KALYANJI SHAH, MUMBAI V. ITO 22(1)(3), MUMBAI

ITA 6241/MUM/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9383 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, AN D SHRI N. K. PRADHAN, AM ./ I.T.A. NO. 6241/MUM/2013 ( / ASSESSMENT YEAR: 2009 - 10 ) MR. KA LYANJI SHAH SAHAKAR SOCIETY STORES, SHOP NO. 29, BLDG NO. 847, PANT NAGAR, GHATKOPAR (E), MUMBAI - 400 075 / VS. ITO - 22(1)(3), MUMBAI ./ ./ PAN/GIR NO. AAEPS 3607 H ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. SUBRAMANIAN / RESPONDENT BY : SHRI RAJESH KUMAR YADAV / DATE OF HEARING : 26.09.2017 / DATE OF PRONOUNCEMENT : 27 .09.2017 / O R D E R PER MAHAVIR SINGH , JM : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A) - 33 , MUMBAI, IN APPEAL NO. CIT(A) - 33/IT/630/11 - 12 DATED 04.09.2013 . THE ASSESSMENT WAS FRAMED BY ITO - 22(1) - 3 , MUMBAI FOR THE A.Y. 20 09 - 10 VIDE HIS ORDER DATED 27.09.2011 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER THE ACT). 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) NOT REFERRING THE MATTER TO DVO IN TERM OF SECTION 50C(2)(A) OF THE ACT. FOR THIS, THE ASSESSEE HAS RAISED FOLLOWING TWO GROUNDS: 2 ITA NO. 6241/MUM/2013 (A.Y. 2009 - 10) MR. KALYANJI SHAH VS. ITO 1. UNDER THE CIRCUMSTANCES AND FACTS OF OUR CASE, THE LAO HAS ERRED IN ADOPTING STAMP DUTY VALUATION U/S 50C OF THE ACT AMOUNTING TO RS. 1 7,48,468/ - [50 % OF RS. 34,96,937/ - ), ON SALE OF ENCROACHED LAND AT KALYAN AS AGAINST THE ACTUAL CONSID ERATION OF RS. 3,00,0007 - [50% OF RS.6,00,000/ - ) RECEIVED AGAINST THE SAID SALE. THE ABOVE ADDITION IS MADE U/S 50C OF THE ACT WITHOUT APPRECIATING THE NATURE OF ENCROACHMENT ON THE LAND, THE READABILITY OF THE ASSET AND SIMPLY ON THE BASIS OF STAMP DUTY V ALUATION. 2. UNDER THE CIRCUMSTANCES AND FACTS OF OUR CASE, THE LAO FAILED TO REFER THE VALUATION OF THE LAND TO A GOVERNMENT APPROVED VALUATION OFFICER SO AS TO ARRIVE AT A TRUE AND FAIR VALUATION OF THE ENCROACHED LAND. THE ADDITION IS MADE BY THE LAO ADHOC AND WITHOUT APPRECIATING THE BACKGROUND AS WELL AS THE NATURE OF THE PLOT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS SOLD LAND AT KALYAN, FOR WHICH HE IS A PART OWNER. THE TOTAL CONSIDERATION OF SALE OF THIS LAND WAS RS.6 LACS AS PER SALE DE ED AND THE ASSESSEES CONSIDERATION WAS RS.3 LACS. THE ASSESSEE DECLARED THE LONG TERM CAPITAL GAIN (LTCG). THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT AS PER S TAMP D UTY VALUATION, THE FAIR MARKET VALUE OF THE PROPERTY IS RS.34,96,937 / - AND THE ASSESSEES SHARE FOR SALE CONSIDERATION SHOULD BE ADOPTED AT RS.17,48,468/ - IN TERM OF SECTION 50C OF THE ACT. 4. THE A.O. ADOPTED THE STAMP DUTY VALUATION FOR THE PURPOSE OF COMPUTATION OF LTCG U/S. 50C OF THE ACT AND ASSESSED LTCG ACCORDING LY AT RS.14,81,320/ - . AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) , WHO ALSO CONFIRMED THE ACTION OF THE A.O. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. BEFORE US, THE ASSESSEE ONLY CONTENDED THAT THIS LAND IS ENCROACHED LAND AND IT CANNOT FETCH THIS AMOUNT OF RS.34,96,937/ - AS VALUED BY STAMP VALUATION AUTHORITY. HENCE, HE REQUESTED THAT THE PROPERTY SHOULD BE VALUED BY DVO IN TERM OF SECTION 50C(2)(A) OF THE ACT. WE FIND THAT THE PLEA OF THE ASSESSEE IS QUITE REASONABLE AND F OR THIS, THE LD. SR. DR ALSO FAIRLY AGREED. WE HAVE ALREADY TAKEN THE VALUATION IN ITA NO.7288/MUM/2014 IN THE CASE OF KASHINATH TAPURIAH , WHEREIN IT IS OBSERVED AS UNDER: 5. NOW, THE ONLY REQUEST BY THE ASSESSEE IS THAT THE MATTER SHOULD BE REFERRED TO T HE VALUATION AUTHORITY FOR DETERMINING THE FAIR MARKET VALUE OF 3 ITA NO. 6241/MUM/2013 (A.Y. 2009 - 10) MR. KALYANJI SHAH VS. ITO THE PROPERTY AS ON THE DATE OF SALE AS PER THE PROVISIONS OF SECTION 50C (2) OF THE ACT. WE FIND THAT THIS ISSUE BY HONBLE CALCUTTA HIGH COURT IN THE CASE OF SUNIL KR. AGARWAL VS. CIT IN GA NO.3686 OF 2013 ITAT NO.221 OF 2013 VIDE JUDGMENT DATED 13.03.2014, WHEREIN IT IS HELD THAT TO ASCERTAIN THE FULL VALUE OF CONSIDERATION IN THE CASE OF TRANSFER OF CAPITAL ASSET, THE FULL CONSIDERATION OF THE CAPITAL ASSET IS TO BE TAKEN ON THE BASIS OF VA LUE ADOPTED BY THE STAMP VALUATION AUTHORITY UNDER SUB - SECTION (1) OF SECTION 50C OR THE CAPITAL ASSET IS TO BE REFERRED TO VALUATION OFFICER FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY FOR AS SESSING THE CAPITAL GAINS. ON QUERY FROM THE BENCH LD. SR. DR FAIRLY STATED HE HAS NO OBJECTION IN CASE THE ISSUE IS SET ASIDE TO THE FILE OF THE AO FOR REFERENCE TO THE DVO TO ASCERTAIN THE FULL VALUE OF CONSIDERATION U/S. 50C OF THE ACT. HE ALSO STATED T HAT IN CASE THE ASSESSEE IS DISPUTING THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY I.E., THE RATE ASSESSED BY THE SUB - REGISTRAR IS CHALLENGED BY THE ASSESSEE, THEN THE MATTER HAS TO BE REFERRED TO DVO FOR ASCERTAINING THE FULL VALUE OF CONSIDERATION FOR ASSESSING LONG TERM CAPITAL GAIN UNDER SECTION 50C OF THE ACT IN TERMS OF THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF SUNIL KUMAR AGARWAL, SUPRA. IN THE CASE OF SUNIL KUMAR AGARWA L, HON'BLE CALCUTTA HIGH COURT HELD AS UNDER: - 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ADVANCED BY THE LEARNED ADVOCATES APPEARING FOR THE PARTIES. THE SUBMISSION OF MS. GHUTGHUTIA THAT THE REQUIREMENT OF CLAUSES A) AND (B) OF SUB - SECTION 2 OF SECTION 5 0C HAS NOT BEEN MET BY THE ASSESSEE, CAN HARDLY BE ACCEPTED. THE REQUIREMENT OF CLAUSE (B) OF SUB - SECTION 2 OF SECTION 50C WAS EVIDENTLY MET. THE ONLY QUESTION IS WHETHER THE REQUIREMENT OF CLAUSE (B) OF SUB - SECTION 2 OF SECTION 50C WAS EVIDENTLY MET. THE ONLY QUESTION IS WHETHER THE REQUIREMENT OF CLAUSE (A) OF SUB - SECTION 2 OF SECTION 50C WAS MET BY THE ASSESSEE. WE HAVE ALREADY SET OUT HEREINABOVE THE RECITAL APPEARING IN THE DEEDS OF CONVEYANCE UPON WHICH THE ASSESSEE WAS RELYING. PRESUMABLY, THE CASE O F THE ASSESSEE WAS THAT PRICE OFFERED BY THE BUYER WAS THE HIGHEST PREVAILING PRICE IN THE MARKET. IF THIS IS HIS CASE THEN IT IS DIFFICULT TO ACCEPT THE PROPOSITION THAT THE ASSESSEE HAD ACCEPTED THAT THE PRICE FIXED BY THE DISTRICT SUB REGISTRAR WAS THE FAIR MARKET VALUE OF THE PROPERTY. NO SUCH INFERENCE CAN BE MADE AS AGAINST THE ASSESSEE BECAUSE HE HAD NOTHING TO DO IN THE MATTER. STAMP DUTY WAS PAYABLE BY THE PURCHASER. IT WAS FOR THE PURCHASER TO EITHER ACCEPT IT OR DISPUTE IT. THE ASSESSEE COULD NOT , ON THE BASIS OF THE PRICE FIXED BY THE SUB - REGISTRAR, HAVE CLAIMED ANYTHING MORE THAN THE AGREED CONSIDERATION OF A SUM OF RS.10 LACS WHICH, ACCORDING TO THE ASSESSEE, WAS THE HIGHEST PREVAILING MARKET PRICE. IT 4 ITA NO. 6241/MUM/2013 (A.Y. 2009 - 10) MR. KALYANJI SHAH VS. ITO WOULD FOLLOW AUTOMATICALLY THAT HIS CASE W AS THAT THE FAIR MARKET VALUE OF THE PROPERTY COULD NOT BE RS.35 LACS AS ASSESSED BY THE DISTRICT SUB REGISTRAR. IN A CASE OF THIS NATURE THE ASSESSING OFFICER SHOULD, IN FAIRNESS, HAVE GIVEN AN OPTION TO THE ASSESSEE TO HAVE THE VALUATION MADE BY THE DEPA RTMENTAL VALUATION OFFICER CONTEMPLATED UNDER SECTION 50C . AS A MATTER OF COURSE, IN ALL SUCH CASES THE ASSESSING OFFICER SHOULD GIVE AN OPTION TO THE ASSESSEE TO HAVE THE VALUATION MADE BY THE DEPARTMEN TAL VALUATION OFFICER. FOR THE AFORESAID REASONS, WE ARE OF THE OPINION THAT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER, CONTEMPLATED UNDER SECTION 50C , IS REQUIRED TO AVOID MISCARRIAGE OF JUSTI CE. THE LEGISLATURE DID NOT INTEND THAT THE CAPITAL GAIN SHOULD BE FIXED MERELY ON THE BASIS OF THE VALUATION TO BE MADE BY THE DISTRICT SUB REGISTRAR FOR THE PURPOSE OF STAMP DUTY. THE LEGISLATURE HAS TAKEN CARE TO PROVIDE ADEQUATE MACHINERY TO GIVE A FAI R TREATMENT TO THE CITIZEN/TAXPAYER. THERE IS NO REASON WHY THE MACHINERY PROVIDED BY THE LEGISLATURE SHOULD NOT BE USED AND THE BENEFIT THEREOF SHOULD BE REFUSED. EVEN IN A CASE WHERE NO SUCH PRAYER IS MADE BY THE LEARNED ADVOCATE REPRESENTING THE ASSESSE E, WHO MAY NOT HAVE BEEN PROPERLY INSTRUCTED IN LAW, THE ASSESSING OFFICER, DISCHARGING A QUASI JUDICIAL FUNCTION, HAS THE BOUNDEN DUTY TO ACT FAIRLY S.P.NOS.103&104/KOL/2014 & IITA NOS.1643 & 1644/KOL/2014 SHRI NIRMAL CHAND SONI & SHRI SUSHIL CHAND SONI A SSESSMENT YEAR: 2007 - 08 AND TO GIVE A FAIR TREATMENT BY GIVING HIM AN OPTION TO FOLLOW THE COURSE PROVIDED BY LAW.' 5. FROM THE ABOVE FACTS AND LEGAL PROPOSITION LAID DOWN BY HON'BLE CALCUTTA HIGH COURT IN THE CASE OF SUNIL KUMAR AGARWAL, SUPRA, WE ARE O F THE VIEW THAT THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY BASED ON CIRCLE RATES IS DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF CAPITAL ASSET, BEING LAND OR BUILDING OR B OTH, FOR THE PURPOSES OF SECTION 48 OF THE ACT. BUT IF THE ASSESSEE DISPUTES THE VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE U/S. 50C(2) OF THE ACT, THE AO SHOULD REFER THE CAPITAL ASSET TO VALUATION OFFI CER TO DETERMINE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF CAPITAL ASSET. HENCE, IN THE PRESENT CASE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR FRESH ADJUDI CATION OF THE ISSUE OF LONG TERM CAPITAL GAIN ARISING OUT OF SALE OF ABOVE THE ASSET AFTER ASCERTAINING THE FULL VALUE OF CONSIDERATION OF THESE TWO ASSETS AS DETERMINED BY VALUATION OFFICER CONCERNED. THE AO WILL TAKE THE FULL VALUE OF CONSIDERATION OF TH E CAPITAL ASSET IN TERMS OF SECTION 50C 5 ITA NO. 6241/MUM/2013 (A.Y. 2009 - 10) MR. KALYANJI SHAH VS. ITO (3) OF THE ACT FOR ASCERTAINING THE LONG TERM CAPITAL GAIN ARISING OUT OF THIS ASSET. IN TERM OF THE ABOVE, APPEAL OF ASSESSEE ON THIS ISSUE IS RESTORED BACK TO TH E FILE OF THE AO FOR FRESH ADJUDICATION AND ALLOWED FOR STATISTICAL PURPOSES. 6. IN TERM OF THE ABOVE, WE RESTORE THE MATTER BACK TO THE FILE OF THE A.O. AND DIRECT HIM TO REFER THE MATTER FOR VALUATION TO DVO TO ASCERTAIN THE FAIR MARKET VALUE AS ON THE DATE OF SALE AND, ACCORDINGLY, ASSESS THE CAPITAL GAINS. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTE MBER 27 TH , 201 7 SD/ - SD/ - ( N. K. PRADHAN) (MAHAVIR SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 27 . 0 9 .201 7 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI