Mrs. Ranjana Khullar, New Delhi V. ACIT, New Delhi

ITA 824/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6835 (ITAT-DELHI)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 15-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Capital asset; Fair market value; Valuation report

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 824/DEL/2014 (ASSESSMENT YEAR: 2008 - 09 ) RANJANA KHULLAR, 1, KHULLAR FARM, SULTANPUR, MEHRRAULI, NEW DELHI PAN:AHJPK7206L VS. ACIT, CIRCLE - 33(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SALIL AGGARWAL, ADV SH. SHAILESH GUPTA, CA REVENUE BY: SH. F.R. MEENA, SR. DR DATE OF HEARING 15/12/ 201 6 DATE OF PRONOUNCEMENT 13 / 02 / 2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XXVIII, NEW DELHI DATED 14.11.2013 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION RETAINED FOR RS. 13,10,9247 - RELATING TO THE SALE OF BUILD UP PROPERTY'S L/3 RD SHARE, IN SHOP AT PLOT NO. 9929 TO 9935, NEW ROHTAK ROAD, NEW DELHI - 110005, AGAINST THE GROSS SALE REGISTERED OF RS. 2,00,0007 - IS UNJUST, UNLAWFUL ADDITION ON THE BASIS OF CIRCLE RATE, IS UNJUSTIFIED AND THE MATERIAL PLACED ON THE RECORD NOT CONSIDERED. THUS THE ORDER IS ILLEGAL AND UNWARRANTED. 2. THAT THE LEARNED CIT (A) HAS FAILED TO APPRECIATE THE FACTS BROUGHT ON RECORD BY THE ASSESSE E TO SUBSTANTIATE AND JUSTIFY THE SALE CONSIDERATION RECEIVED. 3. THAT THE PROVISION OF SECTION 50(C)(2) WAS NO T APPLICABLE AS AGREEMENT OF SALE WAS MADE IN APRIL, 2007 AND SALE DEED WAS REGISTERED ON 17.07.2007 AND CIRCLE RATES WERE PUBLISHED ON 18.07.2007. IGNORING THIS FACT AND EVIDENCE PLACED ON RECORD IS UNWARRANTED, NOT JUSTIFIED AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE APPELLANT CRAVES LEAVE TO ADD /OR TO AMEND / OR TO DELETE / OR TO MODIFY / OR TO ALTER ANY OF THE AFORESAID GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE CASE. 3. APPELLANT IS AN INDIVIDUAL WHO FILED HER RETURN OF INCOME ON 22/09/2008 DECLARING AN INCOME OF RS. 1 549208/ . DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT ASSESSEE HAS SOLD 1/ 3 RD SHARE OF THE PROPERTY PAGE 2 OF 4 OF ONE AND HALF STORIED BUILT UP PROPERTY BEARING MUNICIPAL NO. 9929 TO 9935 BUILT O N FREEHOLD LAND ADMEASURING 398 5 YD. SITUATED AT NEW ROHTAK ROAD NEW DELHI AND ASSESSEE WAS ASKED ABOUT THE SALE PROCEEDS ON CAPITAL GAINS ARISING ON THE SALE OF THE SAID PROPERTY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THAT 1/ 3 RD PORTION OF THE SHOP, WHICH WA S SOLD ON 17/07/2007 WAS IN THE POSSESSION OF AN OLD TENANT FOR LAST 50 YEARS AT A MEAGER RENT OF RS. 8.50 PER MONTH FOR THE WHOLE SHOP YIELDING ANNUAL INCOME OF RS. 102/ ONLY. IT WAS FURTHER SUBMITTED THAT THERE WAS NO POSSIBILITY OF GETTING SUCH TENANT EVICTED. IT WAS FURTHER SUBMITTED THAT COMPLETE PARTICULARS OF THE PROPERTY ARE FULLY DESCRIBED IN THE VALUATION REPORT DETERMINING FAIR MARKET VALUE AS ON 01/04/1981. IN THE CIRCUMSTANCES IT WAS STATED THAT ASSESSEE WAS FORCED TO SELL THIS PROPERTY. WI TH REGARD TO THE QUERY FOR CIRCLE RATE PERTAINING ON THE DATE OF SALE OF THE PROPERTY , IT WAS SUBMITTED THAT THERE IS NO PRESCRIBED CIRCLE RATE NOTIFIED BY ANY GOVERNMENT AUTHORITY OR ANY STATE AUTHORITY AT THE RELEVANT POINT OF TIME AND LATER ON W.E.F. 18/07/2007 FIRST - TIME THE PRESCRIBED RATES WERE NOTIFIED. IT WAS THEREFORE STATED THAT THERE WAS NO CIRCLE RATES ON EXISTENCE ON THE DATE OF THE SALE. HOWEVER, THE LD. ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND STATED THAT MINIMUM RATES FOR VALUATION OF LAND AND IMMOVABLE PROPERTIES IN DELHI WERE ALREADY IN EXISTENCE IN THE ASSESSMENT YEAR 2008 09 AND THE SAME RATE SHOULD BE APPLIED FOR WORKING OUT THE CAPITAL GAIN OF THE ASSESSEE. THEREAFTER APPLYING THE PROVISIONS OF SECTION 50 C OF THE INCOME TAX ACT , HE DETERMINED THE FULL CIRCLE VALUE OF THE PROPERTY AT RS. 4 135643/ AND ADOPTED 1/3 RD OF SUCH SUM AT RS. 1 378548/ AS THIS DEEMED SALE CONSIDERATION AND WORKED OUT CAPITAL GAIN OF RS. 1 310924/ OF SUCH PROPERTY. CONSEQUENTLY, ASSESS MENT UNDER SECTION 143 (3) OF THE INCOME TAX ACT WAS FRAMED ON 27. 12 2010 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 2 860132/ . ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE LD. AO PREFERRED AN APPEAL BEFORE THE LD. CIT (A), WHO DISMISSED THE A PPEAL OF THE ASSESSEE. THEREFORE AGGRIEVED WITH THE ORDER OF THE LD. CIT A ASSESSEE IS IN APPEAL BEFORE US. 4. LD. AUTHORISED REPRESENTATIVE SUBMITTED, SAME FACTS WHICH WERE STATED BEFORE THE LD. ASSESSING OFFICER THAT THE PROPERTY WAS WITH TENANT AND THEREFO RE THE SALE WAS MADE TO THE TENANT WHERE THERE WAS NO POSSIBILITY OF EVICTING SUCH TENANT AND THEREFORE THE OBJECTION WAS RAISED BEFORE THE PAGE 3 OF 4 ASSESSING OFFICER ABOUT THE VALUE OF SAID PROPERTY. HE THEREFORE SUBMITTED THAT THE LD. AO AS WELL AS LD. CIT A ERR ED IN ADOPTING THE PROVISIONS OF SECTION 50 C OF THE INCOME TAX ACT TO THE IMPUGNED PROPERTY. 5. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE PROVISIONS OF SECTION 50 C OF THE INCOME TAX ACT ARE MA NDATORY AND THEREFORE SAME WAS ADOPTED IS DEEMED CONSIDERATION ON SALE OF SUCH PROPERTY FOR WORKING OUT THE CAPITAL GAIN CHARGEABLE TO INCOME TAX ACT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONSIDERATION. ACCORDING TO THE PROVISIONS OF SECTION 50 C THE CIR CLE RATES, IF ANY, SHALL BE APPLIED FOR WORKING OUT CAPITAL GAIN OF TRANSFER OF ANY MOVABLE PROPERTY, IF ACTUAL SALES CONSIDERATION IS LESS THAN THAT. HOWEVER, IF THE ASSESSEE OBJECTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS ABOUT ADOPTION OF THE CIRCLE RATE THEN THE LD. ASSESSING OFFICER HAS TO REFER THE SAME TO THE VALUATION OFFICER FOR VALUATION MANDATORILY. IN THE PRESENT CASE, IT IS APPARENT FROM THE ASSESSMENT ORDER ITSELF THAT ASSESSEE HAS OBJECTED TO THE ADOPTION OF THE CIRCLE RATE STATING THAT I T IS A TENANTED PROPERTY AND ON THE DATE OF SALE, THERE WAS NO CIRCLE RATE PRESCRIBED FOR THAT PROPERTY. IN VIEW OF THIS WE ARE OF THE OPINION THAT LD. ASSESSING OFFICER HAS FAILED IN HIS DUTY TO REFER THE MATTER TO THE VALUATION CELL FOR DETERMINING FAIR MARKET VALUE OF THE PROPERTY AND THEN WORKING OUT CAPITAL GAIN LIABILITY OF THE ASSESSEE ON TRANSFER OF SUCH IMMOVABLE PROPERTY, IN ACCORDANCE WITH THE LAW. THE LD. ASSESSING OFFICER SHOULD ALSO HAVE APPLIED HIS MIND ABOUT THE FACT THAT WHETHER THERE WAS ANY CIRCLE RATE PRESCRIBED BY THE RESPECTIVE AUTHORITY AT THE TIME OF SALE OF IMPUGNED PROPERTY OR NOT. IF ON THE DATE OF THE SALE OF THE PROPERTY THERE WERE NO CIRCLE RATES THAN PROVISIONS OF SECTION 50 C CANNOT BE APPLIED TO. THIS FACT ALSO HAS BEEN OVE RLOOKED BY THE LD. ASSESSING OFFICER. THE LD. CIT A WAS ALSO IN ERROR TO HOLD THAT EVEN IN CASE WHERE ON THE DATE OF THE SALE OF THE PROPERTY THERE WERE NO CIRCLE RATES NOTIFIED, BUT IT WERE NOTIFIED ON THE NEXT DAY THE CIRCLE RATES NOTIFIED LATER ON, SHAL L BE APPLIED FOR WORKING OUT THE CAPITAL GAIN LIABILITY OF THE ASSESSEE. ACCORDING TO US THE PROVISIONS OF SECTION 50 C PROVIDES THAT W HERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED 92 [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION PAGE 4 OF 4 REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED 92 [OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48 , BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. IN VIEW OF THIS , THE CIRCLE RATES APPLICABLE ON THE DATE OF THE SALE OF PROPERTY, SHALL BE APPLIED FOR WORKING OUT OF CAPITAL GAIN. THEREFORE WE SET ASIDE T HE IMPUGNED ORDERS OF THE LOWER AUTHORITIES BACK TO THE FILE OF THE LD. ASSESSING OFFICER TO DETERMINE WHETHER ON THE DATE OF SALE OF THE PROPERTY, CIRCLE RATES WERE IN EXISTENCE OR NOT. IF THE CIRCLE RATES ARE EXISTING ON THAT PARTICULAR DATE, THEN THE AS SESSING OFFICER MUST REFER THE MATTER TO THE VALUATION OFFICER FOR VALUATION OF THE PROPERTY AT FAIR MARKET VALUE IN TERMS OF THE PROVISIONS OF SECTION 50 C IN TERMS OF SUBSECTION (2) AND THEN WORK OUT CAPITAL GAIN IN ACCORDANCE WITH THAT PROVISION. THAT A SSESSEE MAY BE GIVEN ADEQUATE OPPORTUNITY OF HEARING AND PLACING EVIDENCES BEFORE HIM B EFORE DECIDING THE ISSUE. IN THE RESULT, GROUND NO. 1, 2 AND 3 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED WITH ABOVE DIRECTION. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 3 / 02 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 / 02 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI