ACIT RG 16(2), MUMBAI V. ASHOK CHANDI PRASAD BANKA, MUMBAI

ITA 5536/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55088 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 25-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 09-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G K NAIR
• Assessee Lawyers: SHRIKAPIL BAHRI
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH DMUMBAI BEFORE SHRI PRAMOD KUMAR(AM) AND SMT. ASHA VIJAYARAGHAVAN (JM) ITA NO.5536/MUM/2009 ASSESSMENT YEAR 2004-05 THE ACIT, RANGE 16(2), MATRU MANDIR, TARDEO ROAD, MUMBAI-400 007 VS. SHRI ASHOK CHANDI PRASAD BANKA, 22, CHIRANJEEV, GULMOHAR CROSS ROAD NO. 4, J.V.P.D., JUHU, MUMBAI-400 049 PAN-AAGPB 9437L (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI G.K. NAIR RESPONDENT BY: SHRIKAPIL BAHRI DATE OF HEARING :25.08.2011 DATE OF PRONOUNCEMENT: O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DATED 8.7.2009 PASSED BY THE LD. CIT(A)-XVIFOR THE ASSESSMENT YEAR 2004- 05. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN I NDIVIDUAL, ENGAGED IN THE BUSINESS OF TRADING OF CHEMICALS IN THE NAME OF J. PRINTEX POLYCHEM. THE ASSESSEE OWNED A PROPERTY AT VILE PARLE (W). IT WA S JOINTLY OWNED BY THE ASSESSEE WITH MR. SHARAD G. MORARKA. THE ASSESSEE S SHARE WAS 50%. THE ACTUAL CONSIDERATION RECEIVED ON SALE OF THE PLOT W AS RS.1,70,00,000/- THE VALUE OF THE SAID PLOT OF LAND FOR STAMP DUTY P URPOSE WAS ITA NO.5536/M/09 2 RS.2,04,14,000/-. THE AO REQUIRED THE APPELLANT TO SAY WHY THE VALUE FOR STAMP DUTY PURPOSES MAY NOT BE ADOPTED AS THE S ALE CONSIDERATION TO WORK OUT THE LONG TERM CAPITAL GAIN U/S.50C OF T HE INCOME TAX ACT. THE APPELLANT VIDE HIS LETTER DATED 28.12.006 STATE D THAT AN APPEAL HAD BEEN FILED BEFORE D.I.G.R, MUMBAI AND COPY OF T HE APPEAL WAS ALSO FILED. THE AO NOTED THAT FROM THE RECORDS IT C OULD BE SEEN THAT THE APPEAL WAS FILED BEYOND DATE AND NO FINAL OUTCOME W AS KNOWN. THEREFORE, THE APPELLANTS SHARE OF THE CONSIDERATI ON FOR CAPITAL GAIN PURPOSE WAS TAKEN AT 50% OF RS.2,04,14,000/- WHICH COMES TO RS.1,02,07,000/-. 3. BEFORE THE LD. CIT(A), THE ASSESSEE FILED DETAIL ED SUBMISSIONS AS TO WHY THE VALUE FOR STAMP DUTY PURPOSES MAY NOT BE AD OPTED FOR WORKING OUT THE LONG TERM CAPITAL GAIN ON SALE OF PLOT OF LAND. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT THE OBJECTION WAS RAISED AGAINST THE VALUE ADOPTED BY THE ASSESSING OFFICER AND HENCE THE MATTER SHOUL D HAVE BEEN REFERRED TO THE VALUATION OFFICER BY THE AO SECTION 50C OF THE I.T. ACT. 4. THE LD. AR PLACED RELIANCE ON THE DECISION OF TH E HONBLE ITAT IN THE CASE OF MEGHRAJ BAID VS ITO (114 TTJ (JD) 841). 5. THE LD. CIT(A) FORWARDED THE SUBMISSIONS MADE BY THE LD. AR TO THE AO FOR HIS COMMENTS. THE ASSESSEE THEN STATED THAT HE OBJECTED TO THE APPLICATION OF SECTION 50C BY LETTER DT. 27 TH & 28 TH DECEMBER, 2006. THE ASSESSEE THEN ELABORATED ON THE VALUATION OF THE PR OPERTY WHEREIN THE DEPARTMENT DID NOT CONSIDER THE RESTRICTIONS FOR TH E PURPOSE OF STAMP DUTY AND INSTEAD ADOPTED THE READY RECKONER VALUE. THE LD. AR FURTHER ELABORATED ON THE REPORT OF THE APPROVED VALUER M/S. V.S. VAID YA & CO. 6. THE LD. CIT(A) BY HIS ORDER AT PARA-3 HELD THAT THE CONTENTION OF THE ASSESSEE THAT THE LAND DID NOT HAVE THE SAME VALUE AS OTHER PROPERTIES IN THE SAME AREA APPEARS TO BE CORRECT. ITA NO.5536/M/09 3 7. THE LD. CIT(A) STATED AS FOLLOWS: THE ITAT IN ITS DECISION IN THE CASE OF MEGHRAJ BA ID VS. ITO (114 TTJ 841) HAS HELD THAT MAY IN SECTION 50 C SHOULD BE READ AS SHOULD AND IF THE AO IS NOT SATISFIED WIT