Dy. Commissioner of Income Tax, Lucknow V. M/s. Malook Chand Textile Ltd., Lucknow

ITA 83/LKW/2013

• Counselvise Citation: 8323714 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V B BHARGAVA
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report
• Section: 50C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.83/LKW/2013 ASSESSMENT YEAR:2009 - 10 M/S MALOOK CHAND TEXTILE LTD., 1, AMAUSI INDUSTRIAL AREA, NADARGANJ, LUCKNOW. PAN:AADCM7333G VS DY.C.I.T., RANGE - IV, LUCKNOW. (RESPONDENT) (APPELLANT) SHRI O. N. PATHAK, D. R. APPELLANT BY SHRI V. B. BHARGAVA, FCA RESPONDENT BY 16/10/2014 DATE OF HEARING 11 /12/2014 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, LUCKNOW DATED 11/12/2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: THE CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DIRECTING THE AO TO ADOPT THE SALE PRICE OF THE PROPERTIES AT RS.57,01,650/ - BEING THE VALUE AS PER THE SALE DEEDS, AND TO IGNORE THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, HE FAILED TO APPRECIA TE THAT THE 'DEEMED' SALE PRICE OF THE PROPERTIES AS PER SECTION 50C WAS RS.1,60,78,339/ - AND THAT CAPITAL GAINS WAS PAYABLE ON THE SAME. 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN FAILING TO APPRECIATE THAT AS PER PROVISIONS SECTION 50C(2 ) REFERENCE OF THE PROPERTY TO THE D.V.O. TO ASCERTAIN THE FAIR MARKET VALUE IS A DISCRETIONARY POWER OF THE A.O. BY ADOPTING A DIFFERENCE VIEW THE C1T(A) HAS FAILED TO FOLLOW THE DECISION OF THE 2 JURISDICTIONAL ITAT IN THE CASE OF MOHD. SOHAIB VS. DCIT (20 10) 1 ITR (TRIB) 452 (LUCKNOW). 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN NOT REFERRING THE MATTER TO THE D.V.O. HIMSELF. IF HE WAS OF THE VIEW THAT THE DECISION OF THE JURISDICTIONAL ITAT IN THE CASE OF MOHD. SOHAIB SUPRA, WAS NOT APPLIC ABLE TO THE FACTS OF THE CASE THEN HE WAS BOUND TO REFER THE MATTER TO THE D.V.O. FOR HIS VALUATION. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN FAILING TO CONSIDER THE ALTERNATE ARGUMENT OF THE A.O., THAT THE SALE DOCUMENTS OF THE PROPERTI ES ARE NOT RELIABLE AND THAT THE SALE VALUE SHOULD BE COMPUTED AS PER THE PROVISIONS OF SECTION 50C OF THE INCOME - TAX ACT. IN DOING SO, HE HAS FAILED FOLLOW THE DECISION IN THE CASE OF SMT. MEERA SOMASEKARAN VS. ITO (2010) 4 ITR (TRIB) 271 (CHENNAI). 4. T HE CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE DISALLOWANCE MADE BY THE A.O. OF RS.1,00,000/ - ON ACCOUNT OF UNREASONABLY HIGH SALARY PAID TO EMPLOYEES. 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A . R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT ON PAGE NO. 11 & 12 OF HIS ORDER, THE CIT(A) HAS NOTED DOWN VARIOUS INSTANCES OF SALE OF PROPERTY AT A PRICE LOWER THAN THE CIRCLE RATE. HE SUBMITTED THAT THE FAIR MARKET VALUE SHOULD BE ADOPTED AND NOT THE CIRCLE RATE. HE ALSO SUBMITTED THAT FROM PAGES 41 TO 47 OF THE PAPER BOOK IS THE DETAILED SUBMISSION REGARDING THE CONCEPT EXPLAINING THE FAIR MARKET VALUE. HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: ( I ) CIT VS. KHOOBSURAT RESOTRS (P.) LTD. [2012] 211 TAXMAN 510 ( II ) R. VIDHYADHARAN VS DEPUTY COMMISSIONER OF INCOME - TAX, CENT. CIR. 2, TRIVANDRUM [2013] 141 ITD 7 ( III ) RAVI KANT [2007] 110 TTJ 297 (DEL) ( IV ) CIT VS. CHANDNI BUCHAR [2011] 220 TAXATION 65 (PUNJ. & HAR.) ( V ) SMT. KRISHNA BAJAJ VS. ACIT, 221 TAXMAN 431 (KAR). 3 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT S CITED BY LEARNED A.R. OF THE ASSESSEE. WE FIND THAT THIS IS UNDISPUTED FACT THAT THE PROPERTY IN QUESTION WAS SOLD BY THE ASSESSEE FOR A DECLARED CONSIDERATION OF RS.57,01,650/ - AND VALUE AS PER STAMP DUTY IN RESPECT OF THESE 10 PROPERTIES IS RS.1,60,78,339/ - AND THE DIFFERENCE HAS BEEN WORKED OUT BY THE ASSESSING OFFICER AT RS.1,03,76,689/ - THE ASSE SSING OFFICER HAS CONSIDERED THE VALUE AS PER STAMP DUTY CIRCLE RATE FOR THE PURPOSE OF COMPUTING CAPITAL GAIN AND MADE RESULTANT ADDITION. THIS IS BY NOW SETTLED POSITION OF LAW THAT IF THE ASSESSEE OBJECTS THAT THE ACTUAL VALUE IS LESS THAN THE STAMP DU TY RATE THEN THE ASSESSING OFFICER SHOULD REFER THE MATTER TO D.V.O. AS PROVIDED IN SUB SECTION (2) OF SECTION 50C. AS PER THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT IN 225 TAXMAN 211, IT WAS HELD BY HON'BLE CALCUTTA HIGH COURT THAT EVEN IN A CASE WHERE NO SUCH PRAYER IS MADE BY LEARNED ADVOCATE REPRESENTING THE ASSESSEE FOR REFERRING THE MATTER TO D.V.O., THE ASSESSING OFFICER WHO IS DECIDING THE VALUE HAS DUTY TO ACT FAIRLY AND TO GIVE A FAIR TREATMENT AS PROVIDED BY LAW. IT WAS HELD THAT EVEN IN SUCH A CASE, THE ASSESSING OFFICER SHOULD REFER THE MATTER TO D.V.O. TO THIS EXTENT, THERE IS NO QUARREL BUT THE CASE OF THE ASSESSEE IS THAT INSTEAD OF REFERRING THE MATTER TO D.V.O., THE CAPITAL GAIN SHOULD BE ASSESSED BY THE ASSESSING OFFICER HIMSELF ON THE BASIS OF FAIR MARKET VALUE INDICATED BY COMPARABLE CASE S AND CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE ON THIS BASIS. IN OUR CONSIDERED OPINION, THIS DECISION OF CIT(A) IS NOT SUSTAINABLE BECAUSE THE SAME IS NOT IN ACCORDANCE WITH LAW. ONLY ONE EXCEPTIO N IS PROVIDED IN SECTION 50C THAT THE ASSESSING OFFICER MAY REFER THE MATTER TO D.V.O. IN CASE THE ASSESSEE IS NOT SATISFIED THAT THE CIRCLE RATE FIXED FOR STAMP DUTY PURPOSES IS CORRECT. 5. NOW WE ARE CONSIDERING THE APPLICABILITY OF VARIOUS JUDGMENTS CI TED BY LEARNED A.R. OF THE ASSESSEE. 4 5.1 THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF KHOOBSURAT RESOTRS (P.) LTD. (SUPRA). IN THIS CASE, THE DISPUTE WAS REGARDING THE PURCHA SE OF PROPERTY AND NOT SALE OF PROPERTY. IN THAT CASE, THE DISPUTE WAS IN RESPECT OF ADOPTING HIGHER COST AS COST OF ACQUISITION ON THE BASIS OF STAMP DUTY RATE. IT IS SETTLED POSITION OF LAW THAT SECTION 50C IS NOT APPLICABLE IN RESPECT OF ACQUISITION O F PROPERTY. IN THE PRESENT CASE, THE DISPUTE IS REGARDING SALE OF PROPERTY AND THEREFORE, THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE. 5.2 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE TRIBUNAL DECISION IN THE CASE OF R. VIDHYAD HARAN (SUPRA). IN THIS CASE ALSO, THE DISPUTE WAS REGARDING ADOPTING COST OF ACQUISITION IN THE CASE OF BUYER OF PROPERTY AND NOT IN RESPECT OF COMPUTATION OF LONG TERM CAPITAL GAIN IN THE CASE OF SELLER OF PROPERTY AND THEREFORE, THIS DECISION OF THE