Gujarat High Court

Principal Commissioner Of Income ... vs Natvarlal Purshottamdas Patel on 13 December, 2022

Bench: Mauna M. Bhatt

    C/TAXAP/879/2018                             JUDGMENT DATED: 13/12/2022




           HIN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                       R/TAX APPEAL NO. 879 of 2018


FOR APPROVAL AND SIGNATURE:


HONOURABLE MS. JUSTICE SONIA GOKANI                        sd/-

and
HONOURABLE MRS. JUSTICE MAUNA M. BHATT                     sd/-

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1    Whether Reporters of Local Papers may be allowed                  No
     to see the judgment ?

2    To be referred to the Reporter or not ?                           No

3    Whether their Lordships wish to see the fair copy                 No
     of the judgment ?

4    Whether this case involves a substantial question                 No
     of law as to the interpretation of the Constitution
     of India or any order made thereunder ?

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           PRINCIPAL COMMISSIONER OF INCOME TAX, SURAT-1
                              Versus
                  NATVARLAL PURSHOTTAMDAS PATEL
==========================================================
Appearance:
MR KARAN SANGHANI, LD.STANDING COUNSEL FOR MRS KALPANA K
RAVAL(1046) for the Appellant(s) No. 1
for the Opponent(s) No. 1
==========================================================

    CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI
          and
          HONOURABLE MRS. JUSTICE MAUNA M. BHATT

                             Date : 13/12/2022

                      ORAL JUDGMENT

(PER : HONOURABLE MS. JUSTICE SONIA GOKANI)

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022

1. This tax appeal under Section 260-A of the Income Tax

Act,1961 (the"Act" for short) is at the instance of the revenue,

challenging the order dated 22/11/2017, of the Income Tax Appellate

Tribunal, Surat Bench, Surat in I.T.A. No.2836/Ahd/2013 for Assessment

Year: 2009-10.

2. The facts in brief are, the assessee filed its Return of Income

for the A.Y.2009-10, declaring total income of Rs.43,05,447/-. The

Assessing Officer during assessment proceedings, noticed that the

assessee having 53% share in the property situated at Sachin Surat sold

the same at Rs.57,36,000/. The assessee entered in to agreement for sale

on 29/03/2008, however, the sale deed was registered on 25/07/2008 i.e.

previous year relevant to the A.Y.2009-10. All cheques were cleared in

the month of September,2008 and no payment was realized in A.Y.2008-

09. Thus, entire transaction took place in the financial year 2008-09

(Assessment Year 2009-10). The State Government had given benefit of

lower stamp duty valuation to persons, who had purchased stamp paper

before 31/03/2008 and registered in the year 2008-09. As per A.O. this

benefit was limited to stamp duty payment and could not be extended to

applicability of Sec.50C of the Income Tax Act,1961. Therefore, the

Assessing Officer to ascertain the fair market value, referred the matter to

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022

the Department Valuation Officer's (DVO). He, however rejected the

DVO's report, on the ground that the sale instance of A.Y.2008-09 were

considered when the old Jantri rates were prevalent. The Assessing

Officer therefore taking into consideration Jantri rates prevalent after

01/04/2008 made an addition of Rs.3,72,57,828/- u/s.50C of the IT Act.

3. Aggrieved by the order of the Assessing Officer, the

assessee preferred an appeal before the Commissioner of Income-Tax

(Appeals) ("CIT(A)" for short). The CIT(A), allowed the appeal of the

assessee, by holding that, it is not a case where Section 50C of the Act

can be invoked. CIT(A) also observed that the A.O. was not empowered

to reject the report of the valuation officer. The CIT(A) noted that the

assessee had taken the sale consideration at the valuation adopted by the

stamp duty authority.

4. Against the order of CIT (A), the department preferred

appeal before the Income Tax Appellate Tribunal. The Tribunal

confirmed the order of CIT (A). Challenging the same, present tax appeal

is filed proposing the following questions of law:

(A) "Whether on the facts and circumstances of case and

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022

in law, the Hon'ble Appellate Tribunal is justified in

upholding the decision of the Ld CIT(A) of deleting the

addition of Rs.3,72,57,828/- u/s 50C of the Act made by the

Assessing Officer without appreciating the facts that the

Assessing Officer correctly applied Jantri Rates for the

F.Y.2008-09 and calculated Short Term Capital Gain as the

sale of land was executed during the F.Y.2008-09?"

(B) "Whether on the facts and circumstances of case and

in law, the Hon'ble Appellate Tribunal is justified in

upholding the decision of the Ld CIT(A) of deleting the

addition of Rs.3,72,57,828/- u/s.50C of the Act made by the

Assessing Officer without appreciating the facts that the

Assessing Officer correctly pointed outs defects in the

Report of Valuation Officer and estimated value of land as

per revised Jantri Rate applicable for F.Y.2008-09 i.e. at the

time of registration of deed of the immovable property?"

in law, the Hon'ble Appellate Tribunal is justified in

ignoring the facts brought on record by the AO that the

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022

immunity scheme brought by the state Government of lower

valuation stamp valuation to people who had purchased

stamp papers before 31.03.2008 and made registration after

01.04.2008 is limited to stamp duty payment and cannot be

extended to the applicability of Section 50C of the IT Act?"

(D) "Whether on the facts and circumstances of case and

in law, the Hon'ble Appellate Tribunal is justified in

upholding the decision of ld CIT(A) for deleting the addition

of Rs.3,72,57,828/- u/s 50C of the Act made by the Assessing

Officer without appreciating the facts that all the payment

for sale were realized during the F.Y.2008-09?"

5. Heard learned Standing Counsel Mr.Karan Sanghani for

Mrs.Kalpana Raval, learned Senior Standing Counsel for the appellant.

He submitted that order of the Tribunal is erroneous as the State

Government had given benefit of lower stamp duty valuation to the

persons, who had purchased stamp paper before 31/03/2008 and

registered in the year 2008-09, therefore, the said benefit cannot be

extended to applicability of Sec.50C of the Act. Further in this case, no

amount was realised in the A.Y.2008-09. Undisputedly sale deed was

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022

registered on 25/07/2008 and assessee had also shown capital gain in the

A.Y.2009-10. Therefore, the A.O. was correct in assessing the capital

gain considering the Jantri value prevalent on 01/04/2008.

6. The Tribunal relying upon the decision rendered in the case

of Hasmukhbhai M. Patel v. ACTT Circle - 1(1) Baroda reported in

[2011]12 taxmann.com 300(Ahd), held as under:

"8. There is no dispute regarding sale consideration. The

dispute regarding the rate adopted on the basis of

information collected from Stamp Duty Authorities with

regard to various rates which were adopted for the purpose

of payment of stamp duty in respect of transfer of property in

various area. On the basis of such information, the AO

worked out the value of land sold and adopted the same for

the purpose of stamp duty made taken the same for the

purpose of computing capital gain. In our opinion, this

exercise is to be made by the AO Stamp Duty Authorities

and not by the AO, The AO therefore, not justified to adopt

the value other than as adopted by the Stamp Duty

Authorities. As per the provision of section 50C only

C/TAXAP/879/2018 JUDGMENT DATED: 13/12/2022

assessed value by the Stamp Duty Authorities is to be

considered for the purpose of sale consideration of property

if the consideration shown in agreement to sale. In doing so,

less than the Stamp Duty Authorities valuation. In view of

these facts and circumstances, and respectfully following the

decision of co-ordinate Bench (supra) we do not find any

fault or infirmity in the order of ld.CIT(A), fair same is

upheld. Consequently, appeal of the revenue is dismissed."