2015 (6) TMI 481 - AT - Income Tax

Tribunal directs fair market value assessment, upholds capital gains treatment on land sale

The Tribunal set aside the lower authorities' orders and directed the Assessing Officer to refer the matter to the Valuation Officer for determining the ... Reference to Valuation Officer to determine the fair market value - Whether in view of Section 50C when the fair market value is less than the registration value adopted by the registering authority, the matter has to be referred to the Valuation Officer? - Held that:- When the fair market value is less than the value adopted by the registering authority, Section 50C of the Act clearly says that the matter has to be referred to the Valuation Officer to determine the fair market value. In this case, both the authorities below have not referred the matter to the Valuation Officer. When the assessee shows the sale consideration at ₹ 5,58,25,000/- in the sale deed, it would not be correct to say that the assessee did not object to the value adopted by the Assessing Officer at ₹ 9,73,58,800/-. In order to avoid dispute with registering authority and for early registration of the document, stamp duty might have been paid for the value determined by the registering authority. However, the actual sale consideration shown in the sale deed cannot be disregarded unless and until the valuation report obtained by the Assessing Officer as required under Section 50C. Therefore, this Tribunal is of the considered opinion that the matter needs to be referred to the Valuation Officer. - Decided in favour of assessee for statistical purposes. Allowability of TDS - Held that:- The ground relating to TDS certificates to the extent of ₹ 3,83,236/- was not disposed of by the CIT(Appeals). This Tribunal is of the considered opinion that when the tax was deduced at source as per the scheme of the Income-tax Act, the Assessing Officer is bound to give credit for the tax deducted at source, otherwise, the very purpose of deducting tax would be defeated. Therefore, this Tribunal is of the considered opinion that the Assessing Officer shall reconsider the issue after verifying the TDS certificates that were said to be filed by the assessee. Accordingly, the matter is remitted back to the file of the Assessing Officer. - Decided in favour of assessee for statistical purposes. Assessability of surplus on the sale of land - Held that:- It is not the case of the Revenue that the order of the Tribunal was stayed by the High Court for assessment year 2004-05. In those circumstances, the mere pendency of appeal before the High Court cannot be a reason to take a different view. Therefore, by following the order of this Tribunal for assessment year 2004-05 in the assessee's own case the CIT(Appeals) has rightly directed the Assessing Officer to assess the surplus on the sale of lands under the head “capital gains”. We do not find any infirmity in the order of the CIT(Appeals) and accordingly confirm the same. - Decided against revenue. Issues:1. Valuation of property for assessment under Section 50C of the Income-tax Act, 1961.2. Allowability of TDS certificates not claimed in the return of income.3. Assessability of surplus on the sale of land under the head of capital gains.Valuation of Property (Section 50C):The case involved the sale of two plots where the Sub-Registrar valued the property for stamp duty at a higher amount than the sale consideration. The Assessing Officer adopted the higher value for assessment under Section 50C of the Act without referring the matter to the Valuation Officer. The representative for the assessee argued that the matter should have been referred to the Valuation Officer as per Section 50C. The Tribunal agreed, emphasizing that the actual sale consideration in the deed cannot be disregarded without a valuation report from the Valuation Officer. The Tribunal set aside the lower authorities' orders and directed the Assessing Officer to refer the matter to the Valuation Officer for determining the fair market value.Allowability of TDS Certificates:The issue revolved around TDS certificates totaling a specific amount not claimed in the income tax return. The representative for the assessee contended that these certificates should be considered, while the Departmental Representative argued that since the certificates were not filed along with the return or before the CIT(Appeals), they were not considered by the lower authorities. The Tribunal held that the Assessing Officer must give credit for tax deducted at source to fulfill the purpose of the Income-tax Act. The matter was remitted back to the Assessing Officer for verification of the TDS certificates and granting credit accordingly.Assessability of Surplus on Sale of Land:The dispute arose from the treatment of profit on the sale of land as either business income or capital gains. The Assessing Officer had reopened the assessment to treat the profit as business income, but the CIT(Appeals) directed it to be assessed as capital gains, following a previous order in the assessee's case for a different assessment year. The Tribunal upheld the CIT(Appeals)' decision, noting that the mere pendency of an appeal before the High Court did not justify a different treatment. The Tribunal confirmed the direction to assess the surplus on the sale of land under the head of capital gains, dismissing the Revenue's appeal.In conclusion, the Tribunal allowed the assessee's appeal for statistical purposes and dismissed the Revenue's appeal. The judgment emphasized adherence to the provisions of the Income-tax Act, proper valuation procedures, and the significance of treating income sources correctly for tax assessment purposes.