DEPUTY COMMISSIONER OF INCOME TAX,(INTERNATIONAL TAXATION )-2, HYDERABAD vs. ARUDRA VELLANKI, HYDERABAD

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ITA 516/HYD/2021Status: DisposedITAT Hyderabad08 April 2022AY 2012-139 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that Section 50C(1) of the Act mandates the use of fair market value for determining capital gains. It also noted that Section 50D, which might have been relevant for constructed area valuation, was not applicable retrospectively to the assessment year in question. Therefore, the CIT(A)'s direction to use the SRO value was upheld.

What were the facts?

The Revenue appealed against the CIT(A)'s order directing the Assessing Officer to compute capital gains using the SRO value of land for AY 2012-13, instead of the value of the constructed area received by the assessee. The Revenue argued that the constructed area represented the actual sale consideration.

What were the issues?

The key issue was whether the capital gains should be computed based on the SRO value of the land or the value of the constructed area received by the assessee. The applicability of Section 50D was also considered.

Which sections of the Income-tax Act were involved?

Section 50C(1),Section 50D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD ‘A’ BENCH, HYDERABAD.

Before: SHRI S.S. GODARA & SHRI L. P. SAHU

For Appellant: Shri Sunil Goutam, (D.R.)

Dy. Commissioner of Income Tax (International Taxation)-2, Hyderabad. …..Appellant. Vs.

1.

Arudra Vellanki, Hyderabad. PAN ALTPV 7612F 2. Padmavathi Vellanki, Hyderabad. PAN ALUPV7612E …..Respondents. Appellant By : Shri Sunil Goutam, (D.R.) Respondent By : Shri M.V. Joshi, C.A. for D.Shshank, Adv. Date of Hearing : 07.04.2022. Date of Pronouncement : 08.04.2022. O R D E R Per Shri S.S. Godara, J.M. : These twin Revenue’s appeals for Asst. Year 2012-13 arise from the Commissioner of Income Tax (Appeals)-10, Hyderabad’s separate orders both dt.27.07.2021 passed in case Nos. ITBA/ APL / S / 250 / 2021-22 / 1034454959(1) and ITBA/ APL / S / 250 / 2021-22 / 1034459213(1), Heard both the parties. Case file perused.

2.

We notice at the outset that Revenue’s instant appeals suffer from 66 days delay in filing. Mr. Goutham submitted that due to the outbreak of pandemic covid 19 unable to get the documents from the department which caused the impugned delay in filing of the instant appeal. Case law Collector Land Acquisition Vs. Mst. Katiji & Ors, 1987 AIR 1353 (SC) and University of Delhi Vs. Union of India, Civil Appeal No.9488 & 9489/2019 dated 17th Dec., 2019, hold that such a delay; supported by cogent reasons, deserves to be condoned so as to make way for the cause of substantial justice. We accordingly hold that the Revenue’s impugned delay of sixty six days is neither intentional nor deliberate but due to outbreak of Covid-10 only. The same stands condoned.

3.

The Revenue’s identical sole substantive grievance raised in both these appeals reads as under :

3 & 517/Hyd/2021 “ 1. The CIT(A) erred in directing the Assessing Officer to compute the capital gains on transfer of assessee's share of land by adopting the SRO value of the land for Assessment Year 2012-13, ignoring the fact that the actual sale consideration received by the assessee is value of her rights over the constructed area.

2. The CIT(A) ought to have appreciated the fact that on the date of entering into the Joint Development Agreement, the assessee acquired the rights over the constructed area and hence the market value of the assessee's share of constructed area should be adopted as the sale consideration for the purpose of capital gain in the hands of the assessee.”

4.

Mr. Goutam invited our attention to the CIT(A)’s detailed discussion under challenge as follows :

Mr. Goutam vehemently argued during the course of hearing that the CIT(A) has erred in law and on facts in directing the Assessing Officer to go by the SRO value of the relevant capital asset in the year of transfer i.e. Assessment Year 2012-13 than in light of the value of the constructed area which formed the actual sale consideration in assessee's hands. We find no merit in Revenue’s stand herein in as section 50C(1) of the Act stipulates that the assessing authority shall determine fair market value of the 8 & 517/Hyd/2021 capital asset as per the corresponding stamp price or SRO price only. Mr. Goutam sought to draw a distinction herein that it is section 50B which is sought to be applied in the learned lower authorities’ proceedings. We note that we are in Assessment Year 2012-13 whereas section 50D applies from 1.4.2013 only without having any retrospective effect. We therefore hold that the CIT(A) has rightly directed the Assessing Officer to go by SRO value of the relevant capital asset in the year of transfer. The Revenue’s identical sole substantive ground herein stand rejected accordingly.

5.

These Revenue’s twin appeals are dismissed in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the open court on 8th April, 2022.

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