TaxTMI 
TaxTMI 
2019 (5) TMI 1506
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.... for the purpose of computing the long term capital 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. ....
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....ue of the property as per ready reckoner was Rs. 15,04,04,950/- and therefore as to why the same should 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 assesse....
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....om Sion to Mulund on Central Railway side was enhanced manifold due to this revision in FSI. Moreover, assessee was the owner of not only five rooms in 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,....
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....s on the benefit accruing from the enhancement of FSI from 1:1 to 1:2 to the director of the company and not retaining accrued benefit for itself. In this connection the valuation 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 prop....
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....o not received by the assessee on account of multiple litigation going on the said property. The Ld. AR submitted that the venders from whom the purchased was property in 1996 have also 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....
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....ld to one of the Directors and shareholders holding 31.25% of the total share capital of the appellant and the other directors and shareholders are family members of the purchaser i.e. his Father and Brother. Hence, the 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....
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....ssession of only of 626 sq.ft out of the total property as the balance is in the occupation of the tenants. We notice from the records before us that several cases were going on against the said property and are of the view that the contention of the Ld.AR that stamp valuation cannot be considered 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. ....
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....essee was in possession. The assessee trust issued a public notice for inviting bids for sale of their rights in the said properties on the basis of "as is where is" vide public notice published in Newspaper in Hindustan Times and Urdu News paper, copy of which is placed on record at page no. 145 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....
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....ccept the same as correct. Section 50C was bring to curve the black money and not for the genuine transaction. In support of his submission, the ld. AR of the assessee relied upon the following decisions: (1) Devindra Barot [70 taxmann.com 235 (Ahmadabad Trib.)], (2) Smt. D. Anitha [2015] 68 SOT 266 (Hyderabad Trib.), (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 ( V....
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.... and perfecting title of the owner's title. Further, vide clause '5' on page 5 of the said MOI, the purchaser was allowed to act in a lawful manner in clearing the title of the owner on the encroached upon land and /or wrongfully deleting the title of the owner( assessee) from revenue record of the authority concerned. Vide clause '6' of MOI the purchaser was restricted not to transfer or delegate or subcontract the benefit of the agreement 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 involv....
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..... There are two distinct conditions which have to be satisfied before subsection (2) can be invoked by the revenue and the burden of showing that these two conditions are satisfied rests on the revenue. This burden may be discharged by the revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration received by him and there is understatement 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 inc....
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....nd substance of the grounds of appeal raised by the assessee before the lower authorities and before the Tribunal is the same. 16. Ground No. 4 relates to treating the income in AY 2010-11 instead of AY 2011-12. Since we have granted relief to the assessee on grounds No. 1 to 3, therefore, this ground needs no specific adjudication. 17.Ground No. 5 & 6 relates to addition of Rs. 4.80 lakhs under the head 'income from other sources', which has already been offered 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 low....