M/S DIVAKAR LEASING & FINANCE PVT. LTD.,JAIPUR vs. INCOME TAX OFFICER, WARD-2-5, JAIPUR

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ITA 1304/JPR/2018Status: DisposedITAT Jaipur27 March 2019AY 2013-145 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition made by the lower authorities was not justified and was therefore deleted. The Tribunal found that the difference between the sale value adopted by the stamp duty authorities and the sale value taken by the assessee amounted to Rs. 5,11,472, which represented a difference of only 6.73%. The Tribunal noted that the CIT(A) had dismissed the comparability of a sale deed dated 24.02.2012, citing differences in floor location (7th floor vs. 2nd floor) and unspecified unit locations. However, the Tribunal reasoned that in modern buildings equipped with lifts, floor location does not significantly impact value, and properties on higher floors might even have better views and ventilation. The Tribunal also found that the unit numbers in the comparable sale deed (702 and 603) suggested similar locations to the assessee's unit (202). The Tribunal concluded that a marginal difference of 6.73% in sale value did not warrant an addition. Therefore, the Tribunal deleted the addition made by the lower authorities. The appeal of the assessee was allowed.

What were the facts?

The assessee, M/s Divakar Leasing & Finance Pvt. Ltd., filed an appeal against the order of the CIT(A)-I, Jaipur, for Assessment Year 2013-14. The appeal challenged an addition made by the Assessing Officer based on the valuation of the Department's Valuation Officer (DVO) under Section 50C(2) of the Income Tax Act, 1961. The assessee sold an immoveable property for Rs. 76,00,000. The Sub-Registrar determined the stamp duty value at Rs. 81,11,472, and the DVO assessed the fair market value at Rs. 86,11,300. The Assessing Officer made an addition by adopting the stamp duty value. The CIT(A) directed the Assessing Officer to compute capital gains using the DVO's valuation.

What were the issues?

1. Whether the addition made by the Assessing Officer, based on the stamp duty value of the property sold, is justified when the DVO's valuation is available and the difference between the sale consideration and the stamp duty value is marginal (Question of law and fact, relying on Section 50C(2) of the Income Tax Act, 1961). Assessee's contentions: The assessee argued that it had submitted two comparable sale deeds for properties within the same building (SDC Vinay-II) and contemporaneous to the sale date. Analysis of these deeds indicated a fair value per square foot of Rs. 4,966.47 in September 2011, increasing to Rs. 5,500.94 by February 2012. Projecting a further 15-17% increase for the sale in October 2012, the fair value per square foot would be Rs. 6,325, valuing the property at Rs. 68,62,625. Given the sale consideration of Rs. 7,004 per square foot (Rs. 76,00,000), the marginal difference did not warrant an addition. Revenue's contentions: The Revenue relied on the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 50C(2),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES (SMC

Before: SHRI RAMESH C SHARMA

For Appellant: Ms. Shivangi Samdhani (CA) &, Shri Rajiv Sogani (CA)
For Respondent: Ms. Anuradha (JCIT)
Hearing: 20/03/2019Pronounced: 27/03/2019

per sq feet was Rs. 4966 and after approximately 6 months i.e. as on

1.

ITA 1304/JP/2018 3 Divakar Leasing & Finance Co. Vs ITO 24.02.2012 the Fair Value per sq feet increased approx. 10% and was Rs. 5500 (4966*110%=5462). The assessee Company sold the property on 23.10.2012 i.e. approx. after 8 months from 24.02.2012 and, therefore, the Fair Value per sq feet at the maximum could have increased by 15%-17%. As a result the Fair Value per sq feet was Rs. 6325 (5500*115%=6325) and of the property was Rs. 68,62,625 (1085 sq feet * 6325).The assessee Company sold the property for a sales consideration of Rs. 7,004 per sq feet i.e. Rs. 76,00,000/-. Accordingly, it was prayed that for a marginal difference, no addition is warranted.

5.

On the other hand, the ld DR has relied on the orders of the authorities below.

6.

I have considered the rival contentions and carefully gone through the orders of the authorities below and found that there is a difference in the sale value adopted by the stamp duty vis a vis sale value taken by the assessee amounting to Rs. 5,11,472/- and thus difference between the same was just 6.73%. I also found that the ld. CIT(A) has not considered the sale deed dated 24.02.2012 to be comparable with that of assessee company on the basis that the property sold through that sale deed was situated at 7th floor where as the property sold by the assessee company was situated at 2nd floor and the properties at lower floors have higher value. Nowadays there is no such distinction as the buildings are equipped with lifts. Further, the property at higher floor gets better view,

ITA 1304/JP/2018 4 Divakar Leasing & Finance Co. Vs ITO light, ventilation, etc. The ld. CIT(A) also held the sale deed dated 24.02.2012 not comparable with the case of the assessee company as the assessee company had not specified the location of the units. The assessee sold flat No. 202 and gave comparable deed of 702 and 603.

The numbers themselves suggest that the units were similarly located.

The ld. CIT(A) further held that the area of the sale deed dated 24.02.2012 is not comparable with the area of the unit sold by the assessee.

7.

Keeping in view the observation made above, the difference of 6.73% in the sale value adopted on the stamp duty vis a vis the value taken by the assessee company does not matter much.

8.

Keeping in view the totality of facts and circumstances of the case, I do not find any merit in the addition so made by the lower authorities; therefore, the same is deleted. I order accordingly.

9.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on 27th March, 2019

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