Atul Shantilal Maradia v. The Asst.Commissioner of Incometax -Circle 20, Mumbai
[Citation -2016-LL-1005-121]

Citation 2016-LL-1005-121
Appellant Name Atul Shantilal Maradia
Respondent Name The Asst.Commissioner of Incometax -Circle 20, Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 05/10/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags mercantile system of accounting • capital gains account scheme • full value of consideration • transfer of capital asset • carry forward and set off • imposition of penalty • sale consideration • extension of time • fair market value • prescribed period • valuation officer • statutory period • valuation cell • actual payment • cold storage • new asset
Bot Summary: The first issue in this appeal of assessee is against order of CIT(A) confirming the action of the Assessing Officer in applying the provisions of section 50C of the Act, adopting the value as estimated by Stamp Valuation Authority instead of referring the matter to the Valuation Cell for ascertaining the fair market value in terms of section 50C(2) of the Act. The second issue in this appeal of assessee is against the order of the CIT(A) in enhancing the disallowance of exemption claimed by the assessee u/s 54F of the Act at Rs.50,00,000 as against disallowance made by the A.O. at Rs.11,00,000 without appreciating the fact that the entire sale consideration of Rs.50 lakh was deposited in the capital gains deposit account before the due date of filing of return of income u/s 139(1) of the Act. In the instant case, the deposit was made within the date as extended vide Board s Notification No.402/92/2006- MC(42) of 2010 dated 28th September, 2010, which reads as under:- On consideration of the reports of disturbance of general life caused due to floods and heavy rains, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961, hereby extends the due date of filing of returns of income from the Assessment Year 2010-11 from 30.09.2010 to 15th October, 2010. It is the submission of the Department that authorization bestowed on the AO on account of a proviso to section 139(1) of the IT Act to extend the date for furnishing the return in its discretion does not empower the AO to change the due date for filing the return as mentioned in the main clause of s. 139 of the IT Act and, that is the reason that as per the proviso interest has to be paid by the assessee in accordance with s. 139(8) of the IT Act mandatorily even if the date for filing of return is extended by the AO. The proviso to s. 43B was, thus, contended not to be applicable where the amount is not paid as per the due date as specified in the main provision of s. 139(1) of the IT Act. To support the aforesaid interpretation learned counsel also referred to the provisions of s. 80 of the IT Act providing for submission of return for losses to contend that where the legislature wanted the benefit to be extended not only to a return filed within the time allowed under sub-s. of s. 139 of the IT Act or within such further time as may be allowed by the AO a specific provision has been made as in case of s. 80 of the IT Act. The effect of the AO extending the date for filing the return under s. 139(1) of the IT Act was, as contended by the assessee, is as under : When the ITO extends the date for furnishing the return under proviso to s. 139(1), he does so in exercise of the authority conferred by the statute and the additional time available to the assessee consequent upon such extension is, for all relevant purposes, of the same character and as effective as the statutory period specifically enacted by Parliament. The stand of the Department was : Learned lawyer appearing for the IT authorities has submitted that the acts done and/or caused to have been done by the respondent are well justified and in accordance with law and the acts complained of are neither contrary to and/or inconsistent with the provisions of the IT Act and the allegations in the writ petition are otherwise unwarranted and uncalled for.


IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES , MUMBAI Before Shri Mahavir Singh, JM and Shri Ramit Kochar, AM ITA No.1144/Mum/2014: Asst.Year 2010-2011 Shri Atul Shantilal Maradia Asst.Commissioner of Income- 6/64, Navjivan Society tax Lamington Road, Mumbai Central Circle 20 Vs. Mumbai 400 008. Mumbai. PAN : ADYPM7131K. ( Appellant) ( Respondent) Appellant by : Ms.Bhumika VoraRespondent by : Shri A.Ramachandran Date of Hearing : 05.10.2016 Date of Pronouncement:05 .10.2016 O R D E R Per Mahavir Singh, JM: This appeal by assessee arising out of order of Commissioner of Income- tax (Appeals)-39, Mumbai in appeal No.CIT(A)-39/DC.CC.20/IT-189/2012-13 dated 22.11.2013. assessment was framed by DCIT, Central Circle 20, Mumbai for assessment year 2010-2011 vide her order dated 06.02.2013 u/s 143(3) of Income- tax Act, 1961 (hereinafter, Act ). 2. first issue in this appeal of assessee is against order of CIT(A) confirming action of Assessing Officer in applying provisions of section 50C of Act, adopting value as estimated by Stamp Valuation Authority instead of referring matter to Valuation Cell for ascertaining fair market value in terms of section 50C(2) of Act. 3. We have heard rival contentions and gone through facts and circumstances of case. Brief facts are that assessee has declared long term capital gain on sale of six shops situated in ground floor at Municipal premises, No.40 Strand 2 ITA No.1144/Mum/2014. Shri Atul Shantilal Maradia. Road, Kolkata. assessee has declared sale consideration of these shops in sale deed at Rs.50,00,000 whereas Sub-Registrar adopted market value for purpose of stamp duty payment at Rs.59,65,950. According to A.O. in view of provisions of section 50C of Act, full value of consideration is to be taken at Rs.59,65,950 as against claimed and declared at Rs.50,00,000 and long term capital gain is to be computed accordingly. A.O. adopted full value of consideration for purpose of section 50C at Rs.59,65,950 as computed by Sub-Registrar for purpose of computation of stamp duty payment. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed action of A.O. 4. Before us, learned Counsel for assessee stated that it was claimed before A.O. as well as before CIT(A) that property must be referred to Valuation Cell for ascertaining fair market value in terms of section 50C(2) of Act. assessee before us stated that he has not accepted value adopted by Assessing Officer for computation of long term capital gains i.e. stamp duty valuation/registration rate and requested to refer matter to Valuation Cell for ascertaining fair market value of property in terms of Section 50C (2) of Act. We find that this issue is covered by decision of Hon ble Calcutta High Court in case of Sunil Kr. Agarwal Vs. CIT in GA No.3686 of 2013 ITAT No.221 of 2013 vide judgment dated 13.03.2014, wherein it is held that to ascertain full value of consideration in case of transfer of capital asset, full consideration of capital asset is to be taken on basis of value adopted by Stamp Valuation authority under sub- section (1) of section 50C or capital asset is to be referred to Valuation Officer for determining fair market value of property for assessing capital gains. On query from Bench Ld. Sr. DR fairly stated he has no objection in case appeal is set aside to file of AO for reference to DVO to ascertain full value of consideration u/s. 50C of Act. He also stated that in case assessee is disputing value assessed by Stamp Valuation Authority i.e., rate assessed by Sub-Registrar is challenged by assessee, then matter has to be referred to DVO for ascertaining full value of consideration for assessing long term capital gain under section 50C of Act in terms of decision 3 ITA No.1144/Mum/2014. Shri Atul Shantilal Maradia. of Hon'ble Calcutta High Court in case of Sunil Kumar Agarwal, supra. In case of Sunil Kumar Agarwal, Hon'ble Calcutta High Court held as under: "We have considered rival submissions advanced by learned advocates appearing for parties. submission of Ms. Ghutghutia that requirement of clauses a) and (b) of sub-Section 2 of Section 50C has not been met by assessee, can hardly be accepted. requirement of clause (b) of sub-Section 2 of Section 50C was evidently met. only question is whether requirement of clause (b) of sub-Section 2 of Section 50C was evidently met. only question is whether requirement of clause (a) of sub-Section 2 of Section 50C was met by assessee. We have already set out hereinabove recital appearing in Deeds of Conveyance upon which assessee was relying. Presumably, case of assessee was that price offered by buyer was highest prevailing price in market. If this is his case then it is difficult to accept proposition that assessee had accepted that price fixed by District Sub Registrar was fair market value of property. No such inference can be made as against assessee because he had nothing to do in matter. Stamp duty was payable by purchaser. It was for purchaser to either accept it or dispute it. assessee could not, on basis of price fixed by Sub-Registrar, have claimed anything more than agreed consideration of sum of Rs.10 lakhs which, according to assessee, was highest prevailing market price. It would follow automatically that his case was that fair market value of property could not be Rs.35 lakhs as assessed by District Sub Registrar. In case of this nature assessing officer should, in fairness, have given option to assessee to have valuation made by departmental valuation officer contemplated under Section 50C. As matter of course, in all such cases assessing officer should give option to assessee to have valuation made by departmental valuation officer. For aforesaid reasons, we are of opinion that valuation by departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. legislature did not intend that capital gain should be fixed merely on basis of valuation to be made by District Sub Registrar for purpose of stamp duty. legislature has taken care to provide adequate machinery to give fair treatment to citizen/taxpayer. There is no reason why machinery provided by legislature should not be used and benefit thereof should be refused. Even in case where no such prayer is made by learned advocate representing assessee, who may not have been properly instructed in law, assessing officer, discharging quasi judicial function, has bounden duty to act fairly and to give fair treatment by giving him option to follow course provided by law." 4 ITA No.1144/Mum/2014. Shri Atul Shantilal Maradia. 5. From above facts and legal proposition laid down by Hon'ble jurisdictional High Court in case of Sunil Kumar Agarwal, supra, we are of view that value so adopted or assessed or assessable by Stamp Valuation Authority based on circle rates is deemed to be full value of consideration received or accruing as result of transfer of capital asset, being land or building or both, for purposes of section 48 of Act. But if assessee disputes value so adopted or assessed or assessable u/s. 50C(2) of Act, AO should refer capital asset to valuation Officer to determine full value of consideration received or accruing as result of transfer of capital asset. Hence, in present case, we set aside orders of lower authorities and remit issue back to file of AO for fresh adjudication of issue of long term capital gain arising out of sale of above two assets after ascertaining full value of consideration of these two assets as determined by Valuation Officer concerned. AO will take full value of consideration of capital asset in terms of section 50C(3) of Act for ascertaining long term capital gain arising out of these two assets. In term of above, appeal of assessee is restored back to file of AO for fresh adjudication and allowed for statistical purposes. 6. second issue in this appeal of assessee is against order of CIT(A) in enhancing disallowance of exemption claimed by assessee u/s 54F of Act at Rs.50,00,000 as against disallowance made by A.O. at Rs.11,00,000 without appreciating fact that entire sale consideration of Rs.50 lakh was deposited in capital gains deposit account before due date of filing of return of income u/s 139(1) of Act. 7. We have heard rival contentions and gone through facts and circumstances of case. We find that assessee has deposited sum of Rs.50 lakh in bank account under capital gain account scheme on account of sale of office premises and claimed exemption u/s 54F of Act. This amount of Rs.50 lakh was deposited in capital gain account scheme with Union Bank of India, Mulund (West) Branch in Account No.318502090045660 as under:- Date of deposit Amount deposited. 5 ITA No.1144/Mum/2014. Shri Atul Shantilal Maradia. 04.10.2010 Rs.39,00,000 11.10.2010 Rs.11,00,000 Assessing Officer allowed claim of exemption u/s 54F of Act to extent of Rs.39 lakh only as same was deposited on 04.10.2010. CIT(A) enhanced disallowance and entire deposit of Rs.50 lakh was treated as not invested for reason that this was deposited after due date of filing of return u/s 139(1) of Act, i.e., 30.09.2010. According to CIT(A) extension of due date of filing of return of income by CBDT for assessment year 2010-2011 from 30.09.2010 to 15.10.2010 is for extension of due date of filing of return of income and not for making any deposits. For rejecting claim of assessee, CIT(A) recorded following reasons in para 5.4 as under:- 5.4 In response to enhancement notice, appellant has replied that as long as there is extended period of time granted, all acts done within that extended period must be deemed to have been done within period of time originally stipulated. It is further submitted that provision of section 54F being exemption provision, and as appellant has deposited money within extended due date, same should be read liberally and all benefits accruing shall be granted. I am unable to concede to said contention of appellant. deed of conveyance was made on 29th March, 2010. net consideration, to extent not appropriated was to be deposited in designated account in such bank as specified in Capital Gains Account Scheme. There is no dispute that said consideration was to be deposited within due date for filing return as prescribed. due date prescribed statutorily is 30th September of assessment year. said due date has certainly not been complied with. said due date for making deposit has not been extended as per terminology used in Board Notification dated 28.9.2010. appellant seeks to argue that said due date ought to be treated as extended through implication. However there can be no presumption as to tax; in taxing statute one has to look merely at what is clearly said, there is no room for any intendent (Rowlatt J in Cape Brandy Syndicate vs. IRS (1921) 1 KB 64 (KB) 71. Hence it is held that amount of net consideration, not having been deposited as per due date as stipulated in said provision, appellant is not entitled to claim under s.54F. entire claim of Rs.50,00,000/- is declined; claim to extent thereof granted by A.O. stand withdrawn. income will be enhanced accordingly; it is accordingly directed. Aggrieved, assessee is in second appeal before Tribunal. 8. We have heard rival contentions and gone through facts and circumstances of case. We find that admittedly assessee made deposit of long term capital gain arising out of sale consideration of shops in capital gain account 6 ITA No.1144/Mum/2014. Shri Atul Shantilal Maradia. scheme with Union Bank of India, Mulund (West) Branch. Admittedly, these deposits are made on 04.10.2010 amounted to Rs.39 lakh and on 11.10.2010 amounted to Rs.11 lakh. Admitted fact is that CBDT on consideration of reports of disturbance of general life caused due to floods and heavy rains, in exercising of powers conferred u/s 119 of Act, extended due date of filing of return of income from Asst.Year 2010-2011 from 30.09.2010 to 15.10.2010. Board also clarified that due date for Tax Audit Report u/s 44AB of Act is also extended up to 15.10.2010. It means that for all intend and purposes, due date of filing of return is extended up to 15.10.2010. Now we have to go through provisions of section 54F(4), which reads as under:- (4) amount of net consideration which is not appropriated by assessee towards purchase of new asset made within one year before date on which transfer of original asset took place, or which is not utilised by him for purchase or construction of new asset before date of furnishing return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than due date applicable in case of assessee for furnishing return of income under sub-section (1) of section 139] in account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which Central Government may, by notification in Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit ; and, for purposes of sub- section (1), amount, if any, already utilized by assessee for purchase or construction of new asset together with amount so deposited shall be deemed to be cost of new asset : 9. As per above provisions of section 54F(4), amount of net consideration shall be deposited in capital gain account scheme before due date of furnishing of return of income as provided u/s 139(1) of Act. In instant case, deposit was made within date as extended vide Board s Notification No.402/92/2006- MC(42) of 2010 dated 28th September, 2010, which reads as under:- On consideration of reports of disturbance of general life caused due to floods and heavy rains, Central Board of Direct Taxes, in exercise of powers conferred under section 119 of Income Tax Act, 1961, hereby extends due date of filing of returns of income from Assessment Year 2010-11 from 30.09.2010 to 15th October, 2010. Accordingly due date for Tax Audit Report u/s 44AB of Income Tax Act is also extended to 15th October, 2010. 7 ITA No.1144/Mum/2014. Shri Atul Shantilal Maradia. 10. From above notification of CBDT extending date for filing of return of income from 30/09/2010 to 15/10/2010, it is clear that board had extended date for all intents & purposes of computation/assessment of income under Income Tax Act. In view of above, we are of view that whenever return of income has been filed by assessee within extended time by CBDT u/s. 119 of Act, such return is to be regarded as return filed u/s. 139(1) of Act and not u/s. 139(4) of Act. Hon ble Delhi High Court in case of CIT vs. Narender Anand (2011) 332 ITR 483 (Del.), exactly in similar situation, held that what assessee was required to do act up to particular date u/s. 139(1) of Act, was permitted to be done by subsequent date. Hon ble High Court observed that benefit was sought to be extended only on account of actual payment of sales tax within that extended period of time as extended by CBDT. Hon ble Delhi Court in case of Narender Anand (supra) held as under:- 9. It is submission of Department that authorization bestowed on AO on account of proviso to section 139(1) of IT Act to extend date for furnishing return in its discretion does not empower AO to change due date for filing return as mentioned in main clause of s. 139 of IT Act and, that is reason that as per proviso interest has to be paid by assessee in accordance with s. 139(8) of IT Act mandatorily even if date for filing of return is extended by AO. proviso to s. 43B was, thus, contended not to be applicable where amount is not paid as per due date as specified in main provision of s. 139(1) of IT Act. It was emphasized that object with which proviso to s. 43B was inserted must be kept in mind. This was sequitur to Department finding out that certain assessees were claiming liability on basis of accrual following mercantile system of accounting but were disputing payment of such liabilities or not paying such liabilities altogether. Thus, benefit was extended to assessees only if they had actually paid amount within dates specified for filing of return as per main proviso of s. 139(1) of IT Act. 10. To support aforesaid interpretation learned counsel also referred to provisions of s. 80 of IT Act providing for submission of return for losses to contend that where legislature wanted benefit to be extended not only to return filed within time allowed under sub-s. (1) of s. 139 of IT Act or within such further time as may be allowed by AO specific provision has been made as in case of s. 80 of IT Act. Thus, it has been specifically stipulated "in pursuance of return filed within time allowed under sub-s. (1) of s. 139 or within such further time as may be allowed by AO". To appreciate submission we asked learned counsel to set forth as to how these provisions stood at different intervals of time. provision as it stood at different periods of time shows that phraseology "or within such further time as may be 8 ITA No.1144/Mum/2014. Shri Atul Shantilal Maradia. allowed by AO" did not exist till 1st April, 1985 when it was so introduced and continued so till 31st March, 1989. From 1st April, 1989 provision provided for "in accordance with provisions of sub-s. (3) of s. 139". 11. Form No. 6 under r. 13 of IT Rules, 1962, which gives format for application for extension of date for furnishing of return of income under s. 139(1) of IT Act has also been referred to where request made is for "time for furnishing return may be extended up to .." 12. To support his plea learned counsel referred to various judgments. In Krishna Chandra Dutta (Cookme) (P) Ltd. vs. CIT (1994) 117 CTR (Cal) 88 : (1993) 204 ITR 23 (Cal) return for asst. yr. 1983-84 was filed belatedly on 2nd July, 1985 claiming loss on account of premature encashment of cash certificates for paying of debt to bank. amendment to s. 80 of IT Act effective from 1st April, 1984 requiring return of losses to be filed within time for benefit of carry forward and set off was held not to be retrospective in character but effective in respect of assessment years subsequent to asst. yr. 1983-84. 11. Further, Hon ble Delhi High Court deliberated on issue by considering Hon ble Gujrat High Court decision in case of Mehsana Ice & Cold Storage (P) Ltd. vs. CIT (2005) 275 ITR 601 (Guj) and Hon ble Calcutta High Court in Amin Chand Pyarelal vs. IAC & Ors. (1989) 180 ITR 330 (Cal) as under:- We may refer to two judgments cited in this behalf, which are germane to issue. first is in case of Mehsana Ice & Cold Storage (P) Ltd. vs. CIT (2005) 195 CTR (Guj) 571 : (2005) 275 ITR 601 (Guj) by Division Bench of Gujarat High Court. For asst. yr. 1985-86 assessee sought extension of time upto 31st Dec., 1985 and tendered return within that time. application seeking extension of time was neither rejected nor granted and it was held that in view of pronouncements extension application was construed to have been granted and thus return was within time, and as sequitur to that, assessee could not be denied benefit of carrying forward business losses. In that context it was observed as : "Under s. 139(3) of Act return of loss has to be furnished within time allowed under subs. (1) or within such further time which, on application made in prescribed manner, AO may, in his discretion, allow. assessee being limited company, under normal circumstances time to furnish return under s. 139(1) of Act would be before expiry of four months from end of previous year, i.e., 31st July, 1985. However, under proviso to s. 139(1) of Act AO is granted discretion to extend date for furnishing return on application made in prescribed manner. Therefore, scheme of Act envisages that due date is either one stated under cl. (a) or cl. (b) of sub-s. (1) of s. 139 of Act, or extended date which may be fixed on exercise of discretion by AO on application moved by assessee under 9 ITA No.1144/Mum/2014. Shri Atul Shantilal Maradia. proviso. However, as to what is effect in case where application is made in time before AO under proviso to sub-s. (1) of s. 139 of Act, and where such application is not dealt with by AO, i.e., it is neither rejected nor granted, is no longer res integra." 19. Calcutta High Court in Amin Chand Pyarelal vs. IAC & Ors. (1989) 78 CTR (Cal) 84 : (1989) 180 ITR 330 (Cal) dealt with issue of imposition of penalty in case return was filed within extended time allowed. effect of AO extending date for filing return under s. 139(1) of IT Act was, as contended by assessee, is as under : "When ITO extends date for furnishing return under proviso (iii) to s. 139(1), he does so in exercise of authority conferred by statute and additional time available to assessee consequent upon such extension is, for all relevant purposes, of same character and as effective as statutory period specifically enacted by Parliament. It constitutes integral part of time allowed for furnishing return. Therefore, where ITO extends date, then all time upto that date is time allowed for furnishing return. additional period consequent upon such extension falls within expression time allowed in cl. (a) of s. 271(1) and penalty provisions do not come into play during period of extension of time by ITO. It has also been observed that, from language of proviso (iii) to s. 139(1), it is apparent that interest becomes payable only upon ITO acting on application made by assessee for purpose and extending date for furnishing return. ratio of said decision is (i) that in ordinary course of things, ITO could have extended date only upon being satisfied that there was good reason for doing so, and that would have been on grounds pleaded by assessee and that in circumstances of this case, presumption could validly be raised that all that was done; (ii) that, on facts, extension was matter falling within s. 139(1) and returns furnished by assessee must be attributed to that provision; they were not returns furnished within contemplation of s. 139(4); (iii) that, therefore, penalty provisions did not come into play at all." stand of Department was : "Learned lawyer appearing for IT authorities has, however, submitted that acts done and/or caused to have been done by respondent are well justified and in accordance with law and acts complained of are neither contrary to and/or inconsistent with provisions of IT Act and allegations in writ petition are otherwise unwarranted and uncalled for." On basis of submissions, it was observed as under : "With all anxiety, this Court has heard arguments advanced on behalf of respective parties. Undisputedly, petitioner has paid all income-tax dues and grievance of petitioner is only against imposition of penalty and notice of demand in this behalf. question to be decided in this writ petition is as to whether steps taken by respondents to impose penalty are without jurisdiction or not. Regard being had to facts of this case and applying test 10 ITA No.1144/Mum/2014. Shri Atul Shantilal Maradia. laid down by Supreme Court, this Court finds that IAC has no jurisdiction to impose penalty. Time is already extended to file return and assessed amount being paid should be deemed to have been paid within extended time and there cannot be any further demand for penalty in manner sought to be done in instant case." 12. From above precedent and facts of case before us, it is clear that assessee has invested amount in Capital Gain Account Scheme before extended due date of filing of return of income u/s. 139(1) of Act. Hence, we are of view that once no negative consequences will follow to assessee by reason of deposit of sale consideration of shops within extended period of time granted by Central Board of Direct Taxes, all acts done within extended period must, thus, have to be considered as done within prescribed period of time as originally stipulated. For all intend and purposes date for filing of return is extended up to 15/10/2010 and assessee had invested sale consideration in Capital Gains Account Scheme on or before 15/10/2010, deduction u/s. 54F of Act cannot be denied. Accordingly, we allow this deduction. This issue of assessee s appeal is allowed. 13. In result, appeal of assessee is allowed. Order pronounced on this 05th day of October, 2016. Sd/- Sd/- (Ramit Kochar) (Mahavir Singh) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 05th, October, 2016. Devdas* 11 ITA No.1144/Mum/2014. Shri Atul Shantilal Maradia. Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT, Mumbai. 4. CIT(A) - 39, Mumbai 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai Atul Shantilal Maradia v. Asst.Commissioner of Incometax -Circle 20, Mumbai
Report Error