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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश आदेश / ORDER आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This appeal is filed by the assessee against the order of CIT(A)-2, Aurangabad dated 30-03-2015 for the Assessment Year 2009-10.
Grounds raised by the assessee are as under : “1. The learned CIT(A), Aurangabad, erred in law and on facts in sustaining the addition of capital gains amounting to Rs. 28,63,357/- worked out by the ITO, Ward 2(4), Beed, by invoking section 50-C of the ITA, 1961; without appreciating that the rights of the appellant in the said land are not akin to rights as an owner of land, and thus, erred in not appreciating that section 50C is not applicable in the present case. 2. The learned CIT(A), Aurangabad, erred in law and on facts in sustaining the said addition without appreciating that the said land was reserved by Government for cattle grazing (GAIRAN); transfer of which, if made without permission from appropriate Government authorities, is illegal as per Rule 22C of Maharashtra Registration Rules of Registration Act, 1908. The learned CIT(A) failed to appreciate that since the required permission was not taken from stipulated Government Authorities, the said transaction was irregular.
2 ITA No.448/PUN/2015 Shivaji Chintaman Jamkar (HUF)
Without prejudice to the above grounds no. 1 & 2, the learned CIT(A), Aurangabad & the learned ITO, Ward 2(4), Beed; erred in law and on facts in not appreciating that the issue of valuation of the said land was not referred to the Departmental Valuation Officer (DVO), as so stipulated in section 50C(2). The learned I-T authorities ought to have referred the issue of valuation of the said land to the ova before concluding the assessment / appeal.”
Briefly stated relevant facts are that the assessee (HUF) derives
income from House Property and filed the return of income on 21-08-
2009 declaring total income of Rs.1,16,720/- in respect of his
agricultural income for the A.Y. 2009-10. The returned income
includes the income by way of capital gain of Rs.59,550/- earned on
sale of a land at Nalwandi, Dist. Beed. During the re-assessment
proceedings, the AO noticed that the assessee sold certain lands
described as “lands reserved by the Government for cattle grazing” for
the sale consideration of Rs.4,91,000/-. The stamp duty valuation of
the said land is Rs.33.90 lakhs. In the reassessment, the AO adopted
the said figure for working out the long term capital gains and applied
the provisions of section 50C of the Act and accordingly, the capital
gain was worked out. Further, there was another transaction of sale of
plots at Garkheda. The value as per the Sub-Registrar, Beed of the
said plot of lands is Rs.18,55,125/- each (total consideration of both
the plots (Plot No. 17 & 18 at Garkheda) as per section 50C works out
to Rs.37,10,250/-. The AO applied the said provisions for this
transaction as well and determined the total income at
Rs.65,75,972/-.
The CIT(A) confirmed the addition relating to the sale of property
at Nalwandi Road and granted relief with regard to the sale
transactions involving Garkheda plot, Aurangabad. The Revenue is
not in appeal against the relief granted by the CIT(A) to the assessee.
3 ITA No.448/PUN/2015 Shivaji Chintaman Jamkar (HUF)
The assessee is in appeal before us with regard to the decision of
CIT(A) on applicability of provisions of section 50C to the said land,
which are reserved by the Government for cattle grazing.
Before us, Ld. Authorised Representative for the assessee
submitted that AO/CIT(A) failed to appreciate the lands reserved by
the Government for cattle feeding are not free from ownership of the
Government on the said lands. Therefore, the value adopted by the AO
requires downward revision. Assessee opposed the AO’s move for
adopting Sub Registrar’s office value and however, no formal request
was made to the AO for referring the property to the valuation cell for
determining the market value of the said property. If referred, the
value would be certainly lesser than the value of Rs.33.90 lakhs as per
the stamp duty authorities. Ld. Authorised Representative for the
assessee submitted that it is in the interest of justice, the matter
should be remanded now to the file of AO for adjudication of this issue
and for making reference to the valuation authorities for an expert
opinion on these lands/or rights in the lands which are not free from
the litigation/encumbrances/Government attachments, etc.
Further, on the issue of applicability of the provisions to the
“rights” in the lands of this kind, Ld. AR for the assessee brought our
attention to the language of said section 50C submitted that these
provisions are applicable only to ‘a capital asset’, land building or both
and not to the “rights in the said lands” owned and reserved by the
Government for cattle feeding.
Further, Ld. AR for the assessee filed written submissions
(synopsis) mainly harping on the nature of the land and the
applicability of the order of the Tribunal in the case of ITO Vs. Yasin
4 ITA No.448/PUN/2015 Shivaji Chintaman Jamkar (HUF)
Moosa Goodil – ITA No.2519/Ahd/2009 which is relevant for the
proposition of remanding the matter to the income-tax authorities.
Reliance is placed on the following decisions for the proposition that a
request for referral to the DVO at the stage of appellate proceedings is
justified and also the proposition for exclusion of rights in the lands
outside the scope of provisions of section 50C of the Act :
CIT Vs. Greenfield Hotels & Estates (P) Ltd. – 389 ITR 68 (Bom,) Kancast (P) Ltd. Vs. ITO – 55 taxmann.com 171 (Pune Trib.) Atul G. Puranik Vs. ITO – 11 taxmann.com 92 (Mumbai Trib.)
Further, bringing our attention to the provisions of sub-section
(2) of section 50C, Ld. AR for the assessee submitted that referring a
matter to the valuation officer ought to have been done when there is
substantial difference between the value determined by the stamp duty
authorities (Rs.33.90 lakhs) and the actual sale consideration, i.e.
Rs.4,91,000/-. Reliance is placed on the judgment of Hon’ble Calcutta
High Court in the case of Sunil Kumar Agarwal Vs. CIT 372 ITR 83.
Further also, relying on the CBDT Circular No.14XL - 35, dated
11-04-1955, Ld. AR for the assessee submitted, considering the
unawareness of the assessee on the technicalities/legal provisions, the
income-tax authorities should have given option to refer the matter to
the DVO during assessment proceedings. Relevant decisions are
enclosed to the said synopsis before us.
On the other hand, Ld. DR for the Revenue relied heavily on the
orders of the AO and the CIT(A) on this issue and submitted that the
decision of CIT(A) on this issue is fair and reasonable and it does not
call for any interference. However, the fact of not making a formal
request before the CIT(A) or the AO was highlighted by the Ld. DR
before us.
5 ITA No.448/PUN/2015 Shivaji Chintaman Jamkar (HUF)
We heard both the parties on the issue of exclusion of rights of
lands outside the scope of provisions of section 50C of the Act on one
side, adopting the stamp duty value mechanically ignoring that the
fact that the lands are reserved by the Government for cattle feeding
and also the illegality of the transaction of sale of the said lands by the
assessee on the other side. In our view, the request of the assessee
before us on both the counts, i.e. referral to the DVO as well as
exclusion of the rights on the lands outside the scope of provision of
section 50C of the Act requires remanding the issue to the file of AO
for fresh adjudication and a decision on both the issues. It is the duty
of the AO to make a proper assessment. Referral of the property to
DVO is necessary when the assessee objects to the AO’s move directly
or indirectly for reduction of the Sub-Registrar’s office value.
Therefore, AO is directed to study the issue afresh and conclude the
said issues in the light of the decisions relied upon by the Ld. AR for
the assessee before us. Further, considering the special aspects of the
lands, we also direct the AO to obtain an expert opinion of the DVO
after making referral to the DVO and after giving reasonable
opportunity of being heard to the assessee. We find it is not a simple
issue whereby the AO can mechanically adopt the stamp duty for
working out the long term capital gains ignoring the various facts
about the land linked to the public purposes involved and the nature
of the land, long term nature of the asset, Government ownership,
illegality of the transaction, applicability of provisions of section 50C of
the Act to the “mere rights on the land” and not the ownership of the
land for building or both. AO needs to examine all aspects of the
issue and make a proper assessment. In view of the above discussion,
AO is directed to grant reasonable opportunity to the assessee at all
6 ITA No.448/PUN/2015 Shivaji Chintaman Jamkar (HUF)
stages of the assessment and take a fresh decision in the matter.
Accordingly, all the grounds raised by the assessee are allowed for
statistical purposes.
In the result, appeal of the assessee is allowed for statistical
purposes.
Order pronounced in the open court on this 05th day of January, 2018.
Sd/- Sd/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) �याियक �याियक सद�य �याियक �याियक सद�य सद�य /JUDICIAL MEMBER लेखा सद�य लेखा लेखा सद�य लेखा सद�य सद�य / ACCOUNTANT MEMBER सद�य
पुणे Pune; �दनांक Dated : 05th January, 2018. सतीश आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत/Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत
अपीलाथ� / The Appellant 2. ��यथ� / The Respondent The CIT(A)-2, Aurangabad 3. 4. CIT-2, Aurangabad िवभागीय %ितिनिध, आयकर अपीलीय अिधकरण, “A Bench” 5. Pune; गाड फाईल / Guard file. 6. आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार आदेशानुसार
स�यािपत �ित //True Copy// Senior Private Secretary //True Copy// आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune