9911796707
TMI Blog2013 (11) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... fter scrutiny under section 143(3) of the Income Tax Act, 1961 (in short 'the Act') on 30.06.08, accepting the returned income. Thereafter on 06.05.10, a notice under section 148 was issued to the assessee proposing a reopening. Assessee filed a letter on 12.06.10 requesting the Assessing Officer to treat the return originally filed as one filed in response to such notice. 3. Assessee had sold a piece of land measuring 7.98 acres bearing Survey No.188/2 at Sarvanampatti Village, Coimbatore to one M/s.Adwaith Reality Private Ltd. on 31.08.05 through a document numbered as 5511/05. Consideration mentioned in the conveyance deed was Rs. 79 lakhs. However, the Stamp Valuation Authority, for the purpose of registration of the conveyance deed fixed the value of the property at Rs. 3,61,84,512/-. As per Assessing Officer, provision of Sec.50C of the Act stood attracted. Assessee was put on notice. Thereupon assessee filed a valuation of the subject property done by a valuer having approval for doing valuation of agricultural land and the value estimated by such valuer was Rs. 4,18,950/-. Assessee also objected to the reopening. According to the assessee, there was no escapement of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 3,84,204/- 18,837/- 75,00,000 However, the assessee admitted before the Ld. CIT(A) that actual capital gain was Rs. 18,837/- and not Rs. 15,796/- originally worked out by him. 6. Assessee placed reliance on the decision of Jaipur Bench of this Tribunal in the case of Gyan Chand Batra Vs. ITO, 133 TTJ 482, for arguing that a part of the consideration could be separately considered for working out Sec.54EC exemption. Further as per the assessee, consideration relatable to 7.96 acres out of the total 7.95 acres having been fully invested in a bond specified under section 54EC of the Act invocation of Sec.50C was not warranted. If at all any capital gains was to be computed, it could only be with reference to 0.02 acres of land comprised with the total area of 7.98 acres sold. 7. The CIT(A) however, was not appreciative of this contention. According to him, assessee had not declared the stamp duty value of the transaction, while computing the capital gains, when he filed the return of income. He had went by the consideration mentioned in the document. As per CIT(A), Assessing Officer was correct in his view, that the transaction attracted under section 50C of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ully invested in accordance with Sec.54EC of the Act, then there was no room for applying the deeming provision of Sec.50C of the Act. According to him, this view is supported by the decision of Jaipur Bench of this Tribunal in the case of Gyan Chand Batra Vs. ITO(supra). Relevant para-7 of the order of the Tribunal is reproduced hereunder:- "7. We have heard both the parties. Sec. 48 of IT Act states that capital gain is to be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the expenditure incurred in connection with transfer and the cost of acquisition of the asset and the cost of any improvement thereto. Hence, we will have to first ascertain the full value of the consideration. In respect of transfer of capital asset being land or building, full value of the consideration to be adopted for the purpose of s. 48 is defined in s. 50C of the IT Act. It will be useful to reproduce s. 50C(1) of the IT Act : "50C(1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to the decision of Hon'ble apex Court at p. 237 as under : "This controversy has already been settled by the Supreme Court in the case of CIT vs. George Henderson & Co. Ltd. (1967) 66 ITR 622 (SC), the very expression 'full value of consideration' was under consideration of the Supreme Court in the context of the provisions of the Indian IT Act, 1922. The provisions of s. 12B of the 1922 Act pertain to capital gains. Sub-s. (1) was in pari materia to s. 45(1) of the present Act and sub-s. (2) of s. 12B of the 1922 Act was in pari materia to the provisions of s. 48 of the present Act. The Supreme Court was of the view that the expression 'full value of consideration' in the main part of s. 12B(2) of the Act cannot be construed as having a reference to the market value of the asset transferred but the expression only meant, the full value of a consideration received by the transferor in exchange of the capital asset transferred by him. The Supreme Court also observed that in the case of a sale the full value of consideration is the full sale price actually paid. It was further of the view that the expression 'full value' means the whole price without any deduction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of transfer of the original asset, is chargeable under the head 'Income from house property'. Explanation : For the purposes of this section, (***) 'net consideration', in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer." 7.3 In Explanation to s. 54F(1), it is mentioned that net consideration means the full value of consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. The meaning of full value of consideration in Explanation to s. 54F(1) will not be governed by meaning of words 'full value of consideration' as mentioned in s. 50C. The value adopted for stamp duty is to be considered as full value of consideration for the purpose of computing the capital gains under s. 48. Sec. 54F(1) says that capital gains is to be dealt with in accordance with the provisions of sub-ss. (a) and (b) of s. 54F(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO(supra). However, admittedly in the given case, entire capital gains were not invested by the assessee in the bonds. The total sale consideration received was Rs. 79 lakhs and the capital gains on such transaction after deducting indexed cost of acquisition, as per the assessee's own working out to Rs.75,15,796/-. Assessee had invested only Rs. 75 lakhs in the SIDBI capital gain Bonds. Had the assessee invested whole amount of Rs. 75,15,796/- which was the capital gains arising out of the transaction, then may be, the full value of consideration could be taken as the amount specified in the conveyance deed, for the purpose of giving effect to the exemption under section 54EC of the Act. However, assessee here has endeavored to make an artificial split of a single transaction. The sale of 7.98 acres of land was effected through a single document and the sale consideration mentioned shown was Rs. 79 lakhs. In our opinion an artificial split of a single transaction for claiming a better benefit than what is lawfully available cannot be accepted or encouraged. The sale executed through a single conveyance deed can be considered only as one single transaction, not amenable to any suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... full value of consideration should be taken as the value adopted by Stamp Valuation Authority or the value fixed by the District Valuation Officer (DVO) whichever was lower. When the value fixed by the DVO exceeded the value fixed by the Stamp Valuation Authority, then value fixed by the Stamp Valuation Authority alone had to be considered. Here, the value fixed by the Stamp Valuation Authority was Rs.3,61,84,512/- whereas the value fixed by DVO was Rs.1,95,33,000/-. Assessing Officer, in our opinion, therefore, had proceeded in accordance with law, in considering the fair market value at Rs.1,95,33,000/-. Nevertheless, for working out the exemption under section 54EC available to the assessee, Assessing Officer was required to apply the proportion mentioned in sub clause (b) of Sec.54EC(1) of the Act, which has not been done. Therefore, we set aside the order of the authorities below and remit the issue of computation of long term capital gains tack to the file of the Assessing Officer, for computing such capital gains in accordance with Sec.54EC (1) (b) of the Act. Ordered accordingly. 14. In result, the appeal of assessee is treated as partly allowed for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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