9911796707
TMI Blog2015 (7) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... ustrial Estate, Ward No.7, Block No.2, Sanathnagar, Hyderabad, was sold by the assessee and the capital gain arising from the said sale as computed at Rs. 4,39,59,860 was declared in the return of income filed on 28.7.2006. The said return was originally processed by the Assessing Officer under S.143(1) on 14.8.2007, accepting the income as returned by the assessee. Subsequently, a notice under S.148 was issued by the Assessing Officer on 30.4.2010 reopening the assessment after recording the reasons. In reply, a letter dated 07.6.2010 was filed by the assessee requesting the Assessing Officer to treat the original return filed by it on 28.7.2006 as the return filed in response to the notice under S.148. During the course of re-assessment proceedings, the assessee was called upon by the Assessing Officer to explain as to why the market value of the property as taken by the Stamp Valuation Authority at Rs. 11,34,93,000 should not be taken as the sale consideration in place of the lower consideration of Rs. 9,06,00,000 shown in the agreement, for the purposes of computation of capital gains in accordance with the provisions of S.50C of the Act. In reply, it was submitted by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.S.I.D.C is Govt. body hence the Registration Authority collected the Stamp Duty for Rs. 3,69,50,000/- only. Whereas the Property Registration value is Rs. 8,01,57,000/-. As we have purchased the property in Open Auction for Rs. 3,69,50,000/- that is the fair market value at that time even though Registration Authority Value is Rs. 8,01,57,000/. Hence it is evident from this transaction Registration Authority value is more than fair market value. In the same way it is at the time of sale of property also. In this regard our honorable request to the Honorable g Officer to consider the facts of the case. That the fair market value of the property in that Industries Area below the Registration Authority Value and our sale consideration is at fair market value. So kindly adopt the sale consideration value in calculation the capital gain tax and complete the Assessment." 3. The Assessing Officer did not find merit in the above objections raised by the assessee. According to him, the stand of the assessee that the difference that existed at the time of purchase between the purchase price and the valuation as per the registering authority has existed even at the time of sale also h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assessee in filing this appeal before the Tribunal. In this regard, an application is filed by the assessee seeking condonation of the said delay. Keeping in view the submissions made therein, which are duly supported by the affidavits of the concerned persons, we are satisfied that there was a sufficient cause for the delay in filing the present appeal by the assessee, and this position is not disputed even by the Learned Departmental Representative. The delay in filing this appeal on the part of the assessee is, therefore, condoned and we now proceed to dispose of the same on merits. 6. In the original grounds raised in this appeal, the assessee has raised various issues challenging the valuation of its property as determined by the DVO. During the course of appellate proceedings before the Tribunal, the assessee has filed an applications seeking admission of the following additional grounds- "1. It is contended that provisions of 50C are inapplicable to the facts of the appellant's case in as much as the said section has no application to bona fide, genuine and honest transaction entered into between the parties. 2. On the facts on record, it is not the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer is understated or, in other words, shown at least at a lesser figure than that actually received by the assessee. It was held that provisions of S.52(2) therefore, cannot be invoked by the Revenue, unless there is understatement of the consideration in respect of the transfer and the burden of showing that there is such understatement is on the Revenue. It was also held that under Entry 82 List 1 of Seventh Schedule of the Constitution, tax can be imposed on income other than agricultural income and the Parliament cannot choose to tax as income an item which, in no rational sense, can be regarded as a citizen's income or even a receipt. The learned counsel for the assessee submitted that S.52(2) creates a fiction similar to S.50C and therefore, the of S.50C can be invoked only when the Revenue has brought on record something to show that there is understatement of the consideration in respect of the transfer or in other words, the consideration actually received by the assessee is more than what is declared or disclosed by him, as held by the Hon'ble Supreme Court in the case of K.P.Varghese (supra). 10. The learned counsel for the assessee also relied on other caselaws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er valuation. According to him, there is, however, no such satisfaction of the Assessing Officer contemplated under S.50C and therefore, the decision rendered in the context of proviso to S.12B of the Indian Income-tax Act, 1922 and S.52(2) of the Income Tax Act,1961 cannot be applied in the context of S.50C. He contended that the position on this issue has entirely changed after the insertion of S.50C in the statute and if the contention of learned counsel for the assessee is accepted, the very purpose of S.50C will be defeated, rendering the said provision redundant. 13. As regards the decision of the Hon'ble Punjab and Haryana High Court in the case of CIT V/s. Chandani Bhochar (supra), cited by the learned counsel for the assessee, the Learned Departmental Representative submitted that the same is rendered in the case of a purchaser of the property, while applying the provisions of S.69B for making the addition on account of unexplained investment by relying on the value of the asset determined for the purpose of paying stamp duty, and the same, therefore, cannot be applied in the present case, where the assessee is the seller and the issue is relating to the computation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp;"52 (1) Where the person who acquires a capital asset from assessee is directly or indirectly connected with the assessee and the Income-tax officer has reason to believe that the transfer was effected with the object of avoidance or reduction of the liability of the assessee under section 45, the full value of the consideration for the transfer shall, with the previous approval of Inspecting Assistant Commissioner, be taken to be the fair market value of the capital asset on the date of the transfer. (2) Without prejudice to the provisions of sub-section (1), if in the opinion of the Income-tax officer the fair market value of a capital asset transferred by an assessee as on the date of the transfer exceeds the full value of the consideration d d by the assessee in respect of the transfer of such capital assets by an amount of not less than fifteen per cent of the value red, the full value of the consideration for such capital asset shall, with the previous approval of the Inspecting Assistant Commissioner, be taken to be its fair market value on the date of its transfer. " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith whom the assessee is directly or indirectly connected, and Income-tax Officer has reason to believe that the sale, exchange or transfer was effected with the object of avoidance or reduction of the liability of the assessee under this the full value of the consideration for which sale, exchange or transfer is made shall, with the prior approval of the Inspecting Assistant Commissioner of Income-tax, be taken to be the fair market value of the capital asset on the date on which the sale, exchange or transfer took place : ..... Provided further that........" *************** &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than what was declared by it. Such requirement, however, is not contemplated by the provisions of S.50C which, as rightly contended by the Learned Departmental Representative, are plain and simple. No doubt, S.50C also creates a deeming fiction, but for applying the said provision, what is required is that consideration received or accruing as a result of the transfer by the assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of State Government for the purpose of payment of stamp duty in respect of such transfer. If this situation as contemplated in sub-section (1) of S.50C is found to be obtained in any case, the provisions of S.50C can be invoked, subject, of course, to the provisions of sub-section (2) and (3) thereof, and there is nothing more that is required to be done by the Assessing Officer to show the under-valuation of sale consideration by the assessee or to show that the assessee has actually received more than what is declared by him. The scope of S.50C, in our opinion, thus is entirely different from the scope of S.52(2) as well as proviso to S.12B(2) and the ratio of the decisions of the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price as a measure of tax, which is permissible. Relying on this proposition propounded by the Hon'ble Supreme Court in the case of A.Sanyasi Rao and others (supra), it was held by the Hon'ble Bombay High Court in the case of Bhatia Nagar Premises Co-operative society Ltd. (supra), that applying the rule of stamp duty, as contained in S.50C, is for the purpose of computation of income which is only a standard of measure for imposing tax. It was observed that S.50C is a measure provided to bridge the gap as it was found that assessees were not correctly declaring the full value of the consideration or in other words, resorting to the practice of undervaluation. 17. It is interesting to note that in the case of K.R.Palanisamy (supra), a reference was specifically made by the Hon'ble Maras High Court to the decision of the Hon'ble Supreme Court in the case of K.P.Varghese (supra) which is heavily relied upon by the learned counsel for the assessee in the present case. It was observed that in the case of K.P.Varghese (supra), the issue raised was in the context of S.52(2), which did not contain any provision for giving opportunity to the assessee to rebut the presumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot available at the relevant time, it could not be filed before the Assessing Officer. Keeping in this submission made by the learned counsel for the assessee, we are of the view that the learned CIT(A) should have admitted the additional evidence filed by the assessee in the form of letter dated 20.1.2012 issued by the General manger, A.P. Infrastructure Corporation Ltd. 20. During the course of appellate proceedings before the Tribunal, the assessee has also filed a copy of letter dated 1.4.2009 addressed by the Executive Director, APIIC to the Principal Secretary to Government MA & UD Department clarifying that the land can only be used for industrial purposes, as additional evidence with application seeking admission thereof. The Learned Departmental Representative has strongly opposed to the admission of this additional evidence by pointing out that the letter dated 1.4.2009 having been available with the assessee at the relevant time during the assessment proceedings, the same should have been filed by the assessee before the Assessing Officer. The learned counsel for the assessee, however, has submitted that the copy of the said letter has been obtained by the assessee subs ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
