Income Tax Appellate Tribunal - Ahmedabad
Devrajbhai M.Patel, Surat vs Department Of Income Tax on 4 May, 2011
अिधकरण, अहमदाबाद Ûयायपीठ ''सी"
आयकर अपीलीय अिधकरण, सी , अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, "C" BENCH
सव[ौी ौी जी.
जी.डȣ.
डȣ.अमवाल,
अमवाल, माननीय उपाÚय¢,
उपाÚय¢, एवं भवनेश सैनी,
ी, Ûयाियक सदःय के सम¢ ।
BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND
BHAVNESH SAINI, JUDICIAL MEMBER)
ITA No.2657/Ahd/2009
With
CO. No250/Ahd/2009
[Asstt.Year : 2006-2007]
ACIT, Cir.5 बनाम/Vs. Shri Devrajbhai M. Patel
Surat. 606, Lalbhai Contractor
Complex, Opp: Parsi Library
Nanprua, Surat.
PAN : AAZPP 0165 E
(अपीलाथȸ / Appellant) (ू×यथȸ / Respondent)
राजःव कȧ ओर से/ : Shri Vinod Tanwani
Revenue by
िनधा[ǐरती कȧ ओर से/ : Shri M.K. Patel
Assessee by
सुनवाई कȧ तारȣख/ : 29th September, 2011
Date of Hearing
घोषणा कȧ तारȣख/ : 30th September, 2011
Date of Pronouncement
आदे श / O R D E R
PER G.D. AGARWAL, VICE-PRESIDENT : This is Revenue's appeal and
assessee's cross-objection against order of the Commissioner of Income-tax
(Appeals)-III, Surat against the order of the Assessing Officer under Section
143(3) of the Income Tax Act, 1961.
2. In this appeal by the Revenue the following three grounds are raised:
"1. On the facts and in the circumstances of the case and in law, the
learned CIT(A) has erred in deleting the addition of Rs.6,99,437/- made
on account of unaccounted investment in purchase of land u/s.69B of the
Act.
ITA No.2657/Ahd/2009 With
CO. No250/Ahd/2009
2. On the facts and in the circumstances of the case and in law, the
Ld.CIT(A) has erred in deleting the addition of Rs.30,825/- made under
Section 50C of the Act.
3. On the facts and in the circumstances of the case and in loan, the
ld.CIT(A) has erred in deleting the 20% of interest on car loan and car
insurance premium."
3. At the time of hearing before us, it is stated by the learned counsel that
all three grounds are covered in favour of the assessee by the decision of the
ITAT 'C' Bench in the case of ACIT Vs. Shri Ravjibhai P. Patel, in ITA
No.2658/Ahd/2009, order dated 4-5-2011, who was the co-owner of the
property and in his case also similar addition was made.
4. We have heard both the parties and perused the material placed before
us. So far as Ground No.1 is concerned, the facts are that the assessee is one of
the co-owners who purchased the immovable property. The AO found that the
purchase value shown by the assessee was less than the value for the purpose of
stamp-duty. He therefore presumed that the assessee made undisclosed
investment under section 69B. Similar additions were made in the case of
other co-owners and the ITAT in the case of Rajibhai P. Patel (supra) following
the case of another co-owner held as under:
"8. The proposition laid down in the above decision of the co-owner
is that provision of section 50C are not applicable in the case of
purchaser of the property. Similar view has been taken by the Delhi
Tribunal in the case of Fitwell Logic System (P) Ltd. (2010) 1 ITR 286
(Del) (Trib) wherein also the proposition has been laid down that the
difference between the consideration sold in the sale deed and valuation
taken for stamp purposes cannot be added as unexplained investment in
the hands of the purchaser. The proposition that provision of section
50C do not apply to the purchaser of property is also held in the case of
Smt. Kusum Galati in ITA No.1576/Del/2008 (BCAJ A 16 Volume 41 --
B Part VI March, 2010). In view of above, we uphold the order of ld.
CIT(A) and dismiss this ground of Revenue."
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ITA No.2657/Ahd/2009 With
CO. No250/Ahd/2009
Since the facts of the case are identical to the facts in the case of other co-
owners, we therefore respectfully following the above decision of the ITAT, in
the case of Shri Ravjibhai P. Patel (supra), uphold the order of the CIT(A) on
this point and reject Ground No.1 of the Revenue's appeal.
5. So far as ground no.2 of the Revenue's appeal is concerned the AO
applied section 50C in respect of the sale of the property at Surat by the
assessee along with other co-owners. The assessee claimed before the AO that
the assessee has disclosed income from the sale of the property under the head
business income and not as capital gain therefore, Section 50C is not
applicable. The AO did not accept the assessee's explanation and made the
addition of Rs.30,825/- under Section 50C. Similarl issue arose in the case of
another co-owner viz. Shri Ravjibhai P. Patel (supra) wherein the ITAT upheld
the order of the CIT(A) and held as under:
"12. In fact section 50C enables the AO to substitute the declare sale
consideration in the documents by the valuation done by Stamp
Valuation Authorities in case it is higher and compute capital gains
accordingly. Thus even while computing capital gain no separate
addition as such on account of difference in valuation of the property
shown by the assessee and done by Stamp Valuation Authorities can be
made. It is only a case of substitution of one valuation (shown by the
assessee in the documents) by another valuation as made by Stamp
Valuation Authorities. Therefore, the basic premise on which the AO has
proceeded is legally unsustainable. Similar view has been taken by I-
Ion. Madras High Court in Thiru Vengadan Investment Pvt. Ltd. (2010)
DTR 81, 320 ITR 345, 229 CTR 285 (Mad). It is held therein that
provisions of section 50C can be applied only to find out the true value
of capital asset and not for computing business income and hence the
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ITA No.2657/Ahd/2009 With
CO. No250/Ahd/2009
same cannot be applied when there is sale of stock-in-trade. In view of
above, we uphold the order of ld. CIT(A) and dismiss this ground of
Revenue."
6. After carefully considering the facts of the case and arguments of both
the sides, we agree with the view of the ITAT that section 50C is applicable
only in respect of the sale of capital assets and not while computing the
business income. We therefore, respectfully following the above decision of
the ITAT uphold the order of the CIT(A) in this regard and reject Ground No.2
of the Revenue's appeal.
7. Ground No.3 of the Revenue's appeal is against the deletion of 20% out
of the interest on car loan and car insurance premium. The facts of the case
are that the AO disallowed 20% out of vehicle expenses. On appeal, the
CIT(A) sustained the disallowance in principle, however, he allowed the
interest payment on the loan taken for purchase of car as well as insurance
premium paid on car and disallowance of 20% was restricted to the remaining
expenses. Similar issue is considered by the ITAT in the case of Shri Ravjibhai
P. Patel (supra) wherein the ITAT upheld the order of the CIT(A) with the
following finding:
"15. We have heard the parties. In our considered view, there is no
case for interference in the order of the ld.CIT(A). The reasoning given
by her are convincing. The interest and insurance has to be allowed in
full which depends on the use of the vehicle for the business purpose
even if made for part of the year. This ground of Revenue is accordingly
dismissed."
Respectfully following the same, we uphold the order of the CIT(A) and reject
the Ground No.3 of the Revenue's appeal.
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ITA No.2657/Ahd/2009 With
CO. No250/Ahd/2009
CO No.250/Ahd/2009
8. At the time of hearing before us, the learned counsel fairly admitted that
the CO is only in support of the order of the CIT(A). The same being
infructous, is rejected.
9. In the result, the Revenue's appeal and the assessee's CO are dismissed.
Order pronounced in Open Court on the date mentioned hereinabove.
Sd/- Sd/-
भवनेश सैनी /BHAVNESH SAINI)
(भवने जी.
जी.डȣ.
(जी डȣ.अमवाल G.D. AGARWAL)
Ûयाियक सदःय /JUDICIAL MEMBER उपाÚय¢ /VICE-PRESIDENT
Copy of the order forwarded to:
1) : Appellant
2) : Respondent
3) : CIT(A)
4) : CIT concerned
5) : DR, ITAT.
BY ORDER
DR/AR, ITAT, AHMEDABAD -5-