AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 30
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....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, Near Rama Tent House, Bhogal, New Delhi for the purchase of a Hotel Fortune in Grazia,....
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....he 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 submissions, the Assessing Officer further asked to explain and submit the details of loss ....
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....er, 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 loss of Rs. 12.5 crores is not tenable in law." 6. After considering the above submissions, the As....
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....nder:- "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 this Agreement by the BUYER to the SELLER, accordingly BUYER has paid a sum of Rs. 50 lacs after deduction of Tax @1% vide cheque no.849983 dated 09.12.2013 drawn on IDBI....
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....LLER 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 business loss. On the perusal of the facts/details filed by the appellant, I find that the appellant was engaged in the real estate business, therefore, the deal entered into by the appellant for purchase of the property was in accordance with the....
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....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 preferential location charges and have determined the circle rate at Rs. 19.73 crores (17.92+1.79). The assessee company had admittedly acquired 1002 acres of land alongwith its associate company at Agra for development of Integrated Township and had the licen....
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....A 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. preferential location of the plot and other determining factors. Therefore, the assessee's contention that the hotel plot, not being located prudentially to attract the 10% extra stamp duty to the circle rate is contradictory to the circle rate of Rs. 18,700/- applied by the stamp duty authorities of the state government for preferential lo....
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....ential 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 such reference being made the addition made on account of higher stamp duty value should be deleted. 19. In regard thereof, relied on the following case law and submitted that the Hon'ble ITAT deleted the addition u/s 43CA without remand back where the assessee had objected to the valuation adopted by stamp valuation authority even though no valuation r....
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....ion 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 be exercised and the act has to be performed in that manner alone and not in any other manner. Similar view has been expressed by the other decisions cited by the learned authorised representative in this regard hereinabove. The first appellate order on the issue is thus upheld. The grounds are accordingly rejected." 22. Similarly, in the case of ITO vs. Ramesh Chandra Kulshresth in ITA ....