SACHIN O. AGARWAL (HUF), NAVI MUMBAI V. DCIT 22(3), MUMBAI

ITA 6227/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1064 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 02-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAYANK PRIYADARSH
• Assessee Lawyers: RITIKA GARG
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI T.R. SOOD ,(AM) ITA NO.6227/MUM/2009 ASSESSMENT YEAR : 2006-07 SACHIN O. AGARWAL(HUF) 121, ARENJA ARCADE SECTOR-17, VASHI NAVI MUMBAI-400 705. ..( APPELLANT ) P.A. NO. (AAJHS 4425 E) VS. DY. COMMISSIONER OF INCOME TAX -22(3) MUMBAI. ..( RESPONDENT ) APPELLANT BY : MS. RITIKA GARG RESPONDENT BY : SHRI MA YANK PRIYADARSH O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 26.10.2009 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE , AN HUF, DERIVES INCOME FROM HOUSE PROPERTY, CAPITAL GAIN AND OT HER SOURCES, FILED RETURN DECLARING TOTAL INCOME OF RS.18,30,140/-. DURING THE COURSE OF ASSESSMENT IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN RS.6,92, 038/- ON SALE OF 1.61 ACRES AGRICULTURAL LAND SITUATED AT VILLAGE CHAMANI, TALUKA-KALAPUR, DIST. RAIGAD. IN SUPPORT THE ASSESSEE H AS ALSO FILED ITA NO.6227/M/09 A.Y:06-07 2 SALE DEED DATED 29.3.2006 SHOWING APPARENT CONSIDERATI ON OF RS.10,06,250/- ON THE BASIS OF WHICH THE CAPITAL GAIN W AS COMPUTED. IT HAS BEEN STATED BY THE ASSESSEE THAT THIS SALE DEED HAS N OT BEEN REGISTERED. THE ASSESSEE HAS ALSO FILED VALUATION REPORT SHOWING THE VALUE OF PROPERTY AT RS.10,47,000/-. THE ASSESSING OFFI CER WITH A VIEW TO DETERMINE THE VALUATION OF THE PROPERTY AS REQUIR ED U/S.50C MADE A REFERENCE TO THE SUB-REGISTRAR OF ASSURANCE, KHARJAT WHO BY A LETTER DATED 25.11.2008 FURNISHED A READY RECKONER FOR THE P ERIOD IN QUESTION. AS PER THE SAID READY RECKONER, THE RATE AT WHICH A DOCUMENT WOULD HAVE BEEN OTHERWISE STAMPED I.E. THE MA RKET VALUE WORKED OUT BY THE ASSESSING OFFICER AT RS.12,45,000/-. T HE ASSESSEE WAS ASKED TO SHOW AS TO WHY THE SAID VALUE OF RS.12,45,00 0/- SHOULD NOT BE ADOPTED FOR THE PURPOSE OF COMPUTING CAPITAL GA IN. IN THE ABSENCE OF ANY EXPLANATION TO JUSTIFY THE CORRECTNESS OF THE VALUE ADOPTED BY THE ASSESSEE, THE ASSESSING OFFICER AFTER TAKING THE SALE VALUE OF THE PROPERTY AT RS.12,45,000/- AND WORKED O UT CAPITAL GAINS ACCORDINGLY. 3. ON APPEAL, THE LD. CIT(A) WHILE OBSERVING THAT TH ERE HAS BEEN NO REGISTRATION OF SALE, THEREFORE, SEC.50C CANNOT BE INVOK ED AGREED WITH THE BASIS OF VALUATION MADE BY THE ASSESSING OFFICER BY ADOPTING SALE VALUE AS STATED BY THE STAMP DUTY AUTHORITIES AND UPH ELD THE ADDITION MADE BY THE ASSESSING OFFICER. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL :- 1. BECAUSE, LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.2,38,750/- U /S. 50C OF THE INCOME TAX ACT, 1961. ITA NO.6227/M/09 A.Y:06-07 3 2. BECAUSE, LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT ACCEPTING THE REPORT OF THE GOVERNMENT VALUA TION OFFICER SUBMITTED BY THE APPELLANT AND INSTEAD RELY ING UPON THE VALUE AS PER STAMP DUTY AUTHORITY. 5. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE, AT THE OUTSET SUBMITS, THAT THE ISSUE IS DIRECTLY COVERED BY THE T WO DECISIONS OF THE TRIBUNAL IN NAVNEET KUMAR THAKKAR VS. ITO (20 07) 112 TTJ (JD.) 76 AND SMT. VIJAY LAXMI DHADDHA VS. ITO (2009 ) 20 DTR (JP)(TRIB)365. SHE FURTHER SUBMITS THAT THE AMENDED P ROVISIONS WHEREIN THE WORD ASSESSABLE HAS BEEN INSERTED ARE NOT APPLICABLE TO THE PRESENT CASE AS THE SAME HAS BEEN INSERTED BY THE FIN ANCE (NO.2) ACT, 2009 W.E.F. 1.10.2009. SHE THEREFORE, SUBMITS THA T THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CI T(A) BE DELETED. 6. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A). 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS THE AGRICULTURAL LAND IN QUESTION WAS TRANSFERRED WITHOUT ANY REGISTERED SALE DEED WITH THE STAMP VALUATION AUTHORITY. 8. PRIOR TO THE AMENDMENT MADE TO FINANCE (NO.2) ACT, 2009 W.E.F. 1.10.2009 THE RELEVANT PROVISION OF LAW U/S.50C WAS T HAT WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOT H, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STA TE GOVT. FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE ITA NO.6227/M/09 A.Y:06-07 4 VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSE OF SEC.4 8 BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEI VED OR ACCRUING AS A RESULT OF SUCH TRANSFER. 9. FROM THE ABOVE IT IS CLEAR THAT SEC.50C DOES NOT APPL Y TO THE CASES IN WHICH THE TRANSFERRED PROPERTY IS NOT THE SUBJECT MATTER OF REGISTRATION. 10. BY THE AMENDMENT MADE BY FINANCE (NO.2) ACT, 2009 W.E.F. 1.10.2009 IT HAS BEEN EXPLAINED BY THE CBDT CIRCULAR NO.5 OF 2010 DATED 3 RD JUNE, 2010 REPORTED IN (2010) 324 ITR 293 (ST.) AT PAGE 319: 23.2 WITH A VIEW TO PREVENTING THE LEAKAGE OF REVENUE , SEC. 50C IS AMENDED, SO AS TO PROVIDE THA T WHERE THE CONSIDERATION RECEIVED OR ACCRUED AS RESU LT OF TRANSFER OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSES SABLE BY AN AUTHORITY OF STATE GOVT. FOR THE PURPOSE PAYM ENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE S O ADOPTED OR ASSESSED OR ASSESSABLE SHALL BE DEEMED T O BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF SUCH TRANSFER FOR COMPUTING CAPITAL GAIN. 23.3 FURTHER, EXPLANATION 2 HAS BEEN INSERTED IN SUB SECTION (2) OF THE SEC.50C, SO AS TO CLARIFY TH E MEANING OF THE TERM ASSESSABLE. 11. IN NAVNEET KUMAR THAKKAR SUPRA, IT HAS BEEN HELD THAT THE ASSESSEE TRANSFERRED THE PROPERTY IN QUESTION BY EXECUTING AN AGREEMENT WHICH WAS NOT REGISTERED WITH THE REGISTERI NG AUTHORITY, IN SUCH A CASE, SEC.50C COULD NOT HAVE COME INTO OPERATION AND HENCE, THE ADDITION MADE BY THE ASSESSING OFFICER BY ADOPTION THE REPORT OF THE VALUATION OFFICER WAS WHOLLY INVALID. ITA NO.6227/M/09 A.Y:06-07 5 12. THE ABOVE DECISION HAS BEEN FOLLOWED IN THE CASE OF SMT. VIJAY LAXMI DHADDHA SUPRA, AND THE TRIBUNAL FOR THE SAME RE ASONS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 13. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL SUPRA, DELETE THE ADDITION SUSTAINED BY THE LD. CIT(A). THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE ALLOWED. 14. IN THE RESULT, ASSESSEE'S APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.7.2010. SD/- SD/- (T.R. SOOD) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23.7.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.6227/M/09 A.Y:06-07 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 20.7.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21.7.10 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. KEPT FOR PRONOUNCEMENT ON 23.7.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 26.7.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER