Income Tax Appellate Tribunal - Jaipur
Tara Chand Jain, Jaipur vs Department Of Income Tax on 9 October, 2015
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM
vk;dj vihy la-@ITA No. 566/JP/2012
fu/kZkj.k o"kZ@Assessment Year : 2008-09.
Income Tax Officer, cuke Tara Chand Jain,
Ward 6(1), Jaipur. Vs. 2/1, Malviya Nagar, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. ABMPJ 3990 P
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No. 578/JP/2012
fu/kZkj.k o"kZ@Assessment Year : 2008-09.
Tara Chand Jain, cuke Income Tax Officer,
2/1, Malviya Nagar, Jaipur. Vs. Ward 6(1), Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. ABMPJ 3990 P
vihykFkhZ@Appellant izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Shri M.S. Meena (CIT)
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Akhilesh Kr. Jain (CA)
lquokbZ dh rkjh[k@ Date of Hearing : 17/09/2015.
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 09/10/2015.
2
ITA No. 566 & 578/JP/2012
ITO Vs Tara Chand Jain
vkns'k@ ORDER
PER T.R. MEENA, A.M.
These are cross appeals one by the revenue and the another by the assessee arise against the order dated 21/3/2012 passed by the ld CIT(A)-II, Jaipur for A.Y. 2008-09. The effective grounds of both the appeal are as under:-
Ground of revenue's appeal:-
"On the facts and in the circumstances of the case and in law, the ld CIT(A) was not justified in holding that the A.O. should have referred the case for valuation to DVO on the basis of objection made by the assessee during the course of assessment proceedings ignoring the provisions of clause
(b) of Section 50C(2) which puts a bar on making reference to the DVO where the valuation made by the stamp authority has been disputed by making reference/appeal/to the any other authority. In this case, the reference was already made by the sub registrar to the collector stamps, who valued the property at Rs. 12,47,34,260/- in place of Rs. 6,97,66,620/- assessed by the sub registrar."
Ground of assessee's appeal:-
1. The learned Commissioner of Income Tax (Appeals)-II, Jaipur has erred in law and on facts in sustaining the application of provisions of Section 50C(1) in spite of the fact that there was no notified rate (i.e. DLC rate) for the land for stamp duty purpose and no registered sale 3 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain deed for the transaction of sale (dated 18/04/2007) of Agriculture Land (referred as "Khatli Land" in the Jamabandi), situated in the bed of the demarcated Amani Shah Ka Nallah and within the catchment area of Goolar Dam, Sanganer, Jaipur.
2. Without prejudice to above, the learned Commissioner of Income Tax (Appeals)-II, jaipur has further erred in adopting the value of said land determined by the DVO (who presumed that the said land can be used for residential purpose, ignoring the legal and geographical restrictions which came to and brought to his knowledge through copies of the notified Master Plan of Jaipur City, JDA letter dated 02/02/2011, and by his spot visit) in the case of another joint owner of the said land. The value of the DVO has been challenged before the learned Commissioner of Income Tax (Appeals)-II, Jaipur by the said joint owner in the light of geographical limitations and legal restrictions regarding use of land."
2. The revenue's ground of appeal is against deleting the addition made by the Assessing Officer at Rs. 3,11,14,986/- under the head long term capital gain and both the grounds of the assessee's appeal are interlinked and against confirming the addition by applying provisions of Section 50C(1) of the Income Tax Act, 1961 (in short the Act) and restricted the addition at Rs. 1,27,07,500/- (DVO value for whole land). The assessee is a pensioner from University of Rajasthan having long term capital gain and interest income. The assessee filed return on 4 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain 31/07/2008 declaring total income of Rs. 8,46,760/-. The case was scrutinized U/s 143(3) of the Act. The ld Assessing Officer observed that during the assessment order under consideration, the assessee had sold land measuring 11 bighas alongwith three other persons Smt. Shanta Devi Jain, Sh. Naveen Kumar Jain and Sh. Akhilesh Kumar Jain to Shri Mahaveer Swami Grih Nirman Sahkari Samiti Ltd. for total consideration of Rs. 74,91,000/- on 18/04/2007 through an agreement to sale. The assessee had claimed his share at 50% in the property sold and the remaining 50% share belongs to other three persons. Accordingly, the assessee has declared half of the long term capital gains accrued on the above transaction in his hands. The land was not duly registered and no stamp duty was paid on the transaction. Therefore the ld Assessing Officer referred this property to Sub-Registrar, Sanganer-I, Jaipur for its valuation as on the date of transfer, for charging stamp duty on the above transaction. The Sub-Registrar, Sanganer-I valued the property at Rs. 6,97,66,620/- as on 18/04/2007 i.e. the date of transfer, on the basis of DLC rate, for the purpose of charging stamp duty on the above transaction. The ld Assessing Officer gave reasonable opportunity of being heard on this valuation made by the Sub-Registrar, Sanganer-I, Jaipur 5 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain and proposed to adopt fair value of property U/s 50C at Rs. 6,97,66,620/- and also deduction U/s 54F was also proposed recomputed accordingly. The assessee filed objection before the Assessing Officer, which was forwarded to the Sub-Registrar for his comments. The Sub-Registrar again rejected the assessee's objection and valued the property at Rs. 6,97,66,420/-. The copy of valuation report was again given to the assessee for his objection. The AR of the assessee submitted the detailed objection vide letter dated 29/11/2010 against proposed computation of capital gain, the argument of the assessee was that the stamp authority valuation is for the purposes of charging stamp duty and applicability of the provisions of Section 50-C. He objected that Section 50C is not applicable in the case of assessee on the following reasons:-
1. The land sold by the assessee lies in the bed of Amanishah Nallah, which neither residential nor commercial land. The land is 15-20 feet below the road level. The entire land gets submerged with water in rainy season. The area is recorded as Khatli in the government record. It does not have any civic amenities. The land was not a saleable property.
2. The Sub Registrar has applied the DLC rates of residential area while determining the above referred value of the land. 6
ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain
3. The Sub registrar is not competent to determine the market value of any property and it should have been determined by the Collector (Stamps), Jaipur-II.
4. Since the sale deed of property was not presented before the Sub Registrar for registration, hence there was no occasion for him to either adopt or assess the value of the land for charging stamp duty. The ld AR further stated that the word "assessable" was inserted in section 50C w.e.f. 01/10/2009, which is not applicable in the case of the assessee, sale was executed on 18/04/2007 prior to the above amendment. The assessee further submitted before the Assessing Officer that he had sold the land measuring 11 bigha @ Rs. 6,81,000/- per bigha for total consideration of Rs. 74,91,000/- to Mahaveer Swami Grih Nirman Sahkari Samiti Ltd. on 18/04/2007 through PARIPURN PRATIGYA PATRA dated 02/05/2007. The ld Assessing Officer held that any property transferred exceeding Rs. 100/- as per Transfer of Property Act, 1882 (in short the T.P. Act), the transfer of any immoveable property is required to be registered. In order to determine the market value of any immovable property for charging stamp duty at the time of its transfer, the State government constitutes District Level Committee, commonly known as DLC. The DLC means, the committee constituted by the State 7 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain Government for a district from time to time under the Rajasthan Stamp Rules 2004 for the purpose of determining the market value of the land as described in Rajasthan Land Tax Rules, 2006. The DLC is constituted under chairmanship of the Collector and District Magistrate of the district, all the Member of Parliament of than district, all the member of Legislative Assembly of that district and all the chairmen of the local bodies of that district. The DLC decide the market value of the property lying in its jurisdiction by considering the various factors i.e. nature of land, location of land, distance from road/main road, civic amenities, land use etc. The market value so assessed by the DLC are published in local news papers and are also available on website of government. He further observed that when a transfer deed of any immovable property is presented before the Sub Registrar for its registration, the Sub Registrar adopts/applies the market value of the immovable property as determined by the District Level Committee and charges stamp duty on that value. If a person is aggrieved by the market value assessed by the DLC and adopted by the Sub Registrar, then he can file appeal before the Collector (Stamps) against market value being adopted by the Sub Registrar. Aggrieved person can further appeal against the order of the Collector (Stamps) 8 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain before the Revenue Board. As per Section 50C of the Act, where the consideration received or accruing as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by an authority or a State Govt. (Stamp Valuation Authority) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purpose of Section 48, be deemed to the full value of consideration received or accruing as a result of such transfer. He further observed that the word 'assessable' in Section 50C was inserted w.e.f. 01/10/2009. The assessee had not presented the PARIPURN PRATIGYA PATRA before the Sub Registrar, though it was mandatory with a motive to evade payment of stamp duty by the assessee and the purchaser of the property and cause loss to the state government exchequer. The assessee had not filed any appeal before the competent appellate authority against the market value determined by the Sub-Registrar, hence the value so determined is final. The ld AR of the assessee submitted before the Assessing Officer that word 'assessable' was inserted in Section 50C w.e.f. 01/10/2009, which was not applicable in the case of assessee. Sale was executed on 18/04/2007 prior to the above 9 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain amendment. The ld Assessing Officer observed that the Sub-Registrar has merely applied the market rate of the property, which was duly assessed by the DLC for determining the market value of the property for charging stamp duty. Hence the market value is duly assessed by the DLC for the purpose of charging stamp duty. Thus, it is incorrect to say that the market value of the property shall be assessed when the transfer deed shall be presented before the Sub-Registrar. The market value of the lands had already been assessed by the DLC. The Sub-Registrar merely adopts the rate decided by the DLC for determining the market value of the land for charging stamp duty and when transfer deed is presented before him. The assessee and purchaser of the land did not present the sale deed before the Sub-Registrar, consciously and knowingly with motive to evade stamp duty on the transfer of the land and tax on capital gain accruing on such transfer as per the provisions of Section 50C of the Act. Thus the ld Assessing Officer taken full value consideration of half property at Rs. 3,48,83,310/- and finally he calculated the long term capital gain at Rs. 3,11,14,986/-.
3. Being aggrieved by the order of the Assessing Officer, the assessee the matter before the ld CIT(A), who had allowed the appeal partly by 10 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain observing that Khasra No. 4222, 4618 and 4621 which were part of land held by the appellant, had been acquired by Rajasthan Housing Board for residential purposes and the appellant was also awarded compensation for the same. The counsel of appellant on the other hand has argued that even after lapse of 29 years, Rajasthan Housing Board has not undertaken any activity on the said land. Further the A.O. had not inquired from Rajasthan Housing Board as to why the land in question acquired by them for developing residential colony had not been put to such use. In fact the land so acquired could not be converted from agricultural to residential unless a notification to this effect was issued by Ministry of Urban Development, Government of Rajasthan. The process of 90B (conversion of land) was still not yet complete and pattas were yet to be issued in the name of the allottees. He further held that the valuation adopted by Sub-Registrar, Sanganer-I, Jaipur did not have any legal sanctity and therefore any addition made by the A.O. on such valuation did not have legs to stand. Even as per revenue records, the land in question was "Khasara" and the Sub-Registrar had himself admitted that there were no DLC rates for agricultural land in the concerned area. Therefore, he could not have applied DLC rate applicable to residential 11 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain area situated far away from the land of the appellant. The DLC rates of the plots lying in the Nallah were between Rs. 660/- to Rs. 715/- per sq. mt. as on the date of transaction. The Collector (Stamps), Jaipur-II vide her order dated 01/08/2011 had assessed the stamp duty at Rs. 12,47,34,360/- in respect of land in question as on 09/11/2010 i.e. that date on which proceedings were initiated against the assessee. It is not in dispute that the appellant had sold the land about 3 year back on 18/04/2007. The Collector (Stamps) on the other hand had assessed the value of land for the purpose of stamps duty as on 09/11/2010. The counsel of the appellant on the other hand, has brought to his notice that in the case of other co-owner namely Smt. Shanta Devi Jain, the DVO had assessed the fair market value of the land in question at Rs. 1,27,07,500/- as on 18/04/2007 on a reference made by ITO, Ward 7(2), Jaipur. The DVO has clearly mentioned in para 7.3 of his report 20/12/2011 that the land in question was situated in the Amani Shah Ka Nallah and was around 150 metre away from the main road. He had applied rate of 660/- per sq.mt. as the land was situated in the Nallah on the basis of letter of Jaipur Development Authority No. D-8185 dated 02/02/2011 and no construction of residential nature was permissible on the said land. The 12 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain width of Amani Shah Ka Nallah was taken at 135 metres considering the maximum quantity of water flow. Further the JDA had also erected cement concrete pillars on the both the banks of Amani Shah Ka Nallah. The land in the question was also situated below 20-30 feet below the road level. Since the appellant had objected to the adoption of value of Rs. 6,97,66,620/- by Sub-Registrar, Sanganer-I, Jaipur, the A.O. should have referred the matter to the DVO in the light of provisions of Section 50C(2). The purpose of Section 50C of the Act is to prevent undervaluation of the real value of the property in the sale deeds. Sub- sections (2) and (3) of Section 50C provide further safeguard to the assessee, in the sense that if the assessee claims before the Assessing Officer that the value adopted by the stamp duty authorities exceeds the fair market value and the value so adopted or assessed for the purpose of stamp duty has not been disputed in any appeal or revision before any authority, the Assessing Officer could refer the valuation of the capital asset to the Departmental Valuation Officer. On such reference, if the value determined by the Valuation Officer is more than the value adopted or assessed by the stamp duty authority, the Assessing Officer shall adopt the market value as determined by the stamp duty authority. Thus, a 13 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain complete foolproof safeguard has been given to the assessee to establish the real value before the concerned authorities. Thus, what is stated in Section 50C as a real value cannot be regarded as a notional or artificial value and such real value is determinable only after hearing the assessee as per the statutory provisions stated supra. Therefore, the right of an assessee conferred under section 50C of the Act is a valuable statutory right available to protect his interest against any arbitrariness which may creep in while fixing the value of the capital gain and that is the safeguard given to the assessee. The said right is more effective in cases where the parties to the document have not taken any steps to defend or to initiate proceedings under Section 47A of the Indian Stamp Act. The Assessing Officer was bound to follow the sub-section (1) of section 50C or to adopt the lower of the value fixed by the DVO or the value as determined by the stamp valuation authority as per sub-section (3) of Section 50C. For this proposition, the reliance is placed on the decision of the Hon'ble Lucknow Bench in the case of Jitendra Mohan Saxena Vs. ITO (305 ITR (AT) 62). The reference to the DVO under Section 50C(2) is not discretionary, but mandatory for which reliance is placed on the decision of the Hon'ble Jodhpur Bench in the case of Meghraj Baid Vs. ITO (114 TTJ 841). Thus 14 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain as per Section 50C(1), the valuation as fixed by the stamp valuation authority is taken as a bench mark, as per sub-section (2) of section 50C the bench mark can be reviewed by the reference to the valuation officer if the assessee claims that such value exceeds the fair market value. As per sub-section (3), if the valuation as arrived at by the DVO as a consequence of the reference made to him by the Assessing Officer on account of the assessee's claim and such valuation is found to be higher than the value as fixed by the stamp valuation authority then the value as fixed by the stamp valuation authority being the lower of the two is to be applied. In the case of Smt. Trishla Jain Vs. ITO (011 ITR (Trib) 579), the assessee alongwith other two persons were the co-owners of a property having one fourth share each in the property. The co-owners sold the property during the year 2006-07. The assessee had shown long term capital gains on sale of shops at Rs. 72,42,500/- whereas the value of the property fixed by the stamp valuation authority was Rs. 1,69,99,000/-. Similarly, in respect of another property, the assessee had shown sale consideration at Rs. 2,50,000/- as against the value fixed by stamp valuation authority at Rs. 13,80,000/-. Applying the provisions of section 50C of the Income Tax Act, the Assessing Officer adopted the sale 15 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain consideration equal to the value adopted by the stamp valuation authority and then determined the long term capital gains from the sale of the property. The Commissioner (Appeals) held that the Assessing Officer was justified in invoking the provisions of section 50C(1) of the Act in determining the long term capital gains. However, it was held by Hon'ble Delhi Tribunal that it was not in dispute that the assessee had made a claim before the Assessing Officer that the value adopted or assessed by the stamp valuation authority was higher than the fair market value. It was also not a case whether the value adopted by the stamp valuation authority had ever been disputed by the assessee in any appeal or revision or otherwise as referred to in Section 50C(2) of the Act. In these circumstances, it was incumbent upon the Assessing Officer to have referred the matter for valuation to a Valuation Officer as provided in section 50C(2) of the Act. Since the Assessing Officer had failed to refer the matter to the Valuation Officer under Section 50C(2) of the Act as required, the matter was to be restored to the file of the Assessing Officer for his fresh adjudication after referring the matter to the Valuation Officer under section 50C(2) of the Act and then to decide the issue accordingly under the law. This decision is fully applicable to the facts of 16 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain the present case. Though the present A.O. had not made any reference to the DVO however ITO, Ward 7(2) Jaipur had made a reference to the DVO in the case of other co-owner namely Smt. Shanta Devi Jain for the land in question. Therefore, the A.O. is bound to follow the report of the DVO for application of provisions of section 50C. However, since the DVO had assessed the value of land in question at Rs. 1,27,07,500/- in the case of other co-owner i.e. Smt. Shanta Devi Jain, the A.O. should have adopted the lower of two values i.e. the value assessed by Collector (Stamps), Jaipur-II or the value adopted by DVO following the provisions of Section 50C(3). He, therefore directed the Assessing Officer to adopt the value of Rs. 1,27,07,500/- for substituting the sale consideration instead of Rs. 6,97,66,620/- taken by him. These grounds of appeal are therefore partly allowed.
4. Now both are in appeal before us. The ld Sr. DR has argued that the stamp authority had valued the impugned land by considering all factors, which were raised by the assessee i.e. nature of the land, location of the land, distance from the road/main road, civil amenities, land use etc. The ld Assessing Officer only referred this land for valuation to the Sub-Registrar for valuation under the Rajasthan Stamp Rules, 2004 but 17 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain rates of the particular area's land always decided by the DLC and it is a continuous process to evaluate the rates as per the stamp rules. Therefore, the ld Assessing Officer rightly applied the valuation of land disclosed by the assessee for long term capital gain. He further argued that as per Section 2(47), this transfer may be legal but for immovable property valued more than Rs. 100/- is required to register under the Rajasthan Stamp Rules and transfer of immovable property can be said complete thereafter. Further he argued that it is a device not to pay the tax on actual value of the land by adopting such type of mode of transfer. He further argued that the assessee intentionally has not got property registered by adopting this mode of transfer. There is a huge difference between the value taken in agreement to sale i.e. Rs. 74.91 lacs whereas as per Sub-Registrar, Sanganer, Jaipur it was valued at more than Rs. 6.97 crores. Therefore, order of the Assessing Officer may please be confirmed.
5. At the outset, the ld AR of the assessee has submitted that the reference made by the ld Assessing Officer U/s 50C is out of jurisdiction as the assessee only transferred the land to the society vide agreement to sale on 18/04/2007 relevant to A.Y. 2008-09. In Section 50C, the only 18 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain reference can be made for the immovable property, which was registered under the Rajasthan Stamp Rules as the stamp authority assessed the value of assets and duty on it. The Statutes was got amended by the Parliament w.e.f. 01/10/2009 and assessable word has been inserted in Section itself. The purpose of insertion of this word i.e. 'assessable' was to get valuation of the property, which are not being registered. He has further drawn our attention on various case laws on this issue particularly Hon'ble ITAT, Jaipur Bench, Jaipur decision in the case of Smt. Pushpa Kalra Vs. ITO in ITA No. 1130/JP/2011 for A.Y. 2003-04 dated 20/01/2012 wherein the Hon'ble Bench has decided that Section 50C is not applicable on the cases where transfer made prior to this amendment, which is squarely applicable on amendment made in Section 50C i.e. word 'assessable' has been added w.e.f. 01/10/2009. It means that the provisions are not applicable retrospectively. He further argued that the same view has been expressed by the Jaipur ITAT in the case of Sh Pramod Chand Soni Vs. DCIT (2012) 6 Tax Corp (A.T.) 27781 (Jaipur) order dated 03rd January, 2012. He further argued that the the Hon'ble ITAT, Jaipur Bench, Jaipur in the case of DCIT Vs. Ashok Kalani in ITA No. 249/JP/2008 order dated 28/11/2008 wherein facts are identical i.e. sale 19 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain deed has not been registered with the registering authority. The amended provision of Section 50C has been considered, which was effective from 01/10/2009 and allowed the assessee's appeal as the A.O. gathered information regarding DLC value from registering authority and on that basis, the sale consideration in terms of provisions of Section 50C was worked out and additions were made on account of long term capital gain. He further argued that the ld CIT(A) was also not justified to adopt the DVO valuation got done in case of co-owners U/s 50C of the Act as the same is also not applicable in the case of assessee. Thus, he prayed to allow the assessee's appeal.
6. We have heard the rival contentions of both the parties and perused the material available on record. It is undisputed fact that land got transferred on agreement to sale by showing consideration of Rs. 74.91 lacs, which was valued by the stamp authority at Rs. 6,97,66,620/- under Rajasthan Stamp Rules. The assessee's objections were considered by the Sub-Registrar and finally value decided the same. The assessee's argument are not tenable in view of that the land was not salable property, DLC rate are for residential area, land situated in the bed of Amani Shah Ka Nallah, catchment area of the Gooler Dam, 15-20 feet 20 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain below the road level, not touching any city road, waste water of the entire Jaipur city flows in the said Nallah, sewage pipe lines of many colonies, waste water containing high chemicals and acid contents of the textile processing units located in an around Sanganer also discharged and monsoon rain water also flows in the said Nallah when he had got the price through agreement to sale. Now the issue is remained to be answered whether assessable word inserted in Section 50C w.e.f. 01/10/2009 is retrospectively or prospective or are applicable on the assessee's case as various Coordinate ITATs Benches have decided this issue that transfer made on agreement to sale and property has not been registered, the provisions of Section 50C is not applicable and word assessable in Section 50C is inserted w.e.f. 01/10/2009, therefore, ld Assessing Officer's reference to the registering authority is out of jurisdiction.
6.1. From the terms and conditions of the sale document, it is clear that :-
i) Khasra nos. 4222, 4618 and 4621 were already acquired by the Rajasthan Housing Board.
ii) The seller of the land, namely, Shri Tara Chand Jain and others are merely Kastkar ( dk'rdkj ) and Khatedar ([kkrsnkj). 21
ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain
iii) As per the agreement, the seller is owner in respect of the above said Khasra No. for the purpose of using, selling and tilling and transferring for the purpose of gain (mDr reke [kljku Hkwfe gedks izR;sd izdkj ls vius mi;ksx o miHkkx esa ysus ykHk vftZr djus] dk'r djus] dk'rdkjh gdwdks dks gLrkUrfjr vkfn djus ds lEiw.kZ ekfydkuk vf/kdkj izkIr gS])
iv) The seller has received a sum of Rs. 72,18,000/- on various dates from the buyer after adjusting the amount of Rs. 2,73,000/- (already received) during the period 30.03.1996 to 28.9.2006.
6.2. The assessee in the written submission filed before us has mentioned as under :-
a) .............................
(b) The land also falls in the catchment area of Goollar Dam,
situated few hundred meters ahead of the land towards the south direction. It thus gets water logged during monsoon rains.
(c) The land level is 20-30 feet below from the road level.
(d) No construction is permissible under the Master Plan/Rules for urbanization.
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ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain
(e) The land, under the notified Master Plan is reserved for flow of City's waste, rain, sewage water and the land parallel to the banks of the Nalla has been stated as flood affected and reserved for green belt.
(f) The land is classified as "KHATLI" in the revenue records of the State Government. The terms "Khatli" is used for stating that the land gets water logged and fit only for agriculture purpose.
(g) The Rajasthan High Court, in the case of Abdul Rahaman vs. State of Rajasthan & Others has also directed the State to restore the status as of 15.08.1947 of all Nalla, Rivers, Tributaries etc. by removing all encroachments therein.
6.3. Further, in the Addendum Index of Papers at page 112 the assessee has mentioned as under :-
" In addition to above, it is humbly submitted that section 50C is not applicable to the appellant's case under consideration. Kindly refer to the Fact No. 19 mentioned herein above first on page 5 of these submissions. It is an established fact that the land under reference is owned by the State Government as is evidenced by the copy of the JAMABANDI placed at page number 35 of the PB. The assessee has got rights only for agriculture operations on the said land. This "right" can not be called as "land" owned by him. Section 50C is a deeming provision which extends only to a capital asset which is "land or building or both". A deeming provision cannot be extended beyond the purpose for which it is enacted. If a capital asset cannot be described as "land or building or both", Section 50C cannot apply. A "right" in a plot of land is neither "land or building or both". The distinction between a capital asset being "land or building or both"
and any "right in land or building or both" is well recognized.
"Land or building" is distinct from "any right in land or building"
and therefore section 50C does not apply to "rights". Reliance is placed on the recent decision of the ITAT Mumbai in the case of Atul G. Puranik vs. ITO. Photocpy of the head notes of the decision, downloaded from the internet is enclosed herewith for ready reference. The ITAT held that the rights in land or building are different than real land and building, both are two distinct assets.
23
ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain 6.4. In the light of above the submissions of the assessee can be summarized as under:
(i) That the Hon'ble Rajasthan High Court in the case of Abdul Rahaman vs. State of Rajasthan & Others has directed the State to restore the status as of 15.08.1947 of all Nalla, Rivers, Tributaries etc. by removing all encroachments.
(ii) The Khasra nos. 4222, 4618 and 4621 were acquired by the Rajasthan Housing Board.
(iii) As per the case of the assessee, he is merely a Kastkar and has no right in the land and the land is owned by the State Government.
In JAMABANDI at Page 53 of the Paper Book, State Government has been shown as owner of various Khasra Nos. which are as under :-
[kljk ua- {ks=Qy
3676 1-14
4222 1-43
4223 0-59
4224 0-60
4230 0-19
4232 0-37
4233 0-19
4235 0-47
4618 0-22
4621 0-25
4234 0-54
24
ITA No. 566 & 578/JP/2012
ITO Vs Tara Chand Jain
6.5. The ld. A/R contended that the Government has acquired the land in respect of 3 Khasra nos. mentioned above and further the Government is the owner of the other land as per JAMABANDI record.
6.6. The ld AR has further submitted that the assessee was only having right of Kastkari and his name is entered in the revenue record. He further submits that the right on the agricultural land, though is a capital asset but is neither land nor building within the meaning of ACT, therefore, in the return of income the assessee has declared half share of the long term capital gain accrued on the transfer of rights in the land.
6.7. Section 45 clearly provides that any profit or gains arising from the transfer of capital asset effected in the previous year shall save as otherwise provided in section 54 to 54H be chargeable to income tax under the head Capital Gain and shall be deemed to be the income of the previous year in which transfer took place. What is relevant for the applicability of section 45 is Profit or Gain arising from the transfer of capital asset effected in the previous year. It is only in the nature of capital asset transferred in the year which is to be taken into consideration for computing the profit and gain chargeable to tax under the head Capital Gain. The capital asset has been defined in section 2(14) as under :-
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ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain Section 2(14) :
"(14) "capital asset" means--
(a) property of any kind held by an assessee, whether or not connected with his business or profession ;
(b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992), but does not include--
(i) any stock-in-trade [other than the securities referred to in sub-
clause (b)], consumable stores or raw materials held for the purposes of his business or profession ;
(ii) personal effects, that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes-
(a) jewellery ;
(b) archaeological collections ;
(c) drawings ;
(d) paintings ;
(e) sculptures ; or
(f) any work of art.
Explanation -- 1. For the purposes of this sub-clause, "jewellery" includes-
(a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel ;
(b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel ;
Explanation -- 2. For the purposes of this clause--
(a) the expression "Foreign Institutional Investor" shall have the meaning assigned to it in clause (a) of the Explanation to section 115AD ;
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ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain
(b) the expression "securities" shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ;
(iii) agricultural land in India, not being land situate-
(a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or
(b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette ;
(iv) 6½ per cent. Gold Bonds, 1977, or 7 per cent. Gold Bonds, 1980, or National Defence Gold Bonds, 1980, issued by the Central Government ;
(v) Special Bearer Bonds, 1991, issued by the Central Government ;
(vi) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999, notified by the Central Government ;"
Thus the capital asset means the property of any kind held by the assessee whether or not connected with his business or profession. In the present case, the assessee, stated to have owned the property in the agricultural land mentioned in the agreement dated 18.04.2007.
Section 50C of Income-Tax Act, 1961 (2015) 85 [Special provision for full value of consideration in certain cases.27
ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain 85a 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed 86[or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed 86[or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. 2 -------------------------------------------------- 6.8. On going through the above provisions, it transpires that if the full value consideration shown to have been received or accruing on transfer of a capital asset being land or building or both is less than the value adopted or assessed or assessable (w.e.f. 1.10.2009) by Stamp Valuation Authority, the value so adopted etc. shall for the purpose of section 48 be deemed to be the full value of consideration received or accruing as a result of such transfer. This section 50 C was inserted by the Finance Act, 2002 with effect from 1.4.2003 with a view to substitute the declared full value consideration in respect of land or building or both transferred by the assessee with the value adopted or assessed or assessable by the Stamp Valuation Authority. Except for this provision, there is nothing in the Act which require for treating the value adopted by the Stamp Valuation Authority to replace the full value consideration taken by the assessee.28
ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain 6.9. Section 50C is a deeming provision and it is only applicable in respect of capital assets which are land or building or both. It is thus clear that this deeming provision of section 50C will come into play only if the capital asset transferred by the assessee is a land or building or both. If, in the absence of capital asset transferred is neither the land nor building nor both, this deeming provision shall not be applicable to such transfer. 6.10. It is seen from the above mentioned statement of fact i.e. the ownership of the land is with the State Government. The land is acquired and the assessee is merely a Kastkar, this clearly shows that the assessee is only having the limited rights in the land sold. The limited rights of Kastkar on the land cannot be equated with the ownership of land or with building or with both. The Income Tax Act clearly recognized the distinction between the land or building or any right in the land or building under section 50C of the Act. Thus the Act has given the separate treatment to land, building and rights in the land. 6.11. In the opinion of the Bench, the rights in land cannot be equated with the land or building. Therefore, it is concluded that section 50C is applicable to transfer of capital asset only in respect of land or building or both and is not applicable to right in land. In the present case, the assessee has only transferred the right in land for a valuable consideration, therefore, in the opinion of the Bench, the long term capital gain cannot be calculated by 29 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain invoking the deeming provisions provided under section 50C. Therefore we hold that section 50 C is not applicable to present case. This is also of view of Mumbai Tribunal in the case of Atul G. Puranik vs. ITO (2011) 11 ITR (Trib.)
120. 6.12. Even otherwise, the assessee has sold the property on 18.04.2007 and has filed the return of income on 31.07.2008. At the time of selling the property to the purchaser the sale consideration shown by the assessee in the document executed was Rs. 74,91,000/- only and has shown the capital gain to the extent of 50% in the return of income, being the half ownership rights in the property. The agreement was neither registered nor properly stamped and was merely executed on the stamp paper of Rs. 100/-. Section 50C as available ,in the rule book ,on the date of filing of the return or on the date of transfer of the land provides as under :-
Section 50-C as per IT Act 2007 :
" Section 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.30
ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain (2) Without prejudice to the provisions of sub-section (1), where--
(a) the assessee claims before any Assessing Officer that the value adopted or assessed 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 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 asset 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-sections (6) and (7) of section 23A, 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.
Explanation.--For the purposes of this section, "Valuation Officer"
shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).
(3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.
With effect from 1.10.2009 by the Finance (No. 2) Act 2009 the word "assessable" was inserted with effect from 1.10.2009 and thereafter section 50-C provides as under :-
31
ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain Section 50-C as per IT Act 2010 :
"Section 50C (1) Where the consideration received or accruing as a result of the transfer by an assessee or a capital asset, being land or building or both, is less than the value adopted or assessed (or assessable) by any authority or a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed (or assessable) shall, for the purposes of section 48, be deemed to be the full value of the consideration received 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 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 value of the capital asset 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-sections (6) and (7) of section 23A, 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.
Explanation (1) For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).
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ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain Explanation 2. For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment 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 for assessable by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed (or assessable) by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.
In the matter of CIT vs. R. Sugantha Ravindram, 352 ITR 488, the Hon'ble Madras High Court after referring to the Circular issued by the Board has concluded that the word "assessable" is only prospective in nature and not applicable in respect of the transfer which had taken place prior to the insertion of word "assessable" in section 50C. The relevant para of the judgment in the case of R. Sugantha Ravindram (supra) is as under :-
8. We have perused the above circular. It is stated therein that the scope of the provisions does not include transaction which are not registered with stamp duty valuation authority and executed through agreement to sell or power of attorney. Consequently, it is made clear therein that the amendments have been made applicable with effect from October 1, 2009, and, therefore, they will apply only in relation to transaction undertaken on or after such date. The relevant portion of the circular is extracted hereunder (page 319 of 324 ITR) :
"23.4. Applicability.--These amendments have been made appli cable with effect from 1st October, 2009, and will accordingly, apply in relation to transactions undertaken on or after such date."33
ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain
9. Learned counsel for the Revenue is not disputing about the existence of such circular issued by the Board. If the Board has issued a circular clarifying the applicability of section 50C in pursuance of the amendment made by the Amendment Act 2 of 2009, we fail to understand as to how the Revenue can canvass the same issue in this case which in effect is against the circular issued by the Board. Certainly, the Revenue is bound by the circular issued by the Board. At this juncture, it is pertinent to note that in a decision made in the case of State of Tamilnadu v. India Cements Ltd. reported in [2011] 40 VST 225 (SC), the honourable Supreme Court has held that the circulars issued by the Revenue are binding on the Department and, therefore, they cannot repudiate that they are inconsistent with the statutory provisions. The relevant paragraphs 21 and 22 are extracted hereunder (page 237) :
"21. It is manifest from the highlighted portion of the circular that as per the clarification issued by the Commissioner of Commercial Taxes, in exercise of the power conferred on him under section 28A of the TNGST Act, the benefit of the sales tax deferral scheme would be available to a dealer from the date of reaching of BPV or BSV, which ever is earlier, as is pleaded on behalf of the first respondent. It is trite law that circulars issued by the Revenue are binding on the Depart mental authorities and they cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law.
22. In Paper Products Ltd. v. CCE [2001] 247 ITR 128 (SC) ; [1999] 7 SCC 84), while interpreting section 37B of the Central Excise Act, 1944, which is in pari materia with section 28A of the TNGST Act, this court had held that the circulars issued by the Central Board of Excise and Customs are binding on the Department and the Department is pre cluded from challenging the correctness of the said circulars, even on the ground of the same being inconsistent with the statutory provision. It was further held that the Department is precluded from the right to file an appeal against the correctness of the binding nature of the circulars and the Department's action has to be consistent with the circular which is in force at the relevant point of time."
10. Even otherwise, we are of the firm view that the insertion of the words "or assessable" by amending section 50C with effect from October 1, 2009, is neither a clarification nor an explanation to the already existing provision and it is only an inclusion of new class of transactions, namely, the transfers of properties without or before registration. Before introducing the said amendment, only the transfers of properties where the value adopted or 34 ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain assessed by the stamp valuation authority were subjected to section 50C application. However, after introduction of the words "or assessable" after the words "adopted or assessed", such transfers where the value assessable by the stamp valuation authority are also brought into the ambit of section 50C. Thus, such introduction of new set of class of transfer would certainly have the prospective application only and not otherwise. Hence, the assessee's transfer admittedly made earlier to such amendment cannot be brought under section 50C .""
Thus it is clear that the amended provision of section 50C is not applicable to the transfer which had already taken place prior to the amendment. In the present case the assessee has transferred the capital asset for a consideration of Rs. 74,91,000/- and the document was neither registered nor evaluated for the purpose of stamp duty purposes by the Stamp Valuation Authority at the time of execution of said document . Therefore, there was no evaluation of stamp duty payable on the document. Thus in our view the deeming provision of section 50C do not come in to play thereby replacing the full valuation of consideration of the document with the value calculated by the Stamp Valuation Authority / registering Authority. In the absence of any adoption or assessment by the authority of state government for the purposes of the Stamp duty in respect of subject transfer ( as the document was not registered ), there was no occasion for the AO to either refer the matter to the Registering Authority or to the Stamp Valuation Authority for the purpose of arriving at the valuation of the property.35
ITA No. 566 & 578/JP/2012 ITO Vs Tara Chand Jain 6.13. Therefore, in the interest of justice we set aside this issue to the Assessing Officer and directed to apply the provisions of Income Tax including Section 55A to determine the correct capital gain in this transaction and decided the case after considering the above observations of this Bench and also give reasonable opportunity of being heard to the assessee after bringing of required evidences on record. 6.14. The assessee challenged in the second ground of appeal that the ld CIT(A) is allowed the appeal partly by applying DVO's valuation in co- owners case U/s 50C but Section 50C is not applicable in the case of assessee. Therefore, the order of the ld CIT(A) is reversed to that extent as observed in preceding paras. Accordingly, the revenue's appeal as well as assessee's appeal are set aside to the Assessing Officer.
7. In the result both the appeals are allowed for statistical purposes only.
Order pronounced in the open court on /10/2015.
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(Laliet Kumar) (T.R. Meena)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- October, 2015
36
ITA No. 566 & 578/JP/2012
ITO Vs Tara Chand Jain
Ranjan*
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- The ITO, Ward (6)1, Jaipur.
2. izR;FkhZ@ The Respondent- Shri Tara Chand Jain, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No.566 & 578/JP/2012) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar