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TMI Blog2019 (3) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... imself is not borne out at all on record and, therefore, nothing can be said about that. But, in any case, the consideration of objections of the Assessee by the Assessing/Appellate Authorities was a must to be undertaken exercise. But, that was not done. The Departmental authorities failed to meet the objections of the Assessee, which were raised before CIT (A) for the first time at the appeal stage, but were never overruled by a speaking order and the Guidance Valuation as per Section 50C (1) was taken as a Gospel Truth against the disclosed and declared value of the sale by the Assessee. This was not permitted in law. The 'Guidance Value' fixed for stamp duty purposes is fixed by the authority concerned, taking into account the location, current market price of property in particular area etc., as a standard measure to iron out the differences of personal factors, such as, sale in distress for meeting financial emergency, sale to related parties and a host of such other factors. But, in Income Tax Act, the concept of levy of tax on real income exists. Therefore, Capital Gains Tax can also be levied on 'real' capital gains and not on the presumptive cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Authority even at this stage, even though belatedly, and allow the Appeal of the Assessee for the said purpose. We, accordingly, allow this Appeal and set aside the orders passed by the learned CIT (A) and also the learned Tribunal and remit the matter back to the Assessing Authority to decide both the questions about the valuation of the property to be taken while dealing with the objections of the assessee against the Report of Departmental Valuation Officer as well as the presumptive value under Section 50C of the Act and then compute 'Fair Market Value' under Section 48 and the relief under Section 54F - Decided in favour of the Assessee and against the Revenue. - T.C.A.No.142 of 2019 - - - Dated:- 15-2-2019 - Dr. Justice Vineet Kothari And Mr. Justice C.V. Karthikeyan For the Appellant : Mr.R.Sivaraman For the Respondent : Mr.Karthik Ranganathan, Senior Standing Counsel, assisted by Mr.S.Rajesh, Standing Counsel. JUDGMENT DR.VINEET KOTHARI, J . The Assessee, namely, M/s.Jagannathan Sailaja Chitta, Chennai, has filed this Appeal under Section 260-A of the Income Tax Act,1961, in short, 'Act', assailing the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned order. The Tribunal, however, gave relief under Section 54F of the Act in the said valuation under Section 50C of the Act. 5. Learned counsel for the Assessee, relying upon a decision of the Delhi High Court in the case of Commissioner of Income Tax v . Khoobsurat Resorts (P) Ltd ., (2012) 28 Taxmann.com 93 (Delhi), has submitted that the Assessee had raised objections against the higher valuation and sought for fresh valuation of the said property by his letter, dated 10.03.2015 , under Section 142A of the Act from Departmental Valuation Officer (DVO), but, since the assessment was getting time barred, the assessment was completed by the Assessing Authority on 30.03.2015 , adopting the aforesaid stamp duty valuation on 'Guidance Value' and on which the difference of stamp duty was even paid by the Buyer and when the matter was taken before CIT (A), thereafter, for the first time, before CIT (A) only, the Assessing Authority produced the said Departmental Valuation Officer (DVO)'s Report, valuing the said property at even still higher amount of ₹ 27,36,04,000/-. The Assessee raised objections before CIT (A) against such higher valuation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that regard; that inquiry might extend to analyzing sale or transfer contemporaneously at the time of transaction. Yet, the finding cannot start and conclude with the fact that such stamp duty value or basis is higher than the consideration mentioned in the deed. The compulsion for such higher value, is the mandate of the Stamp Act , and provisions which levy stamp duty at pre-determined or notified dates. In the present case, the revenue did not rely on any objection fact or circumstances; consequently, the Court holds that there is no infirmity in the approach of the lower authorities and the Tribunal, granting relief to the assessee. This question is accordingly answered in favour of the assessee, and against the revenue.' III. Without prejudice to the above, the difference between the value adopted by the appellant and the Stamp Valuer is ₹ 18052 per square feet which is only 15% of the guideline value. Considering the larger size of the land, the margin of 15% can be allowed since the value of retail plots was adopted as comparable. Findings of CIT (Appeals) : The appellant's above contentions along with reliance on case laws referred abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... careful consideration to the assessee's objection (sic !) raised before the DVO. From the valuation report, it is apparent that the DVO has given careful consideration to the assessee's objection raised before him and accordingly arrived to a value of the property at ₹ 27,36,04,000/- . Moreover, statute provision of sec.50C (2) r.w.s. 50C (3) has a mandate that subject to the provision contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed or assessable by the Stamp Valuation Authority referred to in sub-section (1), the value so adopted or assessed or assessable by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer. Accordingly, I confirm the action of the assessing officer adopting 50C value of the property as the sale consideration for computing the capital gain. The ground of appeal on this issue is dismissed. 6. The Assessee insisted before CIT (A) that sale value declared in the sale deed was the fair market value of the property in question and, therefore, not only the valuation given by the Departmental Valuation Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was at ₹ 19,70,85,992/-, as determined by the Stamp Value Authority. In the same scenario, for claiming the exemption under section 54F of the Act from the capital gain chargeable under section 45 of the Act, the full value on transfer of asset should also be the same as determined by the Stamp Value Authority and not less than that . As explained in CIT v. Citi Bank N.A . [2003] 261 ITR 570 (Bom), the different provisions of Chapter IV-E of the Act form part of one integrated code. The same are to be read harmoniously and not disjointedly. A deeming provision, it is trite law, is to be read in light of the object of the provision and, further, is to be taken to its logical end. When, for the purpose of computation under section 48 of the Act, the full value of consideration was taken as per section 50C of the Act, the Assessing Officer was not justified in adopting the sale consideration as admitted in the sale deed viz., ₹ 17,09,80,000/-. Similar view has also been taken by the Tribunal in ITO v. Kondal Reddy Mandal Reddy in I.T.A. No. 848/Hyd/2015 dated 13.05.2016. 7.6 In view of the foregoing, we direct the Assessing Officer to adopt the fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or by use of electronic clearing system through a bank account, on or before the date of the agreement for transfer. Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and five percent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration. (2) Without prejudice to the provisions of subsection (1), where- (a) the assessee claims before any Assessing Officer that the value adopted or assessed or assessable] by the stamp valuation authority under subsection (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed or assessable] by the stamp valuation authority under subsection (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 Officer and where any such reference is made, the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of stamp duty, ipso facto, cannot be a legitimate ground for concluding that there was undervaluation, in the acquisition of immovable property . If Parliamentary intention was to enable such a finding, a provision akin to Section 50-C would have been included in the statute book, to assess income on the basis of a similar fiction in the case of the assessee who acquires such an asset. No doubt, the declaration of a higher cost for acquisition for stamp duty might be the starting point for an inquiry in that regard ; that inquiry might extend to analyzing sale or transfer deeds executed in respect of ITA 776/2011 Page 12 similar or neighbouring properties, contemporaneously at the time of the transaction. Yet, the finding cannot start and conclude with the fact that such stamp duty value or basis is higher than the consideration mentioned in the deed . The compulsion for such higher value, is the mandate of the Stamp Act, and provisions which levy stamp duty at pre-determined or notified dates. In the present case, the revenue did not rely on any objective fact or circumstances; consequently, the Court holds that there is no infirmity in the approach of the low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d why Section 50C (2) provided for reference to DVO in case an objection is raised by Assessee has another reason too. The 'Guidance Value' fixed for stamp duty purposes is fixed by the authority concerned, taking into account the location, current market price of property in particular area etc., as a standard measure to iron out the differences of personal factors, such as, sale in distress for meeting financial emergency, sale to related parties and a host of such other factors. But, in Income Tax Act, the concept of levy of tax on ''real income'' exists. Therefore, Capital Gains Tax can also be levied on 'real' capital gains and not on the presumptive capital gains. The need to determine a Fair Market Value upon a fact finding exercise is a sine qua non . But, such fact finding exercise by the Departmental authorities, be that Assessing Authority or even the Appellate Authority, was not really undertaken in the present case and that is where, failure and miscarriage of justice has occurred. 14. It would be an insult to the honest tax payer to adopt an assumed higher market value to impose Capital Gains Tax without allowing him or her an op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remit the matter back to the Assessing Authority even at this stage, even though belatedly, and allow the Appeal of the Assessee for the said purpose. We, accordingly, allow this Appeal and set aside the orders passed by the learned CIT (A) and also the learned Tribunal and remit the matter back to the Assessing Authority to decide both the questions about the valuation of the property to be taken while dealing with the objections of the assessee against the Report of Departmental Valuation Officer as well as the presumptive value under Section 50C of the Act and then compute 'Fair Market Value' under Section 48 of the Act and the relief under Section 54F of the Act. 20. In view of the above, the Substantial Questions of Law framed above are answered in favour of the Assessee and against the Revenue. 21. Before parting, we may say, that for weighing the evidence by the Assessing Authority, the Assessing Authority has the powers of a Civil Court conferred upon him by virtue of Section 131 of the Act by way of enforcing the attendance of any person, including any officer of a banking company or examining him on oath, production of documents, discovery and inspection, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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