Appadurai Vijayaraghavan, CHENNAI V. JCIT (OSD), CHENNAI

ITA 765/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4733 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T BANUSEKAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 765/MDS/2013 ASSESSMENT YEAR : 2007-08 APPADURAI VIJAYARAGHAVAN, 87, ARCOT ROAD, VADAPALANI, CHENNAI 600 026. [PAN: AAAPV 9826 F] (APPELLANT) VS JOINT COMMISSIONER OF INCOME TAX (OSD), COMPANY CIRCLE I(1), VANARMATHY BLOCK, 131, M.G.ROAD, NUNGAMBAKKAM, CHENNAI 600 034. (RESPONDENT) APPELLANT BY : SHRI T. BANUSEKAR, CA REVENUE BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 26-09-2013 DATE OF PRONOUNCEMENT : 07-11-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-IX, CHEN NAI DATED 29-01-2013 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 7-08. I.T.A. NO. 765/MDS/2013 2 2. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY. 2007-08 ON 31-03-2008 DECLARING ITS TOTAL INCOME AS ` 12,72,019/- AND THE SAME WAS PROCESSED U/S. 143(1) OF THE INCOME TAX AC T, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). SUBSEQUEN TLY, THE CASE OF THE ASSESSEE WAS RE-OPENED AND NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 27-09-2010 FOR THE FOLLOWING REASON: DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF ONE SMT.G. RAJAMANI FOR AY.2007-08 [ASSESSED IN SAL ARY WARD V(4)], IT CAME TO LIGHT THAT THE SAID SMT. G. RAJAMANI HAD PURCHASED IMMOVABLE PROPERTY FROM THE ASSESSEE FOR AN APPARENT CONSIDERATION OF ` 85,00,000/-. HOWEVER, THE REGISTERING AUTHORITY HAD VALUED THE SAID PROPERTY AT ` 1,60,00,000/- FOR STAMP DUTY PURPOSES. SMT.G. RAJA MANI HAD ALSO STATED THAT HER HUSBAND HAD ALSO PURCHASED THE OTHER HALF OF THE PROPERTY FOR A SIMILAR CONSIDERAT ION. THUS, THE TOTAL SALE CONSIDERATION FOR THE PURPOSE OF SECTION 50C COMES TO ` 3,20,00,000/-. HOWEVER, THE ASSESSEE HAS NOT SHOWN ANY CAPITAL GAINS IN HIS RETURN OF INCOME FILED FOR AY. 2007-08. 3. THE BRIEF FACTS OF THE CASE ARE: THE ASSESSEE EN TERED INTO TWO SALE AGREEMENTS DATED 27-10-2001 IN RESPECT OF HIS TOTAL LAND MEASURING 9,420 SQ.FT., TOGETHER WITH BUILDING THER EON WITH SMT.G. RAJAMANI AND SHRI V.R. GOVINDASAMY. THE SALE CONSIDERATION FOR THE LAND AND BUILDING SOLD TO SHR I V.R. I.T.A. NO. 765/MDS/2013 3 GOVINDASAMY WAS FIXED AT ` 85,41,261/- AND SALE CONSIDERATION FOR SALE OF LAND ALONG WITH BUILDING TO SMT.G. RAJAMANI WAS FIXED AT ` 85.00 LAKHS. THE SALE DEEDS FOR THE AFORESAID TRAN SACTIONS WERE EXECUTED AND REGISTERED BY THE ASSESSEE IN FAVOUR O F THE VENDEES ON 17-05-2006. THE STAMP VALUATION AUTHORITIES ASS ESSED THE MARKET VALUE OF LAND AND BUILDING SOLD TO SHRI V.R. GOVINDASAMY AS ` 1,63,79,250/- AND LAND AND BUILDING SOLD TO SMT.G. RAJAMANI AS ` 1,63,84,438/-. THUS, THERE WAS TOTAL DIFFERENCE OF ` 1,57,22,427/- BETWEEN THE MARKET VALUE ASSESSED BY THE STAMP VALUATION AUTHORITIES AND THE VALUE DECLARED BY THE ASSESSEE AS PER SALE AGREEMENT. THE STAMP DUTY WAS PAID AS PER THE MARKET VALUE ASSESSED BY THE STAMP VALUATION AUTHORITIES A ND NO OBJECTION WHAT-SO-EVER WAS RAISED EITHER BY THE ASS ESSEE/VENDOR OR THE VENDEE FOR INCREASE IN STAMP DUTY. THE ASSE SSING OFFICER AFTER TAKING INTO CONSIDERATION THE ENTIRE FACTS, A PPLIED THE PROVISIONS OF SECTION 50C AS INSERTED BY THE FINANC E ACT, 2002 TO BE EFFECTIVE FROM 01-04-2003 AND BROUGHT TO TAX LON G TERM CAPITAL GAINS ESCAPED FROM ASSESSMENT. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 05-12 -2011, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APP EALS). THE CIT(APPEALS) VIDE IMPUGNED ORDER DATED 29-01-2013, DISMISSED THE APPEAL OF THE ASSESSEE. NOW, THE ASSESSEE HAS COME IN I.T.A. NO. 765/MDS/2013 4 SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORD ER OF THE CIT(APPEALS). 4. SHRI T. BANUSEKAR, CA APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE SALE AGREEMENT WAS ENTERED INTO BETWEEN THE PARTIES ON 27-10-2001 I.E., IN THE PERIOD RELEVANT TO THE AY. 2002- 03. THE PROVISIONS OF SECTION 50C WERE INSERTED WI TH EFFECT FROM AY. 2003-04, THEREFORE, THE SAME ARE NOT APPLICABLE ON THE TRANSACTION ENTERED INTO BY THE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT ASSESSEE HAD ALREADY RECEIVED SUBSTA NTIAL AMOUNT, APPROXIMATELY 41% OF THE SALE CONSIDERATION AS ADVA NCE PRIOR TO THE INSERTION OF SECTION 50C OF THE ACT. THERE WAS DELAY IN EXECUTION OF SALE DEED AS THE PROPERTY-IN-QUESTION WAS MORTGAGED WITH CATHOLIC SYRIAN BANK. AS SOON AS THE MORTGAGE WAS REDEEMED AND THE TITLE DOCUMENTS WERE RELEASED BY T HE BANK, SALE DEEDS WERE EXECUTED BY THE ASSESSEE IN FAVOUR OF THE VENDEES. THE LD. AR REFERRED TO CLAUSE-7 OF THE SA LE AGREEMENTS, WHEREIN IT HAS BEEN STATED THAT THE POSSESSION OF T HE PROPERTY IS HANDED OVER TO PURCHASER ON THE DATE OF SALE AGREEM ENT. SINCE SECTION 50C WAS NOT IN FORCE WHEN THE AGREEMENTS WE RE EXECUTED, THERE IS NO QUESTION OF ITS RETROSPECTIVE APPLICABI LITY IN THE PRESENT CASE. IN ORDER TO SUPPORT HIS SUBMISSIONS, THE LD. AR RELIED ON THE I.T.A. NO. 765/MDS/2013 5 ORDER OF THE TRIBUNAL IN THE CASE OF M. SIVA PARVATHI & ORS. VS. ITO REPORTED AS 37 DTR 124; (2011) 7 ITR (TRIB) 468. 5. ON THE OTHER HAND, SHRI SHAJI P. JACOB APPEARING ON BEHALF OF THE REVENUE STRONGLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. THE LD. DR SUBMITTED THAT THE POSSESSION OF THE PROPERTY WAS NEVER HANDED OVER TO THE VENDEES BY THE ASSESSE E AT THE TIME OF EXECUTION OF THE SALE AGREEMENT. THE LD. D R FURTHER SUBMITTED THAT THE AGREEMENT RELIED ON BY THE ASSES SEE IS NOT REGISTERED DOCUMENT, THEREFORE NOT MUCH RELIANCE CA N BE PLACED ON IT. THE PARTIES TO THE AGREEMENT HAD ACCEPTED T HE MARKET VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY AND NO RE FERENCE WAS MADE BY THE