MAHENDRA KUMAR HALDIYA, Jaipur V. ITO, Jaipur

ITA 608/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5335 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 03-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R PARIKH J DHK
• Assessee Lawyers: S L PODDAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income
• Section: 50C

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 608/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI MAHENDRA KUMAR HALDIYA E-65, SIDDHARTH NAGAR, MALVIYA NAGAR,JAIPUR CUKE VS. THE ITO WARD- 6(1) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACKPM 5990 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY :SHRI G.R. PARIKH, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 18/05/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 24 /05/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 27-06-2014 FOR THE ASSESSM ENT YEAR 2009-10 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: - 1. THAT LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING APPLICATION OF PROVISIONS OF SECTION 50C AND 45 OF THE I.T. ACT OVER SALE OF HOUSE NO.2122 AND 2123, GANGO URI BAZAR, JAIPUR AND CONFIRMING ADDITION OF RS. 8,86,921/- IN THE ASSESSEE'S INCOME AS SHORT TERM CAPITAL GAIN DESPITE OF THE FA CT THAT :- (I) THE ASSESSEE IS MERE A COMMISSION AGENT AND THI S PARTICULAR TRANSACTION RELATES TO HIS BUSINESS. ITA NO. 608/JP/2014 SHRI MAHENDER KUMAR HALDIYA, VS. ITO, WARD- 6(1), J AIPUR . 2 (II) THE SAID PROPERTIES ARE NOT CAPITAL ASSETS OF THE ASSESSEE. (III) EVEN PROVISION OF SECTION 50C ARE TO BE INVOK ED; THESE WOULD BE APPLICABLE OVER THE OWNER OF PROPERTY AT H IS TRANSACTION OF SALE AND EVEN IN CASE, THE ASSESSEE CAN BE CHARG ED FOR TAX ON CAPITAL GAIN ONLY FOR DIFFERENCE IN DLC PRICES. 2. THE LD. CIT(A) HAS ERRED IN LAW IN NOT REMANDING THE MATTER TO THE ASSESSING OFFICER FOR SENDING THE MAT TER TO THE DEPARTMENTAL VALUATION OFFICER. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE E NTERED INTO AN AGREEMENT WITH ONE SHRI GOPAL KRISHNA NAGAR FOR PUR CHASE OF HOUSE NO. 2122 & 2123 (TOTAL 653.33 SQ. YDS), GANGAURI BAZAR, JAIPUR ON THE BASIS OF POWER OF ATTORNEY WHICH PROVIDED THAT THE ASSESS EE CAN SELL THE PROPERTY TO ANY PURCHASER AND SHRI GOPAL KRISHNA NA GAR WILL EXECUTE THE SALE DEED IN THE NAME OF THE THAT PURCHASER. THEREA FTER, ON THE INSTRUCTIONS OF ASSESSEE, THE SALE DEED WAS EXECUTED BY SHRI GOP AL KRISHNA NAGAR IN FAVOUR OF THE PURCHASER. THE ASSESSEE DISCLOSED THE INCOME FROM THIS TRANSACTION BY WAY OF COMMISSION. ACCORDING TO THE AO, THE ASSESSEE HAD BECOME THE CONSTRUCTIVE OWNER AND HELD THE CAPITAL GAIN FROM THIS HOUSE AS LIABLE TO TAX IN THE HANDS OF THE ASSESSEE ON TH E BASIS OF 50C VALUATION BY FOLLOWING OBSERVATIONS. I HAVE CONSIDERED THE SUBMISSION OF ASSESSEE, THE ASSESSEE SUBMITTED THAT HE HAD SHOWN IT AS INCOME FROM COMMI SSION ONLY BECAUSE THE SAME WAS SOLD ON THE BASIS OF POWER OF ATTORNEY. IN THIS REGARD, I HAVE PERUSED THE SALE DEED OF PLOT N O. 219, VARDHMAN NAGAR, JAIPUR WHICH WAS SOLD ON 24-07-2008, THIS PL OT WAS ALSO ITA NO. 608/JP/2014 SHRI MAHENDER KUMAR HALDIYA, VS. ITO, WARD- 6(1), J AIPUR . 3 SOLD BY THE ASSESSEE ON THE BASIS OF POWER OF ATTOR NEY BUT HE DECLARED INCOME/LOSS FROM IT AS SHORT TERM CAPITAL GAINS INCOME. THE ASSESSEE HAD SHOWN THE INCOME FROM PLOT NO. 219 , VARDHMAN NAGAR, JAIPUR AS CAPITAL GAINS INCOME ONLY BECAUSE THE SALE VALUE AS PER SALE DEED AND VALUE AS PER DLC RATE WAS SAME . BUT IN THE CASE OF HOUSE NO. 2122 AND 2123, GANGAURI BAZAR, JA IPUR IT WAS SHOWN AS BUSINESS INCOME I.E. COMMISSION INCOME ONL Y TO AVOID PROVISIONS OF SECTION 50C BECAUSE SALE VALUE AS PER SALE DEED WAS RS. 60,00,000/- BUT AS PER DLC RATE IT WAS RS. 68,1 6,921/-. SINCE INCONSISTENT VIEW WAS TAKEN BY THE ASSESSEE FOR TWO PROPERTIES SOLD BY HIM DURING THE YEAR UNDER CONSIDERATION, THEREFO RE, I HOLD THAT THE GAIN OCCURRED ON ACCOUNT OF DLC RATES APPLIED BY THE REGISTERING AUTHORITY IS NOTHING ELSE BUT SHORT TER M CAPITAL GAINS OF ASSESSEE AND THEREFORE, THE SAME IS ASSESSED AS SHO RT TERM CAPITAL GAINS OF ASSESSEE AS UNDER:- PURCHASE VALUE RS. 57,80,000/- CONSTRUCTION DONE RS. 1,50,000/- TOTAL COST RS. 59,30,000/- SALE VALUE AS PER PROVISION OF SECTION 50C RS. 68, 16,921/- SHORT TERM CAPITAL GAINS RS. 8,86,921/- THEREFORE, I ASSESS THE INCOME FROM SALE OF HOUSE N O. 2122 & 2123, GANGAURI BAZAR, JAIPUR AS INCOME FROM SHORT T ERM CAPITAL GAINS INSTEAD OF INCOME FROM COMMISSION UNDER BUSIN ESS & PROFESSION. THUS INCOME OF RS. 8,86,921/- IS ASSESS ED UNDER SHORT TERM CAPITAL GAIN INSTEAD OF COMMISSION INCOME OF R S. 70,000/- 2.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WHERE THE ADDITION WAS CONFIRMED BY THE LD. CIT(A) AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. IT IS A N UNDISPUTED FACT THAT THE APPELLANT DEALS IN SALE AN D PURCHASE OF REAL ESTATE, SOMETIMES AS AN INVESTOR, SOMETIMES AS A BROKER AND SOMETIMES AS AN ADATIYA. THE ISSUE IN APPEAL ON THIS GROUND IS WHETHER THE TRANSACTION IN QUESTION IS ONE AS AN INVESTMENT OR FOR COMMISSION. IN MY VIEW, THE FACT THAT THE APPELLANT PAID THE ITA NO. 608/JP/2014 SHRI MAHENDER KUMAR HALDIYA, VS. ITO, WARD- 6(1), J AIPUR . 4 ENTIRE PURCHASE CONSIDERATION FOR THE PROPERTY IN Q UESTION IS RELEVANT. THE FACT THAT THE APPELLANT DID NOT REGIS TER THE PROPERTY IN HIS NAME BUT TRANSACTED IN IT AS A HOLD ER OF POWER OF ATTORNEY IS NOT MATERIAL BECAUSE IN THE CASE OF ANOTHER PROPERTY (PLOT N.219, VARDHMAN NAGAR, JAIPUR ), WHI CH WAS ALSO SOLD ON THE BASIS OF POWER OF ATTORNEY, THE AP PELLANT HAS CONSIDERED IT AS AN INVESTMENT AND OFFERED THE GAIN S AS CAPITAL GAIN. HENCE, THE ORDER OF AO IN TREATING THE SAID TRANSACTION AS INVESTMENT AND TAXING THE GAINS, THE REFORE, AS SHORT TERM CAPITAL GAIN IS UPHELD. 2.3 AGGRIEVED, THE ASSESSEE IS NOW IN SECOND APPEAL . 2.4 I HAVE HEARD THE RIVAL CONTENTIONS OF COUNSEL F OR THE ASSESSEE AND LD. DR AND PERUSED THE MATERIALS AVAILABLE ON RECOR D. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE CAPITAL GAINS IN THI S CASE ARE OFFERED BY THE ACTUAL OWNER SHRI GOPAL KRISHNA NAGAR, THEREFORE, T HE LIABILITY OF CAPITAL GAINS OF 50C VALUATION SHALL BE CHARGEABLE IN THE H ANDS OF SHRI GOPAL KRISHNA NAGAR. THE ASSESSEE ACTED ONLY AS A COMMISS ION AGENT AND EARNED ONLY COMMISSION THEREON. IT IS VEHEMENTLY CO NTENDED THAT UNLESS THIS CRUCIAL FACT IS VERIFIED THE ASSESSEE CANNOT B E HELD AS LIABLE FOR CAPITAL GAINS ON THIS SALE. LD. COUNSEL FOR THE ASSESSEE FA IRLY UNDERTAKES THAT IN CASE IT IS FOUND THAT SHRI GOPAL KRISHNA NAGAR HAS NOT OFFERED THE CAPITAL GAINS BASED ON 50C VALUATION THEN THE ASSESSEE WILL ACCEPT THE LIABILITY OF THESE CAPITAL GAINS. IN THE ENTIRETY OF THE FACTS A ND CIRCUMSTANCES OF THE CASE, IT IS DESIRABLE THAT THE MATTER BE SET ASIDE AND RESTORES BACK TO THE FILE OF THE AO TO VERIFY AS TO WHETHER SHRI GOPAL K RISHNA NAGAR HAS ITA NO. 608/JP/2014 SHRI MAHENDER KUMAR HALDIYA, VS. ITO, WARD- 6(1), J AIPUR . 5 SHOWN THE SALE OF PROPERTY OR NOT AND OFFERED IT FO R CAPITAL GAINS IN THE RETURN FILED BY HIM. IN CASE HE HAS NOT OFFERED THE CAPITAL GAINS, IN THAT EVENTUALITY, AS UNDERTAKEN BY THE ASSESSEE THESE CA PITAL GAINS AS COMPUTED SHOULD BE TAXED IN THE HANDS OF THE ASSESSEE. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 24 /05/2016. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 24 /05/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI MAHENDRA KUMAR HALDIYA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 6 (1), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.608/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR