Sureshchandra Parekh , Surat V. ITO,Ward-3(3)(4), Surat

ITA 841/AHD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9242 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Revenue expenditure; Set aside; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 50C; 250; 201; 43

Judgement Text

ITA NO S . 841 & 1030 / AHD/201 5 ASSESSMENT Y EAR: 20 10 - 11 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM] ITA NO. 841 /AHD/201 5 ASSESSMENT Y EAR : 20 10 - 11 SURESHCHANDRA PAREKH, .... ............ APPELLANT B/44, SHRADHA SOCIETY, SUMU L DAIRY ROAD, SURAT 395 001. [PAN: A DLPP 8524 C ] VS. INCOME TAX OFFICER 3(3)(4), SURAT. .... ........... RESPONDENT ITA NO. 1030 /AHD/201 5 ASSESSMENT Y EAR: 2010 - 11 INCOME TAX OFFICER, WARD 3(2)(5), SURAT. .... ........... APPELLANT VS. SURESHCHANDRA SHANTILAL PAREKH, .... ............ RESPONDENT B/44, SHRADHA SOCIETY, SUMUL DAIRY ROAD, SURAT 395 001. [PAN: A DLPP 8524 C ] APPEARANCES BY MEHUL SHAH FOR THE A SSESSEE JAMES KURIAN FOR T HE REVENUE HEARING CONCLUDED ON: 07 / 12 / 20 1 6 ORDER PRONOUNCED ON : 09 / 0 2 / 20 1 7 O R D E R PER PRAMOD KUMAR , AM: 1. TH ESE CROSS APPEAL S ARE DIRECTED AGAINST THE ORDER DATED 04.02.2015 PASSED BY THE LEARNED CIT(A), IN THE MATTER OF ASSESSME NT UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 201 0 - 11 . ITA NO S . 841 & 1030 / AHD/201 5 ASSESSMENT Y EAR: 20 10 - 11 PAGE 2 OF 6 2. G RIEVANCE S RAISED BY THE PARTIES ARE AS FOLLOWS: - A) GRIEVANCES OF THE ASSESSEE: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SU BJECT, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN PARTLY CONFIRMING THE ADDITION OF RS. 11,91,000/ - UNDER THE DEEMING PROVISIONS OF SECTION 50C OF THE I . T. ACT, 1961 OUT OF THE TOTAL ADDITION OF RS.86,70,607 / - MADE BY THE ASSESSING OFFICE R WHEN THE PROVISIONS OF SECTION 50C DO NOT APPLY IN CASE OF TRANSFER OF LEASEHOLD RIGHTS IN LAND OR BUILDING. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN GIVI NG DIRECTION TO ADOPT INDEXED COST OF ACQUISITION BETWEEN RS.14,91,000 / - AND RS. 51,59,487 / - WHEN THE ISSUE WAS NOT PART OF GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN GIVING THE ABOVE DIRECTION WITHOUT CONFRONTING THE ISSUE TO THE ASSESSEE THEREBY EXCEEDING HIS JURISDICTION WHERE THE IT ACT, 1961 DOES NOT PROVIDE THE POWER TO CIT(A) TO SET ASIDE THE ISSUE. 4. IT IS THE REFORE PRAYED THAT ABOVE ADDITION MADE BY ASSESSING OFFICER AND CONFIRMED BY CIT(A) MAY PLEASE BE DELETED. B) GRIEVANCES OF THE REVENUE : - I) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW IN ACCEPTING THE REPORT OF THE DVO AND REDUCING THE ADDITION OF LONG TERM CAPITAL GAIN FROM RS . 86,70,607/ - TO RS.14,91,000/ - , WHEN SUCH CLAIM OF REFERENCE TO THE DVO WAS NEVER MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. THUS THE DECISION OF CIT(A) IS IN CONTRAVENTION TO T HE PROVISION U/S 50C(2) OF THE IT ACT.( RELIANCE IS PLACED ON THE CASE LAWS REPORTED IN (2011) 15 TAXMAN.COM 103 (AHD.) ITAT IN THE CASE OF SANJAYBHAI Z. PATEL VS . ACIT, CIR - 2, 43 SOT 452 (MUMBAI) IN THE CASE OF SHRI SHARAD DINESH PHOTOGRAPHER V/S ITO, WAR D 25(3)(4),MUMBAI AND 221 CTR 196 (MADRAS) ( HC). (II) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW IN SETTING - A - SIDE THE MATTER REGARDING COST OF ACQUISITION TO THE AO, WHICH REQUIRES SUBJECTIVE APPRAISAL OF EVIDE NCE TO BE PLACED BY THE ASSESSEE, WHEN AS PER FINANCE ACT. 2001 THE POWER OF THE CIT(A) RELATING TO SET - ASIDE HAS BEEN OMITTED. II I) THEREFORE, IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET - ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO S . 841 & 1030 / AHD/201 5 ASSESSMENT Y EAR: 20 10 - 11 PAGE 3 OF 6 3. T O ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL FACTS ARE REQUIRED TO BE TAKEN NOTE OF. DURING THE RELEVANT PREVIOUS Y E AR THE ASSESSEE SOLD A LEASE HOLD PROPERTY FOR A S ALE CONSIDERATION OF RS.49,70,000/ - BUT ACCORDING TO THE ASSESSING O FFICER, THE VALUE OF THIS PROPERTY FOR THE PURPOSE OF STAMP DUTY VALUATION BY THE SUB - REGISTRAR WAS RS.1,36,40,607/ - . IT WAS IN THIS BACKDROP THE ASSESSING O FFICER REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY AN ADDITION OF RS. 8 6,70 ,6 07 / - , BEING DIFFERENCE BETWEEN THE ST AMP DUTY VALUE AND THE SALE CONSIDERATION NOT BE BROUGHT TO TAX IN TERMS OF SECTION 50C OF THE ACT. T HE ASSESSEE INTER ALIA SUBMITTED THAT AS HELD BY THE TRIBUNAL IN THE CASE OF DCIT VS. TEJI NDER SINGH [ 16 ITR (TRIBUNAL) 45 ] , THE LEASE HOLD PROPERTY HELD BY THE ASSESSEE DO ES NOT ATTRACT PROVISIONS OF SECTION 50C OF THE ACT. THERE WERE OF COURSE OTHER ARGUMENTS ADVANCED IN SUPPORT OF THE ASSESSEE S S T AND BUT FOR THE REASON WE WILL SET OUT IN A SHORT WHILE, IT IS NOT NECESSARY TO GO INTO THIS ASPECT. THE ASSESSING O FFICER REJE CTED THIS EXPLANATION AND PROCEEDED TO TREAT RS.1,36,40,607/ - AS SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. AGGRIEVED , ASSESSEE CARRIED THE MA T TER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT SUCCESS. 4. LEARN ED CIT(A) NOT ONLY CONFIRMED ACTION OF THE ASSESSING OFFICER B UT ALSO DIRECTED THE ASSESSING O FFICER TO MAKE AN ADDITION IN RESPECT OF COST OF ACQUISITION A S THE RE WAS VARIATION IN THE FIGURES OF COST OF ACQUISITION AS PER RECORD VIS - A - VIS THE LEASE DEED. THE LEARNED CIT(A) GAVE PARTIAL RELIEF IN QUANTUM OF A D DITION BUT THAT IS NOT MATERIAL IN THE PRESENT CONTEXT. NONE OF THE PARTIES SATISFIED BY THE STAND SO TAKEN BY THE LEARNED C I T(A). WHILE THE ASSESSEE IS AGGRIEVED OF THE ACTION OF THE ASSESSING O FF ICER BEING CONFIRMED AND THE ENHANCEMENT BEING MADE , ASSESSING OF FICER IS AGGRIEVED OF THE MA T TER BEING REMITTED TO HIS FILE , E VEN THOUGH UNDER SECTION 250 THE CIT ( A ) DO E S NOT HAVE ANY POWER TO DO SO . B OTH THE PARTIES ARE IN APPEAL BEFORE US. ITA NO S . 841 & 1030 / AHD/201 5 ASSESSMENT Y EAR: 20 10 - 11 PAGE 4 OF 6 5. WE HAVE H EARD THE RIVAL CONTENTIONS , PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. SO FAR AS THE QUESTION OF ENHANCEMENT BY THE LEARNED C IT (A) IS CONCERNE D , WE FIND THAT IT IS UNDISPUTED POSIT ION THAT THE ASSESSEE WAS NOT PUT TO NOTICE WITH RESPECT TO THE ENHANCEMENT. A CO - O R DINATE BENCH OF THIS T RIBUNAL IN THE CASE OF M/S. MONGA METAL PVT. LTD. VS. ACIT - ITA NO. 326 /LKW/ 2013 - ORDER DAT E D 07.08.2013 - HAS HELD T HAT SUCH AN ACTION OF THE ASSES SING OFFICER I.E. OF PROPOSING ENHANCEMENT WITHOUT PUTTING THE ASSESSEE TO SPECIFICALLY NOTICE IN THIS REGARD IS UNSUSTAINABLE IN LAW. WHILE DOING SO , THE CO - ORDINATE BENCH , INTER ALIA , OBSERVE D AS FOLLOWS : - 4. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD, WE FIND THAT UNDISPUTEDLY THE INCOME ASSESSED BY THE ASSESSING OFFICER WAS FURTHER ENHANCED BY RS. 2,05,987 BY THE LD. CIT(A) BY MAKING DISALLOWANCE OF REVENUE EXPENDITURES CLAIMED BY THE ASSESSEE ON THE GROUND THAT NO BUSI NESS ACTIVITY WAS UNDERTAKEN BY THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR. THE LD. CIT(A) HAS NOT MENTIONED ANYWHERE IN HIS ORDER WITH REGARD TO THE NOTICE OF ENHANCEMENT EVER SERVED UPON THE ASSESSEE. PROVISIONS OF SECTION 251(2) OF THE ACT CATEGOR ICALLY SAYS THAT THE COMMISSIONER (APPEALS) SHALL NOT ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST SUCH ENHANCEMENT OR REDUCTION. THEREFORE, IT IS INCUMBENT UPON THE LD. CIT(A) FOR AFFORDING A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST ENHANCEMENT TO THE ASSESSEE. IF HE FAILS TO AFFORD AN OPPORTUNITY TO THE ASSESSEE, ENHANCEMENT MADE BY HIM IS NOT SUSTAINABLE IN THE EYES OF LAW. IN THE LIGHT OF THESE FAC TS, ENHANCEMENT MADE BY THE LD. CIT(A) IS NOT SUSTAINABLE AS IT WAS DONE WITHOUT ISSUING A SHOW CAUSE AGAINST ENHANCEMENT TO THE ASSESSEE. WE, THEREFORE, FIND NO MERIT IN THE ADDITIONS. ACCORDINGLY, WE DELETE THE SAME. 7. AS REGARDS THE QUESTION AS TO WHE THER THE PROVISIONS OF SECTION 50C CAN BE INVOKED IN RESPECT OF THE LEASE HOLD PROPERTY, THIS ISSUE IS NO LONG ER RES INTEGRA . T HERE ARE SEV ERAL DECISIONS OF THIS TRIBUNAL INCLUDING THE CASE OF DCIT VS. T EJINDER SINGH (SUPRA), ATUL G. PURANIK VS. ITO [132 ITD 499 (MUM TRIB)] IN SUPPORT OF THE PROPOSITION. HON BLE DELHI H IGH COURT IN THE CASE OF CIT VS . SHRI KISHAN DAS ITA NO.64 OF 2014, JUDGEMENT DATED 10.02.2014 , HAS APPROVED THIS SCHOOL OF THOUGHT AND INTER ALIA OBSERVED AS FOLLO W S : - ITA NO S . 841 & 1030 / AHD/201 5 ASSESSMENT Y EAR: 20 10 - 11 PAGE 5 OF 6 3. IT IS CONTEN DED ON BEHALF OF THE REVENUE THAT THE TRIBUNAL FELL INTO ERROR BECAUSE SECTION 50C DOES NOT MAKE ANY DISTINCTION BETWEEN PROPERTIES OF ONE KIND AND THE OTHER AND THAT SO LONG AS THE STATE AUTHORITIES PRESCRIBED A DIFFERENT RATE THAN THE ONE INVOLVED IN THE TRANSACTION, SUCH PRESCRIBED RATE WOULD BE DEEMED THE RATE FOR THE APPLICATION FOR SECTION 50C. CONTENDING THAT THE DISTINCTION MADE IN THE PRESENT CASE BETWEEN THE FRESH LEASEHOLD RIGHTS AND THE CONSIDERATION PAYABLE AND THE RESIDUAL RIGHTS WAS UNJUSTIFI ED, IT WAS ARGUED THAT SUCH DIFFERENCE IS ARTIFICIAL AND UNSOUND. LEARNED COUNSEL RELIED UPON THE DECISION OF THE TRIBUNAL IN ARIF AKHATAR HUSSAIN V. ITO ITA/543/MUM/2010 TO SUBMIT THAT EVEN LEASEHOLD RIGHTS SUCH AS THE PRESENT ONE, WHICH COMPREHENDED ENTI TLEMENTS IN RESPECT OF LAND, BUILDING AND OTHER INTEREST WOULD FALL WITHIN SECTION 50C AND THE PRESUMPTION TO BE DRAWN AS A CONSEQUENCE. THE DECISION IN SHAVO NORGREN (P) LTD. V. DCIT, CIRCLE 3(3) ITA 8101/MUM//2011 BY THE MUMBAI BENCH WAS ALSO RELIED UPON TO SAY THAT THE DEVELOPMENT RIGHTS WOULD BE APPREHENDED WITHIN SECTION 50C. THE TRIBUNAL IN THIS CASE RELIED UPON THE DECISIONS OF THE LUCKNOW BENCH IN CARLTON HOTEL (P) LTD. V. ACIT 2010 (35) SOT 26 (LUCK); MUMBAI BENCH IN ATUL. G. PURANIK V. ITO, 12(1)( 1) AND THAT OF THE CALCUTTA BENCH IN DY. CIT V. TEJENDER SINGH 19 TAXMAN.COM 4 IN ALL THESE, THE VARIOUS BENCHES OF THE TRIBUNAL APPEAR TO HAVE STRICTLY CONSTRUED THE LETTER OF SECTION 50C TO SAY THAT THE CONVEYANCE HAS TO BE COMPLETE IN RESPECT OF ALL ENT ITLEMENTS TO THE PROPERTY. IN THE PRESENT CASE, THE TRIBUNAL HAS UPHELD THE VALUATION OF THE ASSESSEE. WE NOTICE THAT APART FROM THE THREE BENCHES, DECISIONS OF WHICH HAVE BEEN RELIED ON, THE TRIBUNAL ALSO CONSIDERED THE DISTINCTION MADE BETWEEN SECTION 50 C AND 54D(1) WHICH SPECIFICALLY PROVIDES THAT CAPITAL GAINS FROM, TRANSFER BY WAY OF COMPULSORY ACQUISITION UNDER ANY LAW OF CAPITAL ASSET BEING LAND, BUILDING OR ANY RIGHT IN THE LAND OR BUILDING...................... ?. SECTION 50C, ON THE OTHER HAND, TA LKS OF, TRANSFER BY ASSESSEE OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH. THE CONTRAST IN LANGUAGE, GIVEN THAT SECTION 50C IS A SPECIFIC PROVISION, WHICH SEEKS TO ENACT A PRESUMPTION IS SIGNIFICANT. THE VALUATION OF THE CONCERNED STATE AGENCY OR THE GOVERNMENT THAT THE COST OF THE LAND IS, IN THE CIRCUMSTANCES, HIGHER, IS DETERMINATIVE. WE NOTICE THAT IN THE PRESENT CASE, THERE HAS BEEN NO SUCH VALUATION. THAT APART, THE TRIBUNAL ADOPTED AN APPROACH WHICH, WITH RESPECT, APPEARS TO BE CORRECT, IN THAT IT TOOK NOTE OF THE PROPORTIONATE TRANSFER OF LEASEHOLD RIGH TS FOR 54 YEARS. IF THE REVENUE S CONTENTIONS WERE TO BE CONCEDED, THEN IN THE GIVEN FACTS OF CASE, IF THE LEASEHOLD RIGHTS FOR RESIDUAL PERIOD OF 3 OR 4 YEARS WERE TO BE VALUED AT PAR WITH THE CO ST OF ACQUISITION OF THE FULL TENURE OF THE LEASE OF 90 YEARS, ABSURD AND ANOMALOUS RESULTS WOULD ENSUE. 8. IN VIEW OF THE ABOVE DISCUSSION, BOTH THE GRIEVANCE S OF THE ASS E SSE E INDEED DESERVE TO BE UPHELD. NEITHER THE LEARNED CIT (A) WAS JUSTIFIED IN CON FIRMING THE ACTION OF THE ASSESSING O FFICER IN TREATING THE STAMP DUTY VALUATION AS CONSIDERATION FOR TRANSFER FOR THE PURPOSE OF COMPUTING CAP I TAL GAIN , N OR WAS HE JUSTIFIED IN PROPOSING ENHANCEMENT OF INCOME REGARDING REDUCTION IN THE COST OF ACQUISITION WITHOUT PUTTING ITA NO S . 841 & 1030 / AHD/201 5 ASSESSMENT Y EAR: 20 10 - 11 PAGE 6 OF 6 ASSESSEE TO NOTICE IN THIS RESPECT. WE, THEREFORE , UPHOLD THE PLEA OF THE ASSESSEE. IN THIS VIEW OF THE MATTER AND THE ADDITION HAVING BEEN DELETED ON MERIT, GRIEVANCE OF THE ASSESSING O FFICER IS RENDERED ACADEMIC AND DO E S NOT CALL FOR A NY ADJUDICATION. THE DIRECTION WITH WHICH THE MATTER WAS SET ASID E TO THE FILE OF THE ASSESSING O FFICER ANYWAY STAND S DELETED. 9. THE ONLY OTHER POINT RAISED IN REVENUE S APPEAL IS WITH RESPECT TO GRANT OF PARTIAL RELIEF ON THE BASIS OF DEEMING PROVISION OF SECTION 50C OF THE ACT BUT THE ENTIRE ADDITION HAVING BEEN DELETED, THE PARTIAL RELIEF IS RENDERED ACADEMIC. THE APPEAL FILED BY THE REVENUE IS THUS DISMISSED AS INFRUCTUOUS. 10. IN THE RESULT, WHILE APPEAL OF THE ASSESSEE IS ALLOW ED , APPEAL OF THE REV ENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF FEBRUARY, 2017 . SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 9 TH DAY OF FEBRUARY , 201 7 . P BN/* COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD