Ita/11/2013 Of Commissioner Of Income Tax Jalandhar v. Gurdip Singh Sidhu

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No. 11 of 2013(0&M)Date of decision: 02.09.2014 The Commissioner of Income Tax, Jalandhar I, Jalandhar .....- Appe Vs, Shri Gurdip Singh Sidhu ....mesponden CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON BLE MR. JUSTICE FATEH DEEP SINGH Present: Mr. Vivek Sethi, Advocate for the appellant. Mr.Ravish Sood, Advocate for the respondent. Ajay Kumar Mittal,J.. inThis appeal has been preferred by the revenue under section260A of the Income Tax Act, 1961 (in short, “‘the Act’) against the ordedated 3.9.2012, Annexure A.3 passed by the Income Tax Appellate Tribunal,Amritsar Bench, Amritsar (in short, “the Tribunal’) in ITA No.464/(ASR)/2010 for the assessment year 2006-07, claiming following substantialsubstantial questions of law:- 1) Whether on the tacts and in the circumstances of the case,the the Hon'ble ITAT was right in law in interpreting sectionSOC of the Income Tax Act, 1961 by holding that prior to1.10.2009 cases of transfer of land or buildings where thetransaction was not registered with the stamp duty valuationauthority, were out of the ambit of section 50C? 11) Whether on the facts and in the circumstances of the case,the ITAT was right in holding the issue in favour of the assesseefor computation of segment rate at lower than the rate assessedby the Sub Registrar for registration of agricultural land in theparticular village by State Valuation Authority? lu) Whether on the facts and in the circumstances of the case,Hon'ble ITAT was right in holding the issue in favour of theassessee by holding that the order of the AO is based on whimsand fancies whereas the AO has specifically pointed out in theassessment order that the assessee has taken the valuation ofagricultural land on 1.1.1981, on the basis of small piece ofland having commercial value and the AO has taken the base ofvaluation by considering large size piece of land?” |Briefly, the facts necessary for adjudication of the controversyinvolved as narrated in the appeal may be noticed. The return of income wasfiled by the assessee on 7.11.2006 declaring total income of<a14,75 ,180/which comprised of salary, income from other sources and long term capitalgains on sale of agricultural land. The return was processed under section143(1) of the Act on 24.5.2007 on the declared income. The assesseeentered into an agreement on 19.4.2005 for sale of agricultural landmeasuring 37 kanals 5 marlas for a consideration at the rate of=a6,75,000/-per acre. Another agreement of sale of agricultural land was made by theassessee on 2.172.005 for sale of 36 kanals & marlas of land for |=36,40,000/-. Both pieces of land were situated in Village Chak HussainaLama Pind, Tehsil and District Jalandhar. Consideration of agreement wasreceived from the buyer vide three pay orders on |.12.2005. The assessee 1nhis return had calculated long term capital gains by declaring sale proceedsof agricultural land at—<a83,07,949/-, cost of acquisition by adopting fair ITA No.11 of 2013 (O&M) ITA No.11 of 2013 (O&M) market value of the land at “a13,89,720/- (1.e. at the rate of|“a1,50,954/- peracre) aS on 1.4.1981 and indexed cost of acquisition computed at469,06,908/-. The Collector, Jalandhar fixed the segment rates for sale ofproperty in the Village where the sold land was situated at the rate of=a 8lacs per acre for the purpose of payment of stamp duty. The saleconsideration of the land 1.e.9 acres 1 kanal 13 marlas sold by the assesseeas per Collector's rate at the rate of|=a25 lacs per acre worked out at=2,30,15,625/-. Besides, this, the assessee had received another amount of =15,25,000/- on account of sale ofmitti.Since the assessee had not declaredlong term capital gains, as per provisions of the Act, notice under section148 of the Act was issued to him on 18.11.2008 to assess the escaped capitalgains income. Vide notices under sections 142(1) and 143(2) of the Actdated 4.12.2009, the assessee was required to explain as to why the salevalue of the land may not be adopted at the rate of|25 lacs per acre asfixed by the State Government for the purpose of payment of stamp duty; asto why provisions of Section 50C of the Act may not be invoked forcalculating the long term capital gains and fixation of cost of acquisition ason |1.1.1981. The assessee submitted that Section SOC of the Act was notapplicable to his case because land in question had been sold by way ofmodes other than those specified in the said section. After considering thematter, the Assessing officer adopted average cost rate for acquisition at “a1lac per acre. Total cost of acquisition was computed at <a9,01,875/- andindexed cost of acquisition of the transferred asset was computed at L44,82,318/-. Finally, the Assessing officer worked out the capital gains at.L2,00,58,307/- vide order dated 30.12.2009, Annexure A.|. Aggrieved by the ITA No.11 of 2013 (O&M) order, the assessee filed appeal before the Commissioner of Income Tax(Appeals) [CIT(A)]. Vide order dated 30.9.2010, Annexure A.2, the CIT(A)partly allowed the appeal. It was observed that where the assessment by theState Government Valuation authority takes place at the later date, theprovisions of Section 50C will not be attracted. The revenue filed appealbefore the Tribunal whereas the assessee preferred cross objections. Videorder dated 3.9.2012, Annexure A.3, the Tribunal dismissed the appeal andpartly allowed the cross objections. Hence the instant appeal by the revenue. 3)Learned counsel for the assessee respondent placed reliance onthe order dated 14.1.2008, Annexure R.|l passed by Collector Jalandhawhereby according to him, the Collector Jalandhar had accepted the value ofthe registered sale deed assessed by the assessee. It was submitted that thesame could not be produced earlier as it was not within the knowledge ofthe assessee. Learned counsel for the respondent argued that in view ofdocuments Annexures R.1 to R.4 attached with CM No.13550 CII of 2014whereby the sale consideration received by the assessee on sale of hisagricultural land and shown by him as such for computing income underthe head 'Capital gains’ was accepted by the Stamp Valuation authority andjudgment of this Court inCommissioner ofIncome Tax LI, Ludhiana ys.M/s New P.Grand Resorts, GI Road, Jagraon,ITA No.877 of 2010,decided on 5.3.2014, the addition made by the Assessing officer was|unjustified. 4 Learned counsel for the revenue submitted that the Tribunalhad erred in deleting the addition.| 4 We have heard learned counsel for the parties and perused the ITA No.11 of 2013 (O&M) record. 4 Learned counsel for the revenue submitted that the Tribunalhad erred in deleting the addition.| 4 We have heard learned counsel for the parties and perused the ITA No.11 of 2013 (O&M) record. 6.The issue involved in the present case is applicability ofSection 50C of the Act to the facts of the present case. The AssessingOfficer held that the provisions of Section 50C of the Act were applicable asthe transfer of property had been carried out vide a registered sale deed andnot in pursuance of sale agreement. The CIT(A) held that capital gains ariseon transfer of a capital asset and the effective date for computing the capitalgain 1s the date of transfer of capital asset. Since the computation of incomefrom capital gain on sale of land was to be made on the amount of fullconsideration received or accruing on the date of transfer and on the date oftransfer of the land, the provision of Section 50C was not attracted, theAssessing officer was not justified in adopting the value assessed by thestamp duty valuation officer on a subsequent year. When the registration ofthe land sold by the assessee was done alter the date of transfer of land, theprovisions of Section 50C of the Act were not applicable. The Tribunalconcurred with the findings recorded by the CIT(A). TdCM No.13550 CII of 2014 filed by learned counsel for therespondent assessee for placing on record documents Annexures R.1 to R.4in order to show that the sale consideration received by the assessee on saleof his agricultural land and shown by him as such for computing his incomeunder the head ‘Capital gains' was accepted by the Stamp Valuationauthority 1s allowed. The said documents are allowed to be taken on record. § Accordingly, without expressing any opinion on the legal issueinvolved herein, in view of Annexures R.1 to R.4, we set aside the orderdated 3.9.2012, Annexure A.3 passed by the Tribunal and remand the matter ITA No.11 of 2013 (O&M) to it to decide the same afresh after affording an opportunity of hearing tothe parties and considering the documents as noticed above and judgment ofthis Court inM/s New PGrand Resorts'S case (Supra), expeditiously inaccordance with law. The appeal stands disposed of. September 02, 2014;4$; (Ajay Kumar Mittal)vudge(Fateh Deep Singh)Judge