DCIT,Ccircle-11, Kolkata, Kolkata V. M/s Life Pharmaceuticals Pvt. Ltd., Kolkata

ITA 761/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8076 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2012
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA
• Assessee Lawyers: ABHIJIT BISWAS
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , ! /AND ' #!' , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] !$ !$ !$ !$ / I.T.A NO. 761/KOL/2012 #%& '( #%& '( #%& '( #%& '(/ // / ASSESSMENT YEAR: 2005-06 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. LIFE PHARMACEUTICALS PVT. LTD. CIRCLE-11, KOLKATA. (PAN: AAACL5084E) (*+ /APPELLANT ) (,*+/ RESPONDENT ) DATE OF HEARING: 15.10.2012 DATE OF PRONOUNCEMENT: 19.10.2012 FOR THE APPELLANT: SHRI D. J. MEHTA, JCIT FOR THE RESPONDENT: SHRI ABHIJIT BISWAS, CA - / ORDER PER MAHAVIR SINGH, JM ( ' #!' ' #!' ' #!' ' #!', , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XII, KOLKATA IN APPEAL NO.365/XII/CIR-11/09-10 DATED 27.02.2012. ASSESSMEN T WAS FRAMED BY DCIT, CIRCLE-11, KOLKATA U/S.143(3) OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE HIS ORDER DATED 27.12. 2007. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) IN DIRECTING NOT TO APPLY THE PROVISIONS OF SECTION 50C OF THE ACT A ND COMPUTE THE LONG TERM CAPITAL GAINS (LTCG) ON SALE CONSIDERATION OF RS.85,00,000/- AS A GAINST THE STAMP VALUATION OF PROPERTIES AT RS.1.47 CR. FOR THIS, REVENUE HAS RAISED FOLLOWING TWO GROUNDS: 1. THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO ADOPT THE SALE CONSIDERATION AT RS.85 LAKHS AS AGAINST THE MARKET VALUE DETERMIN ED BY THE STAMP VALUATION AUTHORITY AT RS.1.475 CRORES. 2. THAT THE LD. CIT(A) HAS ERRED IN DECIDING THAT S ECTION 50C OF THE I. T. ACT IS NOT APPLICABLE IN THIS CASE WHEN THE SALE WAS COMPLETED IN THE FY 2004-05. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSEE COMPANY SOLD LAND AND BUILDING, BEING LAND 1 BIGHA 6 CHITTAKS AND 22 SFT. AND ONE STORIED BRICK BUILT TILE ROOFED DWELLING HOUSE & STRUCTURE MESSUAGES TENEMENTS HERE DITAMENTS AND PREMISES TOGETHER WITH PIECE AND PARCEL OF REVENUE REDEEMED LAND THEREUNT O BELONGING AND WHEREON OR ON PART WHEREOF THE SAME ARE BUILT AND ERECT CONFIRMING BY ESTIMATION AN AREA OF 1 BIGHA 6 CHATTAKS 22 2 ITA 761/K/2012 M/S. LIFE PHARMACEUTICALS PVT. LTD. A.Y.05-06 SQ. FT. BE THE SAME A LITTLE MORE OR LESS SITUATE L YING AT AND BEING PREMISES NO. 184, N. S. C. BOSE ROAD, KOLKATA AT A TOTAL CONSIDERATION OF RS.85,00, 000/- ON 19.01.2005 BUT THE SUB-REGISTRAR WHO REGISTERED THE SALE DEED OF LAND AND BUILDING O N 19.01.2005 DETERMINED THE VALUATION AS PER CIRCLE RATES FOR THE AFORESAID PROPERTY AT RS.1,47, 50,000/- AND CHARGED STAMP DUTY ACCORDINGLY. THE ASSESSEE DISCLOSED LONG TERM CAPITAL GAIN AS WE LL AS SHORT TERM CAPITAL GAIN ON SALE OF LAND AND BUILDING SEPARATELY ON PROPORTIONATE BASIS. TH E AO ALSO BIFURCATED LAND VALUE AND TERMED THE SAME AS LTCG AND ABOUT BLOCK OF BUILDING AS SHO RT TERM CAPITAL GAINS (STCG) BEING DEPRECIABLE ASSETS, ON THE BASIS OF EARLIER BIFURCA TION GIVEN BY ASSESSEE ITSELF. ACCORDINGLY, AO ASSESSED LTCG ON LAND AT RS.5,30,785/- AND BUILDING AT RS.53,66,629/- AND TAXED ACCORDINGLY. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO REFERRED FOR ESTIMATION OF THE FAIR MARKET VALUE OF THE PROPERTY TO THE DVO, AND AFTER CONSIDERING THE FAIR MARKET VALUE AS DETERMINED BY DVO, DIRECTED THE AO TO ADOPT THE SAL E CONSIDERATION AT RS.85 LACS AND COMPUTED THE CAPITAL GAINS. FOR THIS, CIT(A) RECORD ED HIS FINDING IN PARA 4 AS UNDER: 4. REGARDING GROUND NO.1 RELATING TO ADDITION OF R S.53,66,629/- AS SHORT TERM GAIN ON SALE OF BUILDING AND LONG TERM GAIN RS.5,30,785/- AGAINS T SALE OF LAND. IT IS NOTICED THAT ASSESSEE HAS PUT UP THE OLD IDLE PROPERTY AT 184, N. S. C. B OSE ROAD, KOLKATA-1 FOR SALE DURING 2001 DUE TO FINANCIAL DIFFICULTIES AND SINCE THE PROPERT Y WAS MORTGAGED WITH THE BANK IT COULD ONLY BE RELEASED IN AUGUST, 2002 AND AFTER GETTING CLEAR ANCE FROM EMPLOYEES UNION THE AGREEMENT OF SALE WAS MADE ON 03-01-2003 FOR A CONSIDERATION OF RS. 85,00,000/- ALONG WITH LAND AND BUILDING WHEN RS. 35,00,000/- WAS RECEIVED BY THE ASSESSEE COMPANY AND SINCE THERE WERE LEGAL DIFFICULTIES BECAUSE OF LAND CEILING ACT AND THESE FORMALITIES COULD BE COMPLETED ONLY IN DECEMBER, 2004 THE FINAL DEED OF CONVEYANCE WAS REGISTERED ON 19-01-2005 WHEN BALANCE CONSIDERATION OF RS. 50,00,000/- WAS RECEIVED BY TH E ASSESSEE COMPANY. THE FINAL REGISTRATION PRICE WAS DETERMINED AT RS. 1,47,50,000/- FOR THE P URPOSE OF STAMP DUTY. THE ASSESSEE HAD BIFURCATED THAT THE CAPITAL GAIN ON LAND AND BUILDI NG (DEPRECIABLE ASSET) BY TAKING THE SALE CONSIDERATION OF RS.85,00,000/- WHILE THE A.O BIFUR CATED THE CAPITAL GAIN ON LAND AND BUILDING ON THE BASIS OF THE REGISTERED VALUE OF RS . 1,47,50,000/- IN THE RATIO OF PURCHASE COST OF LAND AND BUILDING. THE ASSESSEE HAS STRONGLY CON TENDED THAT SALE WAS COMPLETED BEFORE MARCH, 2003 AND ACCORDINGLY, SEC. 50C OF THE I.T. A CT, 1961 IS NOT APPLICABLE. AFTER CAREFUL CONSIDERATION OF THE ABOVE FACTS, THE CASE WAS REFE RRED TO THE VALUATION CELL ON 16-11-201L. THE VALUATION OFFICER IN HIS REPORT DT. 29-12-2011 DETERMINED THE ESTIMATED THE FARE MARKET VALUE OF THE PROPERTY ON THE DATE OF TRANSFER I.E. 31-01-2005 AT RS. 83,44,840/- AND ESTIMATED THE COST ON THE DATE OF AGREEMENT . E. 31-08-2003 AT RS. 75,10,356/-. KEEPING IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE A.O. IS DIRECTED TO ADOPT THE SALE CONSIDERATION OF RS.85,00,000/- WHILE COMPUTING THE CAPITAL GAINS. H ENCE, GROUND NO. 1 IS ALLOWED. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. THE MAIN CONTENTION OF THE ASSESSEE BEFORE US WAS T HAT THE PROVISIONS OF SECTION 50C OF THE ACT DOES NOT APPLY TO THE ABOVE TRANSACTION AND ACCORDI NG TO HIM, THE PROPERTY WAS SOLD VIDE AGREEMENT FOR SALE DATED 03.01.2003 FOR A TOTAL CON SIDERATION OF RS.85 LACS ALONG WITH LAND AND BUILDING WHEN ADVANCE OF RS.35 LACS WAS RECEIVED BY ASSESSEE COMPANY AND BALANCE CONSIDERATION OF RS.50 LACS WAS RECEIVED ON 19.01.2 005. ACCORDING TO LD. COUNSEL FOR THE 3 ITA 761/K/2012 M/S. LIFE PHARMACEUTICALS PVT. LTD. A.Y.05-06 ASSESSEE PROVISIONS OF SECTION 50C APPLIES ONLY TO THE TRANSACTION ENTERED ON OR AFTER 01.04.2003 AND NOT TO THE PRESENT TRANSACTION IN QU ESTION. ON THE OTHER HAND, LD. SR. DR RELIED ON THE ASSESSMENT ORDER. 5. WE FIND THAT THE ADMITTED FACTS ARE THAT SALE DE ED OF THE ABOVE STATED LAND AND BUILDING WAS REGISTERED ON 19.01.2005 AND THE STAMP VALUATIO N AUTHORITY HAS VALUED THE TRANSACTION AT RS.1,47,50,000/- AND STAMP DUTY WAS ACCORDINGLY PAI D. THE TRANSACTION OF THIS CAPITAL ASSET WAS EFFECTED ONLY ON 19.01.2005. IT MEANS THAT PROV ISION OF SECTION 50C OF THE ACT WHICH IS APPLICABLE FOR AND FROM AY 2003-04 IS APPLICABLE TO THE PRESENT TRANSACTION. UNDOUBTEDLY, THE PROPERTY HAS BEEN TRANSFERRED BY WAY OF SALE DEED R EGISTERED WITH THE SUB-REGISTRAR DATED 19.01.2005 AND THE STAMP VALUATION OF THE PROPERTY IS AT RS.1,47,50,000/-. THE CIT(A) IN HIS ORDER HAS REFERRED TO THE DVOS REPORT WHO ESTIMATE D THE FAIR MARKET VALUE OF THE PROPERTY AT RS.83,44,840/- AS ON THE DATE OF TRANSFER I.E. ON 1 9.01.2005. WHEN A QUERY WAS PUT TO THE LD. COUNSEL FOR THE ASSESSEE, WHETHER THERE IS ANY VALU ATION REPORT BY DVO, NEITHER LD. COUNSEL NOR SR. DR ANSWERED THE SAME. HOWEVER, LD. COUNSEL FOR THE ASSESSEE ONLY SHOWED ONE VALUATION REPOT ON OUR INSISTENCE BUT HE COULD NOT FILE COPY OF THE SAME AND IT IS ALSO NOT ESTABLISHED THAT WHETHER THE SAME IS AUTHENTIC OR NOT. AT THIS POIN T, WE ARE OF THE VIEW THAT THERE IS NO DOUBT ABOUT APPLICABILITY OF PROVISIONS OF SECTION 50C OF THE ACT ON THE ABOVE TRANSACTION BUT ONLY QUESTION IS WHETHER THE VALUE AS ADOPTED BY STAMP V ALUATION AUTHORITY FOR REGISTRATION OF SALE DEED IS TO BE ADOPTED OR THERE IS ANY DVOS REPORT ON A REFERENCE BY AO OR CIT(A), THIS IS TO BE EXAMINED. IN SUCH CIRCUMSTANCES, WE HAVE NO OPT ION EXCEPT TO SET ASIDE THIS MATTER BACK TO THE FILE OF CIT(A), WHO WILL CONSIDER THE DVOS REP ORT AND STAMP VALUATION DONE BASED ON CIRCLE RATES. THE CIT(A) AFTER ALLOWING OPPORTUNIT Y TO AO AS WELL AS THE ASSESSEE WILL DECIDE THE ISSUE IN TERMS OF THE PROVISIONS OF SECTION 50C OF THE ACT. IN THE LIGHT OF THE ABOVE, MATTER IS RESTORED TO THE FILE OF CIT(A) AND APPEAL OF REV ENUE IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. 7. ORDER PRONOUNCED IN OPEN COURT ON 19 TH OCT., 2012. SD/- SD/- , ' #!' ' #!' ' #!' ' #!' , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( . . . .) )) ) DATED : 19TH OCTOBER, 2012 /0 #%12 #3 JD.(SR.P.S.) 4 ITA 761/K/2012 M/S. LIFE PHARMACEUTICALS PVT. LTD. A.Y.05-06 - 4 ##5 65'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT DCIT, CIRCLE-11, KOLKATA 2 ,*+ / RESPONDENT M/S. LIFE PHARMACEUTICALS PVT. LTD., 3/2B, ORIENT ROW, KOLKATA-700 017. 3 . #-% ( )/ THE CIT(A), KOLKATA 4. #-% / CIT, KOLKATA 5 . >#? #% / DR, KOLKATA BENCHES, KOLKATA ,5 #/ TRUE COPY, -%/ BY ORDER, ' !2 /ASSTT. REGISTRAR .