ARUN LASHKARY,JAIPUR vs. DCIT, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh HkkxpUn] ys[kk lnL; ds le{k BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER vk;dj vihy la-@ITA No. 759/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2011-12 cuke Shri Arun Lashkary The DCIT Vs. 52-53, Chaura Rasta Central Circle- 2 Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABVPL 0192 L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by: Shri Vijay Goyal, CA jktLo dh vksj ls@ Revenue by :Shri R.A. Verma, Addl CIT-. DR lquokbZ dh rkjh[k@ Date of Hearing : 09/02/2017 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 10/02/2017 vkns'k@ ORDER PER BHAGCHAND, AM The assessee has filed an appeal against the order of the ld. CIT(A) dated 16-06-2016 for the assessment year 2011-12 raising therein following ground of appeal. ‘’Under the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in confirming the addition of Rs. 6,05,980/- made on account of Short term capital gain u/s 50C of I.T. Act, 1961 by considering the value adopted by Sub-Registrar at Rs. 15,85,980/- more so when during the assessment proceedings the assessee objected that the value adopted by the registration authorities

2 ITA No. 759/JP/2016 Shri Arun Laskary vs. DCIT, Central Circle- 2,Jaipur . is in excess to fair market value of the property and the AO has not complied the provision of sub-section 2 of Section 50C of I.T. Act.’’

2.1 During the course of hearing, the ld. AR of the assessee raised

following additional ground alongwith case laws in relation to the present

case placed before this Bench.

‘’On the facts and in the circumstances of the case and in law the lower authorities have erred in applying the provisions of Section 50C of I.T. Act,1961 on the sale of Reservation Letter (Arakshan Patra) which is neither land nor building but it is a right to receive the allotment of land.’’

(i) NTPC Ltd. vs. CIT (1998) 229 ITR 383 (SC)

(ii) Zakir Hussain vs. CIT & Anr (2006) 202 CTR 40 Raj.

(iii) Siksha vs. CIT (2011) 336 ITR 112 (Orissa)

(iv) West Bengal Electricity Board vs. DCIT (2005) 278 ITR 218 (Cal.)

(v) Orissa Cement Ltd. vs. CIT (2001) 250 ITR 856 (Del.)

(vi) Ahmedabad Electricity Co. Ltd. vs. CIT (1993) 199 ITR 351 (Bom – F.B.)

(vii) Anand Shankar Mittal vs. DCIT (ITA No. 778 & 779/JP/2009 dated 8th Jan. 2010 ITAT Jaipur Bench 43 TW 1)

(viii) Choudhary & Bros vs. ITO (ITA No. 583/JP/2009 order dated 30-09-2010, 135 TTJ 055)

3 ITA No. 759/JP/2016 Shri Arun Laskary vs. DCIT, Central Circle- 2,Jaipur . (ix) M/s. Mittal Granites (P) Ltd. vs. DCIT (ITA No. 761, 1016, 762, 107, 1018, 1019 & 1020/JP/2013 order dated 16-03-2016)

2.2 I have heard both the sides on this issue of additional ground raised

by the assessee and noted that this is a legal ground which in view of the

decision of the Hon'ble Apex Court in the case of NTPC Ltd. vs. CIT and

other case laws (supra) relied on by the assessee is admitted.

3.1 Apropos solitary ground of the assessee as well as the additional

ground raised by the assessee, the facts as emerges from the order of the

ld. CIT(A) is as under:-

‘’3.2 I have duly considered assessee's submission and carefully gone through assessment order. I have also taken a note of factual matrix of the case as well as applicable case laws relied upon. Ground No. 2 covered in the submission made for Ground No. 1. On perusal of assessment order, it is seen that the AO at page 2 of the assessment order has held that during the year under consideration the assessee sold land situated at SEZ, Bagru of 463 Sq. Mtr for total consideration of Rs. 9,80,000/- as against this the DLC value adopted by the Sub-Registrar for such land was Rs. 15,85,980/-.For the sake of clarity, provisions of Section 50C of the Act is reproduced hereunder:-

‘’Special provision for full value of consideration in certain cases.

50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall,

4 ITA No. 759/JP/2016 Shri Arun Laskary vs. DCIT, Central Circle- 2,Jaipur . for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer ………………...’’

Therefore, as per Section 50C of the Act inserted by the Finance Act 2002-, where the consideration received or accruing as a result of the transfer of land and/or building is less than the value adopted or assessed or assessable by an authority of the State got, then for the purpose of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration received or accruing as a result of such transfer for computing capital gain.

In view of facts and circumstances of the case, I do not find any reason to intervene accordingly assessee's appeal is hereby dismissed.’’

3.2 During the course of hearing the ld. AR of the assessee filed the

following written submission praying therein to delete the addition of Rs.

6,05,980/-confirmed by the ld. CIT(A).

‘’Submission on grounds of appeal Findings of the Assessing Officer: - The finding of the ld. AO is at page 2 of the assessment order wherein the ld. AO held that during the year under consideration the assessee sold land situated at SEZ, Bagru of 463 sq. meter for total consideration of Rs. 9,80,000/- as against this the DLC value adopted by the sub registrar for such land was Rs. 15,85,980/-. In view of such facts and in view of the provision of section 50C of the Act the assessee was required to adopted such DLC value of Rs. 15,85,980/- for the purpose of calculating the capital gain. Thus the ld. AO by rejecting the submission of the assessee applied the provisions of 50C of Income Tax Act, 1961 computed the capital gain by taking the full value of consideration Rs. 15,85,980/- as against Rs. 9,80,000/- taken by the assessee resulted addition of Rs. 6,05,980/- in total income of the assessee. Findings of ld CIT(A) The findings of ld CIT(A) are at pg 4-5 of his order. He confirmed the findings of ld AO.

5 ITA No. 759/JP/2016 Shri Arun Laskary vs. DCIT, Central Circle- 2,Jaipur .

‘’Submission of the assessee: -

Name of Party Date of sales Area (In Sales value Value adopted Sq. Mts) by sub registrar Amit Agarwal 09.07.2010 68 1,60,000 2,60,260 Sumit Agarwal 09.07.2010 91 1,60,000 2,96,940 Chetanaya Prakash 09.07.2010 68 1,60,000 2,60,260 Goyal Bhawana Agarwal 09.07.2010 118 2,50,000 3,84,260 Suman Agarwal 09.07.2010 118 2,50,000 3,84,260 Total 463 9,80,000 15,85,980

At the outset we submit that the provisions of section 50C are not applicable in the case of the assessee. The assessee has sold Reservation Letter (Arakshan Patra). The Arakshan Patra is a right to receive 20% residential land and 5% commercial land in lieu of the land acquired by JDA for SEZ. The assessee purchased these rights from Shri Rekha Ram on 25/09/09 (copy of purchase Deed is at PB pg 18-25 for Rs. 625000/- . The description of the property is mentioned at PB pg 19. The assessee sold these rights by executing different sale deeds in favour of Shri Amit Agarwal (PB pg 26-31), Shri Sumit Agarwal (PB pg 32-37), Chaitanya Prakash Goyal (PB pg 38-43), Smt Bhavana Agarwal (PB pg 44-49), and Smt Suman Agarwal (PB pg 50- 55) for totaling to Rs. 9,80,000/-. From the reading of Section 50C, it is evident that Section 50C is a deeming provision and it extends only to land or building or both. Section 50C can come into play only in a situation where the consideration received or accruing as a result of the transfer by an appellant of a capital asset, being land or building or both is less than the value adopted or assessed or assessable for the purpose of payment of stamp duty in respect of such transfer. It is settled legal proposition that deeming provision can be applied only in respect of the situation specifically given and, hence, cannot go beyond the explicit mandate of the section. Clearly, therefore, it is essential for application of Section 50C that the transfer must be of a capital asset, being land or building or both. If the capital asset under transfer cannot be described as ‘land or building or both’, then Section 50C will cease to apply. In the case of assessee the assessee sold “Arakshan Patra” which is right to receive the 20% residential land and 5% commercial

6 ITA No. 759/JP/2016 Shri Arun Laskary vs. DCIT, Central Circle- 2,Jaipur . land. These Arakashan Patra cannot be terms as land or building therefore the provisions of section 50C cannot be applied. Reliance is placed on the following decision:-

(i) ITAT Ahmedabad Bench:- Smt. Devindraben I. Barot Versus Income Tax Officer, Ward 9(2) , Ahmedabad 2016 (7) TMI 275 ITAT AHMEDABAD ITA. No: 2220/AHD/2012 Dated: 06 May 2016 (Copy of decision is enclosed)

(ii) ITAT Ahmedabad Bench:- ITO Vs Shri Yasin Moosa Godil ITA No 2519/Ahd/2009 order dated 13/04/2012

(iii) ITAT Mumbai Bench:-Atul G Puranil Vs ITO (2011) 132 ITD 0499

(iv) ITAT Mumbai:-Farid Gulmohamed Vs. Income Tax Officer (International Taxation) ITAT, Bombay Tribunal (F) ITA No. 5136/Mum/2014 16th March, 2016 (2016) 46 CCH 0300 Mum trib

v) ITAT Pune Bench:- Kancast (P) Ltd Vs ITO (2015) 68 SOT 0110 (Pune)

(vi) ITAT Lucknow Bench :- ITO Vs Hari Om Gupta (2016) 45 ITR Trib) 0137 (Lucknow)

(vii) ITAT Kolkata Bench:- DCIT Vs Tejinder Singh ITA No 1459/Kol/2011 order dated 29/02/2012

7 ITA No. 759/JP/2016 Shri Arun Laskary vs. DCIT, Central Circle- 2,Jaipur . In view of above your honor is requested kindly to delete the addition made by ld. AO and confirmed by ld CIT(A)’’

3.3 The ld. DR relied on the orders of the authorities below.

3.4 I have heard the rival contentions and perused the materials

available on record. Brief facts of the case are that the assessee is an

individual and derives income from Salary, Capital Gain and income

from other sources. The assessee has filed return of income declaring

total income at Rs. 5,08,910/- on 26-09-2011. The AO completed the

assessment u/s 143(3) on 07-03-2014 on a total income of Rs. 11,14,890/-

by increasing the short term capital gain by Rs. 6,05,980/- as against the

declared short term capital gain of Rs. 3,43,425/- on a/c of difference of

sales consideration received to assessee and value adopted by registrar

authorities by applying the provision of section 50C of I.T. Act, 1961. In

first appeal, the ld. CIT(A) has confirmed the action of the AO. It is noted

from the records that the during the year under consideration the assessee

had sold the Arakshna Patra having right to receive the allotment of land

measure g 463 Sq. Mtr for Rs. 9,80,000/-. The assessee sold these lands

in parts to various persons as under:-

8 ITA No. 759/JP/2016 Shri Arun Laskary vs. DCIT, Central Circle- 2,Jaipur .

Name of Party Date of sales Area (In Sq. Sales value Value adopted Mts) by sub registrar Amit Agarwal 09.07.2010 68 1,60,000 2,60,260 Sumit Agarwal 09.07.2010 91 1,60,000 2,96,940 Chetanaya Prakash 09.07.2010 68 1,60,000 2,60,260 Goyal Bhawana Agarwal 09.07.2010 118 2,50,000 3,84,260 Suman Agarwal 09.07.2010 118 2,50,000 3,84,260 Total 463 9,80,000 15,85,980

It is further noted that the Arakshan Patra is a right to receive 20%

residential land and 5% commercial land in view of the land acquired by

Jaipur Development Authority for SEZ. It is noted that the assessee

purchased these rights from Shri Rekha Ram on 25-09-2009 for which the

assessee filed the copy of purchase deed for Rs. 6,25,000/- at page 18-25

of assessee's paper book. It is also noted that the assessee sold these rights

by executing different sale deeds in favour of the above mentioned five

persons totaling to Rs. 9.80 lacs. It will be worthwhile to mention the

provisions of Section 50C of the I.T. Act whether the assessee’s case is

covered under this section or not. [Special provision for full value of consideration in certain cases. 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.

(2) Without prejudice to the provisions of sub-section (1), where—

9 ITA No. 759/JP/2016 Shri Arun Laskary vs. DCIT, Central Circle- 2,Jaipur . (a) the assessee claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation.—For the purposes of this section, “Valuation Officer” shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.]’’

The plain reading of Section 50C shows that this provision is applicable

only for the capital assets being land or building or both. Taking into

consideration all the facts and circumstances of the case, it is noted that in

assessee's case capital assets are neither land nor building. Hence, in such

a situation, the provisions of Section 50C are not applicable on the

assessee. In view of the above deliberations, the additional ground raised

in the appeal of the assessee is allowed.

10 ITA No. 759/JP/2016 Shri Arun Laskary vs. DCIT, Central Circle- 2,Jaipur .

4.0 In the result, the appeals of the assessee is allowed The order is pronounced in the open Court on 10-02-2017.

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