ALL INDIA PRINTING INK MANUFACTURERS ASSOCIATION LTD, MUMBAI V. ITO 9(1)(2), MUMBAI

ITA 896/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0571 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 08-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: GIRISH M BALEKUNDRI
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Fair market value
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO.896/MUM/2017 (ASSESSMENT YEAR 2012-13) M/S. ALL INDIA PRINTING INK MANUFACTURERS ASSOCIATION LTD. 307C, TWIN ARCADE, MILITARY ROAD, MAROL MAROSHI, MUMBAI 400 059 PAN:AADCA 7486L ...... APPELLANT VS. THE INCOME TAX OFFICER -9(1)(2), MUMBAI -400 020 .... RESPONDENT APPELLANT BY : SHRI GIRISH M. BAL EKUNDRI RESPONDENT BY : SHRI A.K.KARDAM DATE OF HEARING : 11/05/2017 DATE OF PRONOUNCEMENT : 24/05/2017 ORDER THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERT AINING TO ASSESSMENT YEAR 2012-13 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-16, MUMBAI DATED 30/11/2016, WHICH IN TURN, ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 23/03/2015. 2. IN THIS APPEAL, THE ONLY ISSUE RAISED BY THE AS SESSEE IS AGAINST THE ACTION OF THE INCOME-TAX AUTHORITIES IN INVOKING TH E PROVISIONS OF SECTION 50C OF THE ACT IN ORDER TO CALCULATE THE CAPITAL GAIN A RISING TO THE ASSESSEE ON SALE OF TWO OFFICE PREMISES. 2 ITA NO.896/MUM/2017 (ASSESSMENT YEAR 2012-13 3. IN BRIEF, THE RELEVANT FACTS ARE THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE COMPANY SOLD TWO OFFICE PREMISES, NAMELY, FLAT NO.409 & FLAT NO.410 LOCATED AT 4 TH FLOOR, H-BUILDING, ROYAL PALM PROJECT, GOREGAON(E ), MUMBAI. THE ASSESSEE SOLD THE AFORESAID TWO PREMIS ES FOR CONSIDERATION OF RS.17,50,000/- AND RS.27,50,000/- RESPECTIVELY, WHE REAS THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITIES WAS R S.27,43,500/- AND RS.45,27,000/- RESPECTIVELY. BY INVOKING SECTION 5 0C OF THE ACT THE ASSESSING OFFICER ADOPTED THE FULL VALUE OF CONSIDERATION FOR THE PURPOSES OF COMPUTING CAPITAL GAIN AT RS.72,70,500/- INSTEAD OF RS.45,00, 000/- CONSIDERED BY THE ASSESSEE, THEREBY RESULTING IN AN ADDITION OF RS.27 ,70,500/-. THE CIT(A) HAS ALSO AFFIRMED THE ACTION OF THE ASSESSING OFFICER. 4. BEFORE THE TRIBUNAL THE SOLITARY ARGUMENT RAISED BY THE LD.REPRESENTATIVE FOR THE ASSESSEE WAS BASED ON SUB -SECTION(2) OF SECTION 50C OF THE ACT WHICH PROVIDES FOR REFERENCE TO THE VALUATION OFFICER IN ORDER TO DETERMINE THE VALUE OF THE PROPERTY. IT IS SEEN THAT THE ONLY REASON TAKEN BY THE CIT(A) TO REJECT THE AFORESAID PLEA OF THE A SSESSEE WAS THAT SUCH AN ARGUMENT WAS NOT RAISED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. THE CIT(A) ALSO NOTED THAT THOUGH ASSESSEE HAD POINTED OUT THAT THE ACTUAL VALUE OF THE PROPERTY WAS LOWER THAN THE MARKET VALUE OF THE PROPERTY ON ACCOUNT OF VARIOUS LEGAL/SAFETY/CONSTRUCTION ISSUES, BUT TH E SAID ARGUMENT WAS ALSO REJECTED BY HIM IN THE ABSENCE OF ANY DOCUMENTARY E VIDENCE. 5. THE AFORESAID STAND OF THE CIT(A) IS AGAIN REITE RATED BEFORE THE TRIBUNAL BY THE LD. DEPARTMENTAL REPRESENTATIVE IN SUPPORT O F THE CASE OF THE REVENUE. 6. THE LD.REPRESENTATIVE FOR THE ASSESSEE POINTED O UT THAT THERE WAS A DIFFERENCE OF ALMOST 40% BETWEEN THE STATED CONSIDE RATION AND VALUE 3 ITA NO.896/MUM/2017 (ASSESSMENT YEAR 2012-13 DETERMINED BY THE STAMP VALUATION AUTHORITY, WHICH ITSELF SHOWED THAT CERTAIN PECULIAR FEATURES WERE ATTACHED TO THE PROP ERTY. IN THIS CONTEXT, ATTENTION WAS INVITED TO THE STATEMENT OF FACTS ATT ACHED TO THE APPEAL PAPERS, WHICH BRINGS OUT THE REASONS FOR WHICH THE RATES ADOPTED BY THE STAMP VALUATION AUTHORITY WOULD NOT, AS SUCH, APPLY TO THE INSTANT PROPERTY. IN TERMS OF THE SAID STATEMENT OF FACTS, IT IS EXPL AINED BY THE ASSESSEE THAT THERE WAS AN ILLEGAL CONSTRUCTION AND THAT EVEN OCC UPANCY CERTIFICATE WAS NOT GIVEN BY THE AUTHORITIES ON ACCOUNT OF BAD CONSTRUC TION; THAT THERE WAS NO BMC WATER SUPPLY AND EVEN PROPERTY TAX ASSESSMENT H AS NOT BEEN DONE. OTHER REASONS HAVE ALSO BEEN STATED, WHICH ARE TO T HE EFFECT THAT THE PROPERTY IS NOT SERVICED BY ANY EFFECTIVE PUBLIC TR ANSPORT SYSTEM, ETC. 7. IN MY CONSIDERED OPINION, THE CIT(A) HAS UNJUSTL Y DENIED THE CLAIM OF THE ASSESSEE OF REQUIRING THE ASSESSING OFFICER TO REFER THE MATTER TO THE VALUATION OFFICER IN ORDER TO DETERMINE THE FAIR MA RKET VALUE OF THE PROPERTY IN QUESTION. IN FACT, EVEN AS PER THE WRITTEN SUBM ISSION REPRODUCED BY THE CIT(A) IN PARA -5 OF HIS ORDER, ASSESSEE HAS LIST ED OUT VARIOUS ASPECTS, WHICH AFFECT THE VALUATION OF THE PROPERTY AND ON THAT BA SIS, IT IS SOUGHT TO BE CANVASSED THAT THE VALUE TAKEN BY THE STAMP VALUATI ON AUTHORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY. IN ANY CASE, IN MY VIEW, THE PROVISIONS OF SUB-SECTION (2) OF SECTION 50C ARE QUITE CLEAR AND PRESCRIBE THAT WHERE THE ASSESSEE CLAIMS THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROP ERTY AND THE SAME HAS OTHERWISE NOT BEEN DISPUTED IN ANY APPEAL OR REVISI ON OR NO REFERENCE HAS BEEN MADE BEFORE ANY AUTHORITY, COURT OR THE HIG H COURT BY THE ASSESSEE , THEN THE ASSESSING OFFICER MAY REFER THE VALUATION OF SUCH PROPERTY TO THE VALUATION OFFICER TO DETERMINE ITS FAIR MARKET VALU E. SUB-SECTION (3) OF SECTION 50C OF THE ACT FURTHER PRESCRIBES THAT WHER E THE VALUE ASCERTAINED 4 ITA NO.896/MUM/2017 (ASSESSMENT YEAR 2012-13 UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1), THE VALUE SO DETERMINED BY VALUATION OFFICER SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. IN MY CONSIDERED OPINION, IT WOULD IN THE FITNESS OF THINGS THAT THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO R EFER THE VALUATION OF THE IMPUGNED PROPERTY TO THE VALUATION OFFICER IN TERMS OF SUB-SECTION (2) OF SECTION 50C OF THE ACT AND, THEREAFTER PROCEED AS P ER LAW. NEEDLESS TO SAY THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A RE ASONABLE OPPORTUNITY OF BEING HEARD BEFORE PASSING AN ORDER AFRESH WITH REG ARD TO THE COMPUTATION OF CAPITAL GAINS ON SALE OF THE IMPUGNED PROPERTIES . 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24/05/2017 SD/- (G.S. PANNU) ACCOCUNTANT MEMBER MUMBAI, DATED 24/05/2017 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI