KUMARPAL MOHANLAL JAIN, MUMBAI V. ITO WD 18(1)(3), MUMBAI

ITA 7231/MUM/2010

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2112 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 21-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.7231/M/2010 ASSESSMENT YEAR: 2006-07 SHRI KUMARPAL MOHANLAL JAIN, 2, OMKAR APTS., POO. IBP RESID. COMPLEX, GANGAPUR ROAD, NASHIK 422 013 PAN: AABPJ 9082C VS. INCOME TAX OFFICER, WARD 18(1)(3), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MANDAR VAIDYA, A.R. REVENUE BY : SHRI RAKESH RANJAN, D.R. DATE OF HEARING : 21.07.2015 DATE OF PRONOUNCEMENT : 30.11.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 16.07.2010 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2006-07. 2. EARLIER THE APPEAL WAS DECIDED BY THE TRIBUNAL V IDE ORDER DATED 23.10.13. THE ASSESSEE IN HIS APPEAL HAS TAKEN TWO GROUNDS OF APPEAL. HOWEVER, THE GROUND NO.1 WAS INADVERTENTLY NOT DECI DED BY THE TRIBUNAL WHILE DECIDING THE APPEAL OF THE ASSESSEE VIDE ORDER DATE D 23.10.13. THE ASSESSEE MOVED MISCELLANEOUS APPLICATION NO.429/M/2013 POINT ING OUT THE ERROR OCCURRED IN THE ORDER DATED 23.10.13. THE SAID APP LICATION WAS DECIDED BY THE TRIBUNAL VIDE ORDER DATED 04.04.14 AND THE ORDER OF THE TRIBUNAL WAS THEREFORE ITA NO.7231/M/2010 SHRI KUMARPAL MOHANLAL JAIN 2 RECALLED ON THE LIMITED ISSUE FOR DISPOSAL OF GROUN D NO.1 ONLY OF THE ASSESSEES APPEAL. 3. WE HAVE HEARD ON GROUND NO.1 OF THE ASSESSEES A PPEAL. THE ASSESSEE VIDE GROUND NO.1 OF THE APPEAL HAS AGITATED THE ACT ION OF THE LD. CIT(A) IN ACCEPTING THE REPORT OF THE DVO ESTIMATING THE VALU E OF THE PROPERTY SOLD AT RS.53,94,000/- AS AGAINST THE SALE CONSIDERATION OF RS.25 LAKHS DISCLOSED BY THE ASSESSEE. ADMITTEDLY, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION SOLD THE LEASEHOLD RIGHTS IN THE MIDC LAND ALONG WITH BUILT UP STRUCTURE FOR A NET CONSIDERATION OF RS.25.80 LAKH VIDE DEED OF ASSIGNM ENT DATED 29.04.05. THE STAMP DUTY AUTHORITIES LEVIED THE STAMP DUTY UPON T HE REGISTRATION OF THE SAID DEED ADOPTING THE VALUE OF THE LAND AND BUILDING AT RS.77,33,000/-. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE A O) APPLIED THE PROVISIONS OF SECTION 50C OF THE ACT AND ADOPTED THE VALUE OF THE PROPERTY AS DETERMINED BY THE STAMP DUTY AUTHORITIES AND TAXED THE CAPITAL GA INS ACCORDINGLY. 4. IN APPEAL, THE ASSESSEE REQUESTED TO THE LD. CIT (A) THAT THE MATTER BE REFERRED TO THE DVO FOR APPROPRIATE VALUATION OF TH E PROPERTY. CONSEQUENTLY, THE MATTER WAS REFERRED TO THE DVO. THE DVO DETERM INED THE VALUE OF THE PROPERTY AT RS.53.94 LAKHS. THE LD. CIT(A) ADOPTED THE VALUE DETERMINED BY THE DVO AND DIRECTED THE AO TO TAX THE CAPITAL GAIN S ACCORDINGLY. BEING AGGRIEVED, THE ASSESSEE HAS COME IN APPEAL BEFORE U S ON THIS