Hyder Ali Kajani, Hyderabad V. DCIT, Circle-5(1), Hyderabad

ITA 898/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5545 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHARA REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 2 4 3 /HYD/13 : ASSESSMENT YEAR 2009 - 10 SMT. SHERE BANOO KAJANI, HYDERABAD ( PAN - AMGPS 9863 E ) V/S. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 5(1), HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.898/HYD/13 : ASSESSMENT YEAR 2009 - 10 DR. HYDER ALI KAJANI, HYDERABAD ( PAN - ABQPA 3913 K ) V/S. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 5(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANTS BY : SHRI S.RAMA RAO RESPONDENT BY : SHRI P.SOMASEKHARA REDDY DR DATE OF HEARING 27.2.2014 DATE OF PRONOUNCEMENT 28.3.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: TH E S E APPEAL S BY THE ASSESSEES ARE DIRECTED AGAINST SIMILAR BUT SEPARATE ORDERS OF THE COMMISSIONER OF INCOME - TAX - I, HYDERABAD PASSED UNDER S.263 OF THE INCOME - TAX ACT, 1961, DATED 12.2.2013 IN THE CASE OF DR.HYD E R ALI KAJANI AND 24.12.2013 IN THE CASE OF SMT. SHERE BANOO KAJANI , FOR THE ASSESSMENT YEAR 2009 - 10. SINCE THE FACTUAL BACKGROUND AND THE ISSUES INVOLVED IN BOTH THESE APPEALS ARE COMMON, THESE APPEALS ARE BEING DISPO SED OF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 243 & 898 / HYD/20 13 SMT. SHERE BANOO KAJANI, & ANR. H YDERABAD 2 2. FACTUAL BACKGROUND, COMMON IN BOTH THE CASES, LEADING TO THE FILING OF THESE APPEALS BY THE ASSESSEE S , IS THAT THE COMMISSIONER OF INCOME - TAX WHILE PERUSING THE ASSESSMENT RECORD S OF THE ASSES SEE S , NOTICED THAT THE ASSESSEES ARE JOINT OWNERS OF A PROPERTY SITUATED A T ROAD NO.12, BA N JARA HILLS, HYDERABAD, WHICH WAS TRANSFERRED DURING THE RELEVANT PREVIO U S YEAR . THE LONG TERM CAPITAL GAINS ON SUCH TRANSFER HAVE BEEN COMPUTED BY THE ASSESSEES BY A DOPTING THE M ARKET VALUE O F THE P R O P ERTY AT RS. 3, 56,00,000. HOWEVER, IT WAS SEEN FROM THE DEVELOPMENT AGREEMENT - CUM - GPA, THAT TH E VALUE OF THE PROPERTY ADOPTED BY THE VALUATION AUTHORI TI ES FOR THE PURPOSE OF LEVY OF STAMP DUTY WAS R S .5,77,38,700. THE COM MISSIONER OF INCOME - TAX OBSERVED THAT AS PER S.50C OF THE ACT, THE VALUE ADOPTED BY THE R E GISTRATION AUTHORITY NEEDS TO B E TAKEN AS FULL VALUE OF TH E CONSIDERATION AND ACCORDINGLY ADOPTING THE SAID VALUE, THE CAPITAL GAINS HAS TO BE WORKE D OUT, AND WHEN IT IS DONE, THE LONG TERM CAPITAL GAINS WORKS OUT TO RS.1,34,20,774, AS AGAINST THE LONG TERMS CAPITAL GAIN S OF R S .81,06,412 COMPU T ED BY THE ASSESSEES, WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. HENCE, CONCLUDING THAT THE ASSESSMENT S MADE IN THE HANDS OF THESE ASSESSEES, UNDER S.143(3) OF THE ACT FOR THE YEARS UNDER CONSIDERATION , W ERE, PRIMA FACIE, ERRONEOUS AND PREJU D I C IAL TO THE INTERESTS OF THE REVENUE, THE COMMISSIONER OF INCOME - TAX INVOK ED HIS REVISIONARY JURISDICTION UNDER S.263 OF THE ACT . 