Jayant N.Akolkar (HUF), Pune V. Income-tax Officer, Ward - 3(2), Pune

ITA 786/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3699 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Retrospective amendment; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO.786/PUN/2018 / ASSESSMENT YEAR : 2009-10 JAYANT N. AKOLKAR (HUF), 1349-C, SADASHIV PETH, NEAR CHIMANYA GANAPATI, PUNE 411 030 PAN : AAEHJ5048P VS. ITO, WARD -3(2), PUNE . / ITA NO.787/PUN/2018 / ASSESSMENT YEAR : 2009-10 YASHWANT N. AKOLKAR (HUF), 1349-C, SADASHIV PETH, NEAR CHIMANYA GANAPATI, PUNE 411 030 PAN : AAAHY5785Q VS. ITO, WARD -3(2), PUNE . / ITA NO.788/PUN/2018 / ASSESSMENT YEAR : 2009-10 CHANDRASHEKHAR N. AKOLKAR (HUF), 1349-C, SADASHIV PETH, NEAR CHIMANYA GANAPATI, PUNE 411 030 PAN : AACHC6480N VS. ITO, WARD -3(2), PUNE . / ITA NO.1131/PUN/2018 / ASSESSMENT YEAR : 2009-10 MAKRAND N. AKOLKAR (HUF), 1349-C, SADASHIV PETH, NEAR CHIMANYA GANAPATI, PUNE 411 030 PAN : AAIHM6554P VS. ITO, WARD -3(2), PUNE (APPELLANT) (RESPONDENT) ITA NOS. 786 TO 788 AND 1131/PUN/2018 JAYANT N. AKOLKAR (HUF) AND 3 OTHERS 2 / ORDER PER R.S.SYAL, VP : THESE FOUR APPEALS BY RELATED BUT DIFFERENT ASSESSEES RELATE TO ASSESSMENT YEAR 2009-10. SINCE COMMON ISSUE IS RAISED IN THESE APPEALS, I AM, THEREFORE, PROCEEDING TO DIS POSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.786/PUN/2018 JAYANT N. AKOLKAR (HUF) : 2. THE ASSESSEE FILED RETURN DECLARING SALE OF 1/10 TH UNDIVIDED INTEREST IN LAND ADMEASURING ABOUT 10444 SQ.MTR S AT SURVEY NO.34, BAVDHAN KHURD, TALUKA MULSHI, PUNE. NIL CAPITAL GAIN WAS COMPUTED BY TAKING FULL VALUE OF CONSIDERATION AT RS.43.60 LAKH. AFTER DEDUCTING INDEXED COS T, THE ASSESSEE COMPUTED LONG TERM CAPITAL GAIN AT RS.41.96 AND EXEMPTION WAS CLAIMED U/S.54EC OF THE INCOME-TAX ACT, 1 961 (HEREINAFTER ALSO CALLED `THE ACT) FOR A SUM OF RS.42 LAKH , THEREBY GIVING NIL INCOME CHARGEABLE UNDER THE HEAD CAPITA L APPELLANT (S) BY SHRI NIKHIL S. PATHAK RESPONDENT BY SHRI RAJESH GAWLI DATE OF HEARING 20-02-2019 DATE OF PRONOUNCEMENT 21-02-2019 ITA NOS. 786 TO 788 AND 1131/PUN/2018 JAYANT N. AKOLKAR (HUF) AND 3 OTHERS 3 GAINS. THE AO OBSERVED THAT THE PROPERTY TRANSFERRED BY THE ASSESSEE AT 1/10 TH WAS HELD BY MEMBERS OF AKOLKAR AND VAIDYA FAMILY EACH HAVING FIVE MEMBERS WITH EQUAL SHARE. IT WAS STATED ON BEHALF OF THE ASSESSEE THAT A MOU WAS EXECUTED O N 07-08-2006 BETWEEN FIVE MEMBERS EACH OF AKOLKAR FAMILY AND VAIDYA FAMILY ON ONE HAND AND S.R. KULKARNI, PARTNERSHIP FIRM, A DEVELOPER, ON THE OTHER, FOR TRANSFER OF THE LAND IN QUESTION. AS PER THIS MOU, THE RATE OF THE SAID DEVELOPABLE LAND WAS AGREED AT RS.387.83 PER SQ.FT. BY WHICH TOTAL CONSIDERATION WAS DETERMINED AT RS.10.20 CRORE. IN THE M OU, IT WAS