LATA KISHAN CHAND,VISAKHAPATNAM vs. THE DCIT, CIRCLE - 3(1), VISAKHAPATNAM

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ITA 296/VIZ/2014Status: DisposedITAT Visakhapatnam10 August 2018AY 2009-105 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the assessee's appeal on the first issue. It held that the sale of the land occurred on August 7, 2008, the date of registration. The assessee failed to provide any supportive evidence, either before the Assessing Officer, the CIT(A), or the Tribunal, to substantiate the claim that the sale consideration was received on July 31, 2008, or that there was a dispute leading to the postponement of registration. The purchase of stamp paper on August 6, 2008, further weakened the assessee's claim. Therefore, the authorities below were justified in adopting the SDRR value as the full value of consideration under Section 50C of the Act on the date of registration. Regarding the second issue concerning development expenses, the Tribunal found no infirmity in the CIT(A)'s direction to re-compute the capital gains after allowing Rs. 1.00 lakh for improvement of the property and dismissed this ground of appeal as well. The operative direction was to dismiss the appeal.

What were the facts?

The assessee, Smt. Lata Kishen Chand, sold a site admeasuring 311 sq. yards for a sale deed consideration of Rs. 31.10 lakhs on August 7, 2008. However, she declared a total sale consideration of Rs. 25.00 lakhs in her return of income for Assessment Year 2009-10. The Assessing Officer, following Section 50C of the Income Tax Act, 1961, adopted Rs. 31.10 lakhs as the sale consideration. The assessee appealed to the CIT(A), arguing that the sale consideration was paid on July 31, 2008, and registration was postponed to August 7, 2008, due to a dispute, and that the revised valuation by the Registering Authority was not justified. The CIT(A) rejected this, noting the stamp paper was purchased on August 6, 2008, and the transfer was effective only on the registration date. The assessee also claimed development expenses, which were disallowed by the AO. The CIT(A) allowed Rs. 1.00 lakh for improvement and directed re-computation of capital gains.

What were the issues?

1. Whether the Tribunal was justified in invoking Section 50C of the Income Tax Act, 1961, by adopting the Stamp Duty Ready Reckoner (SDRR) value as the full value of consideration when the sale consideration was allegedly agreed upon and paid prior to the registration date? Assessee's contention: The sale consideration was paid on July 31, 2008, and registration was intended for that date but postponed to August 7, 2008, due to a dispute. Therefore, the higher value adopted by the Registering Authority on the registration date should not be applied. Revenue's contention: The authorities below have correctly adopted the value of the property as per the SDRR on the date of registration, considering Section 50C of the Act. 2. Whether the direction of the CIT(A) to re-compute capital gains after considering Rs. 1.00 lakh for improvement of the property is sustainable? Assessee's contention: Not explicitly stated, but implied by the appeal against the AO's disallowance and the CIT(A)'s partial allowance. Revenue's contention: Not explicitly stated, but implied by the support for the orders passed by the authorities below.

Which sections of the Income-tax Act were involved?

Section 50C,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI V. DURGA RAO, HON’BLE & SHRI D.S. SUNDER SINGH, HON’BLE

For Appellant: Shri R.L.N. Somayajulu — CA
For Respondent: Shri P.S. Murthy - Sr.DR
Hearing: 03/08/2018Pronounced: 10/08/2018

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON’BLE ACCOUNTANT MEMBER ITA No. 296/VIZ/2014 (Asst. Year : 2009-10) Smt. Lata Kishen Chand, vs. DCIT, Circle-3(1), D.No. 9-29-15, Siripuram, Visakhapatnam. Balajinagar, Visakhapatnam. PAN No. ADDPK 5094 N (Appellant) (Respondent)

Assessee by : Shri R.L.N. Somayajulu – CA. Department By : Shri P.S. Murthy – Sr.DR Date of hearing : 03/08/2018. Date of pronouncement : 10/08/2018. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Visakhapatnam, dated 02/04/2014 for the Assessment Year 2009-10. 2. The first ground of appeal raised by the assessee is with regard to invocation of section 50C of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). 3. Facts relating to this issue in brief are that assessee is an individual, filed his return of income by admitting income of

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Rs.15,19,200/-. The case of the assessee was selected for scrutiny and after following due procedure, assessment was completed under section 143(3) of the Act, on 22/07/2011. In the assessment order, the Assessing Officer has noted that assessee has sold a site admeasuring 311 sq.yards for a consideration of Rs. 31.10 lakhs vide sale deed dated 07/08/2008 and the same was registered before the Registrar’s Office, Madhuravada, Visakhapatnam. However, in the return of income filed, the assessee has declared the total sale consideration of Rs. 25.00 lakhs only. Accordingly, the Assessing Officer after calling explanation from the assessee, adopted Rs. 31.10 lakhs as a sale consideration in accordance with the provisions of section 50C of the Act. 4. On appeal before the ld. CIT(A), it was submitted that the sale consideration was paid on 31/07/2008 and the registration was supposed to take effect on 31/07/2008. However, as there was some dispute, the registration was postponed to 07/08/2008 and by the time, the revised valuation was adopted by the Registering Authority. The assessee filed an affidavit in this regard and submitted that the adoption of higher value under section 50C is not justified. The ld. CIT(A) considered the

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explanation of the assessee and rejected the same by observing as under:- “5. ....... I have considered the pleas raised. The transfer can be said to have been effected only on 07/08/2008, when the transaction was registered, and there was no conveyance prior to that. As a result, the value on the date of such transfer is required to be adopted in terms of section 50C. Further, it is noted that the stamp paper for the registration was purchased only on 06/08/2008. Hence, the plea that the registration was supposed to have taken place on 31/07/2008 is not acceptable. In view of the clear provisions contained in section 50C, I find that the Assessing Officer is justified in adopting value of Rs.31,10,000/- as the full value of consideration”

5.

On appeal before us, ld. Authorized Representative for the assessee reiterated the submissions, which were made before the ld. CIT(A). 6. On the other hand, ld. Departmental Representative strongly supported the orders passed by the authorities below. 7. In this case, the assessee has sold a piece of land on 07/08/2008, and as on the date of registration, the SRO value of the property is Rs. 31,10,000/-. However, the assessee has only shown as a sale consideration received by her at Rs. 25.00 lakhs. When Assessing Officer asked the assessee to explain, it was submitted that actual registration has took-place on 31/07/2008 as there was some dispute and therefore, the higher value cannot be accepted. The assessee neither filed any supportive evidence before the Assessing Officer nor before the ld. CIT(A). Even

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before the Tribunal except stating that sale consideration was received on 31/07/2008 as there is a dispute in respect of property, but not filed any such details. Therefore, the authorities below have adopted the value of the property as per SRO by considering section 50C of the Act on the date of registration. We find no infirmity in the order of the ld. CIT(A). Thus, this ground of appeal raised by the assessee is dismissed. 8. The another ground of appeal relating to development expenses. 9. The Assessing Officer disallowed the entire expenditure claimed by the assessee on account of development / improvement of the property on the ground that no evidence is filed. On appeal, ld. CIT(A) has considered 1.00 lakh for improvement of the property and directed the Assessing Officer to re-compute the capital gains. We find no infirmity in the direction of the ld. CIT(A) to re-compute the capital gains. Thus, this ground of appeal raised by the assessee is dismissed. 10. In the result, appeal filed by the assessee is dismissed. Order Pronounced in open Court on this 10th day of August, 2018. sd/- Sd/- (D.S. SUNDER SINGH) (V. DURGA RAO) Accountant Member Judicial Member Dated : 10th August, 2018.

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vr/- Copy to: 1. The Assessee – Smt. Lata Kishen Chand, D.No. 9-29- 15, Siripuram, Balajinagar, Visakhapatnam. 2. The Revenue – DCIT, Circle-3(1), Visakhapatnam. 3. The CIT-1, Visakhapatnam. 4. The CIT(A), Visakhapatnam. 5. The D.R., Visakhapatnam. 6. Guard file. By order

(VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Visakhapatnam.

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