ISSUE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE STAMP DUTY AUTHORITIES HAD ADOPTED THE VALUE OF OWNERSHIP RIGH TS OVER LAND & BUILDING WHEREAS THE ASSESSEE HAD TRANSFERRED ONLY THE LEASE HOLD RIGHTS. ORIGINAL LEASE DEED WAS FOR 95 YEARS BY THE MIDC. HOWEVER, THE AS SESSEE HAS TRANSFERRED THE LEASEHOLD RIGHTS FOR THE BALANCE LEASE PERIOD OF 55 YEARS AND FURTHER THAT THE ITA NO.7231/M/2010 SHRI KUMARPAL MOHANLAL JAIN 3 SECTION 50C DOES NOT APPLY TO THE LEASEHOLD RIGHTS. HE HAS FURTHER SUBMITTED THAT EVEN THE DVO HAS ADOPTED THE FAIR MARKET VALUE MORE THAN THE STAMP DUTY AUTHORITIES. THE LD. D.R., ON THE OTHER HAND, HAS RELIED UPON T HE ORDER OF THE LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ADMIT TEDLY, THE MIDC HAS ORIGINALLY GIVEN THE LEASE OF THE LAND IN THE YEAR 1964. THE ASSESSEE HAD PURCHASED THE LEASEHOLD RIGHTS IN THE PROPERTY IN 1 991 FOR A SUM OF RS.9 LAKHS AND AFTER CARRYING OUT HIS BUSINESS FOR 15 YEARS HA D SOLD THE SAME FOR RS.25 LAKHS VIDE DEED OF ASSESSMENT DATED 29.04.05. HENC E, THE ASSESSEE HAD SOLD THE LEASEHOLD RIGHTS FOR THE REMAINING PERIOD OF 55 YEARS. A PERUSAL OF THE PROVISIONS OF SECTION 50C OF THE ACT REVEALS THAT T HE SAME ARE APPLICABLE FOR THE TRANSFER OF LAND OR BUILDING OR BOTH, HOWEVER, THE LEASEHOLD RIGHTS OR THE TENANCY RIGHTS ARE DIFFERENT FROM THE OWNERSHIP OF LAND OR BUILDING ITSELF. RELIANCE IN THIS RESPECT CAN BE PLACED ON THE FOLLO WING DECISIONS: 1. KANCAST (P.) LTD. VS. ITO 2015 68 SOT 110 (PUNE TRIB.) 2. M/S. FORDHAM PRESSINGS (INDIA) PVT. LTD. VS. DCIT [ ITA NO.6033/MUM/2010] DECIDED ON 25.04.2012 3. M/S. HEATEX PRODUCTS PVT. LTD. VS. ACIT [ITA NO.8197/MUM/2010] DECIDED ON 24.07.2013 4. ITO VS. M/S. PAWASKAR SHIPPING & TRADING COMPANY PV T. LTD. [ITA NO.872/MUM/2008] DECIDED ON 29.07.2011 IN VIEW OF THE SETTLED POSITION ON THIS ISSUE, THE SECTION 50C IS NOT APPLICABLE TO THE CASE IN HAND. HENCE, THE CAPITAL GAINS OFFERED BY THE ASSESSEE BY ADOPTING THE SALE CONSIDERATION ACTUALLY RECEIVE D BY HIM ARE TO BE TAXED AS SUCH. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LD. CIT(A) IN ADOPTING THE VALUE OF THE DVO. WE ACCORDINGLY D IRECT THE AO TO TAX THE ITA NO.7231/M/2010 SHRI KUMARPAL MOHANLAL JAIN 4 CAPITAL GAINS ON THE ASSESSEE BY ADOPTING THE SALE VALUE OF THE PROPERTY AT RS.25 LAKHS AS OFFERED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE ON THE LIMITED ISSUE IN RELATION TO GROUND NO.1 IS HEREBY ALLOWED. EVEN AT THE COST OF REPETITION, WE AGAIN MENTION THAT THE OTHER GROUND OF APPEAL OF THE ASSE SSEE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL VIDE ORDER DATED 23.10.13. ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2015. SD/- SD/- (G.S. PANNU) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.11.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.