ANILA J JOSHI, MUMBAI V. ITO 12(1)(4), MUMBAI

ITA 8573/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8148 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 19-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARVIND DALAL; KISHOR PATEL
• Assessee Lawyers: PITAMBAR DAS
• Keywords: Sale consideration of property below Jantri Value; Valuation report
• Section: 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND VIVEK VARMA, (JM) . . , , ./I.T.A. NO.8573/MUM/2011 ( / ASSESSMENT YEAR : 2007-08) SMT.ANILA J JOSHI, BAZARGATE HIGH SCHOOL, GUNBOW STREET, FORT, MUMBAI-400001 / VS. INCOME TAX OFFICER 12(1)(4), MUMBAI. ( / APPELLANT) .. ( / RESPONDENT) ./ ! ./PAN/GIR NO. :AANPJ5699M ' / APPELLANT BY S/SHRI ARVIND DALAL AND KISHOR PATEL # ' /RESPONDENT BY SHRI PITAMBAR DAS $ % # &' / DATE OF HEARING : 11.8.2014 () # &' /DATE OF PRONOUNCEMENT : 26. 9.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 25.10.2011 PASSED BY LD CIT(A)-21, MUMBAI AND IT RE LATES TO THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN HOLDING THAT THE AMOUNT OF RS.22.50 LAKHS PAID BY THE BUYER OF THE FLAT DIRECTLY TO THE TENANT IS NOT DEDUCTIBLE WHILE COMPUTING THE INCOME FROM C APITAL GAIN. 3. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE S TATED IN BRIEF. THE ASSESSEE WAS ONE OF THE CO-OWNERS OF A PROPERTY AND HE WAS HAVING TH SHARE IN IT. THE SAID PROPERTY WAS SOLD FOR A TOTAL CO NSIDERATION OF RS.41.00 LAKHS, OUT I.T.A. NO.8573/MUM/2011 2 OF WHICH ALL THE CO-OWNERS RECEIVED A SUM OF RS.18, 50,000/- AND THE TENANTS RECEIVED A SUM OF RS.22.50 LAKHS. OUT OF THE ABOVE SAID AMOUNT OF RS.18.50 LAKHS, THE ASSESSEE RECEIVED A SUM OF RS.4,62,500/- AS HER SHARE. THE ASSESSEE COMPUTED LONG TERM CAPITAL GAIN AT RS.3,98,871/-. THE AO NOTICED THAT THE PROPERTY WAS VALUED AT RS.50,14,000/- BY THE STAMP AUTHORITY FOR THE PURPOSES OF COMPUTING THE STAMP DUTY. HENCE, THE AO PROPOSE D TO ADOPT THE ABOVE SAID AMOUNT OF RS.50.14 LAKHS AS SALE CONSIDERATION IN T ERMS OF SEC. 50C OF THE ACT. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE TENAN T, WHO WAS RESIDING IN THE PROPERTY ALSO JOINTLY EXECUTED THE SALE DEED AND TH E BUYER HAS PAID A SUM OF RS.22.50 LAKHS TO THE TENANT FOR VACATING THE TENAN CY RIGHTS. ACCORDINGLY, THE ASSESSEE CONTENDED THAT THE SUM OF RS.22.50 LAKHS C ANNOT BE TAKEN AS SALE CONSIDERATION RECEIVED BY HER AND OTHER CO-OWNER. IN THIS REGARD, THE ASSESSEE ALSO INVITED THE ATTENTION OF THE AO TO THE FOLL OWING RECITALS MADE IN THE CONVEYANCE DEED. IT IS AGREED THAT THE TRANSACTIONS CONTAINED IN TH IS DEED OF APARTMENT AGGREGATE TO A VALUE OF RS.22,50,000/- IS BEING PA ID TO THE TENANTS AS ABOVE AND RS.18,50,000/- TO THE VENDORS AS ABOVE IS EACH OF WHOM SHALL PAY TAX AS REQUIRED