Mohd. Shameer Alias Shakeel, Hyderabad V. Income Tax Officer, Ward-7(1), Hyderabad

ITA 609/Hyd/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1263 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 28-05-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 02-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Assessee Lawyers: ARUN KUMAR MALANI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Cost of acquisition; Fair market value; Set aside; Capital Gains
• Section: 50C; 55A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC, HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 609/HYD/2018 ASSESSMENT YEAR: 2008-09 MR. MOHD. SHAMEEM ALIAS SHAKEEL, HYDERABAD [PAN: AGBPM3973F] VS INCOME TAX OFFICER, WARD-7(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI ARUN KUMAR MALANI, AR FOR REVENUE : SMT. AMISHA S.GUPT, DR DATE OF HEARING : 28-05-2020 DATE OF PRONOUNCEMENT : 28-05-2020 O R D E R THIS IS ASSESSEES APPEAL FOR THE AY.2008-09, DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -3, HYDERABAD, DATED 24-10-2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN IND IVIDUAL, SOLD TWO LANDED PROPERTIES AT NIZAMABAD AND RECEIVED HIS SHARE OF CONSIDERATION TOWARDS THE SAME AT RS.12 LAKHS AND RS.5, 86,500/- RESPECTIVELY. THE ASSESSING OFFICER (AO) OBSERVED THAT THE SRO VALUE OF THE ABOVE PROPERTIES IS RS.38 LAKHS AND RS.1 8,07,500/- RESPECTIVELY. SINCE THE ASSESSEE DID NOT OFFER CAPITA L GAIN FROM THE SAID TRANSACTION TO TAX, THE AO ISSUED A NOTICE U/S.148 OF THE INCOME TAX ACT [ACT] TO THE ASSESSEE. THE ASSESSEE DID NOT RESPOND TO THE NOTICE. THEREFORE, A FRESH NOTICE U/S.142(1) OF THE ACT WAS ISSUED, IN RESPONSE TO WHICH, THE ASSESSEE APPEARED A ND DISCUSSED THE CASE WITH AO. THEREAFTER, THE AO COMPUTED THE SHORT T ERM I.T.A. NO. 609/HYD/2018 :- 2 -: CAPITAL GAIN BY ADOPTING SRO VALUE OF THE PROPERTY AND BROUGHT THE CAPITAL GAIN TO TAX. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A), STATING THAT - THE INCOME FROM SALE OF PROPERTY OUGHT TO HAVE BEEN TREATED AS BUSINESS INCOME AND NOT CAPITAL GAIN . WITHOUT PREJUDICE TO THIS ARGUMENT, THE ASSESSEE ALSO TOOK A GRO UND THAT THE AO OUGHT TO HAVE REFERRED THE VALUE OF THE PROPERTY TO THE VALUATION OFFICER U/S.55A OF THE ACT. FURTHER IT WAS A RGUED THAT FOR COMPUTING THE CAPITAL GAIN, IF THE SRO VALUE IS TAKE N, THEN THE COST OF ACQUISITION ALSO SHOULD BE TAKEN AS PER THE SR O VALUATION ONLY. THE CIT(A), HOWEVER, HELD THAT THE INCOME EARNE D BY ASSESSEE IS CAPITAL GAINS AND NOT BUSINESS INCOME AND AS REGAR DS THE COMPUTATION OF CAPITAL GAIN, HE CONFIRMED THE ORDER OF AO. THUS, HE DISMISSED THE APPEAL OF ASSESSEE. 4. AGAINST THIS ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL, RAISING THE FOLLOWING GROUNDS: 1. THE ASSESSING OFFICER OUGHT TO HAVE TREATED THE SALE AND ACQUISITION OF PROPERTY AS BUSINESS INCOME AND NOT CAPITAL GAINS B ECAUSE DURING THE PRESENT ASSESSMENT YEAR 2008-09 THE ASSESSEE HAD NO OTHER SOURCE OF INCOME. THE PRESENT LAND TRANSACTION WAS DONE ALONG WITH 3 OTHERS IN PROPERTY 1 AND ALONG WITH 4 OTHERS IN PROPERTY 2 WH ICH IS IN THE NATURE OF BUSINESS TRANSACTION AND CERTAINLY CANNOT BE AN INV ESTMENT TO BE CLASSIFIED AS CAPITAL GAINS. A) THE INCOME FROM THIS TRANSACTION IS BELOW TAXABLE L IMITS SO NO INCOME TAX RETURN WAS FILED. B) THE WHOLE PURCHASE AND SALE TRANSACTION WAS DONE BY GENERAL POWER OF ATTORNEY THROUGH SRI MOHD AZAM WITH THE IN TENTION TO EARN PROFIT IN SHORT TIME PERIOD AND HENCE AND IF THE IN TENTION WAS INVESTMENT, THEN THE PURCHASE AND SALE WOULD HAVE B EEN DONE BY EXECUTING SALE DEED. C) HENCE THE PROVISIONS OF SECTION 50C ARE NOT APPLICA BLE IN THIS CASE. I.T.A. NO. 609/HYD/2018 :- 3 -: 2) ALL THE GROUNDS OF DECISION MENTIONED BY THE CIT (A) ARE NOT BASED ON THE FACTS OF THE CASE. ALL THE INFORMATION RELATING TO THE TRANSACTION AND COPY OF SALE DEED WAS SHOWN BY THE ASSESSING OFFICE R HIMSELF AND CALLED FOR CLARIFICATION FROM ASSESSEE, HENCE, THERE IS NO SCOPE FOR AFTERTHOUGHT. THERE IS NO PARTNERSHIP FIRM AND ASSESSEE IS NOT RE SPONSIBLE FOR THE INCOME TAX RETURNS OF THE ASSOCIATES INVOLVED IN TH E TRANSACTION. 