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All India Federation of Cooperative Spinning Mills Ltd. Versus ACIT – 1 (1) , Mumbai

2016 (7) TMI 835 - ITAT MUMBAI

Short term capital gains u/s 50 - stamp duty valuation - refer the matter to the DVO - assessee is a mutual association registered u/s 25 of the Companies Act, 1956 engaged in strengthen the cooperative spinning sector and seeking redressal of its various problems - Held that:- A.O. has rightly invoked and applied the deeming provisions of section 50C of the Act whereby the value adopted by the stamp duty authorities of ₹ 1,71,75,000/- was adopted by the AO as full value of consideration f .....

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Hence, we set aside the order of the ld. CIT(A) and confirm the orders of the A.O. adopting ₹ 1,71,75,000/- as full value of consideration under deeming provisions of Section 50C of the Act for the purposes of Section 48 of the Act - Non-granting of credit for tax deducted at source and non-granting of credit for self assessment tax paid - CIT(A) has dismissed these grounds observing that the alternative remedies for the grievances of the assessee are available with the assessee which .....

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learned CIT(A) on both these issues and restore these issues to the file of AO for de-novo determination on merits after examination and verification of the claim of the assessee as indicated above. - I .T.A. No. 6555/Mum/2013 - Dated:- 13-7-2016 - Shri Amit Shukla, Judicial Member And Shri Ramit Kochar, Accountant Member For the Assessee : Shri Bhupendra Karkhanis For the Revenue : Shri Mohd Javed, CIT DR ORDER Per Ramit Kochar, Accountant Member This appeal, filed by the assessee company, bei .....

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ised by the assessee company in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called the Tribunal ) read as under:- 1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) erred in upholding the action of the learned Assessing Officer in invoking the provisions of section 50C of the Income Tax Act, 1961 and thereby erred in confirming the action of the learned Assessing Officer of making addition to .....

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provisions of section 251 (2) of the Income Tax Act, 1961, and as such doing so is wrong and contrary to the facts and circumstances of the case, provisions of Income Tax Act, 1961 and the Rules made thereunder. (b) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) ought to have taken the value adopted by the stamp valuation authority ofRs.1,71,75,000/- instead of the value determined by the Valuation Officer of ₹ 1,88,94,800/- .....

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) erred in dismissing the ground of appeal of the appellant against non-granting of credit for tax deducted at source amounting to ₹ 11,165/- claimed by the appellant, which is wrong and contrary to the facts and circumstances of the case, provisions of Income Tax Act, 1961 and the Rules made thereunder. (b) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) ought to have directed the learned Assessing Officer to grant the appropr .....

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to the facts and circumstances of the case, provisions of Income Tax Act, 1961 and the Rules made thereunder. (b) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) ought to have directed the learned Assessing Officer to grant the credit of Self-Assessment Tax paid by the appellant and not doing so is wrong and contrary to the facts and circumstances of the case, provisions of Income Tax Act, 1961 and the Rules made thereunder. 3. The .....

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On being asked to furnish the detail of the property sold, the assessee furnished the sale agreement dated 29th May, 2008 wherein the sale consideration of the capital asset sold was ₹ 1,60,00,000/- whereas the stamp valuation authorities valued the said property at ₹ 1,71,75,000/- for the purposes of payment of stamp duty for registration of the said property. The assessee was asked to explain by the AO as to why the stamp valuation authority value of ₹ 1,71,75,000/- should n .....

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to the Departmental Valuation Officer(DVO) u/s. 50C(2) of the Act, however, the reply from the DVO was not received till the conclusion of the assessment proceedings u/s 143(3) of the Act. Thus, the A.O. pending receipt of valuation report from DVO, to protect the interest of the Revenue considered the Stamp Valuation Authority Value of ₹ 1,71,75,000/- in accordance with mandate of Section 50C(1) of the Act instead of sale consideration of ₹ 1,60,00,000/- as full value of considerat .....

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ed by the AO u/s. 143(3) of the Act. 4. Aggrieved by the assessment order dated 22-12-2011 passed by the A.O. u/s. 143(3) of the Act, the assessee filed its first appeal before the learned CIT(A). 5. Before the learned CIT(A), the assessee submitted that the title to the said premises was not free from dispute which has adversely affected the contract amount or fair market value of the premises at the time of sale transaction and hence there is no understatement of consideration as it would not .....

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DVO u/s 50C(2) of the Act. It was also submitted that Income-tax is a tax on real income. The hypothetical income cannot be brought to tax which is not the intention of Section 50C of the Act. The ld. CIT(A) considered the submissions of the assessee and observed that the A.O. had determined the sale consideration as per stamp duty valuation adopted by stamp valuation authorities for registering the property. Reference was made by the A.O. to the Departmental Valuation Officer but valuation repo .....

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the valuation report of DVO has arrived and the value estimated by DVO was at ₹ 1,88,94,800/- which is more than the value adopted by the stamp valuation authority of ₹ 1,71,75,000/- , as against sale consideration of ₹ 1,60,00,000/- . The said valuation report of DVO was forwarded by the AO to the learned CIT(A) with the request to adopt the value computed by DVO of ₹ 1,88,94,800/- as full value of consideration u/s 48 of the Act keeping in view provisions of Section 50C .....

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o submit various documents and thus requirement for providing opportunity to the assessee for the purpose of valuation was also fulfilled. The said valuation report of the DVO exhibits details of methods, rates and criteria for determining the value so adopted by the DVO. The ld. CIT(A) thus adopted the value of ₹ 1,88,94,800/- as full value of consideration for the purposes of 48 of the Act as per the valuation report submitted by the DVO which was higher than the value as per stamp duty .....

