NALANDA PACKAGING P. LTD, MUMBAI V. ITO 10(2)(2), MUMBAI

ITA 735/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49474 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIPUL B JOSHI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Additional evidence; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI V.DURGA RAO, JM ITA NO.735/MUM/2010 : ASST.YEAR 2006-2007 M/S.NALANDA PACKAGING PRIVATE LIMITED 7 TH SHIVAM INDUSTRIAL ESTATE GOVANDI ROAD, MUMBAI 400 088. PAN :AAACN9147L. VS. THE INCOME TAX OFFICER WARD 10(2)(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIPUL B.JOSHI RESPONDENT BY : SHRI R.K.GUPTA O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 01.12.2009 IN RELATI ON TO THE ASSESSMENT YEAR 2006-2007. 2. THOUGH SEVEN GROUNDS HAVE BEEN TAKEN RUNNING INTO FIVE PAGES, THE LEARNED A.R. CONTENDED THAT HE WA S PRESSING ONLY TWO ISSUES. 3. WE TAKE UP THE FIRST ISSUE, BEING TH E COMPUTATION OF CAPIT AL GAIN BY INVOKING PROVISIONS OF SECTION 50C. SHORN OFF UNNECESS ARY DETAILS IT IS SEEN THAT THE ASSESSEE SOLD CERTAIN PROPERTY BY ADOPTING SALE C ONSIDERATION AT RS.41 LAKHS. THE ASSESSING OFFICER NOTED THAT AS PER STAMP DUTY AU THORITY THE VALUE WAS RS.76,53,500. ON BEING CALLED UPON TO EXPLAIN AS TO WHY THIS VALUE BE NOT ADOPTED U/S.50C, THE ASSESSEE STATED THAT THE STAMP VALUE SO ADOPTED EXCEED ED THE FAIR MARKET VALUE U/S.50C(2)(A). THE ASSESSING OFFICER REFUSED TO ACCEPT THE A SSESSEES CONTENTION U/S.50C(2)(A) AND COMPUTED THE CAPITAL GAIN ACCORDINGLY. NO RELI EF WAS ALLOWED IN FIRST APPEAL. 4. THE CONTENTION OF THE LEARNED A.R. ON THE FIRST ISSUE IS THAT THE ASSESSING OFFICER WAS OBLIGED TO REFER THE MATTER OF VALUATION TO TH E VALUATION OFFICER IN VIEW ITA NO.735/MUM/2010 M/S.NALANDA PACKAGING PRIVATE LIMITED. 2 OF THE ASSESSEES SPECIFI C OBJECTION TAKEN DURING TH E COURSE OF ASSESSMENT PROCEEDINGS INSTEAD OF GOING AHEAD WITH THE STAMP VALUE. COPIES OF CERTAIN ORDERS PASSED BY THE TRIBUNAL IN SUPPORT OF THIS CONTENTION INCLUDING NANDITA KHOSLA VS. ITO [(2011) 11 TAXMANN.COM 344 (MUM-I TAT)] AND MEGHRAJ BAID VS. ITO [(2008) 114 TTJ (JD.) 841], WERE PLACED ON RECORD. NO SERIOUS OBJECTION WAS TAKEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. IT IS NOTICED THAT SINCE THE ASSESSEE RAISED OBJECTION BEFORE THE ASSESSING OFFICE R ON THE QUESTION OF STAMP VALUE BEING HIGHER THAN THE FAIR MARKET VALUE, IT BECAME INCUMBENT UPON TH E ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICER IN TERMS OF SECTION 50C(2). AS THIS COURSE OF ACTION HAS NOT BEEN FOLLOWED BY THE AO AND THE VALUATION DETERMINED BY THE STAMP VALUATION AUTHORITY HAS BEEN TAKEN AS A BASE FOR COMPUTING THE CAPITAL GAIN, IN OUR CONSIDERED OPINION, IT WOULD BE JUST AND FAIR IF THE IMPUGNED ORDER IS SET ASIDE AND THE MATTER IS RESTORED TO TH E FILE OF A.O. WE ORDER ACCORDINGLY AND DIRECT HIM TO COMPLY WITH THE MANDATE OF SECTION 50C(2) AND DECIDE THIS ISSUE AFRESH ACCORDINGLY. 