TaxTMI 
TaxTMI 
2024 (7) TMI 30
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....e this plot as having preferential location owing to being located in the corner having two approach roads. The Assessing Officer is not bound to refer the matter to the DVO for valuation. 3. That the grounds of appeal are without prejudice to each other. 4. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time hearing of the appeal." 3. We shall proceed to dispose of this appeal ground wise. 4. The relevant facts relating to ground No.1 are, during the assessment proceedings, the Assessing Officer observed that the assessee had claimed an expense on account of business loss of Rs. 12.25 Crs. in respect of non execution of sale deed during the year. The company has claimed expenses of Rs. 3,27,77,388/- during this year as against the expenses of Rs. 1,58,28,330/- in the previous year. The assessee was asked to explain the claim of large expenses in the profit and loss account by issue of questionnaire dated 10/10/2016. In response, the assessee has submitted as under:- "The assessee company has entered into agreement with M/s R.K. Associates and Hoteliers Pvt. Ltd., A-25, Hospital Road, Ne....
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....d to obligation to make timely payment to the vendor within the stipulated time as the time was the essence of the contract. Thus the arbitration has given the award to the fact that the vendor would be paid a sum of Rs. 225 Lacs to the assessee company after forfeiting the amount of Rs. 1225 Lacs as the assessee company has failed to fulfill its obligation in making the payment to the vendor in time. Since no other option is left with the assessee to accept the award of the arbitrator, therefore the assessee company has accepted the loss of Rs. 1225 Lacs (Rs. 1450 lacs - Rs. 225 Lcas). Since the assessee company has made the advance payment for the purchase property in its normal course of business as the assessee company has engaged in the construction of integrated Township, Selling of Flats, Hotels etc., therefore, the loss of Rs. 1225 Lacs was a business and allowable u/s 37 of the Income Tax Act. Accordingly the assessee has claimed business loss of Rs. 1225 Lacs in the profit and Loss account. The copy of the agreement, award, legal notice and copy of resolution and other relevant documents are enclosed for your perusal and reference." 5. After considering the above submi....
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.... agreement for the purchase of Hotel at Rs. 9500 Lacs and started making the advance payments. However, the said deal could not materialized on time due to the backing out of the potential customer who have agreed to buy this hotel at Rs. 100 crores. Further due to the recession in the real estate business, the commercial plot proposed to be sold at Rs. 20 crore could not materialized on time, therefore, the assessee company has realized that there would be apparent loss in completion the transaction and the project would not profitable to buy at Rs. 95 crores as the potential buyer of Rs. 100 crores has backed out. In view of this fact the assessee company has agreed for the surrender of Rs. 1225 Lacs out of Rs. 1650 Lacs as per award given by Arbitrator as damaged against the apparent loss which would much higher for execution of the Sale Deed after the payment of the sale amount on very higher rate of interest on borrowings. Since the payment for damages for cancellation of the deal is a business loss in the real estate business line, therefore, the same is allowable u/s 37 of the Income Tax Act. In view of this fact it is requested that the proposed disallowance of the business....
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....ns before him. 8. After considering the submissions of the assessee, the Ld. CIT(A) decided the issue in favour of the assessee by observing as under:- "5.2 I have considered the facts and circumstances of the case, submission of the appellant and perused the assessment order. I find that the appellant is a real estate company engaged in the business of development of integrated residential township and other real estate business. During the year under consideration, they entered into an agreement with M/s RK Associated and Hoteliers P. Ltd. for purchase of hotel Fortune in Grazia, Sanjay Nagar, Distt. Centre, Sector-23, Ghaziabad, UP. The sale consideration of the impugned property was agreed at Rs. 95 crores which was to be paid as per the agreed dates as mentioned at clause 2 of the agreement, i.e. ".... The BUYER shall purchase the property from the SELLER and the SELLER shall sell the property to the BUYER from the purchase price and conditions set out in this Agreement. The BUYER shall pay the purchase price in the following manner: a) An amount of Rs. 50,00,000/-(Rupees Fifty Lacs only) must be paid by the BUYER to the SELLER upon execution of t....
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....8.01.2014. And an amount of Rs. 78,50,00,000/- within two months of this agreement i.e. by 08.02.2014 this agreement will be treated as "cancelled and Null & Void" and the amount paid by the buyer shall be forfeited by the SELLER and the SELLER will have the right to sell and above SCHEDULE PROPERTY to any person at any cost and the BUYER will not claim and will not file any litigation against the SELLER regarding the SCHEDULE PROPERTY..." as the appellant defaulted in making the balance payment of Rs. 80.50 crore. Thereafter, as per the clause 16, i.e. "...That if any dispute arises out of this agreement to sell then same shall be referred to the ARBITRATOR appointed by both the parties and order of the ARBITRATOR shall be binding on both the parties...." the matter was referred to the arbitrator and the arbitrator vide the award dated 25.03.2014, has ordered M/s RK Associates & Hoteliers P. Ltd. to refund an amount of Rs. 2.25 crore to the appellant out of the forfeited amount of Rs. 14.50 crores, thereby, there was a loss of Rs. 12.25 crore occurred to the appellant out of the impugned deal of the property and the same was claimed by the appellant as b....
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....cution of a contract, therefore, by considering the above facts on record, the Ld. CIT(A) has allowed the claim made by the assessee as Revenue loss u/s 37 of the Act. After considering the detailed findings of the Ld. CIT(A), we do not see any reason to disturb the same. Accordingly, the grounds raised by the Revenue is dismissed. 12. The relevant facts relating to ground No.2 are during assessment proceedings, the Assessing Officer observed that the assessee has sold plot of land i.e. K-1-C, Khasra No.630 part, 631 part, 632 and 142 part, TDI City, Agra for a sale consideration of Rs. 17.93 Crs. whereas the stamp duty valuation was at Rs. 19.73 Crs. The assessee was show caused as to why the difference should not be added to the income of the assessee u/s 43CA of the act. In response the assessee submitted as under:- "The assessee had sold the plot measuring 10545.46 sq. mtrs. The circle rate for the said land at Agra was Rs. 17,000 per square meters. Thus the circle rate comes at Rs. 17,92,72,820/-. Thus the assessee sold the property at Rs. 17.92 crores as determined by the stamp Authorities. Further the stamping authorities have taken 10% additional value being the....
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....t point no. 12, it is clearly mentioned that the circle rates are 17,000/- per sq. mtrs. (10% extra i.e. 18700/-for the plot being coner plot.). This clearly establishes that the state registration authorities recognize this plot as having preferential location owing to being located in the corner. (ii) As per Section 43 CA of the Act, where the consideration received or accruing as a result of the transfer by an assessee of an asset (not being a Capital Asset), being land or building or both, is less than the value adopted or assessed or assesseable by any authority of the state government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall for the purpose of computing profit and gains from transfer of such asset be deemed to be the full value of the consideration received or accruing as a result of such transfer. (iii) The assessee has demanded that the valuation of the property should be referred to the DVO for fair valuation. This is not acceptable as already the Agra Development Authority has determined the value of the property after taking into consideration all the factors i.e. preferen....
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....ning areas in the township for being a corner plot. The Id. AO has also not found or alleged that the assessee received any excess amount over the sale consideration mentioned in the deeds. The assessee objected to the valuation adopted by the stamp duty authorities before Id. AO (Please see page no.3 of the Assessment Order) and submitted that the preferential location charges (10% enhancement) are paid in respect of a plot having preferential location amongst the identical units and since there was only one hotel plot in the entire integrated township, there was no question of having preferential location of plot like corner. The assessee submitted that the actual fair market value of said plot is 1.79 cr and requested for the matter to be referred to DVO vide reply dated 06.12.2016 and 19.12.2016 (Pg. no. 60A to 61A of the paperbook). The Id. CIT(A) deleted the addition based on the numerous judgements relied upon by the assessee which provide that in cases where the assessee had disputed the value adopted by stamp valuation authorities u/s 43CA r.w.s. 50C, the ld. AO was duty bound to refer the valuation of the asset to valuation officer u/s 50C(2) and in the absence of any suc....
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....ding of the learned Commissioner of Income-tax (Appeals) that when the assessee in the present case has claimed before Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1), exceeds the fair market value of the property as on the date of transfer, the Assessing Officer should have referred the valuation of the capital asset to a valuation officer instead of adopting the value taken by the State authority for the purpose of stamp duty. The very purpose of the Legislature behind the provisions laid down under sub- section (2) of section 50C of the Act is that a valuation officer is an expert of the subject for such valuation and is certainly in a better position than the Assessing Officer to determine the valuation. Thus, non-compliance with the provisions laid down under sub-section (2) by the Assessing Officer cannot be held valid and justified. The hon'ble jurisdictional High Court of Allahabad in the case of Shashi Kant Garg (supra) has been pleased to hold that is well-settled that if under the provisions of the Act an authority is required to exercise powers or to do an act in a particular manner, then that power has to ....