PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT-1 vs. NATVARLAL PURSHOTTAMDAS PATEL

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022 HIN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 879 of 2018

FOR APPROVAL AND SIGNATURE:

HONOURABLE MS. JUSTICE SONIA GOKANI sd/-

and HONOURABLE MRS. JUSTICE MAUNA M. BHATT sd/-

========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? No 2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? No ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT-1 Versus NATVARLAL PURSHOTTAMDAS PATEL ========================================================== Appearance: MR KARAN SANGHANI, LD.STANDING COUNSEL FOR MRS KALPANA K RAVAL(1046) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MRS. JUSTICE MAUNA M. BHATT

Date : 13/12/2022

ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) Page 1 of 8

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022 1. This tax appeal under Section 260-A of the Income Tax Act,1961 (the”Act” for short) is at the instance of the revenue, challenging the order dated 22/11/2017, of the Income Tax Appellate Tribunal, Surat Bench, Surat in I.T.A. No.2836/Ahd/2013 for Assessment Year: 2009-10. 2.

The facts in brief are, the assessee filed its Return of Income for the A.Y.2009-10, declaring total income of Rs.43,05,447/-. The Assessing Officer during assessment proceedings, noticed that the assessee having 53% share in the property situated at Sachin Surat sold the same at Rs.57,36,000/. The assessee entered in to agreement for sale on 29/03/2008, however, the sale deed was registered on 25/07/2008 i.e. previous year relevant to the A.Y.2009-10. All cheques were cleared in the month of September,2008 and no payment was realized in A.Y.2008- 09. Thus, entire transaction took place in the financial year 2008-09 (Assessment Year 2009-10). The State Government had given benefit of lower stamp duty valuation to persons, who had purchased stamp paper before 31/03/2008 and registered in the year 2008-09. As per A.O. this benefit was limited to stamp duty payment and could not be extended to applicability of Sec.50C of the Income Tax Act,1961. Therefore, the Assessing Officer to ascertain the fair market value, referred the matter to Page 2 of 8

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022 the Department Valuation Officer’s (DVO). He, however rejected the DVO’s report, on the ground that the sale instance of A.Y.2008-09 were considered when the old Jantri rates were prevalent. The Assessing Officer therefore taking into consideration Jantri rates prevalent after 01/04/2008 made an addition of Rs.3,72,57,828/- u/s.50C of the IT Act. 3. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income-Tax (Appeals) (“CIT(A)” for short). The CIT(A), allowed the appeal of the assessee, by holding that, it is not a case where Section 50C of the Act can be invoked. CIT(A) also observed that the A.O. was not empowered to reject the report of the valuation officer. The CIT(A) noted that the assessee had taken the sale consideration at the valuation adopted by the stamp duty authority. 4. Against the order of CIT (A), the department preferred appeal before the Income Tax Appellate Tribunal. The Tribunal confirmed the order of CIT (A). Challenging the same, present tax appeal is filed proposing the following questions of law: (A) “Whether on the facts and circumstances of case and Page 3 of 8

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022 in law, the Hon’ble Appellate Tribunal is justified in upholding the decision of the Ld CIT(A) of deleting the addition of Rs.3,72,57,828/- u/s 50C of the Act made by the Assessing Officer without appreciating the facts that the Assessing Officer correctly applied Jantri Rates for the F.Y.2008-09 and calculated Short Term Capital Gain as the sale of land was executed during the F.Y.2008-09?” (B) “Whether on the facts and circumstances of case and in law, the Hon’ble Appellate Tribunal is justified in upholding the decision of the Ld CIT(A) of deleting the addition of Rs.3,72,57,828/- u/s.50C of the Act made by the Assessing Officer without appreciating the facts that the Assessing Officer correctly pointed outs defects in the Report of Valuation Officer and estimated value of land as per revised Jantri Rate applicable for F.Y.2008-09 i.e. at the time of registration of deed of the immovable property?” (C) “Whether on the facts and circumstances of case and in law, the Hon’ble Appellate Tribunal is justified in ignoring the facts brought on record by the AO that the Page 4 of 8

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022 immunity scheme brought by the state Government of lower valuation stamp valuation to people who had purchased stamp papers before 31.03.2008 and made registration after 01.04.2008 is limited to stamp duty payment and cannot be extended to the applicability of Section 50C of the IT Act?” (D) “Whether on the facts and circumstances of case and in law, the Hon’ble Appellate Tribunal is justified in upholding the decision of ld CIT(A) for deleting the addition of Rs.3,72,57,828/- u/s 50C of the Act made by the Assessing Officer without appreciating the facts that all the payment for sale were realized during the F.Y.2008-09?” 5. Heard learned Standing Counsel Mr.Karan Sanghani for Mrs.Kalpana Raval, learned Senior Standing Counsel for the appellant. He submitted that order of the Tribunal is erroneous as the State Government had given benefit of lower stamp duty valuation to the persons, who had purchased stamp paper before 31/03/2008 and registered in the year 2008-09, therefore, the said benefit cannot be extended to applicability of Sec.50C of the Act. Further in this case, no amount was realised in the A.Y.2008-09. Undisputedly sale deed was Page 5 of 8

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022 registered on 25/07/2008 and assessee had also shown capital gain in the A.Y.2009-10. Therefore, the A.O. was correct in assessing the capital gain considering the Jantri value prevalent on 01/04/2008. 6. The Tribunal relying upon the decision rendered in the case of Hasmukhbhai M. Patel v. ACTT Circle – 1(1) Baroda reported in [2011]12 taxmann.com 300(Ahd), held as under: “8. There is no dispute regarding sale consideration. The dispute regarding the rate adopted on the basis of information collected from Stamp Duty Authorities with regard to various rates which were adopted for the purpose of payment of stamp duty in respect of transfer of property in various area. On the basis of such information, the AO worked out the value of land sold and adopted the same for the purpose of stamp duty made taken the same for the purpose of computing capital gain. In our opinion, this exercise is to be made by the AO Stamp Duty Authorities and not by the AO, The AO therefore, not justified to adopt the value other than as adopted by the Stamp Duty Authorities. As per the provision of section 50C only Page 6 of 8

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022 assessed value by the Stamp Duty Authorities is to be considered for the purpose of sale consideration of property if the consideration shown in agreement to sale. In doing so, less than the Stamp Duty Authorities valuation. In view of these facts and circumstances, and respectfully following the decision of co-ordinate Bench (supra) we do not find any fault or infirmity in the order of ld.CIT(A), fair same is upheld. Consequently, appeal of the revenue is dismissed.” 7. It is noticed that the assessee had executed agreement for sale on 29/03/2008 and in lieu of that the assessee took six cheques drawn on HDFC Bank dated 24.03.2008 and 25.03.2008 for an amount of Rs.52,36,000, i.e. the consideration mentioned in the agreement to sale. All these cheques were cleared in previous year relevant to A.Y.2009-10. The sale deed was registered on 25/07/2008 accepting the sale consideration of Rs.52,36,000/- shown in the agreement to sale dtd.29/03/2008 and the Stamp Duty Authority had assessed the said valuation for stamp duty purpose as the assessee has purchased stamps before 01/04/2008. The assessee had paid stamp duty of Rs.2,57,000/-. However, AO adopted the jantri rate and made his own valuation on the basis of assessable rate of stamp duty on the date of registration of sale Page 7 of 8

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022 deed. Since, section 50C provides the rate adopted or assessed by the Stamp Duty Authorities is to be considered for the purpose of Section 50C of the Act. Therefore, the AO was not correct in adopting the market value assessable for the purpose of stamp duty, as said the provision has been inserted in the section 50C with effect from 01/10/2009, and applicable from A.Y.2010-11. 8. Further, the Tribunal has rightly observed that once valid reference to the valuation officer is made under section 50(C)(2) of the Act, assessing officer is not empowered to reject the report of the valuation officer. This finding of the Tribunal is supported by the decision of co- ordinate bench in the case of Principal Commissioner of Income-Tax-3 V/s. Ravjibhai Nagjibhai Thesia reported in [2016] 388 ITR 358. Therefore, we could not find any error in the findings of the Tribunal that the A.O. is not justified in adopting the value other than as adopted by the stamp duty authority. We could not find any substantial question of law. Resultantly, the present tax appeal is dismissed. No costs. sd/- (SONIA GOKANI, J) sd/- (MAUNA M. BHATT,J) DIPTI PATEL Page 8 of 8