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Income Tax Appellate Tribunal, ‘B’ BENCH
Before: Shri M.Balaganesh, & Shri S.S.Viswanethra Ravi
Date of Hearing : 24-11-2016 Date of Pronouncement : 30-11-2016 ORDER SHRI S.S.Viswanethra Ravi, JM:
This appeal filed by the Assessee is directed against the order dated 12.04.2016 by the Commissioner of Income Tax(Appeals), 2, Kolkata for the assessment year 2008-09.
In this appeal, the assessee has raised the following effective ground of appeal:- 01. That the Learned CIT (Appeals)-2, Kolkata, had erred in law as well as in facts of the case by confirming the adoption of stamp value of Rs.12,76,000/- as full value of consideration u/s. 50C of the Income Tax Act, 1961, while computing long term capital gains, in place of value determined by the DVO, which should have been accepted by the Ld. CIT(Appeals).”
3. The only issue to be decided is as to whether the CIT-A justified in confirming the order of the AO in respect of long term capital gain without considering the value as determined by the DVO u/s. 50C of the Act in the facts and circumstances of the case.
M/s.HMS Manufacture P.Ltd 4. The assessee is a company dealing in the business in trading of Hessian cloths. The assessee filed its return through online declaring business loss at Rs.2,08,259/- claiming long term capital loss at Rs.67,544/-. Under scrutiny, notice u/s. 143(2) and thereafter, u/s. 142(1) were issued. In compliance, the assessee produced books of account and various other details as required under the said notices. The AO observed that the assessee has sold a property, wherein a showroom no. 56A measuring 176 sq.ft situated at building no.16A, Shakespeare Sarani, Kolkata to M/s. Karanjai Developers P.Ltd on 18.07.2007 for a sale consideration of Rs.2,50,000/-. The AO further found that the value of such property determined by the Stamp Valuation Authority at Rs. 12,76,000/- and expressed why such value should not be taken as long term capital gain. In explanation, the assessee submitted that the property located in Bikram Chand Market, which is less visited by the customers and the business therein was not doing well. Basing on the registered deed, the AO computed the long term capital gain at Rs.9,55,046/- deducting the indexed cost of acquisition at Rs.3,17,954/- [ Rs.1,76,00 x 551/305] from the value of Rs.12,76,000/- determined by the Stamp Valuation Authority against the loss as claimed by the assessee in the return.
During the first appellate proceedings before the CIT-A the assessee reiterated same submissions with regard to marketability of such property and also contended that the AO did not consider the valuation of the said property at Rs.8,48,100/- as determined by the District Valuation Officer vide his report dated 04-01-2011 in pursuance of Section 50C(2) of the Act. The assessee has also relied on the order of ITAT, Kolkata in the case of Jalan Chemical Industries P.Ltd Vs. ITO in for the AY 2009-10. The CIT-A held that the decision as relied on by the assessee is not applicable to the case on hand and did not take into consideration such M/s.HMS Manufacture P.Ltd plea of value as determined by the DVO. Accordingly, he confirmed the impugned addition as made by the AO.
Before us the ld.AR submits that the assessee purchased the property at Rs.1,76,000/- on 22-07-1997 and sold the same at Rs.2,50,000/- on 18- 07-2007. He further submits that during the course of assessment proceedings in explanation the assessee raised its objection to the AO in computing long term capital gain in terms of value determined by the Stamp Valuation Authority and urged the AO to refer to the DVO for determination of market value of such property u/s. 50C of the Act. In pursuance of the same, the AO referred the issue to the DVO and without awaiting the same, he computed the assessment by adding the impugned addition in the order passed u/s. 143(3) of the Act on 31-12-2010. The Ld. AR further submits that during first appellate proceedings the same fact was brought to the notice of the CIT-A. The CIT-A without considering the report dt. 04-01- 2011 of the District Valuation Officer confirmed the impugned addition as made by the AO on this issue. The Ld. AR referred to page no.21 of the Paper Book and submitted that the AO referred the issue to the Valuation Officer, Valuation Cell, Kolkata to determine the value of such property. He also referred to page no.22 of the PB and argued that the DVO [District Valuation Officer, Income Tax Department] vide his report dated 04/01/2011 determined the value of such property at Rs. 8,48,100/- as standing on 23.07.2007 and communicated the same to the AO vide his said report dated 04-01-2011 and urged before us to adopt the same as value of said property.
On the contrary, the Ld.DR submits that the AO received such report after passing the assessment order. The said valuation report of the District Valuation Officer was not before the AO for consideration of the same.
Heard rival submissions and perused the material available on record including the details available in the paper book as filed by the assessee
M/s.HMS Manufacture P.Ltd before us. We find that the AO referred the issue to the DVO for determining the market value of said property as evident from page no. 21 of paper book. We also find that the assessment order was passed much prior to the receipt of report dtd. 04-01-2011 of the District Valuation Officer. Admittedly, this report was not before the AO for his consideration as is evident from the order of the CIT-A which has been rightly pointed out by the ld.DR. These facts are not disputed. We find that clause (a) of sub- section (2) of Section 50C provides that the duty casts on the AO to refer the issue to the valuation officer for valuation of capital asset if the assessee claims the value adopted by the stamp valuation authority exceeds fair market value. We also find that the AO did not await such report and passed the assessment order. In absence of such report, the AO made the impugned addition and passed the said assessment order u/s. 143(3) on 31/12/2010, which is not maintainable. In this regard, we may refer to the order of ITAT, Kolkata in the case of Jalan Chemical Industries P.Ltd supra, wherein it has been held:- the value determined by the District Valuation Officer is lower than the value determined by the Stamp Duty Authority, then for the purpose of computing Capital gain, the value determined by the District Valuation officer shall be considered as full value of consideration.” except observing
In view of the same and as we noticed that the report of the DVO[District Valuation Officer] was not before the AO, therefore, we direct the AO to consider the value as determined by the DVO vide his report dated 04/01/2011 and adopt the same for the purpose of calculation of long term capital gain in pursuance of decision in the case of supra. Therefore, in the interest of justice, we remand the issue to the file of the AO to consider the same as mentioned above and to pass an order in accordance with law. The assessee shall be at liberty to file requisite evidences, if any, to substantiate its claim.
M/s.HMS Manufacture P.Ltd 10. In the result, the appeal of the assessee is allowed for statistical purpose as stated above. Order pronounced in the open Court as dictated on 30-11-2016