TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 347
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....deleting the addition of Rs. 16,09,09,900/- made by the AO on account of unexplained other liability booked in the firm without appreciation the material facts of the case." 3. Succinctly, the fact as culled out from the records is that E return declaring Nil income was filed on 20.11.2016 for the year under consideration. During the year under consideration, the assessee firm was working as a real estate developer (Builders). The case was selected under limited scrutiny through CASS. Notice u/s 143(2) was issued on 23.09.2015 by the undersigned, which was duly served upon the assessee fixing the case for hearing on 29.09.2015. In compliance to notice issued, AR of the assessee firm attended the assessment proceedings from time to time and produced requisite information and documents. The AR of the assessee submitted books of account consisting of cash book, bank statement, sale deed, computation of income and copy of ITR, bills and vouchers which were examined on test check basis and the facts of the case were discussed with him. 3.1 The assessee has introduced new capital of Rs. 6,62,50,000/- during the year under consideration. During the course of assessment proceedings, the ....
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.... asked about the treatment of the land transferred to the firm by Mr. Ram Chandra Gurjar and you have asked that why the capital gain tax will not imposed upon Mr. Ram Chandra Gurjar. Now we are telling you the complete history of the land transferred. The said land was acquired by Mr. Ram Chandra Gurjar in between 2001-2006 copies of the purchase deed is already provided to you during the previous hearing. At The time of purchase the land was an agricultural land. After that the land was converted in to the non agriculture (Resort) with effect from 31 May 2006. In the conversion order it was mentioned that if the converted land was not used for the purpose or which it was converted than it will be suo moto reconverted in to agriculture(copy of order attached). So as per the conditions of the conversion order the land was not used for the resort purpose that why it was reconverted in to the agriculture land with effect from 01 June, 2008. After that the land was transferred t the assessee during the financial year 2013-14. So we are of the opinion that th capital gain tax cannot be imposed on this transaction." 6. The reply of the AR of the assessee was considered and was not fo....
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....onsideration. Accordingly, an addition of Rs. 5, 59,28,300- is made to the total income of the assessee on account of unexplained capital introduced in the form of new capital for the year under consideration. 7. The assessee firm has also booked as other liabilities of Rs 19,19,50,000/- as per balance sheet submitted during the year under consideration. During the course of assessment proceedings, the assessee was asked vide AO's office note sheet dated 04.11.2016 as per para (iv) that the assessee firm was shown other liabilities of Rs.19,19,50,000/- verify source of that investment from Shri Ram Chandra, partner of the firm. In this regard, the AR of the assessee firm has filed his reply dated 04.11.2016. He has submitted that the value adopted by the firm on transfer of agricultural land by Shri Ram Chandra Gurjar, Village- Janaksinghpura, Neemrana who is one of the partner of the firm. The reply of the AR of the assessee was considered and not found fully tenable by the ld. AO. As the assessee has not furnished the documents in support of his investment shown as other fictitious liability of Rs.19,19,50,000/-. As mentioned above the assessee has submitted the introduction of ....
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....cts have emerged; 1. That the assessee firm has come into existence by way of a partnership deed signed on 25/02/2013 where Sh. Dharam Vir and "Sh. Ram Chander came together as partners and form the firm under the name of M/s Stanford Developers. 2. That the firm is created to carry on the business of builders and developers of properties and civil construction. 3. That the partners will have stake in the firm in the ratio of 75%:25% between Sh. Dharam Vir and Sh. Ram Chander. 4. That in pursuant to the partnership deed, a joint venture agreement was signed between the firm M/s Stanford Developers and Sh. Ram Chander vide agreement dated 10/06/2013. 5. That as per the joint venture agreement it was decided that Sh. Ram Chander, owner of the land situated at Village Neemrana will contribute 12,500 sq. meters land to the firm and this will include 10,000 sq. meters of land for which Sh. Ram Chander had obtained the license to develop it as a resort. 6. That the total value of land contributed by Sh. Ram Chander was valued at Rs.26.5 crores. That out of this value, an amount of Rs. 6,62,50,000/- was contributed as partners capital and remaining amount of Rs. 19,19,50,000/-....
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.... DLC rate. In this regard, the provision of the Act as per sub-section 3 of section 45 of the Act reads as under; The profits or gains arising from the transfer of a capital asset by a person to a firm or other association of persons or body of individuals (not being a company or a co-operative society) in which he is or becomes a partner or member, by way of capital contribution or otherwise, shall be chargeable to tax as his income of the previous year in which such transfer takes place and, for the purposes of section 48, the amount recorded in the books of account of the firm, association or body as the value of the capital asset shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. In this section, the Act has made it very clear that when an asset is introduced as capital in the firm then the value recorded in the books of accounts shall be deemed to be the full value of consideration. In this case, the value of the asset as recorded in the books of accounts is Rs.6,62,50,000/-. Therefore, A.O is not justified in taking the DLC value rather the value as recorded in the books of accounts. Even otherw....
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....s. 265,000,000/-. 1.3 That the first party, in addition to the development on the said land as agreed hereinabove shall also pay a sum of Rs. 198.750,000/- (Rupees Nineteen Core Eighty Seven laces and Fifty Thousand only) to the second party. However, the balance of the value of the land money shall be treated as investment/share of the second party in the partnership firm in terms of the partnership deed. The manner partnership firm shall be the sole and exclusive owner of the said land with all payments to the second party by the first party shall be made in the following manner. 2.3 That after vesting the said land into partnership firm, the said land will become the exclusive domain of the partnership firm and no individual including the second party can claim any kind of right, title or interest in respect of the said land. The proprietary rights. 2.4 That once the said land will be vested into partnership and it becomes the exclusive domain of partnership firm, the right to part with possession, to sell or to create third party interest in any manner of the said land will only be vested with the partnership firm and no partner in its individual capacity can do so until ....
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....Neemrana. As per the DLC rate the value per bigha was determined at Rs.79,59,000/-. The A.O has taken the DLC value of the property to determine the value of at Rs. 3,10,40,100/- and thereby making addition of Rs. 16,09,09,900/- as excess value introduced in the partner's liability in the books of accounts as unexplained. 4. That the appellant has submitted that nowhere in the Act has given liberty to A.O to make an addition on account of higher valuation than the DLC and construing the difference in valuation between the DLC rate and the valuation as per books of accounts as unexplained. In this regard the appellant has cited the provision of section 45(3) of the Act where, the Act has given importance to the valuation taken in the books of accounts rather than the DLC value. The appellant has also cited Hon'ble ITAT, Mumbai Bench judgment in the case of M/s Chirayu Estate Dev. Pvt. Ltd. ITA No.263/Mum/2010 in favour of its claim. 5. That the appellant has further submitted that the capital introduction by way of land has been fully explained in the hand of the firm and hence no addition can be made in the firm's hand. 6. That during the appellate proceedings the....
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....ased on the market value and also the perceived escalation in the valuation of the property particularly if the property is slated to be exploited as a business asset. In this case, the A.O while taking the valuation of the land asset as per DLC rate has lost sight of the fact that the partner Sh. Ram Chander has also got license to develop the property as a resort which naturally would fetch a much higher intrinsic value than what has been given by the Sub Registrar as per the prevalent DLC rate. In fact, the appellant has incurred an expenditure of Rs.5,31,59,347/- (as mentioned in the remand report submitted by the A.O) towards conversion charges. I have also taken into account various obligations to be fulfilled by the appellant as per the JV agreement, which also has to be taken into account while a valuation is arrived for the land assets contributed by the appellant (relevant part of the JV agreement is reproduced at para 5.6 above). 6.5 After due consideration of facts mentioned above along with the provision of section 45(3) of the Act, judicial rulings as stated above and facts of the case including JV agreements and obligations there in, the A.O's action of making ....
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....sessee has accounted the said assets as current assets and not as capital assets. Not only that the assessee claims that the land is agricultural land then as per provision of section 2(14) the capital assets exclude the agricultural land and when the assets is not capital asset the benefit of section 45(3) given by the ld. CIT(A) is not in accordance with the law and the therefore, the findings of the ld. CIT(A) is erroneous on law as well as on facts. The ld. DR drawn our attention to the submission of the assessee [ as extracted in the assessment order page - 3 ] which is reiterated here in below for the sake of brevity : The said land was acquired by Mr. Ram Chandra Gurjar in between 2001-2006 copies of the purchase deed is already provided to you during the previous hearing. At The time of purchase the land was an agricultural land. After that the land was converted in to the non agriculture (Resort) with effect from 31 May 2006. In the conversion order it was mentioned that if the converted land was not used for the purpose or which it was converted than it will be suo moto reconverted in to agriculture (copy of order attached). So as per the conditions of the conversion or....
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.... ld. AR of the assessee further submitted that since the assessee has not introduced any money in the books of the firm then the provision of section 68 is not be applicable and cannot be added in the hands of the firm. After considering all these aspects he has considered the transaction as genuine and benefit of the provision of section 45(3) has been correctly granted by a well-reasoned order. As regards the applicability of section 28(iv) the ld. AR of the assessee submitted that these provisions were never referred in the proceeding before the lower authorities and therefore, at this stage the same is not subject matter of the appeal. The ld. AR of the assessee further submitted that the benefit is in exercise of capital introduced in the firm and not the value of benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession and therefore, even on facts the provision is not applicable. 11. We have considered the rival contentions, perused the material available on record and also gone through the findings of the lower authorities recorded in their respective orders. The bench noted that the grievance of the revenue is that....
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....e property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes- (a) jewellery; (b) archaeological collections; (c) drawings; (d) paintings; (e) sculptures; or (f) any work of art. Explanation 1.-For the purposes of this sub-clause, "jewellery" includes- (a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel; (b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel; (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand ; or (b) in any area within the distance, measured aerially,- (I) not being m....