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Income Tax Appellate Tribunal, ‘B/SMC’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN
PER N.R.S. GANESAN, JUDICIAL MEMBER:
Both the appeals of the assessee are directed against the orders passed by the Commissioner of Income Tax (Appeals)-3, Coimbatore dated 02.08.2019 and pertains to the assessment year 2013-14.
Shri T.S.Rajarajeswaran, the Ld. Representative for the assessee submitted that the assessee sold the property for Rs. 50,01,000/-. However, for computation of capital gain, the assessee has taken the sale consideration at Rs. 57,00,000/-. The assesse has also obtained report from the registered valuer, he estimated the market value at Rs. 57,00,000/. The value estimated by the registered valuer is a distress sale value, however the guideline value of the Registration Department is Rs. 72,50,000/- the difference of Rs. 15,05,000/- was taken as sale consideration for computing the capital gain. According to the the Ld. Representative for the assessee, the property was mortgaged to Cathholic Syrian Bank. One of the assessee Smt. Murugasamy Lalitha was suffering due to Kidney failure therefore, they could not effectively negotiate the sale of the property to obtain the correct market value.
Placing reliance on the decision of ITAT, Hyderabad Bench in the case of G. Anitha vs. ITO 55 taxmann.com 538 (Hyd), the Ld. Counsel for the the market value of the property need not be taken for computing the capital gain by applying s. 50C of the Act. In view of the above decision, according to Ld. Representative, the Assessing Officer (AO) is not justified in adopting the value u/s. 50C of the Act.
On the contrary, Shri A.R.V. Sreenivasan, the Ld. Departmental Representative submitted that s. 50C of the Act is a statutory mandate.
Wherever the property was sold less than the guideline value, the AO is bound to take the guideline value for computing capital gain. In the case of Smt. G. Anitha (supra) there was an encumbrance in the capital asset therefore, the Division Bench of ITAT, Hyderabad Bench found that s. 50C of the Act need not be applied.
Having heard the Ld. Representative for the assessee and the Ld. Departmental Representative, this Tribunal is of the considered opinion that the property is admittedly mortgaged with Catholic Syrian Bank. It is also not in dispute that one of the assessee Smt. Muragasamy Lalitha was suffering from Kidney failure. Therefore, the contention of the assessee that the property could not be sold for the market rate may have some justification. Moreover, in the case of G. Anitha (supra) Division
4 & 2813/Chny/2019 Bench of ITAT, Hyderabad Behcn found that wherever there was an encumbrance, the value u/s. 50C of the Act need not be applied. The decision of the Division Bench of ITAT, Hyderabad (supra) is binding on a single Member. Therefore, by following the decision of Division Bench of ITAT, Hyderabad (supra) this Tribunal is of the considered opinion that when the assessee mortgaged property to Catholic Syrian Bank and could not effectively negotiate for sale of property due to Kidney failure of one of the assessee, the provisions of s. 50C of the Act not be applicable. Accordingly, the orders of the both the lower authorities are set aside and the addition made by the AO as confirmed by the Ld. CIT(A) is deleted.