TMI Blog2012 (4) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... 50C of the Act - the findings of the ld. CIT(A) are not legally and factually tenable - the deeming fiction created u/s 50C of the Act, for the purpose of Section 48 of the Act, regarding full value of consideration received or accrued to the seller, cannot be extended to the provisions of Section 69 of the Act, in the case of a purchaser - the issue is restored to the file of the AO, to frame the assessment afresh, after obtaining the valuation report - the provision of Section 50C(2) of the Act, stipulates necessary conditions, for the purpose of making a reference to the Valuation Officer, by the AO - appeal of the revenue allowed. - IT Appeal No. 1053 (Chd.) of 2010 - - - Dated:- 22-2-2012 - H.L. KARWA, MEHAR SINGH, JJ. ORDER Mehar Singh, Accountant Member This appeal filed by the Revenue is directed against the order of CIT(A) Chandigarh, dated 03.05.2010 relating to assessment year 2006-07 passed u/s 250(6) of the Act (hereinafter referred to as 'the Act'). 2. In this appeal, the Revenue has raised the following grounds of appeal: "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in allowing appeal of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant records, including the decisions relied upon by the contending parties. The facts of the case, briefly stated are that the assessee filed her return of income, on 31.10.2006, declaring income at Rs. 3,17,208/- and claimed long term loss, on sale of property, Booth No. 2927-B, Sector 22C, Chandigarh, to be carried forward at Rs. 7,18,980/-. In the course of assessment proceedings, it was noticed that in respect of the Sale Deed, dated 9.3.2006, the value for the purpose of Stamp Duty has been adopted by the Sub Registrar, Chandigarh at Rs. 44 lacs, whereas the assessee adopted the sale consideration of Rs. 25 lacs, for the purpose of computation of long term capital gains, in her return of income. The assessee adopted the indexed cost of acquisition, at Rs. 32,18,980/,- whereas the assessee, on the basis of evidence, filed by the assessee, adopted the index cost of the assessment, at Rs. 20,93,730/-. It is in this factual background, the assessee filed appeal before the CIT(A). 5. The relevant findings of the ld. CIT(A) on the issue in question, are reproduced for the purpose of proper appreciation of the facts and findings recorded by the CIT(A), thereon: "11. I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has made unexplained investment in the house property, no addition can be justified. Learned first appellant authority has appreciated the facts and circumstances in right perspective. We do not find any error in the impugned order on this ground. Thus, the ground of appeal raised by the Revenue is rejected." 13. In the instant case, the following things are very clear : ( i ) Copy of the lease deed and copy of the sale deed bear testimony to the fact that the property in question was sold to the sitting tenant. ( ii ) Two letters for vacation of premises and at least 3 legal notices during the year 2003, 2004 2005 have been submitted by the Ld. Counsel. ( iii ) There is no doubt that the property was in dispute and this was a distress sale. ( iv ) A disputed property sold to sitting tenants can never be equated with a regular sale. The valuation by whichever authority is always done keeping the ground situation in view. ( v ) The widow may have thought that even Rs. 25 lacs put in an FD would give her more money than the rent and would relieve her of harassment legal hassels. What objection can the Department have to that? What she does with her property is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the jurisdictional High Court, rendered in the case of CIT v. Chandni Bhuchar ( supra ), is not applicable to the facts of the present case. This proposition is further proved by the findings of the Tribunal, incorporated in para 7 of its order, as reproduced in the said decision by the Hon'ble High Court : "From a plain reading of this provision, it emerges out that the value adopted or assessed by any authority of a State Government for the purpose of payment of stamp duty in respect of land or building or both, shall for the purpose of s. 48 be deemed to be the full value of the consideration received or accruing as a result of transfer. It nowhere provides that the valuation done by the State Government for the purpose of stamp duty etc. would ipso facto take place of the actual consideration as being passed on to the seller by the purchaser in the absence of any other evidence. The AO is required to bring positive evidence on record indicating the fact that assessee has paid anything more than the one disclosed in the purchase deed. The Department has taken an argument in the grounds of appeal that AO should be directed to make a reference to the Valuation Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69/69B, of the Act contains expression "may" which is not akin to 'shall" in nature. Therefore, the deeming fiction created u/s 50C of the Act, for the purpose of Section 48 of the Act, regarding full value of consideration received or accrued to the seller, cannot be extended to the provisions of Section 69 of the Act, in the case of a purchaser. 8. It is imperative to state here that deeming provision is a well-known legislative device. What in fact is not done as a fact is treated as having been done. In a statute, when the expression "deemed to be" is used, it creates a fiction and a thing is treated to be that, infact, it is not. In a legal fiction, an imaginary situation is treated as real situation, for a definite purpose, for which such legal fiction is created by legislative device. 8 ( i ) It is well-settled that deeming provision creating legal fictions, specially in taxing statute have to be strictly construed, as held in the case of CIT v. Keshavlal Lallubhai Patel [1965] 55 ITR 637 (S.C), Smt. Mohini Thapar v. CIT [1972] 83 ITR 208 (S.C), CIT v. C.P. Sarathy Mudaliar [1972] 83 ITR 170 (S.C) and CIT v. Vadilal Lallubhai [1972] 86 ITR 2 (S.C). Leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) Without prejudice to the provisions of sub-section (1), where- ( a ) the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; ( b ) the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1) 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 where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed or assessable by Stamp Valuation Authority has not been disputed, in appeal or revision or reference before any authority or Court." 13. It is mentioned that consequences where the value is determined by the Valuation Officer, are provided u/s 50C(iii) of the Act. No claim has been made by the assessee appellant that the value adopted by the Stamp Valuation Authority exceeds the FMV of the asset, as contemplated u/s 50C(2) of the Act. In such a fact-situation of the present case, decision of the AO, whereby it was held by him that reference to Valuation Officer is optional, since the assessee had not objected to the value adopted by the State Valuation Authority, and, hence, there was no need to refer the matter to the Valuation Cell. This view of the AO has been supported by the Bombay ITAT in the case of Kalptaru Industries v. ITO , ITA No. 5540/Mum/2007 dated 24.08.2009. Section 50C of the Act comes into play only when, there is valuation at a higher value for stamp valuation purposes, by the State Authority, than declared by the assessee, in the Sale Deed. 13 ( i ) It is in this context, Section 50C of the Act places considerable burden on the Tax Payer to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold or transferred on the basis of valuation adopted by the stamp duty authority. However, there is inbuilt safeguard provided to protect the interest of the seller. An option is given to the seller u/s 50C(2) of the Act either to appeal against the value adopted for registration by the stamp valuation authority or to refer the matter to the valuation officer. Thus, Section 50C(2) of the Act, provides two remedies at the option of the assessee, in that, he can either file appeal against stamp value or seek reference to Valuation Cell. Adoption of the value by the Valuation Cell is again subject to regular appeals available against the order of the AO. However, whether assessee had not availed the opportunity, the AO is bound to follow the clear made of law as contained u/s 50C(2) of the Act, as held by the Hon'ble Madras High Court in the case of Ambattur Clothing Co. Ltd., v. ACIT [2010] 326 ITR 245 (Mad). Similar view has been supported by the Tribunal in the case of Mohd. Sohaib v. DCIT [2010] 1 ITR (Trib) 452 (Lucknow), whereby it was held that where no claim is made at all by the assessee disputing the substitution of stamp duty for consideration declared by him, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant date. Kindly treat it as urgent since a report in this case is to be submitted to the ld. CIT(A), Chandigarh. Yours faithfully, Sd/- (Darshan Singh) Income Tax Officer Ward 6(3) Mohali." 14. Findings of the AO as recorded in the assessment order u/s 143(3) dated 24.11.2008 are reproduced hereunder: "In view of the above provisions, vide order-sheet entry dated 7.10.2008, Sh. Iqbal Singh, son of the assessee, and Sh. Om Parkash Aggarwal, representative of the assessee were apprised of the applicability of provisions of Sec. 50C of the I.T. Act, 1961 according to which the sale value of the said built up booth was to be adopted at Rs. 44.00 Lacs as against Rs. 25.00 Lacs adopted by the assessee in her return of income. A letter dated 15.10.2008, in this regard, as well as to give evidence in respect of payments trade to the Estate Office, Chandigarh was also issued to the assessee. On 10.11.2008, the representatives of the assessee attended and filed a written reply along with a copy of valuation report for the purpose of calculation of cost of construction of the said booth as on June 1997. The issues raised by the assessee vide reply furnished on 10.11. ..... 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