TRI BUNAL IS NOT APPLICABLE IN THE PRESENT CASE. 5.3 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE TRIBUNAL DECISION IN THE CASE OF RAVI KANT (SUPRA). IN THIS CASE , THE VALUE DECLARED BY THE ASSESSEE WAS RS.6.50 LAC AND STAMP DUTY VALUE WAS FIXED AT RS.15.50 LAC. IN THAT CASE , THE MATTER WAS REFERRED TO D.V.O. U/S 50C(2) AND HE DETERMINED THE VALUE AT RS.11.42 LAC. IN THAT CASE, THE ASSESSING OFFICER DISREGARDED TH E VALUE AS PER D.V.O. AND ADOPTED STAMP DUTY VALUATION FOR COMPUTING CAPITAL GAIN. UNDER THESE FACTS, IT WAS HELD BY THE TRIBUNAL THAT D.V.O.S REPORT SHOULD BE BASED ON CONSIDERATION STATED IN THE REGISTRATION DOCUMENTS FOR COMPARABLE TRANSACTIONS, AS AL SO OTHER RELEVANT FACTORS AND NOT ON VALUATION OF STAMP VALUATION AUTHORITY. IN THIS CASE , THE TRIBUNAL I N FACT REMITTED THE MATTER TO ASSESSING OFFICER AND DIRECTED THAT HE SHOULD OBTAIN A FRESH VALUATION REPORT FROM D.V.O. IN TERMS OF OBSERVATIONS IN TH E TRIBUNAL ORDER. 5 HENCE, AS PER THIS TRIBUNAL DECISION ALSO, THIS IS NOT THE RATIO LAID DOWN THAT THE VALUE SHOULD BE ADOPTED AT LESS THAN THE CIRCLE RATE WITHOUT OBTAINING D.V.O. REPORT AND THEREFORE, THIS DECISION OF THE TRIBUNAL IS NOT APPLICABLE IN TH E PRESENT CASE. 5.4 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF CHANDNI BUCHAR (SUPRA). IN THIS CASE ALSO , THE DISPUTE WAS REGARDING PAYMENT OF PURCHASE PRICE AND NOT IN RESPECT OF CAPITAL GAIN. THIS IS ADMITTED POSITION THAT TILL NOW , THE PROVISION S OF SECTION 50C ARE NOT APPLICABLE IN RESPECT OF PURCHASE OF PROPERTY AND SAME ARE APPLICABLE ONLY FOR COMPUTING CAPITAL GAIN AND THEREFORE, THIS JUDGMENT IS NOT APPLI CABLE IN THE PRESENT CASE. 5.5 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE KARNATAKA HIGH CO URT RENDERED IN THE CASE OF SMT. KRISHNA BAJAJ (SUPRA). IN THAT CASE , THE DISPUTE WAS REGARDING ESTIMATING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01/04/81 BECAUSE THE PROPERTY IN QUESTION SOLD BY THE ASSESSEE ON 04/11/2000 WAS ACQUIRED BY THE ASSESSEE ON 8 TH OCTOBER, 64. THE DISPUTE WAS NOT REGARDING THE SALE VALUE REPORTED BY THE ASSESSEE AT RS.27.55 LAC. THE DISPUTE W AS REGARDING FAIR MARKET VALUE AS ON 01/04/81 CLAIMED BY THE ASSESSEE AT RS.2.75 LAC WITHOUT FURNISHING A VALUATION REPORT FROM THE REGISTERED VALUER IN SUPPORT OF THIS CLAIM. IN THE PRESENT CASE, THE DISPUTE IS REGARDING SALE VALUE DECLARED BY THE ASSESS EE AND THEREFORE, THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE. 6. AS PER THE ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE IS RENDERING ANY HELP TO THE ASSESSEE. WE HAVE ALSO SEEN THAT AS PER THE PROVISIONS OF THE ACT, EITHER THE CIRCLE RATE FOR STAMP DUTY PURPOSES IS TO BE ADOPTED AS SALE CONSIDERATION AND IF THE 6 ASSESSEE OBJECTS TO THAT, THE ASSESSING OFFICER SHOULD OBTAIN REPORT FROM D.V.O. AND THEREAFTER , DETERMINE THE CAPITAL GAIN. HENCE, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISION. THE ASSESSING OFFICER SHOULD OBTAIN REPORT FROM D.V.O. AND AFTER THAT , HE SHOULD DETERMINE THE CAPITAL GAIN AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 /12/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR