INDORE PARASPAR SAHAKARI GRAH NIRMAN SANSTHA SAMITI,INDORE vs. ACIT CIRCLE 2(1), INDORE

This appeal by assessee is directed against the order dated 28.06.2023 of the Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi for A.Y.2009-10. The assesse has raised following grounds of appeal:

“1.The order of the learned Commissioner of Income Tax (Appeal) is based on hypothetical presumption, illegal, bad in law, unjustified and is beyond the facts and circumstances of the case. 2. The learned commissioner of income tax (Appeal)

ITANo.322/Ind/2023 Indore Paraspar Sahkari Grih Nirman Sanstha Samiti has erred in confirming market value of the property considered by the learned ACIT 2(1), since the property under appeal is a restricted property having restricted sale, same is decided after taking into account certain characteristics. Usage of the aforementioned leased property is restricted solely to the construction of a community hall, with a clear emphasis on its utilization for educational purposes.This indicates that any construction or usage of the property should align with the goal of creating a space that supports educational initiatives within the community. In the recent provision for valuation of various plots issued by Chairman Central Board of Evaluation and Inspector General Registration Bhopal, Madhya Pradesh. As per the provision "Plots Reserved for Educational or Health Units (School/College/Hospital/Nursing Home): The valuation of plots that are specifically reserved for educational or health units will be accepted at 60 percent of the residential plot rate. This implies that these plots will be assessed at a rate that is 60 percent of the value assigned to residential plots within the same layout. The oxford dictionary defines market value as "The Amount for Which Something Can Be are not available in the captioned property in view of the fact that the mentioned property is not freely marketable, it has number of restrictions on sale and its use, hence the concept of market value is not applicable in the instant case, this fact was overlooked by the assessing authority. 3. the Ld. commissioner of income tax (Appeal) has erred in considering the assessment of total income of the assessee with addition of market value as per CGL guidelines of the property, even without waiting of the DVOS report for aforesaid property. Hence the case requires natural justice of law.

4. The appellant craves leave to add, to amend, to modify or alter any of the grounds of appeal

as and when necessary.”

2. The solitary issue arises in this appeal of the assessee is whether the CIT(A) has erred in confirming the addition made by the AO u/s 50C of the Act by taking full value consideration as per ITANo.322/Ind/2023 Indore Paraspar Sahkari Grih Nirman Sanstha Samiti Stamp Duty Valuation. In ground no.3 the assesse has specifically raised the issue regarding the AO has made the addition on the basis of market value as per collector’s guidelines of the property without waiting the report of the DVO.

3.1 The Next contention of the Ld. Counsel is that since it is a leasehold property and the transfer was under the supervision of the competent authority in the Cooperative Society Department of Government of MP and therefore, the consideration which was duly approved by the authorities as well as the transfer after the permission taken from the IDA cannot be held as suppressed or understated. In support of her contention she has relied upon the decision of Ahmedabad Benches of the Tribunal in case of DCIT vs. Saifee Jubiee High School & Madressa Yusufiyan Society 91 taxmann.com 509 as well as the judgment of Hon’ble Bombay High Court in case of Virendra vs. Appropriate Authority & Ors 327 ITR 185. Thus, the Ld. Counsel for the assesse has submitted that the addition sustained by the CIT(A) is not justified and the same may be deleted.

ITANo.322/Ind/2023 Indore Paraspar Sahkari Grih Nirman Sanstha Samiti 4. On the other hand, Ld. DR has submitted that the objections raised by the assessee before the AO are restricted only for adopting fair market value and not on the applicability of section 50C of the Act. He has referred to the para 6.2.2 of the impugned order of CIT(A) and submitted that the CIT(A) has duly considered the contention raised by the assesse and held that once the capital asset being land or building or both is transferred and consideration received is less than the value adopted by any authority of State Government(Stamp Valuation Authority) the provisions of section 50C are applicable. He has relied upon the impugned orders of the authorities below.

“3. First of all, as pointed out, the show-cause notice dated25-3-1994 is vague. There is no material including any sale instance referred therein. No copy of any document relating to the sale instance, even if any, was furnished to the petitioner along with the notice and/or at any time whatsoever. No justification and/or details provided to purchase the property in question. This according to us, is a gross breach of principle of natural justice as no adequate opportunity to meet the case and to respond to the action as proposed to be taken by the authority was given. Such vague show-cause notice deprives the parties to oppose and to raise appropriate defence to the proposed action as there was not a tentative or prima facie view of the value of the property referred therein. There is no material whatsoever to justify that the transaction was undervalued and the basis for the conclusion which was arrived at. [Vide Appropriate Authority of Income Tax Vs. Jagdish Electricians India P. Ltd. and Others, , Sona Builders v. Union of India and Ors. (2001) 10 SCC 280 , Mrs. Nirmal Laxminarayan Grover Vs. Appropriate Authority and Others, , Shreyas Builders and Another and Laxman Ganesh Tulshibaughwala and Others Vs. M.D. Kodnani and Others, , Jagdish Electronics (India) Pvt. Ltd. and Another Vs. Appropriate Authority, Income Tax and Others, , Smt. Pratibha Sheth and Others Vs. Appropriate Authority and Another, , Jai Nadershah Karani and Another Vs. C.M.

ITANo.322/Ind/2023 Indore Paraspar Sahkari Grih Nirman Sanstha Samiti Betgeri, Commissioner of Income Tax and Others, . In all the above cases, such show-cause notices and actions arising out of the same including orders were quashed and set aside for the similar reasons.

5. Importantly, respondent No. 2 after complying with all the formalities being a trust and property being a trust property, as required under the BPT Act, based upon the proper valuation of the property considered and decided and sanctioned by the competent authority just cannot be overlooked without any contra material to justify to challenge the said valuation. In a case like this, where the sanction is granted by the authority under the BPT Act. In Om Shri Jigar Association Vs. Union of India and Others, a Bench of Gujarat High Court considering similar provisions of Income Tax Act, as well as BPT Act has observed as under:

ITANo.322/Ind/2023 Indore Paraspar Sahkari Grih Nirman Sanstha Samiti In the light of the aforesaid facts, it is apparent that there was no reason for the Appropriate Authority to resort to the provisions of Chapter XX-C of the Income Tax Act. It would be difficult to arrive at a conclusion that there is significant undervaluation of property to the extent of 15 per cent or more in the agreement of sale as evidenced by the apparent consideration being lower than the fair market value by 15 per cent or more. Further, the property was sold after inviting offers from the public at large by giving advertisement in the newspaper and that too after proper verification by the statutory authority under the Bombay Public Trusts Act. Even after executing the agreement to sell, objections are invited as provided under Rule 24. Hence, in such types of cases, even if some lower amount is received, it would not mean that power to purchase the said property u/s 269UD of the Income Tax Act can be exercised by the authorities under Chapter XX-C as it would be difficult to draw a presumption that there was an attempt to evade tax. This is made abundantly clear by the Supreme Court in the case of C.B. Gautam Vs. Union of India and Others,” 5.1 Similarly Ahmedabad Benches of the Tribunal in case of DCIT vs. Saifee Jubiee High School & Madrass Yusufiyan Society (supra) has considered an identical issue in para 4 as under:

“4. Learned Departmental Representative vehemently contends that the CIT(A) has violated the provision contained in Rule 46A of the Income Tax Rules in admitting assessee's additional evidence in the nature of its registered High School & Madressa Yusufiyan Society] A.Y. 2010-11 -4- valuer's report that the above capital assets' fair market value was Rs.12.4lacs only. His case is that the CIT(A) did not issue any notice to the Assessing Officer for factual verification of the said details. We find no merit in the instant argument. Page 11 of the paper book indicates that the Charity Commissioner had passed his order as per the provisions of the Bombay Trust Act and Rules (as applicable in Gujarat state) approving the impugned sale at a price of Rs.12.50lacs which ultimately culminated in the sale deed. There can hardly be any quarrel that such an approval involves a long drawn procedure of public notice inviting relevant bids. The Revenue fails to dispute that the assessee Trust is bound by such an approval order passed by the statutory authority. We further find that hon'ble jurisdictional high court's judgment in Om Shri Jigar Association Vs. Union of India (1994) 209 ITR 608 (Guj) as followed in (2010) 327 ITR 185 (Bombay) Virendra vs. appropriate authority & Ors. holds that there is no inference of understatement of consideration in such a case involving an approval accorded by the Charity Commissioner under the Bombay Trusts Act. Mr. Kabra seeks to distinguish the same by pleading that the said case law pertains to the proceedings u/s.269UD of the Act instead ITANo.322/Ind/2023 Indore Paraspar Sahkari Grih Nirman Sanstha Samiti of Section 50C of the Act. We observe that this distinction fails to rebut the fact that the above hon'ble high courts have considered the relevant provisions enshrined in Bombay Trust Law vis-à-vis understatement of sale considerations of the relevant capital assets therein. We conclude in this factual backdrop that whatever sale price Charity Commissioner had approved had to be followed in assesse's impugned sale deed. Couple with this, the lower appellate authority has already observed that there are various restrictions on usage of the capital asset. All this findings have gone uncontroverted from Revenue side. We thus see no reason to accept Revenue's sole substantive ground. The same is therefore rejected. So is the outcome of its appeal ITA No. 2301/Ahd/2014.” 5.2 Thus, by taking into consideration the facts that the transfer of capital asset was in pursuant to the order of Charity Commissioner as per the provisions of Bombay Trust Act and Rules the Ahmedabad Benches has observed that there can hardly be any quarrel that such an approval involves a long drawn procedure of public notice inviting relevant bids and the assessee trust was bound by such approval order passed by the statutory authority. The Ahmedabad Benches of the Tribunal has followed the judgment of Hon’ble Gujarat High Court as well as judgment of Hon’ble Bombay High Court in case of Virendra vs. Appropriate Authority and Ors. (supra). Accordingly following the judgment of Hon’ble Bombay High Court in case of Virendra vs. Appropriate Authority and Ors. (supra) as well as the order of the Ahmedabad Benches of the Tribunal in case of DCIT vs. Saifee Jubiee High School & Madrass Yusufiyan Society (supra). We hold that the addition sustained by the CIT(A) is not justified in the peculiar facts and circumstances of the case when the transfer of capital asset is took place as per approval and under the supervision of the statutory authorities and after due process of inviting the public ITANo.322/Ind/2023 Indore Paraspar Sahkari Grih Nirman Sanstha Samiti objections in respect of the said transactions. Accordingly the addition is deleted.

Order pronounced in the open court on 18.06.2024.