Taxap/879/2018 Of Principal Commissioner Of Income Tax, Surat-1 v. Natvarlal Purshottamdas Patel

HIN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 879 of 2018 FOR APPROVAL AND SIGNATURE: HONOURABLE MS. JUSTICE SONIA GOKANI sd/- and HONOURABLE MRS. JUSTICE MAUNA M. BHATT sd/- ==========================================================1Whether Reporters of Local Papers may be allowedNoto see the judgment ?2To be referred to the Reporter or not ?No3Whether their Lordships wish to see the fair copyNoof the judgment ?4Whether this case involves a substantial questionNoof law as to the interpretation of the Constitutionof India or any order made thereunder ?==========================================================PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT-1 VersusNATVARLAL PURSHOTTAMDAS PATEL ==========================================================Appearance:MR KARAN SANGHANI, LD.STANDING COUNSEL FOR MRS KALPANA K RAVAL(1046) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI andHONOURABLE MRS. JUSTICE MAUNA M. BHATT Date : 13/12/2022 ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1.This tax appeal under Section 260-A of the Income TaxAct,1961 (the”Act” for short) is at the instance of the revenue,challenging the order dated 22/11/2017, of the Income Tax AppellateTribunal, Surat Bench, Surat in I.T.A. No.2836/Ahd/2013 for AssessmentYear: 2009-10. 2.The facts in brief are, the assessee filed its Return of Incomefor the A.Y.2009-10, declaring total income of Rs.43,05,447/-. TheAssessing Officer during assessment proceedings, noticed that theassessee having 53% share in the property situated at Sachin Surat soldthe same at Rs.57,36,000/. The assessee entered in to agreement for saleon 29/03/2008, however, the sale deed was registered on 25/07/2008 i.e.previous year relevant to the A.Y.2009-10. All cheques were cleared inthe month of September,2008 and no payment was realized in A.Y.2008-09. Thus, entire transaction took place in the financial year 2008-09(Assessment Year 2009-10). The State Government had given benefit oflower stamp duty valuation to persons, who had purchased stamp paperbefore 31/03/2008 and registered in the year 2008-09. As per A.O. thisbenefit was limited to stamp duty payment and could not be extended toapplicability of Sec.50C of the Income Tax Act,1961. Therefore, theAssessing Officer to ascertain the fair market value, referred the matter to the Department Valuation Officer’s (DVO). He, however rejected the DVO’s report, on the ground that the sale instance of A.Y.2008-09 wereconsidered when the old Jantri rates were prevalent. The AssessingOfficer therefore taking into consideration Jantri rates prevalent after01/04/2008 made an addition of Rs.3,72,57,828/- u/s.50C of the IT Act. 3.Aggrieved by the order of the Assessing Officer, theassessee preferred an appeal before the Commissioner of Income-Tax(Appeals) (“CIT(A)” for short). The CIT(A), allowed the appeal of theassessee, by holding that, it is not a case where Section 50C of the Actcan be invoked. CIT(A) also observed that the A.O. was not empoweredto reject the report of the valuation officer. The CIT(A) noted that theassessee had taken the sale consideration at the valuation adopted by thestamp duty authority. 4. Against the order of CIT (A), the department preferred appeal before the Income Tax Appellate Tribunal. The Tribunalconfirmed the order of CIT (A). Challenging the same, present tax appealis filed proposing the following questions of law: (A)“Whether on the facts and circumstances of case and 4. Against the order of CIT (A), the department preferred appeal before the Income Tax Appellate Tribunal. The Tribunalconfirmed the order of CIT (A). Challenging the same, present tax appealis filed proposing the following questions of law: (A)“Whether on the facts and circumstances of case and in law, the Hon’ble Appellate Tribunal is justified inupholding the decision of the Ld CIT(A) of deleting theaddition of Rs.3,72,57,828/- u/s 50C of the Act made by theAssessing Officer without appreciating the facts that theAssessing Officer correctly applied Jantri Rates for theF.Y.2008-09 and calculated Short Term Capital Gain as thesale of land was executed during the F.Y.2008-09?” (B)“Whether on the facts and circumstances of case andin law, the Hon’ble Appellate Tribunal is justified inupholding the decision of the Ld CIT(A) of deleting theaddition of Rs.3,72,57,828/- u/s.50C of the Act made by theAssessing Officer without appreciating the facts that theAssessing Officer correctly pointed outs defects in theReport of Valuation Officer and estimated value of land asper revised Jantri Rate applicable for F.Y.2008-09 i.e. at thetime of registration of deed of the immovable property?” (C)“Whether on the facts and circumstances of case andin law, the Hon’ble Appellate Tribunal is justified inignoring the facts brought on record by the AO that the immunity scheme brought by the state Government of lowervaluation stamp valuation to people who had purchasedstamp papers before 31.03.2008 and made registration after01.04.2008 is limited to stamp duty payment and cannot beextended to the applicability of Section 50C of the IT Act?” (D)“Whether on the facts and circumstances of case andin law, the Hon’ble Appellate Tribunal is justified inupholding the decision of ld CIT(A) for deleting the additionof Rs.3,72,57,828/- u/s 50C of the Act made by the AssessingOfficer without appreciating the facts that all the paymentfor sale were realized during the F.Y.2008-09?” 5.Heard learned Standing Counsel Mr.Karan Sanghani forMrs.Kalpana Raval, learned Senior Standing Counsel for the appellant.He submitted that order of the Tribunal is erroneous as the StateGovernment had given benefit of lower stamp duty valuation to thepersons, who had purchased stamp paper before 31/03/2008 andregistered in the year 2008-09, therefore, the said benefit cannot beextended to applicability of Sec.50C of the Act. Further in this case, noamount was realised in the A.Y.2008-09. Undisputedly sale deed was registered on 25/07/2008 and assessee had also shown capital gain in theA.Y.2009-10. Therefore, the A.O. was correct in assessing the capitalgain considering the Jantri value prevalent on 01/04/2008. 6.The Tribunal relying upon the decision rendered in the caseof Hasmukhbhai M. Patel v. ACTT Circle – 1(1) Baroda reported in[2011]12 taxmann.com 300(Ahd), held as under: “8.There is no dispute regarding sale consideration. Thedispute regarding the rate adopted on the basis ofinformation collected from Stamp Duty Authorities withregard to various rates which were adopted for the purposeof payment of stamp duty in respect of transfer of property invarious area. On the basis of such information, the AOworked out the value of land sold and adopted the same forthe purpose of stamp duty made taken the same for thepurpose of computing capital gain. In our opinion, thisexercise is to be made by the AO Stamp Duty Authoritiesand not by the AO, The AO therefore, not justified to adoptthe value other than as adopted by the Stamp DutyAuthorities. As per the provision of section 50C only “8.There is no dispute regarding sale consideration. Thedispute regarding the rate adopted on the basis ofinformation collected from Stamp Duty Authorities withregard to various rates which were adopted for the purposeof payment of stamp duty in respect of transfer of property invarious area. On the basis of such information, the AOworked out the value of land sold and adopted the same forthe purpose of stamp duty made taken the same for thepurpose of computing capital gain. In our opinion, thisexercise is to be made by the AO Stamp Duty Authoritiesand not by the AO, The AO therefore, not justified to adoptthe value other than as adopted by the Stamp DutyAuthorities. As per the provision of section 50C only assessed value by the Stamp Duty Authorities is to beconsidered for the purpose of sale consideration of propertyif the consideration shown in agreement to sale. In doing so,less than the Stamp Duty Authorities valuation. In view ofthese facts and circumstances, and respectfully following thedecision of co-ordinate Bench (supra) we do not find anyfault or infirmity in the order of ld.CIT(A), fair same isupheld. Consequently, appeal of the revenue is dismissed.” 7.It is noticed that the assessee had executed agreement forsale on 29/03/2008 and in lieu of that the assessee took six cheques drawnon HDFC Bank dated 24.03.2008 and 25.03.2008 for an amount ofRs.52,36,000, i.e. the consideration mentioned in the agreement to sale.All these cheques were cleared in previous year relevant to A.Y.2009-10.The sale deed was registered on 25/07/2008 accepting the saleconsideration of Rs.52,36,000/- shown in the agreement to saledtd.29/03/2008 and the Stamp Duty Authority had assessed the saidvaluation for stamp duty purpose as the assessee has purchased stampsbefore 01/04/2008. The assessee had paid stamp duty of Rs.2,57,000/-.However, AO adopted the jantri rate and made his own valuation on thebasis of assessable rate of stamp duty on the date of registration of sale deed. Since, section 50C provides the rate adopted or assessed bythe Stamp Duty Authorities is to be considered for the purpose of Section50C of the Act. Therefore, the AO was not correct in adopting the marketvalue assessable for the purpose of stamp duty, as said the provision hasbeen inserted in the section 50C with effect from 01/10/2009, andapplicable from A.Y.2010-11. 8.Further, the Tribunal has rightly observed that once valid referenceto the valuation officer is made under section 50(C)(2) of the Act,assessing officer is not empowered to reject the report of the valuationofficer. This finding of the Tribunal is supported by the decision of co-ordinate bench in the case of Principal Commissioner of Income-Tax-3V/s. Ravjibhai Nagjibhai Thesia reported in [2016] 388 ITR 358.Therefore, we could not find any error in the findings of the Tribunal thatthe A.O. is not justified in adopting the value other than as adopted by thestamp duty authority. We could not find any substantial question of law.Resultantly, the present tax appeal is dismissed. No costs. DIPTI PATEL sd/- (SONIA GOKANI, J) sd/-(MAUNA M. BHATT,J)