SHRI SUNIL KUMAR R. AGARWAL, MUMBAI V. THE ACIT CEN CIR-18 & 19, MUMBAI

ITA 7514/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2263 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 29-03-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 18-12-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L K AGRAWAL
• Assessee Lawyers: SHANKAR K JALGAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Salary income; Cost of acquisition; Fair market value; Set aside; Capital Gains
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KU MAR ,(AM) ITA NO.7514/MUM/2007 ASSESSMENT YEAR : 2003-04 ITA NO.7515/MUM/2007 ASSESSMENT YEAR : 2004-05 SHRI SUNILKUMAR R. AGARWAL 303, RAJUL APEARTMENTS HARKNESS ROAD, MALABAR HILL MUMBAI-400 006. ..( APPELLANT ) P.A. NO. (AAAPA 7618 N) VS. ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-18 & 19 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ..( RESPONDENT ) APPELLANT BY : SHRI SHANKAR K. JALGAR RESPONDENT BY : SHRI L. K. AGRAWAL O R D E R PER D.K. AGARWAL (JM). THESE TWO APPEALS PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS DATED 7.11.2007 AND 6.11.2007 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEARS 2003-04 & 2004-05 RE SPECTIVELY. SINCE FACTS ARE IDENTICAL AND ISSUE INVOLVED IS COMMON, B OTH THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.7514 & 15/M/07 A.Y:03-04 & 04-04 2 2. BRIEFLY STATED FACTS OF THE CASE EXTRACTED FROM ITA NO.7154/M/2007 FOR ASSESSMENT YEAR 2003-04 ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVES INCOME FROM SALARY, HOUSE PROPERT Y AND OTHER SOURCES. THE RETURN WAS FILED DECLARING TOTAL INCOME OF RS.20,16,458/- . DURING THE COURSE OF ASSESSMENT IT WAS INTERALIA OBSERVED BY THE AO THAT THE ASSESSEE HAS CALCULATED SHORT TERM CAPITAL LOSS OF R S.56,470/- ON SALE OF TWO INDUSTRIAL GALAS BEING GALA NO.202 AND 204 OF ASHOK INDL. ESTATE LBS MARG, BHANDUP, MUMBAI-78. FROM THE COPY OF THE REGISTERED SALE AGREEMENT IT WAS NOTICED BY THE AO THAT MARKET VALUE OF THE SAID GALAS WAS TAKEN BY THE SUB-REGISTRAR FOR T HE PURPOSE OF STAMP DUTY AT RS.7,60,560/- (RS.7,16,560/-)FOR EACH GAL A. HOWEVER, IN THE SALE AGREEMENT AND RETURN OF INCOME THE ASSESSEE H AS SHOWN SALE CONSIDERATION AT RS.5,50,000/- AND RS.4.00 LACS IN RE SPECT OF GALA NO.202 AND 204 RESPECTIVELY. THE AO AFTER APPLYING T HE PROVISION OF SEC.50C OF THE INCOME TAX ACT, 1961(THE ACT) WORKED OUT THE SHORT TERM CAPITAL GAIN OF THE ABOVE GALAS AS UNDER : SALE CONSIDERATION RECEIVED:- GALA NO.202 RS.7,16,560 GALA NO.204 RS.7,16,560 RS.14,33,120 LESS: COST OF ACQUISITION A) COST PRICE GALA NO.202 RS.5,02,235 GALA NO.204 RS.5,02,235 RS.10,06,470 SHORT TERM CAPITAL GAINS RS. 4, 26,650 ITA NO.7514 & 15/M/07 A.Y:03-04 & 04-04 3 THE AO AFTER MAKING SOME OTHER DISALLOWANCE COMPLETED T HE ASSESSMENT AT AN INCOME OF RS.29,43,641/- VIDE ORDER DATE D 5.1.2006 PASSED U/S.143(3) OF THE ACT. ON APPEAL BEFORE THE LD. CIT(A) IT WAS INTERALIA CONTENDED BY THE ASSESSEE VIDE NOTE APPEARING AT PAGE 2 7 OF ASSESSEE'S PAPER BOOK THAT THE AO OUGHT TO HAVE REFERRED THE MATTER OF VALUATION TO THE VALUATION OFFICER IN ACCORDANCE W ITH THE PROVISIONS OF SEC.50C OF THE ACT AS PER PROCEDURE LAID DOWN IN CBD T CIRCULAR NO.8 OF 2002 DATED 27.8.2002. HOWEVER, THE LD. CIT (A) WHILE OBSERVING THAT IN THE PRESENT CASE, NO SUCH REFERENCE HA S BEEN MADE BY THE AO AND THEREFORE, THE CIRCULAR IS NOT RELEVANT FOR THIS CASE UPHELD THE VIEW OF THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SU STENANCE OF ADDITION MADE BY THE AO WITHOUT FOLLOWING THE PROCED URE LAID DOWN IN CBDT CIRCULAR NO.8 OF 2002 DATED 27.8.2002. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE LD. CIT(A) FURTHER SUBMITS THAT SINCE THE AO HAS NOT REFERRED THE M ATTER OF VALUATION TO THE VALUATION OFFICER, THEREFORE, IN VI EW OF THE CONSISTENT VIEW OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL IN SH RI VASANT K. ITA NO.7514 & 15/M/07 A.Y:03-04 & 04-04 4 NATEKAR VS. ITO (2009)7 ITATINDIA 513 (MUM), ITO VS. SMT. MANJU RANI JAIN (2008) 24 SOT 24(DEL.) AND MEGHRAJ BAID VS. ITO (2008) 23 SOT 25 (JODH.)(URO) THE ISSUE MAY BE RESTORED BACK TO T HE FILE OF THE AO. 5. ON THE OTHER HAND THE LD. DR WHILE RELYING ON TH E ORDER OF THE AO AND THE LD. CIT(A) SUBMITS THAT HE HAS NO OBJECTION IF THE ISSUE IS SET ASIDE TO THE FILE OF AO. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE AO HAS TAKEN THE SALE CONSIDERATION AS P ER THE VALUE ASSESSED BY SUB-REGISTRAR FOR THE PURPOSE OF PAYMENT OF ST AMP DUTY AS PROVIDED U/S.50C OF THE ACT. WE FURTHER FIND THAT B EFORE THE LD. CIT(A) THE ASSESSEE HAS CONTENDED THAT THE AO OUGHT TO HAVE RE FERRED THE MATTER OF VALUATION TO THE VALUATION OFFICER IN ACCORD ANCE WITH THE PROVISION OF SEC.50C READ WITH THE PROCEDURE LAID DOWN IN THE CBDT CIRCULAR NO.8 OF 2002 DATED 27.8.2002. HOWEVER, THE LD. CIT(A) WITHOUT CONSIDERING THE SAME HAS UPHELD THE ORDER OF T HE AO ON THE GROUND THAT NO SUCH REFERENCE HAS BEEN MADE BY THE AO, THEREFORE THE CIRCULAR IS NOT RELEVANT FOR THE CASE. 7. IN SHRI VASANT K. NATEKAR SUPRA, IT HAS BEEN HELD BY THE TRIBUNAL VIDE PARA -7 OF ITS ORDER DATED 19.2.2009 AS UNDER: ITA NO.7514 & 15/M/07 A.Y:03-04 & 04-04 5 7. AS PER SUB-SECTION(2) OF SECTION 50C, IF THE ASSESSEE CLAIMS BEFORE THE A.O. THAT THE VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY IS MORE TH AN THE FAIR MARKET VALUE, THEN THE A.O. MAY REFER THE MATTER OF VALUATION TO THE VALUATION OFFICER. IT IS SEEN T HAT THE ASSESSEE HAS FILED THE APPLICATION BEFORE THE A.O. STATING THAT THE VALUATION MADE BY THE STAMP VALUATION AUTH ORITY WAS MORE THAN THE FAIR MARKET VALUE OF THE LAND. SE CTION 50C IS A DEEMING PROVISION AND SOME STRICT RULE OF INTERPRETATION SHOULD BE APPLIED. ONCE THE CONDITIO N PRESCRIBED UNDER SUB-SECTION(2) OF SECTION 50C ARE FULFILLED THEN IN OUR OPINION, A.O. SHOULD REFER TH E MATTER FOR VALUATION TO THE VALUATION OFFICER. MERELY BEC AUSE THE LEGISLATURE HAS USED THE WORD MAY THAT DOES NOT M EAN THAT IT IS SOUL (SOLE) DISCRETION OF THE A.O. TO RE FER OR NOT TO REFER THE MATTER FOR VALUATION. IF THE LEGISLAT URE DESIRED THAT THE SOUL(SOLE) DISCRETION SHOULD BE GI VEN TO THE A.O. ON THE ISSUE OF REFERRING THE MATTER TO TH E VALUATION OFFICER THEN, THERE WAS NO NECESSITY OF P UTTING THE SAME CONDITION ON SUB-SECTION(2). IN OUR OPINI ON, ONCE THE CONDITION PROVIDED IN SUB-SECTION(2) ARE F ULFILLED THEN ASSESSING OFFICER SHOULD REFER THE MATTER FOR VALUATION OF THE CAPITAL ASSET TO THE VALUATION OFF ICER AS PROVIDED. IN THIS CASE MAY IS TO BE READ AS SHAL L. FOR THE REASONS GIVEN ABOVE, WE CONSIDER IT FIT TO REST ORE GROUND NO.3 AND 4 TO THE FILE OF THE A.O. FOR REFER RING THE SAME TO THE VALUATION OFFICER AS PROVIDED IN SUB- SECTION(2) TO SECTION 50C. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT O N RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL SUPRA, HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT CONSIDERIN G THE ASSESSEE'S REQUEST FOR VALUATION BY THE VALUATION OFFICER AND ACCO RDINGLY IN THE INTEREST OF JUSTICE WE SET ASIDE THE ORDER PASSED BY THE R EVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTER TO T HE FILE OF THE AO FOR REFERRING THE SAME TO THE VALUATION OFFICER A S PROVIDED UNDER SUB-SECTION (2) TO SECTION 50C OF THE ACT AND TO DECIDE TH E ISSUE ITA NO.7514 & 15/M/07 A.Y:03-04 & 04-04 6 ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE AND ACCORDINGLY THE GROUNDS TAKEN BY THE A SSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.7515/MUM /2007 (A. Y. 2004-05): 8. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE M ATERIAL AVAILABLE ON RECORD AND KEEPING IN VIEW OF OUR FINDI NG RECORD IN PARA 6 AND 7 OF THIS ORDER, THE AO IS DIRECTED TO FOLLOW OUR DIRECTION GIVEN IN THE SAID PARAS OF THIS ORDER. WE HOLD AND ORDER ACCORD INGLY. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE, PARTLY ALLO WED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, ASSESSEE'S APPEALS STAND PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5.4.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 5.4.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.7514 & 15/M/07 A.Y:03-04 & 04-04 7 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 29.3.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 30.3.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 5.4.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 12.4.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER