J. Anjaneya Sharma V. Commissioner of Income Tax-V, Hyderabad

ITTA/508/2013

AI Insights

The case involves an appeal by J. Anjaneya Sharma against the Commissioner of Income Tax-V, Hyderabad, concerning the assessment year 2007-08. The core issue was whether land and building should be treated as separate assets for the purpose of computing capital gains under Section 50C of the Income Tax Act, 1961. The Tribunal had previously ruled that they should not be considered separately, and this decision was challenged in the appeal. The High Court examined the interpretation of Section 50C, particularly focusing on the integration of land and building valuations for tax purposes. The court concluded that the assets must be valued together, adhering to the valuation adopted by the Sub Registration Authority or the Departmental Valuation Officer.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 796364 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 25-10-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Keywords: Capital Gains; Stamp Duty; Valuation; Land and building; Separate assets
• Section: 48; 50C

Judgement Text

"HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.508 of 2013 Date: 25.10.2013 Between: J.Anjaneya Sharma .....Appellant AND Commissioner of Income Tax-V, Hyderabad. ...Respondent HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A.No.508 of 2013 JUDGMENT: (per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta ) This appeal is preferred against the judgment and order dated 17.06.2013 passed by the learned Tribunal in relation to the assessment year 2007-08 and sought to be admitted on the following suggested question of law: “Whether on the facts and in the circumstances of the case, the Appellate Tribunal erred in law in concluding that for purpose of Section 50C of the Act, land and building are not to be considered as separate assets and computation of capital gains cannot be bifurcated?” We have heard the learned Counsel for the appellant and have gone through the judgment and order of the learned Tribunal. The whole issue in this case is whether for the purpose of computing capital gains, the land and building can be treated as separate assets as per Section 50C of the Income Tax Act, 1961 (for short “the Act”)? The learned Tribunal held that such course is not permissible. The asset in question (land and building) has to be valued combining together and taking into consideration the valuation adopted by the Sub Registration Authority or by the report of the Departmental Valuation Officer. The Commissioner of Income Tax (Appeals) cannot adopt the valuation of the land done by one authority or method and that of the building of another one. In this context, we have to examine whether such finding is acceptable by this Court or not. We set out Section 50C (1) of the Act, which reads as follows: “Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this 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 or assessable shall, for the purposes of Section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.” In this case, the interpretation of Section 50C of the Act is required to be ascertained by the Court. If sub-section (1) is analyzed it would appear that there must be a transfer of a capital asset, which means, the land or building or both. (2) The consideration received or accrued on the transfer is less than the value adopted or assessed or assessable by an authority of the State Government on which the stamp duty is paid. (3) If the valuation adopted by the Stamp Valuation Authority is more than the consideration received, then such value has to be treated as the full value of the consideration received or accrued for the purpose of Section 48. Thus, it appears that there is scope for accepting the valuation of the land in case of the vacant land alone and the valuation of the building in case of the building only or in case of land and building both. Thus, the valuation has to be adopted in case of transfer of land and building together jointly and not separately. According to use, the learned Tribunal has correctly interpreted the aforesaid Section. However, the learned Counsel for the appellant says that if sub-sections (2) and (3) of Section 50C of the Act are read together there is scope for taking valuation of the land and building separately. We are unable to accept this submission as sub-section (2) of Section 50C has to be read without affecting the applicability of sub-section (1). Similarly, sub-section (3) has to be read subject to sub-section (2). According to us, where the applicability of sub- section (2) will militate against sub section (1), sub-section (1) has to be applied ignoring sub section (2). In this case, sub- section (1) is applicable wholly and when it is applied, there is no scope for applying sub-section (2). Therefore, we do not find any element of law involved for admission of this appeal. Accordingly, the appeal is dismissed. Miscellaneous petitions, if any pending, shall stand disposed of. No costs. ___________________ K.J. SENGUPTA, CJ _________________ SANJAY KUMAR, J 25.10.2013 Gsn "