3. BEFORE THE COMMISSIONER OF INCOME - TAX, PROPOSED REVISION UNDER S.263 WAS STRONGLY OPPOSED, AND ELABORATE WRITTEN SUBMISSIONS WERE ALSO FILED, CONTENDING INTER ALIA THAT THE MARKET VALUE AS CERTIFIED AND CONFIRMED BY THE JOINT SUB - R E GIS T RAR II, HYDER ABAD WAS R S .30,000 PER SQ. YA R D AS ON 1.1.2008, AND AS AGAINST IT, THE ASSESSEE S STILL CHOSE TO ADOPT AN AMOUNT OF RS .40,000 PER SQ. YARD, AS THE FAIR MARKET VALUE OF THE SUBJECT PROPERTY, THEREBY ERRING ON THE RIGHT SIDE . A S A RESULT, THE ASSESSEE HAD O FFERED AN AMOUNT OF RS.89,00,000 AS ADDITIONAL ESTIMATED VALUE (TRANSFER VALUE BEING 50% THEREON I.E. RS.44,50,000) AND ALREADY PAID CONSEQUENTIAL INCREASED TAX ITA NO. 243 & 898 / HYD/20 13 SMT. SHERE BANOO KAJANI, & ANR. H YDERABAD 3 AMOUNT VOLUNTARILY. IT WAS ALSO CONTEN D ED THAT THE ASSESSEE S W ERE NOT INFORMED ABOUT THE BASIS FOR ADOPTING THE MARK E T V ALUE OF THE PROPERTY AT R S .77,38,700 FOR THE PURPOSE OF LEVYIN G STAMP DUTY, AND HOWEVER, SIN C E THE JOINT SUB - R E GI S TRAR II HAS ISSUED CE R TIFICATE VALU I NG THE PROPERTY AT R S .30,000 PER SQ. YARD AND THE ASSESSEE HAS ADOPTED R S .40,000, THERE IS NO M I STAKE IN THE COMPUTATION OF CAPITAL GAINS BY THE ASSESSEE S . THERE WAS THEREFORE, NO MISTAKE ON THE P A RT OF THE ASSESSING OFFICER IN ACCEPTING THE LONG TERM CAPITAL GAINS DISCLOSED BY THE ASSESSEES , AND CONSEQUENTLY, THE PROCEEDINGS INITIATED UNDER S.263 OF THE ACT SHOULD BE DROPPED. 4. AFTER DETAILED CONSIDERATION OF PLEAS OF THE ASSESSEE, INCLUDING THE WRITTEN SUBMISSIONS FILED BEFO R E HIM, THE COMMISSIONER OF INCOME - TAX ULTIMATELY, F OUND NO MERIT IN THE CONTENTIONS OF THE ASSESSEE AGAINST THE REVISION PROPOSED. REFERRING TO THE CERTIFICATE OF THE JOINT SUB - REGISTRAR CERTIFYING THE VALUE OF THE PROPERTY AT A LOWER LEVEL, THE COMMISSIONER OF INCOME - TAX OBSERVED THAT IT WAS OF NO HELP TO THE ASSESSEES SINCE THE CERTIFICATE WA S ISSUED ON 5.12.2012, THOUGH THE PROPERTY WITH VALUATION OF RS.5,77,38,500 WAS REGISTERED ON 15.11.2008, AND THE PROVISIONS OF S.50C OF THE ACT ARE VERY CLEAR AND REFER ONLY TO VALUATION BY STAMP VALUATION AUTHORITY FOR THE PURPOSE OF FIXING STAMP VALUE. THE COMMISSIONER ACCORDINGLY REJECTED THE CONTENTIONS OF THE ASSESSEES , AND REVISING THE ASSESSMENTS MADE UN D ER S.143(3) OF THE ACT, DIRECTED THE ASSESSING OFFICER TO RECO M PUTE THE ASSESSEES SHA R E OF L ONG TERM CAPITAL GAIN S BY TAKING MARKET VALUE O F THE PROPERTY AT RS.5,77,38,500 AS P E R THE VALUE ADOPTED BY THE STAMP VALU A TION AUTHORITY(JOINT SUB - REGI ST RAR), VIDE IMPUGNED ORDER S PASSED UNDER S.263 OF THE ACT. 5. AGGRIEVED ASSESSEES PREFERRED THE PRESENT APPEALS BEFORE US. ITA NO. 243 & 898 / HYD/20 13 SMT. SHERE BANOO KAJANI, & ANR. H YDERABAD 4 6. THE LEARNED COUNSEL FO R THE ASSESSEE, REITERATING THE SUBMISSIONS MADE BEFORE THE COMMISSIONER OF INCOME - TAX SUBMITTED THAT FOR THE PURPOSES OF DETERMINING THE CAPITAL GAINS IN A CASE OTHER THAN SALE, THE PROVISIONS OF S.50C CANNOT BE INVOKED . IN ANY EVENT, NON CONSIDERATION O F THE APPLICABILITY OR OTHERWISE OF THE PROVISIONS OF S.50C BY THE ASSESSING OFFICER, IN THE ASSESSMENT ORDER S PASSED UNDER S.143(3) OF THE ACT, DOES NOT RENDER SUCH ASSESSMENT EITHER ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HE FURTHER S UBMI T TED THAT THE COMMISSIONER OF INCOME - TAX IN THESE CASES, HAS NO OTHER DATA, OTHER THAN THE DOCUMENTS PERUSED BY THE ASSESSING OFFICER. HE SUBMITTED THEREFORE, THAT THE COMMISSIONER OF INCOME - TAX ERRED IN HOLDING THAT THERE IS ANY ERROR IN THE ORDER OF ASSESSMENT. IN SUPPORT OF HIS CONTENTIONS IN THIS BEHALF, RELIANCE IS PLACED ON THE DECISION OF THE BOMBAY BENCH OF THE T RIBUNAL IN THE CASE OF ESCHMANN TEXTURES INDIA P. LTD. DATED 21.3.2012 IN ITA NO.3616/MUM/2011, DULY FURNISHING A COPY THEREOF BEFORE US. RELIANCE IS ALSO PLACED ON THE DECISION OF THE AGRA BENCH OF THE TRIBUNAL DATED 20.12.2013 IN THE CASE OF ITO V/S. HARESH CHAND AGARWAL HUF, AGRA, IN ITA NO.282/AGRA/2013 FOR THE ASSESSMENT YEAR 2004 - 05, COPY OF WHICH HAS ALSO BEEN FURNISHED BEFORE US. IT WAS ALSO ARGUED THAT IF THE ASSESSING OFFICER WERE TO INVOKE THE PROVISIONS OF S.50C, THE ASSESSMENT HAS ALSO TO BE SUBJECTED TO REFERENCE ENVISAGED UNDER S.50C(2) OF THE ACT. BUT, WHEN THE ASSESSING OFFICER HAS NOT INVOKED THE PROVISIONS OF S.50C O F THE ACT, THE COMMISSIONER OF INCOME - TAX, WHILE EXERCISING JURISDICTION UNDER S.263 OF THE ACT, CANNOT DIRECT INVOKING THE PROVISION S OF S.50C(2) OF THE ACT. IN THIS BEHALF, THE LEARNED COUNSEL ALSO RELIED ON THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT V/S. SMT. TASNEEM Z. MADRASWALA (324 ITR 67). 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE COMMISSIONER OF INCOME - TAX AND SUBMITTED THAT THE ASSESSMENTS MADE ARE CLEARLY ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE, AND AS SUCH THE SAME ARE LIABLE TO BE UPHELD. ITA NO. 243 & 898 / HYD/20 13 SMT. SHERE BANOO KAJANI, & ANR. H YDERABAD 5 8. WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE CASE LAW CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE COMMISSIONER OF INCOME - TAX HAS INVOKED THE REVISIONARY JURISDICTION UNDER S.263 OF THE ACT TO BRING TO TAX THE ALLEGED UNDER VALUATION OF THE CAPITAL GAINS DISCLOSED BY THE ASSESSEES AND ACCEPTED BY THE ASSESSING OFFICER, IN RELATION TO THE PROPERTY GIVEN FOR DEVELOPMENT. THERE IS NO DISPUTE WITH REGARD TO TH E FACT THAT THE ASSESSEES HAVE DISCLOSED THE RELEVANT CAPITAL GAINS AND THE ASSESSING OFFICER HAS ACCEPTED, WHILE FRAMING THE REGULAR ASSESSMENT UNDER S.143(3) OF THE ACT, THE AMOUNTS OF CAPITAL GAINS DISCLOSED BY THE ASSESSEE. THAT BEING SO, THERE CAN BE NO ALLEGATION OF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER, WHILE FRAMING THE REGULAR ASSESSMENTS, WITH REGARD TO THE COMPUTATION OF CAPITAL GAINS. AS FOR THE CORRECTNESS OF THE COMPUTATION OF CAPITAL GAINS BY THE ASSESSEES, THE DISPUTE IS WITH RE GARD TO THE VALUE TO BE ADOPTED FOR THE PROPERTY IN QUESTION AS THE MARKET VALUE AS ON 1.1.2008. WHILE THE ASSESSEE HAS ADOPTED THE VALUE AT RS.40,000 PER SQ. YARD, WHILE COMPUTING THE CAPITAL GAINS, THE COMMISSIONER OF INCOME - TAX, IN TERMS S.50C OF THE A CT, ADOPTED THE MARKET VALUE OF THE PROPERTY AS ON 1.1.2008 AT RS.5,77,38,700, WHICH WAS THE VALUE TAKEN BY THE SUB - REGISTRAR OFFICE FOR DETERMINING THE STAMP DUTY TO BE PAID. IT IS THE CONTENTION THAT THE VALUE OF R S .40,000 SQ. YARD ADOPTED BY THE ASSE SSEE IS QUITE REASONABLE, AND THE JOINT SUB - REGISTRAR II, HYDERABAD, VIDE CERTIFICATE DATED 5.12.2012 FURNISHED BY THE ASSESSEE S , BEFORE THE COMMISSIONER, CERTIFIED THAT THE MARKET VALUE OF THE PROPERTY IS RS.30,000/ - PER SQ. YARD FOR RESIDENTIAL AREA A S ON 1.1.2008 AS PER MARKET VALUE GUIDELINES . VIEWED IN THIS LIGHT, THE VALUE ADOPTED BY THE ASSESSEE S FOR COMPUTATION OF CAPITAL GAINS, VIZ. OF RS.40,000, IS ON HIGHER SIDE AND THUS, THE ASSESSEES HAVE , AS RIGHTLY CONTENDED, ERRED ON THE RIGHT SIDE, PA YING HIGHER AMOUNTS OF TAXES. THE COMMISSIONER IN THE IMPUGNED ORDERS IGNORED THIS CERTIFICATE OBSERVING THAT THE VALUE DETERMINED FOR STAMP DUTY PURPOSES ON ITA NO. 243 & 898 / HYD/20 13 SMT. SHERE BANOO KAJANI, & ANR. H YDERABAD 6 15.11.2008 ITSELF BY THE SUB - REGISTRAR OFFICE, RATHER THAN A CERTIFICATE OF JOINT SUB - REGISTRAR I SSUED ON 5.12.2012, IS MORE APPROPRIATE. WE ARE NOT CONVINCED WITH THIS REASONING GIVEN BY THE COMMISSIONER. THE EXPLANATION OF THE ASSESSEE S THAT THE STAMP DUTY LEVIED ON DEVELOPMENT AGREEMENT IS DETERMINED BY THE SUB - REGISTRAR ON A BASIS, WHICH IS DIFFE RENT FROM THE STAMP DUTY LEVIABLE ON OTHER TRANSACTIONS FOR CONVEYANCE OF IMMOVABLE PROPERTIES, IN THIS BEHALF, IS QUITE CONVINCING. AS SUCH, THE VALUE DETERMINED BY THE SUB - REGISTRAR AS ON 15.11.2008 FOR PURPOSES OF STAMP DUTY FOR REGISTRATION OF DEVELOP MENT AGREEMENT - CUM - GPA, CANNOT BE TAKEN AS CLINCHING AND DETERMINATIVE OF THE VALUE IN TERMS OF S.50C OF THE ACT. IT IS MORE SO, BECAUSE THE ASSESSEE S HA VE NO MEANS OF EITHER ESTIMATING OR EVALUATING THE MARKET VALUE OF THE PROPERTY, BUT TO RELY UPON A CE RTIFICATE AS ISSUED BY THE PROPERTY REGISTERING AUTHORITIES. FURTHER, THE MANNER OR METHOD ADOPTED BY THE SUB - REGISTRAR OFFICE FOR ARRIVING AT THE VALUE OF THE PROPERTY, FOR STAMP DUTY PURPOSES, IS NOT KNOWN TO THE ASSESSEES, AND THE STAMP DUTY, IN FACT, WAS CLAIMED TO HAVE BEEN PAID BY THE DEVELOPER. IN ANY EVENT, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAVING ACCEPTED THE VALUE ADOPTED BY THE ASSESSEES FOR COMPUTATION OF THE CAPITAL GAINS, IT IS BEYOND THE SCOPE OF THE POWERS OF THE COMMISSIONE R OF INCOME - TAX TO DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE SAME BY MAKING RECOURSE TO THE PROVISIONS OF S.50C OF THE ACT. WE ARE SUPPORTED IN THIS BEHALF BY THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT V/S. SMT. TASNEEM Z. MADRASWALA ( 324 ITR 67), RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE. I N THIS VIEW OF THE MATTER, WE FIND THAT THE IMPUGNED ORDERS OF ASSESSMENT S ARE NEI T HER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE, AND CONSEQUENTLY, THE COMMISSIONER OF INCOM E - TAX WAS NOT JUSTIFIED IN EXERCISING HIS REVISIONARY POWERS UNDER S.263 OF THE ACT. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDERS OF THE COMMISSIONER OF INCOME - TAX PASSED UNDER S.263 OF THE ACT, ALLOWING THE APPEALS OF THE ASSESSEES. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES ARE ALLOWED. ITA NO. 243 & 898 / HYD/20 13 SMT. SHERE BANOO KAJANI, & ANR. H YDERABAD 7 ORDER PRONOUNCED IN THE COURT ON 28.3.2014 SD/ - SD/ - ( B.RAMAKOTAIAH ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 28 TH MARCH, 2014 COPY FORWARDED TO: 1. 2. SMT . SHERE BANOO KAJANI, C/O. SHRI S.RAMA RAO, ADVOCATE FLAT NO.102, SHIRYA'S ELEGANCE, NO.3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029 DR.HYDER ALI KAJANI, C/O. SHRI S.RAMA RAO, ADVOCATE FLAT NO.102, SHIRYA'S ELEGANCE, NO.3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029 3 . DY. COMMISSIONER OF INCOME - TAX , CIRCLE 5(1), HYDERABAD 4. COMMISSIONER OF INCOME - TAX I , HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S