MARY MARTIS, MUMBAI V. ITO WD 25(2)(2), MUMBAI

ITA 977/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2507 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 15-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.977/MUM/2013 ( %' ( / ASSESSMENT YEAR: 2009-10) MS. MARY MARTIS SHOP NO.2, ALEXIO APTS., I.C.COLONY, BORIVALI (W) MUMBAI - 400092 ' / VS. INCOME TAX OFFICER25(2)(2) PRATYAKSHA KAR BHAVAN, BANDRA (E), MUMBAI - 400051 ./ ./ PAN/GIR NO. : ABRPM4335L ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 22.04.2016 !' /DATE OF PRONOUNCEMENT:20.07.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 19.11.2012 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2009-10. 3. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS OF APPEAL:- ASSESSEE BY: SHRI R.S.BINDRA DEPARTMENT BY: SMT. POOJA SWAROOP ITA NO.977/MUM/13 A.Y.2009-10 2 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN UPHOLDING THE TAXATION OF LONG TERM CAPITA L GAINS IN THE HAND OF YOUR APPELLANT. APPELLANTS BROTHER MR. FELEX VALERIAN MARTIS (NRI) EXECUTED THE POWER OF A TTORNEY (POA) IN FAVOUR OF THE APPELLANT TO SELL HIS PROPER TY. APPELLANT BEING THE POWER OF ATTORNEY HOLDER EXECUT ED NECESSARY DOCUMENTS TOWARDS THE SALE OF THE PROPERT Y ON BEHALF OF HER BROTHER. SO THE APPELLANT WAS NEVER THE OWNER OF THE PROPERTY ON BEHALF OF HER BROTHER. SO THE APPELLANT WAS NEVER THE OWNER OF THE PROPERTY NOR H AD ANY INTEREST IN THE PROPERTY. POWER OF ATTORNEY ONLY A UTHORIZES THE POA HOLDER TO ACT UPON THE INSTRUCTIONS OF THE POA EXECUTOR IN HIS ABSENCE AND DOES NOT CONFER ANY LEG AL TITLE OR RIGHT WITH THE POA HOLDER. APPELLANT WAS NEVER THE OWNER OF THE PROPERTY. SHE HAS SIGNED THE DEED OF TRANSFER AND GOT IT REGISTERED AS THE CONSTITUTED ATTORNEY F OR HER BROTHER MR. FELIX VALERIAN MARTIN. THE SAID FACT H AS BEEN DULY MENTIONED IN THE DEED OF TRANSFER. SO IT WILL BE UNFAIR TO LEVY TAX ON YOUR APPELLANT WHEN THERE IS NO INCO ME ACCRUING TO HER AT ALL. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE INVOCATION OF SECTION 50-C O F THE INCOME TAX ACT, 1961. APPELLANT WOULD LIKE TO SUBM IT THAT THE PROPERTY WAS IN THE POSSESSION OF THE LESSEE MR . JOHN SANTOS WHO IN TURN HAD HANDED OVER THE POSSESSION T O THE THIRD PARTY, MR. CHANDRAKANT JAMNADAS AJMERA WITHOU T THE KNOWLEDGE OF THE OWNER. THE CHANDRAKANT JAMNAD AS AJMERA WITHOUT THE KNOWLEDGE OF THE OWNER. THE PRO PERTY UNDER QUESTION WAS UNDER ADVERSE POSSESSION OF THE TENANTS AND THE SAME WAS FRAUGHT WITH LITIGATIO NS. IN THIS SITUATION OWNER WAS NEITHER IN POSSESSION OF T HE PROPERTY NOR WAS IN CONTROL OF THE PROPERTY. OWNER WAS GETTING TIRED OF LONG LEGAL BATTLE WHICH CONTINUED FOR ALMOST 11 YEARS I.E.1997 TO 2008. HENCE CONSIDERING THE T IME AND COSTS INVOLVED IN LITIGATION, OWNER HAD NO OTHER OP TION THEN TO SURRENDER AND ACCEPT THE AMOUNT OFFERED TO HIM. DUE TO HIS OLD AGE AND ILL HEALTH HE WAS NOT ABLE TO TAKE THE BURDEN AND MENTAL PRESSURE TOWARDS THE COURT PROCEEDINGS. OWNERS HEALTH WAS SO BAD THAT HE DIED WITHIN TWO M ONTHS OF SETTLEMENT. SO IN THIS CASE INVOKING THE PROVIS ION OF SEC. ITA NO.977/MUM/13 A.Y.2009-10 3 50C OF THE INCOME TAX ACT, 1961 WILL CAUSE GENUINE HARDSHIP TO THE OWNER WHO HAD ALREADY SUFFERED HEAV Y LOSSES IN THE DEAL. SEC. 50 C OF THE INCOME TAX AC T WAS INTRODUCED TO CONTROL THE BLACK MONEY INVOLVED IN P ROPERTY TRANSACTIONS. THE DEAL UNDER THIS SITUATION WAS DO NE THROUGH COURT SETTLEMENT, SO THERE IS NO QUESTION O F CASH BEING INVOLVED. 3. AS PER SUB SECTION (2) OF SECTION 50C WHICH READ S AS UNDER: (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION (1), WHERE (A) THE APPELLANT CLAIMS BEFORE ANY ASSESSING OFFI CER THAT THE VALUE ADOPTED OR ASSESSED (OR ASSESSABLE) BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXC EED THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED (OR ASSESSABL E) BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFER ENCE HAS BEEN MADE BEFORE ANY OTHER AUTHORITY, COURT OF THE HIGH COURT, THE ASSESSING OFFICE TO REFER THE VALUATION OF THE PROPERTY UNDER CONSIDERATION TO THE VALUATION OFFIC ER SO AS TO ARRIVE THE FAIR MARKET VALUE OF THE PROPERTY ON THE DATE OF TRANSFER. 4. FURTHER WHILE CALCULATING THE VALUATION AS ON 01 /04/1981, THE VALUER HAS ACTUALLY DISCOUNTED THE VALUE TO 70% OF THE VALUE, SINCE THE PROPERTY WAS NOT IN CONTROL OF THE OWNER AND IT WAS A DISTRESS SALE AND SINCE THE COMPROMISE BY MUTUAL SETTLEMENT WAS ARRIVED AT ABOUT 70% OF THE S TAMP DUTY RATE FOR THE SUBJECT PROPERTY IN THE DEED OF T RANSFER IN 2008. SO IF AT ALL THE FULL VALUE OF THE PROPER TY IS TO BE CONSIDERED FOR CALCULATION OF CAPITAL GAINS THEN TH E VALUE AS ON 01.04.1981 SHOULD ALSO BE TAKEN AS RS.3,95,80 0/- I.E.@RS.1285/- P.S.F. AND NOT RS.2,52,000/- I.E. @R S.900/- P.S.F. ITA NO.977/MUM/13 A.Y.2009-10 4 2. THE APPELLANT IS AN INDIVIDUAL AND FILED HER RET URN OF INCOME ON 03.07.2009 ADMITTING TOTAL INCOME TO THE TUNE OF RS .1,81,209/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT W AS COMPLETED DETERMINING THE TOTAL INCOME TO THE TUNE OF RS.20,5 8,910/- INCLUDING THE INCOME OF LONG TERM CAPITAL GAIN TO THE TUNE O F RS.18,77,705/- U/S.50C OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT). THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISM ISSED THE APPEAL, THEREFORE THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1:- 4. ACCORDING TO ISSUE NO.1 THE ASSESSEE HAS RAISED THE QUESTION OF IRREGULARITY IN THE ORDER IN