Kanala Venkateswarlu, Kurnool V. Asst. Commissioner of Income Tax, Circle-1, Kurnool

ITA 573/Hyd/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1391 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 28-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PRAVEENA
• Assessee Lawyers: A C GAGAIAH
• Keywords: Sale consideration of property below Jantri Value; Business income; Additional evidence; Fair market value
• Section: 50C

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE S MT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S . RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 5 7 3 /HYD/201 8 ASSESSMENT YEAR: 20 13 - 14 KANALA VENKATESWARLU, KURNOOL PAN AFXPK6248N VS. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1, KURNOOL. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A. C. GAGAIAH REVENUE BY : SMT. S. PRAVEENA DATE OF HEARING : 0 1 - 1 0 - 201 8 DATE OF PRONOUNCEMENT : 2 9 - 11 - 201 8 O R D E R PER S . RIFAUR RAHMAN, A .M.: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) , KURNOOL , DATED 14 / 02 /201 8 FOR AY 20 13 - 14. 2. BRIEF FACTS OF THE CASE ARE, ASSE SSEE, AN INDIVIDUAL, DERIVING INCOME FROM HOUSE PROPERTY, INCOME FROM LONG TERM CAPITAL GAINS AND BUSINESS INCOME FROM TRADING IN GRANITES, FILED HIS RETURN OF INCOME FOR AY 2013 - 14 ON 30/12/2014 ADMITTING A TOTAL INCOME OF RS. 2,20,68,420/ - , WHICH INCLUDE S INCOME FROM LONG TERM CAPITAL GAINS OF RS. 2,14,88,092/ - AN D AGRICULTURAL INCOME OF RS. 1,40,200/ - . THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S 143(2) WAS ISSUED AND SERVED ON THE ASSESSEE ON 10/09/2015. 2.1 DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, ASSESSEE WAS ASKED TO FURNISH SALE DEEDS IN RESPECT OF SALE OF TWO OPEN PLOTS ADMEASURING 2.5 ACRES OF LAND IN KALLUR VILLAGE, KURNOOL DISTRICT. AO NOTICED THE DIFFERENCE OF RS. 1,03,00,000/ - BETWEEN THE SRO VALUE 2 ITA NO. 573 /HYD/201 8 KANALA VENKATESWARLU, KURNOOL. AND SALE CONSIDERATION RE CEIVED BY THE ASSESSEE. ACCORDINGLY, SECTION 50C OF THE ACT WAS INVOKED. IN PROTEST, ASSESSEE VIDE HIS LETTER DATED 24/03/2016 SUBMITTED THAT THE ABOVE PROPERTIES WERE SOLD AT A LOWER VALUE THAN THE AMOUNT FIXED BY THE SRO, KURNOOL, AS PER THE MASTER PLAN OF KURNOOL MUNICIPAL CORPORATION, A ROAD I S PASSING THROUGH THE ABOVE LAND BECAUSE OF WHICH THE ASSESSEE EXPECTED TO LOOSE 30 TO 40% OF THE LAND. THEREFORE, ASSESSEE REQUESTED THE AO TO ADOPT THE SALE CONSIDERATION DECLARED BY HIM IN THE RETURN OF INCOME. AO NOTED THAT R OAD WAS MARKED IN THE MASTER PLAN OF KURNOOL MUNICIPAL CORPORATION, WHICH IS EVIDENT FROM THE LETTER DATED 15/03/2016 SUBMITTED BY THE ASSESSEE BEFORE THE MUNICIPAL CORPORATION, KURNOOL. HE REJECTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT MASTER PLAN OF MUNICIPAL CORPORATION ALREADY CONTAINED THE PASSING OF ROAD IN THE ABOVE SAID LAND EVEN BEFORE THE PURCHASE OF THIS LAND BY THE ASSESSEE. ACCORDINGLY, HE REJECTED THE CONTENTION OF THE ASSESSEE AND INVOKED SECTION 50C OF THE ACT. 3. AGGRIEVED WITH THE ABOVE ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING AS UNDER: IT IS ALSO NOTED THAT, (I) THERE IS NO CH ANGE IN NATURE OF LAND AS PROPOSED ROAD WAS ALREADY MARKED IN THE MASTER PLAN WHEN THE APPELLANT PURCHASED THE SAID LAND AND THE SAME LAND IS SOLD AS PURCHASED. (II) IF A ROAD PASSES THROUGH OR BESIDE THE PLOT WILL ACTUALLY ENHANCE THE VALUE OF LAND BEING A INFRASTRUCTURAL DEVELOPMENT. (III) THE AO HAS RIGHTLY INVOKE