Shri V. Rajkumar, CHENNAI v. ITO, CHENNAI

ITA 2115/CHNY/2016 | 2005-2006
Pronouncement Date: 28-10-2016

Appeal Details

RSA Number 211521714 RSA 2016
Assessee PAN ACGPR9689G
Bench Chennai
Appeal Number ITA 2115/CHNY/2016
Duration Of Justice 3 month(s) 15 day(s)
Appellant Shri V. Rajkumar, CHENNAI
Respondent ITO, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2016
Appeal Filed By Assessee
Bench Allotted A
Assessment Year 2005-2006
Appeal Filed On 13-07-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . . . ' #$ % &' ( [ BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH ACCOUNTANT MEMBER ] ./ I.T.A.NO.2115/MDS/2016 / ASSESSMENT YEAR : 2005-06 SHRI V. RAJKUMAR NO.M-76/4 3 RD AVENUE ANNA NAGAR CHENNAI 600 102 VS. THE INCOME TAX OFFICER INTERNATIONAL TAXATION-1 CHENNAI [PAN ACGPR 9689 G] ( )* / APPELLANT) ( + )* /RESPONDENT) / APPELLANT BY : SHRI J. PRABAKAR CA /RESPONDENT BY : SHRI SHIVA SRINIVAS JCIT / DATE OF HEARING : 29 - 0 9 - 2016 ! / DATE OF PRONOUNCEMENT : 28 - 10 - 2016 / O R D E R PER D.S. SUNDER SINGH ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-16 CHENN AI DATED 31.5.2016 FOR ASSESSMENT YEAR 2005-06. 2. ALL THE GROUNDS ARE RELATED TO LONG TERM CAPITAL GA INS ASSESSED AS PER SEC. 50C OF THE INCOME-TAX ACT 196 1 (IN SHORT THE ACT). ITA NO.2115/16 :- 2 -: 3. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OF FICER FOUND THAT THE ASSESSEE HAS SOLD THE PROPERTY FOR A CONSIDERATION OF ` 19.01 LAKHS AND INVESTED IN NABARD BONDS FOR CLAIMI NG EXEMPTION OF CAPITAL GAINS. HOWEVER THE ASSESSING OFFICER FOUND THAT THE REGISTRAR OF STAMP DUTY HAS FIXED THE GUIDELINE VALUE AT ` 27 90 200/- AND THE ASSESSEE ALSO PAID THE EXCESS STAMP DUTY AS PER THE GUIDELINE VALUE. THEREFORE THE ASSESSING OFFICER INVOKED SEC. 50C O F THE ACT AND TAXED THE DIFFERENCE AMOUNT OF ` 6 33 533/-. 4. AGGRIEVED THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) BUT COULD NOT SUCCEED BEFORE THE CIT(A). THEREFORE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. DURING THE APPEAL THE LD. AR ARGUED THE ASSESSEE IS AN NRI STAYING IN ABROAD AND VISIT S INDIA FROM TIME TO TIME. HAVING OBSERVED IN HIS VISIT TO CHENNAI THA T HIS PROPERTY WAS ENCROACHED BY SOME RESIDENTS LIVING EARLIER AND CON STRUCTING DWELLING UNITS THE ASSESSEE HAS TO SELL THE PROPERTY IN DI STRESS. SINCE THE ASSESSEE BEING A ABSENTEE LANDLORD HE HAS GIVEN A POWER OF ATTORNEY TO HIS FATHER TO DEAL WITH THE SALE OF PROPERTY. T HE VALUE OF ` 19 01 000/- WAS RECEIVED BY HIS FATHER AND HE DID N OT NOTICE THE EXCESS STAMP DUTY LEVIED BY THE SRO. ONLY IN 2007 THE ASSESSEES FATHER HAS NOTICED THAT THE EXCESS STAMP DUTY WAS L EVIED BY THE SRO AND FILED AN APPEAL U/S 47A OF THE STAMP DUTY ACT QUESTIONING THE BASIS FOR VALUATION OF STAMP DUTY BY THE SRO IN THE SALE DEED. SINCE ITA NO.2115/16 :- 3 -: THE APPEAL IS PENDING BEFORE THE SRO THE LD. AR CO NTENDED THAT THE ASSESSING OFFICER SHOULD HAVE REFERRED THE MATTER T O THE VALUATION OFFICER BEFORE TAXING THE DIFFERENCE AMOUNT U/S 50 C OF THE ACT. FURTHER THE LD. AR ARGUED THAT THE ASSESSEE HAS I NVESTED THE ENTIRE SALE CONSIDERATION IN NABARD BONDS WHICH IS EXEMPTE D U/S 54EC OF THE ACT. HE FURTHER SUBMITTED THAT SINCE THE ENTIR E SALE CONSIDERATION WAS INVESTED IN CAPITAL BONDS SCHEME SECTION 50C HA S NO APPLICATION IN THE ASSESSEES CASE. 5. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE PR OPERTY WAS SOLD ON 30.4.2004 AND THE CONSIDERATION WAS REC EIVED BY THE ASSESSEE AND EXCESS STAMP DUTY WAS PAID AS PER SALE DEED. THE APPEAL WAS FILED BY THE ASSESSEE ONLY IN SEPTEMBER 2007 AFTER TAKING UP THE CASE FOR SCRUTINY BY THE ASSESSING OFFICER I N JUNE 2007 AND ISSUE OF NOTICE U/S 143(2). THEREFORE THE APPEAL OF THE ASSESSEE BEFORE THE SRO IS NOTHING BUT AN AFTERTHOUGHT. FURT HER THE LD. DR ARGUED THAT AS PER SEC. 50C OF THE ACT THE ASSESSI NG OFFICER MAY REFER THE MATTER TO THE VALUATION OFFICER WHICH MEANS IT IS A DISCRETION OF THE ASSESSING OFFICER AND TO REFER THE PROPERTY TO THE VALUATION OFFICER IS NOT MANDATORY. THEREFORE THE LD. DR WAS OF THE VI EW THAT THE ASSESSING OFFICER HAS RIGHTLY INVOKED SEC. 50C OF T HE ACT AND TAXED THE LONG TERM CAPITAL GAINS. ITA NO.2115/16 :- 4 -: 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL PLACED BEFORE US. THE ASSESSEE HAS SOLD THE PROPE RTY FOR A CONSIDERATION OF ` 19 01 000/- @ ` 190/- PER SQ FT. HOWEVER THE GUIDELINE VALUE WAS ` 27 90 000/- WHICH ATTRACTS SEC. 50C OF THE ACT. THE ASSESSEE IS A NON-RESIDENT INDIAN WHO STAYS IN UAE. HE FREQUENTLY VISITS CHENNAI SINCE HIS PARENTS ARE STA YING IN CHENNAI. HAVING NOTICED THAT THE PROPERTY BEING ENCROACHED B Y UNAUTHORIZED OCCUPANTS THE PROPERTY WAS SOLD THROUGH A POWER OF ATTORNEY HOLDER WHO HAPPENED TO BE HIS FATHER. THE NET CONSIDERATI ON RECEIVED WAS ` 19 01 000/- AND THE ASSESSEE HAS INVESTED THE ENTI RE AMOUNT OF ` 19 01 000/- IN NABARD BONDS WHICH IS EXEMPTED U/S 54EC OF THE ACT. THE PROPERTY WAS SOLD ON 30.4.2004 AND PAID THE EXC ESS STAMP DUTY AS CALCULATED BY THE SRO. AN APPEAL BEFORE THE SR O WAS PREFERRED BY THE ASSESSEE ONLY IN SEP 2007 I.E AFTER ISSUE OF NOTICE U/S 143(2) OF THE ACT ALONG WITH QUESTIONNAIRE IN JUNE 2007 AS P ER THE PAPER BOOK PLACED BEFORE US. THE ASSESSEE FIELD THE PETITION BEFORE THE SUPREME COURT IN THE WIFES CASE ON IDENTICAL FACTS AND THE SAME WAS DISMISSED SINCE THE ALTERNATE REMEDY HAS NOT BEEN EXHAUSTED. HOWEVER THE ASSESSEE HAS OBJECTED FOR ADOPTING THE GUIDELINE VALUE AND FILED APPEAL BEFORE THE SRO DURING THE PENDENCY OF THE ASSESSMENT PROCEEDINGS W HICH WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER . ON IDENTICAL FACTS IN ASSESSEES WIFES CASE THE ASSESSING OFFICER HAS REFERRED THE PROPERTY TO THE VALUATION OFFICER ITA NO.2115/16 :- 5 -: AND THE DVO HAS ADOPTED THE RATE AT ` 190/- PER SQ FT. THE LD. AR STATED THAT THE PROPERTY OF ASSESSEES WIFE IS CON TIGUOUS PROPERTY AND THE ASSESSEE PROPERTYS FAIR MARKET VALUE ALSO BE EQUIVALENT TO THE PROPERTY OF HIS WIFE. THE LD. AR HAS FILED A MAP I N THE PAPER BOOK SHOWING THAT THE PROPERTY OF THE ASSESSEES WIFE I S CONTIGUOUS PROPERTY WHICH REQUIRES TO BE VALUED AT THE SAME RA TE. IF THE FAIR MARKET VALUE OF THE PROPERTY IS TAKEN AT ` 190/- PER SQ FT AS VALUED BY THE DVO THE TAXABLE CAPITAL GAIN WOULD BE NIL. A SSESSEE HAVING SOLD THE PROPERTY THROUGH POWER OF ATTORNEY HOLDER MAY NOT AWARE OF THE ACTUAL HAPPENINGS OR THE GUIDELINE VALUE OF SUB-REG ISTRAR. SINCE THE PROPERTY SOLD BY THE ASSESSEES WIFE IS CONTIGUOUS PROPERTY WHICH WAS VALUED BY THE DVO @ ` 190/- PER SQ FT WE ARE OF THE OPINION THAT THE ASSESSEES CASE ALSO NEEDS TO BE REFERRED TO THE D EPARTMENTAL VALUATION CELL FOR VALUING THE FAIR MARKET VALUE. A S PER SECTION 50C OF INCOME TAX ACT IF THE ASSEESSE DISPUTE THE GUIDE LI NE VALUE THE CASE NEEDS TO BE REFERRED TO THE DEPARTMENTAL VALUATION CELL. FOR READY REFERENCE WE REPRODUCE HEREUNDER SECTION 50C OF IT ACT WHICH READS ASUNDER: SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES. 91 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING A S A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET BEING L AND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED 92 [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION RE FERRED 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 92 [OR ASSESSABLE] SHALL ITA NO.2115/16 :- 6 -: FOR THE PURPOSES OF SECTION 48 BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION (1) WHERE ( A ) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER TH AT THE VALUE ADOPTED OR ASSESSED 92A [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UN DER SUB- SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PR OPERTY AS ON THE DATE OF TRANSFER; ( B ) THE VALUE SO ADOPTED OR ASSESSED 92A [OR ASS ESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB- SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY O THER AUTHORITY COURT OR THE HIGH COURT THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS M ADE THE PROVISIONS OF SUB-SECTIONS (2) (3) (4) (5) AND (6) OF SECTION 16A CLAUSE ( I ) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A SU B-SECTION (5) OF SECTION 24 SECTION 34AA SECTION 35 AND SECTION 37 OF THE WEAL TH-TAX ACT 1957 (27 OF 1957) SHALL WITH NECESSARY MODI-FICATIONS APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THA T ACT. 93 [ EXPLANATION 1 ]. FOR THE PURPOSES OF THIS SECTION 'VALUATION OFFICE R' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( R ) OF SECTION 2 OF THE WEALTH-TAX ACT 1957 (27 OF 1957). 94 [ EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION THE EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUAT ION AUTHORITY WOULD HAVE NOTWITHSTANDING ANYTHING TO THE CONTRARY CONT AINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE ADOPTED OR ASSESSED IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY.] (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SECT ION (2) WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED 94 [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY REFERR ED TO IN SUB-SECTION (1) THE VALUE SO ADOPTED OR ASSESSED 94 [OR ASSESSABLE] BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIV ED OR ACCRUING AS A RESULT OF THE TRANSFER.] IN THE ASSESSEES CASE THE ASSESSEE DISPUTED THE G UIDELINE VALUE DURING THE PENDENCY OF ASSESSMENT PROCEEDINGS AND F ILED THE APPEAL BEFORE THE SRO THEREFORE IN ALL FAIRNESS WE CONS IDER IT NECESSARY TO REFER THE VALUATION TO THE DEPARTMENTAL VALUATION C ELL FOR DETERMINING THE FAIR MARKET VALUE. ACCORDINGLY WE REMIT THE M ATTER BACK TO THE FILE OF ASSESSING OFFICER TO READJUDICATE THE ISSUE AFTE R THE RECEIPT OF THE ITA NO.2115/16 :- 7 -: VALUATION REPORT FROM DVO ON MERITS. THE ISSUE REG ARDING LONG TERM CAPITAL GAINS IS ALLOWED FOR STATISTICAL PURPOSES. 7. THE NEXT ISSUE IN THE CASE OF THE ASSESSEE IS SALE CONSIDERATION OF THE PROPERTY WAS INVESTED IN A SPE CIFIED BOND TO CLAIM EXEMPTION U/S 54EC OF THE ACT AND THEREFORE THER E IS NO CAPITAL GAINS. THE ASSESSEE HAS SOLD THE PROPERTY AND REC EIVED THE SALE CONSIDERATION OF ` 19 01 000/- AND THE ENTIRE SALE CONSIDERATION WAS INVESTED IN NABARD BONDS U/S 54EC OF THE ACT. THE REFORE THE ASSESSEE CONTENDED THAT THERE IS NO CASE FOR ASSESS MENT OF CAPITAL GAINS. 8. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL PLACED BEFORE US. WE HAVE CAREFULLY GONE THROUGH T HE PROVISIONS OF SEC. 54EC OF THE ACT. AS PER SEC. 54EC OF THE ACT IF THE COST OF LONG TERM SPECIFIED ASSET IS NOT LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET THE WHOLE OF SUCH C APITAL GAIN SHALL NOT BE CHARGED TO THE CAPITAL GAINS TAX. IN THIS CASE THOUGH TE ASSESSEE HAS INVESTED THE ENTIRE SALE CONSIDERATION CAPITAL GAINS HAS TO BE WORKED OUT BY TAKING THE GUIDELINE VALUE U/S 50C O F THE ACT. THEREFORE WE DONT FIND ANY MERIT IN THE ARGUMENT OF THE LD. AR AND THIS GROUND OF APPEAL IS DISMISSED. ITA NO.2115/16 :- 8 -: 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER 2016 AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . . ' #$ ) (D.S. SUNDER SINGH) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 28 TH OCTOBER 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ) - . / DR 3. +/' / CIT(A) 6. -01 / GF