Gwl Properties Ltd., Chennai vs Assessee

सन ु वाई क/ तार ख/Date of Hearing : 22.04.2015 घोषणा क/ तार ख/Date of Pronouncement : 15.05.2015 2 I.T.A. No. 409/Mds/13 I.T.A. No. 79/Mds/15

आदे श /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

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.

2. First, let's take assessee's appeal in I.T.A.

No.409/Mds/2013.

3. 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 3 I.T.A. No. 409/Mds/13 I.T.A. No. 79/Mds/15

registering authority for stamp duty purpose. Referring to Section

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).

4. 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.

According to the Ld. D.R., the Sub-Registrar has taken the value of

the property at `9,73,58,800/-. However, the sale consideration

shown in the sale deed is only at `5,58,25,000/-. Since the value

taken by the Sub-Registrar for valuation of the property is more than

the consideration disclosed in the sale deed, according to the Ld. 4 I.T.A. No. 409/Mds/13 I.T.A. No. 79/Mds/15

D.R., the Assessing Officer has rightly adopted the value taken by

the Sub-Registrar at `9,73,58,800/- for the purpose of capital gains

under Section 50C of the Act. Therefore, there is no infirmity in the

orders of the lower authorities.

5. 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.

6. 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 5 I.T.A. No. 409/Mds/13 I.T.A. No. 79/Mds/15

sale deed, it would not be correct to say that the assessee did not

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.

However, the actual sale consideration shown in the sale deed

cannot be disregarded unless and until the valuation report obtained

by the Assessing Officer as required under Section 50C of the Act.

Therefore, this Tribunal is of the considered opinion that the matter

needs to be referred to the Valuation Officer. Accordingly, we set

aside the orders of the lower authorities and the Assessing Officer is

directed to refer the matter to Valuation Officer. Accordingly, the

matter is remitted back to the file of the Assessing Officer. The

Assessing Officer shall reconsider the issue in the light of the report

that would be received from the Valuation Officer and thereafter,

decide the same in accordance with law after giving reasonable

opportunity to the assessee.

7. The next ground of appeal is with regard to allowability of

TDS to the extent of `3,83,236/-.

8. Shri Manuel Thomas, the Ld. representative for the

assessee, submitted that the assessee has filed five TDS 6 I.T.A. No. 409/Mds/13 I.T.A. No. 79/Mds/15

certificates aggregating to `3,83,236/-. The Ld. representative

submitted that the same was not claimed in the return of income.

According to the Ld. representative, the TDS certificates filed before

the lower authorities to the extent of `3,83,236/- have to be

considered.

9. 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.

10. 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.

However, the CIT(Appeals) has not discussed the same in the

appellate order. In other words, the ground relating to TDS

certificates to the extent of `3,83,236/- was not disposed of by the

CIT(Appeals). This Tribunal is of the considered opinion that when

the tax was deduced at source as per the scheme of the Income-tax

Act, the Assessing Officer is bound to give credit for the tax

deducted at source, otherwise, the very purpose of deducting tax 7 I.T.A. No. 409/Mds/13 I.T.A. No. 79/Mds/15

would be defeated. Therefore, this Tribunal is of the considered

opinion that the Assessing Officer shall reconsider the issue after

verifying the TDS certificates that were said to be filed by the

assessee. Accordingly, the matter is remitted back to the file of the

Assessing Officer. The Assessing Officer shall verify all the TDS

certificates filed by the assessee and give credit in respect of the tax

deducted at source.

11. Now coming to the Revenue's appeal, the only issue arises

for consideration is assessability of surplus on the sale of land.

12. 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.

Therefore, the Assessing Officer reopened the assessment and

treated the profit on sale of the land as business income. However,

the CIT(Appeals) by following the order of this Tribunal in the

assessee's own case for assessment year 2004-05, directed the

Assessing Officer to assess the surplus on sale of the land under

the head "capital gains". According to the Ld. D.R., the Revenue

has already filed an appeal before the High Court against the order 8 I.T.A. No. 409/Mds/13 I.T.A. No. 79/Mds/15

of this Tribunal for assessment year 2004-05 in the assessee's own

case. Therefore, the CIT(Appeals) is not right in allowing the claim

of the assessee.

13. 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.

On appeal by the assessee, the CIT(Appeals) considered the same

as capital gain and that was confirmed by this Tribunal. Therefore,

according to the Ld. representative, the profit on sale of lands has to

be assessed only as capital gain and not as business income. Mere

pending of appeal before the High Court cannot be a reason to take

different view on the issue.

14. 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 9 I.T.A. No. 409/Mds/13 I.T.A. No. 79/Mds/15

assessment year 2004-05 in the assessee's own case, directed the

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 I.T.A. No. 1155/Mds/2010 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.

15. In the result, assessee's appeal in I.T.A. No.409/Mds/2013 is

allowed for statistical purposes and the appeal of the Revenue in

I.T.A. No.79/Mds/2015 is dismissed.

10 I.T.A. No. 409/Mds/13

I.T.A. No. 79/Mds/15

Order pronounced on 15th May, 2015 at Chennai.

sd/- sd/- (A.Mohan Alankamony) (N.R.S. Ganesan) (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) लेखा सद य/Accountant Member या यक सद य/Judicial Member

चे नई/Chennai, th 3दनांक/Dated, the 15 May, 2015.

Kri.

आदे श क/ , त4ल5प अ6े5षत/Copy to: 1. Assessee 2. Assessing Officer 3. आयकर आयु7त (अपील)/CIT(A)-I, Coimbatore 4. आयकर आयु7त (अपील)/CIT(A)-II, Chennai 5. आयकर आयु7त/CIT-I(Judl.), Coimbatore 6. आयकर आयु7त/CIT-II, Chennai 7. 5वभागीय , त न ध/DR 8. गाड' फाईल/GF.