ITO, UDAIPUR V. Shri Nand Kishore Rangwani, UDAIPUR

ITA 553/JODH/2013

• Counselvise Citation: 55323314 RSA 2013
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value
• Section: 50C; 54F; 147; 148

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.553/JODH/2013 (A.Y. 2008-09) ITO, WARD-1(4), VS. SHRI NAND KISHORE RANGWANI, UDAIPUR. 157-NAGARWAI, CHANDPOLE, UDAIPUR. PAN NO. AHPR 7247 Q (APPELLANT) (RESPONDENT) ITA NO.554/JODH/2013 (A.Y. 2008-09) ITO, WARD-1(4), VS. SHRI DHARAM DAS RANGWANI, UDAIPUR. 157-NAGARWAI, CHANDPOLE, UDAIPUR. PAN NO. AEMPR 3261C (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 22/05/2014. DATE OF PRONOUNCEMENT : 09/06/2014. O R D E R PER HARI OM MARATHA, J.M THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED A GAINST THE ORDER DATED 02/09/2013 OF LD. CIT(A), UDAIPUR. 2 2. AT THE TIME OF HEARING, DESPITE HAVING BEEN DULY SERVED, NOBODY CAME TO REPRESENT THE CASES OF THE ASSESSEE- RESPONDENT NOR ANY ADJOURNMENT PETITION WAS FILED. THEREFORE, WE PROCEED TO DECIDE THIS APPEAL AFTER H EARING THE LD. D.R. EXPARTE QUA THE ASSESSEE. 3. THE FOLLOWING GROUND HAS BEEN RAISED IN THIS APP EAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 16,83,979/- MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN. 4. FACTS RELATING TO THIS ISSUE ARE THAT THE ASSESS EE, AS INDIVIDUAL, FILED HIS RETURN OF INCOME [ROI] DECLARED TOTAL INC OME OF RS. 97,733/- WHICH WAS ACCEPTED U/S 143(1) OF THE INCOME-TAX ACT , 1961 ['THE ACT', FOR SHORT]. SUBSEQUENTLY, PROCEEDINGS U/S 147 R.W. S. 148 OF THE ACT WERE INITIATED AFTER RECORDING REQUISITE REASONS TH AT THE CAPITAL GAIN HAS ARISEN ON THE SALE OF IMMOVABLE PROPERTY IN TWO PARTS SOLD THROUGH SEPARATE REGISTERED DEEDS. THE IMMOVABLE PROPERTY WAS SOLD FOR RS. 24 LAKHS EACH AS AGAINST WHICH THE SUB-REGISTRAR H AS ADOPTED THE VALUE OF THE PROPERTY AT RS. 36,55,226/- EACH. IN FACT, DURING THE YEAR, THE ASSESSEE ALONGWITH WITH TWO OTHER CO-OWNERS, BEING HIS BROTHERS NAMELY, SHRI SHIV CHAND RANGWANI NAD SHRI DHARAM DA S RANGWANI, HAD SOLD IMMOVABLE PROPERTY IN TWO PARTS. THE SALE CONS IDERATION 3 MENTIONED IN THE TWO SALE DEEDS DATED 26.3,2008 IS RS. 20 LAKHS EACH TOTALING TO RS. 40 LAKHS. HOWEVER, THE REGISTERING AUTHORITY HAS VALUED THIS PROPERTY AS PER PROVISIONS OF SECTION 50C OF T HE ACT AT RS. 1,17,47,366/- TOOK THE VALUE OF THE PROPERTY AS UND ER: SALE CONSIDERATION 3652760 X 2 73,05,520/- COST OF ACQUISITION (PLOT) 2,37,854/- CONSTRUCTION OF HOUSE 50,64,958/- TOTAL CAPITAL GAIN 20,02,708/- 1/3 RD SHARE 6,67,569/- DEDUCTION U/S 54F BEING AMOUNT INVESTED IN NEW CONS TRUCTION 11,76,285/- TAXABLE GAIN (-) 5,08,716/- WHEN THE ASSESSEE WAS SHOW-CAUSED AS TO WHY THE SAL E CONSIDERATION TAKEN BY THE SUB-REGISTRAR SHOULD NOT BE ADOPTED TO ARRIVE AT THE CAPITAL GAIN, IT WAS REPLIED THAT THE TOTAL SALE CO NSIDERATION HAS BEEN TAKEN AT RS. 73,05,520/- [RS. 36,52,760/- X 2] ON THE BASIS OF HOUSE PROPERTY WAS HAVING TWO SIMILAR PARTS, THE VALUATIO N HAS BEEN TAKEN BY THE STAMP AUTHORITY DIFFERENTLY AT RS. 36,52,760/- AND RS. 80,94,606/- RESPECTIVELY. HOWEVER, THE VALUATION CELL HAS ADOP TED THE FAIR MARKET VALUE OF THESE PROPERTIES AT RS. 88,89,400/- AND RS . 45,39,700/- RESPECTIVELY. AS PER SECTION 50C OF THE ACT, THE S UB-REGISTRAR HAS ADOPTED THE ABOVE VALUE. ONE OF THE ECO-OWNERS NAM ELY SHRI SHIV KUMAR RANGWANI HAS FILED HIS ROI ON 19.5.20110 AND HAS SHOWN THE COMPUTATION OF LONG TERM CAPITAL GAIN AS UNDER: 4 FILE VALUE OF SALE CONSIDERATION BEING 1/3 RD OF TOTAL BALL CONSIDERATION OF RS. 73,05,520/- RS. 24,35,173/- LESS: I) COST OF ACQUISITION AFTER INDEXATION RS. 74,388/- RS. 13,79,584/- RS. 14,53,972/- BALANCE RS. 9,81,201/- 5. APART FROM THIS, SHRI SHIV KUMAR RANGWANI HAS SH OWN INDEX COST OF ACQUISITION DONE AS UNDER: SALE CONSIDERATION RS. 24,35,173/- COST OF ACQUISITION F.Y. 88- 80 21736 X 551/161 RS. 74,338/- COST OF IMPROVEMENT 88-89 91912 X 551/161 RS. 3,14,5 56/- COST OF IMPROVEMENT 89-90 156843 X 551/172 RS. 5,02, 244/- COST OF IMPROVEMENT 90-91 185826 & 551/182 RS. 5,62, 583/- RS. 13,79,583/- BALANCE RS. 9,81,202/- ACCORDINGLY, THE A.O. HAS ADOPTED THE COST OF ACQUI SITION AND COST OF IMPROVEMENT AS HAS BEEN ADOPTED BY SHRI SHIV KUMAR RANGWANI WHOSE INCOME HAS BEEN COMPUTED U/S 148 /143(3) OF THE ACT ON 27.12.2010 AS UNDER: FULL VALUE OF CONSIDERATION U/S 50C OF THE I.T. ACT. RS. 39,15,789/- DEDUCTION U/S 48 COST OF ACQUISITION AFTER INDEXATION (AS DECLARED BY SHRI SHIV KUMAR RS. 74,338/- RS. 9,81,369/- 5 RANGWANI) 21736 X 551/161 COST OF IMPROVEMENT AFTER INDEXATION RS. 91,912/- + 156843/- + 185826/- = 434581 X 551/224 RS. 10,55,707/- BALANCE RS. 28,60,082/- LESS : DEDUCTION FOR DEPOSIT IN CAPITAL GAIN A/C U/S 54F OF THE I.T. ACT. RS. 11,76,285/- LTCG RS. 16,83,797/- ACCORDINGLY, TOTAL INCOME OF THE ASSESSEE HAS BEEN COMPUTED AT RS. 17,81,530/- WHICH INCLUDED LONG TERM CAPITAL GAIN O F RS. 16,83,797/-. AGAINST THIS COMPUTATION OF THE A.O., THE ASSESSEE PREFERRED APPEAL AND THE LD. CIT(A) HAS DELETED THIS ENTIRE ADDITION ON THE REASONING THAT THE ENTIRE SHARE IN CAPITAL GAIN HAS BEEN INVE STED BY THIS ASSESSEE IN TERMS OF SECTION 54F OF THE ACT. IN DOING SO, T HE LD. CIT(A) HAS RELIED ON THE JUDGEMENT OF THE APPELLATE TRIBUNAL R ENDERED IN THE CASE OF SHRI GYAN CHAND JAIN VS. ITO REPORTED IN 133 TTJ [JP] 482 WHEREIN IT HAS BEEN HELD THAT FOR THE PURPOSE OF EXEMPTION U/S 54F, THE NET CONSIDERATION HAS TO BE DETERMINED BY TAKING ACTUAL SALE CONSIDERATION AND NOT THE DEEMED FULL VALUE OF CONSIDERATION ADO PTED U/S 50C OF THE ACT. SINCE THIS ASSESSEE HAS INVESTED THE ENTIRE S ALE PROCEEDS FALLING TO HIS SHARE IN THE CAPITAL GAIN ACCOUNT/CONSTRUCTION OF NEW HOUSE, THERE 6 REMAINS NO CAPITAL GAIN TO BE TAXED UNDER THE ACT. NOW THE REVENUE HAS COME IN APPEAL AND HAS DISPUTED THE IMPUGNED DE LETION. 6. WE HAVE HEARD THE LD. D.R. AND HAVE CAREFULLY PE RUSED THE ENTIRE MATERIAL ON RECORD. THE LD. D.R. HAS REPEATED THE REASONS GIVEN BY THE A.O. IN HIS ORDER AND HAS NOT DENIED THAT THE LD. C IT(A) HAS RELIED ON THE JUDGMENT OF THE JURISDICTIONAL APPELLATE TRIBUN AL [SUPRA]. THIS FACT IS ALSO EVIDENT FROM THE ORDER APPEALED AGAINS T. THE FACTS NARRATED ABOVE HAVE NOT BEEN DISPUTED OR CONTESTED BY THE LD. D.R. ACCORDINGLY, WE ARE IN AGREEMENT WITH THE LD. CIT(A )S FINDING THAT WHEN ENTIRE CAPITA GAIN HAS BEEN INVESTED IN TERMS OF SECTION 54F OF THE ACT, THERE WOULD ARISE NO OCCASION TO TAX ANY C APITAL GAIN. ACCORDINGLY, WE CONFIRM THE IMPUGNED FINDING AND DI SMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ITA NO.554/JODH/2013 8. THE FOLLOWING SOLE GROUND HAS BEEN RAISED BY THE REVENUE IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF LONG T ERM CAPITAL GAIN OF RS. 15,48,122/- (WRONGLY MENTIONED AS 16,83,797/ -) MADE BY 7 AO INVOKING PROVISION OF 50C BY INCORRECTLY GIVING BENEFIT OF HIGHER AMOUNT OF DEDUCTION U/S 54F, EVEN THOUGH THE HIGHER CONSIDERATION WAS NOT INVESTED IN THE NEW PROPERTY. 9. FACTS OF THIS APPEAL WHICH HAS BEEN FILED BY THE CO-OWNER SHRI DHARAM DAS RANGWANI ARE EXACTLY IDENTICAL TO THE AB OVE CASE. THE FACTS, CIRCUMSTANCES, REASONS FOR ADDITION AND REAS ONS FOR DELETION BEING SAME AND SIMILAR, WE DO NOT FIND ANY MERIT IN THIS APPEAL AS WELL. WE MAY MENTION THAT THIS APPEAL WAS HEARD EX PARTE DUE TO THE SIMILAR REASONS AS EXISTED IN THE CASE OF SHRI NAND KISHORE RANGWANI. ACCORDINGLY, WE DISMISS THIS APPEAL OF THE REVENUE. 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE STAND DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 09 TH JUNE, 2014). SD/- SD/- (N.K.SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 09 TH JUNE, 2014. V L/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.