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Income Tax Appellate Tribunal, ‘A’ BENCH, PUNE
ORDER
PER S.S. GODARA, JM :
1. This Revenue’s appeal for A.Y. 2011-12 is against the CIT(A)-13, Pune’s order dated 27-01-2020 passed in case No. PN/CIT(A)-13/ITO Ward (IT)- 3/10112/2018-19/507 involving proceedings u/s 143(3) of the Income-tax Act, 1961, in short “the Act”.
Case called twice. None appears at assessee’s behest. She is accordingly proceeded ex-parte.
The Revenue raises the following substantive grounds in the instant appeal:-
On the facts and in the circumstances of the case and in law, the Ld. C1T( A) erred in holding that the assessee had vide sale deed dated 05.01.2011 actually transferred only 777.20 Sq.Mts. of land to the purchaser and erred in directing the AO to adopt the proportionate Stamp Duty value of Rs.1,78,24,707/- as the sale consideration and recompute the capital gain after giving benefit of indexation.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has not mentioned the evidence produced by the assessee to establish that some duty was paid on the sale of the 2500 Sq. Mts. of land Shri. Azim Premji in the year 1991 and that the transfer of 2500 Sq.Mts. of land had already taken place in the year 1991 to Shri. Azim Premji. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the assessee has not produced any evidence to establish that the capital gains relating to the sale of 2500 Sq.Mts had been offered for Smt. Andre E. Raje A.Y. 2011-12 taxation earlier either in the assessment year 1991-1992 or any subsequent assessment year 4. On the facts and in the circumstance of the ease and in law, the Ld. CIT(A) failed to appreciate that the Assessing Officer rightly invoked the provisions of section 50C and taxed the value determined by the Stamp Valuation Authority of RS.7,51,61,000/- to be the consideration accruing to the assessee on 'sale of the immovable property vide agreement dated 05.01.2011.”
Mr. Walimbe takes us to the CIT(A)’s detailed discussion reversing the assessment finding making the impugned addition as follows: “Long term capital gain addition of Rs. 7,23,63,642/- 2.1 On perusal of the facts of the case, it was observed that the appellant had filed his return of income on 19-11-2011, declaring total income of Rs. 76,05,248/-. An information was received from Jt. Director of Income-tax (I&CI), Mumbai that there was escapement of capital gain of Rs. 6,51,61,000/- which was not offered for taxation and therefore, after taking necessary approval from CIT (IT/TP), Pune, notice u/s 148 of the IT Act was issued and duly served on the assessee by the AO. In response to the notice, Ld AR for the appellant vide letter dated 31.01.2018 stated that the assessee had expired on 20.03.2017 and submitted his death certificate and therefore, after taking necessary approval, further notice u/s 148 of the Act was issued on 14.02.2018 to the legal heir of the deceased assessee, Smt. Andree Eichanbaun Raje (wife of deceased assessee). Thereafter, notices ix] s 142(1) arid 143(2) were also issued upon the legal heir of the assessee. In response to the notices, Ld AR for the appellant attended and filed details like copy of return of income, sale deed, valuation report, etc. It was observed by the Ld AO that as per the sale deed dated 05.01.2011,during the year under consideration, the assessee had sold immovable property admeasuring 3277.2 sq. mts - CTS No.1928, S.No.101, Hissa No.31, Village Yerangal on 05.01.2011 for a consideration of Rs. 1 crore to Shri Ryan Rupen Patel. However, as per Index-II, the market value of the said property as on the date of sale was Rs. 7,51,61,000/ - which was also adopted by the Stamp Valuation Authority for the purpose of payment of stamp duty. In this regard, the AO contended that as per section 50C of the IT Act, value of Rs. 7,51,61,000/- adopted by the Stamp Valuation Authority should be treated as full value of consideration received by the assessee. In this regard, show cause notices were issued to the legal heir of the deceased assessee by the AO asking as to why an amount of Rs. 7,51,61,000/- should not be deemed to be the value of the consideration received as per the provision of section 50C of the Act. In response to the show cause notices, Ld AR for the assessee submitted that as per sale deed dated 17.1.1991, 2500 sq. mts of land out of total land of 3277.2 sq. mts was already sold in 1991. Further, in the para-M of the current sale agreement, it was mentioned that the balance 777.2 sq. mts land was sold for the total consideration of Rs. I crore only. Further, as per the sale agreement dated 17.1.1991 ,2500 sq. mts land out of total land of 3277.2 sq. mts was sold. However no stamp duty was paid as the sale was made by way of a sale agreement on Rs 100/- stamp paper. Hence, at the time of appellant's sale deed of balance 777.2 sq. mts, the Govt. Reg. Authority had adjudicated out sale deed and hence stamp duty was required to be paid on entire portion of land of 3277.2 sq. mts on that day's Government valuation of Rs. 7,51,61,000/- and the same was mentioned in the Index-II. The fact that the appellant had sold the balance land of 777.2 sq. mts for total consideration of Rs one crore only was clearly mentioned again and again in Smt. Andre E. Raje A.Y. 2011-12 many paras of the sale deed. The sale consideration received of Rs. One crore was as per the prevailing rate on that day which was shown in his Income tax Return for the A.Y. 2011-12, hence, there was no violation of provision u/s 50C of the Income tax Act, 1961. 2.1.1 Thereafter, the AO asked the legal heir of the assessee to produce documentary evidence to support the sale of 2500 sq. mts of land in the year 1991 and the taxes paid on the resultant capital gains and in response to it, the assessee merely reiterated the submission made earlier. Hence, the contention of the legal heir of the deceased assessee was not found to be acceptable by the AO and it was contended that as per para-e at page 3 of sale agreement dated 05.01.2011, it was crystal clear that para-e speaks about only 'agreement for sale' of land admeasuring 2500 sq. mts on 17.01. 199 1 and no actual sale deed was made as claimed by the assessee and the same was also clear as per para-m at page 9 that the entire land admeasuring 3277.2 sq. mts. including 2500 sq. mts was sold on 05.01.2011 for a consideration of Rs. one crore. According to the AO, the legal heir of the deceased assessee also failed to produce any documentary evidence to prove or establish that the capital gains out of the proceeds received on sale of 2500 sq. mts had been offered for taxation in an earlier AY and therefore, the Stamp Valuation Authority had rightly determined the value of the entire 3277.2 sq.mts to be Rs. 7,51,61,000/- and that this was the area sought to be transferred vide agreement dated 05.01.2011. 2.1.2 It was also noted by the AO that as per the market value of Rs 7,51,61,000/- for the entire 3277.2 sq. mts., the proportionate value for the land admeasuring 777.20 sq. mts comes to Rs. 1,78,24,707/ - whereas the agreement value was only Rs. 1,00,00,000/- and therefore, the contention of the assessee that there was no violation of section 50C of the Act, was not acceptable. Hence, in view of the above, the AO deemed the value of the property at Rs. 7,51,61,000/- as adopted by the Stamp Valuation Authority and after allowing the deduction of the indexed cost of acquisition of Rs. 27,97,358/- as claimed by the assessee, calculated the LTCG of Rs.7,23,63,642/ - to be held taxable in the hand of the assessee. 2.2 During the appellate proceedings, the Appellant filed a written submission which is extracted as under: "The assessee is challenging the addition of Rs. 7,23,63,642/ - to his total income under the head long term capital gain. The assessee himself expired on 20/03/2017. His wife is a French national permanently settled in France. His estate in India is represented by his other relatives being his legal representatives. The dispute in the case is centred on the sale of an immovable property situated at S. no. 10, Hissa No.31, CTS 1928 (P), Yerangal on Madh Island near Mumbai. The property originally consisting of land admeasuring 3277.2 sq. mtrs. together with outhouse, poultry shed etc. was purchased in 1962 by one Mrs. Shiladevi Purshottam Raje being the mother of the assessee. That lady sold a part of the property viz. land admeasuring 2500 sq. mtrs out of total 3277.2 sq. mtrs. to Mr. Azim Premji by executing an agreement to sale on 17 January 1991. The assessee was thus left with only 777. 2 sq. mtrs. of land. Mr. Azim Premji in tum sold his portion of 2500 sq. mtrs. of land to one Mr. RYANRUPEN PATEL (minor) represented by his natural guardian MR. RUPEN PREMJI PATEL by an agreement to sale dated 16 May 2008. This agreement was registered with Sub-Registrar of Assurances, Mumbai bearing registration no. BDR 12 dated 15/07/2009. Thus Smt. Andre E. Raje A.Y. 2011-12 Mr. RYAN PATEL now became the new owner of 2500 sq. mtrs. of land while the balance 777.2 sq. mtrs. remained with the assessee. Mr. RYAN PATEL purchased this balance 777.2 sq. mtrs. of land from the assessee by a deed of conveyance dated 5 Jan 2011 Jar a total price of Rs.1 crore. The Sub Registrar Boriuali mentioned the area of the whale land viz.3277.2.sq. mtrs. and its stamp duty value Rs. 7,51,61,000/ - against the sale price of Rs.1 crore which has led to. the dispute in the present appeal. The assessee had filed his original return of income Jar assessment year 2011-2012 an 11-12-2011 declaring total income of Rs. 76,05,248/ -which included the capital gain arising from the sale of 777.2 Sq. Mtrs. o] land. However, in view of the vast differences between the declared consideration of Rs. 1 crore and the stamp duty value of Rs. 7.51 crore the assessee's case was re-opened u/ s 148. The assessing officer thereafter proceeded to. compute the long term capital gain by adapting the stamp duty value of Rs. 7.51crores as the sale consideration. disregarding the assessee's submissions against which the assessee is now in appeal before your honour. The assessee's argument in this case is that he has said only 777.2 Sq. Mtrs. of land vide agreement dated 5/01/2011 while the assessing officer has computed the long term capital gain by adapting the stamp duty value of the whale land. She has done this ignoring the various references to. the history of the sale embodied in the Deed of Conveyance dated 05/01/2011 itself and picking certain other references in the document out of its context. The assessee shall now give a page wise rebuttal of the assessing officer's contentions from. the document itself which the assessee has separately enclosed for your honour's record. 1) Page No. 1 is the Index II of the deed of conveyance dated 05/01/2011 which admittedly shows the subject matter of sale as land admeasuring 3277.2 sq. mtrs. with stamp duty value of Rs. 7,51,61,000/- 2) On page 3 clause (c) of the document it is mentioned that 2500 s4. mtrs. of land out of the total land was said to. Mr. Azim Premji vide agreement of sale dated 17 Jan 1991. Further an page 4 it is clearly averred that the said agreement was registered with the Appropriate Authority u/ s 269UA of the Income Tax Act and that a no. objection. certificate u/ s 269UL(3) of the Income Tax Act was also. received Jar that transfers. A copy of the said clearance certificate is attached to. the document itself. 3) On page 6 clause (i) it is stated in unambiguous wards that now there remains the balance land of 777.20 sq. mtrs. being portion. of the said property (out of land admeasuring 3277.2 sq. mtrs) with the vendor who. has agreed to. sell and convey that portion. i.e. 777.2 sq. mtrs. to. the purchaser. 4) On page 7 and page 8 it is mentioned that Mr. Azim Premji later an sold that 2500 sq. mtrs. of land which he purchased in 1991 to. Mr. Ryan Patel vide agreement dated 16 may 2008 5) On page 9 clause (m) there is again declaration of the fact that there remains: a balance portion of land admeasuring 777.20 sq. mtrs. with the vendor. 6) On page 9 clause (n) it is clarified that the purchaser had paid full stamp duty of the portion of property admeasuring 2500 sq. mtrs. vide an agreement dated 16 May 2008. Therefore in payment of stamp duty and in calculation thereof in respect of the present document the adjustment of the stamp duty already paid is required to be taken. Now let us come to the averments which the assessing officer has Smt. Andre E. Raje A.Y. 2011-12 relied upon and see how they are erroneous. In Para 7.1 on page 5 of her order the A. 0. has reproduced the extract of clause (c) of the conveyance deed and drawn the conclusion in Para 7.1.1 that it speaks about only an agreement to sale but no actual sale deed was executed. She then proceeds to quote Clause (m) of the conveyance deed to observe that the assessee has sold the entire property of 3277.20 sq. mtrs. on 05/01/2011 conveniently ignoring the recitals of Azim Premji's sale to Mr. Ryan Patel vide Agreement registered on 16/05/2008 quoted above. If the assessing officer's observation in clause 7.1.1 is to be believed then Mr. Azim Premji did not become owner of the 2500 sq. mtrs. of land since his agreement dated 1 7 Jan 1991 was only an agreement to sale. This conclusion flies in the face of the fact that Mr. Azim Premji did sell his 2500 sq. mtrs. to Mr. Ryan Patel on 16 May 2008 and that agreement was duly accepted and registered by the Sub Registrar proving the fact that the Sub Registrar accepted Mr. Azim Premji as the rightful owner of that portion of 2500 sq. mtrs. of the land. The assessee shall now clarify how the assessing officer has jumbled the facts of the case and failed to appreciate them in their proper perspective. Mr. Azim Premji had not indeed paid the full stamp duty on the agreement dated 17 Jan 1991 by which he became the owner of the 2500 sq. mtrs. of land. This fact was overlooked by the Sub Registrar when he registered the sale deed of the same 2500 sq. mtrs by Mr. Azim Premji to Mr. Ryan Patel on 16/05/2008 and collected the full stamp duty only on the agreement dated 16/05/2008. This mistake was discovered when the conveyance of the balance portion of 777.2 sq. mtrs between the assessee and Mr. Ryan Patel was presented for registration on 5 Jan 2011. The Sub Registrar had to therefore show on record that it was conveyance of the entire 3277.2 sq. mtrs. even though in actual fact it was a conveyance of only 777.2 sq. mtrs. This explains the wording of clause (m) quoted by the Assessing Officer where it acknowledges that now only balance land of 777.2 sq. mtrs. remains with the vendor but further proceeds to say that the vendor has conveyed the entire property of 3277.2 sq. mirs. It is pertinent to note that the same clause (m) mentions about the credit for stamp duty on 2500 sq. mtrs being given which the A. O. either missed or conveniently ignored. The assessee therefore pleads that the assessing officer's approach in adopting the stamp duty value of the entire property admeasuring 3277.2 sq. mtrs. for computation of capital gain was patently unjustified. The assessee has already demonstrated hereinbefore that it was only the transfer of the balance 777.2 sq. mtrs. which was the subject matter of transfer on 05101 I 20 11 and hence if at all, the Assessing Officer could adopt only the proportionate stamp duty value of 777.2 sq. mtrs. i.e. Rs. 1,78,24,7071-jor computation of capital gain. It is interesting to note that she did reach that conclusion in Para 7.3 of her order but ultimately tried to play it safe by adopting the stamp duty value of the entire property instead. The assessee therefore prays that your honour may direct the assessing officer to re-compute the capital gain by adopting the stamp duty value of Rs.1, 78,24, 7071 - as the sale consideration accruing and after giving the benefit of indexation and credit for TDS of Rs. 15,00,0001- subject to verification as per law.” Findings 2.3 I have carefully considered the submission of the appellant in light of the facts of the case. A careful perusal of the sale deed dtd. 05.01.2011 shows that the appellant has actually transferred 777.2 square meters of the land to the purchaser by way of the present conveyance deed. Therefore the AO is Smt. Andre E. Raje A.Y. 2011-12 directed to adopt the proportionate stamp duty value of Rs 1,78,24,707/- as the sale consideration and recompute capital gain after giving benefit of indexation. He is also directed to verify the TDS claim of Rs 15,00,000 as per law.”
Mr. Walimbe vehemently reiterated the Revenue’s pleadings that the CIT(A) has erred in law and on facts in deleting the impugned long term capital gain addition made by the Assessing Officer to the tune of Rs. 7,23,63,642/- after holding the assessee to have sold/transferred area measuring 3277.2 sq. mtrs at Yerangal. Suffice to say, it has come on record that the CIT(A) has held the assessee as having sold/transferred the area measuring 777.2 sq. mtrs of land only than 3277.2 sq. mtrs taken at the Assessing Officer’s behest. We sought to verify the factual position ourselves from the corresponding sale deed executed in the relevant previous year. Mr. Walimbe produced the said documents before us dated 5-1-2011 during the course of hearing. It very well emerges therefrom that the assessee indeed sold area measuring 777.2 sq. mtrs only. That being the case, we find no merit in the Revenue’s sole substantive grievance since going against the clinching recital made in the sale deed. Ordered accordingly.
Delay of 88 days in filing of the instant appeal instituted on 02-07-2020 stands condoned since falling in Covid 19 pandemic outbreak period.
This Revenue’s appeal is dismissed in above terms. Order pronounced in the open court on 15th day of July 2023.