UNDER LAW ON THE AMOUNT RECEIVE D BY THEM AND NEITHER OF THEM SHALL BE LIABLE TO BEAR TAX ON THE ENTIRE AGREEMENT AMOUNT OF RS.41,00,000/-. IT BEING UNDERSTOOD THAT ON PAY MENT OF TAX BY TENANTS AND VENDORS THE ENTIRE AGGREGATE AMOUNT OF RS.41,00,000/- UNDER THIS DEED OF APARTMENT GET TAXED AS REQUIRED BY LAW. NOTWITHSTANDING THE ABOVE IF THIS DEED REQUIRES PAY MENT OF HIGHER STAMP DUTY BASED ON AN AMOUNT IN EXCESS OF RS.41,00,000/- THEN IT WILL BE DEEDED (ONLY FOR THE PURPOSE OF PERSONAL TAXATION, OF REQUIRED , AND NOT OTHERWISE) THAT THE AMOUNT IN EXCESS OF RS.41,00,00 0/- WOULD DEEMED TO HAVE BEEN RECEIVED BY THE TENANT AND THE VENDORS IN THIS RATIO OF 54.88% BY TENANT AND 45.12% BY THE VENDORS.) THE AO, HOWEVER, EXPRESSED THE VIEW THAT IT IS NOT CLEAR FROM THE FACTS AS TO WHETHER THE STAMP DUTY VALUATION OF RS.50,14,000/- WAS DETERMINED AFTER TAKING INTO ACCOUNT THE CONSIDERATION PAID TO THE TENANTS TOWARD VACATING THEIR TENANCY RIGHTS AND ALSO THE CONSIDERATION PAID TO THE OWNER . HENCE, THE AO REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER (DVO). SINCE THE AO DID NOT GET VALUATION REPORT FROM THE DVO BEFORE COMPLETION OF THE ASSESSMENT, HE TOOK THE STAMP DUTY VALUATION OF RS.50,14,000/- AS SALE CON SIDERATION AND COMPUTED THE CAPITAL GAIN. HOWEVER, THE AO COMPUTED THE CAPITAL GAIN WITHOUT GIVING DEDUCTION OF RS.22.50 LAKHS PAID TO THE TENANTS FOR VACATING THE TENANCY RIGHTS. I.T.A. NO.8573/MUM/2011 3 4. THE ASSESSEE CHALLENGED THE ORDER OF AO BY FILIN G THE APPEAL BEFORE THE LD. CIT(A). IN THE MEAN TIME, THE VALUATION REPORT FROM THE DVO WAS RECEIVED AND HE HAD VALUED THE PROPERTY AT RS.43,43,000/-. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THAT THE AMOUNT OF RS.22.50 LAKH S PAID BY THE PURCHASER OF PROPERTY TO THE SITTING TENANTS SHOULD NOT BE TAKEN AS SALE CONSIDERATION RECEIVED BY THE ASSESSEE. ACCORDINGLY, BY ADOPTING THE VALU ATION FIXED BY DVO, THE ASSESSEE RE-COMPUTED THE CAPITAL GAINS AS GIVEN BEL OW AND PRAYED FOR ADOPTION OF THE SAME: CONSIDERATION AS PER DVOS REPORT RS.43,43,000 LESS :AMOUNT PAID TO SITTING TENANT BY PURCHASER RS.22,50,000 ========== RS.20,93,000 1/4 TH SHARE RS.5,23,350 LESS : SHARE OF INDEXED COST RS.63,629 ========== LONG TERM CAPITAL GAIN RS.4,59,621 THE LD. CIT(A) HELD THAT THE VALUE OF RS.43,43,000/ - DETERMINED BY DVO SHOULD BE ADOPTED AS SALE CONSIDERATION AS PER THE PROVISI ONS OF SECTION 50C. WITH REGARD TO THE CLAIM OF THE ASSESSEE FOR DEDUCTION O F RS.22.50 LAKHS PAID TO THE TENANTS BY THE PURCHASER, THE LD. CIT(A) EXPRESSED THE VIEW THAT IT WAS NOT AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH TRANSFER OF THE PROPERTY NOR IT CAN BE TAKEN AS PART OF COST OF ACQ UISITION OF THE PROPERTY OR AS COST OF IMPROVEMENT