SANJEEV KUMAR MITTAL 3-J, BLOCK AREA, SHRI GANGA NAGAR-335001,RAJASTHAN V. HARISH CHANDER MITTAL ACIT CIRCLE SRIGANGANAGAR CURRENT JURISDICTIONAL AO DCIT CC-II LUDHIANA, PUNJAB

ITA 604/CHANDI/2024

AI Insights

The case involves Sanjeev Kumar Mittal, the appellant, who contested the assessment of Long Term Capital Gain (LTCG) on the sale of a property under Section 50C of the Income Tax Act, 1961. The property, sold on 20.09.2016, was initially assessed by the AO as a commercial property with a deemed consideration of Rs.1,11,18,800, leading to a significant LTCG. The appellant argued that the property was residential and provided evidence including a valuation report and a provisional allotment letter to support his claim. The CIT(A) upheld the AO's decision, prompting the appeal to the Tribunal. The Tribunal found merit in the appellant's arguments, particularly the classification of the property as residential, and directed a reassessment of the LTCG based on the residential property rate.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471756 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR; ADLL.
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 143(3); 50C; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH “B” CHANDIGARH BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER ITA No. 604/Chandi/2024 Assessment Year 2017-18 Sanjeev Kumar Mittal 3-J, Block Area, Shri Ganga Nagar, Rajasthan - 335 001 Vs. Harish Chander Mittal, ACIT Circle Sri Ganganagar Current Jurisdictional AO DCIT CC-II, Ludhiana, Punjab TAN/ PAN : ABBPM 9387 N (Appellant) (Respondent) Applicant by: Shri Sudhir Sehgal, Adv. Respondent by: Dr. Ranjit Kaur, Adll. CIT, Sr. D.R. Date of hearing: 02 01 2025 Date of pronouncement: 20 01 2025 O R D E R PER MAHAVIR SINGH – VICE PRESIDENT : This appeal by assessee is arising out of order of learned Commissioner of Income Tax (Appeals)-5, Ludhiana (hereinafter referred as ‘the CIT(A)’, in Appeal No.10503/Bikaner/IT/CIT(A)-5/Ldh/2019-20 vide order dated 19.03.2024. The assessment was framed by the Assistant Commissioner of Income Tax, Circle Sri Ganganagar under sections 143(3) of the Income Tax Act, 1961 (hereinafter as ‘the Act’) vide order dated 27.12.2019 for Asst. Year 2017-18. 2. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the AO in adopting the deemed consideration under section 50C of the Act of the immovable property sold on 20.09.2016 at Rs.1,11,18,800/- and accordingly, assessing the Long Term Capital Gain (LTCG). ITA No. 604/Chandi/2024 Sanjeev Kumar Mittal vs. Harish Chander Mittal ACIT A.Y. 2017-18 2 3. Brief facts are that the assessee filed his return of income for relevant A.Y. 2017-18 on 30.10.2017. During the course of assessment proceedings, the AO on perusal of details filed along with ITR, noticed that the assessee has declared Short Term Capital Gain of Rs.25000/- and accordingly, assessee was required to furnish details regarding this capital gain of Rs.25000/-. In reply, the assessee stated that he has sold a property i.e. No.SC-021-C admeasuring 500 sq. yards situated at 200 feet wide road in Narayan Vihar ‘O’ Phase 02 situated at Asarpura/Ganpatpura/Bhankrota, Ajmer Road, Jaipur to Shri Sanjay Chamria on 20.09.2016. The AO noted that the assessee has sold this plot to Shri Sanjay Chamaria for a sum of Rs.5,25,000/- on 20.09.2016. The assessee purchased this property through patta issued by M/s. Shree Salasar Overseas Pvt. Ltd. on 13.07.2012 for a sum of Rs.5,00,000/-. The Assessing Officer required the assessee to explain what is circle rate of this property on the date of sale i.e. 20.09.2016. As the assessee could not submit the circle rate, the Assessing Officer received information from Sub-Registrar, Sanganer-II, Jaipur through e-mail and as per information received, the DLC value of the land situated at Narayan Vihar is as under : Category Rate of land at exterior (Rs.) Rate of land at interior (Rs.) Unit R(Residential) 6800 5100 Sq. meter C (Commercial) 26600 20000 Sq. meter 4. The Assessing Officer after applying the circle rates estimated the deemed consideration in provision of Section 50C of the Act at Rs.1,11,18,800/- and thereby computed the Long Term Capital Gain at Rs.1,04,58,800/- by observing as under: “In light of the above facts, it is clear that assessee sold a commercial property i.e. Shop No. SC-021-C admeasuring 500 sq. Yards situated at 200 feet wide road in Narayan Vihar 'O' Phase 02 situated at Asarpura/Ganpatpura/ Bhankrota, Ajmer Road, Jaipur, to Sh. Sanjay Chamria on 20.09.2016 DLC value of commercial property situated at exterior location at Narayan Vihar is Rs. 26600/- per sq. meter. One ITA No. 604/Chandi/2024 Sanjeev Kumar Mittal vs. Harish Chander Mittal ACIT A.Y. 2017-18 3 square yard is equilant to 0.836 square meter, accordingly, the area of the shop in square meters comes to 418 sq. mtr. (500 x 0.836). Hence, the DLC value of the above shop sold as on 20.09.2016 comes to Rs. 1,11,18,800/- (418 sq. mtr. x Rs. 26600 per sq. mtr.)” 5. Aggrieved, assessee preferred appeal before the CIT(A). The CIT(A) confirmed the action of the AO. Aggrieved, assessee is in appeal before the Tribunal. 6. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the first contention of the assessee is that for ascertaining the fair market value for the purpose of computation of deemed capital gain in term of Section 50C of the Act. The matter should have been restored to the DVO for ascertaining the same. The main contention of the assessee is that factually this property sold by assessee was a residential plot and not a commercial property. Learned Counsel for the assessee drew our attention to the relevant provisional allotment letter which is reproduced in the order of CIT(A) and that was read out by learned Counsel for the assessee. He stated that there is a plot actually and this needs verification. Learned Counsel for the assessee stated that there is a different rate for residential and commercial plot. Consequently, learned Counsel argued that this is a leasehold property obtained by assessee on patta. He stated that patta means property on leasehold. Hence, according to learned Counsel, if the property is a leasehold property, the provision of section 50C of the Act will not apply. With these objections, learned Counsel for the assessee stated that he is ready to produce his own estimate and for this he produced valuation from one Rudra Architects & Consultants dated 01.01.2025, wherein the property was valued at Rs.7,95,500/-. The Authorized Valuer after verifying the case, the complete detailed report which reads as under: “It is submitted that Mr. Sanjeev Mittal S/o Sh. Megh Raj Mittal approached us for Valuation of the Plot No. SC-021-C(D) measuring 500 ITA No. 604/Chandi/2024 Sanjeev Kumar Mittal vs. Harish Chander Mittal ACIT A.Y. 2017-18 4 Sq. Ydsın Narayan Vihaar O- Phase 2 situated at Asarpura/ Ganpatpura/Bhankatora Ajmer Road. Jaipur (Rajasthan) for the period/ year 2016 2. Mr. Sanjeev Mittal informed that he had purchased rights in the said residential plot from M/s Shree Salasar Overseas Private Limited for an amount of Rs 5,00,000/- (Rs Five Lakh only) on 13.07.2012 vide Provisional Allotment Letter dated 13.07.2012 and payment was made on 02 10 2012 Thereafter Mr. Sanjeev Mittal sold the rights of the Plot on 20.09.2016 for an amount of Rs 5.25.000/- (Rs. Five Lakh Twenty Five Thousands) to ShSanjay Chamaria S/o Sh. BR Chamaria, as the Project Narayan Vihaar O- Phase 2 was not approved by JDA (Jaipur Development Authority). An information was received through RTI on 13.04.2023 in which it is clearly mentioned that Narayan Vihaar O-Phase 2 is unapproved till date, along with photographs of the Plot which shows that the project has not been developed at all. Further, on verification of the plot and by way of local enquiries and on the basis of my experience it is certified that the plot is residential Plot and the valuation of the Plot No SC- 021-C(D) measuring 500 Sq. Ydsin Narayan Vihaar O- Phase 2 situated at Asarpura/ Ganpatpura/Bhankatora Ajmer Road Jaipur (Rajasthan), the area of which is still unproved is as under The price for the residential Plot was Rs. 1591 per Sq yd in the year 2016- 17 and It is -certified that the above rate has been given looking into the condition of the land and based on my experience and local enquires. Thus total Value of the Plot No SC-021-C(D) measuring 500 Sq. Ydsin Narayan Vihaar O- Phase 2 situated at Asarpura/ Ganpatpura/Bhankatora Ajmer Road, Jaipur (Rajasthan) was Rs. 7,95,500/- in September, 2016.” 7. In view of the learned Counsel for the assessee stated that the residential property should be valued at the valuation given by Registered Valuer at Rs.7,95,500/- for the purpose of computing Long Term Capital Gain. Even otherwise, he put reliance on the rates given by Sub-Registrar i.e. circle rate / DLC rate of residential property at 6800 sq. meter. When these facts were confronted to learned Sr. DR, she only requested that matter can only be restored back to the file of the AO for ascertaining the fair market value, which can be ascertained after referring the same to DVO. ITA No. 604/Chandi/2024 Sanjeev Kumar Mittal vs. Harish Chander Mittal ACIT A.Y. 2017-18 5 8. After hearing both sides and going through the contentions raised, we are of the view that this being a small matter pending since long. Full facts are available admittedly. It is a fact that this is a residential plot as per the provisional allotment letter, which does not clearly depict whether it is commercial or residential and no enquiry has been conducted. The Registered Valuer has verified and found that this is a residential plot and even the developer Shri Salasar Overseas Pvt. Ltd. has categorized it is a 500 sq. yard plot, whether the same is residential or commercial it has nowhere proved by Revenue. Hence, we take it residential and direct the AO to adopt the rate of residential as information received from Sub-Registrar of circle rate/DLC rate at 6800 per sq. meter. We direct the AO to recomputed the Long Term Capital Gain after taking the DLC value of the above plot rate at Rs.6800 sq meter x 418 sq. meter had comes to Rs.28,42,400/-. The AO will re-compute the Long Term Capital Gain accordingly. 9. In the result, appeal of the assessee is partly allowed. Order pronounced on this day 20 th January, 2025 Sd/- Sd/- Sd/-S Sd/- [KRINWANT SAHAY] [MAHAVIR SINGH] ACCOUNTANT MEMBER VICE PRESIDENT DATED: 20 /01/2025 Priti Yadav, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR Assistant Registrar "