Tuesday, January 14, 2014

Taxability of income from sale of carbon credits

Taxability of income from sale of carbon credits
Carbon credits are made available to the assessee on account of saving of energy consumption and not because of its business. The entitlement earned for carbon credits could at best, be regarded as a capital receipt and could not be taxed as a revenue receipt.- Vide
Ambika Cotton Mills Ltd. v. Deputy Commissioner of Income Tax (2014) 55 (II) ITCL 12 (Chen 'C'-Trib)

Monday, October 21, 2013

Digest of Section 50C Cases


Citation
[2013] 37 taxmann.com 446 (Lucknow - Trib.)
Court
ITAT
Case Name
Pawan Kumar Agarwal vs. Assistant Commissioner of Income-tax -II, Kanpur
In favour of
Matter remanded
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for computation of full value of consideration [Stamp Duty Valuation] - Assessment year 2007-08 - Before Commissioner (Appeals), assessee filed affidavit that he disputed stamp dusty valuation - Assessee clarified facts that objection to valuation was on basis of verbal information received from his advocate and in fact, no objection was filed before any authority - However, Commissioner (Appeals) had not asked assessee to file evidence on basis of which he disputed stamp duty valuation - Commissioner (Appeals) invoking clause (b) of sub-section (2) of section 50C, held that once assessee had raised a dispute to stamp valuation, reference could not be made to DVO - Whether Assessing Officer should have examined objection of assessee in light of documentary evidence and if satisfied, he might refer matter of valuation to Valuation Officer - Held, yes [Paras 8 and 9] [Matter remanded]IT: Where assessee's dispute to stamp duty valuation had not been adjudicated by authority properly, matter was to be remitted back


Citation
[2013] 37 taxmann.com 352 (Madras)
Court
HC
Case Name
S. Muthuraja vs. Commissioner of Income-tax, Coimbatore
In favour of
In favour of assessee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases [Reference to Valuation Officer] - Assessment year 2009-10 - Whether where specific objection was made by assessee as to Assessing Officer adopting market value of property under section 50C(2), Assessing Officer ought to have referred valuation of capital asset to valuation officer - Held, yes [Para 5] [In favour of assessee]IT: In case assessee objects value of asset adopted by Assessing Officer for computing capital gain, Assessing Officer ought to refer valuation of asset to valuation officer

Citation
[2013] 36 taxmann.com 393 (Bombay)
Court
HC
Case Name
Commissioner of Income-tax (Central) vs. Prabhu Steel Industries Ltd.
In favour of
In favour of revenue
Headnote
Section 50C of the Income-tax Act, 1961, read with sections 16A and 24 of the Wealth-Tax Act, 1957 - Capital gains - Special provisions for computation of full value of consideration [Report of valuation officer] - Whether valuation officer is an independent and distinct statutory forum for resolving controversy regarding determination of market value of property with all necessary powers; its order or report is made binding on Assessing Officer - Held, yes - Whether when report/order of Valuation Officer under section 50C(2) is objected to by assessee, Commissioner (Appeals) or Tribunal are obliged to extend an opportunity of hearing to such Valuation Officer - Held, yes - Assessee offered long-term capital gain on sale of property and took actual sale consideration of property as basis for computation of capital gain - Assessing Officer found that fair market value of said property was much higher - On reference, Valuation Officer estimated fair market value on date of transfer and Assessing Officer, accordingly, worked out long-term capital gain and made addition to assessee's income - Tribunal rejected valuation officer's report and deleted addition - However, opportunity of being heard was not extended to valuation officer - Whether since a mandatory requirement of law had been violated, order passed by Tribunal was to be set aside - Held, yes [Para 11] [In favour of revenue]IT: When report of Valuation Officer is objected to by assessee, Commissioner (Appeals) or Tribunal are obliged to extend an opportunity of hearing to said Valuation Officer

Citation
[2013] 35 taxmann.com 595 (Mumbai - Trib.)/[2013] 59 SOT 10 (Mumbai - Trib.)(URO)
Court
ITAT
Case Name
Income-tax Officer, 5(2) (1) vs. Inderlok Infra-Agro (P.) Ltd.
In favour of
In favour of assessee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provisions for full value of consideration in certain cases [Sale by developer] - During year assessee, a developer, sold flats in its residential building - It had shown value of stamp duty more than sale value - Assessing Officer applied provisions of section 50C and added difference between sale value and value as per stamp duty to total income of assessee - Whether Assessing Officer was wrong in applying provisions of section 50C in instant case - Held, yes [Para 8][In favour of assessee]IT: Where assessee, a developer, sold flats in its residential building and showed value of stamp duty more than sale value, Assessing Officer was wrong in applying provisions of section 50C and adding difference between sale value and value as per stamp duty to income of assessee

Citation
[2013] 35 taxmann.com 230 (Mumbai - Trib.)
Court
ITAT
Case Name
Suresh C. Mehta vs. Income-tax Officer, Ward - 13(2)(1), Mumbai
In favour of
Matter remanded
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for computation of full value of consideration [Binding nature of Valuation Officer's report] - Assessment year 2003-04 - Whether where Assessing Officer in terms of provisions of sub-section (2) of section 50C referred valuation of property to Valuation Officer, he was bound by Valuation Officer's report in case it was lower than value assessed by stamp valuation authority - Held, yes - Whether said report was not binding on Commissioner (Appeals) or Tribunal - Held, yes - Whether where assessee had made various objections to such valuation report before Commissioner (Appeals), Commissioner (Appeals) was bound to look into these objections so as to arrive at proper fair market value - Held, yes [Para 7] [Matter remanded]IT: Where Assessing Officer in terms of provisions of section 50C(2) referred valuation of property to Valuation Officer, he was bound by Valuation Officer's report in case it was lower than value assessed by stamp valuation authority, whereas said report was not binding upon Commissioner (Appeals) or Tribunal

Citation
[2013] 34 taxmann.com 258 (Delhi - Trib.)/[2013] 143 ITD 659 (Delhi - Trib.)
Court
ITAT
Case Name
Anil Kumar Jain vs. Income-tax Officer, Ward - 29(3), New Delhi
In favour of
Matter remanded
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for computation of full value of consideration in certain cases [Reference to Valuation Officer] - Assessment year 2009-10 - Assessee earned short term capital gain on sale of property - Assessee made a claim before Assessing Officer that value adopted or assessed by stamp valuation authority was higher than fair market value - Value adopted by stamp valuation authority had not ever been disputed by assessee in any appeal or revision or otherwise to any other authority or Court as referred to in section 50C(2) - Whether it was incumbent upon Assessing Officer to refer matter for valuation to a Valuation Officer as provided in section 50C(2) - Held, yes [Para 9] [Matter remanded]IT: Where fair market value of a property is claimed to be less than stamp duty valuation, valuation is to be referred to Valuation Officer before invoking deeming provision of section 50C

Citation
[2013] 35 taxmann.com 100 (Gujarat)
Court
HC
Case Name
Commissioner of Income-tax vs. Meghjibhai Popatbhai Virani
In favour of
In favour of assessee
Headnote
Section 69A of the Income-tax Act, 1961 - Unexplained money, etc. [Real estate transactions] - Assessment year 2000-01 - In course of assessment, assessee brought on record a copy of family settlement agreement reflecting receipt of Rs. 20 lakhs in cash from three of his brothers - Assessee also produced a sale agreement reflecting assessee as vendor of property and his brothers and relatives as purchasers - Assessing Officer disbelieved those agreements and added said amount to assessee's taxable income - Commissioner (Appeals) as well as Tribunal found no defect in both agreements and, thus, impugned addition made by Assessing Officer was deleted - Whether since finding recorded by appellate authorities was a finding of fact, no substantial question of law arose therefrom - Held, yes [Paras 4 6] [In favour of assessee]IT : Where assessee in support of certain amount received from his family members on account of sale of property, produced family settlement agreement and sale agreement, there being no defect in said agreements, amount so received by assessee could not be added to his taxable income as unexplained money IT : Revenue cannot take recourse to section 50C in case of purchaser of property
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Whether revenue cannot take recourse to section 50C in case of purchaser of property - Held, yes [Para 9] [In favour of assessee]

