Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. Sh. Jatin Haryani

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 122 / 2011 Commissioner of Income Tax, Jaipur-II, Jaipur ----Appellant Versus Sh. Jatin Haryani, Prop. M/s Creative Crafts, C-60, Sarojini Marg, C-Scheme, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. R.B. Mathur with Mr. Prateek Kedawat, Mr. K.D. Mathur For Respondent(s) : Mr. Vivek Singhal _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGHJudgment 25/07/2017 1. By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby Tribunal has allowed the appeal preferred by the department was dismissed and crossobjection of the assessee was partly allowed. 2.This court while admitting the appeal on 25.7.2011 framed following substantial question of law:- “Whether on the facts and in circumstances ofthe case the ITAT was justified in holding that theprovisions of Section 50C are applicable only inthose cases of sale of property where the deed ofsale had been got registered?” 3.Counsel for the appellant has taken us to the provisions ofSection 50C of Income Tax Act which reads as under:- “50C. (1) Where the consideration received or accruingas a result of the transfer by an assessee of a capitalasset, being land or building or both, is less than thevalue adopted or assessed 86[or assessable] by anyauthority of a State Government (hereafter in thissection referred to as the "stamp valuation authority")for the purpose of payment of stamp duty in respect ofsuch transfer, the value so adopted or assessed 86[orassessable] shall, for the purposes of section 48, bedeemed to be the full value of the considerationreceived 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 Officerthat the value adopted or assessed 86[or assessable]by the stamp valuation authority under sub-section (1)exceeds the fair market value of the property as onthe date of transfer; (b) the value so adopted or assessed 86[orassessable] by the stamp valuation authority undersub-section (1) has not been disputed in any appeal orrevision or no reference has been made before anyother authority, court or the High Court, the AssessingOfficer may refer the valuation of the capital asset to aValuation Officer and where any such reference ismade, 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 andsection 37 of the Wealth-tax Act, 1957 (27 of 1957),shall, with necessary modi-fications, apply in relationto such reference as they apply in relation to areference made by the Assessing Officer under sub-section (1) of section 16A of that Act. 87 [Explanation 1].—For the purposes of this section,"Valuation Officer" shall have the same meaning as inclause (r) of section 2 of the Wealth-tax Act, 1957 (27of 1957). 88 [Explanation 2.—For the purposes of this section, theexpression "assessable" means the price which thestamp valuation authority would have, notwithstandinganything to the contrary contained in any other law forthe time being in force, adopted or assessed, if it werereferred to such authority for the purposes of thepayment of stamp duty.] (3) Subject to the provisions contained in sub-section(2), where the value ascertained under sub-section (2)exceeds the value adopted or assessed 88[orassessable] by the stamp valuation authority referredto in sub-section (1), the value so adopted or assessed88[or assessable] by such authority shall be taken asthe full value of the consideration received or accruing as a result of the transfer.]” [Explanation 2.—For the purposes of this section, theexpression "assessable" means the price which thestamp valuation authority would have, notwithstandinganything to the contrary contained in any other law forthe time being in force, adopted or assessed, if it werereferred to such authority for the purposes of thepayment of stamp duty.] (3) Subject to the provisions contained in sub-section(2), where the value ascertained under sub-section (2)exceeds the value adopted or assessed 88[orassessable] by the stamp valuation authority referredto in sub-section (1), the value so adopted or assessed88[or assessable] by such authority shall be taken asthe full value of the consideration received or accruing as a result of the transfer.]” 3.1He contended that the word ‘transaction’ which has beenused is covered under the amended provisions of Section 50C. 4.Counsel for the respondent has contended that the Tribunalwhile considering the case of assessee in cross objection hastaken into consideration the provisions of Section 50(C) and inview of the decision rendered by the Madras High Court reportedin (2013) 32 Taxmann.com 274(Madras) has held in para 7,8,9 and 10 which reads as under:- “7.Learned counsel for the assessee placed a circularin Circular No.5/2010/(F.No.142/13/2010-SO(TPL))dated 03.06.2010 issued by the Board and submittedthat as per the circular, it is made clear that theamendment made by the Finance (No.2) Act, 2009 isonly prospective in nature and cannot be appliedretrospectively. 8.We have perused the above circular. It is statedtherein that the scope of the provisions does notinclude transaction which are not registered withstamp duty valuation authority and executed throughagreement to sell or power of attorney. Consequently,it is made clear therein that the amendments havebeen made applicable with effect from 01.10.2009 andtherefore, they will apply only in relation to transactionundertaken on or after such date. The relevant portionof the circular is extracted hereunder: "23.4. Applicability:- These amendments have beenmade applicable with effect from 1st October, 2009and will accordingly, apply in relation to transactionsundertaken on or after such date." 9.Learned counsel for the Revenue is not disputingabout the existence of such circular issued by theBoard. If the Board has issued a circular clarifying theapplicability of Section 50C in pursuance of theamendment made by Amendment Act 2 of 2009, wefail to understand as to how the Revenue can canvass the same issue in this case which in effect is againstthe circular issued by the Board. Certainly, theRevenue is bound by the circular issued by the Board.At this juncture, it is pertinent to note that in adecision made in the case of State of Tamil Nadu andanother Vs. India Cements Ltd. and another reportedin (2011) 40 VST 225 (SC), the Honourable SupremeCourt has held that the circulars issued by theRevenue are binding on the Department andtherefore, they cannot repudiate that they areinconsistent with the statutory provisions. Relevantparagraphs 21 and 22 are extracted hereunder: "21.It is manifest from the highlighted portion of thecircular that as per the clarification issued by theCommissioner of Commercial Taxes, in exercise of thepower conferred on him under Section 28A of theTNGST Act, the benefit of the sales tax deferralscheme would be available to a dealer from the date ofreaching of BPV or BSV, whichever is earlier, as ispleaded on behalf of the first respondent. It is trite lawthat circulars issued by the Revenue are binding on thedepartmental authorities and they cannot be permittedto repudiate the same on the plea that it isinconsistent with the statutory provisions or itmitigates the rigour of the law. "21.It is manifest from the highlighted portion of thecircular that as per the clarification issued by theCommissioner of Commercial Taxes, in exercise of thepower conferred on him under Section 28A of theTNGST Act, the benefit of the sales tax deferralscheme would be available to a dealer from the date ofreaching of BPV or BSV, whichever is earlier, as ispleaded on behalf of the first respondent. It is trite lawthat circulars issued by the Revenue are binding on thedepartmental authorities and they cannot be permittedto repudiate the same on the plea that it isinconsistent with the statutory provisions or itmitigates the rigour of the law. 22.In Paper Products Ltd. Vs. Commissioner of CentralExcise ((2001) 247 ITR 128 SC: (1999) 7 SCC 84),while interpreting Section 37B of the Central ExciseAct, 1944, which is in pari materia with Section 28A ofthe TNGST Act, this Court had held that the circularsissued by the Central Board of Excise and Customs arebinding on the Department and the Department isprecluded from challenging the correctness of the saidcirculars, even on the ground of the same beinginconsistent with the statutory provision. It was furtherheld that the Department is precluded from the rightto file an appeal against the correctness of the bindingnature of the circulars and the Department's actionhas to be consistent with the circular which is in forceat the relevant point of time." 5.Before proceeding with the matter, it will not be out of placeto mention here that those transactions which are shown as transaction under Section 50C [Explanation-2], even if taken intoconsideration, the transaction which take place as short termcapital gain was in total consideration of the payment after saleand it cannot be assessed. Therefore, both the authorities havecommitted no error in reaching the conclusion. 6.In that view of the matter, the issue is answered in favour of the assessee and against the department. The appeal stands dismissed. (INDERJEET SINGH)J. (K.S.JHAVERI)J. Brijesh 164.