The Hubli Taluka Agricultural Produce Co-op Marketing Society Ltd , Hubli V. The Income Tax Officer Ward-3(3), Hubli

ITA 911/BANG/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2650 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-08-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 21-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K R NARAYANAN
• Assessee Lawyers: E S KIRESUR
• Keywords: Fair market value; Valuation report; TDS; Set aside

Judgement Text

ITA NO.911(B)/2017 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : A, BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNTANT MEMBER AND SMT.BEENA PILLAI, JUDICAL MEMBER ITA NO. 911 (BANG)/2017 (ASSESSMENT YEAR : 20 08 - 09 ) THE HUBLI TALUKA AGRICULTURAL PRODUCE CO - OPERATIVE M A RKETING SOCIETY LTD.. A - 1, APMC YARD, AMARGOL, HUBLI - 580 025 PANNO.AA BAT0128L APPELLANT VS THE ADDL. COMMISSIONER OF INCOME TAX, RANGE - 2(2), BANGALORE RESPONDENT APPELLANT BY : SHRI E.S.KIRESUR, ADVOCATE REVENUE BY : SHRI K.R.NARAYANAN, J CIT DATE OF HEARING : 2 2 - 0 8 - 2019 DATE OF PRONOUNCEMENT : 28 - 08 - 2019 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER : P RESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 26/12/16 PASSED BY LD. CIT (A), HUBLI FOR ASSESSMENT YEAR 2008 - 09 ON FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE ASSESSMENT IS OPPOSED TO LAW AND FACTS OF THE CASE, ILLEGAL AND VOID. ITA NO.911(B)/2017 2 2. THE LD. AO ERRED IN ASSESSING THE INCOME FROM CAPITAL GAINS DURING THIS ASSESSMENT YEAR. IT IS SUBMITTED THAT THE TRANSFER OF PROPERTY TOOK PLACE ON 18 - 05 - 2008. HENC E THE INCOME FROM CAPITAL GAINS AROSE FOR AY: 2009 - 10 AND SHALL BE ASSESSED IN THAT YEAR ONLY. THEREFORE, THE ORDER OF ASSESSMENT IS CONTRARY TO THE PROVISIONS OF THE ACT AND LIABLE TO BE CANCELLED OR SET ASIDE IN THE ENDS OF JUSTICE. 3. THE LD. AO ERRED IN ADOPTING THE FAIR MARKET VALUE (FMV) OF T H E PROPERTY AS ON 01 - 04 - 1981 AT RS.1766/ - GUNTA(I.E.RS.146 SQ.YARD). IT IS SUBMITTED THAT THE PROPERTY SOLD IS INDUSTRIAL LAND. HENCE, AS PER THE REGISTERED VALUERS REPORT, IS AT RS.42084/ - GUNTA. THEREFOR E, THE VALUATION OF THE PROPERTY ADOPTED BY THE AO IN DETERMINING THE COST OF THE PROPERTY AS ON 011 - 04 - 1981 IS ARBITRARY AND BAD IN LAW. 4. THAT THE ORDER OF ASSESS MENT IS BARRED BY LIMITATION. THEREFORE, TH E ORDER OF ASSESSMENT IS ILLEGAL, VOID, NON - E ST IN LAW AND LIABLE TO BE CANCELLED OR S ET ASIDE IN THE ENDS OF JUSTICE. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : ASSESSEE IS A CO - OPERATIVE SOCIETY FORMED BY FARMERS BEING MEMBERS , FOR PURPOSES OF MARKETING OF AGRICULTURAL PRODUCE. IT ITA NO.911(B)/2017 3 DERIVES ITS INCOME FROM BUSINESS, RENT AND INTEREST. FOR YEAR UNDER CONSIDERATION, ASSESSEE FILED ITS RETURN OF INCOME ON 30/09/08 DECLARING TOTAL LOSS OF RS.3,27,170/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143 (2) WAS ISSUED TO ASSESSEE. IN RESPONSE T O STATUTORY NOTICES, REPRESENTATIVES OF ASSESSEE APPEARED BEFORE LD. AO AND FILED VARIOUS DETAILS AS CALLED FOR. IT HAS BEEN SUBMITTED THAT ASSESSEE WA S CARRYING ON AS SOCIETY AND PURCHASED PERPETUAL LEASE HOLD RIGHTS OF LAND SITUATED AT WOMANS COLLEGE R O AD, JC NAGAR, HUBLI BEARING CTL NO. 2868, 2869 AND 2870 RESPECTIVELY. ASSESSEE HAD ALSO PURCHASED A FACTORY BUILDING, GODOWNS, OFFICE BUILDING, RESIDENTIAL BUILDING GARAGE AND OTHER STRUCTURES AND FIXTURES, PLANT AND MACHINERY SPARE PARTS, DEAD STOCKS, STO CK IN TRADE, FURNITURES AND OTHER MO VABLES APPERTAINING TO FACTORY AND ALL INTEREST IN FACTORY AND STOCK IN TRADE GOODS AND EFFECTS FROM M/S GUJARAT G I N NING AND MANUFACTURING CO LTD. 2. LD. AO OBSERVED THAT ASSESSEE DURING THE YEAR SOLD CERTAIN PROPERT IES VIDE SALE DEED DATED 28/03/0 8. LD. AO HELD THAT INCOME ARISING OUT OF TRANSFER OF PROPERTY IS ASSESSABLE FOR ASSESSMENT YEAR 2008 - 09 INSTEAD OF AY: 2008 - 09 AS SUBMITTED BY ASSESSEE. 2.1 ANOTHER ISSUE THAT AROSE WAS IN RESPECT OF THE FAIR MARKET VALUE OF T HE PROPERTY AS ON 01/04/81. LD. AO RELIED ON TWO INSTANCES OF PROPERT IES SOLD , LOCATED NEARBY THE ALLEGED LAND SOLD BY ASSESSEE AND COMPUTED FAIR MARKET VALUE AT RS.1. 46 PER YARD , THEREBY DETER MINING CAPITAL GAINS AT RS. 1,43,54, 300/ - ITA NO.911(B)/2017 4 LD. AO THUS MADE ADDITIO N IN THE HANDS OF ASSESSEE AMOUNTING TO RS.1,40,79, 950/ - . 3. AGGRIEVED BY ADDITION MADE BY LD. AO, ASSESSEE PREFERRED APPEAL B EFORE LD. CIT (A) WHO UPHELD ADDITION . 4. AGGRIEVED BY ORDER OF LD. CIT (A), ASSESSEE IS IN APPEAL BEFORE US. IS LD.AR SUBMITTED TH AT GROUND NO. 1 IS GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION. GROUND NO. 4 HAS ALSO BEEN SUBMITTED TO BE NOT PRESSED A ND ACCORDINGLY THIS GROUND IS DISMISSED AS NOT PRESSED. GROUND NO.2 IS IN RESPECT OF YEAR IN WHICH INCOME FROM TRANSFER OF PROPERTY IS TO BE TAXED IN THE HANDS OF ASSESSEE. 5. LD. AR SUBMITTED THAT DUE TO HEAVY LOSSES IN THE PAST YEARS ASSESSEE DECIDE D BY WAY OF RESOLUTION TO SELL PERMANENT LEASEHOLD RIGHT IN RES PECT OF PR OPERTY SITUATED AT CTS NO. 2870, AREA 30 2 5YARDS. ACCORDINGLY , ATTENDED NOTIFICATION IN SANJ EVANI KANNADA DAILY NEWSPAPER WAS MADE CALLING UPON INTENDING PURCHASER. LD.AR SUBMITTED THAT , AS PER TERMS AND CONDITIONS OF TENDER, EARNEST MONEY DEPOSIT AMOUNT WAS FIXED AT RS. 10 LACS AND SUCCESSFUL BIDDER TO TAKE POSSESSION OF PROPERTY ONLY AFTER HAVING PAID ENTIRE TENDER AMOUNT AND REGIS TRATION OF SALE DEED . HE SUBMITTED THAT, UPON COMPLETION OF CALLING FOR TENDER, PROCEEDINGS TO SELL WAS INITIATED BY FINALISIN G THE HIGHEST BIDDER TO BE THE PURCHASER. CONSEQUENTLY , SALE DEED WAS EXECUTED ON 28/03/08 AND WAS KEPT PENDING TILL CONTINGENT CONDITIONS WERE COMPLIED AS UNDER BY PURCHASER, REGARDING FULL PAYMENT OF TENDER AND REGISTRATION. ITA NO.911(B)/2017 5 LD.AR SUBMITTED THAT PURCHASE RS GAVE POST DATED CHEQUES AS UNDER TO ASSESSEE IN RESPECT OF BALANCE PAYMENT. SL.NO. CHQUE NO. DATE AMOUNT DRAWN ON 1 306651 10/03/2008EMD 10,00,000.00 SBI , VIDYANAGAR, HUBLI 2 306653 28/03/208 27. 5 0,025.00 SBI, VIDYANAGAR, HUBLI 3 303354 10/4/2008 35,00,000.00 SBI, VIDYANAGAR, HUBLI 4 300055 20/04/2008 35,00,000.00 SBI, VIDYANAGAR, HUBLI 5 296756 30/04/2008 35,00,000.00 SBI, VIDYANAGAR, HUBLI 6 293457 10/5/2008 35,00,000.00 SBI, VIDYANAGAR, HUBLI TOTAL 1,77,50,025.00 6. LD.AR SUBMITTED THAT ENTIRE PAYMENT RECEIVED FROM PURCHASER WAS PA ID BY 10/05/2008 AND AGREEMENT WAS REGISTERED ON 01/04/2008 AT SUB REGISTRAR, HUBLI. LD.AR SUBMITTED THAT POSSESSION OF SAID PROPERTY WAS HANDED OVER TO THE PURCHASER V IDE LETTER DATED 18/05/08 UPON SETTLING THE FULL P AYMENT. HE THUS SUBMITTED THAT TRANSFER OF PROPERTY HAS ACTUALLY TAKEN PLACE DURING FINANCIAL YEAR 01/04/08 TO 31/03/09 RELEVANT TO ASSESSMENT YEAR 2009 - 10. IN SUPPORT OF HIS CONTENTION, LD.AR PLACED RELIANCE UPON VARIOUS D OCUMENTS IN PAPER BOOK , WHICH WERE EITHER NOT LEGIBLE N OR WERE IN VERNACULAR LANGUAGE. 7. LD. DR SUBMITTED THAT ISSUE MAY BE SET - ASIDE TO LD. CIT (A) FOR VERIFICATION AS SUBMISSIONS ADVANCED BY ASSESSEE IS NOT VERIFIABLE FROM DOCUMENTS RELIED UPON. ITA NO.911(B)/2017 6 8. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. IT APPEARS THAT EXCEPT FOR EXECUTION OF SALE DEED ( THAT HAPPENED IN FINANCIAL YEAR THE RELEVANT TO ASSESSMENT YEAR 2008 - 09 ) , ACTUAL TRANSFER TOOK PLACE DURING ASSESSMENT YEAR 2009 - 10. HOWEVER , DATES ENUNCIATED BY LD.AR ARE NOT VERIFIABLE FROM DOCUMENTS REL IED UPON IN PAPER BOOK , AS IT IS NOT A TRANSLATED, CERTIFIED COPY OF DOCUMENTS FILED BY ASSESSEE . IT HAS BEEN CONTENDED BY LD.AR THAT REGISTRATION TOOK PLACE ON 01/04/200 8 AND POSITION WAS HANDED OVER TO PURCHASER ON 18/05/08. THE POSSESSION LETTER IS ORIGINALLY WRITTEN IN VERNACULAR LANGUAGE FOR WHICH A CERTIFIED TRANSLATED COPY HAS NOT BEEN FILED BEFORE US. WE ARE THEREFORE UNABLE TO AUTHENTICATE THE ARGUMENTS ADVANCED B Y LD. AR HAVING REGARDS TO THESE DOCUMENTS. HOWEVER WE DEEM IT FIT AND PROPER TO SET ASIDE THIS ISSUE TO LD. CIT (A) WHO SHALL VERIFY ALL THESE DETAILS FROM THE RECORDS AVAILABLE. ASSESSEE IS DIRECTED TO FILE A CLEAR COPY OF REGISTERED SALE DEED TO ESTABLI SH THAT THE REGISTRATION TOOK PLACE ON 01/04/2008. ASSESSEE IS ALSO DIRECTED TO FILE A CERTIFIED TRUE COPY OF POSSESSION LETTER ISSUED TO PURCHASER DATED 18/05/08. ASSESSEE SHALL FILE BANK STATEMENTS SHOWING THE BALAN C E PAYMENTS AS PER TABLE REPRODUCED HER EIN ABOVE, HAVING RECEIVED DURING FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2009 - 10 AS SUBMITTED BEFORE US. LD.CIT (A) SHALL VERIFY ALL THESE DETAILS AS PER LAW . A CCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.911(B)/2017 7 GROUND NO. 3 IS IN RESPECT OF DETERMINATION OF MARKET VALUE AS ON 01/04/81. LD.AR SUBMITTED THAT ASSESSING OFFICER ADOPTED MARKET VALUE OF PROPERTY AT RS.1 . 46 PER SQUARE YARD. HE SUBMITTED THAT AUTHORITIES BE LOW DID NOT APPRECIATE THAT PROPERTY WAS COMMERCIAL PROP ERTY AND REGISTERED VALUER VALUED THE PROPERTY AS ON 01/04/81 AT RS.38,821/ - . PLACING RELIANCE UPON VALUATION REPORT PLACED AT PAGE 58 - 69 OF PAPER BOOK , HE SUBMITTED THAT VALUE COMPUTED BY VALUATION OFFICER WAS AT RS.10, 52 ,1 00 / - AS AGAINST RS.56,45,700/ - B Y LD.AO . HE SUBMITTED THAT THE INSTANCE S CONSIDERED BY LD . AO WAS IN RESPECT OF RESIDENTIAL PROPERTY , WHEREAS ASSESSEE S COMMERCIAL PROPERTY, THAT TOO SOLD BY CALLING TENDER. ON THE CONTRARY , LD. DR SUBMITTED THAT THE VALUATION REPORT DOES NOT SUGGEST NATU RE OF PROPERTY BEING COMMERCIAL AND HAS NOT RELIED UPON ANY INSTANCES BY WHICH IT COULD SUBSTANTIATE THE MARKET VALUE AS ON 01/04/81. 9. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. IN OUR CONSIDERED OPINION , ISSUE NEEDS TO BE VERIFIED BY LD. CIT (A) BY CALLING FOR REL EVANT DETAILS TO ASCERTAIN MARKET VALUE OF PROPERTY AS ON 01/04/81. IT IS ALSO OBSERVED THAT IN THE EVENT GROUND NO. 3 IS DECIDED IN FAVOUR OF ASSESSEE, THEN CAPITAL GAINS C OMPUTATION WIL L NOT ARISE FOR YEAR UNDER CONSIDERATION , AS THEN IT WOULD BE ACADEMIC IN NATURE. LD.CIT (A) IS DIRECTED TO 1 ST ASCERTAIN YEAR IN WHICH CAPITAL GAINS ARISES IN THE HANDS OF ASSESSEE AS PER LAW AND THEN TO ITA NO.911(B)/2017 8 COMPUTE FAIR MARKET VALUE AS ON 01/04/81 BY REFERRI NG TO A VALUATION OFFICER. ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 28 - 09 - 2019 SD/ - SD/ - (A.K.GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 28 TH AUGUST, 2019. *AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6. ITO (TDS) 7.GUARD FILE BY ORDER ASSTT.REGISTRAR