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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED
PER RAJPAL YADAV, JUDICIAL MEMBER:
Present three appeals are directed at the instance of three assessees against orders of the ld.CIT(A)-12, Ahmedabad of even dated i.e.
ITA No.1741/Ahd/2015 and Two Others
2016 passed on the respective appeals of appellants in assessment years 2011-12. Since common issue is involved in all these appeals, therefore, we heard them together and deem it appropriate to dispose of by this common order.
Common grievance of the assessee in all these appeals is that the ld.CIT(A) has erred in confirming the addition of Rs.11,35,783/- in each hand of the assessee on account of capital gain accrued to them. Facts on all vital points are common. Therefore, for the facility of reference, we take up the facts from the appeal of Smt.Priti Jayesh Shah.
The facts emerge out from the assessment record are that on 17.12.2008 appellants have entered into an agreement for sale with Shri Mukeshbhai Bholabhai Patel for sale of agriculture land comprised at Survey No.881/1+2 admeasuring 10,522 sq.meters situated at Chandkheda, Dist. Gandhinagar. The sale consideration was settled between the parties at Rs.3 crores. Ultimately, the sale deed was registered on 30.4.2010. The AO got information from Annual Information Report Wing that the amount of stamp duty paid by the assessee on the transaction would demonstrate the value of such property at Rs.3.50 crores whereas the assessee has shown the value at Rs.3.00 crores. Thus, taking into consideration full sale value of Rs.3.5 crores, the ld.AO has added Rs.50.00 lakhs while computing the capital gain. Since each assessee was having 1/3rd share in the total transaction, he divided Rs.50 lakhs in equal share and made addition of Rs.16,66,766/- in each hand of the appellants. Dissatisfied with this working, the ITA No.1741/Ahd/2015 and Two Others
assessees went in appeal before the ld.CIT(A). The ld.CIT(A) in principle concurred with the AO but found that a reference was made to the DVO under section (2) of section 50C and the DVO has determined fair market value of the property at Rs.3,34,07,350. Thus, according to the ld.CIT(A) differential amount of Rs.34,07,350/- deserves to be added in the hands of the assessee instead of Rs.50.00lakhs. (Amount disclosed by the assessee Rs.3.00 crores; DVO determined Rs.3.34 cores, difference of Rs.34,07,350/- considered for addition). The ld.CIT(A) has divided this amount in equal share and in this way an addition of Rs.11,35,783/- in each hand of the assessee instead of Rs.16,66,666/- has been confirmed by the learned CIT(A).
With the assistance of the ld.representatives, we have gone through the record carefully. The ld.counsel for the assessee has placed on record copy of the agreement dated 17.12.2008. The assessees have received part payment on execution of this agreement. They have received a sum of Rs.50.00 lakhs at the time of execution of the agreement and this sum was received by way of account payee cheque. The details of cheque have been mentioned in the agreement itself. The details have been placed on page no.25 to 27 of the paper book which is translated copy of the agreement. For example, Smt. Pritiben J. Shah received a sum of Rs.2,08,333/- vide cheque no.118566 dated 10.9.2008 of the Navnirman Co-op. Bank. Similarly, details of other cheques have been mentioned in the agreement itself. Each assessee received a sum of Rs.16.66 lakhs. The ld.counsel for the assessee contended that the AO
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failed to consider jantri rate i.e. rate on which stamp duty was to be paid while getting the sale deed registered on the date of agreement i.e. 17.12.2008. He also pointed out that otherwise also on the date of sale circle rate for this area was Rs.2300 per sq.meter. He placed on record copy of the notification issued by the State Government showing circle rate of this area at the relevant time. Calculation of value of the property ought to be made by the AO on the basis of this rate. He placed on record copy of a certificate given by Shri Gaurang K. Patel, Advocate calculating the value of the land at Rs.2,42,00,600/-.
On the other hand, the ld.DR relied upon order of the AO. He contended that the AO has calculated value of property according to the total amount paid as a stamp duty. This has been further re-verified by the DVO under section 50C(2) of the Act and the value has been substantially reduced. The ld.CIT(A) has accepted the said report of the DVO.
On due consideration of the above facts and circumstances, we are of the view that Section 48 of the Income Tax Act provides mode of computation of capital gain. It contemplates that income arising under the head "capital gains" shall be computed by deducting from the full value of the consideration received or accruing, as a result of the transfer of the capital assets the following amounts, viz. (a) expenditure incurred wholly and exclusively in connection with such transfer; and (b) the cost of acquisition of the asset and the cost of any improvement thereto.
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Section 50C further provides that where the consideration received or accruing as a result of 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 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. In other words, full consideration mentioned in section 48 is to be replaced by the consideration on which value of the property was adopted for the purpose of payment of stamp duty.
It is pertinent to note that the assessees have entered into an agreement for sale of their land on 17.12.2008. They have received part payment through account payee cheque. The time limit for filing a suit for specific performance under Specific Relief Act has been provided in the Indian Limitation Act, and this limitation is three years from the date of agreement. In case the vendee refused to get sale deed registered, then the assessee can only sue for specific performance, persuading vendee to purchase land. In that situation, the assessee would not get anything more than the amount agreed in the agreement. Similarly, there can be a time gap between date of agreement vis-à-vis ultimate registration of sale deed. There can be an appreciation or depreciation in the value of property. In other words, at the time of execution of agreement in respect of an immovable property, the right in persona is created in favour of the transferee/vendee. When such right has been created in favour of the vendee, vendor is restrained from selling the said property to someone-else, because vendee in whose favour the right in ITA No.1741/Ahd/2015 and Two Others
persona is created has legitimate right to enforce specific performance of the agreement, if vendor for some reason is not executing the sale deed. Under these circumstances the value of the property transacted ought to be kept in mind on the date of agreement also. Apart from all these factors, we have taken cognizance of the notification issued by the State Government fixing the rate at which stamp duty would be levied on registration sale deed in particular area. For the land sold by the assessee, it was a rate of Rs.2300 per sq.meter. The survey number of the assessee’s land was 881 and for this land circle rate was fixed at Rs.2300 per sq.meter. If at this rate the value of the property is being determined, then the value of the property would be Rs.2,42,600/- whereas the assessees have disclosed the sales consideration at Rs.3.00 crores. It cannot be enhanced under section 50C by a sum of Rs.50 lakhs considered by the AO and reduced by the ld.CIT(A). In other words, true value for the purpose of calculating the full value of consideration required under section 48 of the Income Tax Act for computing capital gain should not be more than Rs.3.00 cores in the present case. We, therefore, allow all three appeals and delete impugned additions.
In the result, the appeals of the assessees are allowed. Order pronounced in the Court on 4th September, 2018 at Ahmedabad. (WASEEM AHMED) JUDICIAL MEMBER Ahmedabad; Dated 04/09/2018
ITA No.1741/Ahd/2015 and Two Others
आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""यथ" / The Respondent. 3. संबं"धत आयकर आयु"त / Concerned CIT 4. आयकर आयु"त(अपील) / The CIT(A)
"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण / DR, ITAT, 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER,उप/सहायक पंजीकार (Dy./Asstt.