H THE EXPLANATION OF THE ASSESSEE THE MATTER HAS TO BE RE FERRED TO THE DVO FOR THE PURPOSE OF DETERMINING THE FAIR MARKET VALUE. IN THE CASE OF THE APPELLANT HE HAD FILED A VALUATION REPO RT BY A GOVERNMENT APPROVED VALUER STATING THAT THE VALUE O F THE CONCERNED PLOT OF LAND WAS RS.1.51 CRORES. THE SALE CONSIDERATION WAS RS.1,70,00,000/- AND VALUE FOR STAMP DUTY PURPO SES WAS RS.2,04,14,000/-. THE APPELLANT HAD OBJECTED TO THE ADOPTION OF VALUE FOR STAMP DUTY PURPOSES FOR WORKING OUT THE L ONG TERM CAPITAL GAINS. THEREFORE, THE AO SHOULD HAVE REFERR ED THE PROPERTY TO THE VALUATION OFFICER TO ASCERTAIN THE FAIR MARK ET VALUE U/S. 50 C (2) OF THE INCOME TAX ACT. 8. HOWEVER IT IS OBSERVED THAT THE AO SHOULD HAVE R EFERRED THE PROPERTY TO THE VALUATION OFFICER TO ASCERTAIN THE FAIR MARK ET VALUE UNDER SECTION 50C OF THE I.T. ACT. THE LD. CIT(A) DEALT WITH THE ISSU E OF ADOPTION OF THE VALUE FOR STAMP DUTY PURPOSES FOR DETERMINING THE CAPITAL GAINS AND FINALLY HELD THAT THE ADOPTION OF VALUE FOR STAMP DUTY PURPOSES IN OR DER TO WORK OUT THE CAPITAL GAINS IS DELETED. 9. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. WE F IND THAT THE LD. CIT(A) HAS ERRED IN DECIDING THE ISSUE ABOUT THE ADOPTION OF VALUE FOR STAMP DUTY PURPOSES WITHOUT TAKING INTO CONSIDERATION THE FACT THAT THE AO SHOULD HAVE REFERRED THE PROPERTY TO THE VALUATION OFFICER TO A SCERTAIN THE FAIR MARKET VALUE UNDER SECTION 50C OF THE I.T. ACT. THE LD. AR HAD P OINTED OUT THE DECISION OF THE ITAT IN THE CASE OF MEGHRAJ BAID VS ITO (SUPRA) IN HIS SUBMISSIONS BEFORE THE LD. CIT(A) AND THE CIT(A) HAD ALSO OBSERVED IN HIS ORDER AND REFERRED TO THE DECISION. NEVERTHELESS WHILE PASSING THE ORDER , HE HAS FAILED TO FOLLOW THE RATIO OF THE DECISION. 10. IN THE CASE OF MEGHRAJ BAID VS ITO, IT HAS BEEN HELD THAT WHEN THE AO DOES NOT AGREE WITH THE EXPLANATION OF ASSESSEE WITH REGARD TO ITA NO.5536/M/09 4 LOWER SALE CONSIDERATION THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, HE SHOULD REFER THE MATTER TO DVO UNDER SUB- SECTION 2 OF SEC.50C. THE WORD MAY IN SEC 50C(2) HAS TO BE READ AS SHOULD SO THAT THE PROVISION IS NOT RENDERED R EDUNDANT. IN THAT CASE THE TRIBUNAL REMANDED THE MATTER BACK TO AO TO PROCEED ACCORDINGLY. ON THIS GROUND THE MATTER REQUIRES T O GO BACK TO AO. 11. WE FIND THAT EVEN IF THE LD. CIT(A) FELT THAT H E CANNOT SET ASIDE THE ORDER OF THE AO FOR BEING REFERRED TO THE DISTR ICT VALUATION OFFICER, HE COULD HAVE ASKED FOR A REMAND REPORT FR OM THE AO AFTER REFERRING TO THE DISTRICT VALUATION OFFICER. BE THA T AS IT MAY, THE ADOPTION OF THE VALUE ADOPTED BY THE STAMP AUTHORIT IES CANNOT BE SUSTAINED WITHOUT THE DETERMINATION OF THE MARKET V ALUE BEING REFERRED TO THE DISTRICT VALUATION OFFICER. IN THES E CIRCUMSTANCES, WE REMIT THE MATTER BACK TO THE AO, WHO WILL REFER THE VALUATION OF THE IMPUGNED PROPERTY TO THE DEPARTMENTAL VALUATION CEL L AND ALSO GIVE SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO SUBMIT HI S CASE AND THEREAFTER THE ASSESSING OFFICER SHALL DECIDE THE I SSUE IN ACCORDANCE WITH LAW. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 30TH DAY OF AUGUST, 2011 SD/ - SD/ - ( PRAMOD KUMAR ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30TH AUGUST, 2011 RJ ITA NO.5536/M/09 5 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR D BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO.5536/M/09 6 DATE INITIALS 1. DRAFT DICTATED ON: 26.8.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 26.08.2011 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: