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2015 (12) TMI 987 - ITAT HYDERABAD

2015 (12) TMI 987 - ITAT HYDERABAD - TMI - Computation of capital gains - whether the date of agreement or the date of execution of sale deed has to be considered for the purpose of adopting the SRO value under S.50C? - Held that:- For want of any evidence to the contrary, we hold that the property in question was in residential zone on the date of transfer and therefore, the SRO value for residential property as on 6.3.2006 or the sale consideration received by the assessee whichever is higher .....

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the fact that the DVO value was more than the SRO value, and hence the SRO value is to be adopted u/s. 50C of the Act, the Assessing Officer in the re-assessment proceedings confirmed the assessment order under S.143(3). Thus, as rightly pointed out by the assessee in his grounds of appeal, the assessment order under S.143(3) got merged with the assessment order under S.143(3) read with S.147 of the Act and the assessee’s challenge against the same before the CIT(A) is maintainable and the CIT( .....

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decision of this Tribunal in the case of other co-owners. - Decided in favour of assessee for statistical purposes - ITA No. 1942, 1943, 1944, 1945, 1946, 1947, 1948, 1949, 1950, 1951, 1952, 1953, 1954/Hyd.2014 - Dated:- 27-11-2015 - SMT P.MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER For The Appellants : Shri Syed Jameeluddin For The Respondent : Shri Ramakrishna Bandi ORDER Per Bench : All these are appeals of the respective assessees for the assessment year 2006-07. .....

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ground against the validity of the proceedings under S.147 was urged. But at the time of hearing, the learned counsel for the assessee has filed written submissions wherein it is stated that this ground of appeal is not being pressed by the respective assessees. Thus, these grounds in both the above appeals are rejected as not pressed. For the sake of brevity and convenience, as common issue is involved in these appeals of the family members and co-owners of the same property, all the appeals w .....

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of stamp duty valuation, based on the first proviso to Section 56(2)(vii)(b) which provides that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken. 3. The Hon'ble Supreme Court, in the case of Sanieev Lal and Smt.Shanti Motilal V/s. CIT (2014)365 ITR 389(SC) held that if a right in the property is extinguished by an execution of an agre .....

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, Valuation Cell, has completely ignored the submission made by the assessee and the evidence produced before him and wrongly estimated the lieu of the property by applying the rates which were prevalent after the cut off date, i.e. 20-05-2005, and by taking into consideration properties which are located in a different area and also by applying the rates applicable to commercial area, though it is in residential area. 6. The CIT(A) is wrong in rejecting the assessee s objection to the huge addi .....

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and hence need no adjudication. As regards ground No.2 to 6, brief facts of the case are that the assessees herein are all family members of two brothers, Shri Mohd. Zia Baig and Shri Abdul Arif Baig. The family of Shri Mohd. Zia Baig consists of the following members 1) Shri Mohd. Zia Baig 2) Shri Mohd. Imran Baig 3) Shri Mohd. Irfan Baig 4) Shri Mohd.Fouzan Baig 5) Smt. Fouzia Begum 6) Smt. Fareena Ayesha Begum 7) Smt. Ruheena Shireen Begum 8) Smt. Shaheeda Begum The family of Shri Abdul Arif .....

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o.1264 of 2006 and ₹ 3,54,40,000 vide Regd. Document No.1262 of 2006 both dated 6.3.2006. The sale consideration was shared by the co-owners in the ratio of their land ownership. The assessees computed long term capital gains from the above transaction on the sale consideration received by them and arrived at the long term capital gains in the hands of each of these assessees. Subsequently, it came to the notice of the Department that the market value of the property in the above transacti .....

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apital gains was short admitted. In view of the same, the Assessing Officer formed an opinion that there was reason to believe that income chargeable to tax has escaped assessment within the meaning of S.147 of the Act. Therefore, notices under S.148 were issued to all the assessees in response to which the assessees have filed their returns of income, admitting the same incomes, which were admitted in the original returns of income. During the reassessment proceedings, the assessees have filed .....

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assage or approach road for individual plots and the property is not abutting the main road; (d) that there occurred certain deaths in the family after the purchase of the property, due to which it was decided to dispose of the property, as soon as possible and that no one was prepared to buy the property and no one was coming forward to buy the property knowing that the property is against Vastu and is also branded as haunted one in the locality; (e) that in the year 2005, the present buyer cam .....

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the Joint Sub Registrar Office Hyderabad revealed that the market value as assessed by the Sub-Registrar as on 20.5.2005 was ₹ 8,250 per sq. yard for both commercial as well as residential area. (h) That the rate fixed in the MOU was ₹ 18,800 per sq. yard, whereby the sale consideration of the property is much more than the market value as per the Market Value Guideline fixed by the Sub-Registrar s Office. 5. It was accordingly submitted that the sale deeds in respect of the above pr .....

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property was in residential area and not in commercial area. 6. It was also submitted that even though circle rates are applied in respect of valuation of land in an area, there could be huge variations in the prices of land falling even within the circle on account of location factors and hence same value cannot be adopted for all the plots in the area. It was accordingly requested to drop the proceedings initiated under S.147 of the Act. 7. The Assessing Officer, however, rejected the objectio .....

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at ₹ 4,51,71,285 and a show cause was accordingly issued to the assessees. The assessees filed their objections to the proposed valuation stating that- (1) The DVO has taken properties situated in Jubilee Hills, Nandagiri Hills and MLA Colony in Banjara Hills Road No.12, which are not comparable to the assessee s property, which is situated at Road No.3, Banjara Hills; (2) The location of some of the properties is on the 80 Ft. main road, as against the location of assessee s property on .....

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d on 20.5.2005 on which date the SRO value was only ₹ 8,250 per sq. yd. which should be considered and not the SRO value as on the date of execution of the sale deed; (6) The properties sold are in residential area, whereas the sale instances considered by the DVO are of commercial properties and further erred in not considering the certificate issued by HMDA authorities that the properties of the assessees were located in residential area . The assessees also reiterated the objections rai .....

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fficer, however, was not convinced with the contentions of the assessee and adopting the Fair Market Value at ₹ 4,50,62,000 as deemed total consideration for the sale of the property, computed the capital gains accordingly in the hands of all the other co-owners. 9. Aggrieved, assessees preferred appeals before the CIT(A) stating as under a. The property was located in a residential area. b. The plot had an odd shape. c. The plot was to abutting the main road and there was no separate pass .....

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re than the SRO s market value as on 20.5.2005. h. The land was earmarked for residential use as per GO Ms. No.574 MA, dated 25.8.1980. This had been certified by the Director (Planning), HMDA in his letter dated 26.3.2013. i. The SRO had adopted a rate of ₹ 25,244 for levy of stamp duty in accordance with the rate of ₹ 25,000 for commercial areas whereas the land was residential in nature. j. In accordance with the first proviso to sec.56(2)(vii)(b), the SRO rate prevailing on the d .....

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registration are not the same, the stamp duty value on the date of the agreement may be taken for the purpose of that section. In support of the contention that this provision is applicable to the case of the assessee, reliance was placed upon the judgment of Hon'ble Supreme Court in the case of Sanjeev Lal and Smt. Shanti Lal V/s. CIT (2014) 365 ITR 389 (SC) for the proposition that the SRO value as on the date of agreement is to be considered. The CIT(A) however, distinguished the said jud .....

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ate of transfer is irrelevant. She observed that the assessees who themselves have rejected the correctness of the SRO s rate as per sale deed, have now sought adoption of the SRO rate on one or the other dates as per convenience. She further observed that the decision of the Hon'ble Supreme Court was rendered in the context of S.54 and was based inter alia on the peculiar facts of the case, and therefore, the same cannot be applied to the facts of the case on hand. She further held that bef .....

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T(A) rejected the assessee s contention that the SRO value for commercial property cannot be applied to a residential property. Even with regard to the irregular shape of land and the lack of direct access to main road and such other aspects of the said property, contentions of the assessee were rejected by the CIT(A) by holding that the alleged negative aspects were apparently negligible enough to be ignored by the purchaser to offer a price that was much higher than the SRO rate, as contended .....

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l available on record, we find that the assessees have contended to have entered into an MOU with the purchaser on 20.5.2005. However, the said document has not been produced either before the authorities below or before us. The only evidence in support of this contention is the recital in the registered sale deeds dated 6.3.2006. At page 3 of the sale deed, we find that there is a recital that the vendors 1 to 8 have entered into an MOU on 20.5.2005 with vendee to sell the said property for a c .....

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d 20.5.2005 and 6.2.2006 and all other payments with consecutive cheque Nos.361102 to 361104 and 361124 are made on 6.2.2006. Similarly, the balance of sale consideration was also paid by the consecutive cheque Nos.361120 to 361123 and 361125 dated 4.3.2006 drawn on Standard Chartered Bank, Raj Bhavan Branch. Hyderabad. As seen from the above, the assessee has failed to produce copy of the MOU either before the authorities below or before us. We, therefore, directed the assessee to produce befor .....

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ered into on 20.5.2005 and further amount of ₹ 5 lakh was paid to Shri Baig towards his 1/5th share vide Cheque no.361101 drawn on Standard Chartered Bank, Rajbhavan branch, Hyderabad and that the said cheque was deposited by him in his SB Account No.19721 in Indian Overseas Bank, Lakdikapool Branch, Hyderabad, which has been credited to his account. A copy of the bank statement issued by Indian Overseas Bank is also submitted and it reflected the deposit of ₹ 5 lakhs on 10th of Marc .....

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ect. 14. On this aspect, the Learned Departmental Representative submitted that the assessees have failed to produce the copy of the MOU to prove that the agreement of sale has been entered into by them on 20.5.2005. In the absence of the same, according to him, the agreement of sale dated 20.5.2005 is not acceptable as major portion of the sale consideration has been paid on 6.2.2006 and 6.3.2006, as is evident from the recitals in the sale deed. He also drew our attention to the fact that all .....

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ve been done in this case. He further submitted that though some of the cheques are allegedly dated 6.2.2006, as seen from the bank account of Abdul Arif Baig, the cheque has been encashed after the execution of registered sale deeds, i.e. 10.3.2006, which clearly shows that the sale consideration was received and possession was given only in March, 2006,. Therefore, he raised a doubt about the execution of MOU dated 20.5.2005. Thus, according to him, the SRO value as on 6.3.2006 was correctly a .....

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g the SRO value under S.50C of the Act. We find that this issue is now settled in favour of the assessee by the decisions of the Hon'ble Supreme Court in the case of Sanjeev Lal and Smt. Shantilal Motilal V/s. CIT(365 ITR 389) as well as decisions of the coordinate bench of this Tribunal at Visakhapatnam in the cases of M/s. Lahiri Promoters Visakhapatnam V/s. ACIT, Circle 1(1), Visakhapatnam (ITA No.12/Vizag/2009 dated 22.6.2010) and Moole Rami Reddy V/s. ITO (ITA No.311/Vizag/2010 dated 10 .....

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ansferee/vendee and when such a right is created in favour of the vendee, the vendor is restrained from selling the said property to some one else because the vendee, in whose favour the right in personam is created, has a legitimate right to enforce specific performance of the agreement, if the vendor, for some reason is not executing the sale deed , is very much applicable to the case before us. 17. In the case of K.P.Verghese V/s. ITO and Anr. reported in (1981) 131 ITR 597, the Hon'ble A .....

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have been intended by the legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement and it is quite well- known that sometimes the competition of the sale may take place even a couple of years after the date of the agreement-the market price shoots up with the result that the market price prevailing on the date of the sale exceeds the agreed price by more than 15% of such agreed price. This situ .....

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sh and inequitable to tax the assessee on income which has neither arisen to him nor is received by him. It is difficult to conceive of any rational reason why the Legislature should have thought it fit to impose liability to tax in the case of nature. Many other similar situations can be contemplated where it would be absurd and unreasonable to apply sub-section 53 (2) according to its strict literal construction. 18. In the cases of Lahiri Promoters and Moole Ram Reddy (supra), the coordinate .....

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tered into. 19. In the case before us, the date of agreement of sale or MOU is allegedly dated 20.5.2005, but the said document was not produced before any of the authorities till date. Though the assessee has claimed to have received the advance of ₹ 60,000 in cash on the date of MOU, there is no evidence in support of the cash payment, as contended by the assessee. There is not even a receipt issued in evidence thereof. Therefore, the moot question is whether the recitals in the sale dee .....

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egal and clear title of the owners and also about the encumbrances on the property before proceeding to make the payment and get the sale deeds executed. All this would consume time and money. For this purpose, they would have negotiated with the owners about the sale consideration before embarking on this exercise, Therefore, it cannot be said that the transaction has been agreed to as well as executed on the same date. Thus, there had to be an agreement to sell, either oral or in writing. But .....

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ing of the return of income by the respective assessees, but before the issuance of notice under S.148 dated 1.3.2013 for initiation of re-assessment proceedings Since no concrete material is filed before us in support of the MOU dated 20.5.2005, we are not inclined to accept the same, particularly, since there was a revision of guideline values of the properties in 2006. The SRO has taken the revised guideline value and the date on which such revision has taken place also is not available on re .....

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an the SRO value and no addition was warranted. Therefore, the nature of the property as on the date of transfer attains importance. As pointed out by the learned counsel for the assessee, the said property is notified as a residential area in the encumbrance certificate issued by Registration and Stamps Department dated 12th April, 2013. As seen from pages 32 and 33 of the paper book filed by the assessee, the market value of the property as on 20.5.2005 is ₹ 8,250 per sq. yard for both r .....

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comparison should be with similar properties in the same location. The DVO has not held the assessee s contentions to be wrong, but has only stated that due consideration and weightage has been given to all the incriminating factors shown by the assessee and the market value is worked out in a fair and judicious manner. Thus, the assessee s objection is that the nature of the property has not been dealt with by the DVO. 22. There cannot be any dispute that the nature of the property on the date .....

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rtifying that Road No.3, Banjara Hills, near Sultan-Ul-Uloom Engineering College, as earmarked for residential use, as per the above G.O. We find that none of the authorities below have commented adversely about this document, but in fact have remained silent on the same. This letter issued by the concerned relevant authority is relevant to determine the nature of the property. It is also a fact that even in a residential zone, one may put a property to commercial use by which it would fetch com .....

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ty in question was in residential zone on the date of transfer and therefore, the SRO value for residential property as on 6.3.2006 or the sale consideration received by the assessee whichever is higher is to be adopted under S.50C of the Act. Assessing Officer is directed to compute the capital gains in the hands of the respective assessees accordingly. 23. As regards the reliance of the assessee on the proviso to S.56(2)(vii)(b) of the Act, we find that the said proviso has been brought into t .....

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s are curative in nature, they are effective retrospectively. However, on the legal principle, we have already held that the guideline value as on the date of agreement of sale is to be adopted. Therefore, the decision on this point would only result in an academic exercise. Therefore, this ground is not adjudicated at this stage. 24. In the result, all the appeals, except ITA No.1953/Hyd/2014, are partly allowed. ITA No.1953/Hyd/2014 Shri Mohd. Yasser Sattar Baig: 25. In this case, the brief fa .....

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oceedings under S.143(3) of the Act, the assessment under S.143(3) read with S.147 got merged with assessment order under S.143(3) and accordingly stands disposed off. 26. Aggrieved, the assessee preferred an appeal before the CIT(A), who dismissed the same holding that the additions/disallowances appealed against were not made in the order under S.143(3) read with S.147 dated 10.3.2014 and that both the grounds raised by the assessee owe their genesis to the order under S.143(3) dated 30.2.2008 .....

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re made in the Order appealed against. The CIT(A) is wrong in not adjudicating the Grounds urged by the assessee in the Grounds of Appeal filed. 3. The assessee can make any claim at any stage of the reassessment proceedings or during the course of appeal proceedings, and therefore, the CIT(A) erred in not adjudicating the grounds urged by the Appellant. 5. Any other ground or grounds that may be urged at or before the time of hearing. 27. Having heard both the parties and having regard to the r .....

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