Income Tax Appellate Tribunal - Agra
Shri Raj Narain Singh Sarin And Sons Suf, ... vs Department Of Income Tax on 25 March, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA BENCH, AGRA
BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND
SHRI P.K. BANSAL, ACCOUNTANT MEMBER
ITA No.454/Agr/2008
Asst. Year: 2004-05
Asstt. C.I.T. - 2, Agra. Vs. Shri Raj Narayan Singh Sarin
& Sons, HUF,
4/117, Civil Lines, Agra.
(PAN : AAEHR 3737 H).
(Appellant) (Respondent)
Appellant by : Smt. Seema Raj, CIT - D.R.
Respondent by : Shri Rakesh Gupta, C.A.
ORDER
PER P.K. BANSAL, A.M.:
This appeal has been field by the Revenue against the order of the CIT(A) dated 25.03.2008 by taking the following effective grounds of appeal :-
"(1). That the CIT (Appeals)-I, Agra has erred in law in deleting the addition of Rs.1,05,39,785/- made u/s 50C of I.T. Act, 1961 without appreciating the facts discussed in the assessment order.
(2). That the CIT (Appeals)-I, Agra has erred in law and on facts in holding that the consideration received/accruing as per transfer deed is the only value which can be taken to be full value of consideration received or accruing, in terms of the provisions of Section 50C of IT Act, 1961 without appreciating the fact that the Chief Controlling Revenue Authority (CCRA) has differentiated transfer of Dawami Lease Rights and Ownership Rights for the purpose of assessment of value for the purpose of Stamp Duty, which is against the definition given u/s 2(47) of IT Act, 1961 under which lease rights of more than 12 years confer ownership rights on transferor.
(3). That the CIT (Appeals)-I, Agra has erred in law and on facts by holding that transfer of Dawami lease Rights is not subject to Fair Market Price for the 2 purpose of Section 50C of IT Act, 1961 against the definition u/s 2(47) of IT Act, 1961 whereby lease rights of more than 12 years confer ownership Rights on transferor."
2. The brief facts of the case are that the assessee has assigned lease hold rights in a property for a consideration of Rs.1 Crore. During the year, the A.O. adopted a consideration for the sale at Rs.2,12,08,000/- taking to be the circle rate and accordingly took the view that the assessee has understated the capital gain by Rs.1,05,39,785/-..
3. When the mater went before the CIT(A), the CIT(A) allowed the appeal of the assessee by observing as under :-
"I have considered the rival contentions and perused the aforesaid orders of the CCRA as quoted above. There remains no doubt that the said authority has held that for the purpose of Stamp duty the amount of consideration set forth in the instrument of transfer is to be considered and that therefore determination of market value is not called for. In section 50C it is provided as under :-
"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.
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, 3 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 (1) 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."
4. The ld. D.R. before us relied on the order of the A.O., while the ld. A.R. vehemently contended that the A.O. has wrongly taken the consideration under section 50C at Rs.2,12,08,000/-. The Chief Controlling Revenue Authority (CCRA) has determined the valuation under the Stamp Act for the purpose of stamp duty at Rs.1,00,00,000/- as per Article 63 of Schedule 1B. Section 50C of the Act is very clear that the value shown in the instrument as approved by CCRA was to be taken as deemed transfer consideration. The CIT(A) has given the categorical finding that the consideration as per transfer deed is finally assessed by the stamp valuation authority is the correct value for the purpose of payment of stamp duty. Therefore, the said value will be taken to be the consideration under section 50C of the Act. Referring to section 50C of the Act, it was pointed out that if there is a transfer of land or building for a consideration which is less than the value adopted or assessed by the stamp valuation authority, the value so adopted or assessed shall be deemed as consideration received. Thus, once there is transfer of capital asset by the assessee, it was incumbent to follow value adopted/assessed by the stamp valuation authority as approved by the CCRA for such transfer. It was not open to the 4 A.O. to say that value adopted by the stamp valuation authority was something else. Otherwise also, it was contended that in the case of the assessee, the assignment of the balance lease hold right by the assessee in favour of the assignee. It is not a case of transfer of land so that provisions of section 50C can be applied. Reliance was placed in this regard on the following decisions :-
Teletube Electronics Ltd. vs. Jt. CIT, 80 ITD 251 (Del) para 46 128 TTJ 290 (Mum)
5. It was also contended that the word "assessable" used in section 50C has got no application in this case for more than one reason. First, this word has been made applicable w.e.f. 01.10.2009. Secondly, the meaning of this word as given in the explanation-2 clearly says that this would acquire any relevance if the valuation would have been referred whereas in this case the stamp valuation authority was approached for the purpose of stamp duty. Thirdly, the word "assessable" was added for the specific purpose mentioned in the Memorandum explaining the provisions of Finance Bill 2009 which is not applicable in the case of the assessee.
6. We have head the rival submissions and perused the material on record along with order of the CIT(A). The ld. A.R. before us vehemently argued that section 50C is not applicable. It was also contended that the CCRA has determined the value for stamp duty at Rs.1 Crore. We have gone through the order of the CCRA which is available at page nos.13 to 20 of the Paper Book. The facts as set out in the order are that one Raj Narain Singh Sarin was having perpetual lease hold rights in a plot of land situated at Mouja Nagla Padi, District Agra by virtue of a registered deed dated 19.07.1937. After his death the said land was inherited by the HUF consisting of his sons and grand sons. The Karta of HUF executed a registered deed dated 5 03.11.2003 of a part of the said property in favour of Vijay Kumar Gupta on payment of Rs.15,00,000/- as consideration for the same. The said document was subject matter of proceedings under section 33 read with section 47A & 47B of the Stamp Act. Before A.D.M. (Finance) vide Order dated 15.06.2004 determined a deficiency of Rs.21,99,000/- in Stamp Duty and levied penalty of Rs.5,49,250/-. The main contention taken by the ld. Counsel for the assessee before the CCRA was that the stamp duty on such instrument is chargeable under Article 63 of Schedule 1B of the Act and the provisions of section 47A & 47B, which require that the stamp duty should be paid on the basis of market value, are not applicable. After hearing detailed arguments and perusing various case laws cited from both the sides, the CCRA vide Order dated 15.12.2004 held as under :-
"The father of the executant was lessee on the basis of lease deed dated 19.07.1937 hence they can not transfer better rights than what they passes, hence the sale deed of conveyance could not be executed by them. The similar view has been taken by CCRA Allahabad in Stamps Appeal No.140 to 156 of 2003-04 decided on 17.06.2004. On the basis of discussions made above, I am of the view that the instrument in question is a deed of transfer of lease rights chargeable with stamp duty according to Art - 63 i.e. on the amount of consideration set forth in the instrument. The ADM (F&R) without perusing the document as whole held it to be a sale deed, but this view is not sustainable in view or the discussions made by me on the basis of settled legal position. Hence the impugned order is set aside.
Since I have held that the instrument is a transfer of lease rights and stamp duty is payable on the amount consideration set forth in the instrument in question according to Art.- 63 hence the other arguments of the learned Counsel for appellant on the question of determination of market value are not required to be dealt with. Moreover, the document which is covered by Article 63 cannot be termed as conveyance in view of the definition of conveyance in section 2(10) of the Act.
Thus accordingly impugned order passed by ADM (F&R) dated 15.06.2004 in this case is set aside."6
7. From the said order we noted that this order nowhere determined the value under the Stamp Act. It only lays down that since the assessee has assigned the lease hold right for the balance period, therefore, provisions of section 47A & 47B of the Stamp Act are not applicable and the stamp duty is payable on the amount of consideration as set out in the instrument in accordance with Article 63 of Schedule-1B of the Stamp Act. Thus, we reject the plea taken by the ld. A.R. that the CCRA has determined the value for Stamp Duty at Rs.1 crore for the property transferred by the assessee.
8. At this juncture, it would be relevant to consider the relevant provision, which runs as under :-
"50C. Special provision for full value of consideration in certain cases.-(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."
9. It is observed that section 50C was inserted by the Finance Act, 2002 with effect from 01.04.2003. Clause 24 of the Finance Bill as per Notes on clauses states that the insertion of this provision is to provide for a special provision for the full value of consideration in certain cases. It has been provided that 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, 7 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.
10. Memorandum explaining provisions of Finance Bill, 2002 states in this regard as under :-
"The Bill proposes to insert a new section 50C in the Income-tax Act to make a special provision for determining the full value of consideration in cases of transfer of immovable property.
It is proposed to provide that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration, and capital gains shall be computed accordingly under section 48 of the Income-tax Act.
It is further proposed to provide that where the assessee claims that the value adopted or assessed for stamp duty purposes exceeds the fair market value of the property as on the date of transfer and he has not disputed the value so adopted or assessed in any appeal or revision or reference before any authority or court the Assessing Officer may refer the valuation of the relevant asset to a Valuation Officer in accordance with section 55A of the Income-tax Act. If the fair market value determined by the Valuation Officer is less than the value adopted for stamp duty purposes, the Assessing Officer may take such fair market value to be full value of consideration. However, if the fair market value determined by the valuation officer is more than the value adopted or assessed for stamp duty purposes, the Assessing Officer shall not adopt such fair market value and will take the full value of consideration to be the value adopted or assessed for stamp duty purposes.
It is also proposed to provide that if the value adopted or assessed for stamp duty purposes is revised in any appeal, revision or reference, the assessment made shall be amended to recompute the capital gains by taking the revised value as the full value of consideration.
These amendments will take effect form 01.04.2003, and will, accordingly, apply in relation to the assessment year 2003-04 and subsequent years."
11. From the perusal of Notes on clauses and Memorandum explaining the provisions in the Finance Bill, 2002, it becomes explicitly clear that if the consideration declared to be received on 8 sale of land or building or both is less than the value adopted or assessed by any authority of the State Government for the purposes of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of consideration and capital gain shall be computed accordingly under section 48 of the Act. A deeming provision has been enshrined for assuming the value adopted or assessed by any authority of State Government as the full value of sale consideration 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 is a trite law that the legal fiction cannot be extended beyond the purpose for which it is enacted. Section 50C embodied the legal fiction by which the value assessed by the stamp duty authorities 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 the provisions of section 50C. By no stretch of imagination, the legal fiction confined to restricted operation can be widened to include within its sweep all the cases where 'such property' is not covered.
12. The provisions of section 50C thus are very clear and this provision can be applied only when 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. The CCRA vide his order, as pointed out by us earlier, has already held that the stamp authority is not capable to impose the stamp duty on the 9 market value of the property and the stamp duty has to be paid only on the agreed consideration in accordance with Article 63 of Schedule-1B of the Stamp Act. Thus, we are of the view that no interference is called for in the order of the CIT(A) and the CIT(A) has rightly deleted the addition.
13. In the result, appeal filed by the Revenue stands dismissed.
(Order pronounced in the open Court on 27.08.2010).
Sd/- Sd/-
(R.K. GUPTA) (P.K. BANSAL)
Judicial Member Accountant Member
Place: Agra
Date: 27th August, 2010.
PBN/*
Copy of the order forwarded to:
1. Appellant
2. Respondent By Order
3. CIT concerned
4. CIT (Appeals) concerned
5. DR, ITAT, Agra Bench, Agra
6. Guard File Assistant Registrar
Income-tax Appellate Tribunal, Agra
True Copy