DCIT, CIR-10(1), KOLKATA, Kolkata V. M/s Universal Petro Chemicals Ltd., Kolkata

ITA 88/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1926 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 21-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR CIT LD
• Assessee Lawyers: L K KANOONGO FCA LD
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BE NCH, KOLKATA BEFORE : SHRI M. BALAGANESH,ACCOUNTANT MEM BER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 88/KOL/2016 A.Y 2012-13 D.C.I.T., CIR-10(1) VS. UNIVERSAL PETRO-CHEMICALS KOLKATA LTD. PAN: AAACU3243L [APPELLANT ] [RESPONDENT ] C.O NO. 14/ KOL/2016 [ITA NO. 88/KOL/2016 A.Y 2012-13] UNIVERSAL PETRO-CHEMICALS VS. D.C.I.T., CIR-10(1), KOLKATA LTD. [CROSS OBJECTOR-ASSESSEE ] [DEPARTMENT-RESPONDENT ] APPELLANT BY : SHRI SAURABH KUMAR, ADDL.CIT, LD. SR.DR RESPONDENT BY : SHRI L.K. KANOONGO, FCA, LD.A R DATE OF HEARING : 16-10-2017 DATE OF PRONOUNCEMENT : 05-01-2018 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS APPEAL AND CORRESPONDING CROSS OBJECTION BY THE REVENUE AND ASSESSEE RESPECTIVELY ARE AGAINST THE ORDER DT. 20-11-2015 OF THE CIT-A, 4, KOLKATA FOR THE A.Y 2012-13. 2. THE ONLY EFFECTIVE ISSUE IS TO BE JUSTIFIED AS T O WHETHER THE CIT- A JUSTIFIED IN DIRECTING THE AO TO REFER THE CAPITA L ASSET TO THE CONCERNED DVO TO DETERMINE THE FULL VALUE OF CONSID ERATION IN TERMS OF SECTION 50C OF THE ACT IN THE FACT AND CIRCUMSTA NCES OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY AND MANUFACTURER AND DEALER IN LUBRICATING OILS AND OTHER PETROLEUM PRODUCTS. THE ASSESSEE FILED ITS E-RETURN ON 26-09 -2012 DECLARING TOTAL INCOME OF RS.1,99,15,050/- FOR THE A.Y UNDER CONSIDERATION. THEREAFTER, NOTICES U/S. 143(2) AND 142(1) OF THE A CT WERE ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE TO WHICH, THE AR OF THE ASSESSEE APPEARED BEFORE THE AO. DURING THE ASSESSM ENT ITA NO. 88/K/16 & CO NO. 14/K/16 M/S. UNIVERSAL PETRO CHEMICALS LTD 2 PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE SOLD ALL THAT PIECE AND PARCEL OF NON-AGRICULTURAL INDUSTRIAL LANDS IN SURV EY NO. 170/4 ADMEASURING 8200 SQ.MTR AND SURVEY NO. 170/7 ADMEAS URING 4100 SQ.MTRS TOTALING TO 12300 SQ. MTRS ALONG WITH THERE ON FACTORY BUILDING(GROUND FLOOR) ADMEASURING 758.71 SQ.MTRS A ND COMPOUND WALL WITH 95 H.P POWER CONNECTION, ALL THE APPURTEN ANCES, ATTACHMENT, ACCESS ETC SITUATED IN VILLAGE-SAYLI, U.T OF DADRA AND NAGAR HAVELI TO S/SH RAKESH BHAI SHREKRISHNA RAMGAR IA AND HEMANTSINH BHARATSINH CHOUHAN. THE SAID PROPERTY WA S REGISTERED IN THE O/O THE SUB-REGISTRAR OF DADRA & NAGAR HAVELI, SILVAS VIDE SR NO. 1862/011 DT. 15-06-2011. THE SUB-REGISTRAR VALU ED THE PROPERTY AT RS.3,84,00,000/-, BUT THE ASSESSEE DECLARED THE SALE CONSIDERATION OF THE SAID PROPERTY FOR THE PURPOSE OF STAMP DUTY AT RS.99,63,000/- . THE AO ISSUED SHOW CAUSE DT. 15-09-2014 TO THE AS SESSEE MENTIONING AS TO WHY THE VALUE DETERMINED BY THE SU B-REGISTRAR I.E AT RS. 3,84,00,000/- SHOULD NOT BE TAKEN INSTEAD O F DEED VALUE OF RS.99,63,000/-. 4. IN RESPONSE TO SAID SHOW CAUSE THE ASSESSEE REQU ESTED THE AO TO REFER THE MATTER TO THE VALUATION OFFICER FOR DE TERMINATION OF VALUE OF CAPITAL ASSET IN TERMS OF 50C OF THE ACT AND REQ UESTED FOR ONE MONTH TIME TO GATHER INFORMATION AND TO GIVE COMPAR ATIVE FIGURES OF SALE OF SIMILAR LAND SITUATED IN SAME LOCAL AREA. B UT FOR NOT SUBMITTING ANY COMPARATIVE FIGURE OF SIMILAR KIND OF LAND, THE AO REJECTED THE CLAIM OF THE ASSESSEE IN REFERRING THE MATTER TO TH E VALUATION OFFICER AND BY INVOKING THE PROVISIONS OF SUB SECTION (1) O F SECTION 50C THE AO ADDED THE DIFFERENCE OF RS.2,84,37,000/- (RS.3,8 4,00,000- RS.99,63,000) UNDER THE HEAD LONG TERM CAPITAL GAI N TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE CHALLENGED THE SAME BEFO RE THE CIT-A. BEFORE HIM THE ASSESSEE RELIED ON THE FOLLOWING DEC ISIONS:- IN THE CASE OF SUNIL KUMAR AGARWAL 372 ITR 83(CAL ) IN THE CASE OF ONKARMAL KAJARIA FAMILY TRUST ITAT, KOLKATA IN THE CASE OF JAWAJEE NAGNATHAN SUPREME COURT ITA NO. 88/K/16 & CO NO. 14/K/16 M/S. UNIVERSAL PETRO CHEMICALS LTD 3 6. CONSIDERING THE CASE LAWS AS RELIED ON BY THE AS SESSEE AND SUBMISSIONS OF THE ASSESSEE THE CIT-A DIRECTED THE AO TO REFER THE CAPITAL ASSET TO THE CONCERNED DVO TO DETERMINE THE FULL VALUE OF THE CONSIDERATION AND TO RE-COMPUTE THE CAPITAL GAINS A FTER GETTING THE DVOS REPORT. THE RELEVANT PORTION OF THE CIT-AS O RDER IS REPRODUCED HEREIN BELOW:- 4.2. I HAVE CONSIDERED THE SUBMISSIONS OF THE AR OF THE APPELLANT IN THE BACKDROP OF THE ASSESSMENT ORDER ON THE PERTINENT ISSUE VIS-A-VIS S ECTION 50C OF THE ACT. IN THIS CASE THE VALUE ADOPTED BY THE STAMP AUTHORITIES WAS RS.3,84, OO,OOO/- AND THE APPELLANT HAD SOLD THE CAPITAL ASSET FOR RS.99,63,OOO/-. THE APPE LLANT HAD MADE A PRAYER FOR REFERENCE TO THE AO U/S 50C(2) OF THE ACT WHICH WAS NOT DONE. I FIND THIS ISSUE IS NOW SQUARELY COVERED BY THE JURISDICTIONAL HON'BLE CALCUTTA HIGH COURT IN GA NO.3686 OF 2013, ITAT NO. 221 OF 2013 VIDE JUDGMENT DATED 13.03.2014, WHE REIN IT WAS HELD AS FOLLOWS: 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ADVANCED BY THE LEARNED ADVOCATES APPEARING FOR THE PARTIES. THE SUBMISSION OF MS. GHUTGHUTIA T HAT THE REQUIREMENT