AGREED TO EXECUTE 3 DEVELOPMENT AGREEMENTS AND POWER OF ATTORNEYS IN FAVOUR OF THE DEVELOPER. THE FIRST DEVELOPMENT AGREEMENT WAS EXECUTED ON 08-03-2007 AND CAPITAL GAIN THEREON WAS DISCLOSED BY THE ASSESSEE AT 1/10 TH SHARE IN HIS RETURN FOR THE A.Y. 2007-08 BY TAKING FULL VALU E OF CONSIDERATION AT THE RATE OF RS.387.83 PER SQ.FT. THE S ECOND DEVELOPMENT AGREEMENT WAS EXECUTED DURING THE PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION ON 30-0 4- 2008 WHEREIN THE CONSIDERATION RECEIVED BY ALL THE PARTIES W AS SHOWN AT RS.4.36 CRORE, WITH ASSESSEES SHARE OF 1/10 TH AT RS.43.60 LAKH. THE AO INVOKED THE PROVISIONS OF SECTION 50C ITA NOS. 786 TO 788 AND 1131/PUN/2018 JAYANT N. AKOLKAR (HUF) AND 3 OTHERS 4 OF THE ACT AND FOUND STAMP VALUE OF THE LAND AS ON THE DA TE OF EXECUTION OF THE SECOND AGREEMENT AT RS.8.04 CRORE. ON BEING CALLED UPON TO EXPLAIN AS TO WHY SUCH STAMP VALUE OF RS.8. 04 CRORE SHOULD NOT BE CONSIDERED IN RESPECT OF THE SECOND DEVELOPMENT AGREEMENT, THE ASSESSEE RAISED CERTAIN OBJECTIONS . THE MATTER WAS REFERRED TO THE DVO, WHO DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY ON SUCH DATE AT RS.4,99,22 ,320/-. THE AO SUBSTITUTED THE ASSESSEES SHARE IN SUCH DETERMINED VALUE WITH THE FULL VALUE OF CONSIDERATION DECLARED BY THE ASSESSEE AT RS.43.60 LAKH. IN THIS WAY, THE AO COMPUTED LONG TERM CAPITAL GAIN AT RS.6,28,662/-. THE ASSESSEE REMAINED UNSUCCESSFUL BEFORE THE LD. CIT(A), AGAINST WHICH THE INSTAN T APPEAL HAS BEEN PREFERRED BEFORE THE TRIBUNAL. 3. I HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE R ELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE ON ANY ASPECT OF THE MATTER EXCEPT THE DETERMINATION OF FULL VALUE OF CONSIDERATION FOR THE PURPOSES OF COMPUTING CAPITAL GAIN FROM THE TRANSFER OF THE LAND IN QUESTION. THE UNDISPUTED FACTS ARE THAT THE ASSESS EE AND OTHER NINE CO-OWNERS OF THE PROPERTY ENTERED INTO MOU WITH M/S. S.R. KULKARNI ON 07-08-2006, A COPY OF SUCH AGREEMENT HAS BEEN PLACED AT PAGE 2 ONWARDS OF THE PAP ER ITA NOS. 786 TO 788 AND 1131/PUN/2018 JAYANT N. AKOLKAR (HUF) AND 3 OTHERS 5 BOOK. AS PER THIS MOU, THE TOTAL SALE CONSIDERATION WAS SETTLED AT RS.10.20 CRORE IN RESPECT OF 2,63,002.19 SQ.FT. OF AREA GIVING RATE OF RS.387.83 PER SQ.FT. CLAUSE 6 OF THE AGRE EMENT PROVIDES THAT THE DEVELOPER HAS, AT THE TIME OF EXECUTION OF THIS MOU, PAID A SUM OF RS.75 LAKH INDIVIDUALLY TO ALL THE CO- OWNERS BY WAY OF 10 SEPARATE CHEQUES OF RS.7.50 LAKH EACH. THE TOTAL AREA WAS TO BE SOLD IN 3 TRENCHES. FIRST DEVELOPME NT AGREEMENT WAS EXECUTED ON 8-03-2007 IN RESPECT OF 80,1 90 SQ.FT. A COPY OF SUCH AGREEMENT IS AVAILABLE AT PAGE 12 ONWARDS OF THE PAPER BOOK. THE ASSESSEE ALONG WITH OTHE R CO- OWNERS COMPUTED LONG TERM CAPITAL GAIN BY ADOPTING FULL VALUE OF CONSIDERATION AT RS.387.83 PER SQ.FT., BEING, THE RATE DETERMINED AS PER THE MOU DATED 07-08-2006. IT IS IN RES PECT OF THE SECOND DEVELOPMENT AGREEMENT EXECUTED DURING THE YEAR IN QUESTION, FOR WHICH THE ASSESSEE ADOPTED THE FULL VA LUE OF CONSIDERATION AT RS.387.83 PER SQ.FT., BEING, THE SAME RATE DETERMINED AS PER THE MOU DATED 7.8.2006. THE AO DISPUTED THE ADOPTION OF THIS RATE AS FULL VALUE OF CONSIDERATION. HE INVOKED THE PROVISIONS OF SECTION 50C AND REFERRED THE M ATTER TO THE DVO, WHO, IN TURN, COMPUTED A HIGHER FAIR MARKET ITA NOS. 786 TO 788 AND 1131/PUN/2018 JAYANT N. AKOLKAR (HUF) AND 3 OTHERS 6 VALUE AT RS.49.92 LAKH AS AGAINST RS.43.64 LAKH DECLARED BY THE ASSESSEE. 4. THE CASE OF THE ASSESSEE IS THAT THE TWO PROVISOS TO SECTION 50C(1) INSERTED BY THE FINANCE ACT, 2016 W.E.F. 01-04-20 17 SHOULD BE RETROSPECTIVELY APPLIED WITH THE EFFECT THAT, IF THE DATE OF AGREEMENT FIXING THE AMOUNT OF CONSIDERATION AND THE ACTUAL REGISTRATION FOR THE TRANSFER OF CAPITAL ASSET ARE NOT SA ME, THEN THE VALUE SHOULD BE CONSIDERED WITH REFERENCE TO THE DATE OF AGREEMENT FIXING THE AMOUNT OF CONSIDERATION OF AN ANTERIO R DATE AND NOT THE STAMP VALUE ON THE DATE OF REGISTRATION OF S ALE DEED. THE OTHER PROVISO PROVIDES THAT SUCH SUBSTITUTION WO ULD BE ALLOWED ONLY IF FULL CONSIDERATION OR PART THEREOF WAS RECEIVED BY MEANS OF BANKING CHANNEL AT THE TIME OF EXECU TION OF THE AGREEMENT FOR TRANSFER. 5. IN MY CONSIDERED OPINION, THE CONTENTION OF THE LD. AR DESERVES TO BE ACCEPTED. FIRST PROVISO TO SECTION 50C(1) OF THE ACT CATEGORICALLY PROVIDES THAT WHERE THE DATE OF AGREEMENT FIXING THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATIO N OF THE TRANSFER OF CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION ITA NOS. 786 TO 788 AND 1131/PUN/2018 JAYANT N. AKOLKAR (HUF) AND 3 OTHERS 7 AUTHORITY ON THE DATE OF THE ORIGINAL AGREEMENT MAY BE TAKEN FOR THE PURPOSE OF COMPUTING FULL VALUE OF CONSIDERATION FO R SUCH TRANSFER. ADMITTEDLY, THE MOU WAS ENTERED ON 07-08- 2006, FIXING THE PRICE AT RS.387.83 PER SQ.FT. EVEN THOUG H THE ACTUAL TRANSFER TOOK PLACE ON 30-04-2008. PRESCRIPTION OF TH E SECOND PROVISO IS ADMITTEDLY FULFILLED IN AS MUCH AS THE ASSESSEE ALONG WITH OTHER NINE CO-OWNERS RECEIVED PART CONSIDERATION OF RS.75 LAKH PERTAINING TO THE MOU DATED 07- 08-2006 THROUGH BANKING CHANNEL. THE QUESTION AS TO WH ETHER OR NOT THE TWO PROVISOS TO SECTION 50C(1) SHOULD BE GIVEN RETROSPECTIVE EFFECT, CAME UP FOR CONSIDERATION BEFORE THE PUNE BENCHES OF THE TRIBUNAL IN SHRI DINAR UMESHKUMAR MORE VS. ITO . VIDE ORDER DATED 25-01-2019, THE TRIBUNAL IN ITA NO.1503/PUN/2015 HAS HELD THAT THE PROVISOS TO SECTION 50C(1) ARE TO BE GIVEN RETROSPECTIVE EFFECT. GOING BY THE MANDATE OF THE ORDER RENDERED BY THE TRIBUNAL IN THE CASE OF SHRI DINAR UMESHKUMAR MORE (SUPRA) , IT IS APPARENT THAT THE PROVISOS TO SECTION 50C(1), SUBSTITUTING FULL VALUE OF CONSIDERATION WITH THE STAMP VALUE, CAN BE INVOKED ONLY BY CONSIDERING THE STAMP VALUE AS ON THE DATE OF MOU DATED 07 - 08-2006 AND NOT WHEN THE DATE OF REGISTRATION FOR THE TRANSF ER ITA NOS. 786 TO 788 AND 1131/PUN/2018 JAYANT N. AKOLKAR (HUF) AND 3 OTHERS 8 WAS ACTUALLY EXECUTED, I.E. ON 05-05-2008. THUS THE VIEW TAKEN BY THE AUTHORITIES IN FIRSTLY CONSIDERING THE STAMP VALUE OF THE PROPERTY W.R.T. 5.5.2008 AND THEN CAUSING THE FAIR MARKET VALUE DETERMINED FROM THE DVO FOR SUCH DATE, CANNOT BE SUSTAINED. THE STAMP VALUE HAS TO BE CONSIDERED WITH REFERE NCE TO THE DATE OF THE ORIGINAL MOU OF 07-08-2006. ON A SPECIF IC QUERY, IT WAS ADMITTED THAT THE STAMP VALUE OF THE PROPERTY ON SUCH DATE IS NOT AVAILABLE. UNDER THESE CIRCUMSTANCES, I SET - ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO FOR COMPUTING THE CAPITAL GAIN BY TAKING INTO CONSIDERATION THE STAMP VALUE U/S.50C(1) AS ON THE DATE OF MOU, NAMELY, 07-08-2006 AND NOT THE DATE OF SECOND REGISTERED SALE DEE D, NAMELY, 05-05-2008. IF SUCH A VALUE IS FOUND TO BE LOW ER THAN THE ACTUAL SALE CONSIDERATION AT THE RATE OF RS.387.83 PER SQ .FT., THEN THAT SHOULD BE IGNORED AND THE CAPITAL GAIN SHOULD BE COMPUTED BY CONSIDERING THE FULL VALUE OF CONSIDERATION AT RS.383.73 PER SQ.FT. AND VICEVERSA. NEEDLESS TO SAY, THE ASSESSEE WILL BE GIVEN A REASONABLE OPPORTUNITY OF HEARING IN SUCH FRESH PROCEEDINGS. ITA NOS. 786 TO 788 AND 1131/PUN/2018 JAYANT N. AKOLKAR (HUF) AND 3 OTHERS 9 ITA NO.787/PUN/2018 YASHWANT N. AKOLKAR (HUF) ITA NO.788/PUN/2018 CHANDRASHEKHAR N. AKOLKAR (HU F) ITA NO.1131/PUN/2018 MAKRAND N. AKOLKAR (HUF) 6. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THE INSTANT THREE ASSESSEES ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF JAYANT N. AKOLKAR (HUF), WHOSE APPEAL HAS BEEN DISPOSED OFF HEREINABOVE. FOLLOWING THE VIEW TAKEN IN EARLIER PARAS, I SET ASIDE THE IMPUGNED ORDERS A ND REMIT THE MATTER TO THE FILE OF AO FOR DECIDING THE ISSUE IN CONFORMITY WITH THE DIRECTIONS GIVEN SUPRA IN THE CASE OF JAYANT N. AKOLKAR (HUF). 7. IN THE RESULT, ALL THE FOUR APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2019. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 21 ST FEBRUARY, 2019 ITA NOS. 786 TO 788 AND 1131/PUN/2018 JAYANT N. AKOLKAR (HUF) AND 3 OTHERS 10 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-3, PUNE 4. THE PR. CIT-2, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 20-02-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 21-02-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *