DCIT, CHENNAI vs. GWL PROPERTIES LIMITED, CHENNAI

Both assessee and Revenue have filed the appeals against the respective orders of the Commissioner of Income Tax (Appeals) for assessment year 2005-06. Since both are for the same assessment year, we heard both the appeals together and disposing of by this common order.

First, let’s take assessee’s appeal in I.T.A. No.409/Mds/2013.

Shri Manuel Thomas, the Ld. representative for the assessee, submitted that the assessee has sold two plots at Maraimalai Nagar, Kanchipuram District during the assessment year under consideration. According to the Ld. representative, the property was sold for `5,58,25,000/-. However, the Sub-Registrar has valued the property at much higher amount for the purpose of stamp duty. The assessee objected to the valuation made by the registering authority. The assessee has requested the Assessing Officer to refer the matter to the Valuation Officer. However, the Assessing Officer ignored the request of the assessee and completed the assessment by taking the value adopted by the 50C of the Income-tax Act, 1961 (in short 'the Act'), the Ld. representative submitted that when the value adopted by the registering authority is higher than the fair market value, the matter ought to have been referred to the Valuation Officer. In this case, according to the Ld. representative, it was not referred to the Valuation Officer. Therefore, the Ld. representative submitted that unless and until the matter is referred to the Valuation Officer, the assessing authority cannot take the valuation made by the registering authority for the purpose of assessment. The Ld. representative placed reliance on the judgment of Madras High Court in the case of Commissioner of Wealth-tax v. Prasad Productions (P) Ltd. (259 ITR 88).

On the contrary, Dr. S. Moharana, the Ld. Departmental Representative, submitted that the assessee has not raised any objection before the Assessing Officer with regard to adoption of the value taken by the Sub-Registrar for registration of property.

We have considered the rival submissions on either side and perused the relevant material on record. It is not in dispute that the assessee had sold two plots at Maraimalai Nagar, Kanchipuram District for a sale consideration of `5,58,25,000/-. However, the Sub-Registrar, for the purpose of registration, has taken the fair market value at `9,73,58,800/- and collected the stamp duty accordingly. Now the assessee claims that in view of Section 50C of the Act, when the fair market value is less than the registration value adopted by the registering authority, the matter has to be referred to the Valuation Officer to determine the fair market value.

We have carefully gone through the provisions of Section 50C of the Act. When the fair market value is less than the value adopted by the registering authority, Section 50C of the Act clearly says that the matter has to be referred to the Valuation Officer to determine the fair market value. In this case, both the authorities below have not referred the matter to the Valuation Officer. When the assessee shows the sale consideration at `5,58,25,000/- in the object to the value adopted by the Assessing Officer at `9,73,58,800/-. In order to avoid dispute with registering authority and for early registration of the document, stamp duty might have been paid for the value determined by the registering authority.

The next ground of appeal is with regard to allowability of TDS to the extent of `3,83,236/-.

Shri Manuel Thomas, the Ld. representative for the assessee, submitted that the assessee has filed five TDS submitted that the same was not claimed in the return of income.

On the contrary, Dr. S. Moharana, the Ld. D.R. submitted that the assessee had not filed the TDS certificates along with return of income and no certificate was filed before the CIT(Appeals). Therefore, it was not considered by the Assessing Officer and the CIT(Appeals) also has not considered the same.

We have considered the rival submissions on either side and perused the relevant material on record. From the grounds of appeal extracted by the CIT(Appeals) it appears that the assessee has raised this ground as Ground No.10 in the grounds of appeal.

Now coming to the Revenue’s appeal, the only issue arises for consideration is assessability of surplus on the sale of land.

Dr. S. Moharana, the Ld. D.R. submitted that the Assessing Officer reopened the assessment by issuing notice under Section 148 of the Act. According to the Ld. D.R., the assessee claims the profit on sale of the land under the head “capital gains”. However, this issue had not been decided in the original assessment.

On the contrary, Shri Manuel Thomas, the Ld. representative submitted that for the assessment year 2004-05, the Assessing Officer had treated the profit on sale of land as business income.

We have considered the rival submissions on either side and perused the relevant material on record. In the original assessment, the assessee’s claim of capital gain was accepted by the Assessing Officer without any discussion. The assessee also filed appeal before the CIT(Appeals) against the order of the original assessment. During the pendency of disposal of the appeal, the Assessing Officer reopened the assessment by issuing notice under Section 148 and treated the profit on sale of the land as business income. The CIT(Appeals), by following his own order for Assessing Officer to treat the profit on sale of the lands as capital gain. The Tribunal also confirmed the order of the CIT(Appeals) for assessment year 2004-05 to assesse the surplus on the sale of the lands under the head “capital gains”. The only objection of the Revenue before this Tribunal is that an appeal was filed against the order of the Tribunal before the High Court. It is not the case of the Revenue that the order of the Tribunal was stayed by the High Court for assessment year 2004-05. In those circumstances, the mere pendency of appeal before the High Court cannot be a reason to take a different view. Therefore, by following the order of this Tribunal for assessment year 2004-05 in the assessee's own case in dated 8.12.2010, the CIT(Appeals) has rightly directed the Assessing Officer to assess the surplus on the sale of lands under the head “capital gains”. We do not find any infirmity in the order of the CIT(Appeals) and accordingly confirm the same.

In the result, assessee’s appeal in is allowed for statistical purposes and the appeal of the Revenue in I.T.A. No.79/Mds/2015 is dismissed.