Shri Manoj Yadav, Indore V. THE ITO 3(1), Indore

ITA 916/IND/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4237 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 02-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: PA NKAJ SHAH A RS
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 143(3); 50C; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.916/IND/2016 ASSESSMENT YEAR: 2007-08 SHRI MANOJ YADAV 8, GF, SHEKHAR RESIDENCY, 204, SCHEME NO.54, INDORE / VS. ITO 3(1), INDORE ( APPELLANT ) (RE VENUE) P.A. AAGPY5452J ITA NO.930/IND/2016 ASSESSMENT YEAR: 2007-08 SMT. RUKMANI YADAV 8, GF SHEKHAR RESIDENCY, 204, SCHEME NO.54, INDORE / VS. ITO 3(1), INDORE ( APPELLANT ) ( RE VENUE) P.A. AAFPY7560G APPELLANT BY SHRI MAHESH AGRAWAL & SHRI PANKAJ SHAH, ARS RESPONDENT BY SHRI P.K. MITRA SR. DR DATE OF HEARING: 03.10.2018 DATE OF PRONOUNCEMENT: 09.10.2018 / O R D E R PER MANISH BORAD, A.M: SHRI MANOJ YADAV & RUKMINI YADAV 2 THESE TWO APPEALS FILED AT THE INSTANCE OF ASSESSEES NAMELY MANOJ YADAV AND RUKMANI YADAV PERTAINING TO A.Y. 2007-08 ARE DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-I, INDORE, (IN S HORT CIT(A)), DATED 25.05.2016 WHICH IS ARISING OUT OF T HE ORDER U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON 29.11.2 011 BY ITO, WARD 3(1), INDORE. 2. AS IN BOTH THESE TWO APPEALS THE ISSUES RAISED ARE COMMON, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSE D OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. GROUNDS OF APPEAL RAISED COMMON IN BOTH THESE APPEALS WHICH AS FOLLOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSIONER (APPEALS) WAS WRONG IN CONFIRMING THE RE- OPENING OF THE CASE U/S 147 R.W.S. 148. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSIONER (APPEALS) ERRED IN LAW BY CONFIRMING T HE ASSESSMENT ORDER SO PASSED U/S 147 R.W.S. 143(3) BY THE LD. AO WITHOUT FIRST DISPOSING OFF THE OBJECTIO N AGAINST THE ISSUE OF NOTICE U/S 148. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE COMMISSIONER (APPEALS) ERRED IN LAW AS WELL AS ON F ACTS BY CONFIRMING THE ADDITION OF RS.19,00,000/- U/S 50 C FOR LONG TERM CAPITAL GAIN. SHRI MANOJ YADAV & RUKMINI YADAV 3 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REQUES TED FOR NOT PRESSING GROUND NO.1 & 2 WHEREIN VALIDITY OF REO PENING OF ASSESSMENT HAS BEEN CHALLENGED. WE, ACCORDINGLY DISMISS RELEVANT GROUND NO.1 & 2 OF BOTH THESE APPEAL S BEING NOT PRESSED. 4. NOW THE ONLY COMMON ISSUE RELATES TO THE ADDITION OF RS.19,00,000/- WHICH WAS MADE IN THE CASE OF BOTH THE ASSESSEES BY THE LD. ASSESSING OFFICER (AO) INVOKING THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, TH EREBY MAKING ADDITIONS UNDER THE HEAD OF LONG TERM CAPITAL GAI N. 5. FOR THE PURPOSE OF ADJUDICATION, WE ARE TAKING THE F ACTS OF MR. MANOJ YADAV IN ITA NO. 916/IND/2016. THE ASSESS EE BEING INDIVIDUAL FILED RETURN OF INCOME ON 31.10.200 7 DECLARING INCOME AT RS.9,17,740/-. THE CASE WAS REOPENE D BY WAY OF ISSUANCE OF NOTICE U/S 148 OF THE ACT AFTER DULY REGARDING THE REASONS AND THE BASIS OF REOPENING WAS ON ACCOUNT OF ALLEGED DIFFERENCE IN THE SALE CONSIDERATION OF IMMOVABLE PROPERTY VIZ-A-VIZ VALUATION OF PROPERTY ADOP TED BY THE REGISTRAR FOR THE STAMP VALUATION PURPOSES. 6. THE LD. ASSESSING OFFICER OBSERVED THAT DURING TH E YEAR ASSESSEE SOLD A PROPERTY JOINTLY HELD BY HIM AND HIS WIFE FOR CONSIDERATION OF RS.85,00,000/-( ASSESSEES SHARE RS.42,50,000/-). SALE DEED WAS REGISTERED IN THE SHRI MANOJ YADAV & RUKMINI YADAV 4 SUBSEQUENT FINANCIAL YEAR. THE VALUE ADOPTED FOR STAMP VALUATION PURPOSE WAS HIGHER. THE LD. AO ISSUED SHOW CAUSE TO THE ASSESSEE. ALLEGED VALUATION WAS CHALLENGED BY THE ASSESSEE. VALUATION OF THE IMMOVABLE PROPERTY WAS REFERRED TO DEPARTMENTAL VALUATION OFFICER BY THE LD. AO WHO VALUED IT AT RS.1,23,00,000/-. THE SAME WAS ADOPTED BY THE LD. AO FOR CALCULATING LONG TERM CAPITAL GAIN AND ACCORDINGLY RS.19,00,000/- EACH WAS ADDED IN THE HANDS OF BOTH THE ASSESSEES UNDER THE HEAD LONG TERM CAPITAL GAIN . 7. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A) BUT FAILED TO SUCCEED, AS LD. CIT(A) CONFI RMED THE ACTION OF THE ASSESSING OFFICER INVOKING THE PROVISI ONS OF SECTION 50C OF THE ACT. 8. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 9. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE SYNOPSIS SUBMITTED THAT TRANSACTIONS OF SALE OF THE PROPERTY TOO K PLACE DURING THE FINANCIAL YEAR 2006-07 I.E. A.Y. 2007- 08. THE ASSESSEE RECEIVED TOTAL SALE CONSIDERATION AND POSSESSION WAS HANDED OVER TO THE BUYER. ALL THE CONDITIONS NEEDED TO FULFILL THE REQUIREMENT OF PRO VISIONS OF SECTION 2(47) OF THE ACT FOR MAKING A VALID TRANSFER WE RE COMPLETED DURING THE YEAR. HOWEVER, THE SALE DEED WAS REGISTERED IN THE SUBSEQUENT FINANCIAL YEAR ON 04.08.20 07. SHRI MANOJ YADAV & RUKMINI YADAV 5 IN THE MEANTIME THE RATES FOR CALCULATING THE STAMP DUTY WERE REVISED. AS A RESULT THE VALUE ADOPTED BY THE ASSESSING OFFICER WAS BASED ON THE GUIDELINES AS ON TH E DATED OF REGISTERING OF SALE DEED WHICH IS NOT CORREC T. 10. LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT T HE IMPUGNED PROPERTY WAS SITUATED IN THE INDUSTRIAL AREA FO R WHICH ONLY 60% OF THE GUIDELINES VALUE OF CONSTRUCTI ON IS TO BE CONSIDERED. HE ALSO SUBMITTED THAT AMENDMENT HAS BEEN BROUGHT IN SECTION 50C BY THE FINANCE ACT 2016 W.E.F. 01.04.2017 WHICH PROVIDES THAT IF THE DATE OF AGREEMEN T FIXING THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF CAPITAL ASSET ARE NOT T HE SAME, THEN THE VALUE ADOPTED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGREEMENT MAY BE TAKE N FOR THE PURPOSE OF COMPUTING THE FULL VALUE OF CONSI DERATION FOR SUCH TRANSFER. HE FURTHER RELYING ON THE JUDGMEN T OF COORDINATE BENCH IN THE CASE OF DCIT VS. M/S. INDORIE FOOT CARE PVT. LTD. IN ITANO.788/IND/2016 DATED 02.05.201 7 SUBMITTED THAT IN THIS CASE COORDINATE BENCH HELD THAT THE AMENDMENT BROUGHT IN SECTION 50C OF THE ACT BY THE FINANCE ACT 2016 IS CLARIFICATORY IN NATURE. THE RELIAN CE WAS ALSO PLACED ON THE FOLLOWING JUDGMENTS: A. ITO V. MODIPON LTD. REPORTED IN [2015] 57 SHRI MANOJ YADAV & RUKMINI YADAV 6 TAXMANN.COM 360 (DELHI) B. DCIT V. S. VENKAT REDDY (IT APPEAL NOS. 974 & 975 (HYD.) OF 2010) C. LAHIRI PROMOTERS VISAKHAPATNAM V/S. ACIT (ITA NO. 12/VIZAG/2009) D. MOOLE RAMI REDDY V/S. ITO - 2011-TIOL-135-ITAT- VIZAG. 11. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY ARGUED SUPPORTING THE ORDER OF THE LOWER AUTHORITIES. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD PLACED BEFORE US AND CAREFULL Y GONE THROUGH VARIOUS JUDGMENTS AND DECISIONS REFERRED AND RELIED BY LD. COUNSEL FOR THE ASSESSEE. COMMON IS SUE RAISED IN INSTANT TWO APPEALS RELATING TO MR. MANOJ YADAV AND RUKMINI YADAV REVOLVES ROUND THE ISSUE OF THE ADDITION OF RS.19,00,000/- MADE BY THE LD. AO BY INVO KING THE PROVISIONS OF SECTION 50C OF THE ACT WHICH STAND S CONFIRMED BY THE LD. CIT(A). 13. WE OBSERVE THAT A JOINT PROPERTY WAS OWNED BY BOTH THE ASSESSEES WHO ARE HUSBAND AND WIFE NAMELY MANOJ YADAV AND RUKMINI YADAV. THE PROPERTY WAS AGREED TO BE SOLD DURING FINANCIAL YEAR 2006-07(A.Y. 2007-08) ON 24.03. 2007 AT CONSIDERATION OF RS.85,00,000/-. BOTH THE ASSESSEE S SHRI MANOJ YADAV & RUKMINI YADAV 7 DISCLOSED THEIR SHARE OF SALE CONSIDERATION OF RS.42,50,000/- IN THEIR RESPECTIVE INCOME TAX RETU RN. IT IS NOT DISPUTED THAT THE ALLEGED CONSIDERATION WAS RECEIVE D DURING THE F.Y. 2006-07 AND POSSESSION OF THE IMPUGN ED PROPERTY WAS GIVEN TO THE BUYER IMMEDIATELY ON RECEIV ING THE SALE CONSIDERATION ON 24.03.2007. THE ISSUE ARISED WHEN THE LD. AO WAS ABLE TO LAY HIS HAND ON, THE COPY OF SALE DEED WHICH WAS REGISTERED BY THE REGISTRAR ON 04.08.2007. THE ASSESSEE PLEADED THAT PROPERTY HAS BEEN SOLD AND ALL THE CONDITIONS FULFILLING THE PROVISIONS OF SECTION 2(47) FOR A VALID TRANSFER WERE DULY COMPLIED AS PER WHICH THE DATE OF TRANSFER WAS 24.03.2007 AND THEREFORE THE VALUE FOR THE PURPOSE OF CALCULATION STAMP DUTY S HOULD BE TAKEN AS ON 24.03.2007, WHEREAS THE AO TOOK THE VALU E AS PER THE SALE DEED REGISTERED ON 04.08.2007 WHICH W AS ALMOST 4 MONTHS AFTER THE ALLEGED DATE OF TRANSFER BY TH E ASSESSEE. 