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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
(A.Y:2010-11) Asst. Commissioner of Income Tax, Shri Mohd Iqbal Abdul Salam Khan., Circle-17(3), Room No.604, 6 th ITT Bhatti. Ittalian Compound, Floor, Piramal Chambers, Parel, Vs. G.M. Link Road, Dr. Ambedkar Mumbai-400012 Chowk, Goregaon, Mumbai-400063 Appellant .. Respondent .. Shri. M.S. Mathuria, AR Assessee by Revenue by .. Shri. Suman Kumar, DR .. Date of hearing 16-01-2017 Date of pronouncement .. 17-02-2017 O R D E R PER MAHAVIR SINGH, JM:
These two appeals one by the assessee and another by Revenue are arising out of the same order of CIT (A)-29, Mumbai in appeal No. CIT (A)-29/RG-17/90/12-13 dated 23-09-2013. The Assessment was framed by ACIT Circle-17(3), Mumbai for the A.Y. 2010-11 vide order dated 31-01-2013 u/s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
At the outset, it is seen that in Revenue’s appeal is a law tax effect and the relief allowed by CIT(A) on account of deletion of addition of income from house property is only Rs.6,50,000/- and the tax on this will beat Rs. 2,,08,000/-. The net tax demand will be Rs.2,08,000/-. Hence, net tax effect in this appeal of revenue on the disputed additions made by AO and deleted by CIT (A), is less than Rs. 10 lacs.
During the course of hearing before us, the learned Counsel for the assessee, pointed out that in this case, the net tax demand is Rs.2,08,000/- and thus, the tax effect in this appeal is below Rs.10.00 lacs. The learned Counsel for the assessee further submitted that in view of the CBDT Circular No.21/2015, dated 10.12.2015 brought out by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, the appeal was not maintainable and be dismissed. The learned Sr. DR also agreed to the facts stated by the learned Counsel for the assessee but could not point out whether this case falls under any of the exception provided in the Circular. 4. We have heard the rival submissions and perused the material on record. We find from the records before us that the tax involved in the disputed issue is below Rs.10 lacs and therefore, in view of the circular No. 21/2015 dated 10th December, 2015 no appeal should be filed by the Revenue before the Tribunal which has tax effect of Rs. 10.00 lacs or less and this circular is also applicable retrospectively to all pending appeals. The relevant extract the said CBDT Circular (Supra) is as under: - “This instruction will apply retrospectively to pending appeals and appeals to be filed henceforth in High Courts/Tribunals. Pending appeals below the specified tax limits in para 3 above may be withdrawn/not pressed. Appeals before the Supreme Court will be governed by the instructions on this subject, operative at the time when such appeal was filed.” 5. Considering the above, the appeal filed by the Revenue, is therefore, dismissed. 6. Coming to assessee’s appeal in for the A.Y. 2010- 11, the first issue in this appeal of assessee is against the order of CIT(A) sustaining the action of the AO in determining the short term capital gain determining by the AO on sale of residential flat instead of determining of long term capital gains. For this assessee has raised following ground No.2: -
“2. On the facts and in law, learned CIT(A) has erred in sustaining determination of “Short Term Capital Gain” at Rs. 53,17,385/- as determined by the AO on sale of residential flat instead of determining of “Long Term Capital Gains.”