OF CLAUSES A) AND (B) OF SUB-SECTION 2 OF SECTION 50C HAS NOT BEEN ME T BY THE ASSESSEE, CAN HARDLY BE ACCEPTED. THE REQUIREMENT OF CLAUSE (B) OF SUB-SECT ION 2 OF SECTION 50C WAS EVIDENTLY MET. THE ONLY QUESTION IS WHETHER THE REQUIREMENT O F CLAUSE (B) OF SUB-SECTION 2 OF SECTION 50C WAS EVIDENTLY MET. THE ONLY QUESTION IS WHETHER THE REQUIREMENT OF CLAUSE (A) OF SUB-SECTION 2 OF SECTION 50C WAS MET BY THE ASSESSEE. WE HAVE ALREADY SET OUT HEREINABOVE THE RECITAL APP EARING IN THE DEEDS OF CONVEYANCE UPON WHICH THE ASSESSEE WAS RELYING. PRESUMABLY, TH E CASE OF THE ASSESSEE WAS THAT PRICE OFFERED BY THE BUYER WAS THE HIGHEST PREVAILI NG PRICE IN THE MARKET. IF THIS IS HIS CASE THEN IT IS DIFFICULT TO ACCEPT THE PROPOSITION THAT THE ASSESSEE HAD ACCEPTED THAT THE PRICE FIXED BY THE DISTRICT SUB REGISTRAR WAS THE F AIR MARKET VALUE OF THE PROPERTY. NO SUCH INFERENCE CAN BE MADE AS AGAINST THE ASSESSEE BECAUSE HE HAD NOTHING TO DO IN THE MATTER. STAMP DUTY WAS PAYABLE BY THE PURCHASER. IT WAS FOR THE PURCHASER TO EITHER ACCEPT IT OR DISPUTE IT. THE ASSESSEE COULD NOT, ON THE BASIS OF THE PRICE FIXED BY THE SUB- REGISTRAR, HAVE CLAIMED ANYTHING MORE THAN THE AGRE ED CONSIDERATION OF A SUM OF RS. 10 LAKHS WHICH, ACCORDING TO THE ASSESSEE, WAS THE HIG HEST PREVAILING MARKET PRICE IT WOULD FOLLOW AUTOMATICALLY THAT HIS CASE WAS THAT THE FAI R MARKET VALUE OF THE PROPERTY COULD NOT BE RS.35 LAKHS AS ASSESSED BY THE DISTRICT SUB REGISTRAR. IN A CASE OF THIS NATURE THE ASSESSING OFFICER SHOULD, IN FAIRNESS, HAVE GIVEN A N OPTION TO THE ASSESSEE TO HAVE THE VALUATION MADE BY THE DEPARTMENTAL VALUATION OFFICE R CONTEMPLATED UNDER SECTION 50C. AS A MATTER OF COURSE, IN ALL SUCH CASES THE ASSESS ING OFFICER SHOULD GIVE AN OPTION TO THE ASSESSEE TO HAVE-THE VALUATION MADE BY THE DEPARTME NTAL VALUATION OFFICER. FOR THE AFORESAID REASONS, WE ARE OF THE OPINION TH AT THE VALUATION BY THE DEPARTMENTAL VALUATION OFFICER, CONTEMPLATED UNDER SECTION 50C, IS REQUIRED TO AVOID MISCARRIAGE OF JUSTICE. THE LEGISLATURE DID NOT INTEND THAT THE CA PITAL GAIN SHOULD BE FIXED MERELY ON THE BASIS OF THE VALUATION TO BE MADE BY THE DISTRICT S UB REGISTRAR FOR THE PURPOSE OF STAMP DUTY. THE LEGISLATURE HAS TAKEN CARE TO PROVIDE ADE QUATE MACHINERY TO GIVE A FAIR TREATMENT TO THE CITIZEN/TAXPAYER. THERE IS NO REAS ON WHY THE MACHINERY PROVIDED BY THE LEGISLATURE SHOULD NOT BE USED AND THE BENEFIT THER EOF SHOULD BE REFUSED. EVEN IN A CASE WHERE NO SUCH PRAYER IS MADE BY THE LEARNED ADVOCAT E REPRESENTING THE ASSESSEE, WHO MAY NOT HAVE BEEN PROPERLY INSTRUCTED IN LAW, THE A SSESSING OFFICER, DISCHARGING A QUASI JUDICIAL FUNCTION, HAS THE BOUNDEN DUTY TO ACT FAIR LY AND TO GIVE A FAIR TREATMENT BY GIVING HIM AN OPTION TO FOLLOW THE COURSE PROVIDED BY LAW. ' 4.3. IN VIEW OF THE ABOVE DECISION OF THE HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE OF SUNIL KUMAR AGARWAL, I DIRECT THE AO TO REFER THE C APITAL ASSET TO THE CONCERNED OVO TO DETERMINE THE FULL VALUE OF THE CONSIDERATION RECEI VED OR ACCRUING AS A RESULT OF TRANSFER OF THE SAID ASSET. THE AO SHALL RE-COMPUTE THE CAPI TAL GAINS AFTER HE OR SHE RECEIVES THE REPORT OF THE DVO. I FIND SIMILAR PROVISIONS ARE AL SO INCORPORATED IN SECTION 155(15) OF THE ACT. THIS GROUND IS DISPOSED OFF IN TERMS OF TH E ABOVE FINDINGS AND THE CONCOMITANT DIRECTION FOR WHICH THIS GROUND IS ALLOWED FOR STAT ISTICAL PURPOSES. [THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE] ITA NO. 88/K/16 & CO NO. 14/K/16 M/S. UNIVERSAL PETRO CHEMICALS LTD 4 7. BEFORE US THE LD.DR SUBMITS THAT THE ISSUE IN HA ND IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF SUNIL KUMAR AGARWA L REPORTED IN 372 ITR 83(CAL). THE SAID DECISION IS BINDING ON THE RE VENUE. HE URGED TO REMAND THE MATTER TO THE AO FOR HIS FRESH CONSIDER ATION. 8. ON THE OTHER HAND, THE LD.AR IS ALSO AGREED ON S UCH PROPOSITION OF THE LD.DR AND IN SUPPORT OF HIS CONTENTION, PLAC ED RELIANCE ON THE SAID DECISION OF THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF SUPRA. 9. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT ON SIMILAR FACTS AND CIRCUMST ANCES THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF SUPRA OBSERVED THAT IN ALL SUCH CASES THE AO SHOULD BE GIVEN OPTION TO THE ASSESSEE TO HAVE THE VALUATION MADE BY THE DISTRICT VALUATION OFFICER AN D IT IS A MACHINERY PROVIDED TO GIVE FAIR TREATMENT TO THE TAX PAYER OR CITIZEN. WE FURTHER FIND THAT THE ASSESSEE REQUESTED THE AO TO REFER TH E MATTER TO THE DVO FOR DETERMINATION OR VALUATION OF THE PROPERTY. BUT, THE AO REJECTED SUCH PLEA OF THE ASSESSEE AND FOR NOT PROD UCING ANY COMPARATIVE SALE FIGURES ON SIMILAR TYPE OF LAND LO CATED IN THE SAME LOCAL AREA. WE FIND THAT THE CIT-A RIGHTLY PLACED R ELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF CALCUTTA IN T HE CASE OF SUPRA AND DIRECTED THE AO TO REFER THE MATTER TO DVO. THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF CALCUTTA IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE CIT-A WAS JUSTIFIED IN DIRECTING THE AO TO REFER THE DVO FOR DETERMINATION OF VALUE OF THE CAPITAL ASSET AND TO RE-COMPUTE THE CAPITAL GAINS ACCORDINGLY, ON RECEIVING THE DVO S REPORT IN THIS REGARD. WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT-A IN DOING SO. WE UPHOLD THE SAME. THE GROUND(S) RAISED BY THE REVENUE IN THIS REGARD IS DISMISSED. 