High Court Of Allahabad
CIT vs. Smt. Raj Kumari Vimla Devi & Anr.
Section GT 4(1)(a)
Asst. Year 1981-82
R.K. Agrawal & Prakash Krishna, JJ.
IT Ref. No. 222 of 1989
15th February, 2005
Counsel Appeared :
Shambhoo Chopra, for the Revenue : Shakeel Ahmad, for the Assessees
JUDGMENT
By the court :
The Tribunal, Allahabad, has referred the following questions of law under s. 26(1) of the GT Act, 1958, hereinafter referred to as “the Act”, for the opinion of this Court :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the rules framed under the Stamp Act are not conclusive of determination of market value of properties ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that there was no deemed gift in the case ?”
The present reference relates to the asst. yr. 1981-82. Briefly stated, the facts giving rise to the present reference are as follows :
From the income-tax records of the late Raja J.P. Singh, the GTO found that during his lifetime, he has executed certain sale deeds in respect of some immovable properties and the sale consideration as disclosed in the sale deeds, was to the tune of Rs. 1,25,000; but the registration authorities took the value of the properties for stamp duty purposes at Rs. 1,79,000. The difference of Rs. 54,000 was subjected to tax by the GTO on the ground that the sale price taken by the stamp duty authorities is commensurate with the prevailing market rate, which order was upheld in appeal by the AAC. Feeling aggrieved, an appeal was preferred before the Tribunal. The Tribunal has allowed the appeal on the following grounds : “We are of the opinion that the provisions contained in the Stamp Act and the rules framed thereunder have the limited object of providing guidelines. They are not conclusive of the determination of the market value. The market value by its nature is such which keeps on varying and changing. The market value of the property worked out in accordance with the Stamp Act rules is neither binding on the person who produces the instrument for registration nor on the State Government. In the absence of any evidence to prove that the sale consideration mentioned in the sale deeds has been understated, we are of the opinion, that the GT authorities were wrong in holding that there had been a deemed gift to the tune of Rs. 54,000.”
We have heard Sri Shambhoo Chopra, learned standing counsel for the Revenue, and Sri Shakeel Ahmad, learned counsel for the respondent-assessee.
Learned counsel for the Revenue submitted that as the stamp duty was paid on the value of Rs. 1,79,000, the GTO had rightly taken the fair market value of the property in question at the same figure and brought the difference of Rs. 54,000 to tax under the Act by treating it as a deemed gift. He submitted that the value of the property disclosed for the purposes of stamp duty has not been disputed by the assessee and, therefore, the tax has rightly been imposed.
Sri Shakeel Ahmad, learned counsel for the respondent-assessee, submitted that the sale consideration of the property in question was only Rs. 1,25,000 and the sale has not been effected to relatives or friends but to strangers/third parties and only for the purposes of stamp duty the value was taken at Rs. 1,79,000 against the actual value of Rs. 1,25,000. He submitted that payment of stamp duty would not be determinative of the fair market value of the properties in question as it may be more than the actual sale consideration paid.
Having heard learned counsel for the parties, we find that it is not in dispute that the properties in question were sold for a total consideration of Rs. 1,25,000 whereas for the purposes of stamp duty it was disclosed at Rs. 1,79,000.
The apex Court in the case of Jawajee Nagnatham vs. Revenue Divisional Officer (1994) 4 SCC 595 has held that the basic valuation register prepared and maintained for the purpose of collecting stamp duty cannot form the foundation to determine the market value mentioned thereunder in instruments brought for registration. Equally it would not be a basis to determine the market value under s. 23 of the Land Acquisition Act, of the lands acquired in that area or town or the locality or the Taluk, etc. This Court in the case of Dinesh Kumar Mittal vs. ITO (1992) 193 ITR 770 (All) : (1991) UPTC 1209 (All) has held that we cannot recognise any rule of law to the effect that the value determined for the purpose of stamp duty is the actual consideration passing between the parties to a sale. The actual consideration may be more or may be less. What is the actual consideration that passed between the parties is a question of fact to be determined in each case, having regard to the facts and circumstances of that case.
It may be mentioned here that to overcome this difficulty for the purposes of bringing to tax capital gain, Parliament has inserted s. 50C of the IT Act, 1961, by the Finance Act, 2002, w.e.f. 1st April, 2003, wherein it has been provided that the value adopted or assessed by any authority of a State Government for the purpose of payment of stamp duty in respect of land or building or both shall for the purposes of s. 48 be deemed to be the full value of the consideration received or accruing as a result of such transfer. There was no such provision applicable during the relevant period, therefore, the value of assets by the stamp valuation authority cannot be treated as full market value for the purposes of imposition of tax.
In this view of the matter, we are of the considered opinion that the rules framed under the Stamp Act cannot be pressed into service for determining the market value of the property and, therefore, there is no deemed gift in the present case. We, accordingly answer both the questions referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. There shall be no order as to costs.
[Citation : 279 ITR 360]
