The ACIT, Circle-5,, Surat v. Shri Devrajbhai M.Patel, Surat

ITA 2657/AHD/2009 | 2006-2007
Pronouncement Date: 30-09-2011 | Result: Dismissed

Appeal Details

RSA Number 265720514 RSA 2009
Assessee PAN AAZPP0165E
Bench Ahmedabad
Appeal Number ITA 2657/AHD/2009
Duration Of Justice 2 year(s) 4 day(s)
Appellant The ACIT, Circle-5,, Surat
Respondent Shri Devrajbhai M.Patel, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 30-09-2011
Date Of Final Hearing 29-09-2011
Next Hearing Date 29-09-2011
Assessment Year 2006-2007
Appeal Filed On 25-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH . .. . . .. . !' !' !' !' #$ #$ #$ #$ %&' ( %&' ( %&' ( %&' ( ) ) ) ) & ' & ' & ' & ' BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND BHAVNESH SAINI JUDICIAL MEMBER) ITA NO.2657/AHD/2009 WITH CO. NO250/AHD/2009 [ASSTT.YEAR : 2006-2007] ACIT CIR.5 SURAT. /VS. SHRI DEVRAJBHAI M. PATEL 606 LALBHAI CONTRACTOR COMPLEX OPP: PARSI LIBRARY NANPRUA SURAT. PAN : AAZPP 0165 E ( (( (+ + + + / APPELLANT) ( (( (-.+ -.+ -.+ -.+ / RESPONDENT) ) / 0 &/ REVENUE BY : SHRI VINOD TANWANI 23 / 0 &/ ASSESSEE BY : SHRI M.K. PATEL 45 / 36/ DATE OF HEARING : 29 TH SEPTEMBER 2011 789 / 36/ DATE OF PRONOUNCEMENT : 30 TH SEPTEMBER 2011 &' / O R D E R PER G.D. AGARWAL VICE-PRESIDENT : THIS IS REVENUES APPEAL AND ASSESSEES CROSS-OBJECTION AGAINST ORDER OF THE COM MISSIONER OF INCOME-TAX (APPEALS)-III SURAT AGAINST THE ORDER OF THE ASSES SING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961. 2. IN THIS APPEAL BY THE REVENUE THE FOLLOWING THRE E GROUNDS ARE RAISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.6 99 437/- MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT IN PURCHASE OF LAND U/S.69B OF THE ACT. ITA NO.2657/AHD/2009 WITH CO. NO250/AHD/2009 -2- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 30 825/- MADE UNDER SECTION 50C OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LOAN THE LD.CIT(A) HAS ERRED IN DELETING THE 20% OF INTEREST ON CAR LOAN AND CAR INSURANCE PREMIUM. 3. AT THE TIME OF HEARING BEFORE US IT IS STATED B Y THE LEARNED COUNSEL THAT ALL THREE GROUNDS ARE COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE ITAT C BENCH IN THE CASE OF ACIT VS. SHRI RAVJIBH AI P. PATEL IN ITA NO.2658/AHD/2009 ORDER DATED 4-5-2011 WHO WAS THE CO-OWNER OF THE PROPERTY AND IN HIS CASE ALSO SIMILAR ADDITION WAS MADE. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. SO FAR AS GROUND NO.1 IS CONCERNED THE FACTS ARE THAT THE ASSESSEE IS ONE OF THE CO-OWNERS WHO PURCHASED THE IMMOVABLE PROPERTY. THE AO FOUND THAT THE PURCHASE VALUE SHOWN BY THE ASSESSEE WAS LESS THAN THE VALUE FOR THE PURPOSE OF STAMP-DUTY. HE THEREFORE PRESUMED THAT THE ASSESSE E MADE UNDISCLOSED INVESTMENT UNDER SECTION 69B. SIMILAR ADDITIONS WE RE MADE IN THE CASE OF OTHER CO-OWNERS AND THE ITAT IN THE CASE OF RAJIBHA I P. PATEL (SUPRA) FOLLOWING THE CASE OF ANOTHER CO-OWNER HELD AS UNDER: 8. THE PROPOSITION LAID DOWN IN THE ABOVE DECISION OF THE CO-OWNER IS THAT PROVISION OF SECTION 50C ARE NOT APPLICABLE IN THE CASE OF PURCHASER OF THE PROPERTY. SIMILAR VIEW HAS BEEN TA KEN BY THE DELHI TRIBUNAL IN THE CASE OF FITWELL LOGIC SYSTEM (P) LT D. (2010) 1 ITR 286 (DEL) (TRIB) WHEREIN ALSO THE PROPOSITION HAS BEEN LAID DOWN THAT THE DIFFERENCE BETWEEN THE CONSIDERATION SOLD IN THE SA LE DEED AND VALUATION TAKEN FOR STAMP PURPOSES CANNOT BE ADDED AS UNEXPLA INED INVESTMENT IN THE HANDS OF THE PURCHASER. THE PROPOSITION THAT PR OVISION OF SECTION 50C DO NOT APPLY TO THE PURCHASER OF PROPERTY IS AL SO HELD IN THE CASE OF SMT. KUSUM GALATI IN ITA NO.1576/DEL/2008 (BCAJ A 1 6 VOLUME 41 B PART VI MARCH 2010). IN VIEW OF ABOVE WE UPHOLD THE ORDER OF LD. CIT(A) AND DISMISS THIS GROUND OF REVENUE. ITA NO.2657/AHD/2009 WITH CO. NO250/AHD/2009 -3- SINCE THE FACTS OF THE CASE ARE IDENTICAL TO THE FA CTS IN THE CASE OF OTHER CO- OWNERS WE THEREFORE RESPECTFULLY FOLLOWING THE ABO VE DECISION OF THE ITAT IN THE CASE OF SHRI RAVJIBHAI P. PATEL (SUPRA) UPHOLD THE ORDER OF THE CIT(A) ON THIS POINT AND REJECT GROUND NO.1 OF THE REVENUES APPEAL. 5. SO FAR AS GROUND NO.2 OF THE REVENUES APPEAL IS CONCERNED THE AO APPLIED SECTION 50C IN RESPECT OF THE SALE OF THE P ROPERTY AT SURAT BY THE ASSESSEE ALONG WITH OTHER CO-OWNERS. THE ASSESSEE CLAIMED BEFORE THE AO THAT THE ASSESSEE HAS DISCLOSED INCOME FROM THE SALE OF THE PROPERTY UNDER THE HEAD BUSINESS INCOME AND NOT AS CAPITAL GAIN THEREFORE SECTION 50C IS NOT APPLICABLE. THE AO DID NOT ACCEPT THE ASSESSEES E XPLANATION AND MADE THE ADDITION OF RS.30 825/- UNDER SECTION 50C. SIMILAR L ISSUE AROSE IN THE CASE OF ANOTHER CO-OWNER VIZ. SHRI RAVJIBHAI P. PATEL (SUPR A) WHEREIN THE ITAT UPHELD THE ORDER OF THE CIT(A) AND HELD AS UNDER: 12. IN FACT SECTION 50C ENABLES THE AO TO SUBSTITU TE THE DECLARE SALE CONSIDERATION IN THE DOCUMENTS BY THE VALUATION DON E BY STAMP VALUATION AUTHORITIES IN CASE IT IS HIGHER AND COMP UTE CAPITAL GAINS ACCORDINGLY. THUS EVEN WHILE COMPUTING CAPITAL GAIN NO SEPARATE ADDITION AS SUCH ON ACCOUNT OF DIFFERENCE IN VALUAT ION OF THE PROPERTY SHOWN BY THE ASSESSEE AND DONE BY STAMP VALUATION A UTHORITIES CAN BE MADE. IT IS ONLY A CASE OF SUBSTITUTION OF ONE VALU ATION (SHOWN BY THE ASSESSEE IN THE DOCUMENTS) BY ANOTHER VALUATION AS MADE BY STAMP VALUATION AUTHORITIES. THEREFORE THE BASIC PREMISE ON WHICH THE AO HAS PROCEEDED IS LEGALLY UNSUSTAINABLE. SIMILAR VIEW HA S BEEN TAKEN BY I- ION. MADRAS HIGH COURT IN THIRU VENGADAN INVESTMENT PVT. LTD. (2010) DTR 81 320 ITR 345 229 CTR 285 (MAD). IT IS HELD THEREIN THAT PROVISIONS OF SECTION 50C CAN BE APPLIED ONLY TO FI ND OUT THE TRUE VALUE OF CAPITAL ASSET AND NOT FOR COMPUTING BUSINESS INC OME AND HENCE THE ITA NO.2657/AHD/2009 WITH CO. NO250/AHD/2009 -4- SAME CANNOT BE APPLIED WHEN THERE IS SALE OF STOCK- IN-TRADE. IN VIEW OF ABOVE WE UPHOLD THE ORDER OF LD. CIT(A) AND DISMIS S THIS GROUND OF REVENUE. 6. AFTER CAREFULLY CONSIDERING THE FACTS OF THE CAS E AND ARGUMENTS OF BOTH THE SIDES WE AGREE WITH THE VIEW OF THE ITAT THAT SECTION 50C IS APPLICABLE ONLY IN RESPECT OF THE SALE OF CAPITAL ASSETS AND N OT WHILE COMPUTING THE BUSINESS INCOME. WE THEREFORE RESPECTFULLY FOLLOW ING THE ABOVE DECISION OF THE ITAT UPHOLD THE ORDER OF THE CIT(A) IN THIS REG ARD AND REJECT GROUND NO.2 OF THE REVENUES APPEAL. 7. GROUND NO.3 OF THE REVENUES APPEAL IS AGAINST T HE DELETION OF 20% OUT OF THE INTEREST ON CAR LOAN AND CAR INSURANCE PREMI UM. THE FACTS OF THE CASE ARE THAT THE AO DISALLOWED 20% OUT OF VEHICLE EXPEN SES. ON APPEAL THE CIT(A) SUSTAINED THE DISALLOWANCE IN PRINCIPLE HOW EVER HE ALLOWED THE INTEREST PAYMENT ON THE LOAN TAKEN FOR PURCHASE OF CAR AS WELL AS INSURANCE PREMIUM PAID ON CAR AND DISALLOWANCE OF 20% WAS RES TRICTED TO THE REMAINING EXPENSES. SIMILAR ISSUE IS CONSIDERED BY THE ITAT IN THE CASE OF SHRI RAVJIBHAI P. PATEL (SUPRA) WHEREIN THE ITAT UPHELD THE ORDER OF THE CIT(A) WITH THE FOLLOWING FINDING: 15. WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF THE LD.CIT(A) . THE REASONING GIVEN BY HER ARE CONVINCING. THE INTEREST AND INSURANCE HAS TO BE ALLOWED IN FULL WHICH DEPENDS ON THE USE OF THE VEHICLE FOR TH E BUSINESS PURPOSE EVEN IF MADE FOR PART OF THE YEAR. THIS GROUND OF REVENUE IS ACCORDINGLY DISMISSED. RESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE ORDE R OF THE CIT(A) AND REJECT THE GROUND NO.3 OF THE REVENUES APPEAL. ITA NO.2657/AHD/2009 WITH CO. NO250/AHD/2009 -5- CO NO.250/AHD/2009 8. AT THE TIME OF HEARING BEFORE US THE LEARNED CO UNSEL FAIRLY ADMITTED THAT THE CO IS ONLY IN SUPPORT OF THE ORDER OF THE CIT(A ). THE SAME BEING INFRUCTOUS IS REJECTED. 9. IN THE RESULT THE REVENUES APPEAL AND THE ASSE SSEES CO ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&' ( %&' ( %&' ( %&' ( /BHAVNESH SAINI ) ) ) ) ) /JUDICIAL MEMBER ( . .. . . .. . G.D. AGARWAL) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD