J.Krishnan, CHENNAI V. ACIT, CHENNAI

ITA 809/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4183 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 03-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAVUNA SUNDARI
• Assessee Lawyers: J SREE VIDHYA
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO. 809/MDS/2017 & '& / ASSESSMENT YEAR : 2008-09 SHRI J. KRISHNAN, C/O NATESA IYER & CO., NEW NO.273, OLD NO.32, LINGHI CHETTY STREET, CHENNAI - 600 001. PAN : AABPK 3183 F V. THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE VIII, CHENNAI - 600 034. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : MS. J. SREE VIDHYA, ADVOCATE +,)* - . / RESPONDENT BY : SMT. PAVUNA SUNDARI, JCIT / - 0' / DATE OF HEARING : 01.06.2017 12' - 0' / DATE OF PRONOUNCEMENT : 28.06.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -13, CHENN AI, DATED 09.03.2017 AND PERTAINS TO ASSESSMENT YEAR 2008-09. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IN THIS APPEAL IS COMPUTATION OF CAPITAL GAIN. 2 I.T.A. NO.809/MDS/17 3. MS. J. SREE VIDHYA, THE LD.COUNSEL FOR THE ASSES SEE, SUBMITTED THAT THE ASSESSEE ENTERED INTO AN AGREEME NT FOR SALE ON 03.10.2006 ALONG WITH ONE MS. PAVITHRA NATARAJAN, W HO IS THE JOINT CO-OWNER OF THE PROPERTY. COPY OF THE AGREEMENT IS AVAILABLE AT PAGE 1 OF PAPER-BOOK. THE SAID DEED WAS EXECUTED O N 29.11.2007. ACCORDING TO THE LD. COUNSEL, THE SALE CONSIDERATIO N AGREED IN THE AGREEMENT DATED 03.10.2006 IS ` 38,25,000/-. IN FACT, THE SALE DEED DISCLOSES THE SALE CONSIDERATION AT ` 38,25,000/-. AFTER THE EXECUTION OF AGREEMENT FOR SALE BUT BEFORE EXECUTIO N OF REGISTERED SALE DEED, THE GUIDELINE VALUE OF THE PROPERTY WAS INCREASED TO ` 1,21,12,000/-. THEREFORE, THE ASSESSEE ALONG WITH THE CO-OWNER PAID THE STAMP DUTY ON THE INCREASED GUIDELINE VALU E OF ` 1,21,12,000/-. TAKING ADVANTAGE OF THIS FACT, ACCO RDING TO THE LD. COUNSEL, THE ASSESSING OFFICER BY ADOPTING SECTION 50C OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') HAS TAKEN THE SALE CONSIDERATION AT ` 1,21,12,000/- AND COMPUTED THE CAPITAL GAIN ACCORDINGLY. 4. REFERRING TO PROVISO TO SECTION 50C OF THE ACT, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DATE OF AGREEMENT FIXING THE SALE CONSIDERATION AND DATE OF REGISTRAT ION OF THE SALE 3 I.T.A. NO.809/MDS/17 DEED ARE NOT THE SAME. THE VALUE ADOPTED OR ASSESS ABLE BY STAMP AUTHORITY ON THE DATE OF AGREEMENT HAS TO BE TAKEN FOR THE PURPOSE OF COMPUTING THE SALE CONSIDERATION ON TRANSFER UND ER SECTION 50C OF THE ACT. ACCORDING TO THE LD. COUNSEL, A PROVIS O TO SECTION 50C OF THE ACT WAS INTRODUCED BY FINANCE ACT, 2016 WITH EFFECT FROM 01.04.2017. HOWEVER, THIS PROVISO IS ONLY TO CLARI FY THE EXISTING POSITION OF LAW, THEREFORE, APPLICABLE RETROSPECTIV ELY EVEN FOR THE YEAR UNDER CONSIDERATION. ACCORDING TO THE LD. COU NSEL, THE GUIDELINE VALUE OR THE VALUE ASSESSABLE BY STAMP AU THORITY ON THE DATE OF AGREEMENT, I.E. ON 03.10.2006 ALONE HAS TO BE TAKEN AND NOT THE GUIDELINE VALUE ON THE DATE OF EXECUTION OF REG ISTERED SALE DEED. 5. ON THE CONTRARY, SMT. PAVUNA SUNDARI, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE STAMP AUTHORITIE S VALUED THE PROPERTY AT ` 1,22,20,750/-. THE ASSESSEE BEING THE CO-OWNER OF THE PROPERTY AND ENTITLED FOR 50% OF SHARE, THE ASSESSI NG OFFICER HAS COMPUTED THE CAPITAL GAIN BY TAKING THE SALE CONSID ERATION AS PER THE VALUE ADOPTED BY STAMP AUTHORITIES. ACCORDING TO THE LD. D.R., PROVISO TO SECTION 50C OF THE ACT CAME INTO FORCE F ROM 01.04.2017, THEREFORE, IT IS NOT APPLICABLE DURING THE YEAR UND ER CONSIDERATION. 4 I.T.A. NO.809/MDS/17 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DETERMINATION OF SALE C ONSIDERATION OF THE PROPERTY FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. THE ASSESSEE CLAIMS THAT THE SALE CONSIDERATION WAS ONLY ` 38,25,000/- ON THE BASIS OF AGREEMENT FOR SALE. HOWEVER, THE REVENUE CLAIMS THAT THE GUIDELINE VALUE AT THE TIME OF REGISTRATION OF DOCU MENT WAS ` 1,21,12,000/-. THE QUESTION ARISES FOR CONSIDERATI ON IS FOR THE PURPOSE OF SECTION 50C OF THE ACT, WHETHER THE GUID ELINE VALUE ON THE DATE OF AGREEMENT FOR SALE OF THE PROPERTY HAS TO BE TAKEN INTO CONSIDERATION OR THE GUIDELINE VALUE ON THE DATE OF EXECUTION OF SALE DEED? THE ASSESSEE CONTENDS BEFORE THIS TRIBUNAL O N THE BASIS OF PROVISO TO SECTION 50C OF THE ACT WHICH WAS INTRODU CED WITH EFFECT FROM 01.04.2017, THAT THE GUIDELINE VALUE AS ON THE DATE OF AGREEMENT HAS TO BE TAKEN INTO CONSIDERATION. THE ASSESSEE CLAIMS THAT PROVISO TO SECTION 50C OF THE ACT INTRODUCED W ITH EFFECT FROM 01.04.2017 IS APPLICABLE RETROSPECTIVELY SINCE IT C LARIFIES THE LAW AS IT STOOD AT THE RELEVANT POINT OF TIME. 7. WHENEVER THE VENDOR AND PURCHASER AGREED TO SELL AND PURCHASE A PROPERTY AT A PARTICULAR PRICE AND ENTER ED INTO A WRITTEN 5 I.T.A. NO.809/MDS/17 AGREEMENT, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE VENDOR AND PURCHASER MAY NOT BE ABLE TO CHANGE THE AGREED SALE CONSIDERATION UNLESS SOME EXCEPTIONAL CIRCUMSTANCES HAPPEN IN THE INTERVENING PERIOD. IN THE CASE BEFORE US, NO SUCH EXCEPTIONAL CIRCUMSTANCE WAS BROUGHT TO THE NOTICE OF THE TRIBU NAL. IN THE ABSENCE OF ANY EXCEPTIONAL CIRCUMSTANCES, THE VENDO R AND PURCHASER, AS THE CASE MAY BE, HAS A RIGHT TO ENFOR CE THE AGREEMENT FOR SALE. THEREFORE, MERELY BECAUSE THE GUIDELINE VALUE WAS INCREASED BY STATE REVENUE DEPARTMENT AFTER EXE CUTION OF AGREEMENT FOR SALE, THAT CANNOT BE A REASON FOR VEN DOR AND PURCHASER TO INCREASE THE SALE CONSIDERATION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE VENDOR IS BOUND TO SELL THE PROPERTY AT A PRICE AGREED AS PER THE AGREEMENT. THEREFORE, THE MARKET VALUE / GUIDELINE VALUE WHICH EXISTED AT THE RELEVANT POINT OF TIME, I.E. ON THE DATE OF AGREEMENT FOR SALE, HAS TO BE TAKEN INT O CONSIDERATION TO DETERMINE THE SALE CONSIDERATION. THIS WAS CLARIFI ED BY WAY OF PROVISO INTRODUCED BY FINANCE ACT, 2016. HENCE, PR OVISO INTRODUCED IN SECTION 50C OF THE ACT BY FINANCE ACT , 2016 WOULD HAVE RETROSPECTIVE IN OPERATION AND APPLICABLE FOR THE YEAR UNDER CONSIDERATION ALSO. 6 I.T.A. NO.809/MDS/17 8. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF CO-OWNER SMT. PAVITHRA NATARAJAN V. ITO IN I.T.A. NO.559/MDS/2012. THE FA CT THAT THERE WAS AN AGREEMENT BETWEEN THE PARTIES ON 03.10.2006 WAS NOT BROUGHT TO THE NOTICE OF THE BENCH WHICH HEARD THE APPEAL OF THE CO- OWNER. THEREFORE, THIS TRIBUNAL PROCEEDED ON THE F OOTING THAT THE PROPERTY WAS VALUED BY THE DISTRICT COLLECTOR UNDER TAMIL NADU COURT FEES AND SUIT VALUATION ACT AND UNDER SECTION 47A OF INDIAN STAMPS ACT. THIS TRIBUNAL HAS NOT CONSIDERED THE V ALUE ASSESSABLE BY THE STAMP AUTHORITY ON THE DATE OF AGREEMENT, I. E. ON 03.10.2006. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE GUIDELINE VALUE OR THE VALUE ASSESSABLE BY THE STAM P AUTHORITY AS ON 03.10.2006 HAS TO BE TAKEN AS SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO TAKE THE VALUE ASSESSABLE BY THE STAMP AUTHORITY / GUIDELINE VALUE AS ON 03.10.2006 AND THEREAFTER COMPUTE THE CAPITAL GAIN, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7 I.T.A. NO.809/MDS/17 ORDER PRONOUNCED ON 28 TH JUNE, 2017 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 28 TH JUNE, 2017. KRI. - +056 76'0 /COPY TO: 1. )* /APPELLANT 2. +,)* /RESPONDENT 3. / 80 () /CIT(A)-13, CHENNAI 4. PRINCIPAL CIT-8, CHENNAI-34 5. 69 +0 /DR 6. :& ; /GF.