TaxTMI 
TaxTMI 
2013 (9) TMI 2
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....unt of Rs. 11,11,90,795/- as Long Term Capital Gain. Further, the assessee has claimed exemption u/s.54F amounting to Rs. 1,84,07,799/- by investing the same in the construction of new residential property. The assessee has further claimed exemption of Rs. 50 lakhs u/s.54EC by investing the same in Rural Electrification Corporation Ltd. on 02-02-2007. 2.1 The Assessing Officer noted that the assessee has invested the amount of Rs. 50 lakhs in Rural Electrification Corporation Ltd. before the date of sale. He, therefore, asked the assessee to explain as to how the exemption is available. Referring to the decision of the Nagpur Bench of the Tribunal in the case of Bhikulal Chandak HUF Vs. ITO reported in 126 TTJ 545 and CBDT Circular No.359 dated 10-05-2003 36 CTR (TLT) 1 it was submitted that the assessee has correctly claimed the deduction. However, the Assessing Officer was not convinced with the explanation given by the assessee. He noted that the CBDT Circular refers to exemption u/s.54E whereas the claim of the assessee is u/s.54EC. Rejecting the arguments advanced by the assessee and distinguishing the decision cited before him, the Assessing Officer disallowed the claim of....
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....M/s. The Southern Machine Industries. The percentage of such labour charges to the total bills works out to 37%. Since the amount was incurred in cash the Assessing Officer was of the opinion that the genuineness of the same cannot be verified. Further, the construction cost includes bills for purchase of computers on 26-04-2008 amounting to Rs. 33,000/- and purchase of one DVD writer on 09-04-2008 amounting to Rs. 12,050/-. He, therefore, asked the assessee to explain as to why the claim of exemption u/s.54F should not be disallowed. Rejecting the various explanations given by the assessee and in absence of production of the architect before him the Assessing Officer disallowed the claim of exemption u/s.54F amounting to Rs. 1,84,07,779/-. 3. So far as the calculation of indexed cost of acquisition the Assessing Officer noted that the property so sold was bequeathed to the assessee as per his father's will in the year 2003-04. The assessee has valued the property as on 01-04-1981 at Rs. 71,18,920/- in respect of land and Rs. 17,39,375/- in respect of the building as per the valuation report dated 20-10-2008 and claimed the cost of indexation w.e.f. 01-04-1981. The Assessing Off....
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....e addition of Rs. 4,18,70,205/- being the income from Long Term Capital Gain on account of sale of land. 4. Before the CIT(A) the assessee made elaborate arguments and filed detailed submissions. The assessee also relied on various case decisions. Based on the arguments advanced by the assessee and relying on various decisions cited before him the Ld. CIT(A) gave part relief to the assessee. So far as the question relating to exemption u/s.54EC amounting to Rs. 50 lakhs is concerned he rejected the claim of the assessee on the ground that there is only one agreement for sale which is dated 05-04-2007. The assessee neither at the assessment stage nor during the appeal proceedings has brought any evidence or documents on record to indicate that any prior agreement for sale has taken place. Distinguishing the decision of the Nagpur Bench of the Tribunal and other decisions cited before him and relying on the decision of the Hon'ble Bombay High Court in the case of Hindustan Unilever Ltd. Vs. DCIT reported in 325 ITR 102 and the decision of Hon'ble Karnataka High Court in the case of ITO Vs. H.P. Vishweshwaraiah reported in 250 ITR 863 wherein it has been held that in order to avail....
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.... of the Tribunal in the case of Ravikant Vs. ITO reported in 110 TTJ 297 and various other decisions the Ld. CIT(A) held that the addition made by the Assessing Officer on the basis of Stamp duty valuation is not correct and deserves to be deleted. 7. As regards the adoption of the cost inflation index for the F.Y. 2003- 04 by the Assessing Officer as against 1981-82 by the assessee he noted that the assessee got the possession of the property as per will on death of his father. Therefore, it clearly falls within the provisions of section 49(1)(ii) of the I.T. Act. Referring to the expression indexed cost of acquisition used in Explanation 3 to Section 48 and following the decision of the Special Bench of the Tribunal in the case of DCIT Vs. Manjula J. Shah reported in 318 ITR (AT) 417 (Mum) (SB) he held that the cost inflation index and the indexed cost of acquisition has to be worked out by taking the date of acquisition by the previous owner in respect of property received by the assessee from his father by way of a will. He accordingly allowed the claim of the assessee. 7.1 In view of the part relief given by the CIT(A) both the assessee as well as the Revenue are in appe....
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....he asset was held by the assessee and not by any previous owner. 7. The learned Commissioner of Income-tax (Appeals) grossly erred in failing to appreciate that under the scheme of the Act, the benefit of indexation can be given only to the owner of the asset, and that too from the date he becomes the owner to the date he ceases to be the owner." 8. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. Ground of appeal No.1 by the assessee relates to addition of Rs. 50 lakhs made by the Assessing Officer by disallowing the claim u/s.54EC and upheld by the Ld.CIT(A). We find the assessee has invested the said amount in Rural Electrification Corporation Ltd bonds on 02-02-2007. It is the case of the Assessing Officer that since the property at Mukundnagar was sold on 05-04-2007 for a total consideration of Rs. 16 Crores and the assessee has invested prior to the date of the sale, therefore, the assessee is not entitled to the claim. While doing so, he further held that the Circular No.359 dated 10-05-1983 is not applicable to the facts of the present cas....
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.... of the present case. The Hon'ble Court in the said case has held that for the purpose of claiming deduction under the provisions of section 54EC, the date of investment by the assessee must be recorded as the date on which payment was made and received by the National Housing Bank. Since in that case the investment was within a period of 6 months from the date of transfer of the asset the Hon'ble Court held that the provisions of section 54EC were complied with by the assessee. However, in the instant case, the issue is regarding advance money received on the basis of agreement to sale and the applicability of section 54EC on account of investment in specified bond out of advance money but before the date of actual sale. Therefore, the said decision is not applicable to the facts of the present case. We also do not find force in the submission of the Ld. Departmental Representative that the Act does not contemplate any advance and that the CBDT Circular No.359 dated 10-05-1983 is not applicable to the facts of the present case. 8.3 So far as the decision of Hon'ble Karnataka High Court in the case of H.P. Vishweswaraiah (Supra) is concerned, we find the issue was compulsory acq....
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....y purchasing a residential property or deposit in specified account before the due date of furnishing the return of income and such date for furnishing the return can be the date u/s.139(4). He however submitted that he has no objection if the same is restored to the file of the Assessing Officer with a direction for the limited purpose of verifying the quantum of deduction. 9.3 The Ld. Departmental Representative on the other hand while supporting the order of the CIT(A) submitted that the architect was not produced before the Assessing Officer. The supporting bills and vouchers produced contain photocopies in most of the cases. Further, in some of the cases the bills were in the name of the firm "Southern Machine Industries". There is no sanction plan and therefore the genuineness of the claim was not proved. There is no date of commencement nor the date of completion. Therefore, the assessee in the instant case has not fulfilled the intention of the legislature. 9.4 The Ld. Counsel for the assessee in his rejoinder referred to the decision of Hon'ble Bombay High Court in the case of Dr. P.S. Pasricha and submitted that the Hon'ble High Court in the said decision has held t....
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....n the case of Dr. P.S. Pasricha. This ground by the assessee is accordingly allowed for statistical purposes. ITA No.152/PN/2012 (By Revenue) : 10. Grounds of appeal No. 1 to 3 by the Revenue relate to the order of the CIT(A) in accepting the Fair Market Value as on 01-04-1981 at Rs. 71,18,920/- adopted by the assessee as against Rs. 40,91,400/- determined by the Assessing Officer. 10.1 We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book furnished on behalf of the assessee. We find in the instant case the assessee sold the property at Mukundnagar for a total consideration of Rs. 16 crores. The said property is bequeathed to the assessee as per his father's will in the year 2003-04. The assessee valued the above property as on 01-04-1981 at Rs. 71,18,920/- in respect of the land and Rs. 17,39,379/- in respect of the building as per the valuation report dated 20-10-2008 and claimed the cost of indexation w.e.f. 01-04-1981. We find the Assessing Officer obtained a report from the Joint District Registrar of Stamps and ascertained the value of the property for Stamp duty valuation who vide....
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....ons of the appellant and the material available on the record. The valuation adopted by the appellant as on 01-04-1981 is on the basis of valuation report obtained from Govt. Approved Valuer. The normal rule is that when there is variation in the stamp duty valuation and the value adopted by the assessee on the basis of valuation report and the assessee objects for considering the .stamp duty valuation, the fair market value is to be adopted unless it is referred by A.O. to Valuation Officer and since in this case the assessee had objected to the stamp duty valuation adopted by the A.O., which is evident from paras 5.2 and 5.3 of the assessment order, the Assessing Officer was not right in substituting the stamp duty valuation without referring the matter to the Valuation Officer. There is force in the contention of the appellant that the valuation by the Stamp Authority is based on the circle rates. These circle rates adopt uniform rate of property for the entire locality, which inherently disregard the peculiar features of a particular property. Even in a particular area, on account of location factors and possibilities of its use, there can be vide variations in the price of the....
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....claim regarding fair market value as on 01.04.1981, has also not been considered at all by the A.O. The valuation has been based on sale instance of the nearby area which appears to be reasonable in forming the basis for the fair market value. In the case of CIT Vs. Chandni Bhuchar, (2010) 323 ITR 510 (P&H), of the Punjab and Haryana High Court there was a categorical finding recorded by the CIT(A) that value adopted or assessed by any authority of the State Govt. for the purpose of payment of stamp duty in respect of land or building cannot be taken as sale consideration received for the purpose of section 48. The Tribunal held that valuation done by any state agency for the purpose of stamp duty would not IPSO facto substitute the actual sale consideration as being passed on to the seller by the purchaser in the absence of any admissible evidence - A.O. is obliged to bring on record positive evidence supporting the price assessed by the State Govt. for the purpose of stamp duty. The High Court concurred with the view of the Allahabad High Court in the case of CIT Vs Smt. Raj Kumari Vimla Devi (2005) 279 ITR 360 (All). In the said case the Allahabad High Court has relied upon the ....