Nitin Promotors Ltd., New Delhi vs Assessee

M/s. Nitin Promotors Ltd., vs. ITO, Ward 13 (3), 2633-36, 2ND Floor, Balaji Building, New Delhi. Naya Bazaar, Delhi - 110 006.

(PAN : AACCN0920F)

(APPELLANT) (RESPONDENT)

ASSESSEE BY : Shri P.K. Jain, FCA REVENUE by : Shri P. Dam Kanunjna, Senior DR

Date of Hearing : 27.02.2015 Date of Pronouncement : 27.02.2015

ORDER

PER B.C. MEENA, ACCOUNTANT MEMBER :

This appeal filed by the assessee emanates from the order of CIT

(Appeals)-XVI, Delhi dated 08.08.2013 for the assessment year 2010-11.

2. The assessee company is engaged in the business of builders and

developers. The return of income for assessment year 2010-11 was filed

on 29.09.2010 declaring income of Rs.6,15,040/-. During the year, the

assessee company sold agricultural land amounting to Rs.90 lacs and

earned long term capital gains and claimed exemption u/s 54EC of the 2 ITA No.5574/Del./2013 Income-tax Act, 1961. The Assessing Officer took the circle rate of

Rs.1,57,89,583/- as the sale consideration by invoking the provisions of

section 50C of the Act. The CIT (A) has confirmed this addition. Now,

the assessee is in appeal before us by taking the following grounds :-

"1. That having regard to the facts and circumstances of the case, the Ld. CIT (A) erred in law and on facts in upholding the addition of Rs.67,89,583/-, the difference of sales price and circles rates on sale of agriculture land after adopting full value of consideration as per Stamp Valuation Authority in accordance with section 50C(1).

2. The Ld CIT (A) upheld the action of the AO which is in violation of section 50C (2), without referring the valuation of the relevant asset to the departmental valuation officer inspite of the objection filed by the Appellant stating that the rate of stamp valuation were higher and the actual sales price of agricultural land were lower as compared to the price of Agriculture land as per circle rate.

3. Therefore the addition made by the Ld AO and upheld by the Ld CIT CA) should be quashed.

4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other."

3. While pleading on behalf of the assessee, ld. AR submitted that

when the Assessing Officer queried about the cost of land taken for the

purpose of stamp duty valuation, the assessee has submitted that the

agricultural land was sold at Rs.90,00,000/- instead of Rs.1,57,89,583/-

due to the adverse market condition in the real estate industry in the year

2009 and the market price of the agricultural land was very much below as 3 ITA No.5574/Del./2013

compared to price of agricultural land as per circle rate. Thus, the assessee

objected before Assessing Officer the rate of valuation by Stamp Valuation

Authority and invoking the provisions of section 50C of the Act. As per

the assessee, the valuation by Stamp Valuation Authority was higher than

the fair market value of the agricultural land. He pleaded that the matter

may be restored back to the file of the Assessing Officer for making a

reference to the valuation cell to ascertain the market value as per the

provisions of section 50C of the Act.

4. Ld. DR relied on the orders of the authorities below.

5. We have heard both the sides on the issue. The assessee has

submitted before the Assessing Officer that the adopted value of the

agricultural land by the Stamp Valuation Authority exceeds the fair market

value of the land. The Assessing Officer has not made reference to the

valuation officer. We find that such issue has been considered by the

ITAT, Coordinate Bench, New Delhi in the case of Mrs. Trishla Jain &

Anr. Vs. ITO reported in [2011] 11 ITR (Trib) 579 (ITAT[Del]) and the

relevant para 4 is reproduced as under :-

"4. We have heard both parties and have carefully gone through the orders of the authorities below. The first and foremost point that arises for our consideration is as to whether the Assessing Officer should have referred to the matter to the Valuation Officer under section 50C(2) of the Act to determine the fair market value before applying the provisions of section 50C(1) of the Act. In this connection, we have carefully perused the Assessing Officer's order and find that in paragraph 3.4 of his order the Assessing Officer has clearly stated that, in the reply, the assessee has emphasised that the circle rate in respect of property is much higher than actual market 4 ITA No.5574/Del./2013

value and the shops/property sold was under old tenancy and occupants. From this finding recorded by the Assessing Officer, it is clear that the assessee made a claim before the Assessing Officer that the circle rate was much higher than the actual market value of the property. Section 50C(2) provides that without prejudice to the provisions of sub-section (1), where the assessee claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority exceeds the fair market value of the property as on the date of transfer, and the value so adopted or assessed by the stamp valuation authority 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 in that event, relevant and corresponding provisions of the Wealth-tax Act shall, with necessary modifications, will apply. In the present case, it is not in dispute that the assessee has made a claim before the Assessing Officer that the value adopted or assessed by the stamp valuation authority was higher than the fair market value.

It is also not the case whether the value adopted by the stamp valuation authority has ever been disputed by the assessee in any appeal or revision or otherwise as referred to in section 50C(2) of the Act. In these circumstances, it was thus incumbent upon the Assessing Officer to refer the matter for valuation to a Valuation Officer as provided in section 50C(2) of the Act. In this respect, the view taken by the Assessing Officer as well as by the Commissioner of Income-tax (Appeals) is not correct. Since the Assessing Officer failed to refer the matter to the Valuation Officer under section 50C(2) of the Act as requires, we find it fit and proper to restore the matter back to the file of the Assessing Officer for his fresh adjudication after referring the matter to the Valuation Officer under section 50C(2) of the Act and then to decide the issue accordingly, as per law. The Assessing Officer shall provide reasonable opportunity of being heard to the assessee. The matter with regard to the determination of sale consideration and capital gain shall remain open before the Assessing Officer, and both parties shall be at liberty to raise any other contention/contentions supported by any other document/documents as they may think fit and proper under the law.

The assessee shall be at liberty to raise all other alternative contentions before the Assessing Officer and to produce any other further evidence or evidences, as he may be advised, which shall be duly deliberated upon, considered and decided by the Assessing Officer by passing a speaking order and reasoned order."

5 ITA No.5574/Del./2013 In this case also, the assessee has claimed before the Assessing Officer that

the value adopted or assessed by the stamp valuation authority exceeds the

fair market value of the property as on the date of transfer and the matter

with regard to the determination of the sale consideration and capital gains

were restored to the file of the Assessing Officer for fresh adjudication

after referred the matter to the valuation officer u/s 50C(2) of the Act and

then decide the issue. Since the facts in the assessee's case are similar to

the aforesaid case of the Coordinate Bench of ITAT, cited supra, in the

interest of justice and equity, we hold that this issue needs to be remanded

back to the file of Assessing Officer for fresh adjudication after referring

the matter to the Valuation Officer u/s 50C(2) of the Act and then decide

the issue accordingly, as per law, of course after providing an opportunity

of hearing to the assessee. We order accordingly.

6. In the result, the appeal of the assessee stands allowed for statistical

purposes.

Order pronounced in open court on this 27th day of February, 2015 after conclusion of the hearing.

Sd/- sd/- (GEORGE GEORGE K) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated the 27TH day of February, 2015 TS 6 ITA No.5574/Del./2013

Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-XVI, New Delhi 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.