3) WITHOUT PREJUDICE TO ABOVE, THE ASSESSING OFFICE R OUGHT TO HAVE REFERRED THE VALUE OF THE PROPERTIES TO THE VALUATION OFFICE R AS PER SECTION 55A. ALSO IF SALE VALUE IS TREATED AS PER SRO VALUATION THEN COST OF ACQUISITION SHOULD ALSO HAVE BEEN TREATED AS PER SRO VALUATION. 4) FOR THESE AND OTHER REASONS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT ASSESSEE PRAYS THAT THE ADDITIONS MAD E TO THE INCOME BE DELETED. THE CASE WAS TAKEN UP FOR HEARING ON 28-05-2020 THROU GH VIDEO CONFERENCING AND BOTH THE PARTIES WERE HEARD. 5. THE LD.COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT H E HAS NO OBJECTION TO TREAT THE INCOME AS CAPITAL GAIN, PROVID ED THE ISSUE OF VALUATION OF THE PROPERTY IS SET ASIDE TO THE FILE OF TH E AO WITH A DIRECTION TO GET THE PROPERTY VALUED U/S.55A OF THE ACT. HE SUBMITTED THAT THE DIFFERENCE BETWEEN THE VALUE DECLARED BY ASSESSEE AND THE VALUE ADOPTED BY THE AO IS MORE THAN 20% AND THEREFORE, THE AO OUGHT TO HAVE REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER (DVO) U/S.55A OF THE ACT . 6. THE LD.DR, HOWEVER, SUPPORTED THE ORDERS OF THE AUTH ORITIES BELOW. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL O N RECORD, I FIND THAT THOUGH THE ASSESSEE HAS RAISED THE GROUND THAT THE INCOME SHOULD BE TREATED AS BUSINESS INCOME AND NO T AS CAPITAL GAIN, HE DID NOT ARGUE ON THE SAID POINT AND AL SO SUBMITTED I.T.A. NO. 609/HYD/2018 :- 4 -: THAT HE HAS NO OBJECTION IF IT IS TREATED AS CAPITAL GAI N IF THE ISSUE WAS TO BE SET ASIDE TO THE FILE OF AO FOR VALUATION OF TH E PROPERTY U/S.55A OF THE ACT. THEREFORE, IT IS TREATED THAT THIS G ROUND IS NOT PRESSED BY THE ASSESSEE. I FIND THAT U/S.55A(B) OF THE ACT, THE AO MAY REFER THE VALUATION OF A CAPITAL ASSET TO THE VALUATIO N OFFICER FOR ASCERTAINING THE FAIR MARKET VALUE, WHERE THE FAIR MARKET VALUE OF THE ASSET EXCEEDS THE VALUE OF ASSET AS CLAIME D BY ASSESSEE BY MORE THAN SUCH PERCENTAGE (I.E.15%) OF THE VALUE OF THE ASSET AS SO CLAIMED OR BY MORE THAN SUCH AMOUNT (RS.25 ,000/-) UNDER RULE 111A, AS MAY BE PRESCRIBED IN THIS BEHAL F. SINCE THE CASE OF THE ASSESSEE FALLS WITHIN THE SAID STIPULATION, I AM OF THE OPINION THAT THE AO OUGHT TO HAVE REFERRED THE CAPITAL ASS ET OF THE ASSESSEE TO THE VALUATION OFFICER IN ACCORDANCE WITH S ECTION 55A OF THE ACT. THEREFORE, I SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE MATTER TO THE FILE OF AO WITH A DIRECTION TO REFER THE SAME TO THE VALUATION OFFICER U/S.55A OF THE ACT AND RE-COMPUTE THE CAPITAL GAIN IN ACCORDANCE WITH THE REPORT OF VALUATION OFFICE R. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE GIVEN A FAIR OPPORTUN ITY OF HEARING. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MAY, 2020 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED: 28-05-2020 TNMM I.T.A. NO. 609/HYD/2018 :- 5 -: COPY TO : 1. MR. MOHD. SHAMEEM ALIAS SHAKEEL, 8-2-293/82/J III/460, PLOT NO.40, ROAD NO.86, JUBLI HILLS, HYDER ABAD. 2. THE INCOME TAX OFFICER, WARD-7(1), HYDERABAD. 3. CIT (APPEALS)-3, HYDERABAD. 4. THE PR.CIT-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.