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TMI Blog2021 (2) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,130/-. Initially, the return of income was processed U/s. 143(1) of the Act and thereafter the case was selected for scrutiny for verification of financial transactions as the assessee had purchased immovable property vide Doc. No. 7003 dated 14/11/2013. Subsequently, the assessment was completed U/s. 143(3) of the Act vide order dated 28/7/2016 wherein the Ld. AO invoked the provisions of section 56(2)(vii)(b) of the Act and brought to tax the stamp duty value of the property purchased which exceeded the actual purchase consideration. On appeal, the Ld. CIT (A) confirmed the order of the Ld. AO, aggrieved by which the assessee is in appeal before us. 4. During the course of assessment proceedings, it was revealed from the data received from the Stamp Valuation Authority that during the FY 2013-14 the assessee had purchased two properties vide Doc. No. 7002 and 7001 in addition to the immovable property acquired vide Doc. No. 7003. All the three properties purchased were in Edulapuram Village S. No. 177/C, H.No. 5-94, 5-95 and the aggregate sale consideration paid for all the three immovable properties was Rs. 1,61,00,000/- as per the registered sale deed while as the aggregate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s:- "5.2....... The section 56(2)(vii)(b) provides for adopting the stamp duty value fixed by the Government as deemed consideration and the difference is assessable as income from other sources. There is no scope for adopting the values assessable by Stamp Value Authority as on the date of agreement as amount was paid in cash as on the date of agreement, the agreement of sale was not registered, the agreement of sale was not part of the registered sale deed. Therefore, I reject the contentions raised by the appellant and confirm the addition made by the Assessing Officer......" 6. Before us, the Ld. AR made the following submissions: (i) The vendor of the property Shri Mittapally Shanta Ram and his family members had obtained loan from HDFC Bank for their business purposes and since they could not repay the loan the bank attached the relevant property and brought it to auction vide Newspaper advertisement in the year 2011 (paper advertisement with English translation at page-8, 8.1 & 8.2 of the paper book). (ii) As on the date of Newspaper advertisement, the outstanding bank loan along with interest stood at Rs. 1,61,00,000/-. (iii) The value of the property as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der observed that the order of the Hon'ble AP Government for revising the value of the property vide Order dated 30/03/2013 is erroneous. Therefore, the value of the property as per the Stamp Valuation Authority even for the relevant AY 2014-15 is only Rs. 800/- per sq. yd and hence provisions of section 56(2)(vii)(b) of the Act will not be attracted. (xii) In the case of the Vendors, though the Revenue proceeded to invoke Section 50C of the Act, they finally arrived at the value of the property only at Rs. 2,03,65,854/-. (xiii) The Ld. AO had arrived at the value of the property at Rs. 2,03,65,854/-following the directions of Additional CIT U/s. 144A of the Act vide his order dated 29/12/2018. The value of the property was so arrived by the Revenue considering the facts and circumstances of the case of the assessee and keeping in view of its inherent disadvantages of the property. Therefore, even if section 56(2)(vii)(b) of the Act is invoked, the sale consideration cannot be adopted more than Rs. 2,03,65,854/-. 7. With the above submissions, the Ld. AR pleaded that since the agreement for the purchase of the property was executed in the AY: 2011-12 and the entire sale consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut to challenge Government order No. 157 dated 30/3/2013 by which the Government has empowered the Commissioner and inspector General of Registration and Stamps to implement the revised market values in urban areas, Secunderabad Cantonment area and rural areas in the State with effect from 1/4/2013. It is the contention of the petitioners that this order has been passed without having any power of relaxation of rules. We have checked up the relevant Rules namely Andhra Pradesh Revisions of Market Value Guidelines Rules, 1998, which is mentioned in the impugned order. Surprisingly, we found that there is no power to relax the Rules. If no power is conferred under the Rules, how the Government can relax the said Rules. Therefore, it is an arbitrary decision, if not totally non-application of mind. On that ground alone, the Writ Petition succeeds and the impugned order dated 30/03/2013 is set aside. However, liberty is given to proceed strictly in accordance with law. The Public Interest Litigation is allowed accordingly. No Costs." 9. From the above, it appears that the order of the Government for enhancing the valuation of the property for determining the Stamp Duty while regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of all those arguments, loss in the business and notices, pressure from bank officers regarding repayment of loans, Sri Mittapalli Santharam decided to sell the land. As no one shown interest in buying the land, he sold the site to Smt. Bhanu Jyothi for Rs. 1.60 Crores which was paid in cash in several instalments. He said that he used that money for repaying the bank loans. At present he is living along with his wife and younger son, Sri Mittapalli Naveen, who works in an insurance company. Sri Mittapalli Naveen got divorced, underwent a survey (relating to heart). The Elder son, Sri Murali Krishna, who underwent a hip joint surgery, is living in Hyderabad, the other son, Sri Ramesh absconded after filing an insolvency petition." 12. Thereafter, the Ld. AO observed in his Order in the case of the vendor Sri Mittapalli Naveen as under: - "8. Under the above circumstances, there appears to be a reason that the consideration amount could have been only Rs. 1.61 Crores for the following reasons:- (a) Neither Sri Shantaram or Smt. Vijayalakshmi or any one of their children appear to be in a flourishing stage having received such excess amounts. (b) The business closed long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler of the property as he is required to pay tax on extra money which he never received. Alternatively, if he wants to claim any exemption by investing in a residential house or capital gains bonds, etc., depending upon the facts of his case, he has to invest an extra amount, which he never received on sale. To come out of the difficulty one may consider recourse to relief provisions, but by the time decision in respect of relief provisions come, the assessee would have devoid of getting benefit out of it, as he would have paid the taxes. Stamp duty is generally paid by the purchaser of the property. Therefore, the purchaser is entitled to dispute higher valuation by stamp duty authorities. However, generally the purchasers do not prefer an appeal before the stamp duty authorities as compared to the purchase price involved, the amount of additional stamp duty becoming payable due to higher valuation by stamp duty authority is meagre amount which does not afford spending money and time involved in the appeal. 11. Under these circumstances, to avoid a high-pitched addition and in view of the existing ambiguity, instructions U/s. 144A of the Act were sought for from the Addl. CIT, K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fair market value of property bearing survey No. 177/1, Edulapalem, Pedda Thanda, Khammam Rural Mandal & District jointly belonging to 1) Mittapalli Vijayalakshmi 2) Mittapalli Muralikrishna 3) Mittapalli Ramesh 4) Mittapalli Naveen. Under instructions from owners, the property was inspected to assess fair market value as on date. The relevant particulars were collected at site and details of valuation are summarised as under:- History: Total vacant land having an extent of 11,129.60 sq. yds was purchased on different years under registered sale deed document Nos. 144/1980; 4711/1982; 513/1992; 514/1992 and 515/1992. Subsequently after purchase, they constructed sheds and RCC roof block. All four owners want to sell entire property and entered an agreement on 1/4/2011, but same property was registered on 14/11/2013. Location of property: - The subject property had been located outskirts about 7 km to 8 km away from Khammam town. In the vicinity Total community are living since long period. Their occupation is manufacturing their liquor / arrack shops and same is supplying various places. Meat and chiken shops also exist in addition to this, there is a huge dumping yard wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration as directed U/s. 144A and as determined by the Registered Valuer is worked out as under:- Document Nos. Dt: 14/11/2013 Land extent (sq. yds) Rate / sq. yd Built-up Area (sq. fts) Rate/sq. ft Total value 7001/2013 3848.00 1000 0 0 38,48,000 7002/2013 1366.00 1000 RCC-935.49 Shed-2800.59 3736.08 630 480 (1366000+589359+1344283) 2,99,642 7003/2013 5914.60 1000 RCC-1365 Shed - 16132.63 17497.63 630 480 (5914600 + 8599950 + 7743662) 1,35,18,212 Total 11128.6 21233.71 2,03,65,854 13.1. Hence, the sale consideration is determined at Rs. 2,03,65,854/- as against the consideration of Rs. 1,61,00,000/-......" 13. Accordingly, in the case of the Vendor the Ld. AO invoking the provisions of Section 50C of the Act computed the long-term capital gain at Rs. 11,26,261/- adopting the market value of the property as Rs. 2,03,65,854/- with respect to the sale of his property to the assessee for Rs. 1,61,00,000/- 14. It is pertinent to mention that section 50C of the Act is a special provision introduced by the Finance Act, 2002 to deal with the unaccounted income by way of understatement of the actual sale consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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