TaxTMI 
TaxTMI 
2011 (3) TMI 1677
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....and hence, the addition derived by the AO for the difference between the consideration paid for the purchase of the immovable property being open plot of land and value of the said property for purpose of stamp duty, without establishing that the property was under valued in the document of purchase and not recorded in the books of accounts, and hence, the addition made u/s.69 of the Act for the alleged differential amount of the valuation as unexplained investments is liable to be deleted." 3. The facts of the case are that during the accounting year relating to the assessment year under consideration, the assessee purchased two properties in respect of which the AO found that the stamp duty valuation was more than the purchase price shown by the assessee. The AO therefore treated the difference between the purchase consideration shown by the assessee and the stamp duty valuation as unexplained investment under section 69 of the I.T.Act. While doing so, the AO also relied upon the provisions of section 50C. On appeal, the CIT(A) also upheld the order of the AO and he held that the deeming provision of Section 50C would also be applicable in the case of a buyer because when in t....
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.... referred to in sub-section (1), the value so adopted or assessed by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer." 5. From the above, it is evident that as per section 50C, where the stamp valuation for the purpose of stamp duty is higher than the consideration shown for the transfer of an asset then for the purpose of Section 48, the stamp duty valuation shall be deemed to be the full value of he consideration for such transfer. As per the above provision, this deeming provision is applicable for the purpose of section 48. It is a settled law that any deeming provision is to be strictly interpreted. A deeming provision provides for certain presumptions and such presumption cannot be extended beyond the scope of deeming provision. If the statute makes section 50C applicable for the purpose of section 48, then the deeming provision of section 50C cannot be applied in respect of other sections of the Income Tax Act. We find that similar view is taken by the ITAT, Ahmedabad Bench in the case of ITO Vs. Harley Street Pharmaceuticals Ltd., 38 SOT 486 (Ahd) wherein the ITAT held as under: "In the instan....
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....ne by the State Government for the purpose of stamp duty etc. would ipso facto take place the actual consideration as being passed on to the seller by the purchaser in the absence of any other evidence. The Assessing Officer is required to bring positive evidence on record indicating the fact that assessee has paid anything more than the one disclosed in the purchase decd. The department has taken an argument in the grounds of appeal that Assessing Officer should be directed to make a reference to the Valuation Officer under section 142A of the Act. It also raised a plea that Assessing Officer has wrongly made a reference of section 5OC while making the addition in fact, the addition is made under section 69B on account of unexplained investment in the property. We have taken cognizance of both these arguments. It is the Assessing Officer who himself ought to have collected the evidence indicating the fact that assessee has paid more money than the one disclosed in the purchase deed. The ITAT while sitting in the second appeal is not supposed to give directions on the appeal of revenue that a reference to the Valuation Officer is to be made in order to substantiate the addition. Th....
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....erused the material placed before us. The AO applied section 41(1) in respect of five creditors on the ground that the assessee could not furnish confirmations of these creditors. However, the assessee had furnished copies of account of these persons for the year under consideration as well as the preceding and subsequent years which showed that there was transaction with those parties and part payment was made in the immediately preceding year as well as subsequent year. The CIT(A) with the following findings deleted the addition: " From the copies of the letters addressed to the AO it is clearly seen that the Assessee had not only furnished copies of the ledger accounts of the said five parties in her books, copy of bank account of the Assessee with The Surat People's Co-op Bank was also furnished, to show that in the immediately preceding year there were transactions with the said entities. I have gone through the same documents which have been furnished before me, and I find that the claim of the AR is absolutely correct. There have been payments made to them in the immediately preceding previous/financial year which means that the said liabilities were still alive....