5. THE SECOND ISSUE PRESSED BEFORE US IS AGAINST THE NON- GRANTING OF DEDUCTION U/S.54EC. THE ASSESSEE CLAIMED DEDUCTION U/S.54EC BY RELYING ON THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN ACE BUILDERS PVT. LTD. VS. 281 ITR 210 (BOM.)] WHICH THE ASSESSING OFFICER REFUSED TO GRANT ON THE GROUND THAT THE SAID JUDGEMENT WAS NOT BINDING AS THE MATTER WAS NOT CONTESTED BEFORE THE HONBLE SUPREME COURT BECAUSE OF SMALLNESS OF TA X EFFECT. WHEN THE MATTER CAME UP BEFORE THE LEARNED CIT(A), HE ADDED A NEW DIMENSION TO THE CASE BY HOLDING THAT DEDUCTION U/S.54EC AMOUNTING TO RS.33 LAKHS WAS NOT ALLOWABLE ON THE GROUND THAT THE ASSESSEE DID NOT GE T THE LEGITIMATE OWNERSHIP IN TH E SAID PROPERTY TILL JUNE 2005 AND HENCE UP TO THIS PERIOD HE WAS ONL Y HAVING LEASEHOLD RIGHTS TO OCCUPY WHICH SUBSEQUENTLY MERGED INTO RIGHT OF OWNE RSHIP AFTER THE AGREEMENT DATED 22.08.2005 WAS SIGNED. IN HIS OPINION SINCE THE ASSESS EE BECAME OWNER IN JUNE 2005, THE SAID PROPERTY SOLD CONSTITUTED ONL Y SHORT TERM CAPITAL ASSET. ITA NO.735/MUM/2010 M/S.NALANDA PACKAGING PRIVATE LIMITED. 3 6. THE LEARNED COUNSEL FOR THE ASSESSEE C ONTENDED THAT THIS TW IST TO THE CASE WAS GIVEN BY THE LEARNED CIT(A) AT HIS OWN WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE TO PUT FORTH HIS SUBMISSION ON THE QUESTION AS TO WHETHER THE SAID PROPERTY WAS HELD BY THE ASSESSEE AS A SHORT TERM OR A LONG TERM CAP ITAL ASSET. AS THE LEARNED CIT(A) DID NOT PROVIDE OPPORTUNITY TO THE ASSESSEE FOR PLACING CORRECT FACTS IN THIS REGARD BEFORE HIM, THE LEARNED A.R. TR IED TO PLACE BEFORE US CERTAIN ADDITIONAL EVIDENCE IN SUPPORT OF ITS CL AIM THAT THE SAID PROPERTY WAS A LONG TERM CAPITAL ASSET. 7. HAVING HEARD BOTH SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD IT IS SEEN THAT THIS FINDING GIVEN BY THE LEARNED CIT(A) IS DIFFE RENT FROM THE REASONS ON WHICH DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER. AS TH ERE IS NO REFERENCE IN THE IMPUGNED ORDER TO ANY OPPORTUNITY GR ANTED BY THE LEARNED CIT(A) BEFORE REACHING THIS CONCLUSION, NATURALLY THE ASS ESSEE COULD NOT HAVE GOT ANY OCCASION TO PROVE ITS CASE. NOW THE LEARNED A.R. HAS PLACED ON RECORD CERTAIN ADDITIONAL EVIDENCE. AS THE APPRECIATION OF THIS ADDI TIONAL EVIDENCE HAS NOT BEEN DONE BY THE ASSESSING OFFICER, IN OUR CO NSIDERED OPINION, IT WOULD BE JUST AND FAIR IF THE IMPUGNED ORDER ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF A.O. WE ORDER ACCORDINGLY AND DIRECT HIM TO DECIDE THIS ISSUE AFRESH IN THE LIGHT OF ANY FRESH EVIDENCE WHICH THE ASSESSEE MAY LIKE TO PRODUCE IN SUPPORT OF ITS CASE. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 15 TH DAY OF JULY, 2011. SD/- SD/- ( V.DURGA RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 15 TH JULY, 2011. DEVDAS*` ITA NO.735/MUM/2010 M/S.NALANDA PACKAGING PRIVATE LIMITED. 4 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XXII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.