Case Law Details
Equivalent Citations : (2012) 80 CCH 372 KarHC (2013), 215 TAXMAN 145 (Karnataka) , (2013) 259 CTR (Kar) 579 , (2013) 356 ITR, 90 (Karn) (2013) 88 DTR (Kar) 59
The appellant-assessee sold a house plot in RMV II Stage, Bangalore, for Rs.20,00,000/- under registered sale deed dated05.06.2004. The Assessing Authority found that the registration value of the property fixed under the Karnataka Stamp Act is Rs.36,00,000/-. The assessee, however, had reinvested Rs.24,00,000/-for construction of residential house at Gangavathi and sought exemption from the payment of capital gain tax under Section 54F of the Income Tax Act (for short ‘the IT Act’).
The Assessing Authority found that under Section 50C of the IT Act the value of the property is Rs.36,00,000/-, The cost price of site paid by the assessee at Rs.1,93,506/- was deducted and the net income chargeable to tax under Capital Gains was assessed at Rs. 34,06,494/-, further, the Assessing Authority given deduction of Rs.20,00,000/- towards investment in construction of residential house at Gangavathi and assessed the long term Capital Gain at Rs.14,06,494/- and the tax payable is assessed at Rs.4,96,989/-. The assesses filed an appeal before the Commissioner of income Tax (Appeals) who confirmed the order of the Assessing Officer. The assessee filed an appeal before the Income Tax Appellate Tribunal, Bangalore. The Appellate Tribunal upheld the order of the Assessing Authority and dismissed the appeal The assessee, aggrieved by the said order of the Appellate Tribunal, has filed this appeal.
After considering the arguments of the appellant and the Revenue, the following substantial questions of law would arise for consideration in this appeal: Whether the registration value fixed by the State authorities under the Stamp Act would constitute full consideration value for the purpose of levy of long-term capital gains’? Whether the assessee is entitled to contend that the sale consideration shown in the sale deed is the fair market value? Whether the long-term capital gain has to be assessed on the value stated in the sale deed?
Section 50C(1) is a deeming provision wherein the registration value fixed by the State Government under the Stamp Act is deemed to be considered as the full value consideration. Section 50C(2), however, permits the assessee to contend before the Assessing Authority that the registration value fixed by the State under the Stamp Act is excessive and does not correspond with the fair market value of the property as on the date of the transfer and that the assessee should not have challenged the levy of stamp duty under the Stamp Act as being excessive and disproportionate to the fair market value of the property before the authorities under the Stamp Act or file any appeal, revision or reference to any Court or High Court against such order, in which event the Assessing Authority would refer the matter to the Valuation Officer to assess the fair market value of the property, keeping in view all the relevant consideration including the registration value fixed by the State, Sub-section 3 provides that if the fair market value fixed by the Valuation Officer is in excess of the registration value, then the registration value should be considered for levy of the capital gains tax. If the Valuation Officer finds that the value of the property is less than the registration value, then, accordingly, the Assessing Authority should levy capital gains tax on the basis of market value stated by the Valuation Officer,
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With due respect to the ITAT order, I am of the opinion that judgment is not good as the assessee is asked to invest full notional value if he want to take full benefit of section 54. If a person has not received the extra consideration but for some reason the stamp duty value is excessive, how can one invest in section 54 for additional amount. The case is also not properly argued by assesses counsel in this regards.