ASSESSEE TO THE DISTRICT VALUATION OFFI CER (DVO) DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE P ROVISIONS OF SECTION 50C ARE VERY MUCH APPLICABLE IN THE FACTS A ND CIRCUMSTANCES OF THE CASE AS NEITHER THE ENTIRE CON SIDERATION WAS PAID NOR THE POSSESSION OF THE PROPERTY WAS HANDED OVER THE VENDEES BEFORE THE INSERTION OF SECTION 50C TO THE ACT. IN ORDER TO SUPPORT HIS SUBMISSIONS, THE LD. DR RELIED ON TH E JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF BAGRI IMPEX (P) LTD., VS. ACIT REPORTED AS 214 TAXMAN 305 (CAL). I.T.A. NO. 765/MDS/2013 6 6. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE S IDES. WE HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISIONS RELIED ON BY THE REPRESENTATIVES O F BOTH THE PARTIES. THE UN-DISPUTED FACTS OF THE CASE ARE THA T THE ASSESSEE ENTERED INTO SALE AGREEMENTS DATED 27-10-2001 FOR S ALE OF LAND AND BUILDING WITH SMT.G. RAJAMANI AND SHRI V.R. GOV INDASAMY. AS PER THE AGREEMENT ENTERED INTO WITH WITH SMT.G. RAJAMANI, THE SALE CONSIDERATION OF LAND AND BUILDING WAS HELD TO BE ` 85.00 LAKHS WHEREAS AS PER THE SALE AGREEMENT WITH SHRI V .R. GOVINDASAMY, THE SALE VALUE OF LAND AND BUILDING WA S MUTUALLY AGREED AT ` 85,41,261/-. SINCE, THE PROPERTY WAS UNDER MORTGAG E, THE SALE DEEDS IN RESPECT OF THE PROPERTY WERE EXEC UTED BY THE ASSESSEE IN FAVOUR OF THE VENDEES ON 17-05-2006 AFT ER THE RELEASE OF MORTGAGE. AT THE TIME OF REGISTRATION OF THE SA LE DEEDS, THE MARKET VALUE OF THE PROPERTIES WERE ASSESSED BY THE STAMP VALUATION AUTHORITIES AS: IN CASE OF SALE OF PROPER TY TO SMT.G. RAJAMANI ` 1,63,84,438/- AND IN CASE OF SHRI V.R. GOVINDASAMY ` 1,63,79,250/-. THE PARTIES TO THE AGREEMENT ACCEPTED THE VALUE ASSESSED BY THE STAMP VALUATION AUTHORITY AND PAID THE STAMP DUTY THEREON. THE ASSESSEE DID NOT PREFER ANY REFERENCE TO THE DVO DURING THE COURSE OF ASSESSMEN T PROCEEDINGS. THE ASSESSING OFFICER IS OF THE OPINIO N THAT SINCE THE I.T.A. NO. 765/MDS/2013 7 TRANSACTION WAS COMPLETED AFTER INSERTION OF SECTIO N 50C OF THE ACT, THE PROVISIONS OF SECTION 50C WILL BE APPLICABLE AN D AS SUCH MADE ADDITION IN THE INCOME RETURNED BY THE ASSESSEE IN RE-ASSESSMENT PROCEEDINGS. THE VIEW OF THE ASSESSING OFFICER HAS BEEN CONFIRMED BY THE CIT(APPEALS) VIDE IMPUGNED ORDER. NOW, THE ISSUE BEFORE US IS WHETHER IN THE FACTS AND CIRCUMS TANCES OF THE CASE, THE PROVISIONS OF SECTION 50C WILL APPLY ON T HE TRANSACTION ENTERED INTO BY THE ASSESSEE. 7. THE AR OF THE ASSESSEE HAS CONTENDED THAT, AT TH E TIME OF EXECUTION OF THE SALE AGREEMENTS, THE POSSESSION OF THE PROPERTY WAS HANDED OVER TO THE VENDEES AND SUBSTANTIAL PART OF THE SALE CONSIDERATION WAS ALSO RECEIVED PRIOR TO THE COMING IN FORCE OF SECTION 50C. IN CASE OF SALE TO SMT.G. RAJAMANI TH E SALE CONSIDERATION WAS FIXED AT ` 85.00 LAKHS AND OUT OF THE SAID AMOUNT, ` 29.00 LAKHS WERE RECEIVED BY THE ASSESSEE ON OR BEF ORE 28-06-2002. SIMILARLY, IN CASE OF SALE TO SHRI V.R . GOVINDASAMY, THE CONSIDERATION WAS FIXED AT ` 85,41,261/-, OUT OF THAT, THE ASSESSEE HAD RECEIVED A SUM OF ` 41,41,261/- ON OR BEFORE 28-07- 2002. THUS, IN CASE OF SALE TO SMT.G. RAJAMANI, TH E ASSESSEE HAD RECEIVED APPROXIMATELY 34% OF SALE CONSIDERATION AS ADVANCE AND IN CASE OF SHRI V.R. GOVINDASAMY, THE ASSESSEE HAD RECEIVED I.T.A. NO. 765/MDS/2013 8 48% OF THE SALE CONSIDERATION AS ADVANCE. THE DELA Y IN EXECUTION OF SALE DEEDS IS ATTRIBUTED TO DELAY IN RELEASE OF MORTGAGE ON PROPERTY BY CATHOLIC SYRIAN BANK. 8. WE ARE OF THE CONSIDERED OPINION THAT THE SALE T RANSACTION HAD TAKEN PLACE AFTER THE INSERTION OF SECTION 50C BY THE FINANCE ACT, 2002 IN THE ACT. THE ASSESSEE HAS MERELY PLAC ED RELIANCE ON AN UN-REGISTERED SALE AGREEMENT TO SUPPORT HIS CONT ENTIONS. THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT THE POSSES SION OF THE PROPERTY HAD PASSED ON TO THE VENDEES AT THE TIME O F EXECUTION OF SALE AGREEMENT. IN FACT, CLAUSE-6 OF THE REGISTERE D SALE DEEDS IS CONTRARY TO THE SUBMISSIONS OF THE AR OF THE ASSESS EE. CLAUSE-6 OF THE REGISTERED SALE DEED READS AS UNDER: 6. THE VENDOR HEREBY CONFIRMS THAT HE HAS THIS DAY PUT THE PURCHASER IN POSSESSION OF THE SCHEDULE B PROPERTY. IN THE SALE DEED DATED 17-05-2006 ENTERED INTO BETW EEN ASSESSEE AND SHRI V.R. GOVINDASAMY WHICH HAS BEEN P LACED ON RECORD BY THE ASSESSEE, SCHEDULE-B PROPERTY REFER S TO THE DESCRIPTION OF THE PROPERTY UNDER SALE. THUS, CLAU SE-6 RE- PRODUCED HEREIN ABOVE CLEARLY SHOWS THAT THE VENDEE S ARE PUT IN I.T.A. NO. 765/MDS/2013 9 POSSESSION OF THE PROPERTY ON THE DATE OF EXECUTION OF THE SALE DEED. SIMILARLY, CLAUSE-6 OF THE REGISTERED SALE D EED EXECUTED BY THE ASSESSEE IN FAVOUR OF SMT.G. RAJAMANI MENTIO NS THAT THE PURCHASER/VENDEE HAS BEEN PUT IN POSSESSION OF THE PROPERTY ON THE DATE OF EXECUTION OF THE SALE DEED. RELIANCE HAS TO BE PLACED ON REGISTERED DOCUMENT RATHER THAN ON AN UN-REGISTE RED DOCUMENT. AS REGARDS SALE CONSIDERATION ALSO, WE DO NOT AGREE WITH THE SUBMISSIONS OF THE LD. AR OF THE ASSESSEE THAT SUBS TANTIAL AMOUNT HAS BEEN PAID BY THE VENDEES TO THE ASSESSEE PRIOR TO THE COMING IN FORCE OF SECTION 50C. AS PER THE ASSESSEES OW N SUBMISSIONS, THE ASSESSEE HAS RECEIVED ONLY 34% OF THE SALE CONS IDERATION ON VARIOUS DATES UP TO 28-08-2002 IN CASE OF AGREEMENT WITH SMT.G. RAJAMANI AND 48%OF THE SALE CONSIDERATION UP TO 28-07-2002 IN CASE OF SHRI V.R. GOVINDASAMY. HOWEV ER, RATIOS HAVE BEEN CALCULATED WITH REFERENCE TO THE SALE CON SIDERATIONS AS DECLARED BY THE ASSESSEE IN UN-REGISTERED SALE AGRE EMENT WHICH HAS BEEN REJECTED BY THE STAMP VALUATION AUTHORITIE S. THE ASSESSEE HAD NEVER SOUGHT REFERENCE TO THE DVO AT T HE TIME OF ASSESSMENT PROCEEDINGS. THEREFORE, IT IS DEEMED TH AT THE ASSESSEE HAD ACCEPTED THE MARKET VALUE ASSESSED BY THE STAMP VALUATION AUTHORITIES. HENCE, THE RATIO OF ALLEGED AMOUNT OF ADVANCE PAID TO THE MARKET VALUE ASSESSED IS FOR TO O LESS. THE LD. I.T.A. NO. 765/MDS/2013 10 DR HAS PLACED RELIANCE ON THE JUDGMENT OF THE HONB LE CALCUTTA HIGH COURT IN THE CASE OF BAGRI IMPEX (P) LTD., VS. ACIT (SUPRA). THE HONBLE HIGH COURT IN THE SAID CASE HAS HELD TH AT THE TRANSFER OF LAND OR BUILDING SHALL BE DEEMED TO HAVE TAKEN P LACE ONLY AFTER STAMP DUTY HAS BEEN ASSESSED BY THE STAMP VALUATION AUTHORITIES. THE RELEVANT EXTRACT OF THE AFORESAI D JUDGMENT IS RE- PRODUCED HEREIN BELOW: AFTER SECTION 50C WAS INTRODUCED IN THE YEAR 2003, THE VALUE OF THE LAND OR BUILDING OR BOTH SOLD OR OTHERWISE T RANSFERRED HAS TO BE THE VALUE ASSESSED BY THE AUTHORITY OF TH E STATE GOVERNMENT FOR THE PURPOSE OF STAMP VALUATION. THE SUBMISSION THAT IN THE FINANCIAL YEAR 2005-06 WHEN THE CONSIDERATION WAS RECEIVED, THE DEED OF CONVEYANCE HAD NOT EVEN BEEN EXECUTED HAS NOT FOUND FAVOUR WITH US FOR THE SIMPLE REASON THAT THE INTENTION OF THE PARLIAMENT IS THAT IN CASE WHERE THE LAND OR BUILDING OR BOTH ARE SOLD OR OTHERWISE TRANSFERRED, SUCH TRANSFER SHALL BE DEEMED TO HAVE TAKEN PLACE ONLY AFTER THE STAMP DUTY HAS BEEN ASSESSED B Y THE STATE GOVERNMENT, BECAUSE IT IS ON THE VALUATION MA DE FOR THE PURPOSE OF STAMP DUTY THAT THE TAX IS PAYABLE UNDER THE INCOME TAX ACT. THE AMENDMENT MADE IN THE YEAR 200 9 MAY HAVE MADE THE THINGS SIMPLER, BUT THE INTENTION OF THE LEGISLATURE WAS VERY CLEAR FROM THE BEGINNING THAT THE VALUE FOR THE PURPOSE OF INCOME TAX SHALL BE THE SAME AS THE VALUE OF STAMP DUTY. BY ADOPTING DEVICES TO DEFEAT THE PROV ISION, THE ASSESSEE CANNOT BE HEARD TO CONTEND THAT SECTION 50 C WOULD NOT BE APPLICABLE MERELY BECAUSE THE DEED OF CONVEY ANCE HAD NOT AT THAT TIME BEEN EXECUTED OR REGISTERED. I.T.A. NO. 765/MDS/2013 11 IN THE INSTANT CASE, THE ASSESSEE HAS NOT BEEN ABLE TO SHOW THAT THE TRANSACTION WAS COMPLETED BEFORE COMING INTO FO RCE OF THE PROVISIONS OF SECTION 50C, NOR THE ASSESSEE WAS ABL E TO PLACE ON RECORD ANY RELIABLE EVIDENCE TO PROVE THAT THE POSS ESSION OF THE PROPERTY-IN-QUESTION HAD BEEN HANDED OVER TO THE VE NDEES AT THE TIME OF EXECUTION OF THE SALE AGREEMENT. EVIDENTAR Y VALUE OF REGISTERED DOCUMENT IS MORE THAN THAT OF UNREGISTER ED DOCUMENT, THEREFORE, HIGHER DEGREE OF RELIANCE HAS TO BE PLAC ED ON THE CONTENTS OF REGISTERED SALE DEED OVER SALE AGREEMEN T WHICH IS UN- REGISTERED. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 50C SHALL BE APPLICABLE ON THE TRANSACTIONS WITH RESPECT OF SALE OF LAND AND BUILDING. THE ORDER OF CIT(APPEALS) IS UPHELD AND THE APPEAL OF THE ASSESSEE IS DISMISSED BEING DEVOID OF MERITS. ORDER PRONOUNCED ON THURSDAY, THE 7 TH NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 07 TH NOVEMBER, 2013 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR