Shri Gustad T. Anklesaria, Ratlam V. The ITO (1), Ratlam

ITA 754/IND/2013

• Counselvise Citation: 75422714 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 27-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S SOLANKI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value
• Section: 50C

Judgement Text

GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, INDORE SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NOS. 754/IND/2013 A.YS.2005-06 SHRI GUSTAD T. ANKLESARIA RATLAM PAN ABCPA 4656K ::: APPELLANT VS INCOME TAX OFFICER-1 RATLAM ::: RESPONDENT ITA NOS. 755/IND/2013 A.YS.2005-06 SMT. RUKSHSANA T. ANKLESARIA RATLAM PAN AAWPA 5922B ::: APPELLANT VS INCOME TAX OFFICER-1 RATLAM ::: RESPONDENT GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 2 ITA NOS. 756/IND/2013 A.YS.2005-06 SHRI SOHRAB T. ANKLESARIA RATLAM PAN AAWPA 5921C ::: APPELLANT VS INCOME TAX OFFICER-1 RATLAM ::: RESPONDENT ITA NOS. 757/IND/2013 A.YS.2005-06 SMT. NINA T. ANKLESARIA RATLAM PAN AFCPA 9897A ::: APPELLANT VS INCOME TAX OFFICER-1 RATLAM ::: RESPONDENT APPELLANTS BY SHRI S.S. SOLANKI RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 7.10.2015 DATE OF PRONOUNCEMENT 8 .10.2015 O R D E R PER SHRI B.C. MEENA, AM ALL THESE APPEALS BY DIFFERENT ASSESSEES EMANATE FROM THE ORDERS OF THE LEARNED CIT(A), UJJAIN, ALL DATE D GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 3 17.10.2014. SINCE COMMON ISSUES ARE INVOLVED IN THES E APPEALS, THEREFORE, THESE ARE BEING DISPOSED OF BY THI S CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. GROUND NOS. 1 AND 2 IN ALL THESE APPEALS RELATE TO TH E ISSUE OF ADDITION MADE BY INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT AND TAKING THE COST OF ACQUISITION OF TH E PROPERTY BY THE ASSESSING OFFICER AT RS.39,50,640/- AS AGAINST THE ASSESSEES CLAIM OF RS. 40,81,025/-. ALL THESE ASSESSEES WERE CO-OWNERS OF THE LAND PROPERTY KNOWN AS JEHANGIR OIL MILL. THE NET SALE CONSIDERATION RECORDE D IN REGISTERED SALE DEED WAS RS.81 LACS WHILE THE STAMP VALUATION OFFICER ADOPTED THE FAIR MARKET VALUE AT RS.1,17,50,000/- FOR THE PURPOSE OF STAMP VALUATION. 3. BEFORE ME THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS THE LE ARNED CIT(A) HAVE NOT CONSIDERED THE REAL FACTS OF THE CASE. THE GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 4 LAND WAS LEASE HOLD BUT THIS FACT WAS NOT DISCLOSED IN SALE DEED BUT THE OTHER DOCUMENTS FILED BEFORE THEM CLEAR LY ESTABLISH THAT THE LAND WAS NOT FREE HOLD. HE DREW OUR ATTENTION TO PAGE 31 OF PAPER BOOK WHEREIN IT IS CLE AR THAT THE LAND WAS GIVEN ON SPECIAL PATTA (LEASE) FOR THE PURPS OE OF CONSTRUCTION OF MILL. THE SALE CONSIDERATION WAS INFLUENCED BY VARIOUS OTHER FACTORS ALSO INCLUDING LIMITATION, LIMITATION, ENCUMBRANCE, TENANCY, THREAT OF ACQUISITION/DEMOLITION, DISPUTES IN REGARD TO TITLE/USE/POSSESSION, ETC. THERE WERE NUMEROUS LITI GATIONS GOING ON AND NECESSARY EVIDENCES WERE SUBMITTED BEFOR E THE AUTHORITIES BELOW. THIS PROPERTY WAS A LEASE-HOLD PROPERTY AND THE SALE WAS A FORCED DISTRESS SALE. ALL TH ESE ASPECTS WERE FACTORS IN REALISING THE VALUE ONLY OF RS. 81 LACS INSTEAD OF THE VALUATION ADOPTED BY THE STAMP VALUATION OFFICER. THIS WAS THE REAL VALUE WHICH THE GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 5 ASSESSEES COULD REALISE ON THE SALE OF THIS LEASE-HOLD RIGHT IN THIS LAND. IT WAS ALSO SUBMITTED THAT THE VALUATION FI XED FOR STAMP DUTY PURPOSES CANNOT FORM THE BASIS TO ASSESS THE VALUE UNDER THE INCOMETAX ACT. SUSPICION CANNOT TAKE THE SHAPE OF EVIDENCE. FOR THIS RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF CIT VS. METAL PRODUCTS OF IND IA (2008) 20(1) ITCL 1010 (P&H). IT WAS ALSO SUBMITTED B EFORE US THAT THIS WAS A LEASE HOLD PROPERTY AND THE PROVISION S OF SECTION 50C OF THE ACT ARE NOT APPLICABLE AS HELD BY TH E HON'BLE ITAT, MUMBAI IN THE CASE OF PRADEEP STEEL RE- ROLLING MILLS LTD.; (2013) 155 TTJ 294 (MUM). THE RELEVANT HELD PORTION IS AS UNDER :- THIS COURT IS UNABLE TO FIND FAULT WITH THE DECISI ON OF THE CIT(A) THAT SECTION 50C CANNOT BE INVOKED TO A TRANSFER OF LEASEHOLD RIGHTS. THE SECTION APPLIES O NLY GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 6 TO CAPITAL ASSETS BEING LAND OR BUILDING OR BOTH. I T DOES NOT IN TERMS INCLUDE LEASEHOLD RIGHTS IN THE L AND OR BUILDING WITHIN ITS SCOPE. THE ASSESSING OFFICER S CONCLUSION TO THE CONTRARY IS BASED ON SECTION 27(I IIB) OF THE ACT, WHICH SAYS THAT A PERSON WHO ACQUIRES ANY RIGHTS, EXCLUDING ANY RIGHTS BY WAY OF A LEASE FROM MONTH TO MONTH OR FOR A PERIOD NOT EXCEEDING O NE YEAR, IN OR WITH RESPECT TO ANY BUILDING OR PART THEREOF, BY VIRTUE OF ANY SUCH TRANSACTION AS IS REFERRED TO IN CLAUSE (F) OF SECTION 269UA, SHALL B E DEEMED TO BE THE OWNER OF THAT BUILDING OR PART THEREOF. FIRSTLY, THIS PROVISION HAS BEEN EXPRESSLY LIMITED IN ITS APPLICATION TO SECTIONS 22 TO 26 OF THE ACT, WHICH DEAL WITH THE COMPUTATION OF THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT HAS NOT BEEN MADE APPLICABLE TO THE COMPUTATION OF GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 7 CAPITAL GAINS. SECONDLY, THE RIGHTS MENTIONED IN TH E PROVISION ARE RIGHTS OVER THE BUILDING AND ANY RIGH TS OVER THE LAND HAVE NOT BEEN INCLUDED IN THE SECTION . IN ANY CASE, SINCE THE SECTION 27(IIIB) HAS NOT BEE N EXTENDED TO THE COMPUTATION OF CAPITAL GAINS UNDER SECTION 45 AND IS LIMITED TO THE COMPUTATION OF THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THE CONCLUSION OF THE CIT(A) THAT SECTION 50C CANNO T BE INVOKED WHERE LEASEHOLD RIGHTS IN LAND OR BUILDI NG ARE TRANSFERRED, SEEMS TO THIS COURT, TO BE CORRECT . THE HON'BLE ITAT BENCH D IN THE CASE OF ACIT VS. R ICOH INDIA LTD.; (2015) 44 CCH 175 (MUMBAI) HELD AS UNDER :- THERE WAS NO DISPUTE THAT WHAT IS TRANSFERRED BY THE ASSESSEE IS THE LEASE HOLD PROPERTY AND, THEREFORE, UNTIL AND UNLESS THE GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 8 PROPERTY IS CONVERTED INTO FREE HOLD THE LESSEE HOLDS ONLY LEASE HOLD RIGHTS OVER THE PROPERTY. IN THE CASE OF ITO V/S PRADEEP STEEL RE ROLLING MILLS PVT. LTD., THE TRIBUNAL, WHILE DEALING WITH AN IDENTICAL ISSUE, HAS HELD THAT SECTION 50C CANNOT BE INVOKED TO A TRANSFER OF LEASEHOLD RIGHTS. THE SECTION APPLIES ONLY TO CAPITAL ASSETS BEING LAND O R BUILDING OR BOTH. IT DOES NOT IN TERMS INCLUDE LEASEHOLD RIGHTS IN THE LAND OR BUILDING WITHIN ITS SCOPE. CONCLUSION OF THE CIT(A) THAT SECTION SAC CANNOT BE INVOKED WHERE LEASEHOLD RIGHTS IN LAND OR BUILDING ARE TRANSFERRED, SEEMS TO US, TO BE CORRECT. GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 9 IN THE CASE OF DCIT VS. TEJINDER SINGH; 32 CCH 58 (K OL TRI) HON'BLE ITAT, KOLKATTA B BENCH HELD HELD AS UNDER :- MONIES RECEIVED BY THE ASSESSEE BEING CLEARLY IN THE NATURE OF RECEIPTS FOR TRANSFER OF TENANCY RIGH TS, SECTION 50C OF THE ACT COULD NOT BE INVOKED. SIMILAR VIEW HAS BEEN TAKEN BY ITAT, PUNE A BENCH I N THE CASE OF KANCAST LTD. VS. ITO (2015); 68 SOT 110 (P UNE). 4. I HAVE HEARD BOTH THE SIDES. I FIND THAT THIS PROPE RTY WAS IN DISPUTE. THERE WERE LITIGATIONS PENDING IN THE COURT. THERE WAS ENCROACHMENT ON LAND. THE LAND WAS ON PATTA (LEASE) FOR CONSTRUCTION OF MILL. THE VARIOUS ITAT BE NCHES HAVE TAKEN A VIEW THAT PROVISIONS OF SECTION 50C OF THE ACT ARE NOT APPLICABLE ON TRANSFER OF THE LEASE-HOLD RIGHTS. I, THEREFORE, HOLD THAT THE LEARNED CIT(A) WAS NOT JUSTIF IED IN SUSTAINING THE ADDITION . I DIRECT TO DELETE THE SAME. GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 10 5. ON THE ISSUE OF COST OF ACQUISITION TAKEN AT RS. 39,50,640/- INSTEAD OFRS.40,81,025/-, AFTER HEARING BO TH THE SIDES, I HOLD THAT THE AUTHORITIES BELOW HAVE NOT CONSIDERED VARIOUS EXPENSES INCURRED AT THE TIME OF REGISTRATION OF THE DOCUMENTS BY THE ASSESSEE WHICH AR E ALLOWABLE AS COST OF ACQUISITION TO WORK OUT THE CAPITAL GAIN. THEREFORE, I FIND SUBSTANCE IN THE CLAIM OF THE ASSESSEE AND DIRECT TO ALLOW THE SAME. 6. IN ITA NO. 754/IND/2013 GROUND NO. 3 IS REGARDING SUSTAINING THE AD HOC DISALLOWANCE OF RS.10,601/- TOWARD S PERSONAL USE OF CAR AND TELEPHONE EXPENSES AND GROUND NOS. 3 & 4 IN ITA NO. 756/IND/2013 ARE AGAINST THE ADDITION OF PERSONAL USE OF CAR AND PERSONAL USE OF TELEPHONE. 7. I HAVE HEARD BOTH THE SIDES. THE LEARNED CIT(A) HAS DELETED THE ADDITION IN BOTH THESE APPEALS BY HOLDING THAT GUSTAD T. ANKLESARIA AND OTHERS ITA NOS,.754 TO 757/IND/2013 11 IT WAS PURELY AD HOC DISALLOWANCE WITHOUT ANY BASIS. BUT LASTLY IT HAS BEEN WRONGLY MENTIONED THAT GROUNDS ARE DISMISSED. AFTER CONSIDERING ASCERTAINING THE TRUE F ACTS AND HEARING BOTH THE SIDES, THESE GROUNDS OF THE ASSESSEE S APPEALS ARE ALLOWED TO THAT EXTENT. 12. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE STAND ALLOWED. PRONOUNCED IN OPEN COURT ON 8 TH OCTOBER, 2015 SD/- (B.C. MEENA) ACCOUNTANT MEMBER 8 TH OCTOBER, 2015 DN/-