14. WE FURTHER FIND THAT AS PER THE STAMP DUTY GUIDELI NES FOR THE FINANCIAL YEAR 2006-07 THE VALUE OF THE ALLEGED PROPERTY COMES TO RS. 80,26,948/-. THE SALE CONSIDER ATION SHOWN BY THE ASSESSEE IS AT RS.85,00,000/-. HOWEVER, VALUATION AS PER THE STAMP DUTY GUIDELINE FOR THE YEAR 2007-08 IS COMPUTED AT RS.1,23,42,360/-. THE CASE OF THE SHRI MANOJ YADAV & RUKMINI YADAV 8 ASSESSEE IS THAT THE VALUATION YEAR AS PER THE STAMP DUTY GUIDELINE FOR YEAR 2006-07 SHOULD HAVE BEEN ADOPTED B Y THE LD. AO AND BOTH THE LOWER AUTHORITIES HAVE ERRED I N ADOPTING THE VALUATION OF STAMP DUTY GUIDELINES FOR THE ALLEGED PROPERTY FOR THE FINANCIAL YEAR 2007-08. 15. WE FIND THAT AN AMENDMENT HAS BEEN BROUGHT IN SECTION 50C OF THE ACT INSERTED BY THE FINANCE ACT 2016 W.E.F 01.04.2017 BY VIRTUE OF WHICH THE PROVISO HAS BEEN INSERTED WHICH PROVIDES THAT WHERE THE DATE OF AGREE MENT FIXING THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSETS ARE N OT THE SAME, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGREEMENT MAY B E TAKEN FOR THE PURPOSE OF COMPUTING THE FULL VALUE OF CONSIDERATION FOR SUCH TRANSFER. THE ABOVE PROVISO EV EN THOUGH HAS BEEN INSERTED W.E.F. 01.04.2017 BUT IN VAR IOUS DECISIONS IT HAS BEEN CONSISTENTLY HELD THAT THE ABOVE PROVISO IS CLARIFICATORY IN NATURE AND SHOULD BE APPLIED HARMONIOUSLY ON SUCH CASES, WHERE THERE IS A GAP BETWE EN THE AGREEMENT TO SALE AND THE FINAL DATE OF REGISTRATION OF SALE DEED. 16. WE FIND THAT COORDINATE BENCH IN THE CASE OF DCIT VS. INDORIE FOOT CARE PVT. LTD. (SUPRA) DEALT WITH THE V ERY SAME SHRI MANOJ YADAV & RUKMINI YADAV 9 ISSUE AND WHILE ADJUDICATING THE ISSUE REFERRED TO THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF SANJEEV LAL AND SMT. SHANTILAL MOTILAL VS. CIT 365 ITR 389 AND THE DECISION OF COORDINATE BENCH, I.T.A.T., DELHI IN THE CASE OF ITO V. MODIPON LTD. 168 ITJ 480 AND ACCORDINGLY DECI DED IN FAVOUR OF ASSESSEE HOLDING THAT THE PROVISO INSERTE D FOR SECTION 50C OF THE ACT BY FINANCE ACT 2016 W.E.F. 01.04.2017 IS CLARIFICATORY IN NATURE OBSERVING AS FOLL OWS: SO FAR AS THE NEXT QUESTION POSED TO US I.E. AMEND MENT INSERTED BY WAY OF FINANCE ACT, 2016 W.E.F. 1.4.201 7 TO THE SAID PROVISION FOR FULL VALUATION OF CONSIDERATION IN CERTAIN CASES U/S 50C OF THE ACT IS CONCERNED, THE MANDATE OF THE LEGISLATURE IS THAT WHERE THE DATE OF AGREEMENT FIXING THE AMOU NT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED O R ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGR EEMENT MAY BE TAKEN FOR THE PURPOSE OF COMPUTING THE FULL VALU E OF CONSIDERATION FOR SUCH TRANSFER. THIS AMENDMENT IS APPLICABLE W.E.F. 1.4.2017 AS PER THE AMENDMENT ITSELF. BE THA T IT MAY, IN OUR CONSIDERED OPINION, THIS AMENDMENT IS NOT A SUB STANTIAL AMENDMENT BUT THE