TaxTMI 
TaxTMI 
2021 (6) TMI 935
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....e has not raised any objection. Consequently, we dismiss this ground as not pressed. 4. Ground no.2, relates to cost of acquisition of 925 shares of Somani & Company. 5. Brief facts are, during the assessment proceedings, the Assessing Officer observed that the assessee has declared long term capital gain on sale of 3,425 equity shares of M/s. Somany & Co. Pvt. Ltd. When the assessee was asked to provide details of the same, the assessee filed the details of acquisition of shares as per below table:- Number of Shares Year of Acquisition Cost (`) Indexed Cost (`) 925 Equity shares prior to 01.04.1981 3545525*785/100 1981-82 35,45,525 2,78,32,371 500 Equity shares 50000*785/519 2006-07 50,000 75,626 2000 Equity shares 2500000*785/463 2003-04 25,00,000 42,38,661 Total: 3,21,46,658 6. The assessee was asked to provide supporting documents in support of the above quantity of indexed cost arrived by the assessee. In response, the assessee filed copy of wealth tax return for the assessment year 1979-80, and copy of wealth tax return order for the assessment year 1979-80 to prove that 925 shares were held by the assessee ....
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....per and accordingly rejected. However, the Assessing Officer considered the value declared by the assessee as on 31st March 1979, in his wealth tax return @ Rs. 105 per share and adjusted the inflation for two years and determined the value per share as at Rs. 120 per share. Accordingly, he allowed the revised indexed cost of 935 shares sold by the assessee. Aggrieved with the above order, the assessee preferred appeal before the learned CIT(A). 8. Before the learned CIT(A), an Affidavit was filed by the assessee. The relevant portion of the Affidavit reproduced by the learned CIT(A) is extracted below:- "2. During the year under consideration I have sold 3,425-equity shares of Somani & Co. Pvt. Ltd (hereinafter referred to as the said (Company) to M/s Sat-guru Corporate Services Private Limited. The LTCG arising from the sale of these shares has been disclosed in the Return of Income at Rs. 53,37,65,018/-. 3. Out of 3,425 shares, 925 shares were purchased by me in 1979 and therefore for the purposes of determining the cost of acquisition of these 925 shares, the value per share had to be determined as on 1st April, 1981. The method adopted for determining the ....
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.... other assets) of the Company, as on 01.04.1981 9. Since the assessee filed additional evidences on this issue, the learned CIT(A) called for a remand report from the Assessing Officer and the Assessing Officer filed remand report dated 27th January 2017. For the sake of clarity, it is reproduced below:- "4.1(a) During the AY under consideration, the assessee had sold 3425 equity shares of M/s Sonani & Co. Pvt Ltd (hereinafter referred to as the said company) to M/s Satguru Corporate Services Pt Ltd. The LTCG declared from the sale of these shares in the ROI was at Rs. 53,37,65,o18/-. Part of the shares, that is about 925 shares were purchased by the assessee in 1979 and therefore the cost of acquisition of these 925 shares had to be determined as on 1' April, 1981. (b)Value of the said shares was determined by adopting the net asset valuation method to arrive at the fair market value of the said shares as on 01/04/81. (c)During the course of assessment proceedings, the assessee only submitted the valuation report pertaining to the land belonging to the said company. The assessee has now submitted a valuation certificate dated 04/10/2016 from the c....
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....e LTCG declared from the sale of these shares in the ROl was at Rs. 53,37,65,o18/-. Part of the shares, that is about 925 shares were purchased by the assessee in 1979 and therefore the cost of acquisition of these 925 shares had to be determined as on 1' April, 1981. b)Value of the said shares was determined by adopting the net asset valuation method to arrive at the fair market value of the said shares as on 01/04/81. (c)During the course of assessment proceedings, the assessee only submitted the valuation report pertaining to the land belonging to the said company. The assessee has now submitted a valuation certificate dated 04/10/2016 from the chartered accountant, certifying that the value of the share as on ist April, 1981 was Rs. 3,881/- per-share. This value was arrived at based on the valuation of the underlying assets of the said company as on 01-04-81. It is the case of the assessee appellant 111CI this certificate had not been submitted at the time to assessment as it was the bonafide belief that the valuation report pertaining to the land held by the company was sufficient to justified the value per share as on 01/04/81. 4.2 (a)The said i....
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.... as on 01/04/1981 on the other. This shows that the assessee with reference to the same transaction, i.e value of the said shares, at different times, insists on the truth of each of the 2 conflicting values to suit his private interests. The Latin Maxim "Allegans contraria non est audiendus" meaning "lie is not to be heard who alleges things contrary to each other", squarely applies to the assessee case. Accordingly, it is requested that this additional evidence need not be admitted." 10. After considering the submissions of the assessee, remand report and the response to remand report filed by the assessee, the learned CIT(A) sustained the addition made by the Assessing Officer with the following observations:- "7.5 I have perused the facts of the case and the contentions of the AO & appellant carefully. I find that in the Chartered Accountant's certificate filed under Rule 46A, the Cost of acquisition as on 01.04.1981 of the shares of Somani & Co. Pvt. Ltd. is arrived @ Rs. 3881/- per share, after considering Value of Land of said company as on 01.04.1981 at Rs. 7,66,80,110/- as per separate Valuation Report of M/s. Shah & Shah, a Govt. approved valuer. The quest....
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....et value of un-quoted equity shares, the re-valuation of assets of a company is not permitted and rejected the method adopted by the assessee. For this proposition, he submitted that provisions of rule 11UA is not applicable for this assessment year and he relied upon the decision of the Co-ordinate Bench in ITO v/s Smita Vinod Bhagwati, ITA no.6709/Mum./2012, order dated 12th August 2016 and submitted that in the above case, it was held that the adoption by the Assessing Officer of the value arrived at under the Wealth Tax Act, for the purpose of computing capital gain under the Income Tax Act, 1961, is wrong as per law. Further he relied upon the decision of the Hon'ble Delhi High Court in Madhu Tyagi v/s DCIT, [2008] 19 SOT 612 (Del.) to submit that the wordings and the purpose of allowing deduction towards cost of acquisition for computing capital gains is quite different from the purpose of levy of wealth tax and it is not permissible to import and apply principle laid down under the Income Tax Act to Wealth Tax Act or vice-versa. Further, relying upon the decision of the Co-ordinate Bench of the Tribunal in Shashi Dharnidharka v/s ITO, ITA no.5314/Mum./2018, order dated 22nd ....
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.... Co. Pvt. Ltd. from independent valuer. The independent valuer re-valued the asset in the aforesaid company. It is pertinent to note that the major asset held by the company is the land belonging to the company which was re-valued to ascertain the fair market value of the company as on 1st April 1981. It is fact on record that the assessee or the company never re-valued the land earlier, all along the company was declaring the value of land as per Balance Sheet. The latest information submitted by the assessee before the taxing authorities of the fair market value per share which was declared in the wealth tax return @ Rs. 105 per share as a fair market value. Before us, the learned Counsel submitted that the Assessing Officer adopted the wealth tax valuation which was submitted by the assessee as on 31st March 1979, and re-adjusted to re-value the value of share as on 1st April 1981. He objected to the above adoption of value based on wealth tax valuation rather than calculating the value of shares of un-quoted shares. We are in agreement with the assessee that the assessee has an option to replace the value of market value as on 1st April 1981 as per section 55(2)(b)(i) of the Ac....
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....ime, the assessee cannot claim the value for the assessment year 2003-04 at Rs. 1,250. Therefore, in our considered view, the best possible option available to the assessee is only to adopt the value of fair market value in assessment year 2003-04 and re-calculate by adopting reverse indexation to determine the value as on 1st April 1981. Therefore, the value of each share will be @ Rs. 1,250 x Rs. 100 / 463 = Rs. 270 per share. Since the Assessing Officer cannot adopt the value as per wealth tax valuation considering the judicial precedent, we deem it fit to direct the Assessing Officer to adopt the fair market value as on 1st April 1981 @ Rs. 270 per share. 16. We noticed that the assessee prayed to restore this issue to the file of the Assessing Officer to refer this matter to the valuation officer. In view of our above observations, we do not see any reason to refer this issue to the valuation officer at this stage. Accordingly, ground no.2, is partly allowed. 17. Ground no.3, relates to the dispute in learned CIT(A)'s order in confirming the deemed sale consideration at Rs. 8,44,18,460 (being the market value on which stamp duty is paid) as against Rs. 5,72,76,000, being....
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....ommissioner (Appeals), the assessee filed an Affidavit the contents of which are reproduced below:- "8.1 On the other hand the appellant submitted by way of an Affidavit dated 11.11.2016, the relevant portion of which is reproduced below: "8.In addition to the above, I have also sold a portion of land admeasuring 1,591 sq. mtrs., which was held under my proprietary concern, Shree Gopal Corporation for a consideration of Rs. 5,72,76,000/-. Although the deal was concluded in December, 2011, the same could not be completed and registered since the Joint Sub-Registrar of Assurances was short staffed. The sale agreement was registered on 04.01.2012. Enclosed on Page 134-137 of Paper book are the email correspondences which show that the deal was concluded in December, 2011. 9. The Ready Reckoner rate in 2011 U)1S Rs. 30,300/- 'MV= 4,82,00,000/-) and in 2012 was Rs. 37,900/- per sq. mtr. (MV 6,02,98,900/-). Thus there was an increase of 25% in the ready reckoner rates within a period of 4 days from the end of the calendar year 2011. Thus had the sale agreement been registered in 2011, the agreement value was much higher than the ready reckoner rates. Enclos....
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.... time of assessment proceedings. 20. As the assessee filed additional evidence on this issue, a remand report was called from the Assessing Officer and the Assessing Officer submitted remand report dated 27th January 2017, the relevant report is reproduced below:- "4.3 The further piece of additional evidence submitted to the Ld. CIT pertains to the sale of a portion of land admeasuring 1951 m2, which was held under the proprietary concern of the assessee [shree Gopal Corporation] for a consideration of Rs. 5,72,76,000/-. It is the case of assessee that the deal was concluded in December, 2011, however the same could not be completed and registered since the joint sub registrar of assurances was short stuffed and the same came to be registered on 01/04/2012. Further, the ready reckoner rate in 2011 was Rs. 30,300/- [Market Value Rs. 4,82,00,000/-I and in 2012 was 37,900/- per square metre [Market Value Rs. 6,02,98,900/-J. The assessee had contended that the stamp duty authorities had taken the value of lund considering utilisation of TDR [Transfer of Development Rights]. Accordingly, the assessee submitted that the stamp duty authorities had taken valuation at 140% of l....
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....e Gopal Corporation, for a consideration of Rs. 5,72,76,00/-. Although the deal was concluded in December, the same could not be completed and registered since the Joint Sub-Registrar of Assurances was short staffed. So the sale agreement was registered on- - 15.The Ready Reckoner rate in 2011 was Rs. 30,300/- per sq. mtr.(MV=Rs. 4,82,00,000/-) and in 2012 was Rs. 37,900/- per sq.mtr. (MV=Rs. 6,02,98,900/-). Thus there was an increase of 25% in the ready reckoner rates within a period of 4 days from the end of the calendar year 2011. Thus, has the sale agreement been registered in 2011, the agreement value was much higher than the ready reckoner rates. 16. The stamp duty has been paid at higher value of Rs. 8,44,18,460/-.This is because, the Stamp Authorities computed the value by taking the value at 140% of the Ready Reckoner Value of Rs. 6,02,98,900/-, which is inclusive of TDR, although the ready reckoner states that only land capable of utilizing TDR should be valued at 1.4 times the land rate. 17. The Appellant has procured a clarification from MMRDA vide letter dated 11-04-2012, that no TDR can be loaded on the said plot of land, thus the Appellant ....
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....he same to the DVO. During the assessment proceedings, the Appellant had submitted the certificate from MMRDA which clearly stated that the TDR cannot be loaded on the said plot of land. The appellant was not aware of the AO's intention and presumed that the explanation provided by him was satisfactory. The Appellant was never given the opportunity to contest the valuation. Further during the remand proceedings the Appellant vide its Affidavit requested the cir (A) to direct the AO to refer the matter to the DVO, who after considering all the facts and circumstances of the case would arrive at the correct market value. It is provided that where the consideration received or accruing us a result of the transfer of a capital asset being land or building or both is less than the value adopted by an authority of the State Government for the purposes of payment of Stamp duty in respect of such transfer, then the value so adopted by the State Government authority shall be deemed to be the full value of consideration received or accruing as a result of such transfer. The said provisions of sub-section (i) of section 50C are further circumscribed by sub-section (2) of section 50C. in t....
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....ur attention to the Order passed by the CIT (A) in the case of Mahakixmi Rope Work Ltd. (having identical facts and circumstances), wherein the addition made on account of section 50C has been deleted. Therefore the addition made by the AO even in this case should be deleted. Copy of the Order is enclosed herewith for your perusal. Enc1:3) 20, We submit the following: (i) For the purpose of adopting the correct value for the sale consideration, we humbly request your Honour to kindly consider the ready reckoner rates of 2011 and not of 2012. This is because the terms and conditions of the agreement was concluded in 2011 itself, but the mere formality of signing and registering was done on 4th January 2012. Kindly note that the terms and condition of the conveyance Deed was finalized and mutually agreed upon on 14th December 2011, (as can be seen from the email dated 14th December, 2011) and the intention of the Parties to execute and register the same before 31 December, 2011. It was only due to unfortunate circumstances that the same could not he completed. (ii) We request you to kindly refer to the Valuation Report dated 9th February, 2016 whic....
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.... Stamp Act, 1958" if the difference in the market value worked out based on the Stamp Duty Ready Reckoner and Market Value of the Properties declared by Maharashtra State Government and the consideration mentioned in the Agreement is not more than 10%, then in that case Agreement value shall be taken for the purposes of levying Stamp Duty. (iii) we would like to rely on the following decisions: • Krishna Enterprises vs. ACIT (ITAT Mumbai) dated 26-11-2016 S. 50C: if the difference between the sale consideration of the property shown by the assessee and the FMV determined by the DVO u/s. 50G(2) is less than 10%, the AO is not-justified in substituting the value determined by the DVO for the sale consideration disclosed by the assessee. • Sita Bai Khetan us. ITO (ITAT Jaipur) dated August, 2016 S. 50C: Valuation is a matter of estimation and some degree of difference is bound to be there. If the difference between the stamp duty valuation and the declared sale consideration is less than 10% addition u/s 50C should not be made. • ACIT vs. S. Suuarna Rckha (ITA No. 743/Hyd/2009 dated 29-10-2010 Held: if differen....
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....not demanded any reference to DVO at assessment stage. In such case, the A.O. was not obliged to suo-moto refer the valuation to DVO. 8.7 The appellant has further contended that the A.O. should have referred the matter to DVO in the light of DVO's report in the case of Mahalaxmi Rope Works Ltd. I find that submission of such report for the first time during remand proceedings do not change the fact that no demand for reference to DVO was made at assessment stage. Also, there can be difference in fair market value of two plots in same area depending upon several factors, hence the said report is not conclusive proof of fair market value of appellant's land being the same as adopted in said report. In view of above, and in the spirit of the provisions of section 50C, I find the assessing officer was bound to adopt the value adopted by stamp valuation authority of Rs. 8,44,19,000/- as the full value of consideration received. This resulted in net addition of Rs. 2,71,43,000/- (i.e. Rs. 8,44,19,000 - 5,72,76,000), which is confirmed, and therefore, Ground No.3 is dismissed." 23. Aggrieved with the above order, the assessee is in appeal before the Tribunal. 24. Befor....
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.... 5.8% variation. Aggrieved, the Revenue was in appeal before the Tribunal and the Tribunal dismissed the appeal of the Revenue. Since the issue was similar to the facts in Mahalaxmi Rope Works Ltd. (supra), he prayed that the assessee's case also may be restored to the file of the Assessing Officer for reference to the valuation officer. 25. On the other hand, the learned Departmental Representative vehemently supported that the findings of the learned CIT(A) in Para-8.6 of his order and further submitted that the assessee's case request for DVO's valuation may not be considered. 26. Considered the rival submissions and perused the material on record. We notice that the assessee has sold Plot no.7, for Rs. 5,72,76,000, on 4th January 2012, however, the assessee claimed that the assessee has negotiated and sold the land based on the earlier stamp valuation rate in December 2011 itself whereas the effective ready reckoner rates were changed w.e.f. 1st January 2012. Further, the assessee submitted that the stamp duty authorities not only adopted effective new rate on this transaction plus adopted TDR @ 140% of the effective rates. Its fact on record that the assessee has not ....
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.... unit by M/s. Starlight Systems Pvt. Ltd., which was developing the project Signature Island. However, the Assessing Officer observed that the application was unsigned and unfilled. The assessee submitted that the land sale was completed on 4th January 2012, the letter of allotment was duly released to him as per clause of escrow agreement and he became owner of the flat. 29. The Assessing Officer issued notice under section 133(6) of the Act to the builder M/s. Starlight Systems Pvt. Ltd., to frame whether the above said flat was allotted to the assessee or not. IN response, M/s. Starlight Systems Pvt. Ltd., vide letter dated 16th February 2015 stated that they have not allotted any flat nor received any payment thereof from the assessee. Subsequently, the assessee was informed about the reply to notice under section 133(6) of the Act. In response, the assessee submitted that the dispute was arisen between him and the builder. The builder disputed the allotment of the above said flat to the assessee. Further, the assessee submitted that the assessee had issued a public notice in the newspapers and filed a Suit against the builder in the High Court. In the interim order, the Hon....
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....e, the assessee failed to provide any documentary proof that he had invested / purchased a new property. Accordingly, he rejected the deduction claimed by the assessee under section 54F of the Act. Aggrieved by this order, the assessee preferred appeal before the first appellate authority. 30. The assessee, before the learned CIT(A), filed detailed submissions vide letter dated 14th March 2017, which is placed on record at Page-22-26 of the order of the learned CIT(A). After considering the detailed submissions of the assessee, the learned CIT(A) rejected the submissions of the assessee with the following observations:- "9.5 Further, in para 25 to 27 of his submissions, the appellant has also linked the sale of shares to the Agreement dated 04.01.2012 for sale of land to Satguru Corporate Services Pvt. Ltd. (Paper book Page no.93-125, being the subject matter of addition u/s 50C discussed above). I find that nowhere in said agreement, there is any reference of any Escrow Arrangement / Sale of shares. Hence, the said agreement has to be considered independent of any such arrangement, if at all. 9.6 Alternatively, even if it is assumed that the sale cons....
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....2 28.09.2014 6 32572434814 2 Years 20,00,000/- 28.09.2012 28.09.2014 7 32572436390 2 Years 20,00,000/- 28.09.2012 28.09.2014 8 132572442509 2 Years 20,00,000/- 28.09.2012 28.09.204 9 32572446127 2 Years 20,00,000/- 28.09.2012 28.09.2014 10 32572449912 2 Years 20,00,000/- 28.09.2012 28.09.2014 Total 2,00,00,000 The Assessing Officer is directed to allow the deduction u/s 54F against above investment after necessary verification at his end. The Assessing Officer may further verify the use of said funds on maturity, and in case the amount is not utilized for purchase / construction of residential house within stipulated period, the taxability of such amount may be considered under Proviso to sub-section (4) of Section 54F, after due application of mind. In view of above, Ground no.4 is partly allowed." 31. On the other hand, the learned Departmental Representative supported the findings of the authorities below and submitted that the learned CIT(A) has rightly concluded and denied the benefit. 32. Considered the rival submissions and perused t....
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....the flat as purchase consideration. We notice that the Assessing Officer has taken a stand that in order to claim deduction under section 54F of the Act, the assessee has to demonstrate documentary evidences of the new property and the assessee should have invested / purchased new residential property within the prescribed time. We notice that in this situation the assessee has already kept the agreed settlement amount for purchase of flat with buyer of the land and accepted to receive the promised allotted flat within the prescribed time. Since there was a dispute between the assessee and the builder the flat was not allotted to the assessee within the prescribed time. We notice that the Courts have held that when the assessee performs his part of the duty before the prescribed time and incase there is a reasonable delay or default on the part of builder and failed to comply the agreement within the prescribed time and when the assessee demonstrated the reasonableness of the time frame of investment then the Courts have taken liberal view in giving deduction under section 54F of the Act. Therefore, in our considered view, in the given case the assessee has not received sale consid....