INCOME TAX OFFICER, Ajmer V. S.K. ENTERPRISES, Ajmer

ITA 918/JPR/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2721 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 01-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S NEHRA J
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Set aside
• Section: 50C; 2(14)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B , JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE : SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 918/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE ITO WARD- 2(1) AJMER CUKE VS. M/S. S.K. ENTERPRISES NEAR VAISHALI PETROL PUMP VAISHALI NAGAR, AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAQFS 2058 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI A.S. NEHRA, JCIT-DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : NONE LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28/08/2019 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 28 /08/2019 VKNS'K@ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER DATED 28-09-2017 OF LD. CIT(A), AJMER ARISING FROM PENAL TY ORDER PASSED U/S 271(1) ( C) OF THE ACT FOR THE ASSESSMENT YEAR 20 09-10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A), AJMER HAS ERRED IN:- ITA NO.918/JP/2017 ITO, WARD- 2(1), AJMER VS M/S. S.K. ENTER PRISES, AJMER 2 1. CANCELLING THE PENALTY OF RS. 71,00,000/- WITHOUT APPRECIATING THE FACT THAT THE QUANTUM ADDI TION MADE BY THE AO ADOPTING THE SALE CONSIDERATION U/S 50C O F THE I.T. ACT WAS CONFIRMED BY THE LD. CIT(A). 2. CANCELLING THE PENALTY OF RS. 71,00,000/- WITHOUT GOING INTO THE MERITS OF THE CASE THAT THE ASSESSEE HAS NOT DISCLOSED INCOME OF LTCG ON SALE OF CAPITAL ASS ET, IN ITS RETURN OF INCOME. 2.1 NONE APPEARED ON BEHALF OF THE ASSESSEE RESPOND ENT DESPITE THE NOTICE WAS ISSUED TO THE ASSESSEE REPEATEDLY FOR 14 TIMES. AN ANONYMOUS LETTER HAS BEEN FILED ON BEHALF OF THE ASSESSEE SEE KING THE ADJOURNMENT OF HEARING ON THE GROUND THAT THE AUTHORISED REPRESENT ATIVE IS BUSY IN RELIGIOUS FESTIVALS. HOWEVER, THERE IS NO AUTHORITY ON RECORD IN FAVOUR OF ANY REPRESENTATIVE OR PROFESSIONAL. SINCE THE LETTE R IS ANONYMOUS WITHOUT GIVING THE PARTICULARS OF THE PERSON OR EVEN NOT SI GNED BY THE ASSESSEE THEREFORE, WE DO NOT ENTERTAIN SUCH REQUEST OF ADJ OURNMENT. ACCORDINGLY, WE PROPOSE TO HEAR AND DISPOSE OFF THIS APPEAL OF T HE REVENUE EX-PARTE. 2.2 WE HAVE HEARD THE LD. DR AND CONSIDERED THE REL EVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT IN THE QUANTUM A PPEAL THE TRIBUNAL VIDE ITS ORDER DATED 05-01-2018 IN ITA NO. 242/JP/2016 H AS SET ASIDE THE ISSUE OF ADDITION MADE BY THE AO U/S 50C OF THE ACT IN P ARAS 2.3 AND 2.4 AS UNDER:- ITA NO.918/JP/2017 ITO, WARD- 2(1), AJMER VS M/S. S.K. ENTER PRISES, AJMER 3 2.3 WE HAVE CONSIDERED THE RIVAL CONTENTIONS, AS WELL AS RELEVANT MATERIALS ON RECORD. THE MAIN CONTEN TION OF LD. A/R OF THE ASSESSEE AGAINST THE APPLICABILIT Y OF SECTION 50C IS THAT THE ASSET IN QUESTION IS A BUSI NESS AND THEREFORE THE PROVISION OF SECTION 50(2) ARE APPLIC ABLE AND THE ACTUAL SALE CONSIDERATION HAS TO BE CONSIDERED FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. THERE IS NO DISPUTE THAT THE LAND IN QUESTION IS NOT A DEPRECIABLE ASSE T AND THEREFORE TO THE EXTENT TO SALE OF LAND THE PROVISI ON OF SECTION 50(2) ARE NOT APPLICABLE. AS REGARDS THE O BJECTIONS AGAINST TREATING THE LAND AND BUILDING AS CAPITAL A SSET WE FIND THAT AS PER THE DEFINITION PROVIDED U/S 2(14) OF THE ACT A PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION, WILL BE CONSIDERED AS CAPITAL ASSETS. SECTION 2(14) HAS AL SO PROVIDED CERTAIN ASSETS WHICH ARE EXCLUDED FROM THE DEFINITIONS OF THE CAPITAL ASSETS SUCH AS STOCK-IN- TRADE, CONSUMABLE STORES OR RAW MATERIALS HELD FOR THE PURP OSES OF BUSINESS OR PROFESSION AS WELL AS PERSONAL EFFECT S, MOVABLE PROPERTY HELD FOR PERSONAL USE BY THE ASSES SEE OR ANY MEMBER OF HIS FAMILY. THEREFORE, IT MAKES NO DIFFERENCE WHETHER A PARTICULAR PROPERTY IS HELD BY THE ASSESSEE FOR BUSINESS PURPOSE OR NOT. IF IT IS A P ROPERTY WHICH IS NOT FALLING IN THE EXCLUSIONS, THEN IT IS A CAPITAL ASSET. 2.4 AS REGARDS THE APPLICABILITY OF THE SECTION 50C WE FIND THAT WHEN THE LAND IS NOT DEPRECIABLE ASSET AND THE STAMP DUTY AUTHORITY HAS ADOPTED THE VALUE OF LAND AT RS. 4,36,51,797/-, THEN THERE IS NO EMBARGO IN APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT. THIS SECTION STIPULATES THE DEEMING PROVISIONS AS THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY WILL BE DEEM TO BE FULL VALUE CONSIDERATION OF THE CAPITAL ASSET. THEREFORE, THER E IS NO LEGAL IMPEDIMENT AGAINST APPLICATION OF SECTION 50C OF THE ACT, SO FAR AS THE VALUATION OF LAND IN QUESTIONS I S CONCERN. SINCE, THE LAND IS NOT DEPRECIABLE ASSET, THEREFORE , ALL THE BENEFITS AVAILABLE FOR COMPUTATION OF CAPITAL GAIN INCLUDING ITA NO.918/JP/2017 ITO, WARD- 2(1), AJMER VS M/S. S.K. ENTER PRISES, AJMER 4 INDEXATION COST ARE TO BE ALLOWED TO THE ASSESSEE. FURTHER, THE ASSESSEE RAISED OBJECTIONS AGAINST THE VALUE AS DETERMINE BY THE STAMP VALUATION AUTHORITY AS FULL VALUE CONSIDERATION. THEREFORE, THE AO OUGHT TO HAVE REFER RED THE VALUATION OF THE PROPERTY TO BE D.V.O. AS PER T HE PROVISIONS OF SECTION 50C(2) OF THE ACT. ACCORDINGL Y, THE ISSUE OF VALUATION OF THE PROPERTY IS SET ASIDE TO THE RECORD OF AO TO BE DETERMINED AS PER THE PROVISION OF SECT ION 50C(2) OF THE ACT. THE IMPUGNED PENALTY ORDER AS WELL AS IMPUGNED ORD ER PASSED BY THE LD. CIT(A) ARE PRIOR TO THE ORDER PASSED BY THIS TRIBU NAL IN QUANTUM PROCEEDINGS. THUS IN VIEW OF THE FACT THAT THE ISSU E WAS SET ASIDE TO THE RECORD OF THE AO FOR REFERRING THE VALUATION OF THE PROPERTY IN QUESTION TO DVO FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS IN TERMS OF SECTION 50C OF THE ACT, THE PENALTY LEVIED BY THE AO BASED ON THE ORIGINAL ORDER, WHICH WAS SUBSEQUENTLY SET ASIDE, WOULD NOT SURVIVE . ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE LD. CIT(A) DELETING THE PENALTY. THE LD. DR HAS POINTED OUT TH AT THE AO IN THE SET ASIDE PROCEEDINGS HAS PASSED THE ORDER DATED 27-11- 2018 AND REPEATED THE ADDITION AFTER CONSIDERING THE DVOS REPORT REGARDI NG FAIR MARKET VALUE OF THE PROPERTY IN QUESTION. SINCE THE DVO HAS VALU ED THE PROPERTY AT MORE THAN THE DLC RATE, THEREFORE, THE AO HAS REPEA TED THE ADDITION BY ITA NO.918/JP/2017 ITO, WARD- 2(1), AJMER VS M/S. S.K. ENTER PRISES, AJMER 5 CONSIDERING THE FULL VALUE CONSIDERATION IN TERMS O F SECTION 50C OF THE ACT. THUS, IT IS CLEAR THAT THE AO HAS PASSED THE O RDER IN PURSUANCE TO THE ORDER OF THE TRIBUNAL AFTER CONSIDERING THE REPORT OF THE DVO. THEREFORE, THE AO IS AT LIBERTY TO TAKE APPROPRIATE STEPS FOR LEVYING THE PENALTY IN CONSEQUENCE OF THE ORDER PASSED IN SET ASIDE PROCEE DINGS. THUS THE APPEAL OF THE REVENUE IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/08/2019. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28 /08/ 2019 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, WARD- 2(1), AJMER 2. IZR;FKHZ@ THE RESPONDENT- M/S. S.K. ENTERPRISES , AJMER 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.918/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR