Madhukar Moreshwar Khare,, Nashik v. ACIT,Cir.-1,, Nashik

ITA 238/PUN/2011 | 2006-2007
Pronouncement Date: 29-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 23824514 RSA 2011
Assessee PAN ACLPK3305P
Bench Pune
Appeal Number ITA 238/PUN/2011
Duration Of Justice 2 year(s) 7 month(s) 27 day(s)
Appellant Madhukar Moreshwar Khare,, Nashik
Respondent ACIT,Cir.-1,, Nashik
Appeal Type Income Tax Appeal
Pronouncement Date 29-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 29-10-2013
Date Of Final Hearing 06-09-2013
Next Hearing Date 06-09-2013
Assessment Year 2006-2007
Appeal Filed On 03-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO.238/PN/2011 (ASSESSMENT YEAR: 2006-07) MADHUKAR MORESHWAR KHARE HANSADHWANI VISE MALA COLLEGE ROAD NASHIK 422 005. PAN : ACLPK3305P . APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 1 NASHIK. . RESPONDENT APPELLANT BY : MR. M. K. KULKARNI RESPONDENT BY : MR. Y. K. BHASKAR DATE OF HEARING : 06-09-2013 DATE OF PRONOUNCEMENT : 29-10-2013 ORDER PER G. S. PANNU AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) II NASHIK D ATED 29.12.2010 WHICH IN TURN HAS ARISEN FROM AN ORDER DATED 22.12.2008 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2006-07. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLL OWING TWO GROUNDS OF APPEAL :- 1. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW THE COMMISSIONER OF INCOME TAX (APPEAL S)-II NASHIK IS NOT JUSTIFIED IN CONFIRMING ADDITION OF RS.36 73 000/- BY THE AO IN RESPECT OF THE SUBSTITUTED DEEMED SALE CONSIDERATION AT THE RATES ADOPTED FOR THE PURPOSE OF STAMP DUTY VALUATION IN PLACE OF ACTUAL SALES CONSI DERATION RECEIVED BY THE APPELLANT THUS INVOKING SEC. 50C OF THE ACT PARTI CULARLY WHEN AN OPPORTUNITY TO CROSS THE DVO IS NOW ALLOWED TO APPELLANT IN SPI TE OF HIS SPECIFIC REQUEST IN THIS RESPECT. ITA NO.238/PN/2011 A.Y. 2006-07 2. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND AS PER LAW THE COMMISSIONER OF INCOME TAX (APPEAL S)-II NASHIK IS NOT JUSTIFIED IN CONFIRMING THE AOS ACTION IN CALCULAT ION OF DEDUCTION CLAIMED U/S.54F OF THE ACT. 3. THE DISPUTE IN THIS APPEAL RELATES TO THE INCOME BY WAY OF CAPITAL GAINS FROM SALE OF LAND DECLARED BY THE ASSESSEE IN THE R ETURN OF INCOME WHICH IS AS UNDER :- INCOME FROM CAPITAL GAIN INCOME RS. LONG TERM CAPITAL GAIN ON SALE OF LAND SALE PROCEEDS OF SURVEY NO. 14/1+2 5 200 000 LESS : TRANSFER EXPENSES 1 56 000 5 044 000 ------------- LESS : INDEXED COST OF ACQUISITION PURCHASED IN F.Y. 97-98 860000 X 497 1 291 299 331 ----------- ---- 3 752 701 LESS : EXEMPT U/S.54EC (INVESTED IN RURAL ELEC. BOND RS.10 00 000 /- & NATIONAL HOUSING BANK RS. 10 00 000/- 2 000 000 1 752 701 -------------- LESS : EXEMPT U/S.54F INVESTMENT IN NEW HOUSE RS.1 392 251/- CAPITAL GAIN X COST OF NEW ASSET NET SALE CONSIDERATION 1 035 825 716 876 4. IN THE ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTICED THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSES OF PAYMENT OF STAMP DUTY IN RESPECT OF THE IMPUGNED TRANSFER OF L AND WAS RS.88 73 000/-. THE ASSESSEE HAD DECLARED THE CONSIDERATION ON SALE OF LAND AS PER THE SALE- DEED WHICH WAS RS.52 00 000/-. THE ASSESSEE ADOPTE D THE STATED AMOUNT OF SALE CONSIDERATION AS THE FULL VALUE OF THE CONSID ERATION RECEIVED FOR THE PURPOSES OF COMPUTING CAPITAL GAIN IN TERMS OF SECT ION 48 OF THE ACT. THE ASSESSING OFFICER HOWEVER NOTED THAT SINCE THE VA LUE ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF S TAMP DUTY WAS HIGHER THAN THE FULL VALUE OF THE CONSIDERATION RECEIVED AS PER THE SALE-DEED THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY WAS TO BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION FOR THE PURPOSES OF COMPUTING CAP ITAL GAIN UNDER SECTION 48 OF THE ACT BECAUSE OF THE EXPLICIT PROVISIONS OF SE CTION 50C OF THE ACT. ON ITA NO.238/PN/2011 A.Y. 2006-07 BEING SHOW-CAUSED ASSESSEE CONTESTED THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSES OF PAYMENT OF STAMP DUTY AND ACCORDINGLY THE ASSESSING OFFICER MADE A REFERENCE TO THE DEPAR TMENTAL VALUATION OFFICER (IN SHORT DVO) AS PER SECTION 50C(2) OF THE ACT. THE REPORT OF THE DVO WAS HOWEVER NOT RECEIVED TILL THE FINALIZATION OF ASSES SMENT. THE ASSESSING OFFICER FINALIZED THE ASSESSMENT BY APPLYING SECTION 50C OF THE ACT AND HE CONSIDERED THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT O F TRANSFER FOR THE PURPOSES OF COMPUTING CAPITAL GAIN UNDER SECTION 48 OF THE ACT. ACCORDINGLY THE ASSESSING OFFICER ADOPTED THE FULL VALUE OF THE CONSIDERATION OF RS.88 73 000/- AS AGAINST RS.52 00 000/- TAKEN BY THE ASSESSEE AND ACCORDING LY THE LONG TERM CAPITAL GAIN WAS ASSESSED AT RS.43 89 876/- AS AGAINST RS.7 16 876/- DECLARED BY THE ASSESSEE THEREBY RESULTING IN AN ADDITION OF RS.36 73 000/- TO THE TOTAL INCOME. 5. AGGRIEVED WITH THE ASSESSMENT ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) ASSESSEE NOT ONLY CONTESTED THE APPLICATION OF SECTION 50C OF THE ACT TO SUBSTITUTE THE FULL VALUE OF CONSIDERATION BUT ALSO ASSAILED THE CALCULATION OF THE AMOUNT OF DEDUCTION UNDER SECTION 54F OF THE ACT PERTAINING TO INVESTME NT IN A NEW HOUSE PROPERTY. THE CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFIC ER IN APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT AND ALSO CALCU LATION OF TAXABLE CAPITAL GAIN INCLUDING THE AMOUNT OF DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 54F OF THE ACT AS DONE BY THE ASSESSING OFF ICER. IN DOING SO THE CIT(A) ALSO TOOK INTO CONSIDERATION THE SUBSEQUENT REPORT OF THE DVO WHEREIN THE FAIR MARKET VALUE (IN SHORT FMV) OF THE PROPE RTY WAS ASCERTAINED AT RS.93.88 LACS. THE CIT(A) NOTICED THAT SINCE THE FM V DETERMINED BY THE DVO WAS HIGHER THAN THE VALUE ADOPTED BY THE STAMP VALU ATION AUTHORITY THE ASSESSING OFFICER MADE NO MISTAKE IN CONSIDERING TH E VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS THE FULL VALUE OF CONS IDERATION TO COMPUTE THE CAPITAL GAIN HAVING REGARD TO SECTION 50C OF THE A CT. NOT BEING SATISFIED WITH ITA NO.238/PN/2011 A.Y. 2006-07 THE ORDER OF THE CIT(A) ASSESSEE IS IN FURTHER APP EAL BEFORE US ON THE STATED GROUNDS OF APPEAL. 6. THE RIVAL COUNSELS HAVE MADE THEIR SUBMISSIONS I N THE ABOVE BACKGROUND WHICH PRIMARILY IS A REITERATION OF THE RESPECTIVE STANDS AS EMERGING FROM THE ORDER OF THE AUTHORITIES BELOW. F IRSTLY AS PER THE ASSESSEE SECTION 50C OF THE ACT IS IN-APPLICABLE IN THE PRES ENT CASE AS THERE WAS NO PRIMA-FACIE CONCLUSION THAT ASSESSEE HAD RECEIVED H IGHER CONSIDERATION THAN THAT STATED IN THE SALE-DEED. THE LEARNED COUNSEL S UBMITTED THAT THERE WAS NO UNDERSTATEMENT OF CONSIDERATION IN RESPECT OF THE I MPUGNED TRANSACTION AND THEREFORE SECTION 50C OF THE ACT HAS BEEN INCORRECT LY APPLIED. FURTHERMORE THE LEARNED COUNSEL POINTED OUT THAT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS ASSESSEE HAD OBTAINED A VALUATION REPO RT FROM THE REGISTERED VALUER WHO HAD VALUED THE SAID PROPERTY AT RS.55 63 200/- AND THEREFORE THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY WAS INDEED NOT THE FAIR MARKET VALUE. 7. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE CONTENDED THAT SECTION 50C OF THE A CT IS A DEEMING PROVISION AND WHEREVER THE VALUE ADOPTED BY THE STAMP VALUATI ON AUTHORITY WAS MORE THAN THE STATED CONSIDERATION SUCH HIGHER VALUE WA S DEEMED TO BE THE FULL VALUE OF CONSIDERATION IN ORDER TO COMPUTE CAPITAL GAINS. IT WAS CONTENDED THAT THERE WAS NO REQUIREMENT FOR THE ASSESSING OFFICER TO PROVE ANY UNDERSTATEMENT IN ORDER TO APPLY THE PROVISIONS O F SECTION 50C OF THE ACT. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN OUR CONSIDERED OPINION THE PROVISIONS OF SECTION 50C OF THE ACT A RE CLEARLY ATTRACTED IN THE PRESENT CASE. THE ASSESSEE HAS SOLD A PROPERTY BEI NG LAND BY WAY OF A REGISTERED SALE-DEED FOR A STATED CONSIDERATION OF RS.52 00 000/-. IT IS ALSO NOT DISPUTED THAT THE VALUE ADOPTED BY THE STAMP VALUAT ION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER IS RS.88 73 000/- ITA NO.238/PN/2011 A.Y. 2006-07 IN SUCH A SITUATION THE PROVISIONS OF SECTION 50C OF THE ACT GET ATTRACTED. SECTION 50C OF THE ACT IS A DEEMING PROVISION WHIC H PRESCRIBES THAT IN CASE WHERE CONSIDERATION RECEIVED OR ACCRUING AS RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY FOR TH E PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER THEN THE VA LUE SO ADOPTED SHALL FOR THE PURPOSES OF SECTION 48 OF THE ACT BE DEEMED TO BE T HE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS RESULT OF SUC H TRANSFER. THE PRIMARILY INGREDIENT NECESSARY TO INVOKE SECTION 50C OF THE A CT IS FULFILLED IN THE PRESENT CASE INASMUCH AS THE VALUE ADOPTED BY THE STAMP VAL UATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF IMPU GNED TRANSFER IS HIGHER THAN THE CONSIDERATION RECEIVED BY THE ASSESSEE FOR SUCH TRANSFER. IN FACT SECTION 50C OF THE ACT DOES NOT REQUIRE THE DEPARTM ENT TO PROVE THAT ASSESSEE HAS RECEIVED ANYTHING OVER AND ABOVE THE STATED CON SIDERATION AND ACCORDINGLY THE PLEA OF THE ASSESSEE TO THE SAID E FFECT IS DEVOID OF MERIT. 9. IN-FACT DURING THE ASSESSMENT PROCEEDINGS ASSE SSEE OBJECTED TO THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AS ACCORDING TO HIM IT WAS IN EXCESS OF THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER. CONSIDERING THIS IN TERMS OF SECTION 50C(2) OF THE ACT THE ASSESSING OFFICER RIGHTLY REFERRED THE MATTER FOR VALUATION TO THE DV O. THE REPORT OF THE DVO HAS SINCE BEEN CONSIDERED BY THE CIT(A) WHEREBY THE FAI R MARKET VALUE HAS BEEN ASCERTAINED AT RS.93.88 LACS WHICH IS HIGHER THAN THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY. THEREFORE WE FIND NO IN FIRMITY IN THE ACTION OF THE CIT(A) IN UPHOLDING THE ASSESSING OFFICERS ACTION OF ADOPTING RS.88 73 000/- (BEING THE VALUE ADOPTED BY THE STAMP VALUATION AUT HORITY) AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING OR AS RESULT OF THE TRANSFER FOR THE PURPOSES OF COMPUTING THE CAPITAL GAIN UNDER SECTIO N 48 OF THE ACT. IN VIEW OF THE AFORESAID DISCUSSION THE ORDER OF THE CIT(A) I S HEREBY AFFIRMED. ITA NO.238/PN/2011 A.Y. 2006-07 10. BEFORE PARTING WE MAY ALSO REFER TO THE DECISI ON OF THE JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF PRAKASH KARNAWAT VS. IT O (2011) 16 TAXMANN.COM 357 (JP.) WHICH HAS BEEN RELIED UPON BY THE ASSESS EE TO SAY THAT WHERE ENTIRE LAND OF SALE CONSIDERATION HAS BEEN INVESTED IN SPECIFIED BONDS THEN THE CAPITAL GAIN WOULD BE EXEMPT UNDER SECTION 54F OF THE ACT AND THE PROVISIONS OF SECTION 50C OF THE ACT WOULD NOT BE A PPLICABLE. WE HAVE CAREFULLY PERUSED THE SAID DECISION AND THE PROPOSI TION SOUGHT TO BE CANVASSED BY THE ASSESSEE BEFORE US ON THE BASIS OF THE SAID DECISION. FACTUALLY SPEAKING THE SAID DECISION IS NOT ON THE SAME FOOTING AS THE PRESENT CASE. IN THE CASE BEFORE THE JAIPUR BENCH OF THE TR IBUNAL THE ENTIRE SALE CONSIDERATION WAS INVESTED IN THE PURCHASE OF BONDS AND THUS THE JAIPUR BENCH OF THE TRIBUNAL HELD THAT ASSESSEE WAS ENTITL ED TO DEDUCTION UNDER SECTION 54F OF THE ACT AND THE PROVISIONS OF SECTIO N 50C OF THE ACT WERE IN- APPLICABLE. WITHOUT GOING INTO THE MERITS OF THE P RECEDENT IT WOULD SUFFICE TO OBSERVE THAT IN THE PRESENT CASE THE FACTS ARE DIFF ERENT IN AS MUCH AS THE ENTIRE CONSIDERATION OF RS.52 00 000/- HAS NOT BEEN INVES TED IN SPECIFIED BONDS OR THE NEW PROPERTY FOR THE PURPOSE OF SECTIONS 54EC A ND 54F RESPECTIVELY AS PER DETAILS IN PARA (3) OF THIS ORDER. IN THE CASE BEFORE THE JAIPUR BENCH OF THE TRIBUNAL THE ENTIRE CONSIDERATION WAS INVESTED IN A NEW PROPERTY FOR THE PURPOSE OF SECTION 54F OF THE ACT AND THUS THE DEC ISION IN THE CASE OF PRAKASH KARNAWAT (SUPRA) IS NOT APPLICABLE IN THE P RESENT CASE. 11. THEREFORE IN VIEW OF THE AFORESAID DISCUSSION IN SO FAR AS THE GROUND OF APPEAL NO. 1 IS CONCERNED THE SAME IS HEREBY DIS MISSED. 12. THE SECOND GROUND OF APPEAL IS WITH REGARD TO T HE COMPUTATION OF DEDUCTION ALLOWABLE UNDER SECTION 54F OF THE ACT. T HE ASSESSEE INVESTED IN A NEW HOUSE OF RS.13 92 251/- AND ACCORDINGLY CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT OF RS.10 35 825/- WHICH HAS SINCE BEEN ALLOWED BY THE ASSESSING OFFICER. ON THIS GROUND NO SPECIFIC PLEA HAS BEEN RAISED BY THE ASSESSEE EXCEPT MAKING A REFERENCE TO THE DECISION OF THE BANGALORE BENCH ITA NO.238/PN/2011 A.Y. 2006-07 OF THE TRIBUNAL IN THE CASE OF SHRI GOULI MAHADEVAP PA VS. ITO (2011) 128 ITD 503 (BANG.). ON THIS ASPECT WE DIRECT THE ASSESSIN G OFFICER TO CONSIDER THE SAID DECISION AND THEREAFTER RE-COMPUTE THE DEDUCTI ON ALLOWABLE UNDER SECTION 54F OF THE ACT IF SO REQUIRED AND RE-WORK THE AMOU NT OF TAXABLE LONG TERM CAPITAL GAIN ACCORDINGLY. NEEDLESS TO SAY THE ASSE SSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD BE FORE WORKING OUT THE ELIGIBLE AMOUNT OF DEDUCTION UNDER SECTION 54F OF T HE ACT AS PER LAW. THUS ON THIS GROUND ASSESSEE SUCCEEDS FOR STATISTICAL PURP OSES. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED : 29 TH OCTOBER 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II NASHIK; 4) THE CIT-II NASHIK; 5) THE DR A BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T. PUNE