QUESTION. THE CONTENT ION OF THE ASSESSEE IS THAT THE ASSESSEE WAS NOT OWNER OF THE PROPERTY IN QUESTION THEREFORE THE INCOME ON ACCOUNT OF SALE OF THE PREMISES BELON GING TO HER BROTHER MR. FELEX VALERIAN MARTIS (NRI) IS NOT LIABLE TO BE ASSESSED ON HER PART THEREFORE THE ASSESSMENT IN QUESTION FOR THE A .Y.2009-10 IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO SET AS IDE. IT IS NOT IN DISPUTE THAT THE PRESENT ASSESSMENT ORDER IS IN CON NECTION WITH MRS. MARY MARTIS (ASSESSEE). THE INCOME OF THE ASSESSEE HAS BEEN ASSESSED ON THE BASIS OF THE SALE OF PROPERTY IN SUM OF RS.2 0,00,000/- BELONGING TO MR. FELEX VALERIAN MARTIS (NRI) HER BROTHER. TH E CAPITAL GAIN WAS ASSESSED UNDER THE PROVISION OF SECTION 50C OF THE ACT AS THE SALE VALUE WAS ADOPTED TO THE TUNE OF RS.20,00,000/- WHI CH WAS BELOW THE STAMP DUTY VALUATION OF RS.33,42,500/-. IT IS NOT IN DISPUTE THAT THE ITA NO.977/MUM/13 A.Y.2009-10 5 PROPERTY WAS UNDER THE OWNER SHIP OF MR. FELEX VALE RIAN MARTIS WHO WAS NRI AND WAS RESIDING AT AUSTRALIA. THE ASSESSE E WAS THE POWER OF ATTORNEY OF HIM WHO ON ACCOUNT OF SALE OF THE PR OPERTY RECEIVED AN AMOUNT OF RS.20,00,000/- WHICH WAS BELOW THE VALUA TION OF STAMP DUTY TO THE TUNE OF RS.33,42,250/-. ANYHOW THE ASS ESSING OFFICER COMPLETED THE ASSESSMENT ON THE PROTECTIVE BASIS. THE ASSESSEE RECEIVED THE CONSIDERATION ON ACCOUNT OF THE SALE O F THE PROPERTY BELONGING TO THE MR. FELEX VALERIAN MARTIS (NRI) HE R BROTHER. THE ASSESSING OFFICER CAN DO THE ASSESSMENT ON PROTECTI VE BASIS IN ACCORDANCE WITH LAW WHEN THE ASSESSEE WAS EVEN NO T THE OWNER OF THE PROPERTY IN QUESTION. IN THIS REGARD WE FIND SU PPORT OF LAW SETTLED IN JAGANNATH HANUMANBUX VS. ITO (1957) 31 ITR 603 ( CAL.). THEREFORE IN THE SAID CIRCUMSTANCES WE ARE NOT IN A GREEMENT WITH THE CONTENTION RAISED BY THE ASSESSEE TO THE FACT THAT SHE WAS NOT THE OWNER OF THE PROPERTY IN QUESTION, THEREFORE SHE W AS NOT LIABLE TO BE ASSESSED IN ACCORDANCE WITH LAW. ACCORDINGLY, THIS ISSUE IS DECIDE IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. ISSUE NO.2, 3 & 4:- 5. ALL THESE THREE ISSUES ARE INTERCONNECTED THEREF ORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE IS SUES THE ASSESSEE HAS CHALLENGED THE APPLICABILITY OF THE PROVISION O F SUBSECTION 2 OF THE SECTION 50C OF THE ACT. THE PROVISION OF SECTION 5 0C IS HEREBY REPRODUCED BELOW:- ITA NO.977/MUM/13 A.Y.2009-10 6 WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OR A CAPITAL ASSET, BEING L AND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREINAFTER IN THI S SECTION REFERRED TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSE OF SECTI ON 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RE CEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE S BROTHER MR. FELEX VALERIAN MARTIS (NRI) PURCHASED A PROPERTY LOCATED AT 514, 5 TH FLOOR, JOLLY BHAVAN NO.1, 10, NEW MARINE LINES, MUMBAI 4 00020 VIDE AGREEMENT FOR SALE DATED 21.01.1970. THEREAFTER, T HE SAID PROPERTY WAS RENTED ON LEAVE AND LICENSE BASIS TO W.E.COX & COMPANY RECOVERIES (ASIA) PVT. LTD. IN THE YEAR OF 1979. T HE OWNER MIGRATED TO THE AUSTRALIA WITH HIS FAMILY. THE LICENSEE CON TINUED TO OCCUPY THE SAID PROPERTY. MR. JOHN SANTOS WHO WAS AN EMPLOYE E OF THE W.E.COX & COMPANY RECOVERIES (ASIA) PVT. LTD. DISCO NTINUED THE BUSINESS AND STARTED DOING BUSINESS IN THE NAME OF JOHN & COMPANY IN 1996. THE OWNER IN THE YEAR OF 1997 FILED THE EJECTMENT SUIT NO.63/71 OF 1997, THROUGH HIS CONSTITUTED ATTORNEYS (SISTERS OF THE OWNER) MS. MARY MARTIS AND MS. AGNES MARTIS. THERE FORE THE PROPERTY REMAINED UNDER THE LITIGATION 11 YEARS. I T IS ALSO CONTENDED ITA NO.977/MUM/13 A.Y.2009-10 7 THAT THE OWNER WAS NOT HAVING GOOD HEALTH THEREFORE THE PROPERTY WAS SOLD UNDER THE COMPELLED CIRCUMSTANCES IN CONSIDERA TION OF RS.20,00,000/-. THE TRANSACTION WAS EXECUTED UNDER THE ACTIVE SUPERVISION OF JUDICIARY AUTHORITIES. THE SECTION 50C IS NOT APPLICABLE. THE CONTENTION OF THE ASSESSEE HAS DU LY BEEN SUBSCRIBED BY THE DEED OF TRANSFER DATED 22.12.2008. THE CONT ENTS OF THE SAID TRANSFER DEED SPEAKS ABOUT THE LITIGATION AND CIRCU MSTANCES UNDER WHICH THE PROPERTY WAS SOLD. THE FACTS AND CIRCUMST ANCES AS EXPLAINED BY THE ASSESSEE NOWHERE LEADS TO THIS CIR CUMSTANCES WHICH ATTRACTS THE PROVISION U/S.50C OF THE ACT. IT DOES NOT SEEMS NORMAL SALE HOWEVER TRANSFER DEED ITSELF SPEAKS ABOUT THE CONSIDERATION AS WELL AS THE STAMP VALUATION NET VALUE OF RS.33,44,2 50/-. THE ASSESSEE IS AN INDIVIDUAL AND HER CONTENTIONS WERE NOT PROPE RLY CONSIDERED BY THE AUTHORITY BELOW. IN THE ABOVE MENTIONED CIRCUM STANCES, WE ARE OF THE VIEW THAT THE VALUATION OF THE PROPERTY IS LIAB LE TO BE ASSESSED THROUGH DISTRICT VALUATION OFFICER FOR CALCULATING THE FARE MARKET VALUE UNDER CIRCUMSTANCES WHICH HAS BEEN MENTIONED IN THE TRANSFER DEED. IN THIS REGARD WE ALSO FOUND SUPPORT OF LAW SETTLED IN MRS. NANDITA KHOSLA, V/S ITO (2011) 46 SOT 90 MUMBAI TRI BUNAL. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) ON THESE ISSUE AND REMAND THE CASE TO THE ASSESSING OFFICER WITH THE D IRECTION TO REASSESS THE VALUE OF PROPERTY IN QUESTION THROUGH DISTRICT VALUATION OFFICER IN VIEW OF THE PECULIAR CIRCUMSTANCES WHICH HAS BEEN M ENTIONED ABOVE. ITA NO.977/MUM/13 A.Y.2009-10 8 ACCORDINGLY, THESE ISSUES ARE DECIDE IN FAVOUR OF T HE ASSESSEE AND AGAINST THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED :20 TH JULY, 2016 MP MP MP MP * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI