S.M. CHANDRASHEKAR,BANGALORE vs. ITO, BANGALORE

per the lease agreement the advance was received by the assessee only in the

next assessment year at the time of execution of the lease agreement.

Therefore there is no justification in making the addition by deeming the

advance from the tenant. The Assessing Officer has not disputed the fact that

the advance was received only at the time of lease agreement therefore, the

addition of notional interest is highly arbitrary action on the part of the

Assessing Officer as there is no actual benefit received by the assessee. Hence,

the said addition made by the Assessing Officer is absolutely illegal and without

any basis and accordingly deleted.

applying the guiding value as per section 50 C as cost of purchase of the

property.

11 ITA No.1060/Bang/2016 9. I have heard the rival submissions as well as considered the relevant

material on record. The property was purchased in 2004 and the sale deed

was registered on 28.6.2007. The Assessing Officer made an addition on

account of difference in the purchase consideration and stamp duty valuation

of the property. The learned Authorised Representative has relied upon the

decision in the case of CIT Vs. Chandni Buchar (2010) 323 ITR 510 (P&H) and

submitted that the deeming provision of section 50C cannot be applied in the

hand of the purchaser. He has further pointed out that amendment in section

56(2)(vi) of the Act was brought vide Finance Act, 2009 dt.1.4.2010.

Therefore, for the year under consideration no addition can be made on

account of difference in purchase consideration paid by the assessee and

guidance value of the property for the purpose of stamp duty.

upon the orders of authorities below.

record, it is noted that the provisions of section 50C are applicable only for the

purpose of capital gains. The said provisions postulate a deemed full value of

consideration received or accruing as a result of transfer of capital asset.

12 ITA No.1060/Bang/2016 Therefore for the purpose of computation of Capital Gains irrespective of the

actual consideration received or accruing on transfer of the capital asset being

land or building or both the full value consideration will be adopted as the

valuation for the purpose of stamp duty valued by the stamp valuation

authority. In the case on hand the assessee has purchased the property in

question and therefore the provisions which are meant for computation of

capital gains and deemed consideration cannot be applied as it is only for the

receipt or accruing amount in the hand of the seller as a result of capital asset.

Therefore the said provision cannot be applied in assessing the income under

Section 69 of the Act. It is pertinent to note that an amendment in this regard

has been brought to the provision of section 56(2)(vi) w.e.f. 1.4.2010 therefore,

the said provision is also not applicable for the year under consideration. The

Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Chandni Buchar

(supra) while dealing an identical issue has held in paras 2 & 3 as under :

“ 2. There is categorical finding recorded by the Commissioner of Income-tax (Appeals) [for brevity ‘CIT(A)’] holding that value adopted or assessed by any authority of the State Government for the purpose of payment of stamp duty in respect of land or building cannot be taken as sale consideration received for the purpose of s. 48 of the Act. As against the purchase price disclosed in the sale deed at Rs. 17,06,700, the AO has adopted the purchase price of the property at Rs. 30,32,000, which is assessed for the purpose of paying the stamp duty. Accordingly, it was held that the assessee must have paid Rs. 13,25,300 over and above the purchase price disclosed in the sale deed and the AO made addition of this difference as income from unexplained sources. The CIT(A)

13 ITA No.1060/Bang/2016 deleted this addition by holding that s. 50C is a deeming provision for the purpose of bringing to tax the difference as capital gain. The CIT(A) further held that in the absence of any legally acceptable evidence, valuation done for the purpose of s. 50C would not represent actual consideration passed on to the seller. He placed reliance on the judgment of Allahabad High Court rendered in the case of CIT vs. Smt. Raj Kumari Vimla Devi (2005) 279 ITR 360 (All). In that case Allahabad High Court has relied upon the observations made by Hon’ble Supreme Court in the case of Jawajee Nagnatham vs. Revenue Divisional Officer (1994) 4 SCC 595 to hold that the basic valuation register prepared and maintained for the purpose of collecting stamp duty could not form the foundation to determine the market value of the acquired land under s. 23 of the Land Acquisition Act, 1894. The burden of proof is always on the claimant to prove such a fact and in each case the prevailing market value as on the date of notification published in the State Gazette under s. 4(1) of the Act has to be proved. The Tribunal also held that valuation done by any State agency for the purpose of stamp duty would not ipso facto substitute the actual sale consideration as being passed on to the seller by the purchaser in the absence of any admissible evidence. The AO is obliged to bring on record positive evidence supporting the price assessed by the State Government for the purpose of stamp duty. The view of the Tribunal is clear from para 7 of the its order, which reads thus : "From a plain reading of this provision, it emerges out that the value adopted or assessed by any authority of a State Government for the purpose of payment of stamp duty in respect of land or building or both, shall for the purpose of s. 48 be deemed to be the full value of the consideration received or accruing as a result of transfer. It nowhere provides that the valuation done by the State Government for the purpose of stamp duty etc. would ipso facto take place of the actual consideration as being passed on to the seller by the purchaser in the absence of any other evidence. The AO is required to bring positive evidence on record indicating the fact that assessee has paid anything more than the one disclosed in the purchase deed. The Department has taken an argument in the grounds of appeal that AO should be directed to make a reference to the Valuation Officer under s. 142A of the Act. It also raised a plea that AO has wrongly made a reference of s. 50C while making the addition, in fact, the addition is made under s. 69B on account of unexplained investment in the property. We have taken cognizance of both these arguments. It is the AO who himself ought to have collected the evidence indicating the fact that assessee has paid more money than the one disclosed in the purchase deed. The Tribunal while sitting in the second appeal is not supposed to give directions on the appeal of Revenue that a reference to the Valuation Officer is to be made in order to substantiate the addition. The steps which AO could have taken, if not taken then that lacuna cannot be filled up at the end of the Tribunal. In the absence of any evidence exhibiting the fact that assessee has made unexplained investment in the house property, no addition can be justified. Learned first appellate authority has appreciated the facts and circumstances in right perspective. We do not find any error in the impugned order on this ground. Thus, the ground of appeal raised by the Revenue is rejected." 3. Having heard the learned counsel, we are of the considered view that the view taken by the Tribunal while accepting the order of the CIT(A) does not suffer from any legal infirmity.”

14 ITA No.1060/Bang/2016 Accordingly, in view of the facts and circumstances of the case as well as the

decision of the Hon'ble Punjab & Haryana High Court (supra), the addition is not

justified and the same is deleted.

Order pronounced in the open court on 31st day of Aug., 2016.

Sd/- (VIJAY PAL RAO) JUDICIAL MEMBER

*Reddy gp

Copy to : 1. Appellant 2. Respondent 3. C.I.T. 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard File.

By Order

Asst. Registrar, ITAT, Bangalore