TaxTMI 
TaxTMI 
2019 (2) TMI 1899
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....of Income-tax (Appeals) erred in confirming determination of capital gain at Rs. 83,23,674 because (i) the land in question had nil cost and therefore, there was no question of charge of capital gain on transfer of such and (ii) when the appellant had converted land into stock-in-trade and such stock-in-trade was introduced in partnership, there was no question of any transfer resulting into capital gains u/s.45(3)of the Act. (2) The appellant further submits that the learned Commissioner of Income-tax (Appeals) ought to have adjudicated on the issue regarding transfer u/s.45(2)/45(3) of the Act particularly when the above issue was disputed by the appellant before the Income-tax Appellate Tribunal who directed it to be considered and was never conceded as observed by the learned Commissioner of Income-tax (Appeals) in the first round. (3) Without prejudice to the above, even if it is held that provisions of section 45(3) of the Act applied, as per that provision the value had to be taken as was recorded in the books of accounts which was nil. (III) Working of capital gain: (1) Without prejudice to the above, the appellant submits that there was no justification for deter....
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....n date of transfer is Rs. 357120/- x 4.63 i.e. Rs. 1653465/- only, In A.Y.2005-G6, relevant to F.Y.2004-05, the assessee has sold the land in the nearest vicinity at Rs. 2108/- per Sq. Meter. Considering 5% increase in fair market value" AY.2005-06, the market value for F.Y.2003-04 relevant to A.Y.2004-05, is taken at Rs. 2000/- per Sq. Meter, and accordingly the market value of 4950 Sq. Meters of Land transferred to M/s. C.N. Builders comes to Rs. 99,20,000/- and therefore, Long Term Capita! Gain to the extent of Rs. 82,66,535/- (Rs. 99,20,000/- minus Rs. 16,53,465/-) has escaped assessment. I have therefore, reason to believe that income to the extent of Rs. 82,66,535/- has escaped assessment within the meaning of Section 147 of the Act and hence it requires proceedings to be initiated u/s.147 of the IT. Act; 1961. Accordingly notice u/s.148 of the IT. Act, 1961 is hereby issued. Sd/- (MOHANAN. D), ITO, Vapi Ward-1, Vapi" The assessing officer noticed that the assessee has converted 14,300 Sq. Mt. of agricultural land in to non agricultural land on 25.05.2000 and thereafter converted the same into stock in trade. Out of this land the assessee has transferred 4,960 sq.....
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....ng a 5% increase in fair market value the assessing officer has stated that the fair market value of the land for assessment year 2004-05 would come to 2000/- per sq. met, therefore, he has determined the fair market value of land 4960 sq. mt to the amount of Rs. 99,20,000/-. Further has he has accepted the cost of land taken by the assessee to the amount of Rs. 3,57,120/- and after providing indexation the cost of the land was determined at Rs. 15,96,326. Consequently, an amount of Rs. 83,23,674/- was added to the total income of the assessee as income from capital gain. 4. The assessee has preferred appeal before the ld. CIT(A). 5. The ld. CIT(A) has partly allowed the appeal of the assessee stating that if the land cost is taken at Rs. 600 per sq. mt. as determined by the registered valuer the GP is 34% whereas if the rate is taken at Rs. 2,000/.the GP is about 19.5% comparatively in the lower side. After taking into consideration the aforesaid facts the CIT(A) has assigned the rate for land at Rs. 900/- per sq. mt. on the date of transfer of the aforesaid land as to the firm. 6. The assessee preferred appeal before the ITAT. Before ITAT, the assessee has raised additional gr....
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.... 210 per sq. mt in assessment year 2005-06 relevant to assessment year 2004-05, therefore, the determining of long term capital gain at Rs. 8266335/- by taking the market value of the land at Rs. 2000 was correctly done by the assessing officer. She has further stated that assessing officer has not done any infirmity in reopening of the assessment in the case of the assessee and the return of income was processed u/s. 143(1) of the act and assessing officer has not verified any information. 10. We have heard the rival contentions and perused the material on record. Regarding reopening of the assessment, we observe that the assessing officer has noticed from the computation of income that the assessee had transferred non-agricultural land measuring 4960 sq, mtrs as stock in trade to the partnership firm M/s. C.N. Builders Developer without disclosing any long term capital gain. However, the assessee had not shown any long term capital gain under the provision of section 45(2) r.w.s. 2(47) and section 55(2)(b)(i) of the act. Therefore, the assessing officer observed that there was under reporting of income from long term capital gain of Rs. 82,66,535/-. We observed there was no mate....
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....t value of land on the basis of sale of another land in the vicinity of the land which was transferred to the partnership firm. The assessing officer has not made any reference under section 55 A of the act to the Departmental valuation officer to deter mine the actual fair market value of the impugned land . According to the provision of section 55A of the act as reproduces as under the assessing officer under various circumstances may refer the valuation of the capital asset to a Valuation officer. 55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the [Assessing] Officer may refer the valuation of capital asset to a Valuation Officer- (a) in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the [Assessing] Officer is of opinion that the value so claimed [is at variance with its fair market value]; (b) in any other case, if the [Assessing] Officer is of opinion- (i) that the fair market value of the asset exceeds the value of the asset as claimed by the assessee by more than such per- centage of the value of the asset as so claimed....