Nirmal Chand Soni, Kolkata vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH: KOLKATA [Before Shri Mahavir Singh, J.M. & Shri Shamim Yahya, A.M.] S.P. No.103/Kol/2014 : Assessment Year: 2007-2008 (arising out of ITA No.1643/Kol/2014) & I.T.A. No.1643/Kol/2014: Assessment Year: 2007-08

Shri Nirmal Chand Soni -Vs- A.C.I.T.,Circle-41, Kolkata (PAN: ARLPS 4328R)

S.P. No.104/Kol/2014 : Assessment Year: 2007-2008 (arising out of ITA Nos.1644/Kol/2014) & I.T.A No. 1644/Kol/2014 : Assessment Year: 2007-08

Shri Sushil Chand Soni -Vs- A.C.I.T.,Circle-41, Kolkata (PAN: ARLPS 4328R) (Applicants) (Respondent)

Date of concluding the hearing : 19.12.2014 Date of pronouncing the Order : 09.01.2015

Appearances : For the Applicants : Shri M.K.Jain, FCA : For the Respondent : Smt. Madhu Malati Ghosh, JCIT, Sr.DR

ORDER Per Shri Mahavir Singh, J.M. :

Both the appeals and Stay Applications by assessee are arising out of separate orders of CIT(A) in appeal Nos. 342 & 343/CIT(A)-XIX/Cir-41/Kol/12-13 dated 09.05.2014. Assessment was framed by DCIT, Circle-41, Kolkata u/s. 143(3)/147 of the Income-tax Act, 1961 (hereinafter referred to as the Act) for AY 2007-08 vide his order dated 30.11.2011.

2. When the above two stay petitions for the assessment year 2007-08 were called for hearing, ld. Counsel for the assessee very fairly stated that the issue is now covered by the decision of the Hon'ble Calcutta High Court in the case of Sunil Kr. Agarwal Vs. CIT in GA No.3686 of 2013 ITAT No.221 of 2013 vide judgment dated 13.03.2014, wherein it is held that to ascertain the full value of consideration in the case of transfer of capital asset, the full consideration of the capital asset is to 2 S.P.Nos.103&104/Kol/2014 & IITA Nos.1643 & 1644/Kol/2014 Shri Nirmal Chand Soni & Shri Sushil Chand Soni Assessment Year: 2007-08 be taken on the basis of value adopted by the Stamp Valuation authority under sub- section (1) of section 50C or the capital asset is to be referred to Valuation Officer for determining the fair market value of the property for assessing the capital gains. On query from the Bench Ld. Sr. DR fairly stated she has no objection in case the stay petitions are dismissed and the appeals are set aside to the file of the AO for reference to the DVO to ascertain the full value of consideration u/s. 50C of the Act. She also stated that in case the assessee is disputing the value assessed by the Stamp Valuation Authority i.e., the rate assessed by the Sub-Registrar is challenged by the assessee, then the matter has to be referred to DVO for ascertaining the full value of consideration for assessing long term capital gain under section 50C of the Act in terms of the decision of the Hon'ble Calcutta High Court in the case of Sunil Kumar Agarwal, supra. On this, the ld. Counsel for the assessee fairly agreed that he is not pressing the first common issue that property was transferred in terms of agreement in earlier year or the sale was completed in terms of part performance in view of section 53A of the Transfer of the Property Act, 1872 read with section 2(47) of the Act.

3. We find that following are the three properties transferred during the year by both the assessees and value transacted as per sale deed, value taken by Sub- Registrar as per circle rates and the difference is as under:

Details of the properties transferred Details of property Value of Stamp Valuation Difference transaction as taken by Sub (Rs.) per deed (Rs.) Registrar (Rs.) Property No.1 13,81,00,000/- 18,30,80,276/- 4,49,80,376/-

(Plot No. 20 to 24 & 24A measuring 4621 sq. yds (app) at ASC Road "Sony Colony", Anand Nagar, Vaishali Nagar, Main Rd., Near Ana Sagar, Ajmer 3 S.P.Nos.103&104/Kol/2014 & IITA Nos.1643 & 1644/Kol/2014 Shri Nirmal Chand Soni & Shri Sushil Chand Soni Assessment Year: 2007-08 Rajasthan Property No.1 13,00,000/- 33,76,391/- 20,76,391/- Sale property at Kaddak Chowk, Ajmer, Rajasthan Property No.3 2,00,000/- 2,70,040/- 70,040/- Sale property at Foi Sagar Road, Chowk, Ajmer, Rajasthan Total 13,96,00,000/- 18,67,26,767/- 4,71,26,807/-

The AO worked out the long term capital gains arising out of the above three properties at Rs.5,11,22,068/-, and there are three co-owners of these three properties in equal share. The relevant computation of capital gains reads as under:

Computation of capital gain Sl. Particulars Property no. Property no. Property Total No. 1 (Rs.) 2 (Rs.) no.3(Rs.) 1 Full value of 18,30,80,376 33,76,391 2,70,040 18,67,26,767 consideration adopted by Registering Authority

2. Deduction u/s. 48 of the I. T. Act.

i. Cost of acquisition 47,96,920 15,86,811 62,290 64,46,021 after indexation ii. Cost improvement 49,67,920 - - 49,67,920 after indexation iii. Expenditure on 69,46,624 - - 69,46,624 transfer iv. Total 1,67,11,464 15,86,811 62,290 1,83,60,565 2(i)+2(ii)+2(iii) v. Capital Gain [1- 16,63,68,912 17,89,580 2,07,750 16,83,66,202 2(iv)]

4. Aggrieved against assessment of long term capital gains, all the three assessees/co-owners preferred appeals before CIT(A), who also confirmed the action of AO. One of the co-owner namely, Shri Pramod Chand Soni is assessed 4 S.P.Nos.103&104/Kol/2014 & IITA Nos.1643 & 1644/Kol/2014 Shri Nirmal Chand Soni & Shri Sushil Chand Soni Assessment Year: 2007-08 with DCIT, Circle-1, Jaipur and Jaipur of Bench "A" of ITAT, Jaipur has already decided the issue in favour of assessee vide order dated 11.08.2014. But, in the jurisdiction of Hon'ble Calcutta High Court, the judgment of Hon'ble Calcutta High Court will prevail and this issue has already been dealt with in the case of Sunil Kumar Agarwal, supra by Hon'ble Calcutta High Court. In the case of Sunil Kumar Agarwal, Hon'ble Calcutta High Court held as under:

"We have considered the rival submissions advanced by the learned advocates appearing for the parties. The submission of Ms. Ghutghutia that the requirement of clauses a) and (b) of sub-Section 2 of Section 50C has not been met by the assessee, can hardly be accepted. The requirement of clause (b) of sub-Section 2 of Section 50C was evidently met. The only question is whether the requirement of clause (b) of sub-Section 2 of Section 50C was evidently met. The only question is whether the requirement of clause (a) of sub-Section 2 of Section 50C was met by the assessee.

We have already set out hereinabove the recital appearing in the Deeds of Conveyance upon which the assessee was relying. Presumably, the case of the assessee was that price offered by the buyer was the highest prevailing price in the market. If this is his case then it is difficult to accept the proposition that the assessee had accepted that the price fixed by the District Sub Registrar was the fair market value of the property. No such inference can be made as against the assessee because he had nothing to do in the matter. Stamp duty was payable by the purchaser. It was for the purchaser to either accept it or dispute it. The assessee could not, on the basis of the price fixed by the Sub-Registrar, have claimed anything more than the agreed consideration of a sum of Rs.10 lakhs which, according to the assessee, was the highest prevailing market price. It would follow automatically that his case was that the fair market value of the property could not be Rs.35 lakhs as assessed by the District Sub Registrar. In a case of this nature the assessing officer should, in fairness, have given an option to the assessee to have the valuation made by the departmental valuation officer contemplated under Section 50C. As a matter of course, in all such cases the assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer.

For the aforesaid reasons, we are of the opinion 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 stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned 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 5 S.P.Nos.103&104/Kol/2014 & IITA Nos.1643 & 1644/Kol/2014 Shri Nirmal Chand Soni & Shri Sushil Chand Soni Assessment Year: 2007-08 and to give a fair treatment by giving him an option to follow the course provided by law."

5. From the above facts and legal proposition laid down by Hon'ble jurisdictional High Court in the case of Sunil Kumar Agarwal, supra, we are of the view that the value so adopted or assessed or assessable by the Stamp Valuation Authority based on circle rates is deemed to be the full value of consideration received or accruing as a result of transfer of capital asset, being land or building or both, for the purposes of section 48 of the Act. But if the assessee disputes the value so adopted or assessed or assessable u/s. 50C(2) of the Act, the AO should refer the capital asset to valuation Officer to determine the full value of the consideration received or accruing as a result of transfer of capital asset. Hence, in the present case, we dismiss these Stay Petitions filed by assessee and set aside the orders of the lower authorities and remit the issue back to the file of the AO for fresh adjudication of the issue of long term capital gain arising out of sale of above three assets after ascertaining the full value of consideration of these three assets as determined by Valuation Officer concerned. The AO will take the full value of consideration of the capital asset in terms of section 50C(3) of the Act for ascertaining the long term capital gain arising out of these three assets. In term of the above, these stay petitions are dismissed and appeals of assessee are restored back to the file of the AO for fresh adjudication and allowed for statistical purposes.

6. In the result, the stay petitions filed by the assessee are dismissed and appeals of assessee are allowed for statistical purposes.

Order is pronounced in the open court on 09th January, 2015.

Sd/- Sd/- (Shamim Yahya) (Mahavir Singh) Accountant Member Judicial Member

Dated : 09th January, 2015 6 S.P.Nos.103&104/Kol/2014 & IITA Nos.1643 & 1644/Kol/2014 Shri Nirmal Chand Soni & Shri Sushil Chand Soni Assessment Year: 2007-08 Copy of the order forwarded to:

1. Shri Nirmal Chand Soni / Shri Sushil Chand Soni, 28 Barrackpore Trunk Road, Kolkata - 700 002.

2 A.C.I.T., Circle-41, Kolkata

3. The CIT(A),

4. CIT,

5. DR, Kolkata Benches, Kolkata True Copy, By order,

Asstt. Registrar, ITAT, Kolkata Talukdar(Sr.P.S.)