Income Tax Appellate Tribunal - Pune
Randheer V. Nahar, Pune vs Assessee on 4 March, 2016
आयकर अपील य अ धकरण, पुणे यायपीठ "बी" पुणे म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
ी आर. के. पांडा, लेखा सद य
एवं ी !वकास अव थी, या#यक सद य के सम$
BEFORE SHRI R.K. PANDA, AM
AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No.159/PN/2011
#नधा&रण वष& / Assessment Year : 2006-07
Shri Randheer V. Nahar, .......... अपीलाथ /
1202/3/20, Shivajinagar, Appellant
Pune - 411 004
PAN No.AGWPN2549J
बनाम v/s
ITO, Ward-3(1), Pune .......... यथ /
Respondent
अपीलाथ क ओर से / Assessee by : Written submission
यथ क ओर से / Revenue by : Shri Manish Kumar Singh
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing :16.02.2016 Date of Pronouncement:04.03.2016
आदे श / ORDER
PER R.K. PANDA, AM :
This appeal filed by the assessee is directed against the order dated 18-12-2014 of the CIT(A)-II, Pune relating to Assessment Year 2006-07.
2. This appeal was earlier decided by the Tribunal vide order dated 18-2-2014. Subsequently, the Tribunal vide order dated 06-12-2015 recalled the order. Therefore, this is a recalled matter.
2ITA No.159/PN/2011
3. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 30-03-2007 declaring total income of Rs.2,05,961/-. During the course of assessment proceedings, the AO noted that assessee in his return of income has declared income from business, long term capital gain and other sources. From the computation statement, the AO noted that the assessee has calculated the long term capital gain at Rs.1,37,471/- on account of sale of land at Survey No.211, Village Maval, Taluka Mulshi by adopting the sale consideration at Rs.1,07,00,000/-. From the sale deed dated 27-08-2005, the AO noted that although the sale consideration received has been shown at Rs.1,07,00,000, however, the value adopted by the stamp valuation authority in respect of the said capital asset is Rs.1,19,30,000/-. He, therefore, asked the assessee to explain as to why the provisions of section 50C shall not be applied. The assessee vide letter dated 30-03-2007 made an application to refer the valuation of the capital asset to the valuation officer. The AO further noted from the details filed by the assessee that the value adopted by the stamp valuation authority at Rs.1,19,30,500/- in respect of the said capital asset has been disputed by the assessee before the Collector of stamps, Pune (Rural) and the Collector has upheld the value of the capital asset for stamp duty purpose at Rs.1,19,30,500/-. The AO, therefore, held that the Department is not obliged to refer the valuation of the capital asset to the valuation officer in view of provisions of section 50C(2) of the I.T. Act. The assessee reiterated that the matter should be referred to the valuation officer under the provisions of section 50C. 3 ITA No.159/PN/2011
4. However, the AO rejected the contention of the assessee on the ground that although the market value of the property as per stamp duty authority was Rs.1,70,00,000/-, the Collector for adjudication at the instance of the assessee has reduced the value by 30% and has determined the value of Rs.1,19,35,000/-. Since the matter was already referred to the Collector who is an authority higher than the sub registrar, therefore, the AO held that there is no need to refer the matter to the DVO for valuation of the property. The AO accordingly determined the long term capital gain at Rs.1,09,43,736/-. After allowing for investment u/s.54F on account of purchase of a flat at Rs.3,57,576/- and deduction u/s.54EC on account of investment in Nabard bonds, the AO determined the long term capital gain at Rs.13,67,971/-.
5. The AO further noted from the computation of income that the assessee has claimed short term capital loss in respect of a shed at Wakad which is as under :
Opening WDV of shed at Wakad Rs.4,37,677/-
Less : Sale price Rs.2,55,000/-
----------------
Short Term Capital Loss Rs.1,82,677/-
----------------
This loss has been set off against long term capital gain on sale of land. From the details furnished by the assessee, the AO noted that the assessee has shown the value of the shed at Rs.60,000/- and the same has been reflected in the block of fixed assets on which depreciation has been claimed. The WDV of the asset as on 31-03-2005 was Rs.51,300/-. The AO after deducting the WDV of Rs.51,300/- from the sale proceed of Rs.2,55,000/- determined the short term capital gain on sale of same at Rs.2,03,700/-. 4 ITA No.159/PN/2011
6. The assessee carried the matter before the CIT(A). So far as determination of short term capital gain on sale of shed is concerned the Ld.CIT(A) dismissed the ground raised by the assessee on this issue in absence of any submission before him.
7. So far as determination of long term capital gain at Rs.3,67,971/- is concerned he upheld the action of the AO by observing as under:
"4.4 I have considered the submissions of the appellant and material available on record, Section 50C(2) of the I.T. Act is being reproduced below:
"(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 A 0. 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 reference made by the Assessing Officer under sub-section (1) of section 16A of that Act."
Therefore, the condition u/s 50C(2)(b) of the Act, is that the value adopted or assessed by the Stamp Valuation authority should not have been disputed in appeal / revision; and no reference should have been made before any authority, court or high court. The main issue of dispute is whether adjudication made by the Collector of Stamps was of the nature of appeal or revision or it could be treated as a reference to any authority. In this case the actual market value as per 'ready reckoner' taken out by the State Government for stamps duty purpose was Rs. 1,70,00,000/-. Since the appellant was not agreeable to this valuation, reference was made to the Collector of Stamps for adjudication, who vide order No. 440/545/06 dated 27.02.2006 has recomputed the value of capital asset for the purpose 5 ITA No.159/PN/2011 of stamp duty at Rs. 1,19,30,500/-. From the copy of Bombay Stamp Act, furnished by the appellant it is clear that the adjudication u/s 31 was different than appeal 1 revision which could have been filed against the adjudication order at different levels. However, the wordings of section 31 regarding adjudication of the proper stamps, and the facts of the case shows that such adjudication could be covered within the ambit of the phrase reference made before any other authority. This is since as per the ready reckoner rate prescribed by the State Government, there existed a stamp duty valuation of Rs.1.70 crores in respect of the impugned property; which was on a firm basis, and the assessee had referred the matter for adjudication of stamp duty to the Collector of Stamps. The appellant, therefore, had not accepted the stamp duty valuation prescribed by the State Government. In my considered opinion, therefore, this would be squarely covered within the term 'reference to any authority' prescribed as alternative u/s 50C(2) of the Act. The A.O. was therefore correct in not referring this to Valuation Officer and adopting this adjudicated value for computation of capital gains. 4.5 So far the other argument regarding non-applicability of section 50C was concerned, it is contended that the land vested with the State Government and therefore this section should not be applied. It is stated that there is no such condition given in section 50C of the I.T. Act. Moreover, it is contended to be a case of a compulsory acquisition of property by which the owner was to receive compensation for acquisition of the land, but it was a case when the assessee had freely transferred the rights in land subject to taking objection regarding its value for stamp duty, and himself offered capital gain on such transfer of capital asset. Therefore, for capital gain purposes section 50C was correctly applied by the A.O. In view of this discussion ground Nos. 3,4, and 5 are liable to be dismissed."
8. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds :
"1. Commissioner of Income Tax Appeals has erred in adopting Stamp Duty Valuation as "Full Value of Consideration" u/s.50C against actual consideration received for transfer of right in land. Appellant prays to declare that section 50C has no application to the Assessee's case.
2. Without prejudice to Ground No.1, lower authorities have erred in not referring the matter to "Valuation Officer" u/s.50C(2), same may be directed to be referred.
3. CIT(Appeals) has erred in confirming Assessing Officer's action of computing Short Term Capital Gain on sale of demolition material of shed and Building at Rs.51,300/- against claim of Short Term Loss of Rs.1,82,677/-. Loss claimed may please be allowed.
4. Lower authorities have erred in charging interest u/s.234B and confirming the same. Appellant prays for deletion of the same.6 ITA No.159/PN/2011
5. Appellant prays for just and equitable relief."
9. The Ld. Counsel for the assessee at the outset submitted that the assessee's land was notified in Gazette as Forest Land u/s.35 of the Central Act, 1927. Referring to pages 156 and 157 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the Gazette Notification dated 16-11- 1961. Referring to pages 45, 47 and 49 of the paper book he drew the attention of the Bench to the Notification of Declaration under the Central Act. Referring to pages 157 and 158 of the paper book he drew the attention of the Bench to the Notice No.31/2723 dated 21-06-1961. He accordingly submitted that the Notification has been issued u/s.35 of the Forest Act, 1927 before the appointed date. Referring to the various pages of the paper book he submitted that the land sold by the assessee was a Forest Land on the appointed date when Maharashtra Act, 1975 came into force. Although various documents were produced before CIT(A) in shape of additional evidence, he submitted that the Ld.CIT(A) has not adjudicated the issue relating to the chargeability of the capital gain on a forest land. He submitted that because of vesting of the land on Government of Maharashtra by virtue of section 3 & 4 of the Maharashtra Private Forest Prohibition Act, 1975 and Notification under Central Forest Act, 1962 and mutation in record of rights in 2002 the assessee has only the right to claim compensation and has no ownership right in land. He submitted that because of the above reasons the Registrar also refused to register the document.
7ITA No.159/PN/2011
10. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Atul Puranik Vs. ITO reported in 132 ITD 499 he submitted that the Tribunal in the said decision has held that transfer of leasehold rights in land do not invite provisions of section 50C of the I.T. Act. Similar view has been taken by the Pune Bench of the Tribunal in the case of Kancast Pvt. Ltd. Vs. ITO vide ITA No.1265/PN/2011 order dated 19-01-2015 for A.Y. 2006-07. He accordingly submitted that the capital gain computation may be restricted on actual consideration as per the document.
11. In his alternate contention, he submitted that despite written request made by the assessee during the course of assessment proceedings, the AO refused to refer the matter to the DVO u/s.50C(2). The CIT(A) also did not consider the request of the assessee to refer the matter to the DVO. Therefore, the matter should be restored to the file of the AO with a direction to refer the matter to the DVO which is mandatory.
12. So far as the computation of short term capital gain is concerned he submitted that the Ld.CIT(A) has wrongly stated that the assessee has not submitted anything on this point. He submitted that computation of income with balance sheet for 31- 03-2005 and 31-03-2006 were submitted and the issue was explained to the CIT(A). However, since a number of hearings have taken place before CIT(A) he might have forgotten. Therefore, the issue may be set aside to the file of the CIT(A) for adjudication of the issue in the light of the documents filed before him. 8 ITA No.159/PN/2011
13. The Ld. Departmental Representative on the other hand submitted that whether the impugned land was a part of Forest land or not has not been adjudicated by the CIT(A). Even assuming but not admitting that the said land was a Forest land, the assessee has the first right over the land and hence section 50C is applicable in this case. He submitted that since the dispute regarding the valuation of the land has already been adjudicated by the Collector of Stamps, it is not open to the assessee to again dispute the valuation. Therefore, as per the provisions of section 50C(2)(b) the matter does not need any reference to the valuation officer. So far as the issue of computation of short term capital gain on sale of shed is concerned he submitted that the matter may be restored back to the file of the AO for re-consideration as held by the Tribunal in the earlier decision.
14. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case the assessee has challenged the order of the CIT(A) in confirming the action of the AO in bringing to tax an amount of Rs.13,67,971/- as long term capital gain and Rs.2,03,700/- as short term capital gain. We find the CIT(A) has observed that the assessee has not submitted anything on the issue of short term capital loss and accordingly confirmed the order of the AO on the said issue. It is the submission of the Ld. Counsel for the assessee that although the balance sheet for the year ending 31-03-2005 and 31-03- 9 ITA No.159/PN/2011 2006 were produced before the CIT(A) and arguments had taken place on different dates, however, the CIT(A) has brushed aside all those details. Considering the totality of the facts of the case and in the interest of justice, we restore the issue of short term capital gain to the file of the AO for fresh adjudication. The AO shall decide the issue as per fact and law after giving due opportunity to the assessee. We hold and direct accordingly.
15. So far as the main issue is concerned, i.e. the long term capital gain on sale of land, it is the case of the assessee that the land in question was a forest land on the appointed date and therefore the provisions of section 50C are not applicable to the facts of the present case since the assessee is not the owner of the land and it has only a right to claim compensation. Although the assessee had filed various documents to demonstrate that the land of the assessee is a forest land, however, we find the CIT(A) is silent on this issue. The AO in his remand report has also not dwelt upon this issue. It is also a fact that the above claim was not made before the AO although this claim was made before CIT(A) for the first time. Considering the totality of the facts of the case, we are of the considered opinion that the matter requires a re-visit to the file of the AO for proper appreciation of the facts. We therefore deem it proper to restore the issue to the file of the AO with a direction to examine the contention of the assessee that the land in question is a forest land and the assessee is not the owner of the land and it is only entitled to claim compensation. The AO shall decide the issue afresh and in accordance with law after giving due opportunity of being heard 10 ITA No.159/PN/2011 to the assessee. He shall also keep in mind the various decisions relied on by Ld. Counsel for the assessee before the Tribunal. We hold and direct accordingly. Grounds raised by the assessee are accordingly allowed for statistical purposes.
16. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 04-03-2016.
Sd/- Sd/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे Pune; दनांक Dated : 04th March, 2016. सतीश
आदे श क) *#त,ल!प अ-े!षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. The CIT(A)-II, Pune
4. The CIT-II, Pune
5.
$वभागीय 'त'न(ध, आयकर अपील य अ(धकरण, "बी" पुणे / DR, ITAT, "B" Pune;
6. गाड- फाईल / Guard file.
आदे शानस
ु ार/ BY ORDER,
स या$पत 'त //True Copy//
// True Copy //
//स या$पत 'त //True C // व/र0ठ 'नजी स(चव / Sr. Private Secretary
आयकर अपील य अ(धकरण, पण
ु े / ITAT, Pune