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Rita Goyal, Kashyap & Co. CAs, 214, Citi Center, Begum Bridge Road, Meerut, Uttar Pradesh. vs ITO, Ward- 2(2), Meerut, Uttar Pradesh.
August, 22nd 2018

Subject: Smt. Krishna Gupta, the assessee was the joint owner of the said property along

Referred Sections:
Section 50C of the I.T. Act.
Section 48.
section 50C,

Referred Cases / Judgments
Vandana D. Shetty vs. ITO

 

            IN THE INCOME TAX APPELLATE TRIBUNAL
                 DELHI BENCH "SMC", NEW DELHI
         BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER

                               ITA No.864/Del/2018
                             Assessment Year : 2013-14
Rita Goyal,                                           ITO, Ward- 2(2), Meerut,
Kashyap & Co. CAs,                                    Uttar Pradesh.
214, Citi Center,
                                                Vs.
Begum Bridge Road, Meerut,
Uttar Pradesh.

PAN : AFKPG3896F
    (Appellant)                                          (Respondent)

      Assessee by                           :         Shri P. S. Kashyap, CA
      Department by                         :         Shri Atiq Ahmed, Sr. DR
      Date of hearing                       :         02-08-2018
      Date of pronouncement                 :         21-08-2018

                                    ORDER

PER R. K. PANDA, AM :

      This appeal filed by the assessee is directed against the order dated

18.12.2017 of CIT(A), Aligarh relating to assessment year 2011-12.

2.    Grounds of appeal raised by the assessee are as under :-

      "1.    That the CIT(A) Aligarh Camp At Meerut has erred in law as well as on facts
      in accepting the value of house property as per the provisions of Sec.50C of the Act
      when the property in question was a lease hold property.
      2.     That the A.O. had framed assessment after adopting the value as per the
      provisions of Sec.50C of the Act in spite of the specific request of the assessee to refer
      the matter of valuation to the DVO. The lapse committed by the A.O. cannot be cured
      by CIT(A). Hence the order passed by CIT(A) and addition passed by A.O. ought to
      be annulled.
      3.     That on facts the addition made u/s 50C of the Act for Rs.30,12,846/- is
      without any basis, totally wrong, unjustified, ill legal and unwarranted.
             i)      That the Ld. CIT(A) has not considered the various facts before
                     passing the order.
             ii)     That addition was made on the basis of agreement execute by the
                     assessee, though the property was sold by her late mother.
                                          2
                                                                   ITA No.864/Del/2018



      4.    That the assessee craves leave to add, amend, alter or withdraw any of the
      ground of appeal on or before the date of hearing."


3.    Facts of the case, in brief, are that the assessee is an individual and

derives income from business. She filed her return of income on 21.03.2012

declaring total income of Rs.1,67,140/-.        During the course of assessment

proceedings, the Assessing Officer noted from the AIR information received

that the assessee has sold property situated at Mahanagar, Lucknow for

Rs.1,08,23,309/-.   On being questioned by the Assessing Officer, it was

submitted that this property was inherited property from her late mother Smt.

Krishna Gupta, who expired on 21.07.2009. As per the Will, after the death of

Smt. Krishna Gupta, the assessee was the joint owner of the said property along

with her sister Smt. Aparna Kumar. Therefore, the assessee was 50% owner of

the said property. From the perusal of calculation of long term capital gain

furnished by the assessee, the Assessing Officer observed following :-







      (a)   The value of acquisition of the said property as on 01.04.1981 was at
            Rs.25,13,779/-.

      (b)   The sale consideration value shown was at Rs.25,00,000/- u/s 50C.

      (c)   The assessee claimed deduction u/s 54F at Rs.10,50,000/-.


4.    The Assessing Officer observed that as per the Sale Deed the sale value

should have been taken at Rs.54,11,655/- as per provisions of section 50C of the

I.T. Act. Further, the assessee has taken the cost of acquisition of the property
                                           3
                                                                    ITA No.864/Del/2018



as per the rate of financial year 1981-82 at Rs.3,50,000/- and cost of

improvement in financial year 2009-10 at Rs.22,470/- without any documentary

evidence. He, therefore, adopted the prevailing circle rate in the financial year

1981-82 at Rs.46,660/- being the cost of acquisition of the property since circle

rate at that time was Rs.10/- per sq.ft. and the total area of the property was

approximately 4666 sq.ft.. Rejecting the various explanations given by the

assessee, the Assessing Officer determined the long term capital gain at

Rs.49,86,062/- after deduction of Rs.19,73,216/- u/s 54 of the I.T. Act, 1961.

The Assessing Officer made addition of Rs.30,12,846/- on account of long term

capital gain by observing as under :-

       Value u/s 50C                                                            54,11,655
       Less : indexed cost
       VALUATION OF LAND @ 12.50 PER SQ FOOT                     2,07,349
       F.Y. 1981-82         29163 x 711
                                100
       IMPROVEMENT                                                 25,279
       F.Y. 2009-10         22470 x 711
                                100
       VALUATION OLD STRUCTURE                                   1,92,965
       F.Y. 1981-82         27140 x 711
                                100
                                                                                  4,25,593
       LESS : DEDUCTION U/S 54                                                  19,73,216
                                                                                30,12,846
      Therefore, an addition of Rs.30,12,946/- is being made in the income of the assessee
      on account of LTCG.


5.    In appeal, the ld. CIT(A) upheld the action of the Assessing Officer by

observing as under :-

      7.1    The A.O. had computed LTCG by taking full value of consideration as the
      value determined for stamp duty purposes. However, the appellant was contesting
                                            4
                                                                      ITA No.864/Del/2018



      this valuation and claimed that the fair market value is much less than the value
      determined for stamp purposes. Accordingly, the matter of valuation was referred to
      the DVO. The DVO has determined the value of the appellant's share at
      Rs.59,32,450/- (half share of Rs.1,18,64,900/-). The value determined by the DVO is
      even higher than the value determined for stamp purposes at Rs.54,11,655/-. Under
      these circumstances, the value determined for stamp purposes i.e. Rs.54,11,655/- has
      to be taken as the full value of consideration for the purpose of section 48. The DVO
      has determined the value as on 01.04.1981 at Rs.70,000/- which is much lower than
      what the appellant has claimed. In the assessment proceedings, the A.O. had
      accepted the appellant's calculation with regard to the indexed cost of acquisition of
      Rs.4,25,593/-. Since the reference for valuation was made under the provisions of
      section 50C, the DVO was not required to give his opinion with regard to the cost of
      acquisition. Moreover, since there was no dispute with regard to the cost of
      acquisition, the value determined by the DVO needs to be ignored.
              In view of the above, no error is established in the computation of LTCG made
      by the A.O. Therefore, the assessment is being confirmed and the grounds of appeal
      are being dismissed."


6.    Aggrieved with such order of the ld. CIT(A), the assessee is in appeal

before the Tribunal.

7.    The ld. counsel for the assessee, at the outset, submitted that since the

property is a leasehold property, therefore, the provisions of section 50C are not

applicable. Referring to the decision of the Mumbai Bench of the Tribunal in

the case of Vandana D. Shetty vs. ITO vide ITA No.6668/Mum/2016 order

dated 05.07.2017, he submitted that the Tribunal following various decisions

has held that the transfer of capital asset and not transfer of leasehold rights

attract the provisions of section 50C of the Act. Since the property in question

was a residential house having municipal no.498/237/2 with leasehold rights in

land measuring 4666 sq.ft., therefore, the provisions of section 50C do not
                                        5
                                                               ITA No.864/Del/2018








apply. Therefore, entire addition made by the Assessing Officer and sustained

by the ld. CIT(A) should be deleted.

8.     The ld. DR on the other hand supported the orders of the authorities

below. He submitted that it was neither stated before the Assessing Officer nor

before the ld. CIT(A) that the property is a leasehold property. Nothing is

coming out of the record that the impugned property is a leasehold property.

Therefore, the argument of the ld. counsel for the assessee cannot be accepted at

this stage.

9.     I have considered the rival arguments made by both the sides and perused

the material available on record. It is the submission of the ld. counsel for the

assessee that the property in question is a leasehold property and, therefore, the

provisions of section 50C are not applicable.        However, a perusal of the

assessment order and the order of the ld. CIT(A) nowhere mentions that it is a

leasehold property since nothing is coming out from the record. It is also not

coming out of record as to what has happened in the case of the co-owner.

Considering the totality of the facts of the case and in the interest of justice, I

deem it proper to restore the issue to the file of the Assessing Officer with a

direction to adjudicate the issue afresh. While doing so, he has to give his

opinion as to whether the property is a leasehold property or not and whether

long term capital gain is chargeable on the leasehold property or not. Further,

the Assessing Officer while passing the order shall keep in mind the decision of
                                           6
                                                               ITA No.864/Del/2018



the Mumbai Bench of the Tribunal in the case of Vandana D. Shetty (supra).

The Assessing Officer shall decide the issue as per fact and law after giving due

opportunity of being heard to the assessee. I hold and direct accordingly. The

grounds raised by the assessee are accordingly allowed for statistical purposes.

10.    In the result, the appeal filed by the assessee is allowed for statistical

purposes.

       Order pronounced in the open Court on this 21st August, 2018.

                                                          Sd/-
                                                    (R. K. PANDA)
                                                ACCOUNTANT MEMBER
Dated: 21-08-2018.
Sujeet
Copy of order to: -
       1)       The   Appellant
       2)       The   Respondent
       3)       The   CIT
       4)       The   CIT(A)
       5)       The   DR, I.T.A.T., New Delhi
                                                              By Order
//True Copy//
                                                          Assistant Registrar
                                                          ITAT, New Delhi

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