TMI Blog2023 (3) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... sale deed, there was no financial loss to the State Government on payment of stamp duty as the stamp duty was collected as per jantri rate, which was much more than the sale consideration shown on the sale deed. The Hon ble jurisdictional High Court in PCIT Vs Ravjibhai Naginbhai Thesia [ 2016 (9) TMI 645 - GUJARAT HIGH COURT] held that once reference made to the DVO under section 50C, even though it is lesser than value adopted by stamp valuation authority, the assessing officer is to compute capital gain by taking valuation given by DVO. Similar view was taken by Allahabad High Court in CIT Vs Dr Indira Swaroop Bhatnagar ( 2013 (2) TMI 456 - ALLAHABAD HIGH COURT] - We find that that actual difference in the sale consideration claimed by the assessee at Rs. 3.41 Crore and the value determined by DVO at Rs. 3.56 Crore, is only 6.66%, therefore, the assessee is entitled for the benefit of third proviso to section 50C(1), which has been held as retrospective in series of decision by Tribunal. We direct the assessing officer to compute the capital gain by consideration the cost of entire asset at Rs. 3.41 Crore and grant benefit of third proviso to section 50C(1). In the resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO u/s 50C of the Act to the extent of substituting the value estimated by the DVO at Rs. 3,54,72,000/- against the actual sale consideration of Rs. 1,80,00,000/- , is liable to be struck down. 4. Your appellant further reserves his right to add, alter, modify or to amend any of the aforesaid grounds before or at the time of hearing of an appeal. It is therefore, respectfully submitted that taking into account various submissions written as well as oral made in the course of assessment proceedings and/or appeal proceedings before the CIT(Appeals) through the written submissions, the entire addition of Rs. 96,81,664/- ought to have been deleted in toto especially in view of the appellant s various submissions with AO/CIT(Appeals), which form part of statement of facts alongwith various submissions to be filed before Hon ble ITAT, Surat and the appeal of the appellant be allowed in full as prayed for. 2. Perusal of record shows that the ld. CIT(A) passed the impugned order on 20/09/2017. However, the present appeal was filed on 30/04/2018, thus there is delay of 91 days in filing the present appeal before the Tribunal. The assessee has filed application for condona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The fact is that the Assessing Officer while passing the assessment order under Section 143(3) made addition of capital gain of Rs. 96.81 lacs by invoking provisions of Section 50C of the Act. The assessee in the return of income has disclosed the capital gain and computed the income as per provisions of Section 48. This fact was not disputed by the Assessing Officer as well as by the ld. CIT(A). However, the Assessing Officer draw inference that full value of consideration shown by assessee under Section 48 is much less the valuation made by Stamp Valuation Authority. The matter was referred to the DVO under Section 50C(2) of the Act. The ld. AR further submits that the Assessing Officer while passing the assessment order under Section 143(3), allowed the expenditure including the land premium paid by assessee at the time of sale/transfer from full value of consideration shown by assessee in the return of income which can be verified from the assessment order. However, while passing the order giving effect, the Assessing Officer has not allowed the deduction for expenditure in incurred wholly and exclusively in connection with the transfer of land i.e. levy of tax/premium by St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of conversion of land use for transfer of land. All these facts are not disputed by ld SR DR for the revenue. The ld. AR of the assessee while making his submission, submitted that in case, the application of assessee under Section 154 had been appreciated the issue under litigation would have come to an end. We further find that initially while passing the assessment order the assessing officer made addition of Rs.96,81,667/-, by invoking section 50C. However, while giving effect of the order of ld. CIT(A), wherein the assessee was allowed relief on the basis of report of DVO, the assessing officer made addition of Rs. 1,15,12,412/-. Here we may also mention that the assessing officer initially considered the value of asset at Rs. 4.70 Crore on the basis of valuation made by stamp valuation authority for the purpose of registration of sale deed. However, on making reference to DVO, the DVO estimated total value of asset at Rs. 3.54 Crore. Thus, we find merit on the submission of ld. AR of the assessee that the assessee was bonafidely pursuing remedy before the Assessing Officer and had it been allowed, the issue would have been settled. Thus, we find merit in the submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r concerned. In response to notice under Section 133(6), the Sub-Registrar informed that on the basis of Jantri value of total land sold by assessee along with his co-owner was assessed at Rs. 4.70 crores. On the basis of such information, the Assessing Officer was of the view that there is difference of Rs. 2.90 crore in the sale consideration shown on the documents and the value determined by stamp valuation authority on the basis of Jantri value. Since the assessee was having 1/3rd share, hence, the difference was worked out to the share of assessee at Rs. 96.81 lacs. 7. The Assessing Officer on the basis of aforesaid observation, issued show cause notice as to why difference of Rs. 96.81 lacs should not be treated as deemed income of