Citation
[2013] 33 taxmann.com 87 (Gujarat)/[2013] 215 Taxman 151 (Gujarat)
Court
HC
Case Name
Commissioner of Income-tax vs. Mukesh & Kishor Barot Co-owners
In favour of
In favour of assessee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases [Transfer of stock-in-trade] - Assessment year 2008-09 - Assessee sold a plot of land which was held by him as stock in trade - Whether sale of plot gave rise to business income and not to capital gain and, therefore, section 50C would have no application - Held, yes [Para 6] [In favour of assessee]IT : Where transferred asset was held as stock in trade, section 50C would not apply

Citation
[2013] 32 taxmann.com 274 (Madras)/[2013] 214 Taxman 543 (Madras)/[2013] 352 ITR 488 (Madras)/[2013] 260 CTR 412 (Madras)
Court
HC
Case Name
Commissioner of Income-tax -I, Coimbatore vs. R.Sugantha Ravindran
In favour of
In favour of assessee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2005-06 - Assessee transferred a property in pursuance of an agreement of sale - Sale of property was not registered - Assessing Officer invoking provisions of section 50C computed long term capital gain adopting guideline value as sale consideration, instead of consideration admitted by assessee - Contention of revenue was that word 'assessable' inserted by way of Finance (No.2) Act, 2009 with effect from 1-10-2009 had to be treated as applicable in case of assessee - Whether since Board has issued Circular No. 5/2010, dated 3-6-2010 clarifying that amendment has been made applicable with effect from 1-10-2009, revenue cannot canvass same issue which in effect is against circular issued by Board - Held, yes - Whether even otherwise, insertion of words 'or assessable' by amending section 50C with effect from 1-10-2009 is only an inclusion of new class of transactions, namely, transfer of properties without or before registration, thus, same would have prospective application only and not otherwise - Held, yes - Whether, therefore, assessee's transfer admittedly made earlier to such amendment could not be brought under section 50C - Held, yes [Paras 8 to 10] [In favour of assessee]IT : Insertion of words 'or assessable' in section 50C by way of Finance (No. 2) Act, 2009 with effect from 1-10-2009 is only an inclusion of new class of transactions namely transfer of properties without or before registration and have prospective application only

Citation
[2013] 32 taxmann.com 147 (Kolkata - Trib.)
Court
ITAT
Case Name
Heilgers Development & Construction Co. (P.) Ltd. vs. Deputy Commissioner of lncomc-tax, Central Circle-II, Kolkata
In favour of
In favour of revenue
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provisions for full value of consideration in certain cases [Scope of provisions] - Assessment year 2008-09 - Assessee sold property for consideration less than stamp duty value, claiming that prices had risen between date of agreement and date of conveyance - In absence of official confirmation of increase in prices, Assessing Officer treated stamp duty value as full value of consideration under section 50C - Assessee contended that where difference in stamp duty value and stated sale consideration was less than 15 per cent of stamp duty value, section 50C could not be invoked - Whether, in absence of any tolerance band prescribed in section 50C, it could be read into the provisions to avoid undue hardship to assessee - Held, no - Whether, therefore, section 50C could be invoked even if difference in stamp duty value and stated sale consideration was marginal - Held, yes [Paras 7 to 10] [In favour of revenue]IT: As no tolerance band is prescribed in section 50C, stamp duty value will be taken as full value of consideration, even if difference in stamp duty value and stated sale consideration is marginal

Citation
[2013] 31 taxmann.com 39 (Calcutta)/[2013] 214 Taxman 305 (Calcutta)/[2013] 259 CTR 553 (Calcutta)
Court
HC
Case Name
Bagri Impex (P.) Ltd. vs. Assistant Commissioner of Income-tax, Circle-9, Kolkata
In favour of
In favour of revenue
Headnote
Section 50C, read with section 2(47), of the Income-tax Act, 1961 - Capital gains - Special provisions for full value of consideration in certain cases - Registration in subsequent year - Assessment year 2006-07 - Whether transfer of land or building or both shall be deemed to have been taken place only after stamp duty has been assessed by stamp valuation authority - Held, yes - Whether, where deed of conveyance got registered in year subsequent to year in which consideration was received, applying section 50C, value assessed by stamp valuation authority in such subsequent year, should be taken as full value consideration - Held, yes [Para 7] [In favour of revenue]IT : Where deed of conveyance got registered in year subsequent to year in which consideration was received, applying section 50C, value assessed by stamp valuation authority in subsequent year, should be taken as full value consideration

Citation
[2013] 33 taxmann.com 120 (Chennai - Trib.)/[2013] 21 ITR(T) 627 (Chennai - Trib.)/[2013] 142 ITD 428 (Chennai - Trib.)
Court
ITAT
Case Name
Assistant Commissioner of Income-tax, Co. Circle IV(3), Chennai vs. MIL Industries Ltd.
In favour of
Partly in favour of assessee
Headnote
I. Section 50C of the Income-tax Act, 1961 - Capital gains - Special provisions for full value of consideration in certain cases [Guideline Value] - Assessment year 2005-06 - Assessee-company sold a portion of land of its factory property for a consideration of Rs. 2.22 crores - Guidelines value adopted by registering authority was Rs. 3.95 crores - Assessing Officer on assessee's request referred matter to DVO who determined value of property at Rs. 3.54 crores - Since report of DVO was not available at time of assessment, Assessing Officer worked out capital gains by adopting guideline value of Rs. 3.95 crores - Whether since consideration stated by assessee was less than guideline value and valuation report of DVO was not available at time of assessment, there was no infirmity in order of Assessing Officer - Held, yes - Whether fact that sale made by assessee was a distress sale cannot be a ground to modify valuation of property - Held, yes - Whether, however, considering fact that there were difference in valuation made by assessee's banker, stamp valuation authority and DVO, consideration was to be refixed at Rs. 2.5 crores - Held, yes [Paras 16 to 19] [Partly in favour of assessee]IT: Where sale consideration stated by assessee was lower than guideline value and valuation report of DVO was not available at time of assessment, Assessing Officer rightly adopted guideline value IT: Misfortunes happened to assessee or difficulties faced by assessee or matter of distress sales, etc., cannot be a ground to modify valuation of a property
II. Section 50C of the Income-tax Act, 1961 - Capital gains - Special provisions for full value of consideration in certain cases [In case of distress Sale] - Assessment year 2005-06 - Whether whatever may be problems suffered by an assessee, in reality those reasons cannot be permitted to go beyond scope of section 50C - Held, yes - Whether, therefore, misfortunes happened to assessee or difficulties faced by assessee or matter of distress sales, etc., cannot be a ground to modify valuation - Held, yes [Para 16] [In favour of revenue]

Citation
[2013] 29 taxmann.com 424 (Mumbai - Trib.)/[2013] 56 SOT 12 (Mumbai - Trib.)
Court
ITAT
Case Name
Irfan Abdul Kader Fazlani vs. Assistant Commissioner of Income-tax, Central Circle-44, Mumbai
In favour of
In favour of assessee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases Assessment years 2007-08 and 2008-09 - Assessee was a shareholder in KMPL - KMPL owned two flats - Along with other shareholders, assessee sold entire shares of KMPL to 'R' - Income earned from sale of shares was declared as 'long term capital gain' - Assessing Officer was of view that by engineering sale of shares of all other shareholders of company, i.e. KMPL, assessee effectively transferred immovable property and, therefore, it was an indirect way of transferring immovable properties, i.e. flats, for lesser consideration - Assessing Officer thus invoked provisions of section 50C in respect of sale of flats and calculated capital gains at a higher amount - It was apparent from records that assessee transferred shares in company and not land or building or both - Moreover, assessee did not have full ownership on flats which were owned by company - It was also noted that transfer of shares was never a part of assessment of stamp duty Authorities of State Government - Whether in aforesaid circumstances, assessee's case was not covered by provisions of section 50C and, therefore, impugned order passed by Assessing Officer was to be set aside - Held, yes [Para 12] [In favour of assessee]IT : Where assessee, a shareholder of KMPL, alongwith other shareholders sold entire shares of KMPL to 'R', it could not be regarded as an indirect transfer of flats owned by KMPL to 'R' and, consequently, provisions of section 50C could not be applied to transaction of sale of shares

Citation
[2013] 33 taxmann.com 491 (Mumbai - Trib.)/[2013] 58 SOT 23 (Mumbai - Trib.)/[2013] 152 TTJ 482 (Mumbai - Trib.)
Court
ITAT
Case Name
Shavo Norgren (P.) Ltd. vs. Deputy Commissioner of Income-tax, Circle 3(3)
In favour of
Partly in favour of revenue
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provisions for full value of consideration in certain cases [Scope of provision] - Assessment year 2008-09 - Assessee had taken a plot of land on lease from State Corporation on lease for 95 years - Later on, assessee sold part of said plot to a company - Assessing Officer invoked provisions of section 50C and considered market value of land as long-term capital gain - Whether since assessee transferred rights in plots as well as rights in building, provisions of section 50C were attracted - Held, yes - Whether, however, since complete details of relevant facts were not available on record matter was to be remanded to file of Assessing Officer - Held, yes [Para 19] [Partly in favour of revenue]IT : Where assessee had taken plot of land in question on lease for 95 years and later on transferred rights in part of said plot as well as rights in building standing on said plot, provisions of section 50C were attracted

Citation
[2013] 32 taxmann.com 324 (Hyderabad - Trib.)/[2013] 57 SOT 117 (Hyderabad - Trib.)
Court
ITAT
Case Name
Deputy Commissioner of Income-tax, Circle-11(1), Hyderabad vs. S. Venkat Reddy
In favour of
In favour of assessee
Headnote
Section 50C, read with section 2(47), of the Income-tax Act, 1961 - Capital gains - Special provisions for full value of consideration in certain cases [Date of transfer] - Assessment year 2006-07 - Assessee sold property and transferred possession vide sale agreement on 13-6-2005, but sale deed was registered only on 25-11-2005 - Assessing Officer took stamp duty value on date of registration as full value of consideration under section 50C for computing capital gains - Whether, where transfer was completed in terms of section 2(47) by giving possession of property on date of sale agreement, but registration was delayed on bona fide reasons and execution of sale deed was only a legal formality, stamp duty value on date of sale agreement and not on date of registration was required to be adopted for computing capital gains - Held, yes [Para 19] [In favour of assessee]IT: Where transfer was completed in terms of section 2(47) by giving possession of property on date of sale agreement, but registration was delayed on bona fide reasons and execution of sale deed was only a legal formality, stamp duty value on date of sale agreement was required to be adopted for computing capital gains

Citation
[2012] 28 taxmann.com 93 (Delhi)/[2012] 211 Taxman 510 (Delhi)/[2013] 256 CTR 371 (Delhi)
Court
HC
Case Name
Commissioner of Income-tax, Delhi-II vs. Khoobsurat Resorts (P.) Ltd.
In favour of
In favour of assessee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Full value of consideration in certain cases, special provision for - Stamp duty valuation - Assessment year 2007-08 - Assessee-resort purchased properties - Declared value of property was found to be less than value on which stamp duty was paid for acquisition - Assessing Officer added back to assessee's income difference between consideration mentioned in sale deeds and consideration declared for purpose of stamp duty - Whether provisions of Stamp Act levy stamp duty at predetermine or notified rates - Held, yes - Whether where higher cost of acquisition is declared for stamp duty, assessing authority should analyze contemporary comparable sales before adopting such higher cost as cost of acquisition and without doing so no addition could be made - Held, yes [Para 15] [In favour of assessee]
Section 68 of the Income-tax Act, 1961 - Cash credits - Purchase of properties - Assessment year 2007-08 - Assessee-company purchased properties - It claimed that sale consideration on its behalf was paid by proprietary concern belonging to one of directors of assessee-company - Assessee filed all necessary documents including confirmation from said director, PAN, complete address, copies of returns of proprietary concern and director and sources of investment made by director - Assessing Officer concluded that genuineness of source of funds made available to assessee had not been proved and added back amount of sale consideration to income of assessee as unexplained cash credit under section 68 - Appellate authorities deleted impugned addition holding that assessee had discharged its onus of proving that funds were received - Whether orders of appellate authorities did not call for interference - Held, yes [Para 16][In favour of assessee]

Citation
[2013] 30 taxmann.com 216 (Chandigarh - Trib.)/[2013] 21 ITR 149 (Chandigarh - Trib.)(TRIB.)/[2013] 141 ITD 21 (Chandigarh - Trib.)/[2013] 151 TTJ 1 (Chandigarh - Trib.)(UO)
Court
ITAT
Case Name
Manjit Singh vs. Deputy Commissioner of Income-tax, Circle III, Ludhiana
In favour of
Partly in favour of assessee
Headnote
Sale consideration of an asset as recorded in Registered Sale Deed is generally understated and, hence, cannot be taken as 'Fair Market Value' of a capital asset as on 1-4-1981; determination of FMV would involve an element of estimation based on relevant...

Citation
[2013] 29 taxmann.com 23 (Mumbai - Trib.)/[2013] 55 SOT 288 (Mumbai - Trib.)/[2012] 150 TTJ 537 (Mumbai - Trib.)
Court
ITAT
Case Name
Rallis India Ltd. vs. Additional Commissioner of Income-tax, Range 1(3), Mumbai
In favour of
Partly in favour of revenue
Headnote
I. Section 50C, read with section 50, of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Depreciable asset - Assessment year 2006-07 - Assessee-company declared short-term capital gains on sale of flats under section 50 - Assessing Officer noticed that Stamp Valuation Authority had adopted a higher stamp value for a flat - He thus having invoked provisions of section 50C, made addition on basis of value adopted for stamp duty purposes - Assessee challenged said addition contending that in respect of depreciable asset, i.e., flat, provisions of section 50 were applicable in which event method prescribed under section 50C could not be invoked - Whether sections 50 and 50C operate in two different fields and if value adopted by Stamp Valuation Authority is accepted by purchaser/seller, there cannot be any variation for limited purposes of computing consideration received under section 50C - Held, yes - Whether since, in instant case, assessee had not challenged valuation adopted by stamp valuation authority, impugned addition made by Assessing Officer was to be upheld - Held, yes [Para 17] [In favour of revenue]IT : Sections 50 and 50C operate in two different fields and if value adopted by Stamp Valuation Authority is accepted by purchaser/seller, there cannot be any variation for limited purposes of computing consideration received, under section 50C
II. Section 145A of the Income-tax Act, 1961 - Method of accounting - In certain cases - Valuation of closing stock - Assessment year 2006-07 - Whether value of purchase tax has to be taken into account while valuing closing stock; however, in such a case, opening stock valuation has to be correspondingly adjusted - Held, yes [Para 11] [Matter remanded]

Citation
[2012] 27 taxmann.com 306 (AHD)/[2012] 54 SOT 556 (AHD)
Court
ITAT
Case Name
Deputy Commissioner of Income-tax, Circle-9 vs. Vallabhbhai
In favour of
In favour of asssesee
Headnote
Section 50C, read with section 69B, of the Income-tax Act, 1961 - Capital gains - Special provision for computation of full value of consideration - Scope of provisions - Whether section 50C is applicable in case of a seller of property and, therefore, cannot be invoked in case of purchase of property for purpose of section 69B - Held, yes [Para 12] [In favour of assessee]
Section 69B, read with section 50C, of the Income-tax Act, 1961 - Undisclosed investments - Property transactions - Assessment year 2006-07 - Assessee had purchased agricultural land - Assessing Officer found that purchase price shown by assessee was quite low as compared to prevailing market price - Assessing Officer on basis of some other sale instances and also subsequent revised jantri fixed by Government, estimated purchase price and added difference to assessee's income - Whether where Assessing Officer had not made any independent enquiry or collected corroborative evidences to support estimation made by him no addition was called for - Held, yes [Para 17] [In favour of assessee]

Citation
[2012] 28 taxmann.com 289 (Mumbai)/[2013] 55 SOT 175 (Mumbai)
Court
ITAT
Case Name
A.T.E. Enterprises (P.) Ltd. vs. Deputy Commissioner of Income-tax, Range-2(1)
In favour of
In favour of assessee
Headnote
I. Section 28(i), read with section 36(1)(vii), of the Income-tax Act, 1961 - Business/deduction - Allowable as - Bad debts - Assessment year 2003-04 - Assessee incurred exhibition expenses on behalf of its principal - On failure of assessee to recover said amount from principal, it was written-off as bad debt - Assessing Officer rejected assessees claim - Whether Assessing Officer rightly concluded that exhibition expenses could not be allowed as bad debt under section 36(1)(vii) - Held, yes - Whether having regard to fact that exhibition expenditure was incurred by assessee on behalf of its principal in ordinary course of business, non-recovery of same could be allowed as business loss - Held, yes [Para 8] [In favour of assessee]
II. Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Reference to DVO - Assessment year 2005-06 - Whether where assessee objected to valuation adopted by stamp valuation authority and also filed copy of valuation report by an approved valuer, Assessing Officer was required to make a reference to valuation officer in terms of section 50C(2) to ascertain correct fair market value of property - Held, yes [Para 15] [In favour of assessee]
III. Section 68 of the Income-tax Act, 1961 - Cash credits - Sale - Assessment year 2005-06 - In course of assessment, assessee declared certain amount as long-term capital gain arising on sale of flat - Assessing Officer treated said amount, as deemed income under section 68, which was credited in books of account on ground that assessee had failed to bring any evidence on record that it was on account of sale of said property - It was noted that assessee had filed a copy of sale agreements in respect of sale of flat wherein it had been mentioned that said property had been sold for a total sale consideration of Rs. 13.80 lakhs - Whether since money had been received by way of sale of a property duly mentioned in sale agreement, same could not be treated as unexplained - Held, yes - Whether, consequently, impugned addition made by Assessing Officer was to be deleted - Held, yes [Para 21] [In favour of assessee]

Citation
[2012] 26 taxmann.com 13 (Ahmedabad)/[2012] 138 ITD 255 (Ahmedabad)/[2013] 151 TTJ 219 (Ahmedabad)
Court
ITAT
Case Name
Deputy Commissioner of Income-tax, Circle-9 vs. Virjibhai Kalyanbhai Kukadia
In favour of
In favour of assessee
Headnote
Section 50C, read with section 69B, of the Income-tax Act, 1961 - Capital gains - Full value of consideration in certain cases - Whether section 50C is a deeming provision where under stamp duty rate is treated as full value of consideration for purpose of computing capital gain under section 48 - Held, yes - Whether it is applicable to seller of property and therefore, cannot be invoked in case of purchaser of property for purpose of section 69B - Held, yes - Whether where Assessing Officer estimated value of land purchased by assessee by relying on prevailing jantry price of land without bringing any material on record to prove that assessee had in fact made investments over and above than that recorded in books, no addition could be made under section 69B by invoking section 50C - Held, yes [In favour of assessee]

Citation
[2012] 25 taxmann.com 543 (AHD)/[2012] 53 SOT 378 (AHD)
Court
ITAT
Case Name
Assistant Commissioner of Income-tax, Circle-5 vs. Prakash Ratanlal Sheth
In favour of
In favour of asssesee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Full value of consideration in certain cases - Assessment year 2008-09 - Whether matter cannot be referred under section 50C(2) to DVO in a case where assessee had shown sale value as a result of transfer at a rate higher than value adopted by stamp valuation authority - Held, yes [In favour of assessee]
Section 55A, read with section 48, of the Income-tax Act, 1961 - Capital gains - Reference to valuation officer - Assessment year 2008-09 - Whether full value of consideration under section 48 cannot be construed as fair market value for purpose of section 55A - Held, yes [In favour of assessee]

Citation
[2012] 24 taxmann.com 30 (BANG)/[2012] 53 SOT 166 (BANG)
Court
ITAT
Case Name
Smt. T.V. Nagasena vs. Income-tax Officer, Ward 13(1), Bangalore
In favour of
In favour of asssesee
Headnote
I. Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2008-09 - Whether Assessing Officer is required under Act to put assessee on notice before invoking provisions of section 50C - Held, no - Whether however, where assessee had objected to action of Assessing Officer in adopting guideline value of property in place of stated consideration in sale deed, Assessing Officer ought to make a reference to Valuation Officer for valuation of said property in accordance with provisions of section 50C(2)(a) - Held, yes [In favour of assessee]
II. Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 2008-09 - Assessing Officer, on examination of assessee's bank account, found that there were a number of cash deposits - Assessee submitted that those cash deposits were savings out of money given to her for expenses by her husband who was assessed to tax - However, lower authorities made addition under section 68 without examining veracity of claim - Whether issue had to be remitted for re-examination and readjudication - Held, yes [In favour of assessee]

Citation
[2012] 22 taxmann.com 37 (PUNE)/[2012] 52 SOT 381 (PUNE)
Court
ITAT
Case Name
K.K. Nag Ltd. vs. Additional Commissioner of Income-tax, Range-9, Pune
In favour of
In favour of asssesee
Headnote
I Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2005-06 - Whether where assessee had claimed before Assessing Officer that value of land and building assessed by stamp valuation authority exceeded fair market value of property, then in terms of section 50C(2) Assessing Officer ought to have referred matter to Valuation Officer instead of straightaway deeming value adopted by Stamp valuation authority as full value of consideration - Held, yes [In favour of assessee]
II Section 115JB of the Income-tax Act, 1961, read with section 211 of the Companies Act, 1956 - Minimum alternate tax - Assessment year 2005-06 - Whether in view of section 211 of Companies Act, net profit as shown in Profit & Loss account for purposes of Explanation 1 of second proviso to section 115JB is to be understood with reference to Notes to accounts accompanying annual accounts also - Held, yes - Whether therefore, incremental liability towards leave encashment not debited to profit and loss account but otherwise disclosed in Notes to accounts, would have to be deducted while determining 'book profits' under section 115JB - Held, yes [In favour of assessee]
III Section 36(1)(vii) of the Income-tax Act, 1961 - Bad debts - Assessment year 2005-06 - Amount of bad debts in question represented cost of corrugated boxes charged by assessee to a company in an earlier year - Whether since cost of boxes as charged constituted a part of income of assessee for earlier year, condition for claiming bad debts had been fulfilled and same could not be disallowed holding same as reimbursement, being not an income - Held, yes [In favour of assessee]

Citation
[2013] 33 taxmann.com 593 (Delhi - Trib.)/[2012] 18 ITR(T) 267 (Delhi - Trib.)
Court
ITAT
Case Name
Assistant Commissioner of Income-tax vs. Anjali Dua
In favour of
In favour of assessee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2007-08 - Where sale consideration received by assessee for sale of land was much higher than applicable circle rate, Assessing Officer was not justified in applying section 50C and making addition to sale consideration on basis of report of DVO [In favour of assessee]

Citation
[2012] 21 taxmann.com 457 (INDORE)/[2012] 52 SOT 159 (INDORE)/[2012] 150 TTJ 527 (INDORE)
Court
ITAT
Case Name
Assistant Commissioner of Income-tax-1(1), Bhopal vs. ETC Industries Ltd.
In favour of
Partly in favour of revenue
Headnote
I. Section 68 of the Income-tax Act, 1961 - Cash Credit - Assessment year 2006-07 - Whether for treating some investment as undisclosed income, revenue must show that such investment made by subscribers actually emanated from coffers of assessee - Held, yes - Whether where assessee, having received share application money, furnished required information to establish creditworthiness of applicant, and had discharged its onus by establishing identity of share-holder along with nature and source of money and Assessing Officer had not brought any adverse material on record to prove otherwise, no addition could be made in hands of assessee - Held, yes [In favour of assessee]
II. Section 50C, read with section 50, of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2006-07 - Whether provisions of section 50C are applicable to transfer of depreciable asset covered by section 50 and capital gain arising from such transfer has to be computed by adopting stamp duty valuation - Held, yes [In favour of revenue]

Citation
[2012] 20 taxmann.com 424 (AHD)/[2012] 18 ITR(T) 253 (AHD)/[2012] 52 SOT 344 (AHD)/[2012] 147 TTJ 94 (AHD)
Court
ITAT
Case Name
Income-tax Officer, Ward 5(4) vs. Yasin Moosa Godil
In favour of
In favour of asssesee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2006-07 - Assessee was an individual who booked a flat which was under construction - Agreed purchase price was Rs. 16.12 lakhs out of which assessee paid Rs. 15.12 lakhs - During relevant assessment year assessee requested builder to cancel booking and refund booking amount - A new buyer was found - Subsequently, assessee, builder and new buyer entered into a tripartite sale agreement whereunder assessee transferred all his rights and title in flat in favour of new buyer and received back booking amount from him - Builder gave possession of said flat to buyer - Assessing Officer observed that for registration purpose flat was valued at Rs. 57.57 lakhs against amount of Rs. 16.12 lakhs - He, accordingly, applying provisions of section 50C, treated difference as assessee's undisclosed income - Whether it is essential for application of section 50C that transfer must be of a capital asset, being land or building or both - Held, yes - Whether since it was builder who was transferring capital asset, by handing over possession as also legal ownership of flat to new buyer and assessee only received back booking advance paid by transferring booking rights, booking advance could not be equated with capital asset and, therefore, provisions of section 50C were not applicable - Held, yes - Whether, therefore, addition made by Assessing Officer was to be deleted - Held, yes [In favour of assessee]

Citation
[2012] 20 taxmann.com 381 (ALL)/[2012] 208 Taxman 478 (ALL)
Court
HC
Case Name
Commissioner of Income-tax - II vs. Kan Construction and Colonizers (P.) Ltd.
In favour of
In favour of asssesee
Headnote
Section 50C, read with section 2(14), of the Income-tax Act, 1961 - Capital gains - Full value of consideration in certain cases - Assessment year 2006-07 - Assessing Officer treated a transaction of sale of a plot by assessee-builder as sale of capital asset and determined capital gain under section 50C - It was found that investment in sale and purchase of plots was ancillary and incidental to business activity of assessee-builder - Further, assessee had treated land as stock-in-trade as corroborated from its balance sheet - Whether section 50C would have no application as it was a case of transfer of plot which was stock-in-trade and income from such transaction was to be treated as business income - Held, yes [In favour of assessee]

Citation
[2012] 21 taxmann.com 324 (Mumbai)/[2012] 51 SOT 461 (Mumbai)/[2013] 152 TTJ 38 (Mumbai)(UO)
Court
ITAT
Case Name
Mrs. Nila V. Shah vs. Commissioner of Income-tax (Appeals), XXV
In favour of
Partly in favour of revenue
Headnote
Section 2(29A) of the Income-tax Act, 1961 - Capital gains - Long-term capital gains - Assessment year 2005-06 - Assessee was having an office premises of 225 sq. ft. in a property on tenancy basis for last 30 years - Other portions of said property were occupied by several tenants - Owners of said property desired to sell property to highest bidder - Thereupon all tenants including assessee entered into an agreement on 10-6-1999, by which they formed a co-operative housing society and purchased aforesaid property on same space through open bidding - Later on said property was demolished and a new property was constructed - New property was completed in assessment year 2002-03 and possession was given to all tenants with same space in same year - Total cost for purchase of office premises in old property, demolishing charges and construction of new office premises in hands of assessee came to Rs. 4.75 lakhs - Later on assessee had sold newly constructed office for Rs. 16 lakhs and invested said amount in a bond - For determining cost of acquisition of office premises for purpose of calculating capital gains, assessee got valuation of office premises by an approved valuer, who determined market value of office premises as on 10-6-1999 at Rs. 10 lakhs - Accordingly, assessee in return of income filed for assessment year 2005-06 declared cost of acquisition of office premises at Rs. 10 lakhs - She further claimed capital gain arising from transfer of office premises as a long-term capital gain - Assessing Officer held that capital gain was a short-term capital gain - He further adopted cost of acquisition of office premises at Rs. 4.75 lakhs, which was cost incurred for acquiring office premises - Assessing Officer further having noticed that stamp valuation authority for purpose of payment of stamp duty adopted sale value of office premises at Rs. 24.48 lakhs invoked provisions of section 50C and adopted sale value of office premises at Rs. 24.48 lakhs - Lastly Assessing Officer allowed deduction under section 54EC on an amount of Rs. 16 lakhs - Whether since agreement dated 10-6-1999 clearly gave interest and right to assessee in old property, date of acquisition of office premises in old property could safely be said to be on 10-6-1999 - Held, yes - Whether since sale of office premises was made on 17-9-2004, capital gain in question was clearly a long-term capital gain - Held, yes [In favour of assessee]
Section 49 of the Income-tax Act, 1961 - Capital gains - Cost with reference to certain modes of acquisition - Assessment year 2005-06 - Whether since in view of facts mentioned under heading 'Capital gains - Long-term capital gains' it was evident that assessee had bought office premises and not ownership rights, cost of acquisition of office premises would be taken at Rs. 4.75 lakhs and not Rs. 10 lakhs as had been contended by assessee - Held, yes [In favour of revenue]
Section 50C of the Income-tax Act, 1961 - Capital gains - Full value of consideration in certain cases - Assessment year 2005-06 - Whether in view of facts mentioned under heading 'Capital gains - Long-term capital gains/assets' Assessing Officer in light of provisions of section 50C was justified in adopting sale value of office premises for purpose of computation of capital gain at Rs. 24.48 lakhs - Held, yes [In favour of revenue]
Section 54EC of the Income-tax Act, 1961 - Capital gains - Not to be charged on investment in certain bonds - Assessment year 2005-06 - Whether in view of facts mentioned under heading 'Capital gains - Long-term capital gains' Assessing Officer was justified in allowing deduction under section 54EC for an amount of Rs. 16 lakhs, which was actual sale consideration and had been invested in bonds - Held, yes [In favour of revenue]

Citation
[2012] 21 taxmann.com 133 (KOL)/[2012] 51 SOT 440 (KOL)
Court
ITAT
Case Name
Chandra Bhan Agarwal vs. Additional Commissioner of Income-tax, Range-31, Kolkata
In favour of
In favour of asssesee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2006-07 - Whether where DVO while estimating fair market value of property, did not take into consideration factors having any depressing or appreciative effect on value of property and, he simply based his report on basis of valuation made by Registrar for stamp valuation purposes, valuation so made by DVO could not be accepted - Held, yes [In favour of assessee]

Citation
[2012] 19 taxmann.com 4 (KOL)/[2012] 16 ITR(T) 45 (KOL)/[2012] 50 SOT 391 (KOL)/[2012] 147 TTJ 87 (KOL)
Court
ITAT
Case Name
Deputy Commissioner of Income-tax, Central Circle VI vs. Tejinder Singh
In favour of
In favour of asssesee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2008-09 - Whether provisions of section 50C will apply on receipt of consideration on transfer of a property, being land or building or both, however, these provisions will not come into play in a case where only tenancy rights are transferred or surrendered - Held, yes [In favour of assessee]
Section 54F of the Income-tax Act, 1961 - Capital gains - Exemption of, in case of investment in residential house - Assessment year 2008-09 - Whether where assessee having transferred its tenancy rights in a property, made qualifying investment under section 54F which was more than consideration for surrender of tenancy rights, he was not liable to pay capital gain tax in respect of aforesaid transaction - Held, yes [In favour of assessee]

Citation
[2012] 19 taxmann.com 66 (Chandigarh)/[2012] 50 SOT 377 (Chandigarh)/[2013] 152 TTJ 252 (Chandigarh)
Court
ITAT
Case Name
Income-tax Officer, Ward 6(3), Mohali vs. Mrs. Inderjit Kaur
In favour of
In favour of assessee
Headnote
Section 50C, read with section 69B, of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2006-07 - Whether deeming fiction created under section 50C, for purpose of section 48, regarding full value of consideration received or accrued to seller, cannot be extended to provisions of section 69, in case of a purchaser - Held, yes - Whether when Assessing Officer refers a property to Valuation Cell, on direction of Commissioner (Appeals), in such a case, Commissioner (Appeals) is not competent to delete addition made by Assessing Officer under section 50C without waiting for such report from Valuation Cell - Held, yes [In favour of assessee]

Citation
[2013] 33 taxmann.com 47 (Karnataka)/[2013] 215 Taxman 145 (Karnataka)
Court
HC
Case Name
Gouli Mahadevappa vs. Income-tax Officer, Ward 2, Hospeth
In favour of
Partly in favour of assessee
Headnote
Section 50C, read with section 54F, of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases [Scope of provision] - Whether when assessee does not avail opportunity to question correctness of registration value fixed by State Government, in such a case deemed full value of consideration as stated in section 50C would come into effect - Held, yes - Whether, however, where capital gain is assessed on notional basis, whatever amount is invested in new residential house within prescribed period under section 54F, entire amount so invested, would get benefit of deduction irrespective of fact that funds from other sources are also utilized for new residential house - Held, yes [Para 7] [Partly in favour of assessee]IT : Where capital gain is assessed on notional basis under section 50C, whatever amount is invested in new residential house within prescribed period under section 54F, entire amount so invested would get benefit of deduction irrespective of fact that funds from other sources are also utilized for new residential house

Citation
[2012] 25 taxmann.com 149 (Jodhpur - Trib.)/[2012] 143 TTJ 65 (Jodhpur - Trib.)(UO)
Court
ITAT
Case Name
Ran Mal Bhansali vs. Assistant Commissioner of Income-tax
In favour of
Partly in favour of assessee
Headnote
I. Section 50C of the Income-tax Act, 1961 - Capital gains - Special provisions for full value consideration in certain cases - Assessment year 2004-05
II. Section 28(i), read with section 45 of the Income-tax Act, 1961 - Business income - Chargeable as - Assessment year 2004-05

