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TMI Blog2015 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... he document. Thus in our view the deeming provision of section 50C do not come in to play thereby replacing the full valuation of consideration of the document with the value calculated by the Stamp Valuation Authority / registering Authority. In the absence of any adoption or assessment by the authority of state government for the purposes of the Stamp duty in respect of subject transfer ( as the document was not registered ), there was no occasion for the AO to either refer the matter to the Registering Authority or to the Stamp Valuation Authority for the purpose of arriving at the valuation of the property. Therefore, in the interest of justice we set aside this issue to the Assessing Officer and directed to apply the provisions of Income Tax including Section 55A to determine the correct capital gain in this transaction and decided the case after considering the above observations of this Bench and also give reasonable opportunity of being heard to the assessee after bringing of required evidences on record. The assessee challenged in the second ground of appeal that the ld CIT(A) is allowed the appeal partly by applying DVO’s valuation in coowners case U/s 50C but Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to and brought to his knowledge through copies of the notified Master Plan of Jaipur City, JDA letter dated 02/02/2011, and by his spot visit) in the case of another joint owner of the said land. The value of the DVO has been challenged before the learned Commissioner of Income Tax (Appeals)-II, Jaipur by the said joint owner in the light of geographical limitations and legal restrictions regarding use of land. 2. The revenue s ground of appeal is against deleting the addition made by the Assessing Officer at ₹ 3,11,14,986/- under the head long term capital gain and both the grounds of the assessee s appeal are interlinked and against confirming the addition by applying provisions of Section 50C(1) of the Income Tax Act, 1961 (in short the Act) and restricted the addition at ₹ 1,27,07,500/- (DVO value for whole land). The assessee is a pensioner from University of Rajasthan having long term capital gain and interest income. The assessee filed return on 31/07/2008 declaring total income of ₹ 8,46,760/-. The case was scrutinized U/s 143(3) of the Act. The ld Assessing Officer observed that during the assessment order under consideration, the assessee had so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential area while determining the above referred value of the land. 3. The Sub registrar is not competent to determine the market value of any property and it should have been determined by the Collector (Stamps), Jaipur-II. 4. Since the sale deed of property was not presented before the Sub Registrar for registration, hence there was no occasion for him to either adopt or assess the value of the land for charging stamp duty. The ld AR further stated that the word assessable was inserted in section 50C w.e.f. 01/10/2009, which is not applicable in the case of the assessee, sale was executed on 18/04/2007 prior to the above amendment. The assessee further submitted before the Assessing Officer that he had sold the land measuring 11 bigha @ ₹ 6,81,000/- per bigha for total consideration of ₹ 74,91,000/- to Mahaveer Swami Grih Nirman Sahkari Samiti Ltd. on 18/04/2007 through PARIPURN PRATIGYA PATRA dated 02/05/2007. The ld Assessing Officer held that any property transferred exceeding ₹ 100/- as per Transfer of Property Act, 1882 (in short the T.P. Act), the transfer of any immoveable property is required to be registered. In order to determine the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty by the assessee and the purchaser of the property and cause loss to the state government exchequer. The assessee had not filed any appeal before the competent appellate authority against the market value determined by the Sub-Registrar, hence the value so determined is final. The ld AR of the assessee submitted before the Assessing Officer that word assessable was inserted in Section 50C w.e.f. 01/10/2009, which was not applicable in the case of assessee. Sale was executed on 18/04/2007 prior to the above amendment. The ld Assessing Officer observed that the Sub-Registrar has merely applied the market rate of the property, which was duly assessed by the DLC for determining the market value of the property for charging stamp duty. Hence the market value is duly assessed by the DLC for the purpose of charging stamp duty. Thus, it is incorrect to say that the market value of the property shall be assessed when the transfer deed shall be presented before the Sub-Registrar. The market value of the lands had already been assessed by the DLC. The Sub-Registrar merely adopts the rate decided by the DLC for determining the market value of the land for charging stamp duty and when tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. It is not in dispute that the appellant had sold the land about 3 year back on 18/04/2007. The Collector (Stamps) on the other hand had assessed the value of land for the purpose of stamps duty as on 09/11/2010. The counsel of the appellant on the other hand, has brought to his notice that in the case of other co-owner namely Smt. Shanta Devi Jain, the DVO had assessed the fair market value of the land in question at ₹ 1,27,07,500/- as on 18/04/2007 on a reference made by ITO, Ward 7(2), Jaipur. The DVO has clearly mentioned in para 7.3 of his report 20/12/2011 that the land in question was situated in the Amani Shah Ka Nallah and was around 150 metre away from the main road. He had applied rate of 660/- per sq.mt. as the land was situated in the Nallah on the basis of letter of Jaipur Development Authority No. D-8185 dated 02/02/2011 and no construction of residential nature was permissible on the said land. The width of Amani Shah Ka Nallah was taken at 135 metres considering the maximum quantity of water flow. Further the JDA had also erected cement concrete pillars on the both the banks of Amani Shah Ka Nallah. The land in the question was also situated below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble Jodhpur Bench in the case of Meghraj Baid Vs. ITO (114 TTJ 841). Thus as per Section 50C(1), the valuation as fixed by the stamp valuation authority is taken as a bench mark, as per sub-section (2) of section 50C the bench mark can be reviewed by the reference to the valuation officer if the assessee claims that such value exceeds the fair market value. As per sub-section (3), if the valuation as arrived at by the DVO as a consequence of the reference made to him by the Assessing Officer on account of the assessee s claim and such valuation is found to be higher than the value as fixed by the stamp valuation authority then the value as fixed by the stamp valuation authority being the lower of the two is to be applied. In the case of Smt. Trishla Jain Vs. ITO (011 ITR (Trib) 579), the assessee alongwith other two persons were the co-owners of a property having one fourth share each in the property. The co-owners sold the property during the year 2006-07. The assessee had shown long term capital gains on sale of shops at ₹ 72,42,500/- whereas the value of the property fixed by the stamp valuation authority was ₹ 1,69,99,000/-. Similarly, in respect of anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le consideration instead of ₹ 6,97,66,620/- taken by him. These grounds of appeal are therefore partly allowed. 4. Now both are in appeal before us. The ld Sr. DR has argued that the stamp authority had valued the impugned land by considering all factors, which were raised by the assessee i.e. nature of the land, location of the land, distance from the road/main road, civil amenities, land use etc. The ld Assessing Officer only referred this land for valuation to the Sub-Registrar for valuation under the Rajasthan Stamp Rules, 2004 but rates of the particular area s land always decided by the DLC and it is a continuous process to evaluate the rates as per the stamp rules. Therefore, the ld Assessing Officer rightly applied the valuation of land disclosed by the assessee for long term capital gain. He further argued that as per Section 2(47), this transfer may be legal but for immovable property valued more than ₹ 100/- is required to register under the Rajasthan Stamp Rules and transfer of immovable property can be said complete thereafter. Further he argued that it is a device not to pay the tax on actual value of the land by adopting such type of mode of transfer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of long term capital gain. He further argued that the ld CIT(A) was also not justified to adopt the DVO valuation got done in case of co-owners U/s 50C of the Act as the same is also not applicable in the case of assessee. Thus, he prayed to allow the assessee s appeal. 6. We have heard the rival contentions of both the parties and perused the material available on record. It is undisputed fact that land got transferred on agreement to sale by showing consideration of ₹ 74.91 lacs, which was valued by the stamp authority at ₹ 6,97,66,620/- under Rajasthan Stamp Rules. The assessee s objections were considered by the Sub-Registrar and finally value decided the same. The assessee s argument are not tenable in view of that the land was not salable property, DLC rate are for residential area, land situated in the bed of Amani Shah Ka Nallah, catchment area of the Gooler Dam, 15-20 feet below the road level, not touching any city road, waste water of the entire Jaipur city flows in the said Nallah, sewage pipe lines of many colonies, waste water containing high chemicals and acid contents of the textile processing units located in an around Sanganer also discharged and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned herein above first on page 5 of these submissions. It is an established fact that the land under reference is owned by the State Government as is evidenced by the copy of the JAMABANDI placed at page number 35 of the PB . The assessee has got rights only for agriculture operations on the said land. This right can not be called as land owned by him. Section 50C is a deeming provision which extends only to a capital asset which is land or building or both . A deeming provision cannot be extended beyond the purpose for which it is enacted. If a capital asset cannot be described as land or building or both , Section 50C cannot apply. A right in a plot of land is neither land or building or both . The distinction between a capital asset being land or building or both and any right in land or building or both is well recognized. Land or building is distinct from any right in land or building and therefore section 50C does not apply to rights . Reliance is placed on the recent decision of the ITAT Mumbai in the case of Atul G. Puranik vs. ITO. Photocpy of the head notes of the decision, downloaded from the internet is enclosed herewith for ready reference. The I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), but does not include-- (i) any stock-in-trade [other than the securities referred to in subclause (b)], consumable stores or raw materials held for the purposes of his business or profession ; (ii) personal effects, that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes- (a) jewellery ; (b) archaeological collections ; (c) drawings ; (d) paintings ; (e) sculptures ; or (f) any work of art. Explanation - 1. For the purposes of this sub-clause, jewellery includes- (a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel ; (b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel ; Explanation - 2. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. 2 -------------------------------------------------- 6.8. On going through the above provisions, it transpires that if the full value consideration shown to have been received or accruing on transfer of a capital asset being land or building or both is less than the value adopted or assessed or assessable (w.e.f. 1.10.2009) by Stamp Valuation Authority, the value so adopted etc. shall for the purpose of section 48 be deemed to be the full value of consideration received or accruing as a result of such transfer. This section 50 C was inserted by the Finance Act, 2002 with effect from 1.4.2003 with a view to substitute the declared full value consideration in respect of land or building or both transferred by the assessee with the value adopted or assessed or assessable by the Stamp Valuation Authority. Except for this provision, there is nothing in the Act which require for treating the value adopted by the Stamp Valuation Authority to replace the full value consideration taken by the assessee. 6.9. Section 50C is a deeming provision and it is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 50-C as per IT Act 2007 : Section 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 value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) Without prejudice to the provisions of sub-section (1), where- (a) the assessee claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer may refer the value of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation (1) For the purposes of this section, Valuation Officer shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2. For the purposes of this section, the expression assessable means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2), where the value ascertained under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21. It is manifest from the highlighted portion of the circular that as per the clarification issued by the Commissioner of Commercial Taxes, in exercise of the power conferred on him under section 28A of the TNGST Act, the benefit of the sales tax deferral scheme would be available to a dealer from the date of reaching of BPV or BSV, which ever is earlier, as is pleaded on behalf of the first respondent. It is trite law that circulars issued by the Revenue are binding on the Depart mental authorities and they cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law. 22. In Paper Products Ltd. v. CCE [2001] 247 ITR 128 (SC) ; [1999] 7 SCC 84), while interpreting section 37B of the Central Excise Act, 1944, which is in pari materia with section 28A of the TNGST Act, this court had held that the circulars issued by the Central Board of Excise and Customs are binding on the Department and the Department is pre cluded from challenging the correctness of the said circulars, even on the ground of the same being inconsistent with the statutory provision. It was further held that the Department is p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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