SAME IS CLARIFICATORY, THEREFORE, IF THIS AMENDMENT IS TAKEN INTO CONSIDERATION IN THE LIGHT OF THE DICTA LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SANJEEV LAL (S UPRA) THEN IT HAS TO BE HELD THAT THE DATE OF AGREEMENT OF SALE I S RELEVANT FOR THE PURPOSE OF COMPUTING FULL VALUE OF CONSIDERATIO N OF SUCH TRANSFER AND HENCE THE CONCLUSION DRAWN BY THE COMM ISSIONER OF INCOME TAX (APPEALS) IS QUITE REASONABLE AND MEA NINGFUL. WE MAY POINT OUT THAT THE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE ARE IDENTICAL AND SIMILAR TO THE FACTS OF THE CASE OF SANJEEV LAL (SUPRA). THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) WAS QUITE CORRECT IN ADOPTING THE SAME AN D FOLLOWING SHRI MANOJ YADAV & RUKMINI YADAV 10 THE ORDER OF ITAT, DELHI BENCH IN THE CASE OF ITO V S. MODIPAN LIMITED; 168 TTJ 480 (ITAT DELHI). FINALLY, WE ARE INCLINED TO ACCEPT THE CONTENTION OF THE RESPONDENT-ASSESSEE WH ICH WAS ACCEPTED BY THE COMMISSIONER OF INCOME TAX (APPEALS ) THAT THE CIRCLE RATE PREVAILING ON THE DATE OF REGISTRATION OF AGREEMENT TO SELL AND NOT CIRCLE RATE AS ON THE DATE OF SALE DEE D, SHOULD BE ADOPTED AS SALE CONSIDERATION FOR COMPUTATION OF IN COME OF THE ASSESSEE FROM LTGS U/S 50C OF THE ACT. ACCORDINGLY , WE UPHOLD THE CONCLUSION DRAWN BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND CONSEQUENTLY THE SOLE GROUND OF T HE APPELLANT IS DE VOID OF MERIT, IS DISMISSED. 17. FROM PERUSAL OF THE ABOVE JUDGMENTS AND EXAMINING THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSEE HAS BEEN SUCCESSFUL TO DEMONSTRATE THAT THERE WAS A VALID TRANSFER OF THE IMPUGNED CAPITAL ASSET AS PER THE PROVIS ION OF SECTION 2(47) OF THE ACT ON 24.03.2007 AS THE ASS ESSEE RECEIVED TOTAL SALE CONSIDERATION OF RS.85,00,000/- THROUGH ACCOUNT PAYEE CHEQUE AND POSSESSION WAS ALSO GIVEN TO THE BUYER AND THE ASSESSEE OFFERED THE CAPIT AL GAIN FROM THE IMPUGNED TRANSFER IN ITS INCOME TAX RETURN FOR F.Y. 2007-08. WE, THEREFORE, ARE OF THE CONSIDERED V IEW THAT BOTH THE LOWER AUTHORITIES ERRED IN APPLYING THE VALUAT ION OF THE IMPUGNED PROPERTY AS PER THE STAMP DUTY GUIDELINE FOR A.Y. 2007-08, MERELY FOR THE REASON THAT SALE DEED WAS REGISTERED ON 04.08.2007. NO ADDITION WAS THEREFORE, CALLED FOR BY APPLYING THE VALUE OF PROPERTY AT RS.1,23,00,0 00/-. SHRI MANOJ YADAV & RUKMINI YADAV 11 WE ACCORDINGLY DELETE THE ADDITION OF RS.19,00,000/- EACH MADE IN THE HANDS OF BOTH THE ASSESSEES AND ALLOW THE GROUND NO.3 RAISED IN BOTH THE APPEALS. 18. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AR E PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 09.10.2 018. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 09/ 10/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE