Income Tax Officer, Ward-6(4), ... vs Assessee

Income Tax Officer Ward 6(4), V/s. M/s. K. Kishore Kumar (HUF), Hyderabad Hyderabad

(PAN - AAGHK 0147 Q )

(Appellant) (Respondent)

Cross Objection No.51/Hyd/14 (in ITA No.1069/Hyd/14) : Assessment year 2009-10

M/s. K. Kishore Kumar (HUF), V/s. Income Tax Officer Ward 6(4), Hyderabad Hyderabad

(PAN - AAGHK 0147 Q )

(Appellant) (Respondent)

Department by : Shri Rajat Mitra, DR

Assessee by : Shri S.Rama Rao

Date of Hearing 16.2.2015 Date of Pronouncement 18.2.2015

ORDER

Per P.M.Jagtap, Accountant Member :

This appeal is preferred by the Revenue against the order of the learned Commissioner of Income-tax(Appeals) IV, Hyderabad dated 14.3.2014 and the same is being disposed of alongwith the cross objection filed by the assessee, being CO No.51/Hyd/2014.

2 ITA No.1069/Hyd/2014 M/s. K. Kishore Kumar (HUF), Hyderabad

2. The only issue involved in the appeal of the Revenue is whether, for the purposes of computation of capital gains arising from the sale of the assessee's property, the provisions of S.50C are to be applied with reference to the sale consideration as shown in the sale agreement dated 23.9.2004 or with reference to the date of registration of the said agreement on 22.12.2008.

3. The assessee in the present case is a HUF, which filed its return of income for the year under consideration on 28.9.2009, declaring total income of Rs.3,47,910. In the said return, capital gains arising from the sale of its share of commercial property, namely, Ashoka Hotel and Lodge located at Nagarajupalle Village, Madras Road, Cuddapah was declared by the assessee and while computing the capital gains so declared, the sale consideration as shown in the agreement dated 23.9.2004 was adopted by the Assessing Officer. During the course of assessment proceedings, it was noticed by the Assessing Officer that the agreement for the sale of the said property was actually registered on 23.12.2008 and on the said date, the value of the property, as determined by the SRO for stamp duty purpose was Rs.1,31,33,000. He, therefore, required the assessee to show cause as to why the said value should not be taken as deemed consideration for computing the long term capital gains by invoking the provisions of S.50C of the Act. In reply, it was submitted by the assessee that the actual sale agreement with the purchaser was entered into on 23.9.2004 for an agreed sale consideration of Rs.70 lakhs, which was more than the value determined by the SRO for stamp duty purpose. It was submitted that due to some dispute, the vacant possession of the property, however, could not be given as a result of which Special Power Attested Deed was executed and registered on 23.12.2008. It was contended that although the capital gains was declared on 3 ITA No.1069/Hyd/2014 M/s. K. Kishore Kumar (HUF), Hyderabad

the basis of the said Special Power Attested Deed, the sale consideration having been agreed on 23.9.2004 itself, which was more than the value determined by the SRO on that date for the purpose of stamp duty, S.50C could not be invoked, to adopt the sale consideration at Rs.1,31,33,000, being the value determined by the SRO on 23.12.2008 for the purposes of computing the capital gain. This contention of the assessee was not found acceptable by the Assessing Officer in the absence of any such exception provided in S.50C of the Act. According to him, the assessee having executed the registered sale agreement-cum- irrevocable GPA and having received the full consideration, the transfer of property had taken place on 23.12.2008, and therefore, capital gain arising from the said transfer was liable to be computed on the basis of the value determined by the SRO for stamp duty purpose on 23.12.2008, as per the provisions of S.50C. Accordingly, he invoked the provisions of S.50C and worked out the capital gains at Rs.45,05,381 by taking Rs.65,05,381, as deemed sale consideration of the assessee's ½ share in the property in the assessment completed under S.143(3) vide order dated 25.3.2011.

4. Against the order passed by the Assessing Officer under S.143(3), an appeal was preferred by the learned CIT(A) disputing inter alia the sale consideration adopted by the Assessing Officer by applying the provisions of S.50C, taking the value determined by the SRO for stamp duty purpose as on 23.12.2008. After considering the submissions made by the assessee on this issue as well as the material available on record, the learned CIT(A) found that this issue was squarely covered by several decisions of the Tribunal in favour of the assessee, wherein it was repeatedly held that the rates prevailing as on the date of agreement are to be adopted instead of the rate prevailing on the date of registration of 4 ITA No.1069/Hyd/2014 M/s. K. Kishore Kumar (HUF), Hyderabad

the property. He therefore, held that S.50C had no application to the facts of the case of the assessee and accordingly directed the Assessing Officer to adopt the sale consideration of Rs.70 lakhs (Rs.35 lakhs coming to assessee's half share in the property) to compute the capital gains. Aggrieved by the order of the learned CIT(A), Revenue has preferred this appeal before the Tribunal.

5. We have heard the arguments of both the sides and also perused the relevant material on record. As agreed by learned representatives of both the sides, the issue involved in this appeal of the Revenue is squarely covered in favour of the assessee by several decisions of the Tribunal. In one of the decisions rendered in the case of Moole Rami Reddy, Visakhapatnam V/s. ITO Ward 1(1) Visakhapatnam (ITA No.311/V/2010 dated 10.12.2010), it was held by the Tribunal that since the value of the property declared by the assessee as on the date of sale agreement was higher than the value shown in the valuation certificate, the value declared by the assessee was required to be adopted for computing the long term capital gains. Respectfully following the decisions of the Tribunal, we uphold the impugned order of the learned CIT(A), giving relief to the assessee on this issue and dismiss the appeal of the Revenue.

6. In its cross objections, the assessee has raised the following grounds-

"1. The learned Commissioner of Income-

tax(Appeals) ought to have directed the Assessing Officer to exclude the market value of the constructed area from the sale consideration of the property of Rs.70 lakhs particularly when the sale consideration is inclusive of the constructed area also.

5 ITA No.1069/Hyd/2014 M/s. K. Kishore Kumar (HUF), Hyderabad

2. The learned Commissioner of Income-

tax(Appeals) ought to have directed the Assessing Officer to consider the market value of the land as on 1.4.1981at Rs.600/- per sq. yard.

3. The learned Commissioner of Income-

tax(Appeals) ought to have directed deduction of the market value of the building as on 1.4.1981 also as the building was existing as on 1.4.1981."

7. As regards ground Nos. 1 and 3 of the assessee's cross objections, it is observed that the issues raised therein have become infructuous, as a result of our decision rendered hereinabove dismissing the appeal of the Revenue, and this position is accepted even by the learned counsel for the assessee. These grounds are accordingly dismissed as infructous.

8. As regards the issue involved in ground No.2 of the assessee's cross objection relating to the determination of market value of the land as on 1.4.1981, it is observed that the same was adopted by the learned CIT(A) as Rs.560 per sq. yard on the basis of the valuation determined by the SRO instead of Rs.600 per sq. yard claimed by the assessee. The valuation adopted by the learned CIT(A), as on1.4.1981 thus was based on the letter of the SRO, where as there was no basis whatsoever given by the assessee for claiming the valuation as on 1.4.1981 at Rs.600 per sq. yard. Even at the time of hearing before us, the learned counsel for the assessee has not been able to explain any basis for the valuation of Rs.600 per sq. yard claimed by the assessee. We, therefore, find no justifiable reason to interfere with the order of the learned CIT(A) on this issue, and dismiss ground No.2 of the assessee in its cross objection.

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9. In the result, appeal of the Revenue as well as the cross-objection of the assessee, are dismissed.

Order pronounced in the court on 18th February, 2015

Sd/- Sd/-

(Saktijit Dey) (P.M.Jagtap) Judicial Member Accountant Member

Dt/- 18th February, 2015

Copy forwarded to:

1. M/s. K. Kishore Kumar (HUF), 6-3-563/63, Sri Nilaya Towers, Erramanzil, Hyderabad 6

2. Income Tax Officer Ward 6(4), Hyderabad

3. Commissioner of Income-tax(Appeals) IV Hyderabad

4. Commissioner of Income-tax III, Hyderabad

5. Departmental Representative, ITAT, Hyderabad.

B.V.S