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before the Tribunal. 7. Before us, the ld. Counsel for the assessee submitted that the property consisting of units situated on 1st floor was sold for ₹ 1,60,00,000/- vide consolidated agreement to sale dated 29-05-2008 while the value adopted by the stamp duty authority was ₹ 1,71,75,000/- in the said agreement to sale dated 29-05-2008. However, the DVO determined the value at ₹ 1,88,94,800/-. The ld. Counsel submitted that the AO adopted the value as determined by stamp duty .....

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units on the same day i.e. 29-05-2008 vide two separate agreement to sale on 1st and 2nd floor in the same building respectively and the agreement value for units in both the floors was in aggregate was ₹ 3.6 crores while stamp duty value of units in both the floors was ₹ 3.36 crores, hence, section 5OC of the Act has no applicability keeping in view both the agreements to sale together as stamp duty value was lower than actual sale consideration but if the agreement to sale are con .....

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000/-. With respect to units sold in second floor, there is no dispute as the sale consideration is ₹ 2,00,00,000/- while stamp duty valuation is ₹ 1,64,52,590/-. There are two separate agreement to sale both dated 29-05-2008 for the units sold on first and second floor respectively . Thus the dispute is with respect to units sold on 1st floor whereby the stamp duty valuation is ₹ 1,71,75,000/- while sale consideration in agreement to sale dated 29-05-2008 is ₹ 1,60,00,00 .....

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was sold on lower rate and hence higher value than sale consideration cannot be adopted. The A.O. has adopted the stamp duty valuation while the ld. CIT(A) enhanced the value keeping in view DVO report. The learned counsel submitted that Section 50C of the Act can be invoked and value adopted if the said value as per stamp duty valuation is higher than the actual consideration , but if DVO valued the property at higher than the stamp duty value, the said valuation by DVO cannot be adopted as per .....

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re are units sold in two different floors vide two different sale deeds and agreement to sales respectively by the assessee which are placed in paper book filed with the Tribunal at page 23- 161. The value is to be taken separately as per each agreement to sale both dated 29-05-2008 and it cannot be clubbed as contended by the ld. Counsel because there are two different agreement to sales although both are dated 29-05-2008. He submitted that the property on the first floor was sold for a conside .....

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the rival contentions and also perused the material available on record including case laws relied upon by the parties. We have observed that the assessee has sold nine units in two different floors i.e. 1st Floor (unit no 1,2A,2B , 3 and 4 admeasuring 2500 square feet) and 2nd Floor( unit no. 5,6,7 and 7 admeasuring 2300 square feet) together with two car parking space situated at Natasha Plaza, Chembur,Mumbai vide two separate agreement to sale both dated 29-05-2008 with respect to each floor .....

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al gains and cannot be clubbed together as contended by the assessee in view of provisions of Section 50C of the Act and hence this contention of the assessee is rejected. Thus, now the dispute is only with respect to the determination and adoption of full value of consideration for the purposes of Section 48 of the Act keeping in view provisions of Section 50C of the Act for computing short term capital gain u/s 50 of the Act with respect to units situated at first floor sold vide agreement to .....

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able to the units sold on second floor. The A.O. has rightly invoked the deeming provisions of section 50C of the Act with respect to units sold situated in first floor as the sale consideration of ₹ 1,60,00,000/- was lower than the stamp duty value adopted by stamp duty authorities of ₹ 1,71,75,000/-. The A.O. has referred the matter to the valuation Officer u/s 50C(2) of the Act as the assessee contended that there is a dispute with respect to title pending in Hon ble Small Cause C .....

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e sale consideration was lower than stamp duty value of the property adopted by stamp valuation authority as the DVO report did not arrived before the time barring period for concluding assessment u/s 143(3) of the Act . However, later on the valuation report of DVO was received which valued the property at ₹ 1,88,94,800/-. The assessee has submitted detailed documents before the DVO at the time of valuation which find mentioned in the ld. CIT(A) order as well in DVO report which is placed .....

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operty at Hon ble Small Cause Court,Mumbai as the same was already factored by DVO while valuing the property . The ld. CIT(A) considered the Departmental Valuation Officer s rate and enhanced the value by substituting the value as determined by the Departmental Valuation Officer of ₹ 1,88,94,800/- as full value of consideration for the purposes of Section 48 of the Act under the deeming provisions of Section 50C of the Act . We have observed that the provisions of section 50C(1), (2) and .....

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the value as determined by stamp duty valuation authorities then in that case, the value as adopted by stamp duty authorities shall be deemed to be the full value of consideration for the purposes of Section 48 of the Act under the provisions as stipulated u/s 50C(3) of the Act. In the instant case, the value determined by the DVO is higher than the value adopted by the stamp duty authority. The value adopted by the stamp duty registration authority was ₹ 1,71,75,000/- while DVO valued th .....

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and or building or both, is less than the value adopted or assessed 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 shall, for the purposes of section 48, 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 .....

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to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section16A, clause (i) of subsection (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, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16 .....

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ceived or accruing as a result of the transfer.] The ld. CIT(A) appellate order dated 20-08-2013 also suffers from infirmity to the extent that the learned CIT(A) has not given any notice to the assessee before making the enhancement and principles of natural justice are breached. Thus, in our considered view keeping in view the interest of justice as well mandate of Section 50C of the Act as per our detailed reasoning and discussions as set out above, we hold that the A.O. has rightly invoked a .....

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