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TMI Blog2023 (2) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoked in the case of the respondent since the transfer of land was made to the NHAI. (ii) Whether the decision of the Learned Hyderabad "SMC" Bench of the Tribunal arrived at in ITA Nos. 1680/Hyd/2018 & 1681/Hyd/2018 is applicable to the instant case. (iii) Whether the Learned Tribunal erred in law in upholding the decision of the Commissioner of Income Tax (Appeals) with regard to the claim of shortage of coal without appreciating the materials on record and without giving its findings on the issue. (iv) Whether the Learned Tribunal is justified in allowing the claim of shortage of coal when the respondent in its reply dated 16.12.2017 has stated that there was surplus of coal as shown in the annual account for the F.Y. 2014-2015. 2. We have heard Mr. Vipul Kundalia, learned senior standing counsel along with Mr. Amit Sharma, learned junior standing counsel for the appellant and Mr. Sumit Ghosh assisted by Mr. Anupam Dey, Mr. Souradeep Majumdar and Mr. Bhaskar Sengupta, learned advocates for the respondent. 3. The respondent filed its original return of income on 28.09.2015 declaring loss of 591,64,96,295/-.Subsequently revised return was filed on 16.01.2017 declaring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Clothing Company Limited Versus Assistant Commissioner of Income Tax 2010 326 ITR 245 (Mad), for the proposition that the assessing officer was justified in treating value adopted by the stamp valuation authority as deemed sale consideration received as a result of the acquisition. Further it is submitted that while passing the impugned order on the issue of shortage of coal, the learned tribunal had merely reproduced the findings of the CIT(A) and did not examine the matter in an independent manner. Thus, according to the learned senior standing counsel, the tribunal failed to properly exercise his powers and mechanically dismissed the appeal filed by the assessee. 5. The learned advocate appearing for the respondent assessee submitted that the entire factual position has been clearly brought out in the order passed by the CIT(A) which is a detailed well-reasoned order and the learned tribunal had examined the matter and has affirmed the said order and as such there is no error committed by the learned tribunal. The learned advocate referred to Section 96 of the Right to Fair Compensation and Re- Settlement Act, 2013 and submitted that the said provision states that no in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer did not properly appreciate the quantity of coal as could be seen from all the statements and this was explained before the CIT(A) who has considered the factual matter and granted relief in favour of the assessee and this order was affirmed by the learned tribunal. The learned advocate placed reliance on the decision of the High Court of Rajasthan in Gopa Ram Versus Union of India and Others in Civil Writ Petition No. 12746 of 2017 dated 22.01.2018 for the proposition that Section 24 of the Acquisition Act, 2013 has no application in the acquisition proceedings under National Highways Act, 1956. 6. The first aspect we will deal with is whether the assessing officer was justified in invoking the provisions of the Section 50C of the Act. Admittedly, the land in question was compulsorily acquired for the NHAI. The assessee received compensation of Rs. 4,47,17,396/- from NHAI and valuation of the stamp valuation authority was Rs. 9,95,60,980/-.The assessing officer adopted the full value of sale consideration under Section 50C and calculated the capital gains in the hands of the assessee at Rs. 548,43,584/-. What is to be noted in the instant case is that the transfer of the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contesting the same and without consulting the assessee and that the assessee as the vendor did not have any locus standi in the proceedings and hence the assessee should not be made to suffer by enhancing the assessment. The said explanation offered by the assessee was rejected on the premise that Section 50C of the Act makes it obligatory on the part of the assessing officer to treat the value adopted by the stamp valuation authority as deemed sale consideration received/accrued as a result of transfer. The facts of the case are entirely different and it was not a case of any compulsory acquisition of land as in the case on the hand. Thus, what is to be borne in mind is that in a case of compulsory acquisition of land by the Government there is no room for suppressing the actual consideration received on such acquisition. Unlike the transaction between the private parties where quite often the actual sale consideration paid for acquiring the immovable property is more than the sale consideration disclosed in the sale deed. With a view to curb such transactions, Section 50C of the Act was introduced so as to adopt the market value determined by the stamp duty authorities as the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) and accepted. According to the assessee, the shortage of 27.426.39/- metric tons of coal was actually a surplus and not a shortage. The assessee referred to the annual accounts for the financial year 2014-2015 and copy of the 597th Meeting of the Board of Directors of the appellant company held on 18.08.2015. The CIT(A) after taking note of the explanation offered by the assessee held that there are various circumstances in which a shortage may occur and the assessing officer failed to examine the reason as to why loss has occurred, was there a shortage of funds as a result of which coal could not be purchased or was there any mishap due to which coal could not reach the factory premises, what was the position of expenses on account of purchase and transportation related to coal as compared to the assessment year 2014- 2015, was there any malfunction in the factory unit which led to more consumption of coal and what was action were taken by the company to tied over the crises. Further the CIT(A)faulted the assessing officer for not having examined the import bills, dates of payments, dates of shipment to find out the exact quantity of coal imported by the appellant along wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the 2013 Act, it is relevant to take note of the circular issued by the CBDT dated 25.10.2016 in Circular No. 36/2016. It was pointed out that under the existing provisions of the Income Tax Act an agricultural land which is not situated in specified urban area is not regarded as a capital asset and hence capital gain arising from the transfer (including compulsory acquisition) of such agricultural land is not taxable. It is further stated that Finance (No. 02) Act, 2004 inserted Section 10(37) in the Act from 01.04.2005 to provide specific exemption to capital gains arising to an individual or a HUF from compulsory acquisition of an agricultural land situated in specified urban limited subject to fulfillment of certain conditions. Thus, it was ordered that the compensation received from the compulsory acquisition of an agricultural land is not taxable under the Income Tax Act subject to the fulfillment of certain conditions for specified urban land. It was further stated that the 2013 Acquisition Act came into effect from 01.01.2014 and Section 96 inter alia provides that income tax shall not be levied on any award or agreement made except those made under Section 46 of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case the consideration received or accruing as a result of transfer is less than such value. 3. For the purpose of deciding as to whether Section 50C is applicable in case of compulsory acquisition of capital asset, it would be relevant to take note of the provisions of Section 50C(1) which runs as follows (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] 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. (emphasis by the Court) 4. The object and purpose behind insertion of the said provision in the act was to curb the menace of the use of unaccounted cash in transfers of capital assets. Upon a plain and literal interpretation of the words used in Section 50C it is amply clear that the legislature intende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stamp duty. 7. Now the question arises whether in cases of compulsory acquisition of a capital asset being land or building or both, the provisions of Section 50C will be applicable. 8. In case of a transfer by way of compulsory acquisition, the capital asset being land or building or both vests upon the government by operation of the provisions of the relevant statute governing such acquisition proceeding and subject to the terms and conditions laid down in the said statute being followed. In case of compulsory acquisition the transfer of property takes place by operation of law and the provisions of the Transfer of Property Act or the Indian Registration Act do not have any manner of application to such transfers. The question of payment of stamp duty also does not arise in such cases. 9. This Court accordingly holds that in case of compulsory acquisition of a capital asset being land or building or both, the provisions of Section 50C cannot be applied as the question of payment of stamp duty for effecting such transfer does not arise. 10. In the instant case, the property was acquired under the provisions of the National Highways Act 1956. The property vests by operation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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