GAJANAN BUILDERS, MUMBAI V. ITO 31(1)(5), MUMBAI

ITA 6157/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7433 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 29-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR H. ANSARI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Fair market value
• Section: 43CA; 50C; 201; 43; 20

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI PAWAN SINGH (JM) I.T.A. NO. 6157 /MUM/ 201 8 (ASSESSMENT YEAR 20 15 - 1 6 ) M/S. GAJANAN BUILDERS OFFICE NO. 20, PATEL INDUSTRIAL ESTATE, OPP VEENA DALWAI INDUSTRIA L ESTATE, NAVPADA ROAD JOGESHWARI - WEST MUMBAI - 400 102. V S . ITO - 31(1)(5) MUMBAI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY MS. KIRAN MEHTA & RAVI DASIJA DEPARTMENT BY SHRI AKHTAR H. ANS ARI DATE OF HEARING 27 . 11 . 201 9 DATE OF PRONOUNCEMENT 07 . 1 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LEARNED CIT - A DATED 29.6.2018 AND PERTAINS TO A.Y. 2015 - 16. 2. GROUNDS OF APPEAL READ AS UNDER : - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING ADDITION OF RS. 19,95,640 MADE U/S 43CA OF THE INCOME TAX ACT, 1061 BY THE LEARNED ASSESSING OFFICER (AO). 2. THE LEARNED CIT (A) ERRED IN DECIDING THE APPEAL WITHOUT QUITE CONSIDERING THE DETAILED SUBMISSIONS MADE AND CASE LAWS RELIED ON BY THE APPELLANT. 3. THE LEARNED CIT (A) ERRED IN NOT ACCEPTING THE PLEA OF THE APPELLANT THAT IN THE FACTS OF THE CASE, IT WOULD BE FAIR AND JUST TO REFER THE MATTER TO THE LEARNED DEPARTMENT VALUER TO OBTAIN F AIR MARKET PRICE OF THE PROPERTY IN REFERENCE BEFORE INVOKING THE VICARIOUS PROVISIONS OF SECTION 43CA. M/S. GAJANAN BUILDERS 2 4. THE LEARNED CIT (A) ERRED IN CONFIRMING THE INTEREST LEVIED. 5. THE APPELLANT CRAVES YOUR HONORS LEAVE TO ADD TO, MODIFY OR WITHDRAW ANY OF THE A BOVE GROUNDS AT OR BEFORE THE FINAL HEARING . 3. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BUILDING AND DEVELOPMENT OF REAL ESTATE PROPERTIES. DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAS SOLD A FLAT FOR RS. 45,00,000 / - WHERE AS THE STAMP DUTY VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES WAS RS. 64,95,460 / - . FINDING THAT THERE IS A DIFFERENCE OF RS. 19,95,640/ - BETWEEN THE SALE CONSIDERATION AND THE STAMP DUTY VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES, THE AO ISSUED A SHOW CAUSE NOTICE TO T HE ASSESSEE IN ORDER TO INVOKE SECTION 43CA OF TH E ACT IN RESPONSE, THE ASSESSEE EXPLAINED THAT BECAUSE OF SLUGGISH MARKETS AND DECLINING SALES OF IMMOVABLE PROPERTIES IN MARKET, THIS WAS ONE OF THE CASES WHERE THE ACTUAL PRICE WAS LOWER THAN THE READY R ECKONER VALUE, THEREFORE THE FLAT WAS SOLD AT THE AFORESAID PRICE ON COMMERCIAL BASIS THE ASSESSEE FURTHER CLAIMED BEFORE THE AO THAT IT WAS IN NEED OF FINANCE AND IT WOULD HAVE INCURRED MORE ON FINANCE CHARGES THAN THE DISCOUNT GIVEN TO THE CUSTOMER IF I T HAD BORROWED MONEY FROM THE MARKET OR BANK CONSIDERING THAT THE ASSESSEE HAS NOT CONTESTED THE VALUATION OF THE PROPERTY BY THE STAMP DUTY AUTHORITIES, THE AO MADE AN ADDITION OF RS. 19,95,640/ - TO THE BUSINESS INCOME OF THE ASSESSEE. 4. UPON ASSESSEE AP PEAL LEARNED CIT(A) UPHELD THE ADDITION BY HOLDING AS UNDER : - THE PROVISION OF SECTION 43CA IS A DEEMING PROVISION. AS PER PROVISIONS OF SECTION 43CA, WHERE THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF TRANSFER OF THE ASSET, OTHER THAN A CAPITAL ASSET, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE FOR THE PURPOSE THE STAMP DUTY, IS DEE MED TO BE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF COMPUTING PROFIT AND GAINS FROM TRANSFER OF SUCH ASSET. HOWEVER, THE PROVISIONS OF SECTION (2) & (3) OF SECTION 50C OF THE ACT ARE APPLICABLE TO SUCH TRANSFER, WHICH PROVIDES THAT WHERE THE ASSESSEE CLAIMS BEFO RE THE AO THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON DATE OF TRANSFER, THE AO MAY REFER THE VALUATION OF THE CAPITAL ASSET TO THE VALUATION OFFICER TO ASCERTAIN THE FAI R MARKET VALUE OF SUCH ASSET. THE PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE APPELLANT M/S. GAJANAN BUILDERS 3 HAS NOT CONTESTED THE VALUATION OF THE PROPERTY BEFORE THE AO. THE APPELLANT HAS ALSO NOT BROUGHT ON RECORD ANY DOCUMENTS WHICH WOULD SUGGEST THAT THE VALUATION OF T HE PROPERTY WAS CHALLENGED BEFORE THE AO CONSIDERING THAT THE APPELLANT HAS NOT DISPUTED THE STAMP DUTY VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES, IT IS HELD THAT THE AO HAS JUSTIFIABLY INVOKED THE PROVISIONS OF SECTION 43CA OF THE ACT AND ACCORDINGLY TH E ADDITION OF RS. 19,95,640/ - MADE BY THE AO ON ACCOUNT OF DIFFERENCE BETWEEN THE SALE CONSIDERATION AND THE STAMP DUTY VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES IS UPHELD . 5. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUN SE L AND PERUSED THE RECORDS. WE FIND THAT THE AUTHORITIES BELOW HAVE PRINCIPALLY TAKEN THE CORRECT VIEW OF THE MATTER ON THE FACTS OF THE PRESENT CA SE. THE PROVISION S OF SECTION 43 CA ARE DEEMING PROVISION. HOWEVER THE PROVISION OF SUBSECTION 2 AND SUBSECTION 3 OF SECTION 50 C A RE ALSO APPLICABLE IN AS MUCH AS IF THE ASSESSEE CONTESTS THE VALUATION THE MATTER NEEDS TO BE REFERRED TO THE DEPARTMENTAL VALUATION OFFICER. IN THE PRESENT CASE LEARNED CIT(A) HELD THAT ASSESSEE HAS NOT ASKED SPECIFICAL LY F OR REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER. HOWEVER WE NOTE THAT WHEN ASSESSEE WAS CONTESTING THE VALUATION AS PER STAMP VALUATION AUTHORITY, IT WAS INCUMBENT UPON THE LEARNED CIT (A) TO ACCEPT THAT ASSESSEE IS NOT SATISFIED WITH THE VALUATION. HENCE THE MATTER NEEDED TO BE REFERRED TO THE DEPARTMENTAL VALUATION OFFICER. HENCE IN THE INTEREST OF JUSTICE WE REMIT THE ISSUE TO THE FILE OF ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO REFER THE VALUATION TO THE DEPARTMENTAL VALUATION OFFIC ER AND THEREAFTER DECIDE THE ISSUE AS PER LAW. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES . ORDER HAS BE EN PRONOUNCED IN THE COURT ON 7.1. 2020 . SD/ - SD/ - ( PAWAN SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 07 / 1 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT M/S. GAJANAN BUILDERS 4 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI