TaxTMI 
TaxTMI 
2019 (5) TMI 1506
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....gain on sale of property as against the sale price of Rs. 28 lakhs. 2. On the facts and in the circumstances of the case, the learned Commissioner of income tax (Appeals) erred in holding that the Assessing Officer was Justified in treating the gain on Sharma House as long term capital gain. The appellant submits that the gain on Sharma House is assessable under the head business income. 3. On the facts and in the circumstances of the case, the learned Commissioner of Income tax (Appeals) erred in holding that the Assessing Officer was justified in referring the matter to the Valuation officer u/s 50C of the Income tax act, 1961. The appellant submits that Sharma House is stockin- trade and hence not coming under the purview of section 50C of the Income tax Act. 4. On the facts and in the circumstances of the case, the learned Commissioner of Income tax (Appeals) erred in accepting the Valuation Report of the Valuation Officer which has been referred to under section 55A of the Income Lax Act 1961, The appellant submits that the provisions of section 55A are not applicable to the facts of the case. 5. On the facts and in the circumstances of the case, the learned Commission....
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....uld not be treated as sale value which was replied by the assessee vide letter dated 26/03/2015 by submitting as under: a)you have taken Ready Reckoner rate of 2011 of residential flat. But the area is taken of land. Hence, the calculation is totally wrong. b) The owners occupied area is only 627 sq.ft ie.. 58.27 sq.mtrs only Balance area is occupied by various tenants and occupants. Hence, the valuation should be made separately for owners's occupied area and for tenants area. Therefore, the valuation of area which is in occupation of tenants is to be valued on the basis of 112 months rent only. c) The property has various pending suits in various Courts. The vendors have also entered into diverse agreements with various persons/parties for sale of this property. Hence, even owners occupied area of 627 sq.ft cannot be valued as per Ready Reckoner rate. d) In short, the value of the company's right in the in the said property on as it is where it is basis cannot be more than Rs. 28 lacs. 5. Finally after considering reply of the assessee, the AO calculated the profit at Rs. 6,98,41,631 by taking the value of the property at Rs. 7,20,91,631/- u/s 50C of the Act as has bee....
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.... the building located on Sharma House, Knar west, Mumbai, but had also purchased all the rights , title and interest in the property-Sharma House, Khar West, Mumbai- 400052. Thus what the assessee sold was " Right in title and interest along with the tenancy rights in five rooms in the building and plot of land located in Sharma House, 4th Road, Khar West, Mumba 1-400052 and not only the Tenancy rights in five rooms in the building" and thus the "sale of right, title and interest in the entire plot of land along with five rooms in Sharma House, Khar West, Mumbai-400052" was much more valuable than Rs. 28,00,000/- despite the fact that there were several court cases pending against the owners and holders of title to the original and subsequent holders 1.4 It also appears from the accounts of the assessee that" assessee was showing the amount of Rs. 24,00,000/- as "advance against purchase of properties" under "other current assets'" for the last several years and even during the year has shown an amount of Rs. 4,00,000/- as "Gain on sale of rights in assets" and not as "Profit from sale of stock in trade". Even though the assessee had purchased the immoveable property in 1996,....
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....ation report made by the valuation officer u/s. 50C of the IT Act 1961 dated 26/5/2017 furnished by the assessee is quite eye opening. The valuation officer has determined the value of the property in 2011 after taking into consideration all the factors like presence of the tenants, litigation, and other factors at Rs. 4,05,35,360/- as against the market value of Rs. 3,60,91,360/- and then allocating one eighth share of the assessee at Rs. 45,11,420/- and then discounting it further to Rs. 27,06,852/-. Prima facie the basic error is committed by the assessee's valuer is in the fact that the valuer has valued the land and allocating the value on the basis that there are 'eight owners" of right, title and property in Sharma House whereas the assesses was the only holder of right , title and interest and hence the entire value of the properly and tenancy rights in five rooms would have been allocable to the assesses only and not to other seven owners. Moreover, calculating the value of land of a prime property located in Knar West, Mumbai at discounted basis is also erroneous and debatable Even otherwise, the value of Rs. 3,60,91,360/- determined by the assessee's valuer i....
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....so entered into several agreements for the said property with various parties and the property was totally in dispute. The Ld. AR submitted that the various suits were going on in the various civil courts such as Bombay city civil court suit no. 5809 of1997 Bombay high court suit no. 7048 of 1981 Bombay city civil court suit no. 3611 of 1998. The assessee purchased the property subject to the pending litigations and other proceedings pending in various courts of law and also subject to other various defects and deficiencies and third parties rights in the property as a result of various agreements entered into by the assessee along with various tenants occupying the said building. The Ld. AR submitted that in 1996 the vendors of the property were not able to settle the matters and the sale was not registered in nthe name of the assessee and even possession of the building could not be handed over to the assessee except a portion measuring 620 sq.ft . Therefore the Ld. AR submitted that the assessee has no absolute title in the said property in 2011. The assessee company has entered into agreement for sale of its right in the said property with Mr. Jayakishan Awtani one of the direc....
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....question of receiving any on money payment by the appellant does not arise. 6. The appellant's own Registered Valuer M/s. Kanti Karamsey & Go Advisory LLP has valued the appellant's share in the property only at Rs. 27 lakhs and not Rs. 3,60,91,360/- as held by the CIT(A). 7 Without prejudice to the above, the learned CIT(A) and the learned Valuation Officer have not properly considered the various objections filed by the appellant against the Preliminary Valuation Report made by the Assistant Valuation Ofificer. It is submitted that if the objectiosn of the appellant are properly considered, the value of the subject property works out to ony Rs. 31,51,776/- as given in the written submission dated 23rd October, 2017 filed before the CIT(A)-21, Mumbai. 8. It may be that there is no development commenced on this property till date. 9. The property with all its tenants is in the same condition as it was in the year 1996 when the appellant has entered into the agreement with the owners of the property. 10. Further, the appellant and/or any of its Directors including Mr. Jaikishan Paraskumar Awtani to whom the property was sold by the appellant have not got any convey....
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....onsidered as sale consideration merit consideration. We further notice that the AO has failed to bring on the record any evidence to show that the assessee has received more than what has been mentioned in the agreement stating that the that property was sold to one of the directors and share holder who is holding 31.25% of total share capital in the assesee company. Even the assessee's registered value M/s Kanti Karamsey & Co valued the appellant's share in the property only at Rs. 27 Lacs and not Rs. 3,60,91,360/- has been held been the CIT(A). Thus we are not in agreement with the order of Ld. CIT(A) in taking the valuation as per - report of Rs. 4,05,35,360/-. We find that the - value of the property was determined by the registered valuer at Rs. 3,60,91,360/- and then allocating 1/8th share to the assessee at Rs. 45,11,420/- and further discounting the said amount to arrive at a figure of Rs. 27,6,852/-. We also note that the development of the said property has not even started till date due to the litigations going on. We further note that the director of the company Shri. Jaikishan Awtani have not got any convenience of the property in his favour till date. The possession o....
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....5 and 146 of Paper Book. The assessee in the public notice published that cost with regard to verification of revenue record and verification of title would be borne by the bidder. In response to the notice the trust received four bids. The bids were open in the presence of Advocates appointed by assessee on 22.07.2003 the said bids were placed before the Board of Trustees on 17.09.2003. The bid of M/s Essa Associates was accepted being highest bidder. The Board of Trustees of assessee approved the bid of Essa Associates. Pursuant to the bid accepting the assessee entered into Memorandum of Intent (MOI) on 18.12.2003, copy of which is placed on record as per page no. 147 to 154 of the Paper Book. As per MOI, the assessee agreed only to sale the land which was in the name of assessee, however, the assessee was not in possession and it was in possessing of unauthorized occupant. Therefore, M/s Essa Associates agreed to pay Rs. 13.06 Lakh per acre. For the land which were in the name of assessee was not shown though, it was earlier owned by assessee, M/s Essa Associates agreed to pay Rs. 6.53 Lakh per acre to the assessee. In the MOI, the assessee entered into registered agreement wit....
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....rib.), (3) Green Field Hotels & Estates (ITA No. 735 of 2014) (Bom. HC), (4) Shri Atul G. Puranik (ITA No. 3051/Mum/2010 (Mum Trib.), (5) Tej Singh [2012] 138 ITD 489 (Agra Trib.), (6) K.P. Varghese [1981] 7 TAXMAN (SC), (7) K.R. Palanisamy [2008] 306 ITR 61 (Madras HC), (8) Khoobsurat Resorts (211 taxman 510 (Del.HC) and (9) Hanuman Prasad Generiwala [2014] 43 taxmann.com 133( Delhi). 7. On the point that the valuation as on the date of execution of MOI date 18.12.2003 be adopted, the ld AR for the assessee relied on the following decisions; (1)Sanjeev Lal [2014]365 ITR 389(SC), (2)Modipon Ltd [2015] 154 ITD 369 (Delhi Tribunal), (3)Dharmsibhai Soni [2016] 161 ITD 627 (Ahmedabad Tribunal) and (4)Chalasani Naga Ratna Kumari (ITA No. 639/Vizag/2013 ( Vishakhapatnam Tribunal) 8. On the other hand the ld. DR for the revenue supported the order of the authorities below. The ld DR further submits that the assessee has raised certain new grounds of appeal which were not raised before lower authorities, therefore, the issue may be restored to the lower authorities for adjudication afresh. 9. We have considered the rival submissions of the parties and have gone ....
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....t ton any other person. In our view there is no doubt from the Public notice issued by the assessee for sale of the piece of the land and from MOI that other documentary evidence produced by the assessee that the was sufficient to indicate that the property was under various encumbrances and the assessee could not be said to be the absolute marketable title of the said property. At the same time, it is also true that the said documentary evidence read with the MOI entered into by the assessee with M/s. Essa Associate that the assessee was still holding certain rights in the property and the same constituting capital asset. Moreover, the MOI was duly approved by Hon'ble Bombay High Court in its order dated 01.10.2004. 11. So far as the issue involved in the appeal relating to the applicability of the provisions of section 50C in the case of the assessee, it is observed that the market value of the property for stamp duty purpose was determined by the concerned authority at Rs. 11.76 Crore and accordingly the stamp duty thereon was also duly paid, while registering the relevant agreement. The value adopted for the purpose of payment of stamp duty is not disputed by the assessee. The ....
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....ment of concealment of the consideration in respect of the transfer. 13. The Hon'ble Delhi High Court in CIT Vs Khoobsurat Resort (supra) while considering the question of law with regard to the addition on account of difference between the circle rate and the purchase price of immoveable properties, declared by the assessee held that that the express provision of Section 50-C enabling the revenue to treat the value declared by an assessee for payment of stamp duty, ipso facto, cannot be a legitimate ground for concluding that there was undervaluation, in the acquisition of immovable property. If Parliamentary intention was to enable such a finding, a provision akin to Section 50-C would have been included in the statute book, to assess income on the basis of a similar fiction in the case of the assessee who acquires such an asset. No doubt, the declaration of a higher cost for acquisition for stamp duty might be the starting point for an inquiry in that regard; that inquiry might extend to analyzing sale or transfer deeds executed in respect of similar or neighboring properties, contemporaneously at the time of the transaction. Yet, the finding cannot start and conclude with the f....
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.... in the hand of individual. The ld. AR for the assessee submits that the amounts distributed in the hands of beneficiary have been taxed at the hand of assessee, though it has been offered to tax in their individual return. Thus, there is double taxation of the same amount. 18.On the other hand the ld DR for the revenue submits that the assessee failed to furnish the require copies of return of the alleged individual to the ld. CIT(A) despite specific direction. The ld DR submits that the assessee be directed to file relevant evidences before assessing officer to verify the claim of assessee. 19.We have considered the rival submissions of the parties and gone through the orders of the lower authorities. We have noted that the ld CIT(A) has recorded that the assessee failed to established the shares of the various beneficiary on the basis of trust deed and their return of income to substantiate that the sums received from the assessee have been offered to tax by those individual. Considering the contention of both the parties this issue is restored to the file of assessing officer to verify the fact and grant relief to the assessee in accordance with law. Needless to direct th....