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2016 (5) TMI 1019 - ITAT PUNE

2016 (5) TMI 1019 - ITAT PUNE - TMI - Revision u/s 263 - understatement of fair market value for the purpose of stamp duty - Held that:- . Nothing has been brought on record that the Ld.CIT had some material before him that the assessable value is more and that the stamp valuation authorities have raised additional demand on account of stamp duty/additional stamp duty till the date of passing of the order although substantial time has elapsed from the date of registration (25-02-2010) and passin .....

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the assessee are allowed. - ITA No.807/PN/2015, ITA No.808/PN/2015 - Dated:- 22-4-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Appellant by : Shri J.P. Bairagra For The Respondent : Shri S.K. Rastogi ORDER PER R.K. PANDA, AM : The above appeals filed by the respective assessees are directed against the separate orders dated 25-03-2015 passed u/s.263 by the Principal CIT-I, Aurangabad relating to Assessment Year 2010-11. ITA No.808/PN/2015 (Shri Dhirendra Mahendraprasad Mehra) : .....

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us the capital gain of ₹ 24,23,000/- has been left to be added. According to him, the assessee along with Mr. Surendra S. Mehra had individually and independently acquired the ancestral land out of Survey Nos. 44 and 45 to the extent of 2 Hector 80R by virtue of family settlement. The above land was sold for a consideration of ₹ 2,16,15,000/- to M/s. Om Sai Ram Steel and Alloys Pvt. Ltd., Jalna vide sale deed No.990/2010 executed on 25-02-2010 before the Joint Sub-Registrar (Class-2) .....

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ch an amount of ₹ 1,100/- per sq.mtr as stamp duty is chargeable as per the prevailing rates for the period 01-01-2010 to 31-12-2010. Accordingly, while executing the sale document, the stamp duty authorities had assessed the stamp duty payable by the assessee and Mr. Surendra S. Mehra at ₹ 12,97,000/- for 47,300 sq.mtrs. He noted that the stamp duty authorities have assessed the stamp duty payable for the aforesaid land collectively instead of individually even though there are two .....

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hirendra M. Mehra, i.e. the assessee comes to ₹ 90,20,000/- and in the case of Mr. Surendra S. Mehra it is ₹ 1,76,55,000/- He, therefore, held that the total assessable value for the purpose of stamp duty in respect of the assessee and Mr. Surendra S. Mehra works out to ₹ 2,66,75,000/-, i.e. ₹ 90,20,000/- + ₹ 1,76,55,000/-. However, the same has been assessed at ₹ 2,16,15,000/-. Thus, there is understatement of fair market value for the purpose of stamp duty o .....

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rovisions of law after giving due opportunity of being heard to the assessee. The relevant observation of the Ld.CIT at Para 3.1.1 to para 4 of the order read as under : 3.1.1 The submissions of the AR of the assessee are considered. From the above submissions of the assessee it is clear that he has not challenged the stamp duty valuation as per the show cause notice on facts. Therefore, there is no doubt that the stamp duty valuation has been understated. To determine the value of land for the .....

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ssessable) has been inserted w.e.f 1/10/2009 to take care of such cases. Therefore in this case the valuation of the land for the purpose of income shall be determined as per the amended provisions of sec. 50C(1), because the assessee has sold its land on 25.02.2010. However, keeping in view assessee s objection regarding reassessing the value by an authority other than the stamp duty authority, I find it fair and just. if the valuation arrived at as per the show cause notice is endorsed by the .....

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per facts and submissions of the assessee and also for necessary verification in the light of the observations made above, after affording proper opportunity to the assessee. 4. Aggrieved with such order of the Prl.CIT the assessee is in appeal before us with the following grounds : 1. The learned CIT -1, Aurangabad erred in holding that assessment order passed by AO u/ s. 143(3) on 04-03-2013 IS erroneous in so far as it is prejudicial to the interest of the revenue. 2. The Ld. CIT further erre .....

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.f. 01-10-2009 are applicable even in respect of sale document registered by paying stamp duty on the value determined by stamp duty authorities. It is submitted that the word "or assessable" is inserted to cover the cases where the sale document is not registered and therefore value of property as per stamp duty authorities is not available. 4. The Ld. CIT further erred in adopting value of land sold by the appellant u/s.50C by calculating in its own way as against value of sale as pe .....

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or amend the foregoing grounds, which are without prejudice to one another, at the time of hearing. 5. The Ld. Counsel for the assessee strongly objected to the action of the Ld.CIT assuming jurisdiction u/s.263 of the I.T. Act. He submitted that the assessee during the impugned assessment order has sold the ancestral property. For the purpose of calculating the long term capital gain the assessee had adopted the cost as on 01-04-1981 on the basis of a certificate issued by Government Approved .....

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refer the matter to the valuation officer in case he is of the opinion that the value so claimed by the assessee is at variance with its fair market value. He submitted that the said clause has been inserted w.e.f. 01-07-2012 which is effective from A.Y. 2013- 14. Earlier, the AO could have referred the matter to the DVO only if such value is less than the fair market value. 7. Referring to the Explanatory Notes to the Provisions of the Finance (No.2) Act, 2009 the Ld. Counsel for the assessee .....

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duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of consideration received or accruing as a result of such transfer for computing capital gain. However, the present scope of the provisions does not include transactions which are not registered with stamp duty valuation authority, and executed through agreement to sell or power of attorney. 23.2 With a view to preventing the leakage of revenue, section 50C is amended, so as to provide that wh .....

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rted in the sub-section (2) of the section 50C, so as to clarify the meaning of the term assessable . 23.4 Applicability - These amendments have been made applicable with effect from Ist October, 2009 and will accordingly apply in relation to transactions undertaken on or after such date. 8. Referring to the decision of Hon ble Madras High Court in the case of CIT Vs. R. Sugantha Ravindran reported in 352 ITR 488 the Ld. Counsel for the assessee drew the attention of the Bench to the following o .....

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jected to section 50C application. However, after introduction of the words or assessable such transfers where the value is assessable by the valuation authority are also brought into the ambit of section 50C. Thus, such introduction of a new set of class of transfer would certainly have prospective application only. In Circular No. 5 of 2010, dated June 3, 2010, issued by the Board, it is made clear that the amendment made by the Finance (No.2) Act, 2009, is prospective in nature and cannot be .....

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cable to transfer of properties without or before registration. 9. In his alternate argument the Ld. Counsel for the assessee submitted that against the order of the AO the assessee preferred an appeal before the Ld.CIT(A) who vide order dated 31-07-2014 has decided the issue considering the reference made by the AO for determination of the fair market value of the property to the DVO u/s.55A of the Act and thereby has deleted the addition of ₹ 66,68,712/- made by the AO. Therefore, once t .....

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8377; 12,97,000/- has been paid towards the stamp duty for the registration which was accepted by the Joint Sub-Registrar (Class 2), Jalna and no additional demand on account of stamp duty/additional duty has ever been raised by the Sub-Registrar, Jalna or any other State Government authority though a period of more than 5 years has elapsed from the date of execution for which the value adopted by the Sub-Registrar at ₹ 2,16,15,000/- is correct and need no further interference, the Ld.CIT, .....

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e on the other hand heavily relied on the order of the CIT. He submitted that the theory of doctrine of merger is not applicable to the facts of the present case since the issue before the Ld.CIT(A) was cost of acquisition and sale consideration was not the issue before the Ld.CIT(A). Therefore, the argument of the Ld. Counsel for the assessee regarding theory of merger is not applicable to the facts of the present case. He submitted that the Ld.CIT s order is based on facts which the AO while p .....

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of the opinion that the assessable value of the property transferred on the basis of the stamp duty payable as per Governments ready reckoner is ₹ 2,66,75,000/- for the entire land. Thus, there is under assessment of fair market value for the purpose of section 50C of the Act amounting to ₹ 50,60,000/- in case of land sold by the assessee and Shri Surendra S. Mehta, the details of which are as under : Sr.No. Name of the assessee Area covered in sale deed in square meter Amount of st .....

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.2,66,75,000/- Rs.50,60,000/- 13. Although the assessee had stated before the Ld.CIT that the consideration received by him for transfer of the land has been accepted by the Sub-Registrar, Jalna for executing the registration and no additional demand on account of stamp duty/additional stamp duty has been raised, we find the Ld.CIT without any evidence at his disposal rejected the aforesaid explanation and set aside the order u/s.263 by giving a direction to the AO to get the computation endorse .....

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ovisions of sub-section(1) of section 50C read as under : 50C (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as 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] sha .....

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ing the above circular has observed as under : 8. We have perused the above circular. It is stated therein that the scope of the provisions does not include transaction which are not registered with stamp duty valuation authority and executed through agreement to sell or power of attorney. Consequently, it is made clear therein that the amendments have been made applicable with effect from 01.10.2009 and therefore, they will apply only in relation to transaction undertaken on or after such date. .....

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Act 2 of 2009, we fail to understand as to how the Revenue can canvass the same issue in this case which in effect is against the circular issued by the Board. Certainly, the Revenue is bound by the circular issued by the Board. At this juncture, it is pertinent to note that in a decision made in the case of State of Tamil Nadu and another Vs. India Cements Ltd. and another reported in (2011) 40 VST 225 (SC), the Honourable Supreme Court has held that the circulars issued by the Revenue are bin .....

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of BPV or BSV, whichever is earlier, as is pleaded on behalf of the first respondent. It is trite law that circulars issued by the Revenue are binding on the departmental authorities and they cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law. 22. In Paper Products Ltd. Vs. Commissioner of Central Excise ((2001) 247 ITR 128 SC: (1999) 7 SCC 84), while interpreting Section 37B of the Central Excise Act .....

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ars and the Department's action has to be consistent with the circular which is in force at the relevant point of time." 10. Even otherwise, we are of the firm view that the insertion of words "or assessable" by amending Section 50C with effect from 01.10.2009 is neither a clarification nor an explanation to the already existing provision and it is only an inclusion of new class of transactions namely the transfers of properties without or before registration. Before introduci .....

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plication only and not otherwise. Hence the assessee's transfer admittedly made earlier to such amendment cannot be brought under Section 50C. 11. Applying the above said decision of the Honourable Apex Court to the facts and circumstances of the case as well as by considering the scope of Section 50C, we hold that the Revenue is not entitled to canvass the correctness of the order passed by the Tribunal, more particularly in the light of the circular issued by the Board. Accordingly, the Ta .....

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Ld.CIT inter-alia had given the following reply : 4) The consideration received by me on the sale of the said land is ₹ 88,65,000/- and my share of the value of the said property accepted by the Sub-Registrar-II, Jalna for executing the registration is also ₹ 88,65,000/- and the same has been accepted and no additional demand on account of stamp duty/additional stamp duty has been raised. The full value of consideration for the purposes of section 48, declared by me has been rightly .....

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that the assessable value is more and that the stamp valuation authorities have raised additional demand on account of stamp duty/additional stamp duty till the date of passing of the order although substantial time has elapsed from the date of registration (25-02-2010) and passing of the order u/s.263 (25-03-2015). 21. The Hon ble Supreme Court in the case of Malabar Industrial Company Ltd. Vs. CIT reported in 243 ITR has held as under (short notes) : A bare reading of provisions of section 26 .....

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is prejudicial to the Revenue - recourse cannot be had to section 263(1). There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the AO; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. 22. The Hon ble Bombay High Court in the case of CIT Vs. Gabriel India Ltd. reported in 203 I .....

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ner to satisfy him, prima-facie, that the two requisites are present - Power cannot be exercised at the whims and caprice of Commissioner. 23. In view of our above discussion and following the decisions cited (Supra) and in absence of any material before the Ld.CIT that the revenue authorities have raised additional demand on account of stamp duty/additional stamp duty after a lapse of more than 5 years the order of the CIT setting aside the assessment to the file of the AO, in our opinion, is n .....

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prejudicial to the interest of the revenue. 2. The Ld. CIT further erred in substituting the sale value of plot of land u/s.50C on the basis of sale value of land calculated by him on the basis of Government of Maharashtra's ready reckoner as against the value adopted by AO on the basis of stamp duty value assessed by the Stamp Duty Authorities for payment of stamp duty as per provisions of section 50C of the Act. 3. The Ld. CIT further erred in holding that provisions of section 50C after .....

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