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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN & SHRI VIKRAM SINGH YADAV
आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:
This is an appeal filed by the assessee against the Order of the Commissioner of Income Tax (Appeals)-3, Coimbatore, in IT Appeal No.108/15-16 dated 14.07.2016 for the AY 2009-10.
Mr. Sridhar Dora, JCIT, represented on behalf of the Revenue and Mr.N.C.Ravikrishnan, Adv., represented on behalf of the assessee.
It was submitted by the Ld.AR that the assessee was running a movie theatre under the name and style of Santhi Theatre. It consisted of land measuring 0.65 acres and building of about 2042 sq.ft. and asbestos roof building of about 5900 sq.ft. The assessee had entered into an agreement for the sale of the said property on 17.03.2004 for an amount of Rs.40.00 lakhs and had received an advance of Rs.10.00 lakhs. It was a submission that the said property had been attached by the state government for failure to pay the various statutory duties being entertainment tax right from the AY 1982-83. It was a submission that the assessee had subsequently sold the property through a Sale Deed dated 27.06.2008 for an amount of Rs.20,25,000/-. It was a submission that the AO had applied the provisions of Sec.50C and had adopted the guideline value as on the date of sale at Rs.1,30,16,600/- and had computed the long term capital gains on the same. It was a submission that the agreement having been entered into on 17.03.2004, the proviso to sec.50C applied the guideline value as on the date of sale, could not be considered. It was a submission that in the course of the assessment, the assessee had categorically intimated the AO that the provisions of Sec.50C was not liable to be applied in the case of the assessee in view of the decision of the Hon’ble jurisdictional High Court in the case of M/s.Thiruvengadam Investment (P) Ltd., reported in 320 ITR 745 (Mad).
It was a submission that he had no objection if the issues in this appeal are restored to the file of the AO for re-computation of the capital gains after obtaining the necessary valuation from the DVO.
In reply, the Ld.DR vehemently supported the order of the AO and the Ld.CIT(A). It was a submission that the Ld.CIT(A) had categorically given findings that the assessee had entered into a sale agreement and as
per the sale agreement, the purchasers had admitted that the tax payable to the state and central government payable by the film division Santhi Theatre, will be paid by the purchaser. It was a further submission that the possession of the property had not transferred as on 17.03.2004 but had transferred only in 2008 and consequently, what was transferred was a business asset and the capital gains was liable to be determined in respect of the land in long term capital gains and the building in short term capital gains. It was a submission that the issue was liable to be restored to the file of the AO for re-adjudication and computation of the correct capital gains.
We have considered the rival submissions.
A perusal of the facts in the present case clearly shows that the Ld.CIT(A) has brought out substantial facts to show that the property sold by the assessee is clearly a business asset and substantial portion of the payment have also been made to the state government. It is also noticed that the Ld.CIT(A) has taken a stand that the assessee has not taken recourse to the remedies available in the statute like requesting for valuation against the adoption of the stamp duty value during the course of the assessment proceedings. Here, admittedly, the assessee has objected to the applicability of Sec.50C of the Act. This being so, in the interest of natural justice, the issue of the valuation of the capital gains is restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity of being heard. The AO shall re-assess the computation of the capital gains whether short term or long term after having the same valued by the DVO. The AO shall also keep in mind that the asset sold is a business asset on which depreciation has been claimed.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.