2012 (11) TMI 753 - AT - Income Tax

Tribunal orders re-adjudication on valuation, capital gain, and possession date in appeal.

The Tribunal vacated the CIT(A)'s findings and directed a re-adjudication of the issues related to the non-disposal of specific grounds of appeal, ... Calculation of long term capital gain - determination of date of sale – sale of factory land - enhancement in the value of consideration – Held that:- In the instant case, the agreement to sell was entered in to on 8.1.2007 while the sale deed was executed on 14.8.2007 and registered. There is not even a whisper in the assessment order regarding handing over of the possession while the ld. CIT(A),without even referring to various terms and conditions in the agreement to sell or sale deed, accepted the submissions of the assessee that possession was handed over on 8.1.2007 itself. – matter remanded to CIT to bring out clearly as to when the possession of aforesaid immovable property was actually allowed - Decided in favor of assessee for statistical purposes. Issues Involved:1. Non-disposal of specific grounds of appeal by CIT(A).2. Arbitrary valuation by the Assessing Officer (AO).3. Incorrect addition of long-term capital gain.4. Applicability of section 50C(2) to the appellant company.Issue-wise Detailed Analysis:1. Non-disposal of Specific Grounds of Appeal by CIT(A):The assessee contended that the CIT(A)-XVII did not dispose of ground No.1, which argued that the enhancement in the value of consideration for calculating long-term capital gain was incorrect and bad in law. The CIT(A) also did not address ground No.3, which claimed that the AO's valuation findings were arbitrary and ignored available material, and ground No.4, which argued that the addition of long-term capital gain was incorrect and not permissible under the law. The Tribunal noted these omissions and directed the CIT(A) to re-adjudicate these grounds.2. Arbitrary Valuation by the Assessing Officer (AO):The AO noticed that the assessee sold a factory shed for Rs. 25 lakhs, while stamp duty was paid on a value of Rs. 46,72,000. The AO added Rs. 10,99,885 as long-term gain instead of the loss returned by the assessee. The CIT(A) upheld this, stating that the value adopted by the stamp valuation authority was not challenged by the appellant, thus making it mandatory under section 50C to adopt this value for computing capital gains. The Tribunal found that the AO did not record any findings on when the transaction was completed or possession handed over, and the CIT(A) did not refer to any evidence or relevant terms in the agreement to sell or sale deed. The Tribunal directed the CIT(A) to re-adjudicate the issue, considering when the possession was actually handed over.3. Incorrect Addition of Long-term Capital Gain:The assessee argued that the AO was not justified in adopting the sale consideration of Rs. 46,72,000 for the year under consideration, as the registration was not done, making section 50C provisions inapplicable. The Tribunal observed that the CIT(A) accepted the assessee's submission without verifying evidence regarding the possession of the property. The Tribunal emphasized the need to determine whether there was a transfer of a capital asset in the relevant year, considering provisions of section 53A of the Transfer of Property Act. The Tribunal vacated the CIT(A)'s findings and directed a fresh adjudication on when the possession was handed over.4. Applicability of Section 50C(2) to the Appellant Company:The CIT(A) held that section 50C(2) was applicable to the appellant company. However, the Tribunal noted that the AO did not refer the valuation to the valuation officer, which the assessee requested. The Tribunal pointed out that the CIT(A) did not allow the AO an opportunity to verify the assessee's contention about the possession date and did not consider the terms and conditions in the agreement to sell and sale deed. The Tribunal directed the CIT(A) to re-adjudicate the issue, considering all relevant evidence and terms.Conclusion:The Tribunal vacated the CIT(A)'s findings and restored the issues to the CIT(A) for re-adjudication, directing to bring out clearly when the possession of the immovable property was actually handed over. The Tribunal emphasized considering the terms and conditions mentioned in the agreement to sell and the sale deed. The appeal was allowed for statistical purposes, with no additional grounds raised.