M.Nataraj, Coimbatore V. DCIT, Coimbatore

MA 115/CHNY/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0781 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 04-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER .. M.P. NO. 115/MDS/2013 (IN I.T.A. NO. 2168/MDS./2012) ASSESSMENT YEAR : 2006-07 SHRI M.NATARAJ, 95,PONNURANGAM ROAD (WEST), R.S.PURAM, COIMBATORE 641 002. PAN : AAIPN 6426 F (PETITIONER) V. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(3), COIMBATORE. (RESPONDENT) PETITIONER BY : NONE RESPONDENT BY : SHRI GURU BASH YAM, JCIT DATE OF HEARING : 23.08.2013 DATE OF PRONOUNCEMENT: 23.08.2013 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THROUGH THIS MISCELLANEOUS PETITION, ASSESSEE SEEK S A RECTIFICATION OF THE ORDER DATED 2.5.2013 OF THIS TRIBUNAL. AS P ER THE ASSESSEE, DIRECTION GIVEN BY THE TRIBUNAL FOR APPLYING CLAUSE (B) OF SECTION 54EC(1) OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') HAS RE SULTED IN AN ADDITIONAL BURDEN AND LIABILITY ON THE ASSESSEE. 2. NOBODY APPEARED ON BEHALF OF ASSESSEE. THERE WA S A REQUEST FOR ADJOURNMENT. HOWEVER, ON THE FIRST DATE OF HEARING , WHICH WAS 26.7.2013, NOBODY APPEARED DESPITE ISSUE OF NOTICE. AGAIN NOTICE WAS 2 M.P. NO. 115/MDS/13 ISSUED REGISTERED POST ON 04/07/2013 FOR HEARING ON 23.8.2013. SINCE SUFFICIENT ADVANCE NOTICE WAS GIVEN TO THE ASSESSEE , THE REASON GIVEN AS HIS AUTHORIZED REPRESENTATIVE WAS OUT OF STATION , CANNOT BE ACCEPTED. HENCE, THE PETITION FOR ADJOURNMENT IS REJECTED AND WE ARE DISPOSING OF THIS MISCELLANEOUS PETITION ON MERITS. 3. IN THE WRITTEN SUBMISSION, IT IS STATED BY THE A SSESSEE THAT THE QUANTUM OF RELIEF ALLOWED UNDER SECTION 54EC WAS NE VER A SUBJECT MATTER OF APPEAL BEFORE THE CIT(APPEALS) OR THE TRI BUNAL. ASSESSING OFFICER HAD CONSIDERED ALLOWANCE OF EXEMPTION UNDER CLAUSE (A) OF SECTION 54EC(1) OF THE ACT. SINCE THIS ASPECT WAS NEVER IN APPEAL, THE TRIBUNAL HAD NO POWERS, ACCORDING TO HIM, TO DIRECT THE ASSESSING OFFICER TO APPLY CLAUSE (B) OF SECTION 54EC(1) OF THE ACT. THEREFORE, ACCORDING TO HIM, DIRECTIONS WERE REQUIRED, TO ENSURE THAT TH E ASSESSING OFFICER RETAINED THE RELIEF ALREADY GIVEN UNDER SECTION 54E C OF THE ACT. 4. PER CONTRA, SHRI GURU BASHYAM, APPEARING FOR THE REVENUE, SUBMITTED THAT THERE WAS NO ERROR IN THE ORDER OF T HE TRIBUNAL WARRANTING INTERFERENCE. IN ANY CASE, ACCORDING TO HIM, THE G RIEVANCE RAISED IN THE MISCELLANEOUS PETITION, IF ALLOWED, WOULD RESULT IN A REVIEW OF THE ORDER OF THE TRIBUNAL FOR WHICH IT WAS HAVING NO POWER. 5. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THE ISSUE ADJUDICATED BY THIS TRIBUNAL WAS WITH REG ARD TO AN ADDITION 3 M.P. NO. 115/MDS/13 MADE FOR LONG TERM CAPITAL GAIN. CONTENTION OF THE ASSESSEE WAS THAT THE CONSIDERATION RECEIVED ON SALE OF ASSET STOOD I NVESTED IN A SPECIFIC ASSET MENTIONED UNDER SECTION 54EC(1)(A) OF THE ACT . ASSESSING OFFICER HAD REFERRED THE VALUATION TO THE DISTRICT VALUATIO N OFFICER, SINCE ASSESSEE HAD OBJECTED TO ADOPT THE VALUE FIXED BY S TAMP VALUATION AUTHORITY. THE REASON WHY THIS TRIBUNAL HELD THAT CLAUSE (B) OF SECTION 54EC(1) ALONE COULD BE APPLIED, IS CLEAR FROM ITS F INDINGS GIVEN AT PARAS 12 AND 13 OF ITS ORDER WHICH ARE REPRODUCED HEREUND ER:- 12. NO DOUBT, IT HAS BEEN CLEARLY MENTIONED BY THE CO-ORDINATE BENCH THAT DEEMING PROVISION OF SEC.50C WOULD NOT BE APPLIC ABLE FOR CONSTRUING THE MEANING OF THE TERM FULL VALUE OF CONSIDERATIO N VIS--VIS APPLICATION OF SEC.54F OF THE ACT. CRUX OF THE DECISION IS THAT ONCE THE ENTIRE AMOUNT OF CONSIDERATION STOOD DEPLOYED, OR INVESTED IN ACCORDANCE WITH SEC.54F, THEN PROVISION OF SEC.50C COULD NOT BE INVOKE D. THE SAME VIEW WAS ALSO TAKEN BY THE JAIPUR BENCH IN THE CASE OF SH RI PRAKASH KARNAWAT VS. ITO(SUPRA). HOWEVER, ADMITTEDLY IN THE GIVEN C ASE, ENTIRE CAPITAL GAINS WERE NOT INVESTED BY THE ASSESSEE IN THE BOND S. THE TOTAL SALE CONSIDERATION RECEIVED WAS ` 79 LAKHS AND THE CAPITAL GAINS ON SUCH TRANSACTION AFTER DEDUCTING INDEXED COST OF ACQUISIT ION, AS PER THE ASSESSEES OWN WORKING OUT TO ` 75,15,796/-. ASSESSEE HAD INVESTED ONLY ` 75 LAKHS IN THE SIDBI CAPITAL GAIN BONDS. HAD THE ASS ESSEE INVESTED WHOLE AMOUNT OF ` 75,15,796/- WHICH WAS THE CAPITAL GAINS ARISING OUT OF THE TRANSACTION, THEN MAY BE, THE FULL VALUE OF CO NSIDERATION COULD BE TAKEN AS THE AMOUNT SPECIFIED IN THE CONVEYANCE DEE D, FOR THE PURPOSE OF GIVING EFFECT TO THE EXEMPTION UNDER SECTION 54EC OF THE ACT. HOWEVER, ASSESSEE HERE HAS ENDEAVORED TO MAKE AN ARTIFICIAL SPLIT OF A SINGLE TRANSACTION. THE SALE OF 7.98 ACRES OF LAND WAS EFFEC TED THROUGH A SINGLE DOCUMENT AND THE SALE CONSIDERATION MENTIONED SHOWN WAS ` 79 LAKHS. IN OUR OPINION AN ARTIFICIAL SPLIT OF A SINGLE TRANSAC TION FOR CLAIMING A BETTER BENEFIT THAN WHAT IS LAWFULLY AVAILABLE CANNOT BE A CCEPTED OR ENCOURAGED. THE SALE EXECUTED THROUGH A SINGLE CONVEYANCE DEED C AN BE CONSIDERED ONLY AS ONE SINGLE TRANSACTION, NOT AMENABLE TO ANY SUCH SPLIT. IT WAS NOT A CASE OF TWO SEPARATE TRANSACTIONS. ASSESSEE HAD SI MPLY TAKEN OUT 0.02 ACRES FROM 7.98 ACRES OF LAND, AND CONSIDERED IT AS A N INDEPENDENT SALE. 4 M.P. NO. 115/MDS/13 ONCE, THE ENTIRE CAPITAL GAINS WAS NOT INVESTED IN A LONG TERM SPECIFIED ASSET , WHAT HAS TO BE APPLIED IS CLAUSE (B) OF SEC .54EC (1) OF THE ACT. THE SAID SEC.54EC(1) IS REPRODUCED HEREUNDER:- 54EC( 1)WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER O F A LONG-TERM CAPITAL ASSET (THE CAPITAL ASSET SO TRANSFERRED BEING HEREA FTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET) AND THE ASSESSEE HAS, AT ANY TI ME WITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER, INVESTED THE WHOLE OR ANY PART OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, THE CAPITAL GAIN SHA LL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY , ( A ) THE COST OF THE LONG-TERM SPECIFIED ASSET IS NO T LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET, TH E WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45; ( B ) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET, SO MUCH O F THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF ACQUISITION OF THE LONG-TERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPITAL GAIN, SHALL NOT BE CHARGED UNDER SECTION 45 : PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1ST DAY OF APRIL, 2007 IN THE LONG-TERM SPECIFIED ASSET BY AN ASSESSEE DURING AN Y FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES.] 13. WHERE A TRANSACTION CALLS FOR A COMPUTATION SP ECIFIED UNDER CLAUSE(B) ABOVE, THEN IT IS NECESSARY TO FIND OUT T HE QUANTUM OF CAPITAL GAINS THAT COULD BE CLAIMED AS EXEMPT. FOR WORKING OUT SUCH CAPITAL GAINS, SECTION 50C OF THE ACT, WHICH IS MANDATORY IN NATURE CANNOT BE IGNORED. SAID SEC.50C REQUIRES SUBSTITUTION OF THE CONSIDERATI ON MENTIONED IN THE DEED WITH THE VALUE FIXED BY STAMP VALUATION AUTHORI TY FOR THE PURPOSE OF STAMP DUTY. IN THE GIVEN CASE, ASSESSEE HAD DIS PUTED THE VALUATION AND THE MATTER WAS REFERRED BY ASSESSING OFFICER TO DVO AS PROVIDED UNDER SECTION 50C(2) OF THE ACT. ONCE THE DVO HAD GIVEN THE REPORT, ASSESSING OFFICER WAS BOUND TO APPLY SUB-CLAUSE (3) OF SEC.50C F OR WORKING OUT THE CAPITAL GAINS. THE SAID SECTION STIPULATES THAT FU LL VALUE OF CONSIDERATION SHOULD BE TAKEN AS THE VALUE ADOPTED BY STAMP VALUA TION AUTHORITY OR THE VALUE FIXED BY THE DISTRICT VALUATION OFFICER (DVO) WHICHEVER WAS LOWER. WHEN THE VALUE FIXED BY THE DVO EXCEEDED THE VALUE FI XED BY THE STAMP VALUATION AUTHORITY, THEN VALUE FIXED BY THE STAMP V ALUATION AUTHORITY 5 M.P. NO. 115/MDS/13 ALONE HAD TO BE CONSIDERED. HERE, THE VALUE FIXED B Y THE STAMP VALUATION AUTHORITY WAS ` 3,61,84,512/- WHEREAS THE VALUE FIXED BY DVO WAS ` 1,95,33,000/- . ASSESSING OFFICER, IN OUR OPINION, THEREFO RE, HAD PROCEEDED IN ACCORDANCE WITH LAW, IN CONSIDERING TH E FAIR MARKET VALUE AT ` 1,95,33,000/- . NEVERTHELESS,, FOR WORKING OUT THE EXEMPTI ON UNDER SECTION 54EC AVAILABLE TO THE ASSESSEE, ASSESSING OF FICER WAS REQUIRED TO APPLY THE PROPORTION MENTIONED IN SUB CLAUSE (B ) OF SEC.54EC(1) OF THE ACT, WHICH HAS NOT BEEN DONE. THEREFORE, WE SET ASI DE THE ORDER OF THE AUTHORITIES BELOW AND REMIT THE ISSUE OF COMPUTATIO N OF LONG TERM CAPITAL GAINS TACK TO THE FILE OF THE ASSESSING OFFICER, FO R COMPUTING SUCH CAPITAL GAINS IN ACCORDANCE WITH SEC.54EC (1) (B) OF THE ACT. ORDERED ACCORDINGLY. 6. ASSESSEE HAD ENDEAVOURED TO MAKE AN ARTIFICIAL S PLIT OF A SINGLE TRANSACTION AND THEREBY TO TAKE ADVANTAGE OF CLAUSE (A) OF SECTION 54EC(1) OF THE ACT. WHEN THE LAW HAS LAID OUT A PA RTICULAR COURSE, IT HAS TO BE FOLLOWED IN LETTER AND SPIRIT. LEARNED D.R. HAD DURING THE COURSE OF HEARING OF THE APPEAL TAKEN AN ARGUMENT THAT ASSESS EES CASE FELL UNDER CLAUSE (B) OF SECTION 54EC(1) AND NOT CLAUSE (A). THIS HAS BEEN SPECIFICALLY MENTIONED BY THE TRIBUNAL AT PARA 9 OF ITS ORDER. 7. WHEN AN APPEAL IS PREFERRED BEFORE THE TRIBUNAL BY ANY OF THE PARTIES, THE WHOLE APPEAL IS BEFORE THE TRIBUNAL. THE TRIBUNAL IS SUPPOSED TO PASS APPROPRIATE ORDER AS IT MAY DEEM F IT IN THE APPEAL PREFERRED BY ANY OF THE PARTIES. IT IS IMMATERIAL WHETHER SUCH ORDER WILL BENEFIT ONE OR THE OTHER OF THE PARTIES IN THE PROC ESS IT MIGHT BE IN FAVOUR OF A PARTY, WHO HAD NOT PREFERRED THE APPEAL BUT IS A RESPONDENT THEREIN, PARTICULARLY, WHEN THE PRINCIPLE OF LAW IS LAID DOW N AND ON SUCH LEGAL PRINCIPLE THE APPELLANT MAY NOT ENTITLED TO ANY REL IEF. THERE IS NOTHING TO 6 M.P. NO. 115/MDS/13 PREVENT THE TRIBUNAL FROM PASSING APPROPRIATE ORDER IN SUCH AN APPEAL PREFERRED BY ONE OF THE PARTIES EVEN THOUGH IT MIGH T AMOUNT TO GRANTING OF RELIEF TO A PARTY, WHO DID NOT PREFER ANY APPEAL . IN CASE IT IS FOUND THAT SUCH ORDER CANNOT BE PASSED SINCE NO APPEAL HAS BEE N PREFERRED BY THE OTHER PARTY, IN THAT EVENT, THE TRIBUNAL HAS THE PO WER TO REMAND THE MATTER FOR A DECISION BY THE TRIBUNAL IN ACCORDANCE WITH THE LAW LAID DOWN. THE TRIBUNAL DISCHARGES JUDICIAL FUNCTION. IT DISPENSES JUSTICE. THE PRINCIPLE ON WHICH JUSTICE IS DISPENSED IS FOUN DED ON FAIR PLAY AND DOING JUSTICE IN THE CASE. THEREFORE, WHILE THE TR IBUNAL LAYS DOWN A PARTICULAR PROPOSITION OF LAW, IT CANNOT CLOSE ITS EYES AND WITHDRAW ITS SELVES WITHOUT APPLYING THE PRINCIPLE OR THE RATION LAID DOWN IN THE FACTS OF THE CASE. THE TRIBUNAL WHENEVER SITTING IN APPE AL HAS TO EXAMINE THE CASE BEFORE IT. IT CANNOT AVOID ITS RESPONSIBILITY WHEN DECIDING THE APPEAL IN A MANNER, WHICH WILL RENDER THE ENTIRE OR DER PASSED BY THE TRIBUNAL CONTRADICTORY. IT CANNOT LEAVE THE MATTER IN A FLUID STATE DECIDING THE PRINCIPLE IN FAVOUR ONE OF THE PARTIES AND PASS ING AN ORDER IN FAVOUR OF THE OTHER AGAINST WHOM THE PRINCIPLE HAS BEEN LA ID DOWN. THE TRIBUNAL IS NOT SUPPOSED TO PASS AN ANOMALOUS ORDER . NEITHER CAN IT CREATE A CONFUSING STATE AND PERMIT CONFUSION TO CO NTINUE, NOR CAN IT PASS AN INCONGRUOUS ORDER. IT HAS TO DECIDE THE CA SE IRRESPECTIVE OF THE FACT AS TO WHETHER IT WOULD AMOUNT TO GRANTING RELI EF TO THE OTHER PARTY WHO DID NOT PREFER THE APPEAL. 7 M.P. NO. 115/MDS/13 8. THE ABOVE POSITION DIRECTLY EVOLVE OUT OF THE DE CISIONS RENDERED BY HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CCAP LTD . V. CIT (270 ITR 248), HONBLE ANDHRA PRADESH HIGH COURT IN CONTROLL ER OF ESTATE DUTY V. SMT. K. NARASAMMA (125 ITR 196) AND THAT OF HON'BLE APEX COURT IN THE CASE OF CIT V. ASSAM TRAVELS SHIPPING SERVICE (199 ITR 1). WE ARE, THEREFORE, OF THE VIEW THAT THE ASSESSEE HERE IS SE EKING REVIEW OF THE ORDER OF THE TRIBUNAL AND THIS TRIBUNAL IS HAVING N O SUCH POWER TO MAKE A REVIEW. THERE WAS NO MISTAKE IN THE ORDER OF THE TRIBUNAL MUCH LESS ANY MISTAKE APPARENT ON RECORD. WE THUS DO NOT FIN D ANY MERIT IN THIS MISCELLANEOUS PETITION MOVED BY ASSESSEE. 9. IN THE RESULT, MISCELLANEOUS PETITION FILED BY T HE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN THE COURT ON FRIDAY, THE 23 RD AUGUST, 2013, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 23 RD AUGUST, 2013. KRI. COPY TO: PETITIONER/RESPONDENT/CIT(A)/CIT/D.R./GUA RD FILE