RITA GOYAL,MEERUT vs. ITO, WARD- 2(2), MEERUT

PER R. K. PANDA, AM : This appeal filed by the assessee is directed against the order dated

18.12.2017 of CIT(A), Aligarh relating to assessment year 2011-12.

“1. That the CIT(A) Aligarh Camp At Meerut has erred in law as well as on facts in accepting the value of house property as per the provisions of Sec.50C of the Act when the property in question was a lease hold property. 2. That the A.O. had framed assessment after adopting the value as per the provisions of Sec.50C of the Act in spite of the specific request of the assessee to refer the matter of valuation to the DVO. The lapse committed by the A.O. cannot be cured by CIT(A). Hence the order passed by CIT(A) and addition passed by A.O. ought to be annulled. 3. That on facts the addition made u/s 50C of the Act for Rs.30,12,846/- is without any basis, totally wrong, unjustified, ill legal and unwarranted. i) That the Ld. CIT(A) has not considered the various facts before passing the order. ii) That addition was made on the basis of agreement execute by the assessee, though the property was sold by her late mother.

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derives income from business. She filed her return of income on 21.03.2012

declaring total income of Rs.1,67,140/-. During the course of assessment

proceedings, the Assessing Officer noted from the AIR information received

that the assessee has sold property situated at Mahanagar, Lucknow for

Rs.1,08,23,309/-. On being questioned by the Assessing Officer, it was

submitted that this property was inherited property from her late mother Smt.

Krishna Gupta, who expired on 21.07.2009. As per the Will, after the death of

Smt. Krishna Gupta, the assessee was the joint owner of the said property along

with her sister Smt. Aparna Kumar. Therefore, the assessee was 50% owner of

the said property. From the perusal of calculation of long term capital gain

furnished by the assessee, the Assessing Officer observed following :-

(a) The value of acquisition of the said property as on 01.04.1981 was at Rs.25,13,779/-. (b) The sale consideration value shown was at Rs.25,00,000/- u/s 50C. (c) The assessee claimed deduction u/s 54F at Rs.10,50,000/-.

should have been taken at Rs.54,11,655/- as per provisions of section 50C of the

I.T. Act. Further, the assessee has taken the cost of acquisition of the property

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as per the rate of financial year 1981-82 at Rs.3,50,000/- and cost of

improvement in financial year 2009-10 at Rs.22,470/- without any documentary

evidence. He, therefore, adopted the prevailing circle rate in the financial year

1981-82 at Rs.46,660/- being the cost of acquisition of the property since circle

rate at that time was Rs.10/- per sq.ft. and the total area of the property was

approximately 4666 sq.ft.. Rejecting the various explanations given by the

assessee, the Assessing Officer determined the long term capital gain at

Rs.49,86,062/- after deduction of Rs.19,73,216/- u/s 54 of the I.T. Act, 1961.

The Assessing Officer made addition of Rs.30,12,846/- on account of long term

capital gain by observing as under :-

Value u/s 50C 54,11,655 Less : indexed cost VALUATION OF LAND @ 12.50 PER SQ FOOT 2,07,349 F.Y. 1981-82 29163 x 711 100 IMPROVEMENT 25,279 F.Y. 2009-10 22470 x 711 100 VALUATION OLD STRUCTURE 1,92,965 F.Y. 1981-82 27140 x 711 100 4,25,593 LESS : DEDUCTION U/S 54 19,73,216 30,12,846 Therefore, an addition of Rs.30,12,946/- is being made in the income of the assessee on account of LTCG.

observing as under :-

7.1 The A.O. had computed LTCG by taking full value of consideration as the value determined for stamp duty purposes. However, the appellant was contesting

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this valuation and claimed that the fair market value is much less than the value determined for stamp purposes. Accordingly, the matter of valuation was referred to the DVO. The DVO has determined the value of the appellant’s share at Rs.59,32,450/- (half share of Rs.1,18,64,900/-). The value determined by the DVO is even higher than the value determined for stamp purposes at Rs.54,11,655/-. Under these circumstances, the value determined for stamp purposes i.e. Rs.54,11,655/- has to be taken as the full value of consideration for the purpose of section 48. The DVO has determined the value as on 01.04.1981 at Rs.70,000/- which is much lower than what the appellant has claimed. In the assessment proceedings, the A.O. had accepted the appellant’s calculation with regard to the indexed cost of acquisition of Rs.4,25,593/-. Since the reference for valuation was made under the provisions of section 50C, the DVO was not required to give his opinion with regard to the cost of acquisition. Moreover, since there was no dispute with regard to the cost of acquisition, the value determined by the DVO needs to be ignored. In view of the above, no error is established in the computation of LTCG made by the A.O. Therefore, the assessment is being confirmed and the grounds of appeal are being dismissed.”

before the Tribunal.

property is a leasehold property, therefore, the provisions of section 50C are not

applicable. Referring to the decision of the Mumbai Bench of the Tribunal in

the case of Vandana D. Shetty vs. ITO vide ITA No.6668/Mum/2016 order

dated 05.07.2017, he submitted that the Tribunal following various decisions

has held that the transfer of capital asset and not transfer of leasehold rights

attract the provisions of section 50C of the Act. Since the property in question

was a residential house having municipal no.498/237/2 with leasehold rights in

land measuring 4666 sq.ft., therefore, the provisions of section 50C do not

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apply. Therefore, entire addition made by the Assessing Officer and sustained

by the ld. CIT(A) should be deleted.

below. He submitted that it was neither stated before the Assessing Officer nor

before the ld. CIT(A) that the property is a leasehold property. Nothing is

coming out of the record that the impugned property is a leasehold property.

Therefore, the argument of the ld. counsel for the assessee cannot be accepted at

this stage.

the material available on record. It is the submission of the ld. counsel for the

assessee that the property in question is a leasehold property and, therefore, the

provisions of section 50C are not applicable. However, a perusal of the

assessment order and the order of the ld. CIT(A) nowhere mentions that it is a

leasehold property since nothing is coming out from the record. It is also not

coming out of record as to what has happened in the case of the co-owner.

Considering the totality of the facts of the case and in the interest of justice, I

deem it proper to restore the issue to the file of the Assessing Officer with a

direction to adjudicate the issue afresh. While doing so, he has to give his

opinion as to whether the property is a leasehold property or not and whether

long term capital gain is chargeable on the leasehold property or not. Further,

the Assessing Officer while passing the order shall keep in mind the decision of

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the Mumbai Bench of the Tribunal in the case of Vandana D. Shetty (supra).

The Assessing Officer shall decide the issue as per fact and law after giving due

opportunity of being heard to the assessee. I hold and direct accordingly. The

grounds raised by the assessee are accordingly allowed for statistical purposes.

purposes. Order pronounced in the open Court on this 21st August, 2018.

Sd/- (R. K. PANDA) ACCOUNTANT MEMBER Dated: 21-08-2018. Sujeet Copy of order to: - 1) The Appellant 2) The Respondent 3) The CIT 4) The CIT(A) 5) The DR, I.T.A.T., New Delhi By Order //True Copy// Assistant Registrar ITAT, New Delhi