ACIT, CHENNAI V. Shri S.P.Balasubramaniam, CHENNAI

ITA 638/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4739 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 11-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR JT
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Capital Gains
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, CHENNAI B E F O R E DR. O.K.NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER .. ITA NO.638(MDS)/2011 ASSESSMENT YEAR: 2007-08 THE A SSISTANT COMMISSIONER OF INCOME-TAX, MEDIA CIRCLE I, CHENNAI. VS. SHRI S.P.BALASUBRAMANIAM, 16, KAMDAR NAGAR, MAHALINGAPURAM,CHENNAI. PIN 600034. PAN AADPB4195J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.P.GOPAKUMAR , JT.CIT RESPONDENT BY: NONE. O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2007-08. THE APPEAL IS DIRECTED AGAINST THE - - ITA NO.638(MDS)/20 11 2 ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V I AT CHENNAI DATED 4-1-2011 AND ARISES OUT OF THE ASSESS MENT COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX AC T, 1961. 2. IN THE PRESENT CASE, THE ASSESSEE HAD SOLD ONE HOUSE PROPERTY IN THE RELEVANT PREVIOUS YEAR AND OF FERED SHORT TERM CAPITAL GAINS FOR TAXATION. THE PURCHASE WAS MADE FOR A CONSIDERATION OF ` . 24 LAKHS. BUT IN THE MEMO OF COMPUTATION OF INCOME, THE ASSESSEE ADOPTED THE COST OF ACQUISITIO N OF THE PROPERTY AT ` . 49,82,300/-. THIS DIFFERENCE WAS ASKED TO BE EXPLAINED. THE ASSESSEE REPLIED THAT AS PER THE AG REEMENT, THE VALUE OF THE PROPERTY WAS ` . 46 LAKHS AND THE VALUE WAS TAKEN AT ` . 24 LAKHS ONLY FOR THE PURPOSE OF REGISTRATION. B UT THE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE CONTENTI ON AND ADOPTED THE COST OF ACQUISITION AT ` . 24 LAKHS. THIS INTERFERENCE MADE BY THE ASSESSING OFFICER INCREASED THE QUANTUM OF SHORT TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. 3. THIS ISSUE WAS TAKEN IN FIRST APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSI ONER OF - - ITA NO.638(MDS)/20 11 3 INCOME TAX (APPEALS), RELYING UPON SECTION 50C(1), HELD THAT THE STAMP DUTY VALUE SHOULD BE TREATED AS THE PURCHASE PRICE OF THE PROPERTY AND, THEREFORE, THE SAME SHOULD BE THE COS T OF ACQUISITION. HE ACCORDINGLY DIRECTED THE ASSESSING AUTHORITY TO TREAT THE SUM OF ` .49,82,300/- AS COST OF ACQUISITION INCLUSIVE OF STAMP DUTY AND OTHER REGISTRATION EXPENSES. THE ST AMP DUTY ALSO INCLUDED THE ADDITIONAL STAMP DUTY PAID BY THE ASSESSEE SUBSEQUENT TO THE REGISTRATION OF THE PROPERTY ON T HE DEMAND MADE BY THE DISTRICT COLLECTOR. 4. THE REVENUE IS AGGRIEVED AND, THEREFORE, IN APP EAL BEFORE THE TRIBUNAL. 5. WHEN THE MATTER WAS CALLED ON FOR HEARING, NOBO DY APPEARED ON BEHALF OF THE RESPONDENT-ASSESSEE IN SP ITE OF NOTICE. SHRI K.P.GOPAKUMAR, THE LEARNED JOINT COMM ISSIONER OF INCOME-TAX, APPEARED FOR THE REVENUE AND ARGUED THE CASE AT LENGTH. - - ITA NO.638(MDS)/20 11 4 6. AS RIGHTLY ARGUED BY THE LEARNED OFFICER APPEAR ING FOR THE REVENUE, SECTION 50C PROVIDES FOR THE MECHA NISM FOR COMPUTING CAPITAL GAINS WHERE THE SALE CONSIDERATIO N IS GOVERNED BY THE VALUE FIXED BY STAMP DUTY AUTHORITI ES. IT NEED NOT REPLACE THE ACTUAL CONSIDERATION PAID BY THE PA RTIES. IT IS A DEEMING PROVISION WHEREBY THE SALE CONSIDERATION FO R THE PROPERTY IS TREATED AS THE VALUE DECLARED IN THE DO CUMENT OR THE VALUE ADOPTED BY THE REGISTERING AUTHORITY, WHICHEV ER IS HIGHER. 7. IN THE PRESENT CASE THE ASSESSEE WAS ASKED TO P AY ADDITIONAL STAMP DUTY ON THE BASIS OF THE FINDING O F THE STAMP DUTY AUTHORITIES THAT THERE WAS A CASE OF UNDER PAY MENT OF STAMP DUTY WHEN COMPARED THE VALUE OF THE PROPERTY IN THE LIGHT OF THE GUIDELINE VALUE. IT HAS NOTHING TO DO WITH THE ACTU AL PAYMENT MADE BY THE ASSESSEE TO ACQUIRE THE PROPERTY. THE DE FACTO PAYMENT MADE BY THE ASSESSEE CANNOT BE REPLACED BY THE DEEMED VALUE OF THE PROPERTY DETERMINED BY THE STAM P DUTY AUTHORITIES. THEREFORE, WE DO NOT AGREE WITH THE F INDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE COST OF ACQUISITION IN THE HANDS OF THE ASSESSEE MUST BE TA KEN AT - - ITA NO.638(MDS)/20 11 5 ` .49,82,300/-. THE COST OF ACQUISITION MUST BE TAKE N AT ` . 24 LAKHS, AS ADOPTED BY THE ASSESSING AUTHORITY. BUT, AS THE ASSESSEE HAS THEREAFTER PAID ADDITIONAL STAMP DUTY AND INCURRED OTHER CHARGES ON THE GROUND OF UNDERPAYMENT OF STAM P DUTY, THOSE AMOUNTS SUBSEQUENTLY PAID BY THE ASSESSEE SHO ULD ALSO BE ADDED TO THE AMOUNT OF ` .24 LAKHS TO ARRIVE AT THE COST OF ACQUISITION. TO THIS EXTENT THE ASSESSEE IS ENTIT LED FOR THE RELIEF. THEREFORE WE DIRECT THE ASSESSING AUTHORITY TO REFI X THE ACQUISITION COST BY ADDING THE AMOUNT OF ` . 24 LAKHS AND THE AMOUNT OF ADDITIONAL STAMP DUTY AND EXPENSES INCURR ED BY THE ASSESSEE. BUT FOR THIS MODIFICATION, THE COMPUTATI ON MADE BY THE ASSESSING AUTHORITY IS UPHELD. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS POINT IS VACATED AND THE ORDER OF THE ASSESSING OFFICER IS R ESTORED, SUBJECT TO THE MARGINAL RELIEF ORDERED BY US. 10. IN RESULT THIS APPEAL FILED BY THE REVENUE IS ALLOWED. - - ITA NO.638(MDS)/20 11 6 ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON MONDAY, THE 18 TH DAY OF JULY, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 18 TH JULY, 2011. V.A.P. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.