Briefly stated facts are that the assessee has purchased one Flat in Orchid by way of agreement on 28-09-2009 for a sum of Rs. 56,00,000/- and sold the same on 31-08-2009 for a sum of Rs. 61,39,560/-. According to AO, the assessee has recorded the sale consideration as on 31-08-2009 of Orchid Flat at Rs. 61,39,560/- as against the same stamp duty value of Orchid as on 28-01-2009 is Rs. 1,04,56,387/- as per registered documents of purchase. According to AO, the assessee has purchased this Flat on 28-01-2009 and sold the same on 31-08-2009, the gain arising out of the same is short term capital gain and accordingly he computed the short term capital gain at Rs. 53,17,385/- by working out the same as under: -
“5.2.7 The submission made by the assess4e have been considered vis-a-vis facts of the case and the same are not acceptable. Firstly, the revision of co, of purchase has not been done by filing revised return. Therefore, claim of enhanced purchase cost is not tenable. Secondly provisions of sec. 50C are applicable to seller of the property and not the purchaser of the property. Therefore, claim of the assessee that stamp duty valuation of the property at the time of purchase be adopted as purchase value of the Orchid Tower flat is not tenable and hence rejected. In view of these discussions, the short term capital gains is worked out as under:
Sate consideration Rs.1,04,56,800/- (value as per stamp duty valuation) - Les: purchase cost as per the return of income Rs. 51,39,415/- Short term capital gains - Rs. 53,17,385/-
Therefore, short term capital gains of R. 53,17,385/- is added to the total income of the assessee. Penalty proceedings u/s. 271(1)(c) are separately initiated for furnishing inaccurate particulars of income”
Aggrieved assessee preferred appeal before CIT(A), who also confirmed the action of AO and he determined the short term capital gain at Rs. 61,39,560/-. Aggrieved, now assessee is in second appeal before Tribunal.
We have heard the rival contentions and gone through the facts of the case. We find that the facts of the case are that the assessee entered into agreement with the builder Neelkamal Realtors & Erectors (I) Pvt. Ltd for purchase of residential Flat No.3202, 32nd Floor, ‘A’ Wing in the proposed and under consideration building known as ‘Orchid Tower’ for which assessee paid a total consideration of Rs. 56,00,000/-as under: -: -
“[A] Payment made by the Appellant
Date Amount
04.06.2005 10,00,000 05.12.2005 6,00,000 23.02.2006 5,00,000 13.06.2006 2,00,000 23,00,000 [B] Payment made by the father of the Appellant
Date Amount
5.12.2005 16,00,000 07.02.2006 10,00,000 23.02.2006 5,00,000 16.06.2006” 2,00,000 33,00,000
The builder issued an allotment letter No. 48/OT/3202/A/06 dated 04-12-2006, the copy of which is enclosed in the assessee’s paper book. After consideration and occupation certificate from the appropriate authorities, the builder Neelkamal Realtors & Erectors (I) Pvt. Ltd., finally entered into agreement vide letter dated 28- 01-2009, which was registered with the registrar of stamp duty vide registration No. BBE-3/746/2009 and paid stamp duty of Rs. 5,07,600/- along with registration fee of Rs. 31,960/-. The assessee enclosed this registered agreement in his paper book. The Page 4 of 8 assessee paid a total consideration including stamp duty and registration charges i.e. the cost of acquisition at Rs. 61,39,560/-. Although, while filing return of income the assessee shown less cost of acquisition of this flat at Rs. 51,39,415/-, which was revised by filing a revised return disclosing the cost of acquisition at Rs. 61,39,560/-. The assessee sold this residential flat no. 3202, 32nd floor, A Wing of Orchid tower to Mrs. Tasneembai Abbasbhai Yamni and Mr. Abbasbhai Shaikh Ebrahim Yamini for a total consideration recorded in the sale deed at Rs. 61,39,560/- vide sale deed dated 28-08-2009. The sale deed was registered vide No. BBE-3/7446/2009 and copy of the registered sale deed is enclosed in assessee’s paper book. The assessee disclosed long term capital gain on sale of this residential flat No.3202 in Orchid tower for the reason that the assessee acquired right in this residential flat by paying total consideration of Rs. 56,00,000/- on or before 16-06-2006 and the same was sold on 28-08-2009. It means that this flat was retained by assessee for more than 36 months and this is a long term capital asset. In our view, AO should have assessed this as long term capital gain after verifying the fact of cost of acquisition and sale consideration. The AO is directed accordingly. The issue is restored back to the file of the AO but for limited purpose of verification only.
The next issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the AO in taking the full value consideration as assessed by stamp valuation authority and AO adopted the same by invoking the provision of Section 50C of the Act. For this assessee has raised following ground No.1: -
“1. On the facts and in law as well as in the circumstances of the Appellant’s case, the learned CIT(A) has erred in sustaining sale value of residential flat at 1,04,56,800/- as determined by the AO instead of actual sale value of Rs.61,39,560/-”
While adjudicating the issue of assessment of capital gain whether the same is long term capital gain or short term capital gain, we have discussed the facts of the case which are undisputed. The only disputed points in this issue is that the assessee has recorded the sale consideration of this flat No. 3202, 32nd floor, A Wing, Orchid tower on 28-08-2009 at Rs. 61,39,560/-. But for the purpose of stamp duty valuation, the market value of property has been determined by stamp value authorities at Rs. Page 5 of 8 1,04,56,800/-. The AO adopted the same and CIT(A) confirmed the same by observing in Para 26 as under: -
“26. The above provisions are applicable in the case of the seller of the property. The appellant is the seller of the property and sold the same on 28/08/2009 and as per sale deed, he received a consideration of Rs. 61,39,560/-. For the purposes of the stamp Duty valuation, the market value of the property has been determined at Rs.1,04,56,800/- by the stamp valuation authorities. The provisions of section 500 provides for Levy of capital gains tax on immovable property, not on the basis of actual consideration for transfer of the property but on the basis of the value of the property assessed or adopted by the stamp duty authority for the purpose of registration of the conveyance deed. The AO had put the assessee on guard regarding the application of the provisions of section 500 vide letter dated 21/01/2013 and the charging the capital gains accordingly. if the appellant had any objection to the application of the provisions of section 500, he should have asked the AO to refer the matter of the valuation of the property to the Valuation officer as per the provisions of section 50 C(2). But the appellant did not take recourse to this remedy available with him to put forward his point of view. Therefore, in my opinion, the action of the AO taking the value of the property as per the market value of the property determined by the stamp valuation authorities in accordance with the provisions of section 500, in is order.”
Now before us, the only issue raised by the assessee is that while registering the above sale deed dated 28-08-2009 stamp valuation authority, Maharashtra State had charged only Rs. 1,00,000/- as stamp duty and no other valuation was assessed under the applicable low. For this learned Counsel for the assessee drew our attention to the Maharashtra Stamp Act section 5 clause g-a (ii) which reads as under: -
“(ii) if relating to the purchase of one or more units in any scheme or project by a person from a developer: provided that, on conveyance of property by the person, under an agreement udner this sub-clause, to the subsequent purchaser, the duty chargeable for each unit under this sub- Page 6 of 8 clause shall be adjusted against the duty chargeable under Article 25 (conveyance) after keeping the balance of one hundred rupees, if such transfer or assignment is made [within a period of one year] from the date of the agreement. If one adjustment, no duty is required to be paid, then the minimum duty for the conveyance shall be rupees one hundred.
Explanation- For the purposes of this sub-clause, the unit shall include a flat, apartment, tenant, block or any other unit by whatever name called, as approved by the Competent Authority in the building plan.”
The learned Counsel stated that once as per applicable law of Stamp Duty Valuation Authority has charged only Rs. 1,00,000/- as stamp duty, the property cannot be valued more than that.
We have considered the issue and gone through the facts and circumstances of the case and find that the provision of section 50C of the Act is very clear, even where assessable value is to be determined the authority has to find out the fair market value and in the present case the stamp valuation authority has determined the value at Rs. 1,04,56,387 as per the registered document and as per this agreement the stamp duty charged is Rs.4, 04,900/- along with the documents which is recorded on the sale agreement. According to us, the AO rightly invoking the provision of section 50C of the Act and CIT(A) also confirmed the same. We find no infirmity in this record and hence the same is confirmed.
In the result, the appeal of assessee is partly allowed and the appeal of Revenue is dismissed.
Order pronounced in the open court on 17-02-2017.