2008 (9) TMI 944 - AT - Income Tax

Valuation of the property - sale of office premises - invocation of provisions of s. 50C - HELD THAT - We find that the contention of the assessee that the agreement to sell the property was entered into on the date of first instalment of the amount in consideration i.e. 11th May, 2002 and handed over the possession of the property in question by the seller to the assessee (sic) on the payment of entire consideration on 4th Sept., 2002 has not been accepted by the lower authorities in absence of a written agreement on those dates. With the above contentions, the assessee intended to make a case that sale was completed well before coming into operation of the provisions of s. 50C of the Act w.e.f. 1st April, 2003, hence the provisions of s. 50C of the Act are not applicable in the present case merely because the sale deed was registered two years later on 10th March, 2004. We thus in the interest of justice while setting aside the orders of the lower authorities remand the matter to the file of the AO. An alternative contention of the ld AR remained that if the sale is considered to have come into effect on the date of registration of sale deed i.e. 10th March, 2004, then the relevant AY for the invocation of provisions of s. 50C of the Act would be the AY 2004-05 and not the AY 2003-04 under consideration. Since we have remanded the matter to the file of the AO, the AO is directed to consider this aspect of the matter while deciding the issue as directed above. The ground No. 1 is accordingly allowed for statistical purposes. Valuation of the property - difference between the value of land estimated by the Valuation Officer and shown by the assessee - CIT(A) upheld the action of the AO for invoking provisions of s. 50C and made addition - HELD THAT - We concur with the contention of the ld AR which is also supported by the decision of Jodhpur Bench of the Tribunal in the case of Navneet Kumar Thakkar vs. ITO 2007 (3) TMI 317 - ITAT JODHPUR that provisions of s. 50C cannot be invoked in absence of a registered document i.e. in absence of the value adopted or assessed by any authority of State Government i.e. the stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer. Admittedly, in the present case, there was no registered sale deed to enable the AO to adopt or assess the value assessed by the stamp valuation authority for the purpose of s. 48 treating the same as full value of the consideration received or accruing as a result of such transfer. There was also no evidence that the assessee had received higher amount in consideration against the sale of that plot than shown by the parties in the agreement to sale. We thus while setting aside orders of the lower authority direct the AO to delete the addition in question. The ground No. 2 is thus allowed. The appeal is accordingly partly allowed.

Summary

Issues:
1. Invocation of provisions of s. 50C on the sale of office premises in Kamal Complex, New Colony, Jaipur.
2. Invocation of provisions of s. 50C on the sale of a plot in Dharm Park, Shyam Nagar, Jaipur.
3. Charging of interest under ss. 234B, 234D, and 244A.

Issue 1 - Sale of Office Premises in Kamal Complex, New Colony, Jaipur:

The appellant contested the first appellate order concerning the invocation of s. 50C provisions in computing the property value at Rs. 13,05,880. The AO computed long-term capital gain based on this valuation, which the CIT(A) upheld. The appellant argued that as possession was handed over and full payment received by September 2002, the sale was completed before s. 50C came into effect. The Tribunal found that while a written agreement was dated March 2003, possession and payment occurred earlier. The matter was remanded to the AO for further examination based on circumstantial evidence. The Tribunal allowed the appeal for statistical purposes.

Issue 2 - Sale of Plot in Dharm Park, Shyam Nagar, Jaipur:

Regarding the sale of a plot in Shyam Nagar, Jaipur, the AO invoked s. 50C provisions, adding Rs. 53,100 to the property value. The appellant argued against including the cost of a boundary wall and the comparison with JDA-approved land. The Tribunal concurred with the appellant that s. 50C cannot be invoked without a registered document. As there was no registered sale deed, the AO was directed to delete the addition of Rs. 53,100. The Tribunal allowed this ground of appeal.

Issue 3 - Charging of Interest under ss. 234B, 234D, and 244A:

The appellant also challenged the charging of interest under ss. 234B, 234D, and 244A. However, the judgment did not provide detailed analysis or specific findings on this issue.

In summary, the Tribunal addressed the issues related to the invocation of s. 50C provisions in the sale of properties in Jaipur, emphasizing the importance of registered documents and timing of possession and payments. The judgment provided detailed reasoning for each issue, ultimately allowing the appeal in part based on the findings and directions provided for further assessment by the AO.