TaxTMI 
TaxTMI 
2017 (9) TMI 1696
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....as allowed the appeal of the assessee. 3. This court while admitting the appeals framed following substantial question of law:- 3.1 Appeal No.690/2008 admitted on 21.1.2009 "Whether under the facts and circumstances of the case and in law the order of the Tribunal is perverse in holding that the land was sold by the assessee is not in the nature is not in the nature of business and therefore the sale consideration cannot be treated as business income which is contrary to the dictum of Hon'ble Apex Court in the case of Raja J. Rameshwar Rao vs. CIT reported in 42 ITR 179?" 3.2 Appeal no.830/2008 admitted on 9.2.2009 "Whether under the facts and circumstances of the case and in law the order of the Tribunal is perverse in holding that the land sold by the assessee is not in the nature of business and therefore the sale consideration cannot be treated as business income which is contrary to the dictum of Hon'ble Apex Court in the case of Raja J. Rameshwar Rao vs. CIT reported in 42 ITR 179?" 3.3 Appeal No.123/2009 admitted on 15.4.2009 i. Whether under the facts and circumstances of the case and in law the order of the tribunal is perverse in hol....
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....0,46,216/- in the income of the appellant on this account. 5. Counsel for the appellant has taken us to the order of the AO and while considering the issue, the AO has taken into consideration the transaction which has taken place and land which was originally belonging to the assessee which was sold for consideration and it has been held as under:- "Value of sale consideration Total area of Rose Villa Land, Bharatpur sold out during the A.Y. under consideration was 10051.40 sq. yards. The assessee has executed documents showing value @ Rs. 200/- per sq. yards. Sub-registrar (Stamps), Bharatpur has taken the value of land @ Rs. 1100/- per sq. yards and additional stamp duty was charged from the purchasers of plots. Moreover, some of the plot purchasers have also confirmed that the plots have been purchased by them @Rs. 1100/- per sq. yards. Relevant facts of the statement recorded on 26.02.2004 from Smt. Mithilesh Gupta w/o Sh. Ram prsad Gupta, Plot No. 21, Rose Villa Scheme, Bharatpur is as under:- Regarding the discrepancy the assessee was apprised of and a copy of statement of the above mentioned lady was supplied to the assessee. In respon....
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....of both the authorities. 6.1 She has taken us to the order of the CIT(A) which reads as under:- "6.1 I have considered the facts of the case and submissins of the AR of the appellant carefully. It is seen that the appellant purchased the immovable property known as Rose Villa in co-ownership with his sons namely Sh. Baijnath, Sri Niwas, Sh. Vinod Kumar, Sh. Anil Kumar and Sh. Ravindra Kumar in duly executed registered deed dated 28.3.1987. The co-owners were partner inthe firm M/s Bharatpur Trading Co. And the total purchase cost of the property amounting to Rs. 7.00 lacs shown in the books of the firm. Thereafter on 31.3.91 the cost of the property was bifurcated equally among the co-owners by debit entry to their respective capital accounts. In meanwhile all the above persons entered into a sale agreement in writing on stamp paper on 20.7.90 with Sh. Narendra Singh Advocate S/o Sh. Munshi Singh, Sh. Gopi Singh S/o Sh. Girraj Singh and others regarding sale of entire land of 42 bighas and 7 biswas (i.e. 79376 sq. Yards). The above parties agreed to sale the above land for a consideration of Rs. 90,00,000/- and the assessee alongwith his other co-owners received an adva....
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....the appellant alongwith his co-owners purchased the land to exploit the same for commercial purposes only. 6.4 It may be pointed out that the appellant is in regular business of selling the land after cutting the same into residential plots. He has sold the residential plots of land from the financial year 1995-96 to 2000-2001 as per following details.- A.Y. Area of land sold (Sq. Yards) 1996-97 808 1997-98 844 2000-01 2405.32 2001-02 10051.40 6.5 It is relevant to note that in all the sale deeds which have been entered into by the appellant with the purchaser of lands following facts have been mentioned:- I 6.5.1. The aforesaid would show that the appellant himself has claimed that he had divided the land in the plots of reasonable sizes for residential purposes. The cutting of land in the plots for residential purposes clearly establishes the fact that the appellant wanted to exploit the land commercially. He has not sold the land in the copndition in which it was originally purchased. The land was not only divided in residential plots, yet the space for roads and other connected facilities for a residential colony....
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.... 7. The second issue under this ground raised by the AR pertains to advance of Rs. 10.00 lacs allegedly forfeited by the appellant and the co- owners of the land. In this regard the AR of the appellant made the following submissions:- "From the discussion made earlier on this issue, it is clear that the ld. AO has on its own assumption and to gain an unfair advantage over the appellant has alleged that the advance of Rs. 10.00 lacs was forfeited. She has tried to find support from the terms and conditions of the agreement dated 20-7-90 and from so-called statement of Shri Narendra Kumar. As against this, the appellant had categorically said that the said agreement though could not be completed in stipulated time due to certain disputes, was still in force as per implied consent of both the parties and the sale of land has been carried out in terms of the said agreement. To substantiate the same by documentary evidence, we have already placed copy of the registered sale deed executed in the year 1995- 96 which carried signature of Shri Narendra Kumar establishing the fact that terms of agreement were still in force even long after 3- 3-1992 . So far as....
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....dra Singh, yet he was claiming that the impugned agreement was in force. 7.5 In view of the foregoing discussion it is clear that money under reference remained with the appellant and the co-owners. I have already held that the land has to be treated as tock-in-trade of the appellant, therefore, the provisions of section 51 of the Act cannot be invoked in the given circumstances. The cost of land under reference cannot be adjusted against the aforesaid amount. The cost of land has to be taken as per the records of the appellant. This is a case where the appellant received advance in usual course business which remained with him and same was not returned till date. The AR of the appellant claimed that the agreement was in force in F.Y. 1995-96. He filed the copy of a registered sale deed executed in F.Y. 1995-96 bearing signature of Sh. Narendra Singh However, no evidence has been brought on record to show that the agreement was in force beyond F.Y. 1995-96. Therefore, if agreement lasted till F.Y. 1995-96, yet the appellant could not give any evidence to show that any plots etc. was given to Sh. Narendra Singh against the advance of Rs. 10.00 lacs under reference.....
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....ng sale of land situated in vicinity of Rose Vila Scheme i.e. Jawahar Nagar. The Secretary, UIT, Bharatpur vide letter dated 8-3-2004 No. 1695 informed that the rate of sale of land for residential purposes was Rs. 1244/- per sq. yard and for commercial purpose the rate was Rs. 4110/- per sq. yard at the relevant point of time. Therefore, keeping in view the surrounding circumstances the AO taken the average rate of land at Rs. 900/- per sq. yard accordingly. 8.1 During the appellate proceedings the AR of the appellant has objected to the aforesaid action of the AO and has made the following submissions:- "That it would have been evident that statement of Smt. Mithlesh Gupta has been treated as bench mark. We have also contended that her statement is unreliable piece of document as she looses her credibility because while before the registrar she admits that she has purchased the land Rs. 200/- per sq. yards as is depicted in the registered sale deed and on the other hand before the ld. AO she states the rate at Rs. 1100/- per sq. yards. The department sought to blindly rely on the statement of Smt. Mithlesh Gupta without trying to inquire from her that w....
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.... in the near by locality Smt. Mithlesh Gupta, Sh. Bhupendra Singh and Sh. Chandra Pal Singh have purchased their plots Rs. 1100/-,900/- and 600/- per sq. yard during the year in the same colony (Rose villa). They are all government servant and filing income- tax returns to the department. Only computation of income filed by these government servants and not filing their balance sheet. (ii) it is normal practice that no one can declare actual sale consideration at the time of registered the document before Sub Registrar for the purpose of saving stamp duty. Due to this state government is suffering from great loss of revenue charged from stamp duty. To stop the evasion of stamp revenue, statement government fixed the rate of land in each area for charging of stamp duty. Rates are decided by the District Magistrate in a meeting of revenue officers in each three months on the basis of location, other facts and circumstances of the land. In this area Sub-Registrar taken market rate 2 Rs. 1035/- to Rs. 1273/- per sq. yard for the purpose of charging of stamp duty. Therefore, it is established that market value of this land is approximately Rs. 1100/- per sq. yard in th....
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....ot admitted the real truth (i.e. the real purchase cost), yet following persons in their statement recorded earlier during the assessment proceedings by the undersigned have clearly admitted higher rate of purchase price than declared in the registered documents. S.No. Name of person Year of purchase Rate shown per sq. yard in registry Rate per sq. yard admitted in the statement Remarks 1. Smt. Mithlesh Gupta 2000-01 200/- 1100/- Statement recorded at the time of assessment 2. Sh. Bhupendra Singh 2000-01 200/- 900/- -do- 3. Sh. Chandra Pal Singh 2000-01 200/- 600/- -do- The copy of the aforesaid report was handed over to the AR of the appellant for further submissions in this regard. The AR of the appellant vide letter dated 2-4-2005 countered the report of the AO and made the following submissions:- "That so far as Smt Sandhya Bansal, Smt Kusum Tiwari, Shri Bejnath Tiwari and Shri Vijay Bansal are concerned, they have confirmed the sale consideration Rs. 200/- and thus the issue ends than and there and the doubts and apprehensions of the Id AO are irrelevant. We hope your honour would appreci....
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.... of the statement of Shri Vijay Bansal. Reliance place on the statement of shri Chandrapal Singh is of no relevance in the case of the appellant as clearly enough the said person has not purchased land from the appellant, but from Sriniwas Goyal and therefore necessary comments on merits would be given in the relevant case. We have repeatedly emphasized that even though statement of Shri Vijay Bansal has not been given to the appellant, yet as the same has been recorded, your honour to consider the same and should clearly comment upon the same. (ii) In the next para the ld. AO has made generalized adverse comment that no one declares the actual sale consideration and therefore the statement government has fixed DLC rate which establishes that market value of this land is approximately Rs. 1100/- per sq. yard. Deeming provisos have always found place in statutes for one reason or the other and the recent section 50C inserted in the Income-tax Act, 1961 is an apparent example of it. But such provisions never conclusively states that the deemed value is the real value and always leaves an option for the assessee to chose otherwise. What this suggests is that....
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.... It may be pointed out that Shri Sri Niwas Goyal son of the appellant also sold his plots during the relevant period and discloscd the rate at Rs. 200/- per sq. yard. Shri Chandra Pal Singh who had purchased the plot from Shri Sri Niwas Goyal deposed before the AO that he had purchased the plot a Rs. 600 per sq, yard. Shri Sri Niwas Goyal did not cross examined Sh. Chandra pal Singh when opportunity for the same was given to him by the AO in this regard. 8.6 The AR of the appellant in support of his claim has filed affidavits from the aforesaid 7 persons wherein they have stated that they had purchased the land from him Rs. 200/- per sq,yard. I have gone through the affidavit and found that they contain the identical language. It may be pointed out that these affidavits have filed by the appellant to counter the findings of the AO which are based on the statement of Smt. Mithlesh Gupta and the rates of land sold by the UIT in the adjoining area. The AO has also considered the rates of Sub- Registrar (Stamp) taken for the purposes of stamp duty. 8.7 As regards the affidavits filed by the appellant, it is seen that they are from the persons who are interest....
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....n in aforesaid land are not reliable. Therefore, under these circumstances the AO has rightly cstimated the sale price of the land. The provisions of scction 145 (3) of the Act are applicable in the given circumstances. However, the various factors are to be taken into consideration before estimating the rates of land. In the given circumstances the rates at Rs. 900/- per sq. yard applied by the AO are on higher side. Therefore, keeping in view the totality of facts and circumstances of the case, it would be fair and reasonable if the rates of land are adopted at Rs. 600/- per sq. yard. The AO is directed to apply this rate and work out the profit of the appellant accordingly. 9. The last ground of appeal is directed against the charging of interest u/s 234A, 234B and 234C of the Act. The AO in the assessment order made the direction that charge interest u/s 234A, 234B and 234C "as per rules". 9.1 The AR of the appellant in his submissions has contended that there is no scope for charging of interest as per ruled. Therefore it has been argued that charging of interest u/s 234B may be deleted as laid down by the ratio of in the c....
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....has clearly stated that the amount has not been forfeited. The ld. CIT(A) is not justified in ignoring the later letter of Shri Narender Kumar and cannot rely upon earlier statement of Shri Narender Kumar which has not been cross examined. Such statement of Shri Narender Kumar on which the ld. CIT(A) has relied upon cannot be given any evidentiary value. In such circumstances, the AO and the ld. CIT(A) are not justified in treating the said amount of Rs. 10.00 lacs as against the cost of land as amount forfeited and therefore, the treatment given by the authorities below is hereby dismissed. 9. The total area of the land was 79,376 sq. yards which was divided into different sizes of plots in the saleable lots which comes out to 45,000 sq. yards and the share of each owner was 7500 sq. yards for which there was no documentary evidence with regard to the said division. The assessee was also having the land adjacent to the said land which has been sold by the assessee. The AO vide page 5 to 10 of his order was of the view that the assessee after taking the land into his possession divided the same into different sizes of plots after providing space for infrastructure faciliti....
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....ed into an agreement with Shri Narender Kumar etc. to sell the land as a whole and a sufficient time period was given to Shri Narender Kumar etc. for completing the agreement which was not matured for the reasons mentioned herein before. The AO has not brought on record any material to prove that the said agreement was a tactic to evade the tax liability. Therefore, the findings of the AO and of the ld. CIT(A) that the assessee had the intention to sell the Plots as a business proposition by treating the said land as stock in trade since the land from 31-3-87 cannot be said to be correct findings in the absence of any material on record .If the whole land could not be sold for which the evidence is on record, then if the assessee has opted to sell the land in small plots, then the intention ofthe assessee cannot be said to be an intention to earn the profit as a business venture. None of the authorities below has brought any material on record that the assessee has converted the said land into stock in trade i e, the authorities below have not brought on record any permission by the assessee from the Municipal Authorities or any of the Govt. Authorities to act as a colonizer. The o....
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....e Revenue which could suggest that the assessee has converted the impugned land as a stock in trade i e, no permission from the Municipal Authorities or any other Govt. Authorities or any other evidence has been brought on record and therefore, it cannot be said that the assessee had the intention to sell the land as a stock in trade. It is not possible to evolve any single test or formula which can be applied in determining whether the transaction is an adventure in the nature of trade or not. The answer to the question must necessarily depend in each case on the total impression and affect of all the relevant factors and circumstances proved therein which determine the character of the transaction, In the present proved thereb case, the assessee had no intention to sell the land as stock in trade and the said transaction cannot be treated as adventure in the nature of trade within the Section 2013) of the Income Tax Act, 1961. Therefore, the meaning findings of below treating the transaction of sale as business the authorities transaction is reversed. 12. As regards the rate of sale of land, the AO has estimated the sale of land at Rs. 900/- sq. yard as against Rs. 200/-....
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....eas this-- is not the fact in the present case. The reliance of the AO on the valuation adopted by the Sub- Registrar, Stamp Duty, cannot be the basis for treating the higher valuation of the sale in the case of the assessee in the absence of any material for real income on record. There is no material on record that the assessee has earned anything more than the sale consideration referred to in the registration / sale deed. Moreover, none of the authorities below has referred the matter to the DVO and the AO and the ld. CIT(A) cannot be said to be an expert for the valuation of the land. Therefore, in such circumstances and facts of the case, the value adopted by the AO or the ld. CIT(A) is not justified. 14. The assessee has sold the land to 32 persons as stated whereas the Ao has mainly relied upon the statement ofsmt. Mithlesh Gupta which has no evidentiary value as observed hereinbefore. The ld Counsel for the assessee Shri LK. Gupta, Chartered Accountant had submitted the affidavits of 7 persons which were admitted by the ld. CIT(A) as an additional evidence and the AO was required to verify the veracity of the same as per direction ofthe CIT(A). The remand....
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....¨à¥‡ वरà¥à¤— फà¥à¤Ÿ / वरà¥à¤— गज का पà¥à¤²à¥‰à¤Ÿ खरीदा है। किस दर से तथा कितनी राशि में खरीदा हैं, बताà¤à¤‚। उतà¥à¤¤à¤°à¤ƒ- मैनें पà¥à¤²à¥‰à¤Ÿ नं.21 कोठी रोज बिला, à¤à¤°à¤¤à¤ªà¥à¤° में 40 X 60 वरà¥à¤— फीट का पà¥à¤²à¥‰à¤Ÿ दिनांक 16.01.2000 को 1100 रूपये पà¥à¤°à¤¤à¤¿ वरà¥à¤— गज की दर से at 1100/- रूपये 2,80,000/- में खरीदा था पà¥à¤°à¤¶à¥à¤¨ संखà....
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....¥‡ सà¥à¤µà¤¾à¤®à¤¿à¤¤à¥à¤µ, मिलिकियती, कबà¥à¤œà¥‡à¤¯à¤¾à¤¤ à¤à¤µà¤‚ अधिपतà¥à¤¯ 6. की समà¥à¤ªà¤¤à¥à¤¤à¤¿ खसरा नं. 1200 आबादी वाके चम नं. 1 à¤à¤°à¤¤à¤ªà¥à¤° राजे 7. बिला कोठी राजेनà¥à¤¦à¥à¤° नगर के पास à¤à¤°à¤¤à¤ªà¥à¤° में सà¥à¤¥à¤¿à¤¤ है जिसका मैं विकà¥à¤°à¥‡à¤¤à¤¾ 8. सà¥à¤µà¤¾à¤®à¥€ हूं मैंने उकà¥à¤µ समà¥à¤ªà¤¤à¥à¤¤à¤¿ में छोटे छोटे रिहायशी à¤à¥‚खà....