Income Tax Appellate Tribunal - Delhi
Acit, New Delhi vs M/S Modern Lace House, New Delhi on 28 May, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH: 'E': NEW DELHI)
BEFORE SHRI G.D. AGRAWAL, HON'BLE PRESIDENT
&
SHRI KULDIP SINGH, JUDICIAL MEMBER
ITA No:- 1032 /Del/2015,
(Assessment Year: 2011-12)
Assist. Commissioner of M/s Modern Lace House,
Income tax, Vs. V-48, Near Surya Hotel,
Circle-45(1), Rajouri Garden,
New Delhi. New Delhi.
PAN No: AAAFM0153E
APPELLANT RESPONDENT
Revenue by : Sh. B.R. Mishra (Sr. DR)
Assessee by : Sh. Salil Aggarwal (Adv.) &
Sh. Shailesh Gupta (CA)
Date of Hearing : 22.05.2018.
Date of Pronouncement : 28/05/2018.
ORDER
PER: KULDIP SINGH, JM The appellant, Assistant Commissioner of Income-tax, Circle- 45(1), New Delhi. (hereinafter referred to as 'the revenue') by filing the present appeal, sought to set aside the impugned order dated 01.10.2014 qua 2 ITA No. 1032/Del/2015. M/s Modern Lace House, New Delhi.
Assessment Year 2011-12 respectively passed by Ld. CIT(A)-XXIV, New Delhi on the grounds that:-
" 1. Ld. CIT(A) has erred in deleting addition which was made by the AO invoking section 50C of the Act wherein value adopted by the stamp valuation authority is deemed to be the full value of consideration if the consideration received is less than the value adopted by such authority.
2. Ld. CIT(A) failed to appreciate the fact that the request for valuation of property was made by the assessee on the date of passing of assessment order i.e. 20.02.2014 and it was not possible for the AO to accede to the assessee's request especially when the date of completion of time barring scrutiny assessment was March, 2014.
3. The appellant craves leave for reserving the right to amend, modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.
2. Briefly stated the facts necessary for adjudication of the controversy at hand are: during the assessment proceedings, the AO noticed that the assessee is into the business of manufacturing of knitted fabrics and export of garments and has been incurring losses year after year and during the year under consideration incurred business loss of Rs. 11,44,200/-. The AO noticed that the assessee has sold its factory building along with land, Plot No. 231, Phase-1, Udyog Vihar, Gurgaon for the sale consideration of Rs. 10,25,00,000/-, but in the sale deed, the property was valued at Rs. 14,83,68,000 for stamp duty purposes. Since the assessee has 3 ITA No. 1032/Del/2015. M/s Modern Lace House, New Delhi.
shown sale consideration at the lesser price, it was called upon to explain as to why the amount of Rs. 14,83,68,000/- should not be considered for the capital gain for the purpose of U/s 50C of the Income Tax Act,1961 (for short 'the Act' ). The Assessee requested the AO to refer the matter to the Valuation Officer to ascertain the fair market value of the property in question. The AO without referring the matter to the Valuation Officer made addition of Rs. 4,58,68,000/- (Rs. 14,83,68,000 - Rs.10,25,00,000) on account of "long term capital gain".
3. The Asseessee carried the matter before the Ld. CIT(A) by way of filing the appeal, who has deleted the addition made by the AO by accepting the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.
4. We have heard the Ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and order passed by the revenue authorities below in the light of the facts and circumstances of the case.
4ITA No. 1032/Del/2015.
M/s Modern Lace House, New Delhi.
5. Undisputedly, the assessee has claimed to have sold its factory along with land for consideration at Rs. 10,25,00,000/- during the year under assessment. It is also not in dispute that for stamp duty purposes, the property in question was valued at Rs. 14,83,68,000/-. It is also not in dispute that a request was made by the assessee to the Assessing Officer to refer the matter to the valuation officer to ascertain fair market value, but AO though stated that the matter would be referred to the DVO, so that assessee could avail the legal remedies available to him but proceeded to decide the issue without waiting for the valuation report. It is also not in dispute that the Assessing Officer decided the issue by treating Section 50C as a deeming provision with regard to the full value of the consideration having been inserted to adopt circle rate to ascertain the full value of the consideration to compute the capital gains.
6. In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower revenue authorities, case law referred and argument addressed by the Ld. Authorized 5 ITA No. 1032/Del/2015. M/s Modern Lace House, New Delhi.
Representatives of the parties to the appeal, the sole question arises for determination in the case is:-
As to whether the Assessing Officer was legally obliged to refer the matter to valuation authority to ascertain the fair market value of the property in question, In the face of the fact that the value assessed by the stamp valuation authority exceeds the value adopted by the assessee Under section 50C of the Act."
7. To proceed further relevant provisions contained U/s 50C(2) are extracted for ready perusal as under:-
" (2) Without prejudice to the provision of sub-section (1), where-
(a) The assessee claims before any Assessing Officer that the value adopted or assessed [or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer;
(b) The value so adopted or assessed [or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, The Assessing Officer may refer the valuation of the capital assets to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-section (6) and (7) of section 2A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-
section (1) of section 16A of that Act.
6ITA No. 1032/Del/2015.
M/s Modern Lace House, New Delhi.
8. Bare perusal of provisions contained U/s 50C(2) shows that when the assessee has made a specific claim before the Assessing Officer to get the fair market value ascertain from the valuation authority, the Assessing Officer is under legal obligation to call for the valuation report failing which assessment order is not valid and justified.
9. Identical issue has been decided by the Co-ordinate Bench of the Tribunal in case cited as in the case of ITO vs. M/s Aditya Narian Verma (HUF) in ITA No. 4166/Del/2013 in favour of the assessee by observing as under:-
Non-compliances of the provisions laid down under sub section (2) by the Assessing Officer cannot be held valid and justified. The Hon'ble Jurisdictional High Court of Allahabad in the case of Shashi Kant Garg (Supra) has been pleased to hold that it is well settled that if under the provision of the Act and authority is required to exercise powers or to do an act in a particular manner, then that power has to be exercised and the act has to be performed in that manner along and not in any other manner.
10. In view of the provisions contained U/s 50C(2) of the Act and the order passed by Co-ordinate Bench in Aditya Narain Verma 7 ITA No. 1032/Del/2015. M/s Modern Lace House, New Delhi.
(Supra) case question framed is answered in favour of the assessee. The Ld. CIT(A) after relying upon decision rendered in the case of N. Menakshi v. Asstt. CIT [2010] 326 ITR 229 (Mad.) and B.N. Properties Holding (P.) Ltd. vs. Asstt. CIT [2010] 6 ITR (Trib.) 1 (Chennai) has rightly deleted the addition made by the AO. So, we find no illegality or perversity in the impugned order passed by Ld. CIT(A), hence, appeal filed by the Revenue is hereby dismissed.
Order pronounced in the open court on 28/5/2018 Sd/- Sd/-
(G.D. AGRAWAL) (KULDIP SINGH)
PRESIDENT JUDICIAL MEMBER
Dated: 28.05.2018
Pooja/-
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
8
ITA No. 1032/Del/2015.
M/s Modern Lace House, New Delhi.
ITAT NEW DELHI
Draft Dictated on 28 .05.2018
Draft placed before the author.
Draft proposed & placed before the second member Draft discussed/ approved by second member Approved draft comes to the Sr. Ps/ ps Kept for pronouncement on File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk Date of dispatch of Order.
9ITA No. 1032/Del/2015. M/s Modern Lace House, New Delhi.