TaxTMI 
TaxTMI 
2010 (4) TMI 1225
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....is consolidated order. The grounds are common in all the seven appeals and for the sake of convenience and brevity we will discuss ITA No.3374/Ahd/2009 in the case of Kaushik Sureshbhai Reshamwlal. The grounds raised by the assessee, which reads as under:- "1. On the facts and circumstances of the case and in law The Learned Commissioner of Income Tax (Appeal) has erred in enhancing the value of land from Rs. 400/- Sq. Mtr. to Rs. 5000/- Sq. Mtr. 2. On the facts and circumstances of the case The Learned Commissioner of Income Tax ought to have taken view to accept the sales price at Rs. 400/- per Sq. Mtr. Shown by your appellant and deleted the addition of Rs. 21,24,472/- being amount estimated at Rs. 700/- per Sq. Mtr. By the Assessing Officer. 3. It is therefore prayed that the addition made by The Assessing Officer and there after enhancement made of Rs. 1,23,08,119/- by the Learned Commissioner of Income Tax Appeal-IV, may please be deleted." 3. The brief facts leading to the above issue are that the assessee along with other six family members owned an ancestral agricultural land at Survey No.227 Bhestan, Surat ad measuring 88700 sq. mt. agricultural land falling u....
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....000 11. Hasmukhlal D Reshamwala (HUF) 15,00,000 2,50,000 12. Rasiklal D Reshamwala (HUF) 15,00,000 2,50,000 13. Govardhan D Reshwamwala (HUF) 15,00,000 2,50,000 14. Jaswantlal D Reshamwala (HUF) 15,00,000 2,50,000 Total 3,00,00,000 49,99,990 4. Post survey proceedings, the Revenue summoned the purchaser, Shri Hitendra D Patel and recorded his statement u/s.131 of the Act, wherein he admitted to have purchased the agricultural land for total consideration of Rs. 3 crore from Reshamwala Family, and they offered the above sale consideration in their respective return of income qua their individual shares. While framing the assessment the Assessing Officer estimated the value of land @ 700 per sq.mt and worked out capital gains, accordingly at Rs. 21,24,472/-, as against the capital gain declared by the assessee at Rs. 7,48,128/- and thereby made addition of Rs. 19,76,374/-. The AO while computing this capital gain adopted the fair market value of the land at Rs. 700/- per sq.mt. as against the stamp valuation fixed by the Registration Authority at Rs. 400/- per sq.mt. The assessee disclosed the value in terms ....
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....d under consideration was Rs. 400/- whereas the New Jantry Rate is Rs. 5,000/-. Thus, there is a huge difference between the old and new jantry rates, which amply evidences that the prevailing market rates were very much higher as compared to the old jantry rates. Therefore, the sales consideration as shown by the appellant as per the old jantry rates, is not at all acceptable. Further, it is a matter of common sense that property prices would not increase abnormally from Rs. 400/- per sq. mt. to Rs. 5,000/- per sq. mt. in just a few months, but in fact this suggests that the actual market rates were much higher than the old Jantry prevailing during 2006 i.e. during the period when the deal under consideration was finalized. In the State of Gujarat, stamp duty is recovered as per the provisions of Section 32(A) of the Bombay Stamp Act, 1958. The first jantry was prepare in 1984 and thereafter in 1999. The Jantry made applicable in 2008 was based on the market situation during the period 2005- 2006 i.e. during the period when the subject deal had taken place. Therefore, the revised jantry rate of Rs. 5,000/- per sq. mtr. is the perfect basis for determining the market value....
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....the assessee is that the agricultural land was ancestral agricultural land and accordingly fair market value as on 01-04-1981 for computation of capital gain i.e. the cost of acquisition, is to be determined according to the assessee as per valuation report obtained from approved Valuer, Shri P. K. Desai, who valued the land as on 01-04-1981 at Rs. 60 per sq. mt. as against this, the Assessing Officer determined the fair market value at Rs. 25/- per sq. mt. on the ground that the comparable sale instance given by the Registered valuer ranges from Rs. 15/- to Rs. 32 per sq. mt. 7. We find one more interesting fact from the orders of the lower authorities as well as from the submissions of the assessee's counsel and Ld. CIT-DR that the total consideration of Rs. 3 crores was received by the co-owners up to Dec.'05 but the sale deeds were registered in Feb'07 and the assessee had to received further amount from the buyers amounting to Rs. 8 lakh, which was balance, to be received at the time of registration of sale deed. The Ld. counsel for the assessee before us stated that the lower authorities have failed to appreciate the fact that the deal was entered into in April'05 fro....
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.... amounting to Rs. 3,00,11,111/-. We find that the Revenue could not bring any evidence that the entire consideration was not paid on or before 31-03-2006 and possession of land was not handed over by these co-owners to the seller. Even otherwise, we accept the claim of the Revenue that the possession of this land and the balance payment of Rs. 8 lakh was delivered at the time of registration of sale deed in Jan. & Feb'07, when the sale deeds were registered, the Revenue cannot assess the capital gain in the assessment year under consideration i.e. assessment year 2006-07. However, the vital issue before us is whether in the case of sale through registered sale agreement, the capital gain is to be computed in terms of Sec.50C of the Act or not. We are of the view that when the asset is transferred in terms of Sec.53A of the Transfer of Property Act, 1882, the provisions of Sec.50C of the Act will apply to the transaction. The relevant provision of Sec. 2(47) of the Act reads as under:- 2(47) transfer, in relation to a capital asset, includes, - "(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part pe....
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....adopted or assessed 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 on accruing as a result of the transfer." 9. The relevant provision of Section 50C of the Act was explained and elaborated in the following portion of the Departmental Circular No.8 of 2002 dated 27-08-2002, as under:- "37. Computation of capital gains in real estate transactions, - 37.1 The Finance Act, 2002 has inserted a new section 50C in the Income-tax Act to make a special provision for determining the full value of consideration in cases of transfer of immovable property. 37.2 It provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration, and capital gains shall be computed accordingly under section 48 of the Income-tax Act. 37.3 It is ....
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....vision or no reference has been made before any other authority, court or a High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer, and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-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, shall, with the 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. The Valuation Officer shall be the Valuation Officer as defined in clause (r) of section of the Wealthtax Act, 1957. The proposed sub-section (3) provides that where the value ascertained under sub-section (2) exceeds the value adopted or assessed by the authority referred to in sub-section (1), the value so adopted or assessed by the authority shall be taken as the full value of the consideration received or accruing as a result of the transfer. This amendment will take effect from 1st April, 2003, and will....
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....the tax-payers against adoption of arbitrary values for the computation of capital gains and the following precautionary are provided:- (i) The value which is considered as the proper value of the property as fixed by the authority for registration for stamp duty purposes is presumed to be the fair market value for the purposes of computation of capital gains on the sale of property. (ii) It is open to the taxpayer to plead that such stamp value is abnormal and contest the same in appeal under the stamp law requiring adoption of reduced value. If such value is reduced in appeal under the provisions of the relevant stamp law, such reduced value would alone be adopted. (iii) Where such stamp value is not disputed, it is open to the assessee to require the Assessing Officer to refer the valuation to the Valuation Officer, who shall fix the valuation by adoption of the procedure prescribed under section 16A of the Wealth-tax Act. It is such value, which will be adopted by the Assessing Officer. 12. We further find from the Memorandum Explaining the provision of Section 50C in the Finance Bill, 2002, which clearly states that where the consideration declare....
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.... effect to the fiction, Hon'ble Supreme Court in CIT v. Mother India Refrigeration Pvt. Ltd. (1985) 155 ITR 711 (SC) held that legal fictions are created only for some definite purpose and they must be limited to that purpose and should not be extended beyond that legitimate field. In CIT v, Bharani Pictures (1981) 129 ITR 244 (Mad,) it is held that legal fictions are for a definite purpose and are limited to the purpose for which they are created and should not be extended beyond its legitimate field. The statutory fiction introduced in one enactment cannot be incorporated in another enactment. The point that legal fiction cannot be extended to a new field was highlighted by Hon'ble Madras High Court in CIT v. Rajam T.S, (19SS) 125 ITR 207(Mad,) wherein it is held that section 41(2) creates a legal fiction under which the balancing charge is treated as business income chargeable to tax but when this amount is distributed to shareholders then it would not become deemed dividend and it would be only a capital receipt and not distribution of accumulated profits. Thus, a legal fiction was invoked in the hands of the assessee company and was not extended inthe hands of the shar....