TaxTMI 
TaxTMI 
2016 (10) TMI 218
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....see which was as per the registered sale deed. 2.3 The CIT(A) has erred in accepting the argument of the assessee that the mistake had occurred in consideration mentioned in the original sale deed which was to a huge extent. 2.4 The CIT(A) ought to have appreciated that the Valuation Officer had rebutted the objections raised by the assessee pointwise in his final report. 2.5 The CIT(A) erred in ignoring the agreement dt.14.06.2011 being a very vital evidence in arriving at the value of the property. 2.6 The CIT(A) while observing that the stamp duty payment was to be paid by the purchaser and not by the seller, ought not to have ignored the receipt of consideration of Rs. 20,74,60,400/- by the assessee as per the registered .sale deed and signed by the parties. 2.7 The CIT(A) ought to have appreciated that the guideline value adopted by the Stamp Valuation Authority is reflective of the true market value of the property as the Stamp Valuation Authority has not deviated from the guideline value of Rs. 2,910/- per sq.ft. 2.8. The relied upon decision of the Supreme Court in the case of R. Sai Bharathi Vs. J. Jayalalitha & Others ....
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.... access only from Gangai Amman Koil Street and Pillaiyar Koil Street, and the property was not bounded by Old Mahabalipuram Road on any side. 4.2 Since the transfer was done at book value, the AO referred the matter of valuation of the impugned property to the District Valuation Officer (DVO) to ascertain the Fair Market Value (FMV) for the computation of capital gains. The draft valuation report dated 20.03.2015 was received from the DVO valuing the impugned property at Rs. 20,48,38,430/-. The assessee LLP filed its objections to the proposed valuation on 27.03.2015. The AO finalized the assessment on 31.03.2015 assessing the value of the property at Rs. 20,74,60,400/- being the guideline value adopted by the Stamp Valuation Authority at the time of the registration, invoking the provisions of Section 50C of the Act. DVO, after countering the objections of the assessee LLP, issued his final valuation on 27.05.2015. In the report, the DVO estimated the Fair Market Value of the impugned property, as per the draft report, the amount being Rs. 20,48,38,430/-. 5. Regarding slump sale, the CIT(A) observed that as per Section 2(42C) of the Act, Slump Sale is a transfer of one or mo....
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....rpose of stamp duty. This fact is evident from Para No.1 at Page 3 of the registered sale deed dt. 09.11.2011 for transfer of property by the assessee, which reads as follows: "That in pursuance of the said agreement and in consideration of Rs. 20, 74, 60,400/- (Rupees Twenty Crore Seventy Four Lakh Sixty Thousand Four Hundred only) paid by the PURCHASER to the VENDOR, the receipt of which sum the VENDOR herein doth hereby acknowledge and the payment wherefrom the VENDOR doth hereby SELL, CONVEY, ASSIGN AND TRANSFER absolutely unto the PURCHASER the Schedule-B mentioned property, ..." A mere statement by the assessee in the 'rectification deed' subsequently entered on 17.12.2014, during the course of scrutiny proceedings stating that the consideration for' the transferred property was only Rs. 2,27,386/-, as against Rs. 20,74,60,400/- as per the registered sale deed, cannot change the taxability of Capital Gains in the hands of the assessee. The learned CIT(A) accepting this single argument of the assessee has lead his wrong inference in the case. He further submitted that the learned CIT(A) has grossly erred in listing out the 'undisputed facts....
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....pect of date or address is understandable, mistake in the consideration mentioned in the original sale deed, to such a huge extent (rectification deed seeks to rectify the consideration from Rs. 20, 74,60,4001 - to Rs. 2,27,386/ -) cannot be accepted. The learned CIT(A) has erred in accepting this argument of the assessee. • The learned CIT(A) has erred in his observation in Para 9.9 of the order, which is reproduced as under: "The AD, in his order, without rebutting the objections of the appellant company has invoked the provisions of Sec. 50C based on the guideline value of OMR. " It is to be stated that the objections raised by the appellant against the observations of the District Valuation Officer cannot be rebutted by the Assessing Officer but can only be rebutted by the District Valuation Officer. The Valuation Officer has rebutted the objections raised by the assessee, point-wise, in his final report. • The learned CIT(A) has erred in ignoring the agreement dt. 14/06/2011, being a very vital evidence in arriving at the value of the property. The agreement dt.14/06/2011 is the retirement deed between the assessee company and Shri.R....
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..... CIT(A) in deciding the case in favour of the assessee . • Para 9.12 of the Order, in his comments on the assessee not disputing the value adopted by the Stamp Valuation Authority, the CIT(A) has stated as follows: "......In any case, in so far as the stamp duty is concerned, the is paid by the purchaser of the property, in this case being Shri.Ranvir R Shah, and not the seller i.e. appellant LLP. Hence, in my considered opinion, the non challenge of the guideline valuation of OMR for the purpose of stamp duty will not vitiate the case for the appellant LLP. " As rightly observed by the CIT(A), the guideline value adopted by the Stamp Valuation Authority was not challenged by the assessee as the stamp duty payment was to be paid by the Purchaser, Shri. Ranvir R Shah. But, the receipt of consideration of Rs. 20,74,60,400/ - by the assessee as per the Registered Sale Deed dt. 09/11/2011 and signed by the parties to the Registered Deed has been ignored by the CIT(A) without assigning any reason, in deciding the case in favour of the assesee. • Further, the CIT(A), in Para 9.12 of the order, has referred to the decision of the Hon' ble S....
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....of R. Sai Bharathi vs J. Jayalalitha & Others (supra). 9. On the other hand, the ld. AR submitted that the rectification deed of the assessee-company was only for rectification of certain mistakes crept in the original registered documents. He submitted that the DVO has not properly considered the objection filed by the assessee at various stages against the proposal of valuation of property by DVO. According to the ld. AR, the subject property access road is only Gangai Amman Koil Street and Pillaiyar Koil Street and not the OMR. The Sale Deed dated 09.11.2011 registered as Doc. No. 7497/2011 executed by the assessee in favour of Mr. Ranvir R. Shah on the North and West, the access road are mentioned as Gangai Amman Koil Street and Pillaiyar Koil Street respectively. Attached plan to the document makes it clear that there is no access to OMR from this property. According to the ld. LD. A.R , Deed of Rectification dated 17.12.2014 registered as Doc. No.9231/2014 also makes it clear that the subject property is Northern portion of Door No.2/79 Old Mahabalipuram Road, having access only from Gangai Amman Koil Street and Pillaiyar Koil Street and without any access from Old Mahabal....
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....tamp Valuation Authority should not have been disputed in any appeal or revision or reference before any authority, Court or High Court. The ld. LD. A.R further submitted that the reference u/s 50C(2) was not made to DVO to arrive at a Fair Market Value on the basis of the value adopted by the Stamp Valuation Authority, but to arrive at a fair market value without getting influenced by the value adopted by the Stamp Valuation Authority. 12. As regards the objections to the valuation report and order u/s 16A(5) of the Wealth Tax Act, 1957 r.w.s 55A 50C(2) of the Act dt 27.5.2015, the ld. Ld. A.R submitted that the assessee reiterated the objection dt 27.3.2015 filed before the DVO. The DVO has not considered the objection in the proper perspective and given evasive reply to uphold his draft valuation report. He further submitted that while replying to objection No.1, the DVO made a reference to last para under "About the property" in the Valuatio Report for access t the property. The assessee's submission was that the subject property has no access to OMR. In the last para cited by DVO, which was aslso objected to by the assessee in Objection No.7, has after referring to Pillaiya....
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.... subject property while 'Calculation' of the fair market value. 14. We have considered the rival submissions and perused the material on record. In this case, the sale deed was executed on 9.11.2011 in respect of property consisting of land and building at No.2/79, Okkiyam, for a consideration of Rs. 20,74,60,400/-. However, the assessee offered no capital gains in the return of income. It had claimed that it was slump sale for a consideration of Rs. 3,15,00,000/- and computed the capital gains on slump sale for assessment year 2011-12 as follows: Sale consideration Rs.3,15,00,000 Net worth Rs.3,14,98,548 Capital gain on slump sale Rs. 1,451 15. Since there is no transfer of business or undertaking as a whole and also the assessee-company has admitted during the course of survey that there was no business or manufacturing activity since assessment year 2002-03. Further the assessee has already sold the plant and machinery of the business of the assessee undertaking separately during the financial year 2005-06. It is also brought on record that the assessee has assigned separate specific value to the aeets even in the rectification deed dated 17.12.....
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....section (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 16A of that Act. Explanation.-For the purposes of this section, "Valuation Officer" shall have the same meaning as in Clause (r) of Section 2 of the Wealth-tax Act, 1957 (27 of 1957). (3) Subject to the provisions contained in Sub-section (2), where the value ascertained under Sub-section (2) exceeds the value adopted or assessee by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.] 17.1 This section was introduced by the Finance Act, 2002 with effect from 1.4.2003. The intention of the Legislature for introducing this section can be gauged from the Explanatory notes to the amendment. For this purpose, we refer to the same as under: "Introduction.-....
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....essee of a capital asset being land or building or both) is less than the value adopted or assessed by an authority of State Government for the purposes of stamp duty in respect of such transfer. Sub-section (2) thereof is applied in a situation where assessee claims before the Assessing Officer that the value adopted by State valuation authority has not been disputed in appeal, revision or reference before any authority ,Court or High Court. Under that situation, the Assessing Officer may refer valuation of the capital asset to a Valuation Officer and where such reference is made then the provisions of Sub-sections (2)(2A), (3), (4),(5) and(6) of 16A of W.T. Act and other provisions of Section 23A, 24, 34AA, 35 and 37 of W.T. Act with necessary modification will apply in relation to a reference so made by the Assessing Officer under Section 50C of the I.T. Act. Thus, the provisions of Section 50C(2) are on the lines of Section 55A with certain modifications. 17.3 Sub-section (3) of Section 50C is applicable where the value ascertained by the DVO exceeds the value adopted or assessed by stamp valuation authority as referred to in Section 50C(i). In that situation, the value so a....
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....rpose of invoking the provisions of sec. 50C(1) of the Act what is to be considered is the consideration shown by the assessee and the valuation shown by stamp valuation authorities. The rectification deed which was executed after a long period has no evidentiary value on the simple reason that when language used in a document i.e sale deed, is plain in itself, and when it applies accurately to the existing facts, evidence may not be given to show that it was not meant to apply to such facts. Section 94 of the Indian Evidence Act, 1872 also stipulated the same. Further, it is to be noted that sale deed is an important legal document for transfer of ownership of the property from the seller to the buyer which was prepared with utmost care. Errors may occur in a sale deed at times. Some of the common errors in a sale deed which could be rectified subsequently are as follows: (i) Incorrect description of the property such as its area and dimension (ii) Incorrect description of parties such as their names and addresses (iii) Incorrect location, address and survey number of the property (iv) Incorrect description of revenue records (v) Incorr....
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.... the result, the Revenue's appeal is partly allowed. 23. Coming to the cross objection filed by the assessee, Ground No.1 with regard to slump sale is already adjudicated in earlier part of this order while disposing of the Revenue's appeal. As such, this ground requires no specific adjudication. 24. Ground No.2 is with regard to valuation of property. Since we have reversed the order of the CIT(A) in totality and directed to consider the value mentioned in the original sale deed dated 9.11.201, this ground also requires no specific adjudication. 25. As regards Ground No.3 with regard to enhancement of assessment of capital gains on building and Ground No.4 with regard to enhancement of rental income, the facts are that during the course of hearing before the CIT(A), the Assessing Officer vide communication dated 23.9.2015 submitted the following issues for enhancement of assessment: (a) As per Annexures 1A to the sale deed, market value of building on the date of sale is Rs. 48,49,185/- WDV of such building as on 1.4.2011 as per the Depreciation Table is Rs. 1,69,853/-. Hence, the difference f Rs. 46,79,332/- needs to be assessed as Short Term Capital Gains under....