ACIT CC 3(4) CEN RG 3, MUMBAI V. SKY BUILD P.LTD, MUMBAI

ITA 7366/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2728 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 10-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SATHYA MOORTHY
• Assessee Lawyers: V C SHAH
• Keywords: Sale consideration of property below Jantri Value
• Section: 43CA; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER / I .TA NO. 7366/MUM/2014 ( / ASSESSMENT YEAR:2011-12 THE ACIT, CC - 3(4), CENTRAL RANGE-3, MUMBAI / VS. M/S. SKY BUILD PVT. LTD., 1 ST FLOOR, HENLEEN, 32, MAIN AVENUE, ./ ./ PAN/GIR NO. AAACS 9956L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI S. SATHYA MOORTHY / RESPONDENT BY: SHRI V.C. SHAH / DATE OF HEARING :12.07.2016 ! / DATE OF PRONOUNCEMENT :23.09.2016 / O R D E R PER C.N. PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF THE LD. CIT(A)-39, MUMBAI DATED 01.09.2014 PERTAINING TO AS SESSMENT YEAR 2011-12. 2. THE ONLY GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 78,24, 992/- IN RESPECT OF SALES OF FLATS/OFFICE SPACE MADE BY THE ASSESSEE WH ICH WAS MUCH LESS THAN THE STAMP DUTY VALUATION. ITA NO.736/M/14 2 3. BRIEF FACTS ARE THAT THE ASSESSEE IS A PRIVATE L IMITED COMPANY ENGAGED IN THE BUSINESS OF CONSTRUCTION FILED RETU RN OF INCOME ON 30.9.2011 DECLARING LOSS OF RS. 82,26,873/-. THE A SSESSMENT WAS COMPLETED U/S. 143(3) ON 29.1.2014 DETERMINING INCO ME AT RS. 56,40,630/-. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER MADE ADDITION OF RS. 78,24,992/- ON THE GROUND THA T THE SALE VALUE REPORTED BY THE ASSESSEE IN THE AGREEMENT IS LESS T HAN THE STAMP DUTY VALUE AS PER MAHARASHTRA STATE GOVERNMENT READY REC KONER THEREFORE, FOR THE PURPOSE OF COMPUTING PROFIT AND GAINS FROM THE ABOVE SALES, THE VALUE SO ADOPTED BY THE STATE GOVE RNMENT AUTHORITY IS DEEMED TO BE THE FULL VALUE OF CONSIDERATION REC EIVED BY THE ASSESSEE. THUS, THE DIFFERENCE BETWEEN THE READY R ECKONER VALUE AND THE AGREEMENT VALUE WAS TREATED AS INCOME OF THE AS SESSEE IGNORING THE SUBMISSION OF THE ASSESSEE THAT IT IS CONSTRUCT ING A COMMERCIAL BUILDING AND STARTED CONSTRUCTION IN THE YEAR 2004 AND NOT YET COMPLETED AS ON DATE. THERE WERE HURDLES FROM LAN D OWNERS AND OTHERS, THE MATTER WAS IN THE COURT, SOME BOOKINGS WERE DONE IN THE INITIAL YEAR AND ONLY THE ALLOTMENT LETTERS WERE GI VEN, ONLY PART PAYMENT WAS RECEIVED. THERE HAS BEEN ABNORMAL DELA Y DUE TO LITIGATION. MOREOVER, THE PRICE AGREED WAS MUCH EA RLIER WHEN INITIAL PART PAYMENT WAS RECEIVED. REGISTRATION IS NOW DON E AND HENCE READY RECKONER VALUE ADOPTED IS OF THE DATE WHEN AG REEMENT WAS ENTERED INTO. READY RECKONER GIVES VALUE OF READY PREMISES AND NOT FOR UNDER CONSTRUCTION PREMISES. MORE THAN 3 YEARS HAVE PASSED AFTER AGREEMENT AND TILL TODAY POSSESSION HAS NOT B EEN GIVEN. THE PREMISES WERE SOLD TO THIRD PARTY NOT RELATED TO AN Y DIRECTORS AT MARKET VALUE. HENCE THE MARKET VALUE BEING THE SA LE VALUE IS REQUIRED TO BE ACCEPTED AS CORRECT. HOWEVER, THE ASSESSING OFFICER ITA NO.736/M/14 3 WITHOUT APPRECIATING THE ABOVE SUBMISSIONS ADDED TH E DIFFERENCE AS INCOME OBSERVING THAT ASSESSEE DID NOT SUBMIT IN TERMEDIATE DEEDS OR ANY OTHER EVIDENCE/DOCUMENT SUPPORTING SUCH CLAI M. 4. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION O BSERVING THAT THE PROVISIONS OF LAW DO NOT ENABLE THE ASSESSING O FFICER TO TREAT THE VALUE AS DECLARED BY THE STAMP VALUATION AUTHORIT Y AS DEEMED SALES AS ON THE DATE OF AGREEMENT. AGAINST THIS ORDER, T HE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE ASSESSEE HAS NOT FURNISHED ANY DETAILS BEFORE THE ASSESSING OFFICER OR THE LD. CIT(A) IN SUPPORT OF ITS CLAIM THAT THE READY RECKO NER VALUE CANNOT BE ADOPTED AS DEEMED CONSIDERATION. HE VEHEMENTLY SUP PORTED THE ORDER OF THE ASSESSING OFFICER IN BRINGING TO TAX T HE DIFFERENCE BETWEEN THE AGREEMENT VALUE AND THE READY RECKONER VALUE AS INCOME OF THE ASSESSEE. 6. THE LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATT ENTION TO THE WRITTEN SUBMISSIONS FILED BEFORE THE LD. CIT(A) AND PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDI TION. HE FURTHER SUBMITS THAT ASSESSEE HAS RECEIVED ONLY ADVANCES AN D THERE WAS NO COMPLETED SALE, NO POSSESSION HAS BEEN GIVEN TILL T ODAY, THEREFORE HE SUBMITS THAT THERE IS NO JUSTIFICATION IN BRINGING TO TAX THE DIFFERENCE BETWEEN THE READY RECKONER VALUE AND THE AGREEMENT VALUE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE HAS BEEN CONSIDER ED BY THE LD. ITA NO.736/M/14 4 CIT(A) WITH REFERENCE TO THE AVERMENTS IN THE ASSES SMENT ORDER AND THE ELABORATE SUBMISSIONS MADE BY THE ASSESSEE BEFO RE HIM. THE LD. CIT(A) CONCLUDED THAT NO ADDITION CAN BE MADE AS PE R PROVISIONS OF LAW AS IT STOOD THEN TREATING THE VALUE AS DECLARED BY THE STAMP VALUATION AUTHORITY AS DEEMED SALES AS ON THE DATE OF AGREEMENT OBSERVING AS UNDER: 7.1. THE DISCUSSION ON THIS MATTER IS FOUND IN PARA GRAPH 7 OF THE ASSESSMENT ORDER. IN RESPECT OF SALE OF OFFICE PREMISES, AS DETAILED IN PARA 7 OF THE ASSESSMENT ORDER, THE A.O . HAS STATED THAT THE CONSIDERATION RECEIVED OR ACCRUING IS SHOW N TO BE LESS THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHO RITY/STATE GOVERNMENT. THE AO NOTICED THAT THE VALUE AS APPEND ED IN THE AGREEMENTS IS LESS THAN THE STAMP DUTY VALUE AND TH E A.O. COMPUTED THE DIFFERENCE AT RS. 78,24,992/- WHICH HA S BEEN CONSIDERED AS INCOME FOR THE CAPTIONED YEAR. THE AP PELLANT OBJECTED TO THE SAID ADDITION STATING THAT THE PRIC ES WERE AGREED MUCH EARLIER WHEN INITIAL PART PAYMENT WAS RECEIVED AND THAT MORE THAN 3 YEARS HAVE PASSED AFTER THE AGREEMENT B UT TILL TODAY POSSESSION HAS NOT BEEN GIVEN. ACCORDING TO THE APP ELLANT, DUE