ITO, Jaipur V. MANGAL SHREE ESTATES LTD., Jaipur

ITA 88/JPR/2011

• Counselvise Citation: 8823114 RSA 2011
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 02-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: G G MUNDRA
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C

Judgement Text

1 ITA 88-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 88/JP/2011 ASSTT. YEAR : 2006-07. THE INCOME-TAX OFFICER, VS. MANGAL SHREE ESTATES LTD., WARD 2(2), 24, GOYAL HOUSE, JAIPUR. AJMER ROAD, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K. MEENA RESPONDENT BY : SHRI G.G. MUNDRA ORDER DATE OF ORDER : 05/08/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. THE DEPARTMENT IS OBJECTING IN DELETING ADDITION MADE BY AO BY APPLYING PROVISIONS OF SECTION 50C OF THE ACT. 3. THE AO COMPUTED CAPITAL GAIN AT RS. 26,36,153/- AS AGAINST RS. 4,93,955/-. THE AO, HOWEVER, BY APPLYING PROVISIONS OF SECTION 50C HAS ADOPTED DEEMED FULL VALUE OF CONSIDERATION AT RS. 30,63,132/- AND ON THIS AMOUNT THE AO WORKED OUT THE LONG TERM CAPITAL GAINS. IT WAS CONTENDED BEFORE LD. CIT (A) THAT TRANSFER WAS MADE THROUGH UNREGISTERED AGREEMENT TO SALE WHICH HAS NOT BECOME THE SUBJECT MATTER OF REGISTRATION AND, THEREFORE, QUESTION OF VALUATION OF STAMP DUTY HAS NOT ARISEN. SECTION 50C IS INAPPLICABLE. RELIANCE WAS PLACED IN THE CASE OF N AVNEET KUMAR THAKAR VS. ITO, 110 ITD 525 (JODHPUR) WHEREIN IT HAS BEEN HELD THAT LE GAL FICTION CANNOT BE EXTENDED BEYOND 2 THE PURPOSE FOR WHICH IT IS ENACTED. WHERE THE ASSE SSEE TRANSFERRED THE PROPERTY IN QUESTIN BY EXECUTING AN AGREEMENT WHICH WAS NOT REGISTERED WITH THE REGISTERING AUTHORITY, SECTION 50C HAD NO APPLICATION TO SUCH A CASE. REL IANCE WAS ALSO PLACED IN CASE OF PUSHPENDRA K. SURANA VS. ITO IN ITA NO. 1288/JP/200 8. IT WAS FURTHER SUBMITTED THAT FINANCE (NO.2) ACT, 2009 HAS AMENDED SECTION 50C BY WHICH THE WORD ASSESSABLE HAS BEEN INSERTED IN IT WITH EFFECT FROM 1.10.2009. T HE WORD ASSESSABLE HAS BEEN DEFINED IN NEWLY ADDED EXPLANATION 2 TO THE SAID SECTION 50 C WITH EFFECT FROM 1.10.2009. ACCORDINGLY IT WAS SUBMITTED THAT IN VIEW OF LEGAL POSITION, APPLICATION OF SECTION 50C IS NOT JUSTIFIED. THE CONTENTION OF THE ASSESSEE WAS C ONSIDERED BY LD. CIT (A). IT WAS FOUND THAT PROVISIONS OF SECTION 50C ARE SPECIAL PROVISIO N FOR ADOPTING FULL VALUE OF CONSIDERATION IN CERTAIN CASES. IN CASES WHERE CON SIDERATION RECEIVED AS A RESULT OF TRANSFER OF LAND OR PLOT IS LESS THAN THE VALUE ADO PTED/ASSESSED BY STAMP VALUATION AUTHORITY, THE VALUE SO ADOPTED SHALL FOR THE PURPO SE OF SECTION 48 BEING DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED. THUS, IF THE VALUE IS ADOPTED ASSESSED BY STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF S TAMP DUTY THEN ONLY THE PROVISIONS WILL BE APPLICABLE. THE VALUE SO ADOPTED OR ASSESS ED SHALL FOR THE PURPOSE OF SECTION 48 BE FULL VALUE OF CONSIDERATION. THE LD. CIT (A) FU RTHER OBSERVED THAT AMENDMENT HAS BEEN MADE TO SECTION 50C BY INSERTING WORD ASSESS ABLE IN ADDITION TO ADOPTED OR ASSESSED BECAME EFFECTIVE ONLY FROM 1.10.09. THE AMENDMENT IS NOT RETROSPECTIVE AND, THEREFORE, IT CAN BE SAID THAT PRIOR TO 1.10.09 PRO VISIONS OF SECTION 50C CAN NOT BE APPLIED WHERE THE PROPERTY UNDER CONSIDERATION WAS NOT REGI STERED. ACCORDINGLY, THE APPEAL OF THE ASSESSEE ON THIS ISSUE WAS ALLOWED BY LD. CIT ( A). 4. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 3 5. THE LD. D/R PLACED RELIANCE ON THE ORDER OF AO. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE RELIED ON THE ORDER OF LD. CIT (APPEALS). 7. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT LD. CIT (A) WAS JUSTIFIED IN ALLOWING THE ISSU E IN FAVOUR OF THE ASSESSEE. THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT JODHPUR IN THE CASE OF NAVNEET K. THAKAR (SUPRA). THERE WAS NO STAMP DUTY IMPOSED IN THIS C ASE AS THE LAND IN QUESTION WAS TRANSFERRED THROUGH UNREGISTERED SALE DEED. THE AM ENDMENT IN SECTION 50C CAME INTO FORCE WITH EFFECT FROM 1.10.2009 WHICH IS NOT APPLI CABLE FOR THE YEAR UNDER CONSIDERATION AS THE YEAR UNDER CONSIDERATION IS 2006-07. THEREF ORE, FOR THIS REASON ALSO THE ISSUE ALLOWED BY LD. CIT (A) IN FAVOUR OF ASSESSEE IS JUS TIFIED. THE FINDING OF LD. CIT (A) REMAINED UNCONTROVERTED, THEREFORE, WE CONFIRM THE FINDING OF LD. CIT (A). 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. 9. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05. 08.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ITO WARD 2(2), JAIPUR. M/S. MANGAL SHREE ESTATES LTD., JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 88/JP/2011) BY ORDER, AR ITAT JAIPUR. 4