TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Tribunal upholds CIT(A)'s decisions, reverses rent addition, rejects land valuation, adjusts capital gains.</h1> <h3>Income tax Officer Versus Umedbhai International (P) Ltd.</h3> The Tribunal partially allowed the Revenue's appeal, upholding the CIT(A)'s decisions on most issues but reversing the deletion of a Rs. 27,000 addition ... - Issues Involved:1. Validity of the reference made by the AO to the DVO for valuation of land.2. Recasting of the P&L account by the AO.3. Deletion of addition on account of unrealized rent.4. Determination of long-term capital gain/loss.Summary:Issue 1: Validity of the Reference to the DVOThe Department challenged the CIT(A)'s decision that the reference made by the AO to the DVO for valuation of land was 'bad in law and therefore, liable to be quashed.' The Tribunal upheld the CIT(A)'s decision, stating that 'the AO had no power under the law to refer the valuation of the capital asset to the DVO when the valuation made by the registered valuer is higher than the fair market value of the asset.' The Tribunal referenced s. 55A of the IT Act, noting that the AO can only make such a reference if the value claimed by the assessee is less than its fair market value. The Tribunal cited several cases, including *Hiaben Jayantilal Shah v. ITO & Anr.*, to support this interpretation.Issue 2: Recasting of the P&L AccountThe AO recast the P&L account of the assessee based on the DVO's report, arriving at a net profit of Rs. 6,09,025. The CIT(A) rejected this recasting, and the Tribunal upheld this rejection, stating that 'the net profit by recasting the trading cum P&L a/c at Rs. 6,09,025 cannot be substituted by the loss disclosed at Rs. 9,92,600 in the trading results arrived at in the audited accounts furnished by the assessee.'Issue 3: Deletion of Addition on Account of Unrealized RentThe AO added Rs. 27,000 to the total income of the assessee for unrealized rent, arguing that the assessee follows the mercantile method of accounting. The CIT(A) deleted this addition, citing that some land was under forceful occupation, preventing rent realization. The Tribunal reversed the CIT(A)'s decision, stating, 'the assessee has not brought any material on record that there was any dispute between the assessee and the tenant and the rent had not accrued to the assessee.' Thus, the AO's addition of Rs. 27,000 was justified.Issue 4: Determination of Long-Term Capital Gain/LossThe AO determined a long-term capital gain of Rs. 18,79,866, while the CIT(A) concluded a long-term capital loss of Rs. 1,69,533. The Tribunal upheld the CIT(A)'s decision, rejecting the AO's determination based on the DVO's report, which was deemed invalid.Conclusion:The Tribunal allowed the appeal of the Revenue in part, specifically reversing the CIT(A)'s deletion of the Rs. 27,000 addition for unrealized rent, while upholding the CIT(A)'s decisions on the other issues.
TaxTMI 
TaxTMI 
