Gujarat High Court
The Commissioner Of Income Tax-Iii vs Kaushik Sureshbhai ... on 3 August, 2016
Author: Ks Jhaveri
Bench: Ks Jhaveri, G.R.Udhwani
O/TAXAP/2300/2010 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 2300 of 2010
With
TAX APPEAL NO. 2301 of 2010
TO
TAX APPEAL NO. 2306 of 2010
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI SD/-
and
HONOURABLE MR.JUSTICE G.R.UDHWANI SD/-
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1 Whether Reporters of Local Papers may be allowed YES
to see the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the fair copy of NO
the judgment ?
4 Whether this case involves a substantial question of NO
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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THE COMMISSIONER OF INCOME TAX-III....Appellant(s)
Versus
KAUSHIK SURESHBHAI RESHAMWALA....Opponent(s)
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Appearance:
MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1
RULE SERVED for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
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Date : 03/08/2016
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE KS JHAVERI) By way of this group of appeals, the department challenged the order passed by the tribunal whereby the tribunal has reversed the finding of the CIT (A) which has not only approved the order of the AO, but also enhanced the value of assessment under capital gain tax.
2. At the outset, it is required to be noted here that in earlier round of litigation, this group of appeals were dismissed by this Court by an order dated 14/06/2011, which came to be challenged before the Apex Court by way of preferring Civil Appeal No.3528 of 2014 {SLP (CIVIL) No.12068 of 2012} and the Apex Court has passed the following order:
"4. After carefully considering the submission so made by learned counsel, we are of the opinion that in the facts and circumstances, this case requires to be remitted back to the High Court, not only to consider the provisions of Section 50C of the Act, but also Sections 45 and 48 of the Act.
5. Accordingly, we set aside the impugned judgment(s) and order(s) remit the matter back to the High Court to consider the provisions of Section 45, 48 and 50 of the Act."Page 2 of 8
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3. After remand of the matter, this group of appeals came up for hearing before this Court and the said group of appeals came to be admitted on the following substantial questions of law:
"[A] Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal was right in holding that the capital gain is taxable under sec. 50C of the Act and not as per provisions of section 45 of the Income-tax Act ?
[B] Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal was right in accepting the cost of acquisition of land at Rs. 60/- per sq.mtr. On the strength of the Registered Valuers report when the Assessing Officer adopted the rate at Rs. 25/- per sq.mtr. On the basis of Sale Deeds registered at the time in that locality ?"
4. Though the matter came to be admitted since last years, none appears for the respondent. Earlier also the matter was listed for hearing 23/06/2016 and 25/07/2016 and came to be adjourned from time to time. However, none was appeared for the respondent.
5. Learned Counsel Mr.Mehta for the department has contended that the Hon'ble Apex Court has remitted the matter back to consider the provisions of Section 50C as also Sections 45 and 48 of the Act. Learned Counsel for the appellant has taken this Court to the observations made by the CIT (A) and contended that the considering the facts of the case, it has elaborately discussed the issue which reads thus:
"I have carefully considered the submissions of the appellant and the arguments made by the AR. It is pertinent to note that the provisions of Section 50C are Page 3 of 8 HC-NIC Page 3 of 8 Created On Wed Aug 10 00:05:29 IST 2016 O/TAXAP/2300/2010 JUDGMENT applicable only in cases where the sales consideration as per the registered deed is lower than the Jantry value.
In the present case, the appellant had shown capital gains as per th sale consideration mentioned in the unregistered Agreement to Sale with possession receipt dated 3132006 and there is no registered sale deed in the year under consideration.
It is significant to note that the registered sale deed has been executed by the appellant much later on 22 207 and the appellant has himself offered the capital gain in the year under consideration on the basis of unregistered agreement and handing over of the possession of the land.
Section 50C comes into operation only if the transaction relating to transfer of property has been registered by way of sale deed and for that purpose the value has been assessed. Whereas in the present case the sale was complete on 31.3.2006 when the possession receipt was executed. Therefore, the transfer of property was through an agreement which was not registered with the stamp valuation authorities and thus, the provisions of Section 50C would not be applicable to the facts of the present case, as is even held by various courts in the following cases, that in absence of a registered sale document, the provisions of Section 50C are not applicable.
(i) ITO vs. Smt. Satyawatidevi Verma (2008) 16 DTR (Del) (Trb) 409;Page 4 of 8
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(ii) ACIT vs. Mrs.Geetadevi Pasari (2006) 104 TTJ (Mum) 375;
(iii) DCIT vs. Asain Distributors Ltd. (2001) 70 TTJ (Mumbai) 88; and
(iv) Vanaz Engineers Ltd. vs. DCIT (2007) 109 TTJ (Pune) 350.
Thus, the attempt of the appellant to take shelter of the provisions of Section 50C by arguing that the sale consideration as shown by him has been accepted by the Stamp Duty Authority and hence, there is no point of there being suppression in sales consideration, is not acceptable. In fact, in the present case the proposal is to estimate the sale consideration as per Section 45 and not as per Section 50C of the Act. Therefore, this argument of the appellant is not acceptable."
6. Learned Counsel for the appellant has also taken this Court to Section 48 of the Income Tax Act and has contended that the case would cover under Section 48 which reads thus:
"48. The income chargeable under the head "Capital gains"
shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :--
(i) expenditure incurred wholly and exclusively in connection with such transfer;
(ii) the cost of acquisition of the asset and the cost of any improvement6 thereto:
Provided that in the case of an assessee, who is a non resident, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset Page 5 of 8 HC-NIC Page 5 of 8 Created On Wed Aug 10 00:05:29 IST 2016 O/TAXAP/2300/2010 JUDGMENT into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so, however, that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every reinvestment thereafter in, and sale of, shares in, or debentures of, an Indian company :
Provided further that where longterm capital gain arises from the transfer of a longterm capital asset, other than capital gain arising to a nonresident from the transfer of shares in, or debentures of, an Indian company referred to in the first proviso, the provisions of clause (ii) shall have effect as if for the words "cost of acquisition" and "cost of any improvement", the words "indexed cost of acquisition" and "indexed cost of any improvement" had respectively been substituted:
[Provided also that nothing contained in the second proviso shall apply to the longterm capital gain arising from the transfer of a longterm capital asset being bond or debenture other than capital indexed bonds issued by the Government :] [Provided also that where shares, debentures or warrants referred to in the proviso to clause (iii) of section 47 are transferred under a gift or an irrevocable trust, the market value on the date of such transfer shall be deemed to be the full value of consideration received or accruing as a result of transfer for the purposes of this section :] [Provided also that no deduction shall be allowed in computing the income chargeable under the head "Capital gains" in respect of any sum paid on account of securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004.] Explanation.--For the purposes of this section,--
(i) "foreign currency" and "Indian currency" shall have the meanings respectively assigned to them in section 2 of [the Foreign Exchange Management Act, 1999 (42 of 1999)];
(ii) the conversion of Indian currency into foreign currency and the reconversion of foreign currency into Indian currency shall be at the rate of exchange prescribed in this behalf;
(iii) "indexed cost of acquisition" means an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later;
(iv) "indexed cost of any improvement" means an amount which bears to the cost of improvement the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the year in which the improvement to the asset took place;
[(v) "Cost Inflation Index", in relation to a previous year, means such Index as the Central Government may, having regard to seventyfive per cent of average rise in the [Consumer Page 6 of 8 HC-NIC Page 6 of 8 Created On Wed Aug 10 00:05:29 IST 2016 O/TAXAP/2300/2010 JUDGMENT Price Index for urban nonmanual employees] for the immediately preceding previous year to such previous year, by notification in the Official Gazette, specify, in this behalf.]]"
7. Having heard the learned Counsel for the appellant and having gone through the order passed by the CIT (A), we are of the considered opinion that the case would not cover under Section 50(c) of the Income Tax Act and the case will be covered under Section 48 of the Income Tax Act. In that view of the mater, while accepting the findings recorded by the CIT (A) which has elaborately discussed the issue in these appeals as referred herein above, we restore the order of the CIT (A) and remitted matter back to the A.O. for reassessment taking into consideration the provisions of Section 48 of the Income Tax Act.
8. Accordingly, we answer the question [A] in favour of the Department and against the assessee. Now, so far as the question [B] is concerned, since this Court has confirmed the order passed by the CIT (A) and remitted the matter back to AO for reassessment considering consideration the provisions of Section 48 of the Income Tax Act, the same need not required to be answered at this stage. Hence, the present Tax Appeals stand disposed of.
(K.S.JHAVERI, J.)
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(G.R.UDHWANI, J.)
sompura
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