KODY MEDICAL ELECTRONICS P LTD.,CHENNAI vs. ACIT, CHENNAI

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

ITA No.1899/Mds/2015 :- 2 -: passed u/s.143(3) r.w.s.263 and 250 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’).

The assessee has raised the following grounds:- 2.

‘’2. The Commissioner (Appeals) erred in fixing the value of the property (Land & Factory Building) at Dr.Vikram Sarabhai Instronics Estate, Thiruvanmiyur sold on 21.09.2005 as Rs.1 ,21 ,75,1111- as against the actual sale consideration of Rs.80,00,000/-.

ITA No.1899/Mds/2015 :- 3 -: has not been complied with thereby violating the requirement of the Act and the principles of natural justice’’.

The Brief facts of the case, the assessee is in the business of 3. trading of medical equipments and filed Return of income on 30.11.2006 admitting total income of �.31.89,950/- and return was processed u/s.143(1) of the Act and the case was selected for scrutiny and assessment was completed u/s.143(3) of the Act vide order dated 18.12.2008 accepting long term capital gains admitted by the assessee in the revised computation of income. The ld. Commissioner of Income Tax found the order passed u/s.143(3) of the Act is erroneous and prejudicial to the interest of the Revenue as the long term capital gains was admitted by the assessee based on sale consideration of �.80,00,000/-. The ld. Commissioner of Income Tax found that the long term capital gains on sale of land measuring 8535 sq.ft in Vikram Sarabai Instronics Estate, Thiruvanmiyur based on the adopted rate of �.879/- per sq.ft, wereas as per the stamp duty and registration charges paid �.10,95,760/- based on guide line of �1,21,75,111/-.

The ld. Commissioner of Income Tax considered the facts and passed Revision order u/s.263 of the Act in C.No.218(46)/CIT-I/263/2010-11, dt. 16.03.2011 by set asiding the assessment u/sec.143(3) dt.

18.12.2008 and directed the Assessing Officer to refer for the valuation of capital asset and to make fresh assessment in accordance

ITA No.1899/Mds/2015 :- 4 -: with provisions of Sec. 50C of the Act. The ld. Assessing Officer as

per the directions of ld. Commissioner of Income Tax referred to the valuation officer for ascertaining the value. The valuation officer vide order in F.No.VO II/MDS/CG(04)/2010-11, dated 29.04.2011 estimated fair market value of the property at �1,22,13,000/- as under:-

Value of Building : �. 15,09,881/- Value of land (835 * 1254): �. 1,07,02,890/- ------------------------

�. 1,22,13,000/- ------------------------------------------------------========== The assessee filed submissions and objections for adopting the value.

The Assessing Officer completed assessment u/s.143(3) r.w.s. 263 of the Act based on value determined by the valuation officer were the value of land was estimated at �1,07,02,890/- being �1,254/- per sq.ft adjusted value in comparison with value �879/- sq.ft offered by the assessee. Aggrieved by the order, the assessee filed an appeal before the CIT(A).

In the appellate proceedings, the ld. Authorised 4.

Representative argued the grounds of appeal and filed written submissions. Further gave clarifications on the adoption of stamp duty value supported by elaborate submissions by letters dated

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06.02.2014 and 17.03.2015 on disputed issue. The ld. CIT(A) considered the submissions in details and observed in paras 4.1.3 to 4.1.6 of his order and dismissed the appeal as under:-

‘’4.1.3. I have considered the appellant's submissions in detail. The appellant's contention now is that it was not aware under what circumstances the buyer had paid additional stamp duty of 3,75,600/- and thereby rendering the consideration for the purposes of section 50C of the Income Tax Act at Rs. 1,21,75,111/-. The Appellant filed an application before the Stamp Duty Authorities under RTI Act on 28-10-2013, eight years after the transaction took place, and the Authorities replied that the records asked for are not available as the application was filed beyond the retention period of the documents. No purpose is served by summoning the Sub-Registrar or other officials at this juncture, as requested by the appellant, since the documents on which the valuation of property was based are no longer available with the concerned authorities. 4.1.4. The facts and circumstances of this case are more or less similar to those in the case of Ambattur Clothing Co. Ltd. (2010) 326 ITR 0245 (Mad), where the jurisdictional High Court had an occasion to decide this issue. In this case the Sub- Registrar refused to release the documents except on payment of higher stamp duty on enhanced valuation. Since the buyers wanted the title document to be released at the earliest, they chose to pay the stamp duty without contesting the same and without consulting the assessee. The explanation offered by the assessee that, as seller, it did not have any locus standi in the proceedings and hence the assessee should not be made to suffer by enhancing the assessment was rejected by the Assessing Officer. In its judgement, the Hon'ble High Court of Madras observed as under:

The explanation offered by the assessee before the assessing authority in respect of the deemed value of the two properties was that' while registering, the Sub-Registrar refused to release the documents except on payment of higher stamp duty on enhanced valuation. Since the buyers wanted the title document to be released at the earliest, they have chosen to pay the stamp duty without contesting the same and without consulting explanation offered by the assessee was rejected on the premise that ITA No.1899/Mds/2015 :- 6 -: s. SOC of the Act makes it obligatory on the part of the AO to treat the value adopted by the stamp valuation authority as the deemed sale consideration received/ accrued as a result of transfer.

4.1.5. Therefore, the Assessing Officer has rightly brought the enhanced value of consideration to tax. Moreover, as observed by the Hon 'ble Allahabad High Court in the case of Commissioner of Income Tax Vs. Dr. Indra Swaroop Bhatnagar (2012) 349 ITR 0210 (All) the report of the DVO is binding on the Assessing Authorities once a reference is made u/s 50C of the Income Tax Act. This is a case where appellant requested for reference to the DVO in the course of proceeding u/ s.263 of the LT. Act. 4.1.6. However, sub-section 3 of Section 50C of the Income Tax Act says that in case the value ascertained by the DVO under sub-section 2 exceeds the value adopted by the Stamp Valuation Authority, the value so adopted, will be taken as the full value of consideration received or accruing as a result of the transfer. Therefore the Assessing Officer is directed to adopt the figure of Rs.1,21,75,111/- in place of the value of ₹1,22,13,000/- estimated as the consideration accruing and recalculate the income of the appellant. The appellant's plea on this ground is dismissed’’ Aggrieved by the order, the assessee assailed an appeal before Tribunal.

Before us, the ld. AR of the assessee reiterated the 5. submissions of assessment, appellate proceedings and valuation cell.

The ld. CIT(A) erred in fixing the value of the property at �.1,21,75,111/- as against original consideration of �.80,00,000/-. The ld. CIT(A)relied on the estimation of the valuation officer as per section 50C(2) of the Act and reference of Wealth Tax Act 1957 and ITA No.1899/Mds/2015 :- 7 -: overlooked the objections in valuation of the asset and accepted land rate estimated by the valuation officer contrary to the sale value as

per Sub-Registrar office records. Further there is gross violation of natural justice in appellate proceedings as the assessee requested valuation officer to forward the CD furnished by the Sub-Registrar office but ld. Commissioner of Income Tax (Appeals) passed order without considering the data in the CD and confirmed the value adopted u/sec. 50C of the Act. The ld. Authorised Representative further submitted that the valuation rate adopted by the assessee being �.879/- per sq.ft for the land, wereas ld. Assessing officer based on the valuation report adopted the land value �.1,254/- per sq.ft and assessed the income. The ld. Commissioner of Income Tax has ignored the grounds and information of the registration department in letter dated 24.02.2011, were the guideline value fixed for Vikran Sarabai Institute Estate in Kottivakkam Village, Thiruvanmiyur for the period 1.04.2003 to 31.07.2007 is �.516/- per sq.ft and the value adopted by the assessee �879/- per sq.ft is higher in comparison with the Registration value applicable to the current assessment year and pleaded to allow the appeal of the assessee.

Contra, the ld. Departmental Representative relied on the 6. orders of the lower authorities and vehemently opposed the grounds.

ITA No.1899/Mds/2015 :- 8 -:

We heard the rival submissions, perused the material on 7. record and judicial decision cited. The only issue in dispute being adoption of land rate for the purpose of valuation u/s.50C of the Act.

The assessee has sold the property and offered long term capital gains of �.41,52,340/- for 8535 sq.ft area situated in Vikram Sarabai Instronics Estate, Thirumanmiyur by adopting �.879/- per sq.ft as sale consideration. But on perusal of the sale deed, the registration charges are paid �.10,95,760/- being 9% of market value adopted by the Sub-Registrar paid by the purchaser. Subsequent to the revision proceedings the Assessing Officer referred the matter to the valuation cell and adopted �.1,22,13,000/- as value of the property including land rate of �.1,254/- per sq.ft and completed assessment applying the provisions u/s.50C of the Act. The facts being the matter was referred to the valuation cell and ld. Commissioner of Income Tax depended on the value adopted by the Sub-Registrar office and directed the Assessing Officer to adopt the value as per provisions of stamp valuations. In the appellate proceedings, the assessee has requested the ld. Commissioner of Income Tax (Appeals) to call for the CD of SRO for valuation. The ld. Authorised Representative drew our attention to the letter dated 08.02.2014 filed with the Commissioner of ITA No.1899/Mds/2015 :- 9 -:

Income Tax (Appeals) requesting to call for the CD for adjudicating the appeal. Further to consider valuation cell letter dt. 10.03.2005 and letter of Registration Department, Sub-Registrar, Adayar dt 24.02.2011 referring guideline value adopted in respect of Vikram Sarabai Instronics Estate, Thirumanmiyur alongwith CD. The guideline value adopted by SRO for the period from 01.04.2003 to 31.07.2007 being �.516/- per sq.ft and present assessment year falls within the above period and there is an increase in guideline from 01.08.2007 being �.2,400/- per sq.ft. The ld. Counsel substantiated the arguments with the letters addressed to the valuation cell, Sub- Registrar, and objections filed with the valuation officer. The ld. Commissioner of Income Tax has not provided opportunity to the assessee inspite of written request furnished in the appellate proceedings. So, considering the apparent facts circumstances and valuation rates adopted by Sub-Registrar and the assessee, we are of the opinion that assessee should be provided with one more opportunity based on the guideline value, valuation report and valuation under Wealth Tax Act and to consider the contents of CD as requested by the assessee in adjudicating the appeal. Therefore, we set aside the order of Commissioner of Income Tax (Appeals) and remit the entire disputed issue to the Commissioner of Income Tax

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(Appeals) to pass the order afresh based on the above findings and provide adequate opportunity of being heard to the assessee.

In the result, the appeal of the assessee is partly allowed for 8. statistical purpose.

Order pronounced on Tuesday, the 19th day of April, 2016, at Chennai.