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Income Tax Appellate Tribunal, Kolkata Bench, KOLKATA
Before: SHRI N. V. VASUDEVAN & SHRI M. BALAGANESH,
ORDER Per M. BALAGANESH, AM
This is an appeal preferred by the Revenue against the order of Commissioner of Income Tax (Appeals) -XIX, Kolkata, (hereinafter referred to as the “Ld. CIT(A)”), dated 27.03.2014, arising out the assessment order of the Assessing Officer (hereinafter referred to as the “Ld. AO”), dt. 30.12.2011, passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), relating to Assessment Year (A.Y.) 2009-10.
The only issue to be decided in this appeal is as to whether the Ld. CIT(A) was justified in deleting the addition made in determination of the fair market value of the property in the facts and circumstances of the case.
The brief facts of this issue is that the Ld. AO observed that the assessee purchase a plot of land for Rs.64,80,700/- which matched with the value adopted by the Stamp Duty Authority of the State Government, during the year under consideration. The ld. AO further observed that the assessee made sales of flats to 7 parties at a price which was less than the value determined by the Stamp Duty Authority. Accordingly, the ld. AO substituted the Stamp Value adopted by the Stamp Duty Authority as the market value of the property and proposed to make a disallowance of Rs.37,97,502/- as tabulated below:-
SERIAL NAME DEED VALUE MARKET VALUE DIFFERENCE (A) (B) [B-A] 1 Deepali Bose & Salil Bose 650000 1114939 464939 2 Bibhas Chandra Mondal 307000 510541 203541 3 Geeta Roy & Debabrata 1050000/- 1441396/- 391396/- Roy 4 Jayanti Paul 1245000 1735461 490461/- 5 Antara Mukherjee 1196000 2165775 969775/- 6 Sankar Chakraborty 1150000 1767590/- 617590/- 7 Subhasish Roy & Shrabani 1183000/- 1842800 659800/- Roy 3797502/-
In effect the Ld. AO adopted the provisions of Section 50C of the Act for the sale of flats which were held as stock in trade by the assessee and made an addition of Rs.37,97,502/-, towards the difference in sale consideration of the said flats. Before the Ld. CIT(A), the assessee contended that the provisions of Section 50C of the Act cannot be made applicable for immovable properties held as stock in trade and that the provisions of Section 43CA of the Act which mandated determination of value as fixed by the Stamp Duty Authority to be the market value for properties held as stock in trade has been brought under the statute only w.e.f. 01.04.2014 and accordingly not applicable for assessment years prior to the same. In this regard, the Ld. CIT(A) placed reliance on the decision of the Hon’ble Madras High Court in the case of CIT vs. Thiruvengadam Investments (P) Ltd. [320 ITR 345] (Madras) and deleted the addition made in the sum of Rs.37,97,502/- by the Ld. AO. Aggrieved the Revenue is in appeal before us on the following grounds:
1. On the facts and under the given circumstances of the case, the Ld. CIT(A) was not justified in deleting the addition of Rs.37,97,502/- classifying it as having been made u/s 50C.
2. The Ld. CIT(A) ought to have appreciated that u/s 143(3), an AO cannot overlook the unreasonably wide variation in the fair market value and transacted value as determined by the Stamp Duty Authority vis-à-vis the assessee’s self-declared rate occurring only at the time of sale by the assessee-firm.
3. Under the facts and circumstances of the case, Ld. CIT(A) was not justified in attesting the assessee’s contention that the referred case law of the Hon’ble Supreme Court as distinguishable while adopting the estimated market value.
4. Ld. CIT(A) was not justified in law in overlooking that at the time of purchase of the property by the assessee, the valuation made by the stamp duty authority tallied with the shown cost of purchase. 5. The Ld. CIT(A) has stepped into perversity to state that the AO had invoked section 50C whereas the AO merely estimated the sales figure in the light of reasonableness. 6. That the appellant craves leave to add, alter or abrogate any ground of appeal.
The Ld. DR argued that the Ld. AO had not specifically invoked the provisions of Section 50C of the Act in the instant case. He argued that out of many methods for determining the fair market value of the property, the Ld. AO had chosen to adopt the value fixed by the Stamp Valuation Authority as in Section 50C, to be the fair market value of the property which were sold by the assessee as stock in trade. In response to this the Ld. AR vehemently supported the order of the Ld. CIT(A) and also argued that the decision of the Hon’ble Supreme Court in the case of K.P. Varghese v. ITO [1981] 131 ITR 597(SC), wherein it was held that the onus is on the Revenue to prove that assessee had indeed received extra consideration over and above what is stated in the registered sale deed. Admittedly, in the instant case, the Revenue had not brought any material on record to prove the same. Hence, it should only be concluded that the Ld. AO had adopted the value fixed by the Stamp Duty Authority as per the provisions of Section 50C of the Act which admittedly cannot be made applicable if the assessee is engaged in real estate business, where properties are held as stock in trade, during the year in appeal, as held by the Hon’ble Madras High Court (Supra).
We have heard the rival submissions. We find lot of force in the arguments advanced by the Ld. AR in this regard and we find that the provisions of Section 50C of the Act are not applicable for the assessee engaged in the business of real estate, where the properties are held as stock in trade. Reliance in this regard has been rightly placed by the Ld. CIT(A) in the decision of the Hon’ble Madras High Court in the case cited (supra). We find that the provisions of Section 43CA of the Act have been introduced in the statute by the Finance Act, 2013 w.e.f. 01.04.2014, being substantive in law, as only perspective in nature and hence cannot be made applicable for the year under appeal. Hence, we do not find any infirmity in the order of the Ld. CIT(A) in this regard. We are not in agreement with the argument advanced by the Ld. DR that the provisions of Section 50C have not been applied by the AO in the instant case. If the consideration fixed by the Stamp Valuation Authority has been adopted as the full value of consideration by the Ld. AO as compared to the value declared in the registered sale deeds, as rightly pointed out by the Ld. AR by placing reliance on the decision of the Hon’ble Supreme Court in the case of K.P. Verghese (supra), the onus would squarely fall on the Revenue to bring on record, evidences to prove that the assessee indeed has received on monies over and above what has been declared in the registered sale deed. Admittedly, there is no material brought on record by the Revenue to prove the same. Hence we are not inclined to accept the argument of the Ld. DR in this regard. 7. In view of the aforesaid findings, we do not find any justifiable reason to interfere with the order of the Ld. CIT(A). Hence, the grounds raised
by the Revenue are dismissed.
8. In the result the appeal of the Revenue is dismissed.
Order pronounced in the Court on 05.04.2017 Sd/- Sd/- [N.V. Vasudevan] [M. Balaganesh] Judicial Member Accountant Member Dated : 05.04.2017 {SC SPS} Copy of the order forwarded to:
1. 1. Appellant/Assessee – I.T.O. Ward 41(2), Kolkata.
2. Respondent – M/s Delta Constructions, 5D Gopal Bose Lane, Kolkata- 700050 3. CIT(A)- Kolkata.
4. CIT – , Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.