Keyaa Exim Private Limited, Ahmedabad V. The Income Tax Officer, Ward-4(2), Ahmedabad

ITA 697/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7010 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P SRIVASTAVA
• Assessee Lawyers: MANOJ ACHERYA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Fair market value; Right to appeal
• Section: 50C; 37

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.697/AHD/2017 / ASSTT. YEAR: 2011-12 KEYAA EXIM P.LTD. 307, PANCHTIRTH APARTMENT JODHPUR CHAR RASTA SATELLITE AHMEDABAD. VS. ITO, WARD-4(2) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI MANOJ ACHERYA, AR REVENUE BY : SHRI B.P. SRIVASTAVA, SR.DR ! / DATE OF HEARING : 10/01/2019 '#$ ! / DATE OF PRONOUNCEMENT: 15 /01/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-4, AHMEDABAD DATED 12.1.2017 PASSED FOR T HE ASSTT.YEAR 2011-12. 2. GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2,55,000/- IN THE SAL E OF PROPERTY FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. ITA NO.697/AHD/2017 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S SOLD A PROPERTY FOR A CONSIDERATION OF RS.1.00 CRORE. THE SUB-REGI STRAR, PANVEL, MAHARASHTRA DETERMINED THE VALUE OF THE PROPERTY FO R THE PURPOSE OF CHARGING STAMP DUTY AT RS.1,49,31,000/-. THE LD.AO CONFRONTED THE ASSESSEE AS TO WHY SALE CONSIDERATION OF THE PROPER TY FOR THE PURPOSE OF COMPUTING CAPITAL GAIN OUGHT NOT TO BE DEEMED EQUIV ALENT TO THE AMOUNT ON WHICH STAMP DUTY CHARGED BY SUB-REGISTRAR , AS PROVIDED IN SECTION 50C OF THE ACT. THE ASSESSEE CONTENDED THA T IT HAS SOLD PROPERTY FOR RS.1 CRORE ONLY WHICH IS REAL PRICE OF THE PROPERTY, AND THEREFORE, REFERENCE UNDER SECTION 50C(2) BE SENT T O THE DVO FOR DETERMINING FAIR MARKET VALUE OF THE PROPERTY. SOM EHOW, THIS REFERENCE WAS NOT MADE BY THE AO, BUT THE LD.CIT(A) HAS CALLE D FOR REMAND REPORT, WHEREIN REFERENCE WAS MADE TO DVO WHO DETER MINED FAIR MARKET VALUE OF THE PROPERTY AT RS.1,02,55,000/-. THUS, ACTUAL DIFFERENCE BOILED DOWN TO RS.2.55 LAKHS. THE LD.CI T(A) HAS ACCEPTED DVOS REPORT AND CONFIRMED ADDITION TO THE EXTENT O F RS.2,55,000/- INSTEAD OF RS.49,31,000/- MADE BY THE AO. IN OTHER WORDS, CAPITAL GAIN ARISEN TO THE ASSESSEE ON SALE OF PROPERTY WAS DETE RMINED BY TAKING FULL SALE CONSIDERATION AT RS.1,02,55,000/- AS AGAINST R S.1,49,31,000/- ADOPTED BY THE AO. DISSATISFIED WITH THIS ACTION O F THE LD.CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. THE STAND OF THE ASSESSEE IS THAT ONCE A REFEREN CE UNDER SECTION 50C(2) IS BEING MADE TO THE DVO, HE WAS REQUIRED TO DETERMINE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF SALE. HIS VIEW POINT IS ESTIMATED ONE AND ELEMENT OF GUESS WORK IS ALWAYS I NVOLVED IN THE VALUE DETERMINED BY THE DVO. SINCE THE VARIATION B ETWEEN THE ACTUAL SALE CONSIDERATION RECEIVED BY THE ASSESSEE AND THE ONE DETERMINED BY THE DVO IS ONLY RS.2,55,000/-, WHICH IS JUST 2.55%, THEN SUCH VARIATION CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE, BECA USE THE ADDITION IS BEING MADE UNDER DEEMING FICTION AND IF VARIATION I S LESS THAN 10% , THEN THAT HAS TO BE IGNORED. LONG TERM CAPITAL GAI N OUGHT TO BE ITA NO.697/AHD/2017 3 DETERMINED BY CONSIDERING FULL SALE CONSIDERATION E QUIVALENT TO THE ONE THE ASSESSEE HAS DISCLOSED I.E. RS.1 CRORE. FOR BU TTRESSING HIS CONTENTION, THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE ITAT, PUNE BENCH IN THE CASE OF RAHUL CONSTRUCTION VS. DCIT, ITA NO.1543/PN/2007. COPY OF THIS ORDER OF THE TRIBUNA L IS PLACED ON RECORD. 5. ON THE OTHER HAND, THE LD.DR CONTENDED THAT THER E WAS NO CHOICE FOR THE LD.CIT(A) EXCEPT TO ADOPT THE CONSIDERATION DETERMINED BY THE DVO. HE MADE REFERENCE TO SECTION 50C(2) AND CONTE NDED THAT ONCE STAMP DUTY VALUATION AUTHORITY HAS DETERMINED A HIG HER VALUE OF THE PROPERTY FOR THE PURPOSE OF CHARGING STAMP DUTY, TH EN SUCH HIGHER VALUE DESERVES TO BE DEEMED AS FULL CONSIDERATION. THIS HIGHER VALUE HAS BEEN REPLACED BY THE DVO AT A LITTLE LOWER FIGU RE, HENCE THAT HAS TO BE ACCEPTED. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. WE FIND THAT IDENTICAL ASPECT HA S BEEN CONSIDERED BY THE ITAT PUNE BENCH. THE RELEVANT DISCUSSION MADE BY THE TRIBUNAL IS WORTH TO NOTE. IT READS AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISP UTE TO THE FACT THAT THE ASSESSEE RECEIVED AN AMOUNT OF RS. 19,00,0 00 AS SALE CONSIDERATION ON ACCOUNT OF SALE OF BASEMENT NOS. 2 AND 3 AT RAHUL CHAMBERS. THERE IS ALSO NO DISPUTE TO THE FAC T THAT THE STAMP VALUATION AUTHORITIES HAVE ADOPTED THE VALUE AT RS. 28,73,000 FOR THE PURPOSE OF STAMP DUTY. THERE IS A LSO NO DISPUTE TO THE FACT THAT ON BEING OBJECTED BY THE ASSESSEE FOR SUBSTITUTION OF THE SAME FIGURE UNDER S. 50C(2) OF THE ACT, THE AO REFERRED THE MATTER TO THE DVO WHO DETERMINED THE FMV OF THE PRO PERTY ON THE DATE OF SALE AT RS. 20,55,000. WE FIND THAT THE LEARNED CIT(A) UPHELD THE ACTION OF THE AO IN SUBSTITUTING THE VAL UE DETERMINED BY THE DVO ON THE GROUND THAT THE ASSESSEE HAS NOT OBJECTED TO THE VALUATION EITHER BEFORE THE DVO OR BEFORE THE A O OR EVEN BEFORE HIM. FURTHER, ACCORDING TO HIM, AS PER THE P ROVISIONS OF S. ITA NO.697/AHD/2017 4 50C, THE AO IS BOUND TO TAKE THE VALUATION AS PER T HE STAMP VALUATION AUTHORITIES AND HE IS NOT EMPOWERED TO GO BEYOND THE VALUATION MADE BY THE STAMP VALUATION AUTHORITIES. HOWEVER, SINCE THE AO HAS ALREADY ADOPTED THE FMV DETERMINED BY THE DVO HE UPHELD THE ACTION OF THE AO. IT IS THE SUBMISSIO N OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE CAN CHAL LENGE THE VALUATION DETERMINED BY THE DVO AS PER THE PROVISIO NS OF S. 50C(2) OF THE ACT. HOWEVER, ACCORDING TO THE LEARNE D DEPARTMENTAL REPRESENTATIVE ONCE THE MATTER IS REFE RRED TO THE DVO AND THE VALUE DETERMINED BY THE DVO IS LESS THA N THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITIES, THE AO HAS NO OTHER OPTION BUT TO ADOPT THE VALUE SO DETERMINED BY THE DVO. WE FIND THE PROVISIONS OF S. 50C READ AS UNDER : '50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR A SSESSED SHALL, FOR THE PURPOSES OF S. 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-S. (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY AO THAT THE VALUE ADOPTE D OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-S. (1) E XCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRAN SFER; (B) THE VALUE SO ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-S. (1) HAS NOT BEEN DISPUTED IN ANY APPEA L OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY OTHER AUTH ORITY, COURT OR THE HIGH COURT, THE AO MAY REFER THE VALUATION O F THE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REF ERENCE IS MADE, THE PROVISIONS OF SUB-SS. (2), (3), (4), (5) AND (6) OF S. 16A, CL. (I) OF SUB-S. (1) A SUB-SS. (6) AND (7) OF S. 23A, SUBS. (5) OF S. 24, S. 34AA, S. 35 AND S. 37 OF THE WT ACT, 1 957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY I N RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFER ENCE MADE BY THE AO UNDER SUB-S. (1) OF S. 16A OF THAT ACT. EXPL ANATION : FOR THE PURPOSES OF THIS SECTION, VALUATION OFFICER S HALL HAVE THE SAME MEANING AS IN CL. (R) OF S. 2 OF THE WT ACT, 1 957 (27 OF 1957). (3) SUBJECT TO THE PROVISIONS CONTAINED IN S UBS. (2), WHERE THE VALUE ASCERTAINED UNDER SUB-S. (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERR ED TO IN SUB-S. (1), THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHO RITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIV ED OR ACCRUING AS A RESULT OF THE TRANSFER.' A BARE READING OF THE AB OVE PROVISIONS SHOWS THAT AS PER THE PROVISIONS OF S. 50C(1) THE V ALUE ADOPTED BY THE STAMP VALUATION AUTHORITIES IN RESPECT OF TR ANSFER OF A CAPITAL ASSET SHALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION ITA NO.697/AHD/2017 5 RECEIVED OR ACCRUING AS A RESULT OF TRANSFER IF SUC H VALUE IS MORE THAN THE VALUE OF CONSIDERATION RECEIVED BY THE ASS ESSEE. AS PER THE PROVISIONS OF SUB-S. (2) OF THE SAID SECTION IF THE ASSESSEE CLAIMS BEFORE THE AO THAT SUCH VALUATION BY THE STA MP VALUATION AUTHORITIES UNDER SUB-S. (1) EXCEEDS THE FMV OF THE PROPERTY AS ON THE DATE OF TRANSFER THE AO MAY REFER THE VALUAT ION OF THE CAPITAL ASSET TO THE DVO. AS PER THE SAID SUB-SECTI ON WHERE ANY SUCH REFERENCE IS MADE THE VARIOUS PROVISIONS OF WT ACT AS MENTIONED IN SUB-S. (2) REFERRED ABOVE SHALL, WITH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE AO UNDER SUB-S. (1) OF S. 16A OF THE WT ACT. WE FIND THE PROVISIONS OF S. 16A OF THE WT ACT DEAL WITH REFERENCE TO THE VALUATION OFFICER BY THE AO. SIMILARLY S. 23A(1)(I) INTER ALIA CONFERS RIGHT OF APPEAL TO THE CIT(A) TO ANY PERSON OBJECTING TO ANY ORDER OF THE DVO UNDER S. 3 5 HAVING THE EFFECT OF ENHANCING THE VALUATION OF ANY ASSET OR R EFUSING TO ALLOW THE CLAIM MADE BY THE ASSESSEE UNDER THE SAID SECTI ON. WE FIND THE PROVISIONS OF S. 23A(6) AND S. 23A(7) AND S. 24 (5) OF THE WT ACT READ AS UNDER : '23A(6) IF THE VALUATION OF ANY ASSET IS OBJECTED TO IN ANY APPEAL UNDER CL. (A) OR CL. (I) OF SUB-S. (1) THE CWT(A) SHALL, (A) IN CASE WHERE SUCH VALUATION HAS BEEN MADE BY A VALUATION OFFICER UNDER S. 16A, GIVE SUCH VALU ATION OFFICER AN OPPORTUNITY OF BEING HEARD; (B) IN ANY OTHER CASE O N REQUEST BEING MADE IN THIS BEHALF BY THE AO, GIVE AN OPPORT UNITY OF BEING HEARD TO ANY VALUATION OFFICER NOMINATED FOR THE PU RPOSE BY THE AO.' (A) AT THE HEARING OF AN APPEAL, ALLOW AN APPE LLANT TO GO INTO ANY GROUND OF APPEAL NOT SPECIFIED IN THE GROUNDS O F APPEAL; (B) BEFORE DISPOSING OF ANY APPEAL, MAKE SUCH FURTHER E NQUIRY AS HE THINKS FIT OR CAUSE FURTHER ENQUIRY TO BE MADE BY T HE AO OR, AS THE CASE MAY BE, BY THE VALUATION OFFICER.' '23A(7). TH E CWT(A) MAY, '24(5) THE TRIBUNAL MAY, AFTER GIVING BOTH PAR TIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORD ERS THEREON AS IT THINKS FIT, AND ANY SUCH ORDERS MAY INCLUDE AN O RDER ENHANCING THE ASSESSMENT OR PENALTY : PROVIDED THAT IF THE VA LUATION OF ANY ASSET IS OBJECTED TO, THE TRIBUNAL SHALL, (A) IN A CASE WHERE SUCH VALUATION HAS BEEN MADE BY VALUATION OFFICER UNDER S. 16A, ALSO GIVE SUCH VALUATION OFFICER AN OPPORTUNITY OF BEING HEARD; (B) IN ANY OTHER CASE, ON A REQUEST BEING MADE IN THIS BEH ALF BY THE AO, GIVE AN OPPORTUNITY OF BEING HEARD ALSO TO ANY VALU ATION OFFICER NOMINATED FOR THE PURPOSE BY THE AO : PROVIDED FURT HER THAT NO ORDER ENHANCING AN ASSESSMENT OR PENALTY SHALL BE M ADE UNLESS THE PERSON AFFECTED THEREBY HAS BEEN GIVEN A REASON ABLE OPPORTUNITY OF SHOWING CAUSE AGAINST SUCH ENHANCEME NT.' A COMBINED READING OF THE ABOVE PROVISIONS SHOWS THAT THE VALUATION ADOPTED BY THE DVO IS SUBJECT TO APPEAL A ND THE SAME IS NOT FINAL. IN THE INSTANT CASE WE FIND THAT AS A GAINST THE VALUE OF RS. 28,73,000 ADOPTED BY THE STAMP VALUATION AUTHOR ITIES, THE ITA NO.697/AHD/2017 6 DVO HAS DETERMINED THE FMV ON THE DATE OF TRANSFER AT RS.20,55,000. THIS ITSELF SHOWS THAT THERE IS WIDE VARIATION BETWEEN THE TWO VALUES. FURTHER, THE VALUE ADOPTED BY THE DVO IS ALSO BASED ON SOME ESTIMATE. WE FIND THAT THE DIFFE RENCE BETWEEN THE SALE CONSIDERATION SHOWN BY THE ASSESSEE AT RS. 19,00,000 AND THE FMV DETERMINED BY THE DVO AT RS. 20,55,000 IS ONLY RS.1,55,000 WHICH IS LESS THAN 10 PER CENT. THE COU RTS AND TRIBUNALS ARE CONSISTENTLY TAKING A LIBERAL APPROAC H IN FAVOUR OF THE ASSESSEE WHERE THE DIFFERENCE BETWEEN THE VALUE ADOPTED BY THE ASSESSEE AND THE VALUE ADOPTED BY THE DVO IS LE SS THAN 10 PER CENT. 7. IN THE ABOVE JUDGMENT, TRIBUNAL WAS OF THE OPINI ON THAT ONCE FMV WAS TO BE DETERMINED BY THE DVO UNDER SECTION 50C(2 ) OF THE ACT, THEN HE HAS TO FOLLOW PROCEDURE CONTEMPLATED UNDER THE W EALTH-TAX ACT. HIS OPINION WAS NOT FINAL, BUT SUBJECT TO APPEAL. HIS OPINION IS AN ESTIMATED GUESS WORK DETERMINING THE VALUE OF A PROPERTY AT A PARTICULAR POINT OF TIME. IF VARIATION BETWEEN FMV CLAIMED BY THE ASSE SSEE VIS--VIS DETERMINED BY THE DVO IS LESS THAN 10%, THEN THERE IS NO NEED TO ACCEPT FMV DETERMINED BY THE DVO. VALUE DISCLOSED BY THE ASSESSEE COULD ALSO BE STATED TO BE TRUE VALUE REPRESENTING FMV. IN SUCH SITUATION NO ADDITION OUGHT TO BE MADE. IN THE PRE SENT CASE, VARIATION IS ONLY 2.55% WHICH IS LESS THAN 10%. THUS FMV ADO PTED BY THE ASSESSEE IN THE SALE DEED ITSELF DOES NOT REQUIRE T O BE REPLACED, WITH THE HELP OF DEEMING FICTION UNDER SECTION 50C(2) OF THE ACT. WE ALLOW THIS GROUND OF APPEAL AND DELETE ADDITION OF RS.2,55,000 /- FROM THE FULL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAIN IN THE HANDS OF THE ASSESSEE. APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 15 TH JANUARY, 2019 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 15/01/2019