the assessee. The assessee filed his reply on 16/03/2015. The Assessing Officer has scanned certain part of reply in para 5.4 of his order. In the reply, the assessee stated that the land sold by assessee being new Sharat (eligible for premium if converted into non-agricultural land). The market value of this land is too much less than the value of law of old sharat. The reason for difference in market value is because as per State Government Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can only be used for agricultural purposes by the Ganotiya (occupier) of the land as per the land record of State Government. The assessee further explained that the land of Navi Sharat could not be transferred or sold to any other person for any other purpose, except for agricultural purposes and if the land owner desires to transfer or sale the agricultural land of Navi Sharat to any person being interested buyer in the open market for the use of said land for the purpose of other than agricultural purposes, can be sold or transferred after getting permission of Deputy Collector having jurisdiction that too on payment of levy of tax/land premium at the rate of 40% of Jantri value declared for residential zone. The assessee and two other co-owners (all three brothers) were not in a position to sell the land in the open market at the desired price or at the Jantri price. Jantri rate for the particular block of land without demarcation as to the character of agricultural of Navi Sharat or Juni Sharat. As a matter of fact, the Jantri declared by the State Government simply exhibits the average rate per square meter of agricultural land or non-agricultural land and there is no demarc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of stamp duty and jantri rate are considered in general and never take into consideration various adverse factors effecting the fair market value of land or building. The assessee also stated that Jantri value determined by the Stamp Valuation Authority is Rs. 4.70 crores and market value determined by DVO is Rs. 3.540 crore, thus when the value determined by the DVO is below the valuation of Stamp Valuation Authority, there is no applicability of Section 50C(3) of the Act. 10. The submission of assessee was remanded to the Assessing Officer for his objection/remand report. The assessing Officer filed his reply vide reply dated 29/10/2015 along with report of DVO. The report of DVO was furnished to the assessee for his comment. The assessee filed its comment dated 07/07/2016. In the comment/rejoinder, the assessee in sum and substance repeated the same contention as made in his earlier submission. In addition to the earlier submission, the assessee relied on the case law in C.B. Gautam Vs Union of India (1993) 199 ITR 530/65 Taxman 440 (SC). 11. The ld. CIT(A) after considering the assessment order, submission of assessee and remand report and report of DVO, held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Jantri price in absence of change of land use. The Assessing Officer failed to appreciate this crucial aspect having adverse effect on the market value as per Jantri rate and simply invoke the provisions of Section 50C for making addition at Jantri rate. The ld AR for the assessee submits that it was explained before the Assessing Officer about the dispute of title/ownership pending in the Civil Court and the assessee and his brothers were not in a position to fetch the desired market price at per jantri rate. The assessee and his co-owners agreed that they will apply for conversion of land use and the premium on such land use would be payable by purchaser. Accordingly, the purchaser paid the land premium to the local authorities of Rs. 1.61 Crore being a part of sale consideration. The assessee furnished copy of challan for the payment of conversion of land in question from Navi Sharat to Juni Sharat, copy of Gaam Namuno No. 6 in the form of Hakk Patrak (ownership document). The ld AR for the assessee submits that only sale consideration of land at Rs. 1.80 crore was shown at the sale deed, however, the actual sale consideration was Rs. 3.41 Crore, being Rs.1.80 crore shown on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Hon ble Kerala High Court in Mahamood Ibrahim Sait Vs ITO (1994) 210 ITR 700 (Ker), while considering the issue whether consideration for transfer of a property subject to mortgage includes amount paid for discharge of mortgage is deductible in computation of capital gain under section 48. It was held that the amount spent on discharge of mortgage is deductible in computation of capital gain. 16. The ld AR for the assessee submits that various Courts and Tribunal have taken view that the beneficial provisions inserted in the Income Tax Act, particularly third Proviso by Finance Act 2020 shall be treated as retrospective and it is effective from the date on which section 50C itself was inserted w.e.f. 1st April 2003. To support his submissions, the ld AR for assessee relied on the following case laws; Maria Feranandes Cheryl Vs ITO ( 2021) 123 taxmann.com 252 (Mum), CIT Vs Vemmudi Amarendran (2020) 120 taxmann.com 171 (Mad), Joseph Mudaliar Vs DCIT (ITA No. 6912/Mum/2019 dated 14.09.2021), RMG Buildwell (P) Ltd Vs ITO (ITA No. 1311/Del/2018 dated 27.07.2021), Amrapali Cenema Vs ACIT (2021) 127 taxmann.com 376 (Delhi-Trib). 17. In alternative and withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or both, is less than the value adopted or assessed or assessable by any authority of state Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purpose of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. Thus, this provision is deeming provision. The provisions of Income tax are very much clear in itself. Nowhere it is mentioned that the expenditure made by the purchaser under any head should include in the full value of consideration. Hence, the plea taken by the assessee on this issue may not be entertained. The expenditure of Rs. 1.81 Crore incurred by the purchaser on account of levy of tax was not covered by any agreement. In absence of any agreement between the parties, the additional expenditure may never be treated as part of full value of consideration of immovable property in question. The ld Sr DR for the revenue further submits that the full value of consideration as per registered document is Rs. 1.80 Crore. The stamp valuation authorities determined the value of asset at Rs. 4.70 Crore, thus, the difference be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order, the Assessing Officer made addition of Rs. 96.81 lacs by invoking provisions of Section 50C. The request of assessee to refer the issue of valuation to DVO was rejected by taking view that it is a time barring matter. As noted above that before ld CI(A), the assessee filed detailed written submissions. In the submissions the assessee stressed that the agricultural land/ asset was having character of Navi Sharat , which can only be used for agricultural purposes by the Ganotiya. The land of Navi Sharat cannot be transferred or sold to any other person for any other purpose, except for agricultural purposes and if the land owner desires to transfer or sale the agricultural land of Navi Sharat to any person being interested buyer in the open market for the use of said land for the purpose of other than agricultural purposes, can be sold or transferred after getting permission of Deputy Collector having jurisdiction that too on payment of levy of tax/land premium at the rate of 40% of Jantri value declared for residential zone. It was also contended that all three brothers were not in a position to sell the land in the open market at the desired price or at the Jantri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was a part of sale consideration, though consideration of land at Rs. 1.80 crore was shown at the sale deed, however, the actual sale consideration was Rs. 3.41 Crore, being Rs.1.80 crore shown on sale deed, which is received by all three owners plus Rs. 1.61 crore, land premium paid to Government. The buyer of property is always interested to buy property without any encumbrances, charge or lien, so they directly paid the land premium to the state Government in accordance with the provision of section 43 of Ganotdhara. And if the land premium is considered as part of sale consideration, which is in fact was part of total sale consideration, the total sale value is Rs. 3.41 crores and the value DVO determined the market value of land at Rs. 3.54 crores, the difference is less than 10% and no addition would survive in view of the provisions of third Proviso of section 50C(1). We find that on the direction of the bench the assessee filed confirmation of purchaser of impugned land namely Batukbhai son of Nanjibhai Dudhat. In the affidavit the purchaser confirmed that he had paid land premium of Rs. 1.61 Crore under mutual understanding on behalf of seller of the land, being integra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a contract must be in writing, unless specified by law or the parties themselves contemplate the reduction of terms of agreement to writing. (*emphasis added by us). 26. The Hon ble Apex Court in the case of Alka Bose vs. Parmatma Devi Ors [CIVIL APPEAL NO(s). 6197 OF 2000] (*), held that even a sale agreement can be oral and have the same binding value and enforceability, as a written agreement. The agreement should be in tandem with the essential conditions in section 10 of the Indian Contract Act, 1872 and thus, will have the equal force of evidentiary value, as a written one. An oral agreement is as equally valid, as a written one. The legality, of an oral agreement, cannot be questioned, if it falls under the ambit of the requirements stated in section 10 of the Indian Contract Act, 1872. (* emphasis added by us ). 27. Section 48 of the Registration Act, 1908, which states that all non-testamentary documents require to be registered under this Act, and relating to any property, whether movable or immovable, shall take effect against any order, agreement or declaration relating to such property, unless where the agreement or declaration has been accompanied or foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per jantri rate, which was much more than the sale consideration shown on the sale deed. 31. The Hon ble jurisdictional High Court in PCIT Vs Ravjibhai Naginbhai Thesia (supra) held that once reference made to the DVO under section 50C, even though it is lesser than value adopted by stamp valuation authority, the assessing officer is to compute capital gain by taking valuation given by DVO. Similar view was taken by Allahabad High Court in CIT Vs Dr Indira Swaroop Bhatnagar (supra). We find that that actual difference in the sale consideration claimed by the assessee at Rs. 3.41 Crore and the value determined by DVO at Rs. 3.56 Crore, is only 6.66%, therefore, the assessee is entitled for the benefit of third proviso to section 50C(1), which has been held as retrospective in series of decision by Tribunal. 32. In view of the aforesaid factual and legal discussion, we direct the assessing officer to compute the capital gain by consideration the cost of entire asset at Rs. 3.41 Crore and grant benefit of third proviso to section 50C(1). In the result, the appeal of the assessee is allowed in the above terms. As we have granted substantial relief to the assessee, on the prim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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