Mr. Sumit Khurana, New Delhi v. ACIT, New Delhi

ITA 1877/DEL/2011 | 2005-2006
Pronouncement Date: 15-07-2011 | Result: Allowed

Appeal Details

RSA Number 187720114 RSA 2011
Assessee PAN AAGPK0515Q
Bench Delhi
Appeal Number ITA 1877/DEL/2011
Duration Of Justice 2 month(s) 27 day(s)
Appellant Mr. Sumit Khurana, New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 15-07-2011
Assessment Year 2005-2006
Appeal Filed On 18-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH G DELHI ] BEFORE SHRI R. P. TOLANI JM AND SHRI K. D. RANJ AN AM I. T. APPEAL NO. 1877 (DEL) OF 2011. ASSESSMENT YEAR : 2005-06. MR. SUMIT KHURANA ASSTT. COMMISSIONER OF I NCOME-TAX B 6 / 67 SAFDARJUNG ENCLAVE VS. C I R C L E : 3 (1) N E W D E L H I 110 029. N E W D E L H I. PAN/GIR NO. AAGPK 0515Q. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI ARUN KISHORE C. A.; DEPARTMENT BY : SHRI B. KISHORE SR. D. R. O R D E R. PER K. D. RANJAN AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 05-06 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)XXV NEW DELHI. 2. THE GROUND OF APPEAL RAISED BY THE ASSESSEE READ S AS FOLLOWS :- 1. THAT THE ORDER OF THE LD. CIT (APPEALS) 25 DT. 8 TH MARCH 2011 DISMISSING THE APPEAL OF THE ASSESSEE IS ILLEGAL UNJUST AND OPPOSED TO THE FACTS OF THE CASE; 2. THAT THE LD. CIT (APPEALS) HAS ERRED IN NOT ADJUDICATING GROUND NOS. 4 5 6 & 7 OF GROUNDS OF APPEAL AGITATED BEFORE HIM; 3. (I) THAT ON THE FACTS AND CIRCUMSTANCES O F THE CASE THE LD. CIT (APPEALS) HAS ERRED IN UPHOLDING THE REFERENCE FOR VALUATION UNDER SECTION 142-A OF THE I.T. ACT AND THE REPORT OF DVO ALSO MADE IN TERMS OF SEC TION 142-A OF THE I. T. ACT; 3. (II) THAT THE LD. CIT (APPEALS) DID NOT A PPRECIATE THAT THE DVO DID NOT SUBMIT REPORT ON FORM NO. O-1 (RULE 8-D OF W. T. RU LES) AS REQUIRED UNDER SECTION 55-A OF THE I. T. ACT; 2 I. T. APPEAL NO. 1877 (DEL) OF 2011. 4. (I) THAT ON THE FACTS AND CIRCUMSTANCES O F THE CASE THE LD. CIT (APPEALS) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS.2 4 98 600/- ON THE BASIS OF ERRONEOUS REPORT OF DVO; 4. (II) THAT THE DVO THE ASSESSING OFFICER AND THE CIT (APPEALS) HAVE AGAIN GROSSLY ERRED IN IGNORING THE SIMILAR SALE INSTANCE S OF SALE OF DDA FLATS IN THE SAME BLOCK / AREA AND SPECIFICALLY REFERRED UNDER G ROUND OF APPEAL NO. 4 BEFORE CIT (APPEALS)-25; 5. THAT THE ADDITION OF RS.24 98 600/- BE DELETED . 3. THE FIRST ISSUE FOR CONSIDERATION RELATES TO CON FIRMING THE ACTION OF THE ASSESSING OFFICER FOR MAKING REFERENCE TO VALUATION CELL UNDER SECTIO N 142-A OF THE ACT. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE SOLD HOUSE PR OPERTY OF DDA FLAT BLOCK : F173 DUPLEX FLAT SARITA VIHAR SFS CATEGORY ON 6/12/2007 FOR AN APPA RENT SALE CONSIDERATION OF RS.14 55 000/-. THE COST OF THE PROPERTY WAS CLAIMED AT RS.3 55 438 /- AND THE INDEX COST WAS CLAIMED AT RS.11 65 097/-. THUS THE ASSESSEE DECLARED NET CAP ITAL GAIN OF RS.2 89 903/-. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE APPARENT SALE CO NSIDERATION OF RS.14 55 000/-. ACCORDING TO HIM THE APPARENT SALE CONSIDERATION WAS LOW. HE T HEREFORE REFERRED THE MATTER TO DVO WHO ESTIMATED THE FAIR MARKET VALUE OF THE PROPERTY AT RS.39 53 600/- AS AGAINST THE DECLARED SALE CONSIDERATION OF RS.14 55 000/-. THE ASSESSING OFF ICER COMPUTED CAPITAL GAINS AND MADE ADDITION OF RS.24 98 600/-. 4. BEFORE THE LD. CIT (APPEALS) THE ASSESSEE CHALLE NGED THE REFERENCE OF VALUATION OF THE PROPERTY TO THE DVO. IT WAS SUBMITTED THAT REFEREN CE OF VALUATION OF PROPERTY TO THE DVO UNDER SECTION 142A WAS NOT CORRECT. THE AO COULD HAVE MA DE REFERENCE TO VALUATION CELL EITHER UNDER SECTION 50C OR UNDER SECTION 55A OF THE ACT. THE L D. CIT (A) AFTER CONSIDERING THE FACTS OF THE CASE OBSERVED THAT UNDER THE INCOME-TAX ACT REFEREN CE TO THE VALUATION CELL CAN BE MADE UNDER THREE DIFFERENT SECTIONS NAMELY SECTION 50C SECT ION 55A AND SECTION 142A OF THE ACT. HE FURTHER OBSERVED THAT ALL THE THREE SECTIONS TALK A BOUT REFERENCE BY THE AO TO DVO FOR THE VALUATION OF THE PROPERTY AS PER MARKET VALUE. THE AO HAD REFERRED THE VALUATION OF THE PROPERTY TO THE DVO FOR THE PURPOSE OF ESTIMATING THE FAIR M ARKET VALUE OF THE PROPERTY. HE FURTHER OBSERVED THAT MENTIONING OF A WRONG SECTION WOULD N OT TAKE AWAY THE STATUTORY POWER OF THE AO 3 I. T. APPEAL NO. 1877 (DEL) OF 2011. FOR MAKING REFERENCE TO THE VALUATION CELL. HE FUR THER NOTED THAT THE ASSESSEE HAD NOT DISPUTED THE FACT THAT THE AO DOES NOT HAVE POWER TO REFER T HE VALUATION TO THE DVO UNDER THE ACT. THE DVO HAS FOLLOWED PROPER PROCEDURE FOR VALUATION OF THE PROPERTY AFTER ALLOWING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. HE ALSO NOTED THAT EVE N MENTIONING OF WRONG SECTION WOULD NOT VITIATE THE POWER OF THE AO TO REFER THE VALUATION OF THE PROPERTY TO DVO AS AO HAD ACTED WITHIN THE STATUTORY POWERS AND THE ACTION OF THE AO EVEN OTHERWISE IS PROTECTED UNDER PROVISIONS OF SECTION 292-B OF THE ACT. HE THEREFORE DISMISSED THE CONTENTION OF THE ASSESSEE THAT REFERENCE TO THE VALUATION CELL WAS MADE UNDER WRONG SECTION. 5. BEFORE US THE LD. AR OF THE ASSESSEE REITERATED THE SIMILAR ARGUMENTS. HE SUBMITTED THAT REFERENCE TO THE VALUATION CELL CAN BE MADE UNDER S ECTION 50C OR UNDER SECTION 55A. REFERENCE UNDER SECTION 55A IS MADE TO DETERMINE THE FAIR MAR KET VALUE OF THE PROPERTY WHEREAS FOR COMPUTATION OF CAPITAL GAINS U/S 48 OF THE ACT FULL VALUE OF THE CONSIDERATION IS TO BE TAKEN. HENCE REFERENCE TO VALUATION OFFICER UNDER SECTION 142A IS NOT JUSTIFIED. ON THE OTHER HAND THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (APPE ALS). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE MATERIAL AVAILABLE ON RECORD. UNDER SECTION 142-A OF THE ACT REFERENCE TO THE VALUATION OFFICER CAN BE MADE FOR THE PURPOSE OF MAKING AN ASSESSMENT OR RE-ASSESSMENT WHERE AN ESTI MATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR SECTION 69B OR THE VAL UE OF ANY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE REFERRED TO IN SECTION 69A OR 69B OF THE AC T IS REQUIRED TO BE MADE. THE AO MAY REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF SUCH V ALUE AND REPORT THE SAME TO HIM. FROM THE PLAIN READING OF PROVISIONS OF SECTION 142A(1) IT I S CLEAR THAT REFERENCE TO THE VALUATION OFFICER CAN BE MADE FOR THE PURPOSE OF ESTIMATING THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 69-A OR SECTION 69-B. UNDER SECTION 48 OF THE INCOM E-TAX ACT 1961 THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS NAMELY : ( I ) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CO NNECTION WITH SUCH TRANSFER; 4 I. T. APPEAL NO. 1877 (DEL) OF 2011. ( II ) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO: THUS NO REFERENCE CAN BE MADE U/S 142A TO THE VALU ATION OFFICER FOR ESTIMATING THE FULL VALUE OF CONSIDERATION OF THE PROPERTY FOR THE PURPOSE OF CO MPUTATION OF CAPITAL GAINS UNDER SECTION 48 OF THE ACT. UNDER SECTION 55-A REFERENCE TO VALUATION CELL CAN BE MADE FOR THE PURPOSE OF DETERMINATION OF FAIR MARKET VALUE OF THE CAPITAL A SSET UNDER CERTAIN CIRCUMSTANCES. THEREFORE REFERENCE UNDER SECTION 55-A OF THE ACT CANNOT BE M ADE FOR THE PURPOSE OF ESTIMATING THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUED. FURTHER PROVISIONS OF SECTION 50C OF THE ACT DEFINES THE SCOPE OF FULL VALUE OF CONSIDERATION IN CERTAIN CASES. UNDER SECTION 50C(1) IN A CASE 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 VA LUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVT. [STAMP VALUATION AUTHORI TY] FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER THE VALUE SO ADOPTED O R ASSESSED OR ASSESSABLE SHALL FOR THE PURPOSES OF SECTION 48 BE DEEMED TO THE FULL VALUE OF THE C ONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. THUS FOR THE PURPOSE OF COMPUTING CAPITAL GAINS IN RESPECT OF CAPITAL ASSET BEING LAND AND BUILDING OR BOTH THE FULL VALUE OF CONSID ERATION WILL BE THE VALUE ADOPTED OR ASSESSED FOR THE PURPOSE OF STAMP DUTY. SUB SECTION (2) OF SECTION 50C EMPOWERS THE AO FOR MAKING REFERENCE TO THE VALUATION OFFICER IN THE CASES WHE RE THE ASSESSEE CLAIMS BEFORE ASSESSING OFFICER THAT THE VALUE ADOPTED ASSESSED OR ASSESSABLE BY S TAMP VALUATION AUTHORITY UNDER SECTION 50C(1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER. CLAUSE (B) OF SECTION 50C(2) PROVIDES THAT THE VALUE SO ADOPTED OR ASSESS ED OR ASSESSABLE BY STAMP VALUATION AUTHORITY HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY AUTHORITY COURT OR THE HIGH COURTS ASSESSING OFFI CER MAY REFER THE VALUATION OF THE CAPITAL ASSET TO THE VALUATION OFFICER. THEREFORE PROVISIONS OF SECTION 50C(2) OF THE ACT ARE APPLICABLE AT THE REQUEST OF THE ASSESSEE WHEN HE CLAIMS THAT THE ST AMP VALUATION IS HIGHER THAN THE FAIR MARKET VALUE OF THE PROPERTY. THE PROVISIONS OF SECTION 55 A ARE GENERAL AND PROVISIONS OF SECTION 50C ARE SPECIFIC. IT IS A SETTLED LAW THAT IN A CASE WH ERE THERE IS CLASH BETWEEN TWO PROVISION DEALING WITH THE SAME SUBJECT AND IN THE SAME STATUTE THE SPECIFIC PROVISIONS WILL OVERRIDE THE GENERAL PROVISIONS. PROVISIONS OF SECTION 50C ARE SPECIFIC PROVISIONS FOR DETERMINATION OF FULL VALUE OF CONSIDERATION IN RESPECT LAND OR BUILDING OR BOTH AND THEREFORE THEY WILL OVERRIDE PROVISIONS OF SECTION 55A OF THE ACT. FROM THE ABOVE DISCUSSION IT IS CLEAR THAT PROVISIONS OF SECTION 142-A OF THE ACT ARE APPLICABLE FOR VALUATION OF INVESTMENTS . FOR THE PURPOSE OF COMPETITION OF CAPITAL 5 I. T. APPEAL NO. 1877 (DEL) OF 2011. GAINS STAMP DUTY VALUATION HAS TO BE TAKEN AS FULL VALUE OF THE CONSIDERATION. THEREFORE IN OUR CONSIDERED OPINION THE AO WAS NOT JUSTIFIED IN MAK ING REFERENCE TO THE VALUATION CELL UNDER SECTION 142A OF THE ACT AS THE REFERENCE IS TO BE M ADE FOR THE PURPOSE OF DETERMINATION OF FAIR MARKET VALUE OF THE INVESTMENT COVERED UNDER SECTIO N 69 69A AND 69B OF THE ACT AND NOT FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS UNDER SECTI ON 48 OF THE ACT. 7. THE NEXT ISSUE FOR CONSIDERATION RELATES TO UPHO LDING THE ADDITION OF RS.24 98 600/- ON THE BASIS OF DVOS REPORT. THE LD. CIT (APPEALS) WHILE DECIDING THE ISSUE OBSERVED THAT THE DVO HAD FOLLOWED PROPER PROCEDURE FOR THE VALUATION OF THE PROPERTY AND HAS GIVEN THE OPPORTUNITY TO THE ASSESSEE BEFORE PREPARING THE VALUATION REPORT AND DVO HAD NOTED THIS OBSERVATION IN PARA 7.3 OF HIS REPORT. HE FURTHER NOTED THAT FAIR MARK ET VALUE OF THE PROPERTY HAS BEEN CALCULATED BY COMPARING THE SALE INSTANCE OF DUPLEX FLAT NO.500 O N FIRST AND SECOND FLOOR HAWA SINGH BLOCK ASIAN GAMES VILLAGE COMPLEX HAVING SIMILAR SPECIFIC ATIONS AFTER ALLOWING DUE FACTORS FOR ADJUSTMENT TO BRING BOTH THE PROPERTIES AT PAR ON T HE DATE OF VALUATION. THE LD. CIT (A) ACCORDINGLY CONFIRMED THE ADDITION OF RS.24 98 600/ - MADE BY THE ASSESSING OFFICER ON THE BASIS OF VALUATION OF THE PROPERTY BY DVO. 8. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT THE IMPUGNED PROPERTY IS SITUATED IN SARITA VIHAR WHEREAS COMPARISON HAS BEEN MADE WITH THE PROPERTY SITUATED IN ASIAN GAMES VILLAGE COMPLEX. HE FURTHER SUBMITTED THAT PROVISI ONS OF SECTION 50C OF THE ACT ARE APPLICABLE AND THEREFORE NO ADDITION CAN BE MADE ON THE BASI S OF DVOS REPORT AS THE ASSESSING OFFICER HAD NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT UN DER-HAND MONEY HAD BEEN PASSED ON. HE ALSO SUBMITTED THAT CAPITAL GAINS ARE TO BE COMPUTED ON THE BASIS OF FULL VALUE OF CONSIDERATION AND NOT ON THE BASIS OF FAIR MARKET VALUE OF THE PROPERTY. ON THE OTHER HAND THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. UNDER SECTION 48 OF THE I. T. ACT THE CAPITAL GAINS ARE T O BE COMPUTED AFTER DEDUCTING FROM THE FULL VALUE OF CONSIDERATION THE EXPENDITURE INCURRED WHOLLY AN D EXCLUSIVELY IN CONNECTION WITH THE TRANSFER 6 I. T. APPEAL NO. 1877 (DEL) OF 2011. OF THE PROPERTY AND THE INDEXED COST OF ACQUISITION OF ASSET AND THE INDEXED COST OF ANY IMPROVEMENTS THERETO. THEREFORE FOR THE PURPOSE O F COMPUTATION OF CAPITAL GAINS THE LEGISLATURE HAS USED EXPRESSION FULL VALUE OF CONSIDERATION A ND NOT THE FAIR MARKET VALUE OF THE PROPERTY. SECTION 50C OF THE ACT PROVIDES FULL VALUE OF CONSI DERATION IN CERTAIN CASES. IN RESPECT OF PROPERTY BEING LAND OR BUILDING OR BOTH THE FULL V ALUE OF CONSIDERATION WILL BE THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY STAMP VALUATION AUTHOR ITY FOR THE PURPOSE OF STAMP DUTY. IN THE CASE BEFORE US THERE IS NOTHING ON RECORD TO PROVE THAT THE ASSESSEE HAD TRANSFERRED THE PROPERTY MORE THAN THE PRICE MENTIONED IN SALE DEED. FROM THE PE RUSAL OF THE SALE DEED IT IS NOT CLEAR WHETHER THE TOTAL CONSIDERATION RECEIVED BY THE ASSESSEE IS BASED ON CIRCLE RATES PRESCRIBED BY STAMP VALUATION AUTHORITY. AS PER PROVISIONS OF SECTION 50C THE FULL VALUE OF CONSIDERATION IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT UNDER-HAND MON EY HAD BEEN PASSED HAS TO BE TAKEN AS PER STAMP VALUATION AUTHORITY. THEREFORE IN OUR CONSI DERED OPINION IF THE SALE HAS BEEN MADE AT THE RATES PRESCRIBED BY THE STAMP VALUATION AUTHORITY NO ADDITION CAN BE MADE. HOWEVER IF SALE HAS BEEN MADE AT LOWER VALUE THAN THE VALUE PRESCRIBED BY STAMP VALUATION AUTHORITY FOR THE PURPOSE OF STAMP DUTY THE AO WILL ADOPT THE VALUATION AS P ER STAMP DUTY ACT. WE THEREFORE DIRECT THE AO TO ADOPT THE FULL VALUE OF CONSIDERATION AS PER PROVISIONS OF SECTION 50C OF THE ACT. WE ORDER ACCORDINGLY. 10. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS INDICATED ABOVE. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 15 TH JULY 2011. SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH JULY 2011. *MEHTA * 7 I. T. APPEAL NO. 1877 (DEL) OF 2011. COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT (APPEALS) 5. DR ITAT NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR ITAT.