J.NITHYANANDAN vs. THE INCOEM TAX OFFICER

T.C.A.No.959 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.10.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.959 of 2018 Shri J.Nithyanandan .. Appellant Versus The Income Tax Officer, Non Corporate Ward 5(2), Chennai – 600 006 .. Respondent Prayer:- Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, Madras 'B' Bench, dated 15.03.2017 made in I.T.A.No.2991/Mds/2016 relating to the Assessment Year 2010-11. For Appellant : Mr.A.S.Sriraman For Respondent : M/s.R.Hemalatha Senior Standing counsel 1/6 http://www.judis.nic.in T.C.A.No.959 of 2018 JUDGMENT [Order of the Court was made by

T.S.SIVAGNANAM

, J.]

This Tax Case Appeal has been filed by the assessee under Section 260 A of the Income Tax Act, 1961 ('the Act' for brevity), challenging the correctness of the orders passed by the Income Tax Appellate Tribunal, Madras, 'B' Bench ('the Tribunal' for brevity) dated 15.03.2017 in I.T.A.No.2991/Mds/2016 for the Assessment Year 2010-11. The following Substantial Question of Law has been raised for consideration. “1. Whether the adoption of stamp duty value fixed by the DRO (Stamps) on July 2011 at the instance of the purchaser of the immovable property is correct pertaining to the transaction of sale of property in June 2009 for the purpose of levy of capital gains tax in terms of Section 2(47) read with Section 45 read with Section 50C of the Act? 2. Whether the interpretation of Section 50C of the Act is correct on the factual matrix of the case while overlooking the scope of sub-section (2) to the said section both by the Valuation Cell and the Respondent/the Assessing Officer while adopting the value determined by the DRO (Stamps) in July 2011 as the sale consideration for the property transferred in June 2009 for the purpose of levy of 2/6 http://www.judis.nic.in T.C.A.No.959 of 2018 capital gains tax? 3. Whether the stamp duty value/guideline value as on the date of presentation of the sale document for registration is relevant for the provisions of Section 50C of the Act and not the enhanced value determined under the Stamp Duty Laws subsequently?” 2. We have heard Mr.A.S.Sriraman, learned counsel for the appellant / assessee and M/s.R.Hemalatha, learned Senior Standing counsel appearing for the respondent / Revenue. 3. The dispute in the instant case lies in a very narrow compass. The assessee is an individual, practicing as an Advocate and for the Assessment Year under consideration AY – 2010-11, the assessee filed his return of income on 01.11.2012, showing the taxable total income of Rs.2,55,67,170/-. The return of income was initially accepted under Section 143(1) of the Act and thereafter, the assessment was reopened by issuance of notice under Section 148 of the Act dated 21.06.2013. The reassessment proceedings were completed by order dated 25.02.2015 and the taxable total income was determined at Rs.3,72,81,755/-. The Assessing Officer 3/6 http://www.judis.nic.in T.C.A.No.959 of 2018 recomputed the Long Term Capital Gains pertaining to the sale of property in Zamin Pallavaram Village and adopted the value of the sale consideration at Rs.3,79,90,860/-, based on the valuation report obtained on 19.02.2015, by applying Section 50C of the Act. The correctness of this decision is called in question in the present appeal, raising the above Substantial Questions of Law. The Tribunal missed to note a very important point that the sale consideration received by the assessee as Vendor of the property was at the rate of Rs.400/- per Square feet for the entire extent and the total sale consideration as reflected in the deed of conveyance is Rs.2,80,00,000/- This fact is not in dispute. Further, the Sub Registrar entertained the document for registration, did not accept the value computed at Rs.400/- per square feet for the purpose of calculating the Stamp duty payable under the Indian Stamp Act on the said deed of conveyance, but determined the value of the property at Rs.555/- per Square feet. Unfortunately, the Assessing Officer, while reopening the assessment, took note of this figure namely Rs.555/- per square feet and recomputed the total sale consideration. The re- computation of the total sale consideration based on the higher value fixed by the Sub Registrar is for the purposes of computing Stamp duty is wholly erroneous. It is not the case of the Assessing Officer that the assessee had 4/6 http://www.judis.nic.in T.C.A.No.959 of 2018 received the total sale consideration of Rs.3,79,90,860/-. Rather it is not in dispute that the sale consideration received as reflected in the deed of conveyance is only Rs.2,80,00,000/-. Thus, the Assessing Officer committed a serious error and this error stood perpetuated before the Commissioner of Income Tax (Appeals) as well as before the Tribunal. 4. In the light of the above, the order passed by the Tribunal also warrants interference. In the result, the Tax Case Appeal is allowed and the impugned order I.T.A.No.2991/Mds/2016 dated 15.03.2017 is set aside and the Substantial Questions of Law are answered in favour of the assessee. No costs. (T.S.S.,J) (V.B.S.,J) 13.10.2020 Kak Index: Yes / No Internet: Yes / No Speaking Order/Non-Speaking Order To The Income Tax Appellate Tribunal, 'B' Bench, Chennai. 5/6 http://www.judis.nic.in T.C.A.No.959 of 2018 T.S.SIVAGNANAM, J. AND V.BHAVANI SUBBAROYAN, J. Kak T.C.A.No.959 of 2018 13.10.2020 6/6 http://www.judis.nic.in