M/s. Bhopal Motors Pvt Ltd., Bhopal V. The ACIT 1(1), Bhopal

ITA 631/IND/2013

• Counselvise Citation: 63122714 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Valuation report
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.631/IND/2013 A.Y. : 2010-11 M/S.BHOPAL MOTORS PVT.LTD., ACIT, 1(1), BHOPAL BHOPAL VS APPELLANT RESPONDENT I.T.A.NO.702/IND/2013 A.Y. : 2010-11 ACIT, 1(1), BHOPAL M/S.BHOPAL MOTORS PVT.LTD., VS BHOPAL APPELLANT RESPONDENT P.A.N. NO AAACB5811B ASSESSEE BY SHRI ANIL KHABYA AND SHRI SUMIT KHABYA, CAS DEPARTMENT BY SHRI R.R. MEENA, DR -: 2: - 2 DATE OF HEARING : 10.08.2015 DATE OF PRONOUNCEMENT : 10.08.2015 O R D E R PER GARASIA, J.M. THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF CIT(A)-I, BHOPAL, DATED 05.09.2013, FOR ASSESSMENT YEAR 2010- 11. I.T.A.NO. 702/IND/2013: (DEPARTMENTS APPEAL ) : 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUND OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE AO REGARDING ADDITION OF RS. 47,79,000/- AS LONG TERM CAPITAL GAINS BY APPLYING PROVISIONS OF SECTION 50C(1) OF T HE INCOME-TAX ACT, 1961. TO REFER THE VALUATION OF FAI R MARKET VALUE OF THE IMPUGNED PROPERTY AS ON THE DATE OF TRANSFER TO THE DVO IN ACCORDANCE WITH PROVISIONS OF SECTION 50C(2) OF THE ACT AND TO ADOP T THE FULL VALUE OF CONSIDERATION OF THE IMPUGNED -: 3: - 3 PROPERTY FOR COMPUTATION OF CAPITAL GAINS AT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY OR FAIR MARKET VALUE DETERMINED BY THE DVO. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF DEALERSHIP OF JCB INDIA LTD FOR SALES AND SERVICE O F THEIR MACHINES AND SPARES (EARTHMOVING AND MATERIAL HANDL ING EQUIPMENTS). THE APPELLANT HAD FILED ITS RETURN OF INCOME FOR A.Y. 2010-11 ON 25/09/2010 DECLARING INCOME OF RS.1,11,28,580/-. THE CASE WAS SELECTED FOR SCRUTIN Y BY ISSUING NOTICE U/S 143(2) OF THE INCOME TAX ACT, 19 61 AND ASSESSMENT U/S 143(3) WAS COMPLETED ON 16/12/2010 ASSESSING THE TAXABLE INCOME OF THE ASSESSEE AT RS. 1,59,07,580/-. THE AO NOTED THAT THE APPELLANT HAD SOLD A PROPERTY AT MUMBAI ON 11.09.2009 AND HAD SHOWN SALE CONSIDERATION OF RS.85,00,000/- AS PER THE SALE DEE D, WHEREAS THE MARKET VALUE AS PER THE STAMP VALUATION AUTHORITY WAS DETERMINED AT RS. 1,32,79,000/-. WHEN THE ASSESSEE WAS CONFRONTED AS TO WHY THE PROVISIONS OF SECTION -: 4: - 4 50C SHOULD NOT BE APPLIED AND, ACCORDINGLY FOR COMP UTATION OF CAPITAL GAINS, THE FULL VALUE OF CONSIDERATION S HOULD NOT BE ADOPTED AT RS. 1,32,79,000/-, THE ASSESSEE SUBMITTE D BEFORE THE AO THAT THE VALUE ADOPTED BY STAMP VALUATION AU THORITY WAS HIGHER THAN THE PREVAILING MARKET PRICE AND REQ UESTED THE AO TO REFER THE MATTER REGARDING VALUATION OF M ARKET VALUE OF THE SAID PROPERTY ON THE DATE OF TRANSFER TO THE DEPARTMENTAL VALUATION OFFICER IN ACCORDANCE WITH P ROVISIONS OF SECTION 50C(2) OF THE ACT. BUT THE AO DID NOT AC CEPT THE SUBMISSION OF THE ASSESSEE MAINLY ON THE GROUND THA T IT IS NOT MANDATORY TO REFER THE TRANSACTION TO THE VALUA TION OFFICER AS THE WORD USED IN SECTION 50C(2) ARE THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSE T TO A VALUATION OFFICER, WHEREAS IT IS MANDATORY FOR THE AO TO APPLY PROVISIONS OF SECTION 50C(1) AS IT READS THAT ....VALUE SO ADOPTED OR ASSESSED OR ASSESSABLE SHALL FOR THE PURPOSE OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF TH E CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. FURTHER, THE ASSESSEE REQUESTED TO REFER THE MATTER TO DVO VIDE ITS REPLY DATED 28.12.2012 ONLY AT THE FAG END OF -: 5: - 5 THE ASSESSMENT PERIOD, WHICH SHOWS THAT IT WAS A CA SE OF HINDSIGHT AND NOT A BONA FIDE ACTION ON THE PART OF THE APPELLANT. THE ASSESSEE HAD ALSO FURNISHED A COPY O F VALUATION REPORT FROM REGISTERED VALUER IN WHICH TH E FAIR MARKET VALUE WAS ASCERTAINED AT RS.85,00,000/- ONLY , WHICH WAS ALSO NOT ACCEPTED BY THE AO BECAUSE ON THE SAME VALUATION REPORT AS PER COLUMN 17(C), THE VALUE AS PER READY RECKONER AS ON 11.09.2009, (DATE OF TRANSFER), WAS STATED TO BE AT RS. 1,32,79,000/-. THUS, THE LD. AO HAD NOT G IVEN ANY COGNIZANCE TO THE VALUATION REPORT OF REGISTERED VA LUER AND ALSO DID NOT ACCEPT THE REQUEST OF THE ASSESSEE TO REFER THE MATTER TO DVO. ACCORDINGLY, THE AO HAD ADOPTED THE FULL VALUE OF CONSIDERATION OF THE PROPERTY AT RS. 1,32, 79,000/- I.E. THE VALUE ADOPTED BY THE STAMP VALUATION AUTHO RITY FOR THE PURPOSES OF STAMP DUTY AS AGAINST THE SALE CONSIDERATION OF RS.85,000/- SHOWN BY THE APPELLANT RESULTING INTO NET ADDITION OF RS.47,79,000/- (RS. 1,32,79,000 - RS.85,00,000) INTO THE LONG TERM CAPI TAL GAINS SHOWN BY THE ASSESSEE. THUS, THE A,0 MADE ADDITION OF RS.47,79,000/- IN THE LONG TERM CAPITAL GAINS. -: 6: - 6 4. THE MATTER CARRIED TO LD. CIT(A) AND THE LD. CIT(A) HAS RESTORED THE MATTER TO THE VALUATION OFFICER FOR VA LUATION OF THE PROPERTY, AS PER THE VARIOUS DECISIONS OF I.T.A.T., BY OBSERVING AS UNDER :- 3.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. THE ISSUE INVOLVED IS WHERE AN ASSESSEE CLAIMS BEFORE THE AO THAT THE VAL UE ADOPTED BY THE STAMP VALUATION AUTHORITY EXCEEDS TH E FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF THE TRANSFER AND REQUEST TO REFER THE VALUATION OF THE CAPITAL ASSETS TO A VALUATION OFFICER, WHETHER IT IS MANDAT ORY FOR THE AO TO REFER THE MATTER TO THE DEPARTMENTAL VALU ATION OFFICER OR NOT. IT MAY BE NOTED THAT SECTION 50C(2) , CLEARLY PROVIDES THAT WHERE THE ASSESSEE CLAIMS BEF ORE ANY AO THAT THE VALUE ADOPTED BY THE STAMP VALUATIO N. AUTHORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROP ERTY, THE AO MAY REFER THE VALUATION OF THE CAPITAL ASSET TO A VALUATION OFFICER AND THE FULL VALUE OF CONSIDERATI ON SHALL BE TREATED AS THE VALUE DETERMINED BY THE VALUATION -: 7: - 7 OFFICER OR THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, WHICHEVER IS LOWER. THIS ISSUE CAME UP F OR CONSIDERATION BEFORE VARIOUS BENCHES OF ITAT WHEREI N IT HAS BEEN HELD THAT WHERE THE ASSESSEE CLAIMS THAT T HE VALUE ADOPTED BY STAMP VALUATION AUTHORITY IS HIGHE R THAN FAIR MARKET VALUE, IT IS INCUMBENT UPON AO TO REFER TO A VALUATION OFFICER FOR VALUATION OF THE PROPERT Y IN SUCH CASES. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND FROM THE FACTS OF THE CASE THAT TH E ASSESSEE HAS CLAIMED BEFORE THE AO THE VALUE OF LAND AND BUI LDING ASSESSED BY THE STAMP AUTHORITY EXCEEDS FAIR MARKET VALUE OF THE PROPERTY THAN IN TERMS OF SECTION 50C(2), THE A O, HAD TO REFER THE MATTER TO VALUATION OFFICER. ACCORDINGLY, THE AO WAS DIRECTED TO OBTAIN VALUATION REPORT AND SUBMIT TO C IT(A), BUT THE AO FAILED TO DO SO. THEREFORE, THE LD. CIT(A) H AS GIVEN DIRECTION, WHICH READS AS UNDER :- -: 8: - 8 THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL POSITION ON THE ISSUE INVOLVE D, THE AO IS DIRECTED TO REFER THE VALUATION OF FAIR M ARKET VALUE OF THE IMPUGNED PROPERTY AS ON THE DATE OF TRANSFER TO THE DEPARTMENTAL VALUATION OFFICER IN ACCORDANCE WITH PROVISIONS OF SECTION 50C(2) OF THE ACT AND TO ADOPT THE FULL VALUE OF CONSIDERATION OF THE IMPUGNED PROPERTY FOR COMPUTATION OF CAPITAL GAINS AT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY OR FAIR MARKET VALUE DETERMINED BY THE DVO, WHICHEVER IS LOWER. WITH THESE DIRECTIONS, THESE GROUNDS OF APPEAL ARE DISPOSED OF ACCORDINGLY. 6. WE ARE OF THE VIEW THAT THE LD. CIT(A) WAS JUSTIFI ED IN GIVING THE DIRECTION. BUT THE LD. CIT(A) HAS NO POW ER TO RESTORE THE MATTER. THEREFORE, WE ARE OF THE VIEW THAT THE TRIBUNAL HAS ALL THE POWERS TO RESTORE THIS MATTER TO AO AND DVO . THEREFORE, WE DISMISS THE DEPARTMENTAL APPEAL AND A SSESSEES -: 9: - 9 APPEAL IS RESTORED TO DEPARTMENTAL VALUATION OFFICE R AND ASSESSING OFFICER AS PER THE DIRECTIONS GIVEN BY TH E LD. CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES AND DEPARTMENTAL APPEAL IS DIS MISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 10 TH AUGUST, 2015. CPU* 24