Income Tax Appellate Tribunal - Delhi
Anjali Dua,, New Delhi vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `A' NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER
I.T.A.No.1008/Del/2011
Assessment Year : 2007-08
Asstt.Commissioner of Income Tax, vs Anjali Dua,
Circle 42(1), 2nd Floor, Ashoka Centre,
New Delhi. E-4/15, Jhandewalan Extn.,
New Delhi.
(PAN: AAHPD8230C)
(Appellant) (Respondent)
Appellant by: Shri Aroop Kumar Singh, Sr.DR
Respondent by : Shri Salil Agarwal, Gautam Jain
ORDER
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
This appeal has been preferred by the Revenue against the order dated 20.12.2010 for AY 2007-08 of the CIT(A)-XXX, New Delhi by which he allowed the appeal of the assessee deleting the addition made by the AO vide his order dated 31.12.09, on account of enhancing the sale consideration of land u/s 50C of the Income Tax Act, 1961 (hereinafter referred as "the Act").
2. The sole ground of appeal reads as under:-
2 ITA No.1008/Del/2011
"On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in:-
1. Deleting the addition of Rs.65,05,425/- made by the A.O. by enhancing sale consideration of land u/s 50C of the I.T.Act."
3. Briefly stated the facts of the case are that the assessee sold land Khasra No. 279/3, Khata No. 24/27, page No. 18, Jambandi Year 2001-02, situated at Village - Dhandari Khurd, Tehsil & District Ludhiana (Punjab) through separate sale deeds nos. 12686 and 12687 and received total consideration of Rs.85,50,000/-. In the assessment order, the AO held that on the basis of the DVO report the sale consideration should be adopted at Rs.1,50,55,425/- u/s 50C of the Act. The AO relied upon the report of Valuation officer, Ludhiana u/s 55A of the Act dated 27.8.2009 wherein he adopted circle rate @Rs.5500/- per square yard for the land sold considering the above valuation as fair market value of the land sold.
4. We have perused the entire assessment order and relevant paras 10 and 11 of the findings which read as under:-
"10. The submissions of stamp valuation authority and the submissions of the AR of the assessee were carefully considered but cannot be accepted in the light of the following:-
10.1 There is no value adopted or assessed by stamp valuation authority for the land which was subject matter of sale. The value of stamp valuation authority as reflected in the sale deeds furnished by the assessee, does not pertain to the actual land which was sold, as is evident from the report of the Valuation Officer and actual physical inspection.3 ITA No.1008/Del/2011
10.2 The fact that stamp valuation authority has erred (or was fooled to err), as far as actual location of the property is concerned, is very clear from the valuation report and actual physical inspection. Thus, the stamp value of Rs.1300/sqyd is on the basis of an erroneous and perverse sale deed. Therefore, the stamp valuation rates quoted on the sale deed submitted by the assessee cannot be taken for arriving at value adopted or assessed by stamp valuation authority.
10.3 Though the stamp valuation authority vide 133(6) notice dated 4.12.2009 was specifically asked to furnish the reasons for disagreement with the report of valuation officer along with supporting documents and evidences.
The submissions of the stamp valuation authority is devoid of any reasoning and is not supported by evidences such as location maps and other documents establishing the actual location of the property. Therefore, it is held that the value adopted the stamp valuation authority cannot be taken as Rs.1300/sqyd., as this value does not pertain to the land which was subject matter of sale.
11. Now, the question is how to arrive at value adopted or assessed by stamp valuation authority for the actual land, which was sold. To arrive at value adopted or assessed by stamp valuation authority, following facts have been kept in mind:
11.1 From the actual location of the land which was subject matter of sale, it is evident that land is located on Delhi Ludhiana Highway (N.H.1/G.T. Road). This is established by the report of valuation officer and annexures to the valuation report. The stamp valuation rates as prescribed by stamp valuation authority for the land situated within 300 ft from the GT road is Rs.5500/-
per sq. yard.
4 ITA No.1008/Del/2011
11.2 Since the land is situated on the G.T. Road, and is within 300 ft. from G.T. Road, the stamp value rate is taken as Rs.5500/- per sq. yard. Total land sold was 2737.35 Sqr. Yards."
5. On the basis of above findings, the AO has taken fair market value of land sold @Rs.5500/- per square yard and made an addition of Rs.65,05,425 to the value of sale consideration u/s 50C of the Act. Being aggrieved by the above order, the assessee invoked the first appellate authority i.e. ld. CIT(A) and the appeal was allowed deleting the addition made by the AO with finding as reproduced below:-
"6. I have considered the findings in the order of assessment, submissions made by the assessee along with evidence on record. The issue involved in Ground No. 1 to 3 of the Grounds of Appeal is in respect of addition of Rs.65,05,425/- by determining long term capital gain arising on sale of land at Rs.94,41,793/- as against declared capital gain of Rs.29,36,368/- by enhancing sale consideration from Rs.85,50,000/- to Rs.1,50,55,425/- u/s 50C of the Act on the basis of report of Valuation Officer, Ludhiana u/s 55A of the Act dated 27.08.2009. According to the AO, circle rate of the land sold is Rs.5500/- per sq. yard whereas according to the assessee the circle rate is 1300/- per sq. yrd. It has been contended that , sine the sale consideration received is at an average rate of Rs.3,123,46/- per sq. yd, which is far higher than the circle rate of Rs.1300/- per sq. yard application of section 50C of the Act is not tenable. In the instant case, it is evident from the material on record that the Tehsildar and Sub-Registrar, Ludhiana have confirmed in their letters dated 11.9.2009, 5.11.2009 and 11.12.2009 that circle rate of the land is 1300/- per sq. yrd. In fact, in the letter dated 11.12.2009 (pages 60 to 61 of the Paper Book), it was stated as under:-
5 ITA No.1008/Del/2011
"With reference to the above subject your letter no. ACIT/CIR-42(1) 2009-10 dated 4.12.2009 regarding Vasika No. 12696 dated 1.11.2006 area Dhandari Khurd, Abadi Prem Nagar maximum collateral rate in year 2006-07 was Rs.1300/- per sq. yd. and this sale deed is registered with Rs.2794/- per sq. yds. And Vasika No. 12687 dated 1.11.2006 at that time rate was also Rs.1300 per sdq. Yds and this sale deed is registered with Rs.3360/- per sq. yds. So these both sale deeds are registered much higher than the collateral rates. Moreover area Patwari directed or report of Kh.No.279/3 Area Village Dhandari Khurd Abadi Prem Nagar, as per his report this land is on west side of Delhi Ludhiana. Above land is on a road of approx. 30 to 35 ft width is on west side of Delhi Road, fair market value of above said land is Rs.2800/- Rs.2900/- per yd in year 2006-07. Here I bring to your notice that this land is located on Dhandari Khurd so rate of Dhandari Kalan cannot be applied, so these sale deeds registered in area Dhandari Khurd are genuine."
6.1 Thus once the Sub-Registrar cum Tehsildar have clarified that the circle rate is 1300/- per sq. yard, the valuation report stating the circle rate at Rs.5500/- per sq. yrd is not acceptable since the best person to determine the circle rate under authority of law is Sub- Registrar and not valuation officer. It is not a case of determination of cost of construction of the property but case of ascertainment of circle rate of the land based on the location of the land. Further, even the DVO has essentially stated that, the land sold was not located at Dhandari Khurd but at Dhandari Kalan and therefore, circle rate is Rs.5000/- per sq. yard. This basis is not acceptable as it is contrary to even the purchase deed dated 9.3.2006 wherein too location of the land has been stated at village Dhandari Khurd (purchase deed is placed on pages 131 to 133 of the Paper Book). The contents of the purchase deed have not been disputed or adversely commented by the AO. Hence, on the above basis it is held that the sale of the land was of a land located at Dhandari Kalan and not Dhandari Khurd and, thus, circle rate applicable is Rs.1300/- per sq. yard and 6 ITA No.1008/Del/2011 not Rs.5500/- per sq. yard. The DVO should have made correct verification of land in the field with the appellant on her representative, and then should have given proper report.
