTED OUT THAT LD. COUNSEL FOR THE ASSESSEE DID NOT MAKE ANY CLAIM IN WRITING BEFORE T HE ASSESSING OFFICER. HE, THEREFORE, UPHELD THE ASSESSMENT ORDER. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND HAS TAKEN FOLLOWI NG GROUNDS OF APPEAL :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, GURGAON {CI T(A)} ERRED IN CONFIRMING THE ACTION OF THE INCOME TAX OFFICER IN HOLDING THAT THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 19 61 (ACT) APPLIED IN RESPECT OF SALE OF BASEMENT OF K-10/40, DLF PHASE-I I, GURGAON {BASEMENT}. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, AND WITHOUT PREJUDICE TO GROUND OF APPEAL NO.1 ABOVE, CIT(A) ER RED IN HOLDING THAT THE PROVISIONS OF SECTION 50C(2) OF THE ACT WERE NOT AP PLICABLE IN THE CASE OF THE APPELLANT AS THE APPELLANT ALLEGEDLY MA DE NO CLAIM BEFORE THE ITO THAT THE VALUE OF THE BASEMENT ASSESSED BY THE STAMP VALUATION OFFICER EXCEEDED ITS FAIR MARKET VALUE. 3.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, AND WITHOUT PREJUDICE TO THE GENERALITY OF GROUNDS OF APPEAL NO .1 & 2 ABOVE, CI!T(A) ERRED IN CONFIRMING THE LONG TERM CAPITAL G AIN OF RS.26,86,423/- ARISING OUT OF THE SALE OF BASEMENT AS AGAINST RS. 13,223/- SHOWN BY THE APPELLANT. 4 ITA NO.5494/DEL/2016 3.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE AFORESAID COMPUTATION OF LONG TERM CAPITAL GAIN IS ARBITRARY & HIGHLY EXCESSIVE. 4. THE APPELLANT CRAVES LIBERTY TO ADD, VARY OR AME ND ANY GROUNDS OF APPEAL. 4. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE PRESSED ONLY GROUND NO.2 AND POINTED OUT THAT THE PROVISIONS OF SECTION 50C(2) PERMITS THE ASSESSEE TO CONTEND BEFORE ASSESSING AUTHORITY THAT THE REGISTRATION VALUE FIXED UNDER STAMP ACT IS EXCESSIVE AND DOES NOT COR RESPOND WITH THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF THE TRANSFER SUBJECT TO CONDITION THAT THE ASSESSEE HAD NOT CHALLENGED THE LEVY OF STAMP DUTY UNDER THE STAMP ACT BEFORE ANY FORUM. HE SUBMITTED THAT ASSESSING OFFICER BEING QUASI-JUDICIAL AUTHORITY SHOULD HAVE REFERRED THE MATTER TO DVO B ECAUSE OF VAST DIFFERENCE IN VALUATION. HE PLEADED THAT THE MATTER MAY BE REFERRED TO THE ASSESSING OFFICER FOR BEING REFERRED TO DVO FOR VALUATION OF PROPERTY. 5. I HAVE CONSIDERED BOTH THE PARTIES AND HAVE PERU SED THE RECORD OF THE CASE. THE ASSESSEE HAD RAISED SPECIFIC PLEA BEFORE THE LD. CIT(A) IN REGARD TO REFERENCE TO BE MADE TO DVO AS THERE WAS WIDE DI FFERENCE BETWEEN VALUATION ARRIVED AT BY STAMP VALUATION AUTHORITIES AND AS PER SALE DEED. FROM THE OBSERVATIONS OF ASSESSING OFFICER, REPRODU CED EARLIER, IT IS EVIDENT THAT THE ASSESSEE HAD DISPUTED THE CAPITAL GAINS PR OPOSED AT RS.41,81,523/- ON THE GROUND THAT THE ASSESSEE HAD DEDUCTED A CONS IDERATION OF RS.15 LACS FOR THE FIRST FLOOR. HOWEVER, WHEN THIS CLAIM WAS REJECTED THEN THE 5 ITA NO.5494/DEL/2016 ASSESSING OFFICER BEING QUASI-JUDICIAL AUTHORITY SHOULD HAVE REFERRED THE MATTER TO THE DVO FOR ARRIVING AT PROPER VALUATION OF THE PROPERTY. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SUNIL KU MAR AGARWAL VS. CIT (2015) 372 ITR 83 (CAL) HAS OBSERVED AS UNDER :- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ADVANCED BY THE LEARNED ADVOCATES APPEARING FOR THE PARTIES. THE SUBMISSION OF MS. GH UTGHUTIA THAT THE REQUIREMENT OF CLAUSES A) AND (B) OF SUB-SECTION 2 OF SECTION 5 0C HAS NOT BEEN MET BY THE ASSESSEE, CAN HARDLY BE ACCEPTED. THE REQUIREMENT O F CLAUSE (B) OF SUB-SECTION 2 OF SECTION 50C WAS EVIDENTLY MET. THE ONLY QUESTION IS WHETHER THE REQUIREMENT OF CLAUSE (A) OF SUB-SECTION 2 OF SECTION 50C WAS M ET BY THE ASSESSEE. WE HAVE ALREADY SET OUT HEREINABOVE THE RECITAL APP EARING IN THE DEEDS OF CONVEYANCE UPON WHICH THE ASSESSEE WAS RELYING. PRE SUMABLY, THE CASE OF THE ASSESSEE WAS THAT PRICE OFFERED BY THE BUYER WAS TH E HIGHEST PREVAILING PRICE IN THE MARKET. IF THIS IS HIS CASE THEN IT IS DIFFICUL T TO ACCEPT THE PROPOSITION THAT THE ASSESSEE HAD ACCEPTED THAT THE PRICE FIXED BY THE D ISTRICT SUB REGISTRAR WAS THE FAIR MARKET VALUE OF THE PROPERTY. NO SUCH INFERENC E CAN BE MADE AS AGAINST THE ASSESSEE BECAUSE HE HAD NOTHING TO DO IN THE MATTER . STAMP DUTY WAS PAYABLE BY THE PURCHASER. IT WAS FOR THE PURCHASER TO EITHER A CCEPT IT OR DISPUTE IT. THE ASSESSEE COULD NOT, ON THE BASIS OF THE PRICE FIXED BY THE SUB-REGISTRAR, HAVE CLAIMED ANYTHING MORE THAN THE AGREED CONSIDERATION OF A SUM OF RS.10 LAKHS WHICH, ACCORDING TO THE ASSESSEE, WAS THE HIGHEST P REVAILING MARKET PRICE. IT WOULD FOLLOW AUTOMATICALLY THAT HIS CASE WAS THAT T HE FAIR MARKET VALUE OF THE PROPERTY COULD NOT BE RS.35 LAKHS AS ASSESSED BY TH E DISTRICT SUB REGISTRAR. IN A CASE OF THIS NATURE THE ASSESSING OFFICER SHOULD, I N FAIRNESS, HAVE GIVEN AN OPTION TO THE ASSESSEE TO HAVE THE VALUATION MADE BY THE D EPARTMENTAL VALUATION OFFICER CONTEMPLATED UNDER SECTION 50C. AS A MATTER OF COUR SE, IN ALL SUCH CASES THE ASSESSING OFFICER SHOULD GIVE AN OPTION TO THE ASSE SSEE TO HAVE THE VALUATION MADE BY THE DEPARTMENTAL VALUATION OFFICER. FOR THE AFORESAID REASONS, WE ARE OF THE OPINION TH AT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER, CONTEMPLATED UNDER SECTION 50C, IS REQUIRED TO AVOID MISCARRIAGE OF JUSTICE. THE LEGISLATURE DID N OT INTEND THAT THE CAPITAL GAIN SHOULD BE FIXED MERELY ON THE BASIS OF THE VALUATIO N TO BE MADE BY THE DISTRICT SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY. THE LE GISLATURE HAS TAKEN CARE TO PROVIDE ADEQUATE MACHINERY TO GIVE A FAIR TREATMENT TO THE CITIZEN/TAXPAYER. THERE IS NO REASON WHY THE MACHINERY PROVIDED BY TH E LEGISLATURE SHOULD NOT BE USED AND THE BENEFIT THEREOF SHOULD BE REFUSED. EVE N IN A CASE WHERE NO SUCH PRAYER IS MADE BY THE LEARNED ADVOCATE REPRESENTING THE ASSESSEE, WHO MAY NOT HAVE BEEN PROPERLY INSTRUCTED IN LAW, THE ASSESSING OFFICER, DISCHARGING A QUASI JUDICIAL FUNCTION, HAS THE BOUNDEN DUTY TO ACT FAIR LY AND TO GIVE A FAIR TREATMENT BY GIVING HIM AN OPTION TO FOLLOW THE COURSE PROVID ED BY LAW. 6 ITA NO.5494/DEL/2016 6. IN VIEW OF THE ABOVE DISCUSSION, THE GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ASSESSING OFFICER IS DIRECTED TO REFER THE MATTER TO DVO FOR ARRIVING AT FAIR MARKET VALUE OF THE PROPERTY AS ON DATE OF SALE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF DECEMBER, 2016. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED : 23-12-2016. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI