TaxTMI 
TaxTMI 
2016 (7) TMI 513
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....Hyderabad giving relief to assessee on the consequential order u/s. 263 of the Act. 2. Briefly stated, assessee is engaged in the business of real estate constructing flats etc., For the AY. 2008-09, assessee filed its return of income declaring total income of Rs. 2,20,88,896/- on 30-09-2008. In the return, assessee admitted capital gains on the conversion of property from capital asset to stock-in-trade as on 01-01-2008 and business income on subsequent sale of the said property on the basis of sale document which however, was subsequently registered in December, 2009. AO while completing the assessment u/s. 143(3) vide order dt. 31-12-2010, redetermined the cost of construction in respect of Ellareddyguda Project, Chirag Ali Lane Project and Himayathnagar Projects. After referring the properties for valuation by the DVO, AO noticed that the valuation shown by assessee with reference to Ellareddyguda Project and Chirag Ali Lane Projects are excessive by an amount of Rs. 13,81,515/- and Rs. 11,46,046/- respectively. AO has reduced the cost of construction of the project by the said amounts while computing the business income thereby making an addition. With reference to Himayat....
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....05/Hyd/2012 by the Revenue. ITA No. 305/Hyd/2012: 4. There are three grounds raised by the Revenue in this appeal which are on the deletion of Rs. 25,27,561/- value of Himayathnagar Project and Chirag Ali Lane Project and addition u/s. 69C of Rs. 30,03,740/- in respect of Himayathnagar Project. 5. The other ground is with reference to determination of value at Rs. 625 per Sq. ft., as against Rs. 550/- per Sq. ft., which Revenue contends that the Ld. CIT(A) does not have any basis for calculations. 6. After considering the rival submissions, we are of the opinion that there is no merit in Revenue's appeal. In fact while computing the business income, assessee has claimed certain cost of construction and most of the amounts were spent in earlier years. Instead of verifying the expenditure incurred during the year, the AO undertook the exercise of referring the cost of construction to valuation itself which indicated certain differences in valuation. As rightly opined by the Ld. CIT(A) as against the books values shown by assessee, the total valuation by the Valuation Officer on all the three projects has resulted in a difference of 0.1% which is very negligible considerin....
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....n exchange of their right in the above mentioned site. Therefore, the assessee company entered into an agreement of sale cum irrecoverable GPA (Registered document) dated 14.09.2008 with M/s.Shasan Finance Ltd also. As per the said document it was agreed that the matter has to be settled outside the court and as per the terms and conditions the assessee company has to pay Rs. 6.5 crores to M/s.Shasan Finance Ltd to give up and settle all the matters irrespective of the fact that Mr. Mustafa Ali Khan & Others have a right in the site. Thus, the litigation as far as M/s.Shasan Finance Ltd is concerned came to a finality. With regard to the claim of right in the property by Mr.Mustafa Ali Khan & Others, the assessee company entered into an agreement with two of six claimants who agreed for a settlement by surrendering their respective rights in the constructed area of 1571 sq ft with undivided share ofland vide documents nos.3757/2009 dated 02.12.2009 and doc.no. 3839/2009 dated 03.12.2009. Thus, as can be seen from the above details the assessee settled the matters with M/s.Shasan Finance Ltd and also two of the six claimants of Mr. Mustafa Ali Khan & Others. As mentioned above....
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.... long term capital gain. In the light of above facts the issue now for adjudication before the Hon'ble CIT(A) is whether the assessing officer was correct in adopting the rate at Rs. 550 per sft in the process of buy back of the relevant properties instead of rates Rs. 2000 per sft as well as Rs. 1100 per sft adopted by the assessee company". 9. Ld. CIT(A) adopted value of Rs. 625 per sft. After considering the rival considerations, we do not see any reason in the action of the AO and CIT(A) in restricting the amounts claimed by assessee. First of all, assessee has made an agreement with the parties for acquisition of the undivided portion of the share from two different unrelated parties at a value which is not disputed. Since the sale occurred during the year, assessee has offered Long Term Capital Gain and business profits on the total project including the portions which are acquired to fulfill the sale and the assessee has reduced the values correspondingly to arrive at the market value on the day of offering the gains. As seen from the agreement of sale and the amounts paid by assessee which are not disputed by the Revenue for the purpose of determination of capital....
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....to notice that assessee has offered capital gains on conversion from fixed assets to work-in-progress and provisions of Section 50C are not applicable. It was also submitted that the transaction of sale on 31-03-2008 cannot be considered u/s. 50C. Further, the valuation also does not pertain to year under consideration but to a subsequent registration of the property. 13. After considering the rival contentions, we are of the view that there is no justification for the CIT to invoke the powers u/s. 263. As noticed in the appeals considered earlier on the orders u/s. 143(3), AO was very much aware that assessee has converted the fixed asset into stock-in-trade as on 01-01-2008 and he has computed the Long Term Capital Gain on that day by making certain adjustments to the cost claimed by assessee. Not only that, AO also has brought to tax the business profits of subsequent sale and in doing so, he has restricted the cost of the building. Even though those issues were subject matter of earlier appeals, it is noticed that AO is very much aware about the conversion of fixed assets to work-in-progress on 01-01-2008 and subsequent sale on 31-03-2008, consequently the transaction does n....