6.2 As regards, the letter from the Sub-Registrar Ludhiana dated 14.5.2010 the same stands clarified vide letter dated 8.9.2010 wherein he has stated as under:-
"In the above noted case regarding waskia no. 12686 and 12687 dated 1.11.06 Smt. Anjali Dua has made a representation and submitted that the land in the above wasikas is situated in Khasra no. 279/3 situated at village Dhandari Khurd and the said wasikas are rightly registered @Rs.2794 and 3360/- sq. yard respectively whereas the Collector Rate for the land was Rs.1300/- sq. yard and wasikas were rightly registered @Rs.2794 and Rs.3360 per sq. yard respectively which is higher than the Collector Rate at that time. The letter no. 933/SR dated 14.5.2010 which was earlier sent to Collector (ADC) Ludhiana and the copy of which was sent to you has been recalled and the same may be considered as annulled. The above noted wasikas were got registered in the office of Sub Registrar (East) and Collector Rate of Rs.1300/- per sq. yard was applicable as the land is situated in Dhandari Khurd as per the report of Halqa Patwari dated 5.11.09 and letter dated 12.11.09 send to you by this office under the signature of the Joint Sub-
Registrar Ludhiana (East). The land in above said wasika is situated in village Dhandari Khurd as per revenue record presented by Smt. Anjali Dua at the time of registration of wasika. The area of Dhandari Kalan was with Sub-Registrar Ludhiana (West) and at present is with Sub-Registrar Ludhiana (Central) so the rate of Dhandari Kalan cannot be imposed on the wasikas which had been registered @Rs.2794/- and Rs.3360/- per sq. yard respectively which is much higher than the Collector Rate of Rs.1300/- existing at that time. So no penalty can be imposed on the wasikas as far as registration and Collector Rate is concerned." 6.3 In light of the aforesaid, it is held that the ld. ACIT has erred in adopting the circle rate @5500/- per sq. yard for determining the full value of consideration when the 7 ITA No.1008/Del/2011 actual consideration of Rs.3123.46/- per sq. yard, higher than the circle rate of Rs.1300 per sq. yard.
7. Further, addition made is otherwise not tenable since for the purpose of the section 50C of the Act in the instant year 2007-08, the consideration which can be adopted is the value adopted or assessed by stamp valuation authority for the payment of stamp authority and only if the value adopted or assessed by the stamp valuation authority for the purpose of stamp duty is less than the consideration received or accrued as a result of transfer by an assessee of a capital asset, then value adopted or assessed by stamp valuation authority shall be deemed to be full value of the consideration received or accruing as a result of transfer of capital asset. In the instant case, stamp valuation authority had adopted value at Rs.85,50,000/- for the purpose of stamp duty and since value adopted or assessed by the stamp valuation authority is Rs.85,50,000/- which is equivalent to the consideration received or accruing to the appellant as a result of transfer of the agricultural land, the full value of consideration even for the purpose of section 50C of the Act has to be taken at Rs.85,50,000/- and not Rs.1,50,55,425/- as adopted by the learned officer. Reliance in support of the aforesaid submissions is placed on the judgement of Jodhpur Bench in the case of Navneet Kaur Thakkar vs ITO reported in 112 TTJ 76 wherein on consideration of the provisions contained in section 50C of the Act, including Memorandum explaining provisions of Finance Bill, 2002, it was held in para 7 as under:-
"But for section 50C, there is absolutely no warrant for replacing the value adopted by the stamp valuation authority with the actual sale consideration for the purposes of computing capital gain. Thus it is clear that the property in respect of which valuation is made for purposes of stamp duty must be the very same property, which is the subject matter of transfer for calculating capital gain by invoking the provisions of this section. It is wholly irrelevant to consider the assessed value of another property for stamp duty purposes as full value of consideration by making reference o the Valuation 8 ITA No.1008/Del/2011 officer under section 55A. Unless the property transferred has been registered by sale deed and for that the purpose the value has been assessed and stamp duty has been paid by the parties, section 50C cannot come into operation. In such a situation, the position existing prior to section 50C would apply and the onus would be upon the revenue to establish that sale consideration declared by the assessee was understated with some clinching evidence. The relevant judgments discussed above viz. K.P. Varghese and Shivakami Co. (P) Ltd. would come into operation and govern the determination of full value of consideration" (Emphasis supplied)
8. In light of the aforesaid, it is held that addition made of Rs.65,05,425/- by enhancing sale consideration u/s 50C of the Act is not based on misappreciation of the facts and statutory provisions of law and is thus deleted."
6. The DR supported the assessment order and submitted that from the factual physical location of the land sold was located at Delhi, Ludhiana Highway (NH-1/G.T. Road) as per report of the Valuation Officer an annexure to the report and stamp valuation rates as prescribe by the Stamp Valuation Authority for the land situated within 300 ft. from G.T. Road was 5500 per sq. yd. He also submitted that the land and question was situated on the G.T. Road within 300 ft. from the main G.T. Road. Therefore, the AO rightly taken the stamp value rate as Rs. 5500 per sq. yd. The land sold was 2737.35 sq. yd., therefore, value adopted or assessed by the Assessing Officer was rightly taken to Rs. 1,50,55,425/-. The ld. DR supported the addition and concluded with the submission that the ld. CIT(A) deleted the 9 ITA No.1008/Del/2011 addition of Rs. 65,05,425/- under the head "capital gains" on account of sale of land by the assessee during the relevant year on erroneous grounds.
7. Replying to the above submissions, the AR, supporting the impugned order, submitted that the ld. CIT(A) rightly deleted the said addition on the basis of letters of the Tehsildar and Sub-Registrar, Ludhiana vide dated 11.09.2009, 05.11.2009 and 11.12.2009 stating that the circle rate of the land sold was 1300 per sq. yd. The AO also submitted that the letter of Tehsildar and Sub-Registrar, Ludhiana, dated 11.12.2009 clearly shown that the land situated in the area Dhandari Khurd, Abadi Prem Nagar was bearing maximum collecteral rate in the year 2006-07 @ Rs. 1300 per sq. yd. and the sale deeds were executed by the assessee viz. Vasika No. 12686 dated 01.11.2006 was for the consideration @ 2794 per sq. yd. and Vasika No. 12687 on the same date was for the consideration @ 3360 per sq. yd. and both sale deeds were executed on sale consideration on the much higher side than the collateral rates. The AR also drawn out attention towards the Patwari report of Kh. No. 29/3 Area Village Dhandari Khurd Abadi Prem Nagar, to support this fact that the land sold was situated on the west side of Delhi Ludhiana Road and the fair market value of said land in the year 2006- 07 was estimated by the Patwari @ Rs. 2800 & 2900 per sq. yd. On behalf of the assessee, the AR vehemently contended the submissions of the ld. DR and submitted that the valuation rate adopted by the AO was merely on the 10 ITA No.1008/Del/2011 basis of Hyper Technical grounds based on surmises and conjectures and this factual error was corrected by the ld. CIT(A) passing the impugned order. Therefore, the appeal of the Revenue is baseless.
8. We have considered the rival submissions of both the parties and have gone through the material available on record.
9. The case of the assessee was selected for scrutiny through CASS and a notice u/s 143(2) of the Act was issued to him. The AO noticed that two sale deeds No. 12686 & 12687 were executed for the land measuring 1592 sq. yd and 1145.35 sq. yds. out of Kh. No. 279/3, Kh. No. 24/27 page no. 18 Jama Bandi Year 2001-02 situated at Village Dhandari Khurd, Tehsildar and Distt. Ludhiana. These sale deeds were executed for the sale consideration of Rs. 53,50,000/- and Rs. 32,00,000/- total amounting to Rs. 85,50,000/- as received by the assessee from the purchasers of the land. The main basis of the addition made by the AO under the head of "capital gains" of Rs. 65,05,425/- was made u/s 50C(1) of the Act adopting the value of the land at Rs. 5500 per sq. yd. From the bare reading of the assessment order and the submissions of the AR recorded therein, we also noted that the submissions of the assessee were based on the reliance of the judgment of ITAT Amritsar Bench in the case of Punjab Poly Jute Corporation vs. ACIT reported as (2009) 120 TTJ (Asr.) 1113, wherein it was held that where full value consideration declared by the assessee in the sale deed accepted by the 11 ITA No.1008/Del/2011 Stamp Valuation Authority than the value adopted by the Stamp Valuation Authority need not to be substituted with value determined by the DVO for computation of the capital gains. But the AO noted that there was no value adopted or assessed by the Stamp Valuation Authority for the land which was subject matter of the sale and the value taken by the Stamp Valuation Authority as reflected in the sale deeds furnished by the assessee, does not pertain to the actual land which was factually sold. With this finding, the AO adopting the report of the Valuation Officer, he valued the land sold @ Rs. 5500 per sq. yd. keeping aside the report of the Stamp Valuation Authority.
10. In the impugned order, the ld. CIT(A) considered the submissions of the assessee which are being reproduced below: -
"5. In the appellate proceedings, the appellant has submitted as under:
i) It is submitted that, the ld. AO has erred in adopting the circle rate @ 5500/- per sq. yard for determining the full value of consideration is clear and blatant disregard of the fact that, circle rate of the land was Rs. 1300/- per sq. yd. It is submitted that, in arriving at the above conclusion, the ld. Officer has over looked the following evidences on record:
a) A letter dated 11.12.09 (pages 60 to 61 of the Paper Book) from the Tehsildar cum Sub-Registrar, Ludhiana (East);
b) A letter dated 05.11.2009 of Tehsildar cum Sub-
Registrar, Ludhiana (East) (pages 51 to 53 of the Paper Book);
c) Confirmation from M/s Padam Motors (page 48 of Paper Book);12 ITA No.1008/Del/2011
d) Clarification from Sub Registrar, Ludhiana dated
11.9.2009 (page 63);
e) Copies of registrations deed, the stamp authority has clearly mentioned the circle rate of Rs. 1300/- per sq. yd. of the said property (page 30 and page 86 of the Paper Book);
f) Record's of stamp authorities, "in the basic value master record", the circle rate mentioned is Rs. 1300/- per sq. yd. (page 47);
g) That circle rate adopted was Rs. 1300/- per sq. yd. for the other properties sold in nearby area (Page 90 to 96 of the Paper Book);
ii) It is submitted that, the ld. Officer has mechanically relied upon the report of the valuation officer to firstly assume that, the land is located within 300 ft. from GT Road at Village Dhandari Kalan and, thereafter conclude that, the circle rate applicable for such land is Rs. 5500/- per sq. yd.
iii) It is submitted that, sub-registrar cum tehsildar i.e. the stamp valuation authority have repeatedly clarified that, location of the land was at village Dhandari Khurd and not, Dhandari Kalan, the conclusion is wholly untenable and, not sustainable.
iv) It is submitted that, since the stamp value of authority has been established under the stamp Act then and the statutory provision contained in sec. 50C of the Act refers to stamp valuation authority then in such circumstances it is neither legally nor factually desirable or otherwise permissible to draw interpretation on the basis of the report of the valuation officer in preference to the report of stamp value authority. Reliance in the context is also placed on the judgment of Apex Court in the case of Surana Steels P. Ltd. Vs. DCIT reported in 237 ITR 777.
v) The fact that, land is located at Dhandari Khurd and nto at Dhandari Kalan is otherwise evident from the purchae deed of the appellant, copy of which is also placed on record.
vi) Even otherwise, it is submitted that since stamp valuation authority had adopted value at Rs. 85,50,000/- for the purpose of stamp duty and since value adopted or 13 ITA No.1008/Del/2011 assessed by the stamp valuation authority is Rs. 85,50,000/- which is equivalent to the consideration received or accruing to the appellant as a result of transfer of the agricultural land, the full value of consideration even for the purpose of sec. 50C of the Act has to be taken at Rs. 85,50,000/- and not rs. 1,50,425/- as adopted by the ld. Officer. Reliance in support of the aforesaid submissions is placed on the judgment of Jodhpur Bench in the case of Navneet Kaur Thakkar vs. ITO reported in 112 TTJ 7 and, Amritsar Bench in the case of Pubjab Poly Jute Corp. vs. ACIT reported in 120 TTJ 1113 (Asr.).
vii)Also, amendment made in sec. 50C(1) of the Act made by the Finance (No. 2) Act, 2009 w.e.f. 1.10.09 clarifies the position that, even for sake of argument, it is assumed that, value assessable is Rs. 5500/- per sq. yd. (as it is not value assessed) though the same is seriously disputed, no addition can be made in the instant year by invoking the provisions contained in sec. 50C of the Act.
viii)Lastly, fair market value cannot be adopted for computing capital gain. Reliance is placed on the following:
a) CIT vs. Smt. Nilofer I. Singh reported in 309 ITR 233 (Del)
b) CIT vs. George Henderson and Co. Ltd. Reported in 66 ITR 622 (SC)
c) CIT vs. Gillanders Arbuthnot and Co. reported in 87 ITR 407 (SC)
d) K.P. Verghese vs. ITO reported in 131 ITR 97 (SC)
ix) It is well settled that, deeming provisions creating legal fictions, especially in taxing statute, have to be strictly construed vide the decisions in the case of CIT vs. Keshavlal Lallubhai Patel 55 ITR 63 (SC), Smt. Mohini Thapar vs. CIT 83 ITR 208 (SC), CIT vs. C.P. Sarathy Mudaliar 83 ITR 170 (SC) and CIT vs. Vadilal Lallubhai 86 ITR 2 (SC).
x) The appellant also referred to the purchase deed dated 09.03.2006 wherein too location of the land has been stated at village Dhandari Khurd, copy of purchase deed placed on record.14 ITA No.1008/Del/2011
xi) Further as regard the letter of the Sub-Registrar dated 14.05.2010, it has been stated that appellant made a representation before Sub-Registrar, Ludhiana dated 01.09.2010 before Sub-Registrar, Ludhiana dated .09.2010 (pages 153 to 155 of Paper Book-II) and on the basis of the said representation, the ld. Sub-Registrar Ludhiana in an order dated 8.09.2010 has clarified his letter dated 14.05.2010."
11. From the impugned order, at the outset we observed that the ld. CIT(A) held that the land sold was located at Village Dhandari Khurd and not at Village Dhandari Kalan. Thus, the circle rate applicable was Rs. 1300 per sq. yd. and not at Rs. 5500 per sq. yd. with a finding that the DVO should have made correct verification regarding location of the land in the field with the appellant or her representative and then only should have given the proper report.
12. We have perused the paper book carefully and observed that as per report of Sub-Registrar, Ludhiana East available at page 45 of the paper book and its translation in English is also available at page 46 of the paper book shows that the land sold was situated at Dhandari Khurd nor at Dhandari Kalan. At this point, we also see from the report of Valuation Officer (available from page 39 to 44 of the paper book) shows that the valuation made by the Valuation Officer was related to the land situated at Village Dhandari Khurd (page 41 column 4.1 of the paper book).
13. The AR drawn our attention to page no. 156 of the Paper Book, a letter from Tehsildar cum Sub-Registrar, Ludhiana (East) dated 09.09.2010 15 ITA No.1008/Del/2011 addressed to ACIT, Circle 42(1), New Delhi where the revenue-cum- registration or Stamp Valuation Authority informed about the location and collector or circle rate applicable in the relevant year. For the sake of clarity to the finding the same letter is being reproduced as under: -
From Tehsildar cum Sub-Registrar Ludhiana (East) To The Assistant Commissioner of Income Tax, Circle 42(1), Room No. 621, Mayur Bhawan, Connaught Place, New Delhi.
No. /S.R Dated:
Sub: Determination of Market Value in wasika nos.
12686 and 12687 dated 1.11.06 regarding payment of Stamp Duty.
Sir, In the above noted case regarding wasika no. 12686 and 12687 dated 1.11.06. Smt. Anjali Dua has made a representation and submitted that the land in the above wasika is situated in Khasra no. 279/3 situated at village Dhandari Khurd and the said wasikas were rightly registered @ Rs. 2794 and 3360/- sq. yd. respectively where as the Collector Rate for the land was Rs. 1300 per sq. yd. and wasikas were rightly registered @ Rs. 2794/- and Rs. 3360/- per sq. yd. respectively which is higher than the Collector Rate at that time. The letter no. 933/SR. dated 14.5.2010 which was earlier sent to Collector (ADC) Ludhiana and the copy of which was sent to you has been recalled and the same may be considered as annulled. The above noted wasikas were got registered in the office of Sub Registrar (East) and Collector Rate of Rs. 1300/- per sq. yd. was applicable as the land is situated in Dhandari Khurd as per the report of Halqa Patwari dated 5.11.09 and letter dated 12.11.09 send to you by this office under the signature of the Joint 16 ITA No.1008/Del/2011 Sub-Registrar Ludhiana (East). The land in above said wasika is situated in village Dhandari Khurd as per revenue record presented by Smt. Anjali Dua at the time of registration of above said wasikas, moreover the area of Dhandari Kalan does not falls under the Sub- Dhandari Kalan was with Sub-Registrar Ludhiana (West) and at present is with Sub-Registrar Ludhiana (Central) so the rate of Dhandari Kalan cannot be imposed on the wasikas which had been registered @ Rs.
2794/- and Rs. 3360/- per sq. yd. respectively which is much higher than the Collector Rate of Rs. 1300/- existing at that time. So no penalty can be imposed on the wasikas as far as registration and Collector Rate is concerned."
Sd/-
Tehsildar cum Sub-Registrar Ludhiana (East)
14. A bare reading of above letter clarifies the location of sold land at Village Dhandhari Khurd and effective circle or collector rate at Rs. 1300/- per sq. yd. and at the end it is also mentioned that rates of Dhandari Kalan village cannot be taken to impose penalty as because the sale deeds had been executed on much higher prices than effective circle rate i.e. Rs. 1300/- per sq. yd. Relying on the facts revealed from above letter the ld. CIT(A) held that the addition was made on erroneous ground and was not sustainable.
15. In the case of Navneet Kumar Thakar vs. ITO the ITAT, Jodhpur, SMC Bench reported as (2007) 112 TTJ (Jd.) 76, it was held that a deeming provision has been enshrined in section 50C of the Act by virtue of which a legal fiction has been created for assuming the value adopted or assessed by any authority of the State Government as the full value of sale consideration 17 ITA No.1008/Del/2011 received in respect of such transfer. A legal fiction has been created only in respect of the cases where the consideration received by the assessee is less than the value adopted or assessed by the Stamp Valuation Authority of the State Government for the purpose of payment of stamp duty in respect of such transfer. It was further held that it is a trite law that the legal fiction cannot be extended beyond the purpose for which it is enacted. Section 50C embodies the legal fiction by which the stamp duty authority is considered as the full value of consideration for the property transferred. It does not go beyond the cases in which the subject transferred property has not become the subject matter of registration and the question of valuation for stamp duty purpose has not arisen.
16. In above case of Navneet Kumar Thakar the Jodhpur ITAT Bench also held that the value adopted or assessed by the Stamp Valuation Authority has to be of the very same property, which is the subject matter of the transfer. The language of this section provides in unambiguous terms that the value adopted or assessed by the Stamp Valuation Authority has to be substituted with the sale consideration of such property. But for sec. 50C of the Act there is absolutely no warrant for replacing the value adopted by the Stamp Valuation Authority with the actual sale consideration for the purpose of computing capital gain. Thus, it is clear that the property in respect of which valuation is made for the purpose of stamp duty must be the 18 ITA No.1008/Del/2011 very same property, which is the subject matter of the transfer for calculating capital gain by invoking the provisions of this section. It was finally held that this is wholly irrelevant to consider the asset value of another property for stamp duty purpose as full value of consideration why making reference to the Valuation Officer u/s 55A. Unless the property transferred has been registered by sale deed for that purpose. Value has been assessed and stamp duty has been paid by the parties sec. 50C of the Act cannot come into operation.
17. We note that the ld. CIT(A) relied on the judgment of the Hon'ble SC in the cases of CIT (Mad.) vs. Shiva Kami Company Pvt. Ltd. (1986) reported as 159 ITR 71 (SC) and in the case of K.P. Varghese vs. ITO, Ernakulam & Othrs. reported as (1981) 131 ITR 597 (SC). In the case of Shiva Kami (supra) the Hon'ble Apex Court held that in the case of capital gains if there is an allegation against the assessee of under statement of consideration then the burden of prove lies on the department that the actual consideration was higher than as declared by the assessee. In the case of K.P. Varghese (supra) the Hon'ble Apex Court held that sub-section (2) of section 52 of the Act can be invoked only where the consideration for transfer of the capital asset has been under stated by the assessee or in other words the full value of consideration in respect of the transfer is shown at lesser figure then that actually received by the assessee and the burden of 19 ITA No.1008/Del/2011 proving such under statement or concealment lies on the revenue. The sub- section has no application in the case of honest and bona-fide transaction where the consideration received by the assessee has been correctly declared or disclosed.
18. In the present case, the ld. CIT(A) called a specific report from Tehsildar cum Sub-Registrar, Ludhiana regarding location and applicable circle or collector rate in the F.Y. 2006-07 and the Stamp Valuation Authority informed him that the land sold was situated at Village Dhandari Khurd and applicable circle of collector rate for the said land in the year 2006-07 was Rs. 1300/- per sq. yd. and the sale consideration actually received by the assessee was much higher than the above circle rate. Therefore, the ld. CIT(A) rightly held that unless the property transferred has been registered by sale deed for the purpose of the value has been assessed and stamp duty has been paid by the parties then the section 50C of the Act cannot come into operation. In such a situation, the position existing prior to sec. 50C of the Act would apply and the onus would be upon the revenue to establish that the sale consideration declared by the assessee was under
stated with some clinching or comparable evidences.
19. We also noted from the impugned order that the ld. CIT(A) firstly decided the location of the land sold to reach at the right conclusion and he arrived on the finding that the land sold was located at Dhandari Khurd. 20 ITA No.1008/Del/2011 Thus, circle rate applicable in the year 2006-07 was @ 1300 per sq. yd. The location of circle rate taken by the ld. CIT(A) was based on the letter of the Sub-Registrar, Ludhiana dated 14.05.2010 which was further clarified by vide letter dated 08.09.2010 clearly stating that the land in question, sold by the assessee, was located at Dhandari Khurd and the land was sold on the much higher price than the applicable collecteral rate of Rs. 1300 per sq. yd. existed at that time and he resisted to impose penalty on these sale deeds u/s 47 of the Stamp Act.
20. Therefore, on the basis of foregoing discussions, we finally observed that the AO was working on the wrong location of the land sold and the ld. CIT(A) passed the impugned order on the basis of report submitted by the Revenue Authority as well as Sub-Registrar and he rightly held that the land sold was located at Village Dhandari Khurd and the applicable collecteral rate on that land was Rs. 1300 per sq. yd. and the assessee sold the land on much higher price than the collector or circle rate. Therefore, we are constrained to held that the findings of the ld. CIT(A) in the impugned order are based on the reports of the Revenue Authorities and there is no reason before us to interfere with the same.
21. Therefore, we finally conclude that this appeal by the Revenue is devoid of merits and deserves to be dismissed.
21 ITA No.1008/Del/2011
22. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 18.05.2012 Sd/- Sd/-
(G.D. AGRAWAL) (CHANDRA MOHAN GARG)
VICE PRESIDENT JUDICIAL MEMBER
Dated: 18.05.2012
*Kavita
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, New Delhi.
TRUE COPY
By Order
DEPUTY REGISTRAR