TO BAD TRACK RECORD REGARDING POSSESSION, THE ACTUAL P RICE WAS MUCH LESS THAN THE READY RECKONER VALUE. THE A.O. H OWEVER REJECTED THE SAID EXPLANATION ON THE GROUND THAT TH ERE HAS BEEN NO DEED OR DOCUMENT PROVIDED TO SUBSTANTIATE THAT T HE BOOKINGS WERE DONE EARLIER AND THE AGREEMENTS WERE REGISTERE D MUCH LATER. THE A.O. HAS STATED THAT NO INTERMEDIATE DEE DS OR ANY OTHER EVIDENCE WAS PROVIDED SO AS TO ENABLE THE A.O. TO A DOPT THE READY RECKONER VALUES FOR THAT DATE ON WHICH THE BOOKING WAS DONE. ACCORDINGLY, THE A.O. TREATED THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS THE FULL VALUE OF CONSIDERAT ION RECEIVED AND THEREBY MADE ADDITION OF RS. 78,24,992/-. 7.2. THE APPELLANT HAS BEEN HEARD IN THE MATTER. I T IS THE SUBMISSION OF THE APPELLANT THAT THE GOVERNMENT DID NOT PROVIDE FOR ADOPTING READY RECKONER VALUE FOR PREMISES UNDE R CONSTRUCTION PARTICULARLY BY BUILDERS BEING STOCK I N TRADE UNTIL 31.03.2013. IN THE SAID CIRCUMSTANCES, WHEN SALE OF STOCK IS EFFECTED, THE PRESCRIBED VALUE BY THE MAHARASHTRA G OVERNMENT IN READY RECKONER IS NOT MATERIAL. IT IS FURTHER POINT ED OUT THAT THE ITA NO.736/M/14 5 A.O. HAS ERRED IN CALCULATING THE DIFFERENCE IN RE ADY RECKONER VALUE BY COMPARING THE SAME WITH AGREEMENT VALUE AN D INCLUDING THE DIFFERENCE IN THE TOTAL INCOME. THE APPELLANT HAS ALSO POINTED OUT THAT SOME OF THE AGREEMENTS CONSID ERED BY THE A.O. PERTAINED TO THE PRECEDING FINANCIAL YEAR. IT IS FURTHER POINTED OUT THAT THERE IS NO SALE COMPLETED BY THE APPELLANT IN THE IMPUGNED YEAR AND HENCE, NO SUCH INCLUSION CAN BE MADE TO THE TOTAL INCOME. 7.3 I HAVE VERY CAREFULLY CONSIDERED THE MATTER. TH E A.O. HAS CALCULATED THE DIFFERENCE BETWEEN THE READY RECKONE R VALUE AND THE AGREEMENT VALUE AND TREATED THE DIFFERENCE AS I NCOME. IN OTHER WORDS, THE A.O. HAS TREATED THE VALUATION AS MADE BY THE STAMP VALUATION AUTHORITY AS ON THE DATE OF AGREEME NT AS DEEMED SALES CONSIDERATION. I AM UNABLE TO SUSTAIN THE S AID ACTION OF THE A.O. THE PROVISIONS OF LAW, AS IT STO OD THEN DO NOT ENABLE THE A.O. TO TREAT THE VALUE AS DECLARED BY T HE STAMP VALUATION AUTHORITY AS DEEMED SALES AS ON THE DATE OF AGREEMENT. THE PROVISIONS OF SEC. 43CA HAS COME INT O EFFECT ONLY WITH EFFECT FROM 01.04.2014. IN THE CIRCUMSTANCES, THE ADDITION IS NOT SUSTAINED. GROUND III IS ALLOWED. 8. ON CAREFUL READING OF THE LD. CIT(A)S ORDER AND THE OBSERVATIONS THEREIN, WE DO NOT FIND ANY VALID REAS ON TO INTERFERE WITH THE FINDINGS. THUS, WE SUSTAIN THE ORDER OF T HE LD. CIT(A) AND REJECT THE GROUNDS OF THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2016. SD/- SD/- (RAJENDRA) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER $ %' /JUDICIAL MEMBER MUMBAI; (' DATED 23 RD SEPTEMBER, 2016 . % . ./ RJ , SR. PS ITA NO.736/M/14 6 !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI