In the case, Deputy Commissioner of Income Tax vs Saifee Jubiee High School & Madressa Yusufiyan Society, Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) recently ruled that sale price approved by charity commissioner had to be followed in case of Trust’s sales deed.
The assessee in the instant case is a public trust registered under the Bombay Public Trust Act. It has transferred a capital asset for a consideration of Rs. 12.50 lakhs by way of the registered sale deed during the financial year.
During the course of assessment proceedings, the Assessing Officer (AO) has received AIR information that the price was taken for stamp purposes was Rs.74,87,400 and accordingly, the AO has adopted the value of the land on the basis of the value shown by the Stamp Valuation Authority. Further, the AO has taken the full consideration of the property to be Rs.74,87,400 and cost of acquisition is held to be Rs.71,640 as per the book value of the Assessee and Long-Term Capital Gain is worked out at Rs.70,34,635 by relying on the AIR information and added the same to the total income of the Assessee.
On appeal, the CIT(A) granted relief to the Assessee by deleting the addition made by the AO and held that the transaction of sale of the property has been made with the prior approval of the Charity Commissioner. Thereafter, a written order was passed permitting the Assessee to sell the said property for Rs.12,50,000. As the transaction took place under the supervision and directions of an Authority then the Stamp Authority need not to arrive at the value of Rs.74,87,400 but the AO has worked out such amount on the basis of details furnished.
The authority also observed that the Charity Commissioner has stated in the order of approval passed that the said property could not be used for commercial purpose and the same has to be put to use for the objects of the purchaser trust, the valuation of the property could not be the same as any unrestricted property.
Aggrieved by the order of the authority the Revenue approached the Tribunal by appeal and contended that the CIT(A) has violated the provision contained in Rule 46A of the Income Tax Rules in admitting assessee’s additional evidence in the nature of its registered valuer’s report that the above-mentioned capital assets’ fair market value was Rs.12.4lakhs only.
After considering the above narrated facts and circumstances of the case the Tribunal bench comprising of Judicial Member S.S.Godara and Accountant Member Amarjit Singh observed that while perusing the available materials on records it is clear that the Charity Commissioner had passed his order as per the provisions of the Bombay Trust Act and Rules approving the impugned sale at a price of Rs.12.50lakhs which ultimately culminated in the sale deed, therefore, it would be the market value of the property.
While concluding the issue the division bench further held that whatever sale price Charity Commissioner had approved had to be followed in assessee’s impugned sale deed and also upheld the order of the lower authority and accordingly dismissed the appeal of the Revenue.
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