THE PROVISION OF SEC. 50(C) OF THE ACT, AS DURING THE YEAR NO LAND HAS BEEN ACQUIRED BY THE GOVT. (IV) THE STAMP AUTHORITY HAS VALUED THE IMPUGNED LAND AFTER CONSIDERING ALL FACTORS I . E . NAT URE OF LAND, LOCATION OF LAND, DISTANCE FROM ROAD/PROPOSED ROAD, CIVIL AMENITIES AND LAND USE ETC. 3 ITA NO. 573 /HYD/201 8 KANALA VENKATESWARLU, KURNOOL. (V) THE APPELLANT ALSO TOOK A PLEA THAT LAND WAS PURCHASED AT LOWER RATE THAN THE RATE FIXED BY THE STAMP AUTHORITY. THE PLEA TAKEN BY APPELLANT CANNOT BE A PPRECIATED AS AT THAT TIME, APPELLANT WAS PURCHASER AND THIS PROVISION IS APPLICABLE ON THE SELLER ONLY NOT ON BUYER. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE SALE CONSID ERATION OF LAND IN KURNOOL ON WHICH ROAD PASSES AS PER MASTER PLAN IS ASSESSED TO TAX INVOKING S.50C. AO MIGHT HAVE REFERRED TO DVO FOR KNOWING THE EFFECT OF VALUATION DUE TO P ASSIN G OF ROAD AS P ER MASTER PLAN. 2. APPELLANT SUBMITTED A PETITION BEFORE CIT (A) FOR ADDITIONAL EVIDENCE SPECIFYING OF PASSING ROAD WITH A LETTER FROM KURNOOL MUNICIPAL CORPORATION RECEIVED AFTER PASSING ASSESSMENT ORDERS. CIT(A) MIGHT HAVE SENT PETITION FOR ADDITIONAL EVIDENCE FOR REMAND RE ORT UNDER RULE 46A. 3. TO PERMIT THE AP PELLANT TO RAISE ANY OTHER GROUND AT THE TIME OF HEARING OF THE A PP EAL. 6. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. WE NOTICE THAT ASSESSEE HAS SOLD TWO OPEN PLOTS OF LAND ADMEASURING 2.5 ACRES LOCATED AT KALLUR VILLAGE, KURNOOL DISTRICT FOR A CONSIDERATION OF RS. 2,60,00,000/ - , WHEREAS, SR O VALUE AS PER THE SALE DOCUMENT IS RS. 3,63,00,000/ - . FOR THE DIFFERENCE IN THE MARKET VALUE, ASSESSEE SUBMITTED BEFORE THE AO THAT THERE IS A PLAN OF LAYING ROAD IN THE MASTER PLAN OF KURNOOL MUNICIPA L CORPORATION, AS PER WHICH, ASSESSEE MAY LOOSE 30 TO 40% OF THE LAND, HENCE, THE ASSESSEE HAS SOLD THE PROPERTY BELOW THE FAIR MARKET VALUE EXISTING AT THAT POINT OF TIME. WHEREAS, THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE SAME ROAD PLAN WAS EXISTING AT THE TIME OF PURCHASE OF THE LAND BY THE ASSESSEE, WHICH IS EVIDENT FROM THE LETTER ISSUED BY THE KURNOOL MUNICIPAL CORPORATION, WHICH IS PLACED ON RECORD. AS PER THE LETTER ISSUED BY KURNOOL MUNICIPAL CORPORATION, MASTER PLA N CONTAINED 60 FT. ROAD EXISTED FROM 1996 TO TILL DATE. IT CLEARLY INDICATES THAT THERE IS A PLAN IN THE MASTER PLAN TO LAY 60 FT. ROAD, BUT, IT WAS NOT IMPLEMENTED. WE NOTE THAT SRO VALUE IS CALCULATED BASED ON THE REGISTERED VALUE OF ADJACENT LANDS, WE A RE 4 ITA NO. 573 /HYD/201 8 KANALA VENKATESWARLU, KURNOOL. NOT SURE WHETHER THE ADJACENT LAND ALSO HAVING SIMILAR ISSUE I.E. IN THE ADJACENT LAND ALSO, THEY WILL LOOSE CERTAIN PORTION OF LAND FOR LAYING OF ROAD. THEREFORE, IN OUR CONSIDERED VIEW, SRO VALUE CANNOT BE ACCEPTED AS MARKET VALUE UNLESS IT IS VERIFIE D BY AN EXPERT VALUER. SINCE ASSESSEE HAS PROTESTED IN ADOPTING THE SRO VALUE, AO SHOULD HAVE REFERRED THIS MATTER TO THE DVO INSTEAD OF ADOPTING SRO VALUE U/S 50C(2) OF THE ACT. THEREFORE, WE REMIT THIS ISSUE BACK TO THE FILE OF AO TO RE DO THE ASSESSMENT DE - NOVO AFTER GETTING A REPORT FROM THE DVO. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 29 TH NOVEMBER , 2018. SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 29 TH NOVEMBER , 2 018. KV COPY TO: - 1) KANALA VENKATESWARLU, 86 - 335, DOCTORS, COLONY, KURNOOL - 5 18002 2) AC IT, CIRCLE 1, KURNOOL 3) CIT(A), KURNOOL 4) PR. CIT, KURNOOL . 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE