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Income Tax Appellate Tribunal, BENCH ‘B’ KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM & Shri M.Balaganesh, AM ]
ORDER
Per N.V.Vasudevan, JM
This is an appeal by the Assessee directed against the order dated 05.03.2013 of CIT(A)-XVI, Kolkata, relating to AY 2009-10.
The facts and circumstances gave rise to the present appeal by the assessee are as follows :
The Assessee and his brother one Mr. Dilip Kumar Addy, were co-owners of the property at 71/1, Hazra Road, Kokata-700019 (herein after referred to as property). The assessee and his brother had half share each over the property. By a registered sale deed dated 04.03.2009, the property was sold for a consideration of Rs.90 lakhs. The registrar of Assurances valued the property for the purpose of stamp duty and registration at a sum of Rs.2,76,76,138/-. Sec.45 of the Act lays down that any profit or gain arising from the transfer of a capital asset effected in the previous year shall be chargable to income tax under the head “capital gains” and shall be deemed to be the income of the previous year in which the transfer took place. Sec.48 lays down the method of computation of long term capital gain and it reads as follows: Kumar Addy A.Y.2009-10
“Sec.48: The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :— (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto....... As per Sec 50C, where the consideration received or accruing as a result of the transfer of land and/or building is less than the value adopted or assessed or assessable by an authority of the state govt. for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of the consideration received or accruing as a result of such transfer for computing capital gain. The expression “cost of acquisition” has been defined in Sec.55 (2) of the Act. The clause of Sec.55(2) of the Act which is relevant in the present case is clause (b)(i) which reads thus:
“(2) For the purposes of sections 48 and 49, "cost of acquisition",— (b) in relation to any other capital asset,— (i) where the capital asset became the property of the assessee before the 1st day of April, 1981, means the cost of acquisition of the asset to the assessee or the fair market value of the asset as on the 1st day of April, 1981, at the option of the assessee; It can be seen that clause (b)(i) of Sec.55(2)(b) would be attracted only when “the capital asset became the property of the Assessee” before 1st April, 1981. It is not in dispute that the assessee and his brother became owners of the property prior to 01.04.1991 and therefore they were entitled to adopt fair market value of the property as on 01.04.1981 for the purpose of ascertaining the cost of acquisition of the property.
The assessee filed computation of long term capital gain. The fair market value of the property as on 01.04.1981 was estimated at Rs.43,40,400/-. The aforesaid fair market value as on 01.04.1981 was also supported by a report by a registered valuer one Shri N.K.Chakravarty. The computation of long term capital is given by the assessee as follows :-
Particulars Amount Total value of property as at 1/04/1981 determined by Govt. Rs.43,40,400.00 Regd. Valuer (see Page no.25 to36) Indexed Cost –Rs.43,400 x 582/100 Rs.2,52,61,128.00 Sales Value as determined by Stamp Valuation Authority Rs.2,76,76,138.00 Long Term Capital Gain (Rs.2,76,76,138.00-Rs.2,52,61,128.00) Rs.24,15,010.00 Appellant’s share – 50% (Rs.24,15,010.00 x 50%) Rs.12,07,505.00 Less : Investment in 54EC Bonds Rs.40,00,000.00 Taxable Long Term Capital Gain NIL
It can be seen from the computation of capital gain as filed by the Assessee that the Assessee has adopted the full value of consideration received on transfer the value of the property as adopted by the Registrar of Assurances for the purpose of stamp duty and registration charges. The AO however noticed in the case of the other co- owner Shri Dilip Kumar Addy, a reference was made by his AO to DVO and DVO had estimated the fair market value of the property as on 1.04.1999 at Rs.14,56,208/-. The AO adopted the fair market value of the property as on 1.4.1981 at Rs.14,56,208/- as given in the DVO’s report and allowed indexation thereon. The AO computed long term capital gain as follows :-
“The L.T.C.G. on property sale is calculated as under :- Sale price of property : Rs.2.76,76,138/- Cost price as on 1/4/1981 : Rs. 14,56,208/- Indexed cost of property : Rs.14,56,208 x 582 / 100 = 84,75,131 Long Term Capital gain : Rs.1,92,01,007/- Assessee is 50% owner of property Kumar Addy A.Y.2009-10 And his share of L.T.C.G. is : Rs.96,00,504/- Investment in Capital Gain Bond : Rs.40,00,000/- Balance : Rs.56,00,504/-“
Aggrieved by the aforesaid order of AO the assessee preferred appeal before CIT(A). Before CIT(A) the assessee pointed out that the DVO in the very same report has estimated the fair market value of the property as on the date of sale i.e. 04.03.2009 at Rs.1,68,82,444/- . If that value is adopted as full value of consideration received on transfer there would be no capital gain chargeable to tax in the hands of the assessee. The assessee gave the computation of long term capital gain if the sale value as per DVO is adopted as on 04.03.1999 , the date of transfer, as follows :- “Sale price given by the DVO : Rs.1,68,82,444.00 Indexed cost as on 01/04/1981 as per DVO’s Report Rs. 84,75,131.00 (Rs.1456208582/100) Therefore Long Term Capital Gains Rs. 84,07,313.00 (Rs.16882444 – 8475131) Appellant’s share – 50% therein Rs. 42,03,656.00 Less : Investment in Capital Gain Bonds Rs. 40,00,000.00 Hence Net Long Term Capital gains Rs. 2,03,656.00
The assessee relied on the decision of ITAT, C Bench, Kolkata reported in (2012) 17 ITR (Trib.) 431 (Kolkata) in the case of ITO v Gita Roy wherein almost identical matter (the only difference being the AO referred the matter to the DVO as directed by the CIT(Appeals), the Hon’ble Bench dismissed the Department’s appeal and upheld the decision of the CIT(A) directing the AO to accept the DVO’s report as regards the value on the date of sale in place of the Stamp Duty Authority’s value for registration.
CIT(A) however did not accept the aforesaid submissions and he held as follows :-
“I carefully considered the material before me. I found that the appellant filed return in response to notice u/s. 148 of the IT Act showed income form capital Kumar Addy A.Y.2009-10 gain Nil. The appellant gave the calculation of capital gain in said return, wherein value determined by Stamp Valuation Authority was taken by sale value of property. In this way the appellant followed the provision of section 50C( 1) of the Act. The appellant did not dispute stamp authority value, the provision of section 50C(2) also does not apply. The DVO determined the value of property as on 01/04/1981 at Rs.14,56,208/- and indexed cost of property as on 01/04/1981 came to Rs.84,75,131/-. The appellant was owner of 50% of the property.
The argument of the AIR that AO is duty bound that he should accept the sale value of the property which determined by the DVO in his brother's case of the said property. In this case, the appellant in return of income himself shown the sale value of the property of Rs.1,38,38,069/-. Then, the AO rightly taken the value which shown by the appellant in his return of income. So, the argument of the appellant is not tenable.
Considering the finding and facts of the case, I am of the view that the action of the AO is as per law to determine the excess long term capital gain of Rs.56,00,504/-. Therefore, I confirm the addition made by the AO. These grounds are not allowed.”
At the time of hearing of this appeal the leaned counsel for the assessee drew our attention to the decision of the Hon’ble ITAT Kolkata Bench in the case of the property of the assessee and the other co-owner of the assessee Shri Dilip Kumar Addy vide dated 16.09.2015 wherein this Tribunal held that the value as on the date of sale as estimated by the DVO should be taken as full consideration received on transfer for the purpose of computation of long term capital gain. The following observations of the ITAT are as follows :- “7. We have heard the rival submissions and perused the materials available on record. The AO has taken the sale proceeds as recorded by the registrar of property for the purpose of stamp duty without appreciating the valuation done by the DVO. Section 50C reads as under :- “50C (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the “stamp valuation authority”) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) Without prejudice to the provisions of sub-section (1), where – Kumar Addy A.Y.2009-10
(a) the assessee claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer ; (b) the value so adopted or assessed by the stamp valuation authority under sub- section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, The Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section 91) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation – For the purposes of this section , “Valuation Officer” shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.” In the case of Sunil Kumar Agarwal Vs. CIT ITA 221 of 2013 & GA No.3686 of 2013 – High Court of Calcutta, it has been held that “the Valuation by the departmental valuation officer, contemplated under section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the district sub registrar for the purpose of the stamp duty. The legislature has taken care to provide adequate machinery to give fair treatment to the citizen/Tax payer. There is no reason why the machinery provided by the legislature should not be used and benefit thereof should be refused. Even in a case where no such prayer is made by the Ld. Advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law. The assessee has not disputed the valuation of the stamp authority. It is very unfortunate that the AO has worked out the capital gain tax liability including the DVO report which is binding to the assessee. We allow the appeal in favour of the assessee.
From the above fact and legal provision laid down by Hon’ble Jurisdictional High Court in the case of Sunil Kumar Agarwal, supra, we are of the view that the value of the property estimated by DVO as on the date of sale is to be taken as final sale consideration for the purpose of computation of capital gain under section 50C of the Act. Accordingly the AO is directed to take the DVO value for Kumar Addy A.Y.2009-10 the working of capital gain and adjudicate the matter afresh as per the provisions of section 50C. “
In the light of the aforesaid decision of the Tribunal we are of the view that the claim of the assessee made before CIT(A) and the manner of computation of long term capital gain has to be accepted. We hold and direct the AO to accept the said computation in view of the above conclusion that there is no necessity to decide on the correctness of the fair market value as on 01.04.1999 because the fair market value as on 01.04.1999 and also the value of the property as on the date of sale as given by the DVO is being accepted in toto.
In the result the appeal of the assessee is partly allowed.
Order pronounced in the Court on 11.05.2016.
Sd/- Sd/- [M.Balaganesh ] [ N.V.Vasudevan ] Accountant Member Judicial Member Dated : 11.05.2016. [RG PS] Copy of the order forwarded to: 1.Samir Kumar Addy, 97/1B, Hazra Road, Kolkata-700026. 2.I.T.O., Ward-29(3), Kolkata 3. CIT(A)-XVI, Kolkata 4. CIT-X Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata. True Copy By order,