Smt Savitri Khandelwal,, Indore v. The ACIT.,, Indore

ITA 190/IND/2010 | 2004-2005
Pronouncement Date: 28-02-2011 | Result: Partly Allowed

Appeal Details

RSA Number 19022714 RSA 2010
Bench Indore
Appeal Number ITA 190/IND/2010
Duration Of Justice 10 month(s) 15 day(s)
Appellant Smt Savitri Khandelwal,, Indore
Respondent The ACIT.,, Indore
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 28-02-2011
Date Of Final Hearing 30-11-2010
Next Hearing Date 30-11-2010
Assessment Year 2004-2005
Appeal Filed On 12-04-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO. 190/IND/2010 A.Y. 2004-05 SMT. SAVITRI KHANDELWAL INDORE PAN AHLPK-3692E APPELLANT VS ASSTT. COMMR. OF INCOME TAX CIRCLE 3(1) INDORE RESPONDENT APPELLANT BY SHRI ANIL KHANDELWAL RESPONDENT BY SHRI K.K. SINGH O R D E R PER SHRI R.C. SHARMA ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) DATED 9.2.2010 FOR THE ASSESSMENT YEAR 20 04- 05 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE ACT. 2 2. IN THE FIRST GROUND THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN REJECTING THE CONTENTION THAT SECOND NOTICE U/S 143(2) OF THE ACT WAS ACTUALLY TIME BARRED. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT THE NOTICE U/S 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 29.7.2005. THIS NOTICE WAS SENT THROUGH POST WHICH IS CLAIMED TO BE RECEIVED BY THE ASSESSEE. HOWEVER KEEPING IN VIEW THE FACT THAT LIMITATION WAS EXPIRING ON 31.7.2005 THE ASSESSING OFFICER TOOK ADDITIONAL CARE AND SERVED ANOTHER NOTICE THROUGH NOTICE SERVER AND SUCH NOTICE WAS ACTUALLY SERVED ON THE ASSESSEE AS PER TOKEN OF SERVICE AVAILABLE ON SUCH NOTICE. THE NOTICE SERVER HAS ALSO PUT A SIGNATURE AND DATE REGARDING THE SERVICE OF NOTICE OF 31.7.2005. THERE WAS NO PURPOSE IN ISSUING ANOTHER NOTICE ON THE ASSESSEE AFTER 31.7.2005 ONCE A NOTICE BY DAK WAS ALREADY SENT EARLIER AND ALSO 3 ACKNOWLEDGE BY THE ASSESSEE. SINCE THE SERVICE OF FIRST NOTICE IS NOT DISPUTED BY THE ASSESSEE WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSEE AND THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS JUSTIFIED IN REJECTING THE ASSESSEES CONTENTION THAT SECOND NOTICE U/S 143(2) OF THE ACT WAS ACTUALLY TIME BARRED. ACCORDINGLY THE FIRST GROUND OF THE ASSESSEES APPEAL IS DISMISSED. 4. THE REMAINING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE WITH REGARD TO CAPITAL GAINS OFFERED BY THE ASSESSEE IN RESPECT OF THE LAND SOLD BY HER AND POWER OF THE ACTION OF AUTHORITIES TO ATTRACT THE PROVISIONS OF SECTION 50-C OF THE ACT IN RESPECT OF SUCH TRANSACTION. IN THIS REGARD THE FACTS ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SHOWN CAPITAL GAINS ON SALE OF PLOT AMOUNTING TO RS.10.95 LACS. DURING THE YEAR THE ASSESSEE HAD TRANSFERRED PLOTS OF LAND BEARING DIFFERENT KHASRA NOS. IN REVENUE VILLAGE CHITAWAD TEHSIL AND DISTRICT INDORE DULY CONVERTED FOR RESIDENTIAL USE TO 4 SUPARSHVANATH GRIH NIRMAN SAHAKARI SANSTHA MARYADIT THROUGH REGISTERED SALE DEED ON 20.11.03. SALE DEED WAS EXECUTED BY A GROUP OF 6 CO-OWNERS INCLUDING THE ASSESSEE FOR TOTAL AREA OF LAND MEASURING 54965 SQ.FT. OR 5108 SQ.MT OF OPEN LAND. SALE DEED ALSO MENTIONED THE NAME OF 8 CONSENTERS AND THIRD PARTY IN RESPECT OF SUCH LAND SALE TRANSACTIONS. THE A.O. NOTED THAT THE ASSESSEE RECEIVED RS.17 43 000/- FOR HER SHARE OF LAND I.E. 16100 SQ.FT. AND THE RATE OF TRANSFER WORKED OUT TO ON THE BASIS OF GROSS SALES CONSIDERATION INCLUDING PAYMENT MADE TO 8 CONSENTORS AT RS.65 60 000 AT 233.24 PS PER SQ.FT. AND THE NET CONSIDERATION AFTER REDUCING PAYMENTS MADE TO CONSENTORS WORKED OUT TO RS.108.27 PS PER SQ.FT. THE ASSESSING OFFICER FOUND THAT THE GROSS RATE ON WHICH THE LAND WAS TRANSFERRED AT RS.233.24 PS PER SQ.FT. CONSIDERING THE REAL ESTATE MARKET POSITION AND LOCATION OF THE PROPERTY UNDER CONSIDERATION. HE ACCORDINGLY APPROACHED SUB-REGISTRAR INDORE 5 PER LETTER DATED 20.11.06 TO FURNISH INFORMATION ON THE FOLLOWING : A. MARKET RATE OF THE LANDS BEARING KHASRA NOS.46/1/3 46/1/5 52/2 52/3 55/1 55/2 50/2.51/3 46/1/6 AT VILLAGE CHITAWAD AB ROAD AS ON 1.4.1981. B. AND MARKET RATE AS ON 24.11.2003 FOR THE ABOVE QUOTED KHASRA NOS. SUB-REGISTRAR INDORE PER LETTER NO. 329/MP/IND/ DATED 12.9.06 STATED THAT IN VILLAGE CHITAWAD ON AB ROAD DURING F.Y. 2003- 04 THE GUIDELINE RATES FOR RESIDENTIAL PLOT AT RS.8000 AND COMMERCIAL PLOT AT RS. 12 000/- WAS DETERMINED AND IN THE YEAR 1981 NO SUCH GUIDELINE RATES WERE AVAILABLE AND SALE DEEDS WERE REGISTERED ON THE BASIS OF PRICE STATED IN SUCH SALE DEEDS. THE ASSESSING OFFICER ON THE BASIS OF SUCH REPLY WORKED OUT THE RATE PER SQ.FT. AT RS. 742/- FOR RESIDENTIAL PLOT AND RS. 1113/- FOR COMMERCIAL PLOT AND HE FURTHER HELD THAT AS PER VALUATION REPORT ENCLOSED WITH THE RETURN OF INCOME THE PROPERTY WAS STATED COMMERCIAL- 6 CUM-RESIDENTIAL AREA AND THEREFORE AVERAGE OF TWO RATES 742 AND 1113 I.E. RS. 928 PER SQ.FT WOULD BE APPROXIMATE FAIR MARKET VALUE FOR DETERMINING FULL VALUE OF SALE CONSIDERATION. THE ASSESSING OFFICER ALSO REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE ASSESSEES CLAIM OF COST OF ACQUISITION AS ON 1.4.1981 AT RS. 8 PER SQ.FT. SHOULD NOT BE REJECTED AND THE COST OF ACQUISITION SHOULD BE TAKEN AS RS. 3.44 PER SQ.FT. AND FURTHER CONFRONTING THE ASSESSEE WITH THE INFORMATION GATHERED FROM SUCH REGISTERS OFFICE ABOUT THE GUIDELINE RATES FOR AND TO EXPLAIN WHY SALE CONSIDERATION SHOULD NOT BE TAKEN AT RS.12000 PER SQ. MT. AFTER CONSIDERING THE ASSESSEES CONTENTION WITH REGARD TO RATE OF SALE CONSIDERATION THE ASSESSING OFFICER HELD THAT RS.8000 PER SQ.FT FOR RESIDENTIAL PROPERTY INDICATED THAT SUCH PROPERTY WAS NOT SITUATED ON MAIN ROAD AND WAS NOT COMMERCIAL. HE ALSO REJECTED THE ASSESSEES CLAIM THAT SUCH PROPERTY WAS DISPUTED AS THE SAID DEED CLEARLY MENTIONED THE SELLERS TO BE THE UNDISPUTED OWNERS TO THE 7 PROPERTY ON THE DATE OF SALE AND HE INCORPORATED THE SCANNED IMAGE OF THE TABLE OF SALE DEED. THE ASSESSING OFFICER FINALLY HELD THAT SALE CONSIDERATION WAS TO BET TAKEN AT RS. 928/- PER SQ.FT. THE ASSESSING OFFICER ALSO REJECTED THE ASSESSEES CONTENTION OF FAIR MARKET VALUE OF PROPERTY AS ON 1.4.1981 AT RS.8/- PER SQ.FT. INSTEAD OF IT HE HAS TAKEN THE RATE OF RS.4.27 PER SQ.FT. IN VIEW OF THE FACT THAT THE LAND WAS SITUATED AT AB ROAD. THE ASSESSING OFFICER ALSO REJECTED THE ASSESSES CLAIM FOR DEDUCTION U/S 54F FOR WANT OF DEFINITE EVIDENCE. THE ASSESSING OFFICER ACCORDINGLY ARRIVED AT LTCG BY ADOPTING THE SALE VALUE AT RS. 928/- PER SQ.FT. AND ADOPTING THE COST OF ACQUISITION ON 1.4.81 AT RS. 4.27 PER SQ.FT. ON WHICH FURTHER BENEFIT OF INDEXATION WAS GIVEN. THE ASSESSING OFFICER HOWEVER GRANTED THE DEDUCTION FOR PAYMENT MADE TO THE CONSENTING PARTIES @ RS. 125/- PER SQ.FT. REDUCING THE LTCG SO ARRIVED AT BY RS. 20 12 500/- AND FURTHER ACCEPTED THE CLAIM OF 8 BROKERAGE PAID FOR THE SAME AT RS.17 420/- ARRIVED AT NET LTCG AT RS. 1 29 10 870/-. 5. BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THE ASSESSEE ALLEGED INVOCATION OF PROVISIONS OF SECTION 50C AND COMPUTATION OF LONG TERM CAPITAL GAINS BY THE ASSESSING OFFICER. BY THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED BY THE SAME THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FIND FROM RECORD THAT THE ASSESSEE HAS SOLD THE LAND TO A COOPERATIVE SOCIETY. THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT THE PURCHASER BEING A COOPERATIVE SOCIETY WAS EXEMPT FROM PAYMENT OF STAMP DUTY AND THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITY FOR PURPOSE OF REGISTRATION OF SUCH LAND WOULD NOT BE APPLICABLE TO IT AND THEREFORE THE PROVISIONS OF SECTION 50C WERE NOT 9 APPLICABLE. WE DO NOT FIND ANY MERIT IN THIS CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. EVEN THOUGH THE COOPERATIVE SOCIETY TO WHOM SALE WAS MADE WAS EXEMPT FROM PAYMENT OF STAMP DUTY BUT THE TITLE DEED WAS REQUIRED TO BE GOT REGISTERED. THE STAMP DUTY AUTHORITIES ARE HAVING THE RATE OF LAND PREVAILING AT A PARTICULAR POINT OF TIME WITH REGARD TO LAND/BUILDING FOR WHICH TITLE DEED IS BEING GOT REGISTERED. UNDER THE PROVISIONS OF SECTION 50C OF THE ACT IF THE ASSESSING OFFICER FINDS THAT THE TRANSACTION OF SALE HAS BEEN EFFECTED AT A RATE LOWER THAN THE RATE ADOPTED BY THE STAMP VALUATION AUTHORITY THEN THE VALUE SO ADOPTED BY THE STAMP VALUATION AUTHORITY WILL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION. FOR PURPOSE OF INCOME TAX ACT THE ASSESSING OFFICER IS EMPOWERED TO TAKE THE RATE APPLICABLE FOR STAMP VALUATION AND TO REOCMPUTE THE CAPITAL GAIN U/S 50C OF THE ACT. THUS WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE LOWER AUTHORITIES FOR INVOKING PROVISIONS OF SECTION 10 50C FOR COMPUTATION OF CAPITAL GAINS ON SALE OF PLOTS. 7. FROM RECORD WE ALSO FIND THAT THE PLOT SO SOLD BY THE ASSESSEE WAS UNDER A CIVIL LITIGATION AND THE SAME WAS ALSO STATED IN CLAUSE 2 OF SALE DEED THROUGH CIVIL SUIT NO. 56A/955. THUS THE TITLE OF THE PROPERTY SO SOLD WAS NOT CLEAR. WE ALSO FIND THAT THE PLOT SO SOLD HAD NO DIRECT ACCESS TO THE MAIN ROAD. IT WAS THE CONTENTION OF THE ASSESSEE THAT ADOPTION OF GUIDELINE VALUE OF RS.928/- PER SQ. FT. FOR THE ASSESSEES AREA OF PLOT OF LAND SOLD WAS NOT CORRECT INSOFAR AS THESE GUIDELINE RATES ARE NORMALLY APPLICABLE TO PLOTS OF SMALLER SIZE WHICH ARE FULLY DEVELOPED AND THIS RATE CANNOT BE APPLIED TO A BIGGER PLOT OF LAND AS IN THE CASE OF THE ASSESSEE WHICH WAS AROUND 55 000 SQ.FT. AND THAT TOO WITHOUT DEVELOPMENT. WE FIND SUFFICIENT FORCE IN THE ASSESSEES ARGUMENT THAT THE RATE OF PLOT APPLICABLE FOR SMALLER SIZE IN RESPECT OF FULLY DEVELOPMENT AREA CANNOT BE APPLIED FOR BIG SIZE OF PLOT WITHOUT DEVELOPMENT BECAUSE INFRA 11 STRUCTURE LIKE ROADS ETC. ARE TO BE CUT OUT OF THESE BIGGER SIZE OF PLOTS AND AFTER MAKING FULL DEVELOPMENT THE SAME CAN BE BROUGHT AT PAR WITH THE DEVELOPED SMALLER SIZE OF PLOTS. WE ALSO FIND THAT THE SUB-REGISTRAR HAS ADOPTED THE RATE APPLICABLE TO WELL DEVELOPED RESIDENTIAL COLONIES WHICH HAVE ALL INFRA STRUCTURE AND FACILITIES SUCH AS ROADS ELECTRICITY DRAINAGE GARDEN ETC. IN THE INSTANT CASE SUB-REGISTRAR HAS STATED THAT IN THE YEAR 2003-04 THE RATES WERE RS. 8 000/- PER SQ.FT. FOR RESIDENTIAL AND RS. 12 000/- PER SQ.FT. FOR COMMERCIAL PLOTS IN CHITWADA ON AB ROAD. REGARDING 1981 RATE IT WAS STATED BY THE SUB-REGISTRAR THAT THERE WAS NO GUIDELINE FOR THE YEAR 1981. UNDISPUTEDLY THE LAND OF THE ASSESSEE WAS NOT DEVELOPED FOR WHICH APPLICABLE RATE IS TO BE APPLIED AFTER GIVING DUE REBATE FOR SUCH DEVELOPMENT EXPENDITURE RATHER THAN APPLYING THE RATE PREVAILING FOR FULLY DEVELOPED LAND. AS PER OUR CONSIDERED VIEW IN CASE OF REAL ESTATE PROPERTIES THE SIZE AND DEVELOPMENT ARE IMPORTANT FACTORS IN DECIDING THE RATES OF ANY 12 PROPERTY. IF A VERY BIG PLOT OF LAND IS UNDER CONSIDERATION THE BUYER HAS TO CUT IT INTO SMALLER PLOTS AND FOR WHICH PURPOSE 40% OF LAND WILL HAVE TO BE EAR-MARKED FOR ROAD AMENITIES ETC. THUS THE SALEABLE AREA OF SUCH LAND REMAINS ONLY TO THE EXTENT OF 60% OF THE TOTAL AVAILABLE LAND. FURTHER COST IS ALSO INCURRED FOR OBTAINING VARIOUS APPROVALS/ SANCTIONS LIKE POWER WATER DRAINAGE ETC. WE FIND THAT THE ASSESSING OFFICER HAS NOT CONSIDERED ALL THESE FACTS WHILE ADOPTING THE RATE SUGGESTED BY THE SUB-REGISTRAR WITH REGARD TO FULLY DEVELOPED LAND. ACCORDINGLY WE RESTORE THE ISSUE WITH REGARD TO COMPUTATION OF CAPITAL GAIN BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH AFTER CONSIDERING THE ASSESSEES CONTENTION WITH REGARD TO EXACT LOCATION OF LAND ITS STATE OF DEVELOPMENT AT THE TIME OF SALE AND THE REQUIRED INFRA-STRUCTURE WHICH IS REQUIRED TO BE DONE FOR SUCH LAND. FURTHERMORE IF THE LAND IS UNDER DISPUTE SUCH LITIGATION IS TO BE KEPT IN MIND FOR APPLYING THE FAIR MARKET VALUE OF SUCH LAND. THE 13 ASSESSEE IS AT LIBERTY TO FILE AND SUBSTANTIATE HER CLAIM WITH REGARD TO THESE CONTENTIONS BEFORE THE ASSESSING OFFICER. WE DIRECT ACCORDINGLY. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT 28 TH FEBRUARY 2011. (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE FEBRUARY 28 2010 COPY TO APPLICANT RESPONDENT CIT CIT(A) DR DN/-