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Income Tax Appellate Tribunal, DELHI ‘SMC’ BENCH,
Before: SHRI B.P. JAIN
Assessee by : Shri Salil Aggarwal, Adv Shri Shailesh Gupta, Adv Revenue by : Shri Atiq Ahmed Sr. DR ORDER This appeal of the assessee arises from the order of the ld. CIT(A), Muzaffarnagar vide order dated 03.10.2016 for A.Y. 2008-09.
The assessee has raised as many as 9 grounds of appeal. However, he has not pressed Ground Nos. 1 to 2.6 which are dismissed as not pressed. In the remaining grounds, the main grievance of the assessee is in relation to the action of the ld. CIT(A) in upholding the Rs. 12,67,528/- as against the capital loss suffered at Rs. 6,70,713/-.
Facts of the case, in brief, as emanating from the order of the Assessing Officer are that during the course of assessment proceedings, the Assessing Officer found that during the year under consideration, the assessee sold two properties for Rs. 15,25,000/- and Rs. 19,75,000/- respectively but stamp duty was paid on the amount of Rs. 23,77,520/- and Rs. 30,60,720/-. Therefore, the Assessing Officer was of the opinion that an amount of Rs. 19,38,240/- deserves to be added into the total income of the assessee as per provisions of section 50C of the I.T. Act 1961, as the assessee has not shown this amount in her computation of income. Therefore, the assessee vide office show cause letter dated 03.02.2015 was asked to explain why this amount of Rs.19, 38,240/- be not added in her total income as per provisions of section 50C of the I.T. Act 1961. The assessee, vide her written reply stated as under:-
“(a) Provisions u/s 50C(2)(a) provides option for the assessee of fair market value instead of valuation adopted for stamp purposes where stamp valuation exceeds the fair market value.
(b) Sec 50C(2)(a) further has a provision to make this claim before the Assessing Officer. In this regard we wish to bring in your kind notice that we have made it clear at the time of filing of income tax return.
(c) while filing income tax return, it was clearly mentioned at Schedule CG point no. B sub point (3)(a) which specifies for computation of capital gain that property was under litigation & fair market value has been taken.
It is also worth mentioning here that the said defects were existing at the time of transfer and perhaps till today. All the same facts were disclosed by me at the time of sale as mentioned in Line No. 2-4 of Page NO. 14 of sale deed No. 3396 dated 28.05.2007 and in Line no. 2-3 and 1 of page no. 13 & 14 respectively of sale deed no. 3397 dated 28.05.2007. Moreover the seller was having a registered agreement to sell with Sh. Krishan Lal Sachdeva and Shri Subhash Chandra Sachdeva which was prior to our purchase and discovered later on when he made his claim on the said property in the court in 2004. The reply of the assessee has been considered and it was found that the contention of the assessee is not satisfactory because no litigation matter was mentioned in sale deed of properties. After
50C of the I.T. Act 1961 was computed by the Assessing Officer as under:-
Business Loss as shown by the assessee (-)Rs. 3,01,5687/- Total Sale of property (As per section 50C) Rs.54,38,2407- Index cost 3383500 x 551 447 Rs. 41,70,712/-
Rs. 9,65,960/- Taxable income
Aggrieved, the assessee went in appeal before the ld. CIT(A) who confirmed the same. Further aggrieved, the assessee is in appeal before me.
I have heard the rival contentions and perused the relevant material on record. It was argued by the ld. counsel for the assessee that the property was in dispute for which a suit was filed in the court of law and this fact was brought to the notice of both the authorities below, but the same has been ignored. These two properties were purchased in March 2003 and accordingly property was sold at market rate as submitted by the assessee in his reply before the Assessing Officer as well as the ld. CIT(A). Provisions of Section 50C(2)(a)
provides an option for the assessee of fair market value instead of valuation adopted for stamp purposes where stamp valuation exceeds the fair market value. On a bare reading of the provisions of the said section, it is evident that the alternative left with the Assessing Officer to refer the matter at the most to the valuation officer which has not been done and the property was in dispute and was the subject matter of litigation and therefore, the property has been sold at market value. Accordingly, we find no defect in the submissions of the ld. counsel for the assessee. An identical issue has been decided in favour of the assessee by the ITAT ‘A’ Bench in the case of ITO Vs. Aditya Narain Verma [HUF] in vide order dated 7.6.2017 wherein vide para 4.1, the Tribunal has held as under:
“4.1 On the very perusal of the provisions laid down under section 50C of the Act reproduced hereinabove, we fully concur with the finding of the Id. CIT (Appeals) that when the assessee in the present case had claimed before 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, the Assessing Officer should have referred the valuation of the capital asset to a valuation officer instead of adopting the value taken by the state authority for the purpose of stamp duty. The very purpose of the Legislature
(2) to section 50C of the Act is that a valuation officer is an expert of the subject for such valuation and is certainly in a better position than the Assessing Officer to determine the valuation. Thus, non-compliance of the provisions laid down under sub section-(2) by the Assessing-Officer cannot be held valid and justified. The Hon'ble jurisdictional High Court of Allahabad in the case of Shashi Kant Garg (supra) has "been pleased to hold that it is well settled that if under the provisions of the Act an authority is required to exercise powers or to do an act in a particular manner, then that power has to be exercised and the act has to be performed in that manner alone and not in any other manner. Similar view has been expressed buy the other decisions cited by the ld. counsel for the assessee in this regard hereinabove. The first appellate order on the issue is thus upheld. The grounds are accordingly rejected.”
In that view of the matter, in the facts and circumstances of the case and reliance placed on the decision of the ITAT in the case of Aditya Narain Verma [supra], all the grounds raised by the assessee are allowed and the remaining grounds of the assessee for the purpose of capital gain are also decided in favour of the assessee.
In the result, the appeal of the assessee in is partly allowed. The order is pronounced in the open court on 29.11.2017.