10. THE APPEAL OF THE REVENUE IN ITA NO. 88/KOL/201 6 FOR THE A.Y 2012-13 IS DISMISSED. ITA NO. 88/K/16 & CO NO. 14/K/16 M/S. UNIVERSAL PETRO CHEMICALS LTD 5 11. C.O NO. 14/KOL/2016 ARISING OUT OF ITA NO. 88/K OL/2016 FOR THE A.Y 2012-13 BY THE ASSESSEE. 12. THE LD.AR SUBMITS THAT THE GROUND NO.1 OF THE C .O IS IN SUPPORTING WITH THE ORDER OF THE CIT-A, WHICH WE HA VE ALREADY UPHELD BY DISMISSING THE APPEAL OF THE REVENUE. THEREFORE, GROUND NO.1 OF THE C.O OF THE ASSESSEE IS DISMISSED. 13. GROUND NO. 2 IS RELATING TO CONFIRMATION OF DIS ALLOWANCE OF RS.98,000/- UNDER THE HEAD ADVANCE WRITTEN OFF BY THE ORDER OF THE CIT-A. 14. THE LD.AR SUBMITS THAT AN OPPORTUNITY MAY BE GI VEN TO ASSESSEE TO SUBSTANTIATE ITS CLAIM BY FILING OF PRO PER EVIDENCE ALONG WITH EXPLANATION TO SUBSTANTIATE THE CLAIM OF THE A SSESSEE AND, THEREFORE, PRAYED TO REMAND THIS ISSUE TO THE FILE OF THE AO FOR HIS FRESH CONSIDERATION. 15. THE LD.DR, ON THE OTHER HAND, RELIED ON THE ORD ERS OF THE AO AND THE CIT-A. HOWEVER, HE HAS NOT OBJECTED TO REMA ND THE ISSUE TO THE FILE OF THE AO FOR HIS VERIFICATION. 16. HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ASSESSEE CLAIMED THE ADVANCES WRITTEN OFF UNDER THE HEAD DETAILS OF SUNDRY EXPENSES RELATED TO THE FACTORY OWNED BY TH E ASSESSEE. THE CIT-A RIGHTLY FOUND THAT THE SAME WERE NOT IN THE N ATURE OF DEBTS RECEIVABLE AND WE ARE NOT IN AGREEMENT WITH THE SUB MISSIONS OF THE ASSESSEE IN REMITTING THE ISSUE TO THE FILE OF THE AO FOR HIS FRESH CONSIDERATION. WE FIND NO INFIRMITY IN THE ORDER O F CIT-A. THUS, GROUND NO. 2 RAISED BY THE ASSESSEE IN THE CROSS OB JECTION IS DISMISSED. 17. THE CROSS OBJECTION OF THE ASSESSEE IS DISM ISSED. ITA NO. 88/K/16 & CO NO. 14/K/16 M/S. UNIVERSAL PETRO CHEMICALS LTD 6 18. IN THE RESULT, THE APPEAL (ITA NO. 88/KOL/2016) FILED BY THE REVENUE FOR THE A.Y 2012-13 IS DISMISSED AND CROSS OBJECTION (C.O NO. 14/KOL/2016) FILED BY THE ASSESSEE FOR THE A.Y 2012-13 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 -01-2018 SD/- SD/- M. BALAGANESH S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :05-01-2018 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/REVENUE : DEPUTY COMMISSIONER OF INCOME T AX, CIRCLE-10(1),P-7, CHOWRINGHEE SQUARE, 3 RD FLOOR, KOLKATA-69. 2 RESPONDENT/ASSESSEE: M/S. UNIVERSAL PETRO-CHEMICALS LIMITED, P-34, SHAH HOUSE, INDIA EXCHANGE PLACE,KOLKATA-1. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER SR.P.S, HEAD OF OFFICE ITAT KOLKATA