TaxTMI 
TaxTMI 
2019 (8) TMI 1527
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....ssioner of Income Tax (Appeals) erred in considering the revalued amount as full value of consideration of Rs. 10,42,83,478/- while computing capital gains u/s 45(3) of the Act. 2.3 The Learned Commissioner of Income Tax (Appeals) erred in not considering that the provisions of section 45(3) over rides the provisions of section 50C. 3. For that the Learned Commissioner of Income Tax (Appeals) erred in indirectly confirming the levy of interest u/s 234A of the Act amounting to Rs. 16,00,771/- through computation attached as Annexure to the Order though not specifically adjudicating the ground raised in this regard. 4. For that the Learned Commissioner of Income Tax (Appeals) erred in indirectly confirming the levy of interest u/s 2348 of the Act amounting to Rs. 75,46,491/- through computation attached as Annexure to the Order though not specifically adjudicating the ground raised in this regard. 5. For that the Learned Commissioner of Income Tax (Appeals) erred in indirectly confirming the levy of interest u/s 234A of the Act amounting to Rs. 16,541/- through computation attached as Annexure to the Order though not specifically adjudicating the ground raised in this regard.....
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....ssessee had owned 31.52 cents acquired by him in the year 2006 in his name and during the relevant financial year, he received through settlement two pieces of land admeasuring 11.27 cents and 12.83 cents aggregating to 24.10 cents. Thus, the assessee had a total extent of 55.62 cents (31.52+11.27+12.83 cents) 3.2 The said land was transferred to the partnership firm M/s. K G P Builders as capital contribution at valuation of Rs. 29,77,300/- and accordingly the firm was reconstituted on 02.06.2014. Subsequently the said partnership was reconstituted whereby the value of land was revalued and the corresponding credit was given to the respective capital account in the profit and sharing ratio. Finally based on the market value of the land, the land was revalued and the same was credited to the respective partners account and the share of the appellant was determined at Rs. 23,94,41,006/-. Based on this valuation, the AO adopted this value as consideration for transfer of the asset to the firm and computed the capital gains by deducting the cost of acquisition, as increased by the cost of inflation index. Accordingly, the AO arrived the Long Term Capital Gain at Rs. 23,69,78,315/- an....
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....ons of Section 50C of the Act shall override the provisions of Section 45(3) of the Act. He further submitted that the provisions of Section 50C of the Act prevail over the provisions of Section 45(3) of the Act as the provisions of Section 50C of the Act are special provisions. 7. We heard the rival submissions and perused the material on record. The appellant entered into partnership in the name and style of M/s. K G P Builders with one Shri K G Pandian. Towards the capital contribution, the appellant contributed land whose value was recorded in the books of firm at Rs. 29,77,300/-. The AO had treated the transaction of capital contribution as the case of transfer of asset and accordingly worked out the capital gains by adopting the market value of the land as revalued subsequently by the firm in the books of accounts. While doing so, the AO adopted 50% of the revalued value of the entire land owned by the firm as the consideration and accordingly computed the capital gains. While doing so, the AO assumed that the revalued figure is the market value which is required to be adopted under the provisions of Section 50C of the Act. Accordingly, AO had impliedly applied Section 50C o....
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....Dr.D. Ramamurthy, reported in 410 ITR 236 (Madras) held that the value recorded in the books of the firm is conclusive as to the consideration received on transfer of asset by a partner to the firm. Therefore, the Hon'ble Madras High Court further held that the assessment has to be done on the basis of value of asset when the firm was constituted, not on the basis of revalued value of the assets. Applying the ratio to the facts of the present case, the value to be adopted by the AO is only Rs. 29,77,300/- lakhs which was recorded in the books of accounts of the firm as on date when the firm was constituted. 9. Then the issue that may crop up is whether the provision of Section 50C of the Act are applicable to the case covered by the Section 45(3) of the Act. We had already discussed the rationale behind the introduction of Section 45(3) of the Act. The provisions of Section 50C of the Act, provides that for the purpose of computing the capital gains U/s. 48 of the Act, the higher of two values i.e., the actual consideration received and the value adopted for stamp duty purpose for the valuation of the property shall be deemed to be consideration received. From the mere reading of ....