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2009 Supreme(Mad) 3669
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P. JYOTHIMANI
N. Meenakshi
Versus
The Assistant Commissioner of Income Tax
W.P.No.851 of 2009
Decided on : 11-09-2009
For the Petitioner:V. Ramachandran, Sr.Counsel for Dr. Anita Sumanth, Advocate. For the Respondent: Patti B. Jaganathan, SCGSC.
Ratios
a. To determine the value of the property sold by an assessee for the purpose of computation of capital gain, the assessee can use either the valuation finally decided under the Indian Stamp Act, 1899 or by the departmental valuer under Sec.50C of the Income Tax Act, 1961.
b. Getting the property sold by an assessee valued by the valuer under Sec.50C of the Income Tax Act, 1961 is the valuable right of an assessee.
Headnote:(A)Indian Stamp Act, 1899(2 of 1899)-Sec.47A-Income Tax Act, 1961(43 of 1961)-Sec.50C, 143(3), 153-Constitution of India-Art.226-Immovable property-Sale-Guideline value-Income tax-Capital gain-Determination-Natural justice-Valuation-Challenge-Seller-Right-Alternative remedy-Appeal-Writ-Maintainability-Petitioner had sold her land to IOC who was in possession of it for a longer period-The price agreed was lesser than the guideline value fixed by the Registration official-Buyer did not contest the valuation but paid the stamp duty on the guideline value-When the petitioner had filed her return for the purpose of capital gain, the respondent referred the transaction to valuation officer to determine the value-When the valuation report was not forthcoming, the respondent proceeded to assess the tax due and demanded the petitioner to pay the tax on capital gain on the value adopted for the purpose of the stamp duty-Petitioner challenged it and contended that assessing capital gain before the receipt of the valuation report had prejudiced her and the action of the respondent was against the provision of law-Respondent contended that when the period prescribed for completing the assessment was about to be over, without waiting for the report of the valuation officer, the respondent could complete the assessment-Held, the assessment of the value of the property by the valuation officer was the valuable safeguard provided to the assessee-When the valuation had been done under the Stamp Act without hearing the seller, the seller could rely upon the value fixed by the valuation officer-Order of assessment was set aside and the respondent was directed to complete the valuation after the receipt of the valuation report from the valuation officer-Writ petition was allowed.
(B)Indian Stamp Act, 1899(2 of 1899)-Sec.47A-Income Tax Act, 1961(43 of 1961)-Sec.50C-Immovable property-Sale-Guideline value-Income tax-Capital gain-Determination-Valuation-Challenge-Seller-Right-To determine the value of the property sold by an assessee for the purpose of computation of capital gain, the assessee can use either the valuation finally decided under the Indian Stamp Act, 1899 or by the departmental valuer under Sec.50C of the Income Tax Act, 1961-Getting the property sold by an assessee valued by the valuer under Sec.50C of the Income Tax Act, 1961 is the valuable right of an assessee.
A combined reading of the entire provisions show that in respect of the valuation of the registered property, the assessee can either use the valuation which has been finally decided, including the appeal under section 47A of the Indian Stamp Act or the valuation which has been ascertained by the Departmental Valuer as per Section 50C of the Act. On the facts and circumstances of the present case, inasmuch as the purchaser, which is a Government concern, has not taken any steps under the Indian Stamp Act as per Section 47A, it is really the valuable right of the petitioner, who is stated to have sold the property for a sum of Rs.99 Lakhs while the stamp duty paid by the purchaser under the sale deed was on the valuation of Rs.3,92,68,800/-, which is involved. It was at the request of the petitioner, the matter has been referred for valuation. Therefore, the only available remedy to the petitioner in respect of her capital gain is under Section 50C of the Act, which cannot be dispensed with merely due to the reason that the Valuation Officer has not chosen to pass orders regarding the valuation in time. Para 12
The writ petition is directed against the assessment order of the respondent dated 312. 2008 by which the respondent, having referred the matter to the Valuation Cell on 112. 2008 as per Section 50C(2) of the Income Tax Act, 1961 (for brevity, "the Act"), completed the assessment by invoking Section 50C of the Act by taking the value of land as determined for stamp duty purpose as the sale value, as no valuation report was received from the Valuation Cell till the said date.
1. The petitioner was the owner of a plot of land comprised in R.S.No.3123/2, Block No.51, Old No.258 (New No.849), Poonamallee High Road, Purasawalkam, Chennai. She leased out the said portion of land to the Indian Oil Corporation for more than 40 years in which the Corporation was operating a petrol bunk. The petitioner, having decided to sell the property to the Indian Oil Corporation, after negotiation, fixed the sale consideration at Rs.99 Lakhs. Pursuant to the agreement, a sale deed was executed in favour of the Indian Oil Corporation. Since there was a capital gain on the sale, the petitioner offered the capital gains for assessment based on the actual consideration received by her, namely Rs.99 Lakhs and paid capital gains tax. However, the Registering Authority adopted the guideline value of the property which comes to Rs.3,92,68,800/-and levied stamp duty and the Indian Oil Corporation which is the purchaser has also paid stamp duty on the said amount.
2. 2. According to the petitioner, in these circumstances, the Assessing Authority proposed to assess the capital gains on the basis of the value adopted by the Stamp Authorities which was in excess of actual consideration received by the petitioner and the petitioner filed a writ petition challenging the vires of Section 50C of the Act, which was dismissed. The matter was also ultimately decided by the Supreme Court by rejecting the SLP and directing the petitioner to approach the authorities by keeping open the question of vires of the provision.
2. 3. Thereafter, the Assessing Authority proposed to assess the capital gain on the value fixed by the Stamp Authorities. The petitioner made a request to the Assessing Authority to refer the matter to the Valuation Officer for determining the market value of the property and the reference was made to the Valuation Officer in the course of the assessment proceedings. However, even before the Valuation Officer filed a report, the Assessing Authority passed the assessment order taking the value of the land as determined by the Registering Authority, which according to the petitioner is against Section 50C(2) of the Act.
4. The assessment is challenged on the grounds that it is opposed to Section 50C of the Act; that it is opposed to principles of natural justice; that, admittedly, the Valuation Officers report has not been received before 312. 2008 and the Assessing Authority has passed the assessment order urgently; and that even though there is a right of appeal available against the assessment order inasmuch as the order is said to be without jurisdiction the present writ petition is maintainable.
1. Mr. V. Ramachandran, learned Senior Counsel appearing for the petitioner would submit that the Supreme Court while upholding Section 50C(2) of the Act has kept open the issue relating to its validity. He would rely upon an order of this Court dated 24. 2009 made in W.P.No.2092 of 2009 in an identical situation. It is his contention that there was no opportunity given before passing such order and the order itself is without jurisdiction since at the request of the petitioner the matter has been referred for the purpose of valuation and the assessment has been passed without the valuation report.
2. It is his submission that Section 55A of the Act cannot be invoked as that provision empowers the Assessing Authority to refer for valuation, while Section 50C(2) of the Act is the right of the assessee.
3. It is his submission that the v
