2017 (9) TMI 575 - AT - Income Tax

Apportionment of sale consideration among the owners on property jointly sold - Capital gain computation - Adoption of value of sale consideration for the purpose of computing the capital gains in respect of property sold jointly - Held that - There can be several reasons as to why some of the owners had agreed for the lesser amount of consideration depending upon location of physical shape of the land held by them or the proximity to the main road etc. But, in our considered opinion, this fact has no relevance. Therefore, once the sale consideration stated in the registered Conveyance Deed, it is held to be conclusive proof of the amount of the consideration received in the absence of contrary evidence on the record suggesting higher consideration was received by the assessee. In the light of the decision of the Hon ble Supreme Court in the case of CIT Vs. Shivakami Co. (P) Ltd., (1986 (3) TMI 2 - SUPREME Court) wherein it was held that in the absence of evidence suggesting that more consideration that what was stated in deed was received, no higher consideration can be adopted for the purpose of capital gains. Further onus always lies on the Revenue to prove the existence of the material from which inference can be drawn that higher consideration was in fact received. In the present case, there was no material to draw interference that higher consideration was received than what was stated in the sale deed. It is not even the case of AO that the provisions of Section 50C are applicable to the facts of the present case. Therefore, the AO was not justified in adopting consideration of ₹ 28,12,500/- as against ₹ 8,33,000/- declared by assessee. Therefore, the Grounds of Appeal raised by assessee are allowed.

Issues Involved:
1. Legality and validity of the CIT (A)'s order dated 30-01-2015.
2. Requirement of explicit direction in the order u/s 263 for a fresh assessment.
3. Relevance of the High Court of Gauhati's judgment in the case of CIT vs Shankar Rajkhowa.
4. Interpretation of the CIT's direction to the ITO regarding the taxability of transactions.
5. Correct computation of capital gains under Section 48 of the Income Tax Act, 1961.
6. Consideration of written submissions by the CIT (A).
7. Binding nature of the ITAT's observations.
8. Determination of the quantum of consideration received for computing capital gains.
9. Adoption of the sale consideration amount by the CIT (A) and ITO.

Detailed Analysis:

1. Legality and validity of the CIT (A)'s order dated 30-01-2015:
The appellant challenged the CIT (A)'s order as being "perverse, illegal and contrary to the facts and circumstances of the case and the law on the subject." The Tribunal examined the grounds raised by the appellant and found that the CIT (A) had dismissed the appeal without merit, affirming the AO's adoption of a higher sale consideration for capital gains computation.

2. Requirement of explicit direction in the order u/s 263 for a fresh assessment:
The appellant argued that the CIT's order u/s 263 dated 23-05-2014 only set aside the assessment without directing the ITO to make a fresh assessment, which is necessary to empower the ITO. The Tribunal noted that the CIT's order did direct the AO to make enquiries regarding the taxability of transactions, thus implicitly directing a fresh assessment.

3. Relevance of the High Court of Gauhati's judgment in the case of CIT vs Shankar Rajkhowa:
The appellant contended that the CIT (A) should have followed the High Court of Gauhati's judgment in CIT vs Shankar Rajkhowa. The Tribunal did not find this argument persuasive, as the facts and legal issues in the current case differed from those in the cited judgment.

4. Interpretation of the CIT's direction to the ITO regarding the taxability of transactions:
The appellant argued that the CIT (A) misinterpreted the CIT's direction regarding the taxability of transactions as a direction to make a fresh assessment. The Tribunal found that the CIT's direction was clear and required the AO to examine the taxability of the transactions, which justified the fresh assessment.

5. Correct computation of capital gains under Section 48 of the Income Tax Act, 1961:
The appellant claimed that the capital gain should be computed based on the amount of ?8,33,000/- as per Section 48. The Tribunal agreed, noting that the sale consideration mentioned in the registered Conveyance Deed is conclusive proof of the amount received unless contrary evidence suggests a higher amount.

6. Consideration of written submissions by the CIT (A):
The appellant argued that the CIT (A) ignored their written submissions. The Tribunal reviewed the CIT (A)'s order and found that the CIT (A) had considered the submissions but did not find them convincing enough to alter the assessment.

7. Binding nature of the ITAT's observations:
The appellant contended that the CIT (A) wrongly treated the ITAT's observations as binding. The Tribunal clarified that the ITAT's observations, while not binding, were relevant and supported the AO's approach in the fresh assessment.

8. Determination of the quantum of consideration received for computing capital gains:
The appellant argued that the ITAT did not specify the quantum of consideration received for computing capital gains. The Tribunal emphasized that the sale consideration stated in the registered sale deed should be taken as conclusive proof unless there is evidence of a higher amount received.

9. Adoption of the sale consideration amount by the CIT (A) and ITO:
The Tribunal found that the AO and CIT (A) were not justified in adopting a higher sale consideration of ?28,12,500/- instead of ?8,33,000/- declared by the assessee. The Tribunal allowed the appellant's grounds of appeal, holding that the sale consideration stated in the registered Conveyance Deed is conclusive in the absence of contrary evidence.

Conclusion:
The Tribunal allowed the appeal of the assessee, setting aside the orders of the CIT (A) and AO, and directed that the sale consideration of ?8,33,000/- be adopted for the purpose of computing capital gains. The Tribunal emphasized the importance of the registered Conveyance Deed as conclusive proof of the consideration received in the absence of evidence to the contrary. The decision was pronounced in the open court on 7th September, 2017.

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