TaxTMI 
TaxTMI 
2021 (2) TMI 322
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.... on 3/2/2015 admitting total income of Rs. 6,91,130/-. Initially, the return of income was processed U/s. 143(1) of the Act and thereafter the case was selected for scrutiny for verification of financial transactions as the assessee had purchased immovable property vide Doc. No. 7003 dated 14/11/2013. Subsequently, the assessment was completed U/s. 143(3) of the Act vide order dated 28/7/2016 wherein the Ld. AO invoked the provisions of section 56(2)(vii)(b) of the Act and brought to tax the stamp duty value of the property purchased which exceeded the actual purchase consideration. On appeal, the Ld. CIT (A) confirmed the order of the Ld. AO, aggrieved by which the assessee is in appeal before us. 4. During the course of assessment proceedings, it was revealed from the data received from the Stamp Valuation Authority that during the FY 2013-14 the assessee had purchased two properties vide Doc. No. 7002 and 7001 in addition to the immovable property acquired vide Doc. No. 7003. All the three properties purchased were in Edulapuram Village S. No. 177/C, H.No. 5-94, 5-95 and the aggregate sale consideration paid for all the three immovable properties was Rs. 1,61,00,000/- as per ....
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....he Ld. CIT (A) confirmed the order of the Ld. AO by observing as follows:- "5.2....... The section 56(2)(vii)(b) provides for adopting the stamp duty value fixed by the Government as deemed consideration and the difference is assessable as income from other sources. There is no scope for adopting the values assessable by Stamp Value Authority as on the date of agreement as amount was paid in cash as on the date of agreement, the agreement of sale was not registered, the agreement of sale was not part of the registered sale deed. Therefore, I reject the contentions raised by the appellant and confirm the addition made by the Assessing Officer......" 6. Before us, the Ld. AR made the following submissions: (i) The vendor of the property Shri Mittapally Shanta Ram and his family members had obtained loan from HDFC Bank for their business purposes and since they could not repay the loan the bank attached the relevant property and brought it to auction vide Newspaper advertisement in the year 2011 (paper advertisement with English translation at page-8, 8.1 & 8.2 of the paper book). (ii) As on the date of Newspaper advertisement, the outstanding ba....
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.... of the Government was challenged before the Hon'ble High Court of Andhra Pradesh vide Public Litigation No. 274 of 2013 wherein the Hon'ble AP High Court in its order observed that the order of the Hon'ble AP Government for revising the value of the property vide Order dated 30/03/2013 is erroneous. Therefore, the value of the property as per the Stamp Valuation Authority even for the relevant AY 2014-15 is only Rs. 800/- per sq. yd and hence provisions of section 56(2)(vii)(b) of the Act will not be attracted. (xii) In the case of the Vendors, though the Revenue proceeded to invoke Section 50C of the Act, they finally arrived at the value of the property only at Rs. 2,03,65,854/-. (xiii) The Ld. AO had arrived at the value of the property at Rs. 2,03,65,854/-following the directions of Additional CIT U/s. 144A of the Act vide his order dated 29/12/2018. The value of the property was so arrived by the Revenue considering the facts and circumstances of the case of the assessee and keeping in view of its inherent disadvantages of the property. Therefore, even if section 56(2)(vii)(b) of the Act is invoked, the sale consideration cannot be adopted more than Rs. 2,03....
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....eproduced herein below for reference:- "The Court made the following: ORDER: (Per the Hon'ble Chief Justice Sri K. J. Sengupta) This Public Interest Litigation has been taken out to challenge Government order No. 157 dated 30/3/2013 by which the Government has empowered the Commissioner and inspector General of Registration and Stamps to implement the revised market values in urban areas, Secunderabad Cantonment area and rural areas in the State with effect from 1/4/2013. It is the contention of the petitioners that this order has been passed without having any power of relaxation of rules. We have checked up the relevant Rules namely Andhra Pradesh Revisions of Market Value Guidelines Rules, 1998, which is mentioned in the impugned order. Surprisingly, we found that there is no power to relax the Rules. If no power is conferred under the Rules, how the Government can relax the said Rules. Therefore, it is an arbitrary decision, if not totally non-application of mind. On that ground alone, the Writ Petition succeeds and the impugned order dated 30/03/2013 is set aside. However, liberty is given to proceed strictly in accordance with law.....
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....repay the loans. The land where the rice mill was located was in the middle of a Lambada Area. As told by him, the Lambada people did not provide road for his mill which led to further arguments between him and the Lambada People. In view of all those arguments, loss in the business and notices, pressure from bank officers regarding repayment of loans, Sri Mittapalli Santharam decided to sell the land. As no one shown interest in buying the land, he sold the site to Smt. Bhanu Jyothi for Rs. 1.60 Crores which was paid in cash in several instalments. He said that he used that money for repaying the bank loans. At present he is living along with his wife and younger son, Sri Mittapalli Naveen, who works in an insurance company. Sri Mittapalli Naveen got divorced, underwent a survey (relating to heart). The Elder son, Sri Murali Krishna, who underwent a hip joint surgery, is living in Hyderabad, the other son, Sri Ramesh absconded after filing an insolvency petition." 12. Thereafter, the Ld. AO observed in his Order in the case of the vendor Sri Mittapalli Naveen as under: - "8. Under the above circumstances, there appears to be a reason that the consider....
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.... 4,39,23,056/-. But the assessee/AR argued that the market value of the property as on the date of agreement is much lower than the value as on the date of registration and he has not received such consideration as specified by the market value. In certain cases, this causes a very difficult situation for the seller of the property as he is required to pay tax on extra money which he never received. Alternatively, if he wants to claim any exemption by investing in a residential house or capital gains bonds, etc., depending upon the facts of his case, he has to invest an extra amount, which he never received on sale. To come out of the difficulty one may consider recourse to relief provisions, but by the time decision in respect of relief provisions come, the assessee would have devoid of getting benefit out of it, as he would have paid the taxes. Stamp duty is generally paid by the purchaser of the property. Therefore, the purchaser is entitled to dispute higher valuation by stamp duty authorities. However, generally the purchasers do not prefer an appeal before the stamp duty authorities as compared to the purchase price involved, the amount of additional stamp duty becom....
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....ble to this land. The detailed report of the Regd. Valuer is reproduced as under: "V. Sreedhar, Chartered Engineer (India) No. M/121750/4, Registered Wealth Tax and Income Tax Valuer, No. C-1; 33/CCIT-III/XX/Reg. Val/56/03-04, Approved by CHIEF Commissioner of Income Tax, Hyderabad, A.P. (Value has a value only if it is valued) Valuation report on fair market value of property bearing survey No. 177/1, Edulapalem, Pedda Thanda, Khammam Rural Mandal & District jointly belonging to 1) Mittapalli Vijayalakshmi 2) Mittapalli Muralikrishna 3) Mittapalli Ramesh 4) Mittapalli Naveen. Under instructions from owners, the property was inspected to assess fair market value as on date. The relevant particulars were collected at site and details of valuation are summarised as under:- History: Total vacant land having an extent of 11,129.60 sq. yds was purchased on different years under registered sale deed document Nos. 144/1980; 4711/1982; 513/1992; 514/1992 and 515/1992. Subsequently after purchase, they constructed sheds and RCC roof block. All four owners want to sell entire property and en....
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....the construction cost, the web site is browsed, and it is ascertained that the rates varied from Rs. 380 to Rs. 622 between the period 2010 to 2014. Though the construction was made way back in 1930 and the structures are dilapidated ones, and the actual cost of construction has no value as on the date of transfer, yet the value of RCC is taken at Rs. 630/- per s.ft. and the value of sheds are taken at Rs. 480 per s.ft s determined by the stamp duty authority. Therefore, the probable sale consideration as directed U/s. 144A and as determined by the Registered Valuer is worked out as under:- Document Nos. Dt: 14/11/2013 Land extent (sq. yds) Rate / sq. yd Built-up Area (sq. fts) Rate/sq. ft Total value 7001/2013 3848.00 1000 0 0 38,48,000 7002/2013 1366.00 1000 RCC-935.49 Shed-2800.59 3736.08 630 480 (1366000+589359+1344283) 2,99,642 7003/2013 5914.60 1000 RCC-1365 Shed - 16132.63 17497.63 630 480 (5914600 + 8599950 + 7743662) 1,35,18,212 Total 11128.6 21233.71 2,03,65,854 13.1. Hence, the sale consideration is determined at Rs. 2,03,65,854/- as against the consideration ....