2012 (8) TMI 808 - AT - Income Tax

Acceptance of fresh evidence by CIT(A)- Revenue appeal on violation of Rule 46A of the I.T. Rules, 1962 - Held that - The copy of the assessees s letter to the AO exhibits that one copy each of the two deeds dated 15-01-1998 and 26-05-2006, i.e., the two dates on which the entire bunch of 15 deeds were executed, were filed as specimen copies before the AO, the other deeds being identical in all other respects. Had the AO wanted, he averred, the assessee could have supplied the copies of all the other deeds as well which was confirmed by DR as forming part of the assessment record - could not demonstrate any wrong assumption of fact/s by the AO - against revenue. Addition in the sale value consideration for computing long term capital gain u/s 50C - difference in value as per the valuation of stamp duty authority and as declared by assessee - Held that - Section 50C stands co-opted on the statute by Finance Act, 2002, with effect from 01-04-2003 and would apply in respect of capital gains arising on the transfer of any capital asset, being land or building or both, chargeable u/s. 45 of the Act for A.Y. 2003-04 or any subsequent year. As such, the impugned capital gains, being chargeable u/s. 45 for the current year, i.e., AY 2006-07, section 50C would be per se applicable - The words adopted or assessed (as also assessable ) in s. 50C(1) qualify the word value preceding it, and not the word transfer , thus the assessee s case that the assessment of the fair market value of the property (land) by the SVA was done only on 27-11-2007 and, therefore, there being no assessment by it by the end of the relevant year, i.e., 31-03-2006 cannot be accepted - in favour of revenue.

Issues Involved:
1. Acceptance of fresh evidence in violation of Rule 46A of the I.T. Rules, 1962.
2. Deletion of addition in sale value consideration for computing long term capital gain.
3. Assessing Officer's right to adopt the sale consideration as per the valuation of stamp duty authority.

Issue-wise Detailed Analysis:

1. Acceptance of Fresh Evidence in Violation of Rule 46A:
The Revenue contended that the Commissioner of Income-tax (Appeals) [CIT(A)] erred in accepting fresh evidence, violating Rule 46A of the Income-tax Rules, 1962. The Revenue argued that while all fifteen conveyance deeds were produced before the CIT(A), only one copy was given to the Assessing Officer (AO). The assessee clarified that all relevant material was before the AO, and no fact was wrongly assumed by the AO. The letter dated 16-07-2008 to the AO showed that specimen copies of the deeds were filed, and the AO could have requested additional copies if needed. The Departmental Representative (DR) confirmed the letter as part of the assessment record and could not demonstrate any wrong assumption of facts by the AO. The Tribunal found no merit in the Revenue's case on this ground, thereby dismissing it.

2. Deletion of Addition in Sale Value Consideration for Computing Long Term Capital Gain:
The assessee sold a 2/5th share in land along with co-owners to fifteen different buyers through separate conveyance deeds. The agreements to sell were executed on 15-10-1996, with some deeds executed and registered in 1998 and others in 2006. The assessee returned long-term capital gains (LTCG) for the assessment year (A.Y.) 2006-07, but the AO assessed a higher amount by invoking section 50C of the Income-tax Act, 1961, which deems the value assessed by the Stamp Valuation Authority (SVA) as the sale consideration if it is higher than the actual sale consideration.

The CIT(A) granted relief to the assessee, leading to the Revenue's appeal. The Tribunal noted that section 50C applies to capital gains chargeable under section 45 for A.Y. 2003-04 or subsequent years. For the first five deeds dated 15-01-1998, there was no difference between the value assessed by the SVA and the value disclosed by the assessee, making section 50C inapplicable. For the remaining ten deeds executed in 2006, the Tribunal found that the circle rate prescribed by the competent authority under the Stamp Act for the relevant year should be adopted, even if the formal assessment by the SVA occurred later. The Tribunal rejected the assessee's argument that section 50C would not apply since the assessment by the SVA was done after the relevant year.

3. Assessing Officer's Right to Adopt Sale Consideration as per Valuation of Stamp Duty Authority:
The Tribunal clarified that section 50C applies where the consideration received for a transfer of land or building is less than the value adopted or assessed by the SVA for stamp duty purposes. The words "or assessable" were inserted in section 50C(1) by Finance (No.2) Act, 2009, effective from 1-10-2009. However, the Tribunal held that even without considering the words "or assessable," the value prescribed by the competent authority for stamp duty purposes should be adopted for computing capital gains, irrespective of when the formal assessment by the SVA occurred. The Tribunal distinguished the cited case laws on the grounds that they involved unregistered documents or different factual circumstances.

Conclusion:
The Tribunal dismissed the Revenue's first ground regarding the acceptance of fresh evidence. On the merits, the Tribunal held that section 50C applies to the impugned transfers, and the value prescribed by the competent authority for stamp duty purposes should be adopted for computing capital gains. The Revenue's appeal was partly allowed.

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