Citation
[2013] 30 taxmann.com 293 (Allahabad)/[2013] 213 Taxman 52 (Allahabad)(MAG.)/[2012] 349 ITR 210 (Allahabad)
Court
HC
Case Name
Commissioner of Income-tax vs. Dr. Indra Swaroop Bhatnagar*
In favour of
In favour of assessee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Full value of consideration in certain cases, special provision for - DVO's report - Assessment year 2003-04 - Assessee sold a property for certain consideration - Assessing Officer rejected valuation of property done by assessee's registered valuer and referred matter to DVO to obtain fair market value - He also rejected valuation done by DVO and adopted valuation done by Stamp valuation authorities as full value of consideration received and accordingly calculated capital gains - Whether when Assessing Officer had obtained DVO's report, same was binding on him - Held, yes - Whether, therefore, valuation done by DVO was to be adopted as sale consideration - Held, yes [Para 11] [In favour of assessee]

Citation
[2011] 15 taxmann.com 19 (DELHI)/[2011] 48 SOT 339 (DELHI)
Court
ITAT
Case Name
Income-tax Officer, Ward 32(1), New Delhi vs. Ms. Namita Singh
In favour of
Matter remanded
Headnote
I - Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2004-05 - Assessee sold a flat for a consideration of Rs. 12 lakhs - Said property was purchased by assessee for a sum of Rs. 12 lakhs - Capital gain on account of sale of property was admitted as 'Nil' - Assessing Officer referred matter to valuation officer (DVO) who estimated value of property at Rs. 57,58,400 - Assessing Officer adopted sale consideration as per DVO's report and computed capital gain of Rs. 39,36,760 - Commissioner (Appeals) determined value of flat at Rs. 14,40,000 - Whether in absence of any material to effect that assessee had received amount over and above value on which stamp duty was payable, full value of consideration would be value adopted for purpose of stamp valuation in respect of transfer of asset - Held, yes - Whether value for purpose of stamp valuation has to be adopted as per circle rates as on date of transfer - Held, yes - Whether from sale deed or from assessment order or appellate order of Commissioner (Appeals) it was not clear as to whether flat was transferred at circle rate prescribed for purpose of stamp valuation - Held, yes - Whether, therefore, it was proper to set aside matter to file of Assessing Officer with directions to examine whether value of property sold was at Rs. 14,40,000 or value was higher as per circle rate applicable as on date of transfer, than this amount for purpose of stamp valuation - Held, yes [Matter remanded]
II - Section 142A of the Income-tax Act, 1961 - Estimate by valuation officer in certain cases - Assessment year 2004-05 - Whether Assessing Officer can make reference to valuation officer under section 142A for determination of fair market value of property for purpose of assessment in respect of properties received without consideration referred to in section 56(2) and that too when assessee claims that value adopted or assessed or assessable by stamp valuation authority exceeds fair market value of property as on date of transfer - Held, yes - Assessee had made investment in shop Nos. 11, 12 and 12A for an amount of Rs. 24 lakhs - As per assessee, investment was made out of sale proceeds of flat and from personal sources - All three properties were let out to 'B' for a monthly rent of Rs. 65,000 and a lease agreement was entered into by assessee wherein interest free security of Rs. 1,35,000 had been provided being three months security - In order to verify fair market value of investment, matter was referred to DVO under section 142A who estimated value of assets at Rs. 1,51,26,800 - Assessing Officer estimated valuation of property by adopting rent capitalization method at Rs. 1,46,88,062 and reduced sale consideration of flat which was determined at Rs. 57,58,400 - Undisclosed investment was determined at Rs. 89,29,622 - Whether rent capitalization method of valuation of property for estimating value of investments is also an approved method recognized in law and prescribed in Wealth-tax Act which is also applicable for valuation of property covered by section 69/69A/69B - Held, yes - Whether, therefore, investment in properties were rightly valued by adopting rent capitalization method - Held, yes - Whether, however, valuation of property, by adopting rent capitalization method was to be made as per rule 3 of Schedule III of Wealth-tax Act, 1957 and, therefore, matter was to be restored to file of Assessing Officer to compute value of property as per said rule - Held, yes [Matter remanded]

Citation
[2011] 14 taxmann.com 161 (DELHI)/[2011] 48 SOT 61 (DELHI)(URO)
Court
ITAT
Case Name
Assistant Director of Income-tax, Circle 1(2), International Taxation, New Delhi vs. Ranjay Gulati
In favour of
In favour of asssesee
Headnote
Section 50C, read with sections 45 and 48, of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2007-08 - Assessee sold an industrial plot for a sum of Rs. 2.90 crores - Assessing Officer made a reference to District Valuation Officer (DVO) to ascertain fair market value of plot on date of sale who arrived at a valuation of Rs. 5.36 crores - Assessing Officer without giving an opportunity of being heard to assessee, adopted valuation made by DVO and, accordingly, enhanced amount of capital gain liable to tax - On appeal, Commissioner (Appeals) deleted addition made by Assessing Officer - It was noted from records that value of assessee’s property as per circle rates was Rs. 2 crores as against sale consideration of Rs. 2.90 crores admitted by assessee - Further, there was nothing on record to suggest that assessee had received more than what was stated in sale deed - Whether in aforesaid circumstances, Assessing Officer had to adopt amount received by assessee as full value of sale consideration for calculating capital gain liable to tax - Held, yes - Whether even otherwise, adoption of report of DVO without providing an opportunity of being heard to assessee was against principles of natural justice - Held, yes - Whether, consequently, impugned addition made by Assessing Officer was rightly deleted - Held, yes [In favour of assessee]

Citation
[2011] 15 taxmann.com 103 (AHD)/[2011] 48 SOT 231 (AHD)
Court
ITAT
Case Name
Sanjaybhai Z. Patel vs. Assistant Commissioner of Income-tax, Circle-2
In favour of
In favour of revenue
Headnote
Section 50C, read with section 48, of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2006-07 - Assessee sold a piece of land - Value with which sale deed was registered was found to be below value determined by Stamp Valuation Authority - Assessing Officer invoked provisions of section 50C and brought to tax the differential - Whether in view of fact that assessee had accepted valuation determined by Stamp Valuation Authority for purpose of payment of stamp duty for registration of deed and further in view of fact that assessee had not availed opportunity under sub-section (2) of section 50C as to demonstrating that fair market value was less than stamp duty valuation, it was to be held that Assessing Officer had rightly invoked section 50C - Held, yes [In favour of revenue]

Citation
[2011] 11 taxmann.com 344 (MUM)/[2011] 46 SOT 90 (MUM)
Court
ITAT
Case Name
Mrs. Nandita Khosla vs. Income-tax Officer 12(1)(1), Mumbai
In favour of
In favour of asssesee
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2006-07 - Whether in some cases where assessee points out strong reasons that sale consideration is less than value determined for stamp duty, such cases have to be referred to DVO and in such cases sale consideration which has been deemed to be value adopted for stamp duty purposes as per main provision, would be value adopted by DVO - Held, yes - Whether once matter is referred to DVO, then valuation given by DVO has to be adopted as deemed consideration - Held, yes

Citation
[2011] 11 taxmann.com 92 (MUM)/[2011] 11 ITR(T) 120 (MUM)/[2011] 132 ITD 499 (MUM)/[2011] 141 TTJ 69 (MUM)
Court
ITAT
Case Name
Atul G. Puranik vs. Income-tax Officer, 12(1)(1)
In favour of
Partly in favour of revenue
Headnote
Section 2(14), read with section 45, of the Income-tax Act, 1961 - Capital gains - Capital asset - Assessment year 2006-07 - Whether sole criteria for considering whether asset transferred is capital asset under section 2(14) or not is to consider nature of asset so transferred in previous year and not origin or source from which such asset came to be acquired - Held, yes - Whether, therefore, if a 'capital asset' as per section 2(14) is purchased out of agricultural income, that would not lose its character of capital asset notwithstanding fact that income exempt from tax was employed for purchasing such capital asset - Held, yes [In favour of revenue]
Section 49 of the Income-tax Act, 1961 - Capital gains - Cost with reference to certain modes of acquisition - Assessment year 2006-07 - Whether in order to apply mandate of section 49(1), it is sine qua non that capital asset acquired by assessee in any of modes prescribed in clauses (i) to (iv) should become subject-matter of transfer and only in such a situation where such capital asset is transferred, cost to previous owner is deemed as cost of acquisition of asset - Held, yes - Whether, however, once such capital asset is transferred and another capital asset is acquired, there is no applicability of section 49(1) to such converted asset - Held, yes [In favour of revenue]
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2006-07 - Whether in view of provisions of section 50C, deeming fiction of substituting adopted or assessed or assessable value by stamp valuation authority as full value of consideration is applicable only in respect of 'land or building or both' - Held, yes - Whether lease right in a plot of land can not be included within scope of 'land or building or both' and, thus, in case of transfer of leasehold rights in land, provisions of section 50C cannot be invoked - Held, yes [In favour of assessee]

Citation
[2011] 14 taxmann.com 95 (AHD)/[2011] 48 SOT 16 (AHD)
Court
ITAT
Case Name
Income-tax Officer, Ward-7(1) vs. Nitin Jayantilal Shah
In favour of
In favour of asssesee
Headnote
Section 50C, read with section 55A, of the Income-tax Act, 1961 - Capital gains - Special provisions for full value of consideration in certain cases - Assessment year 2006-07 - Whether in case of immovable property reference to DVO can be made only under section 50C(2) and not under section 55A - Held, yes - Assessee sold certain property for Rs. 1,30,41,000 on 14-11-2005 - This was also valuation done by stamp valuation authorities (SVA) - For purpose of working out capital gain, assessee obtained report from approved valuer who determined fair market value of property as on 1-4-1981 as Rs. 26,24,269 - Indexed cost of acquisition of Rs. 26,24,269 for assessment year 2005-06 was shown at Rs. 1,30,42,617 - Assessing Officer, however, referred property to DVO for its valuation who valued sale value as on 14-11-2005 at Rs. 3,05,66,700 and determined value of property as on 1-4-1981 at Rs. 15,78,000 - Assessing Officer adopted said values and accordingly, worked out long-term capital gain - Whether since full value of consideration was equal to valuation done by SVA, reference to DVO for determining fair market value as on date of sale and adoption of fair market value in place of sale consideration declared by assessee were not legally proper - Held, yes - Whether further estimate made by registered valuer was not less than fair market value as adopted by Assessing Officer on basis of DVO's report and, therefore, Assessing Officer could not make any reference under clause (a) of section 55A - Held, yes [In favour of assessee]
Section 55A of the Income-tax Act, 1961 - Capital gains - Reference to valuation officer - Assessment year 2006-07 - Whether section 55A cannot be invoked when transfer of immovable property being land or building or both are involved - Held, yes [In favour of assessee]

Citation
[2011] 12 taxmann.com 300 (AHD)/[2011] 46 SOT 419 (AHD)
Court
ITAT
Case Name
Hasmukhbhai M. Patel vs. Assistant Commissioner of Income-tax, Cir. 1(1), Baroda
In favour of
Partly in favour of revenue
Headnote
I. Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2004-05 - Whether once a document is registered with stamp duty authority, value adopted by stamp duty authority is to be considered as value of asset for purpose of clause (b) of section 50C - Held, yes - Whether Assessing Officer cannot substitute value which stamp duty authority ought to have adopted for purpose of stamp duty - Held, yes - Assessing Officer made addition on account of capital gain in respect of assets of assessee - It was seen that value disclosed by assessee was accepted by stamp valuation authority and no further stamp duty was levied - Whether Assessing Officer had to consider value adopted by stamp valuation for purpose of payment of stamp duty in respect of such transfer - Held, yes
II. Section 71 of the Income-tax Act, 1961 - Losses - Set off of from one head against income from another - Assessment year 2004-05 - Assessee sold certain shares of company 'A' and claimed capital loss - Assessing Officer disallowed loss holding that assessee had sold shares so as to set off this loss against capital gains arising on sale of land - Whether since shares were duly transferred and recorded in books of account and further, assessee also explained circumstances in which he sold shares, there was no justification for disallowing capital loss from sale of shares - Held, yes
III. Section 2(47) of the Income-tax Act, 1961 - Capital gains - Transfer - Assessment year 2004-05 - Whether where assessee was given possession of property as per sale agreement dated 3-4-1999 and assessee had also made part-payment of consideration, Commissioner (Appeals) had rightly held that assets would be deemed to be transferred to assessee on 3-4-1999 and since said land was sold on 4-4-2003/2-5-2003, it would be a long-term capital asset, gains wherefrom would constitute long-term capital gains - Held, yes

Citation
[2011] 10 taxmann.com 320 (MUM) (SB)/[2011] 9 ITR(T) 639 (MUM) (SB)/[2011] 130 ITD 113 (MUM) (SB)/[2011] 138 TTJ 129 (MUM) (SB)
Court
ITAT
Case Name
Income-tax Officer-22(3)(4) vs. United Marine Academy
In favour of
In favour of revenue
Headnote
Section 50C read with section 50, of the Income-tax Act, 1961 - Capital gains - Full value of consideration in certain cases - Whether in a case where capital gain arising from transfer of depreciable asset is computed as per special provisions contained in section 50, provisions of section 50C can be applied so as to adopt value assessed for purpose of payment of stamp duty to be full value of consideration received or accruing as a result of such transfer - Held, yes

Citation
[2011] 12 taxmann.com 170 (AGRA)/[2011] 46 SOT 315 (AGRA)
Court
ITAT
Case Name
Shri Pyare Mohan Mathur, HUF vs. Income-tax Officer, Ward - 2, Aligarh
In favour of
In favour of asssesee
Headnote
I. Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2005-06 - Whether in view of provisions of section 50C, circle rates are deemed to be full value of consideration received or accruing as a result of transfer but those rates do not represent fair market value of property for purpose of computation of capital gain - Held, yes
Section 55A of the Income-tax Act, 1961 - Capital gains - Reference to Valuation Officer - Assessment year 2005-06 - Assessee had shown long-term capital loss of Rs. 2,30,000 by taking fair market value of property as on 1-4-1981 to be cost of acquisition for purpose of computation of capital gains - He got valuation of property done through registered valuer - Assessing Officer did not agree with assessee and deputed Inspector who adopted circle rate of village where land was situated - Assessing Officer adopted circle rate to be fair market value and, accordingly, recomputed amount of capital gain - Whether there is no provision under Chapter relating to computation of capital gain, that circle rate will be treated to be cost of acquisition - Held, yes - Whether, even otherwise, once assessee had submitted necessary evidence by way of valuation report made by registered valuer, onus got shifted on Assessing Officer to contradict report of registered valuer - Held, yes - Whether since Assessing Officer was not agreeable with report of Registered Valuer, he was duty bound to refer matter to DVO for determining fair market value of land as on 1-4-1981 - Held, yes - Whether since Assessing Officer failed to do so, impugned order passed by him was to be set aside and, matter was to be remanded back with a direction to re-compute capital gain after taking fair market value of land as on 1-4-1981, as claimed by assessee - Held, yes
II. Section 68 of the Income-tax Act, 1961 - Cash credit - Assessment year 2005-06 - In course of assessment, cash deposited in bank account was found disproportionate to income shown by assessee in return of income - Assessee was, thus, required to explain source of these deposits and to furnish cash flow statement - Though assessee furnished cash flow statement, but for want of any evidence in support thereof and also fact that assessee did not prepare and personal statements of affairs nor maintained any books of account, cash flow statement furnished by assessee was doubted and amount in question was added to income of assessee - It was noted from records that assessee had filed cash flow statement for assessment years 2004-05 and 2005-06 which reflected all cash transactions entered by him - Further, department had failed to bring any evidence on record to belie cash transactions shown in cash flow statement submitted by assessee nor was there any such objection that such cash transactions entered by assessee were not verifiable from bank account - Whether on facts, impugned addition made by Assessing Officer was to be deleted - Held, yes

Citation
[2011] 11 taxmann.com 180 (AHD)/[2011] 11 ITR(T) 317 (AHD)/[2011] 131 ITD 1 (AHD)/[2011] 140 TTJ 430 (AHD)
Court
ITAT
Case Name
Income-tax Officer, Ward - 2(4), Ahmedabad vs. Chandrakant R. Patel
In favour of
In favour of asssesee
Headnote
Section 55A, read with section 48, of the Income-tax Act, 1961 - Capital gains - Reference to valuation officer - Whether, section 55A is meant only to ascertain fair market value of a capital asset but not meant to determine full value of consideration received as a result of transfer and therefore it has its own limitation for its operation - Held, yes - Whether if a reference can be made to ascertain fair market value of a property, then wherever this phrase 'to determine fair market value of property' is used there only recourse of section 55A is possible- Held, yes - Whether since section 48 do not prescribe determination of capital gain on fair market value it is out of ambit of reference prescribed under section 55A - Held, yes
Section 50C of the Income-tax Act, 1961 - Capital gains - Full value of consideration in certain cases - Whether Assessing Officer can refer for valuation of capital assets to valuation officer under section 50C if he finds that consideration received is less than value adopted by stamp valuation authority for purpose of stamp duty - Held, yes
Section 48 of the Income-tax Act, 1961 - Capital gains - Computation of - Whether for purposes of computation of capital gain under section 48, a reference can be made to DVO only in a situation as prescribed under section 50C and not otherwise - Held, yes
Section 142A of the Income-tax Act, 1961 - Assessment - Estimate by valuation officer in certain cases - Whether area of operation of section 142A is limited in its span and confined to provisions of section 69, etc., and section 56(2) - Held, yes

Citation
[2012] 19 taxmann.com 121 (KOL)/[2012] 17 ITR(T) 431 (KOL)/[2012] 135 ITD 345 (KOL)/[2012] 146 TTJ 762 (KOL)
Court
ITAT
Case Name
Income-tax Officer, Ward-42(1) vs. Gita Roy
In favour of
In favour of asssesee
Headnote
Section 50C, read with section 48, of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2005-06 - Assessee sold a property and disclosed sale consideration for her half share at Rs. 20 lakhs and computed long-term capital gains at nil by taking indexed cost of acquisition at Rs. 30.81 lakhs - Assessing Officer noticed that stamp valuation of property was at Rs. 1.3 crores - Accordingly, adopting stamp duty valuation, Assessing Officer computed long-term capital gain at Rs. 50.70 lakhs towards share of assessee - On appeal, Commissioner (Appeals) referred matter to DVO for ascertaining fair market value of said property and directed Assessing Officer to adopt value of property as per valuation by DVO - Fair market value as assessed by DVO was lower than value adopted by Stamp Duty Authorities - Whether value adopted by DVO had to be adopted by Assessing Officer for purpose of computation of LTCG - Held, yes [In favour of assessee]

Citation
[2011] 10 taxmann.com 235 (MUM)/[2011] 46 SOT 199 (MUM)(URO)
Court
ITAT
Case Name
Mrs. Arlette Rodrigues vs. Income-tax Officer, Ward 15(2)(2), Matru Mandir Tardeo, Mumbai
In favour of
In favour of asssesee
Headnote
Section 50C, read with section 48, of the Income-tax Act, 1961 - Capital gains - Special provision for full value consideration in certain cases - Assessment year 2006-07 - Assessee and her sons were having 50 per cent share in a property - They decided to develop said property and accordingly entered into development agreement with a developer - It was claimed by assessee that development rights were transferred to developer to extent of 4171.48 sq.ft. out of total area of 9931.48 sq.ft. (932 sq.mtrs) - In respect of development rights given to developer assessees were paid Rs. 1.5 crores - Assessing Officer taking into account fact that at time of registration of development agreement, assessee paid stamp duty on fair market value of said property determined by registration authorities at Rs. 3,98,31,000 invoked section 50C and adopted valuation made by registration authorities in place of value declared by assessee and, accordingly, determined capital gain - Whether as per development agreement to extent of 4171.48 sq.ft development rights had been transferred in favour of developer out of total area and, therefore, for purpose of computing capital gain consideration attributable to 4171 sq. ft. of area only was to be considered - Held, yes - Whether when development rights are transferred, it is nothing but right to exploit said property in favour of developer, and same is covered under sub-clause (i) of section 2(47) and, therefore, provisions of section 50C were applicable when rights to develop property was transferred - Held, yes - Whether since assessee had filed objection before Assessing Officer in respect of valuation adopted for payment of stamp duty for registration of conveyance, Assessing Officer should have referred matter to DVO as per provisions of section 50C(2) - Held, yes - Whether therefore, issue of valuation was to be restored to the file of the Assessing Officer with direction that he should refer valuation matter to Departmental Valuation Officer (DVO) as per provisions of sub-section (2) of section 50C and thereafter re-compute capital gains - Held, yes
Section 55 of the Income-tax Act, 1961 - Capital gains - Cost of acquisition - Assessment year 2006-07 - Whether it cannot be said that when right to develop of property is transferred it is only independent right not attached to ownership of property and, hence, there is no cost of acquisition - Held, yes

Citation
[2011] 10 taxmann.com 45 (JODH)/[2011] 46 SOT 149 (JODH)/[2011] 141 TTJ 511 (JODH)
Court
ITAT
Case Name
Manjula Singhal vs. Income-tax Officer, Ward 2(1), Udaipur
In favour of
Matter remanded
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2004-05 - Whether term 'may' used in sub-section (2) of section 50C is to be read as 'shall' and, thus, if stamp valuation adopted by stamp valuation authority is disputed before Assessing Officer, then Assessing Officer is bound to refer matter to DVO for determining fair market value of property - Held, yes

Citation
[2011] 9 taxmann.com 90 (MUM)/[2011] 45 SOT 257 (MUM)/[2011] 140 TTJ 413 (MUM)
Court
ITAT
Case Name
Arif Akhatar Hussain vs. Income-tax Officer, 12(2) (1)
In favour of
In favour of revenue
Headnote
Section 50C of the Income-tax Act, 1961 - Capital gains - Full value of consideration in certain cases - Assessment year 2006-07 - Assessee along with other co-owners inherited a property - He entered into an agreement with developer for development of said property against consideration of Rs. 63 lakhs - Instant property was valued by Stamp Valuing Authorities at Rs. 4,73,48,000 - Assessing Officer accordingly, issued a show-cause notice to assessee to explain as to why provisions of section 50C should not be invoked in their case - Assessee contended that provision of relevant section were not applicable as instant case was not a case of transfer of land or other capital asset but was a case of transfer of development rights - Assessing Officer set aside assessee’s contention but on his request, property was referred to DVO for revaluation - DVO considered all relevant factors attached with property and thereby valued property at Rs. 1,81,34,749 as against value arrived at by stamp valuing authority at Rs. 4,73,48,000 - Thus, capital gains were re-worked out by Assessing Officer as per DVO’s report - Whether when assessee had received sale consideration and handed over possession of property in question vide development agreement, then conditions prescribed under section 53A of Transfer of Property Act were satisfied and, accordingly, as per provisions of section 2(47)(v), transaction amounted to transfer - Held, yes - Whether further since DVO had already taken into account all aspects while making valuation of property and assessee had participated in proceedings before DVO accordingly, there was no error or illegality in valuation made by DVO which was much less to valuation made by Stamp Valuation Authority - Held, yes

Citation
[2011] 9 taxmann.com 223 (MUM)/[2011] 133 ITD 172 (MUM)/[2011] 139 TTJ 308 (MUM)
Court
ITAT
Case Name
Mrs. Gopi S. Shivnani vs. Income-tax Officer-21(1)(2)
In favour of
Matter remanded
Headnote
Section 55 of the Income-tax Act, 1961 - Capital gains - Cost of acquisition - Assessment year 2005-06 - Assessee acquired a property on 1-9-1978 - She sold said property during assessment year in question - Assessee, while filing return of income had taken its cost of acquisition as on 1-9-1978 - After making valuation as on 1-4-1981, assessee arrived on indexed cost of acquisition at Rs. 2.93 lakhs - During assessment proceedings assessee filed a valuation report stating value as on 1-4-1981 at Rs.3,80,000 - Assessing Officer did not accept said claim as assessee had not filed any revised return - Commissioner(Appeals) upheld order of Assessing Officer - Whether provision of section 55(2)(b) permits assessee to adopt either actual cost of acquisition or fair market value of asset as on 1-4-1981 if said asset is acquired prior to 1-4-1981 - Held, yes - Whether, therefore, authorities below erred in not entertaining assessee's claim in respect of cost of acquisition which was a legally permissible claim - Held, yes
Section 50C of the Income-tax Act, 1961 - Capital gains - Special provision for full value of consideration in certain cases - Assessment year 2005-06 - During relevant assessment year, assessee filed its return showing sale of a property at Rs. 21 lakhs - Revenue authorities, however, adopted sale consideration of Rs. 30.08 lakhs on basis of report of DVO - Whether since authorities below had adopted sale consideration as mentioned by DVO without considering objections of assessee, impugned order passed by them was to be set aside and, matter was to be remanded back to Assessing Officer for disposal afresh - Held, yes
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