SMT. DELWIN PHILOMINA D'SOUZA,BANGALORE vs. ITO, BANGALORE

PDF · subscribers
ITA 471/BANG/2014Status: DisposedITAT Bangalore31 March 2016AY 2006-075 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(Appeals) did not properly examine the impact of the land litigation on its market value. Therefore, the matter was restored to the AO to refer the issue to the Departmental Valuation Officer (DVO) for ascertaining the correct market value.

What were the facts?

The assessee sold a piece of land for Rs. 36.30 lakhs, but the Assessing Officer (AO) invoked Section 50C and estimated the sale consideration at Rs. 72.60 lakhs. The CIT(Appeals) confirmed this addition. The assessee argued the land was litigated and had lower market value.

What were the issues?

Whether the market value of a litigated property, for the purpose of capital gains, should be determined by considering the litigation's impact, and if so, by what mechanism.

Which sections of the Income-tax Act were involved?

Section 50C,Section 144,Section 147,Section 234A,Section 234B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH : BANGALORE

Before: SHRI SUNIL KUMAR YADAV & SHRI A.K. GARODIA

For Appellant: Smt. Pratibha R., Advocate
For Respondent: Shri Sunil Kumar Agarwala, Jt. CIT(DR)
Hearing: 30.03.2016Pronounced: 31.03.2016

Per Sunil Kumar Yadav, Judicial Member

1.

This appeal is preferred by the assessee against the order dated 15.1.2014 of the CIT(Appeals), LTU, Bangalore inter alia on the following grounds:-

“1. The learned CIT (Appeals) grossly erred in passing the order in the manner he did.

2. The learned CIT (Appeals) ought to have appreciated that the land which was sold by the Appellant for a sale consideration of Rs.36.30 lakhs was a litigated land and hence did not have much marketable value. Accordingly, the estimate of the sale proceeds to be Rs.72.60 lakhs as confirmed by the CIT (Appeals) is opposed to law and is liable to be deleted.

3. The learned CIT (Appeals) ought to have appreciated that the impugned land sold was a litigated land and that the buyer of the land from the Appellant had incurred substantial legal expenses to regularize the litigation, due to which the land fetched the sale consideration of Rs.72.60 lakhs. But for this regularization, it would not have fetched the said sale consideration. Accordingly, the learned CIT (Appeals) ought not to have confirmed the sale consideration of Rs.72.60 lakhs. 4. Without prejudice to the above grounds. the learned CIT (Appeals) ought to have adopted the sale consideration of Rs.36.30 lakhs which was the actual sale consideration duly acknowledged in the absolute sale deed dated 0l.07.2005 by the Appellant. Accordingly, the learned CIT (Appeals) could not challenge the sanctity of the registered document. Consequently, the difference of sale consideration as estimated by the assessing officer and confirmed by the learned CIT (Appeals) is liable to be deleted in full. 5. The learned CIT (Appeals) ought to have deleted the interest charged under Sections 234A and 2348 of the Act. 6. Without prejudice, the estimate of sale consideration as confirmed by the learned CIT (Appeals) is highly arbitrary, unrealistic and the same is liable to be reduced substantially.”

7.

For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed.”

2.

During the course of hearing, the ld. counsel for the assessee has invited our attention to the assessment order with the submission that Assessing Officer has passed the assessment order u/s. 144 r.w.s. 147 of the Act, without affording proper opportunity of being heard to the assessee.

3.

Before the CIT(Appeals), the assessee has contended that the market rate of land sold cannot be adopted by invoking the provisions of section 50C of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] because the land in question was under litigation, but these aspects were not even examined by the CIT(Appeals) and the CIT(A) has confirmed the addition made by the AO. In support of her contention, the ld. counsel for the assessee has invited our attention to the order passed by the Deputy Commissioner, Bangalore Rural District.

4.

The ld. DR, besides placing reliance on the orders of lower authorities, has contended that before the AO the assessee has not raised any objection with regard to invoking the provisions of section 50C of the Act, therefore the AO rightly made the additions having invoked the provisions of section 50C of the Act.

5.

Having carefully examined the order of lower authorities in light of the rival submissions, we find that the AO has framed the assessment after issuing few notices to the assessee and made the addition having invoked the provisions of section 50C of the Act. Before the CIT(Appeals), the assessee has placed evidence with regard to litigation of ownership with respect to the land in question, but this aspect was not examined while ascertaining the market value of the disputed land. Under these circumstances, we are of the view that the right course to ascertain the market value of the land was only to make a reference to the DVO, who can ascertain the market value of the land in light of the litigation in respect of the impugned land. We, therefore, set aside the order of the CIT(Appeals) and restore the matter to the Assessing Officer with a direction to readjudicate the issue of valuation of the land sold by the assessee in order to compute the capital gain by making reference to the DVO, who can examine the market value of the land in light of the litigation made by certain other parties. Needless to mention here that proper opportunity be afforded to the assessee. Accordingly, the appeal of the assessee is disposed of.

6.

In the result, the appeal by the assessee is allowed for statistical purposes.

Pronounced in the open court on this 31st day of March, 2016.

More judgments on Section 50C

All 3,223 judgments and leading authorities on Section 50C →

Recent GST High Court judgments

Search GST case law →