THEREOF. ACCORDINGLY, THE LD. CIT(A) HELD THAT THE DEDUCTION OF RS.22.50 LAKHS WAS NOT REQUIRED TO BE ALLOWED TO THE ASSESSEE OR OTHER CO- OWNERS WHILE COMPUTING THE COMPUTING THE CAPITAL GA INS. AGGRIEVED, BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THIS AP PEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSING OFFICER HAS REFERRED THE MATTER OF DETERMINATION OF SALE CONSIDERATION U/S 50C OF THE ACT TO THE DVO, SINCE HE APPREHENDED SOME CONFUSION ON THE VALUE FIXED BY STAMP AUTHORITY. A CCORDING TO THE LD A.R, THE AMOUNT OF RS.22.50 LAKHS PAID BY THE PURCHASER TO T HE TENANTS IS A CASE OF DIVERSION BY OVERRIDING TITLE, SINCE THE OWNERS COU LD NOT SELL THE PROPERTY ON THEIR I.T.A. NO.8573/MUM/2011 4 OWN WITHOUT IMPLEADING THE TENANTS. THE LD A.R ALS O INVITED OUR ATTENTION TO THE FACT THAT THE TENANTS ALSO JOINED THEM IN EXECUTING THE CONVEYANCE DEED IN FAVOUR OF THE PURCHASERS. WE HAVE NOTICED THAT THE ASSESSING OFFICER DID NOT ADDRESS THIS CLAIM AT ALL, WHERE AS THE LD CIT(A) H AS TAKEN THE VIEW THAT THE AMOUNT OF RS.22.50 LAKHS PAID TO THE TENANTS IS NOT A PRESCRIBED EXPENDITURE WHILE COMPUTING CAPITAL GAINS. THE QUESTION THAT A RISES IS WHETHER THE CLAIM OF THE ASSESSEE THAT THE SAID PAYMENTS IS A CASE OF DI VERSION BY OVERRIDING TITLE AND THE SAME HAS NOT BEEN ADDRESSED BY THE TAX AUTHORIT IES. SINCE THE UNDERLYING FACTS HAVE NOT BEEN PROPERLY BROUGHT OUT BY THE TAX AUTHORITIES, IN OUR VIEW, THIS QUESTION NEEDS TO BE EXAMINED AT THE END OF THE ASS ESSING OFFICER. FURTHER THE STAND TAKEN BY THE REVENUE IN THE CASE OF OTHER CO- OWNERS IS NOT AVAILABLE ON RECORD. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD C IT(A) AND RESTORE THE SAME TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE TH E ABOVE SAID ISSUE BY DULY CONSIDERING THE FACTS PREVAILING IN THE INSTANT CAS E AND ALSO THE EXPLANATIONS GIVEN BY THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. BEFORE US, THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING CASE LAW, WHICH SHOULD BE TAKEN INTO CONSIDERATION BY THE AO. (A) CIT VS. A. VENKATRAMAN & OTHERS (137 ITR 846) (MAD) (B) CIT VS. SHAKUNTALA RAJESHWAR (160 ITR 840)(DE LHI) (C) CIT VS. SHAKUNTALA KANTILAL (190 ITR 56) 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 26TH SEPT , 2014. () $ * +, 26TH SEPT, 2014 ) # -% . SD SD ( / VIVEK VARMA) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER $ % MUMBAI: 26TH SEPT,2014. . . ./ SRL , SR. PS I.T.A. NO.8573/MUM/2011 5 !'# $#%! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. $ /& ( ) / THE CIT(A)- CONCERNED 4. $ /& / CIT CONCERNED 5. 0- &1 , ' 1 , $ % / DR, ITAT, MUMBAI CONCERNED 6. -2 3% / GUARD FILE. 4 $ / BY ORDER, TRUE COPY 5 (ASSTT. REGISTRAR) ' 1 , $ % /ITAT, MUMBAI