TaxTMI 
TaxTMI 
2025 (9) TMI 1120
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..... The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs. 66,67,806 made by the assessing officer towards profit on sale of asset by erroneous application of the provisions of S.50C of the Act. 3. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs. 20,67,000 made by the assessing officer towards unexplained investment in property. 4. Any other ground that may be urged at the time of appeal hearing." 2. Succinctly stated, the assessee company that is engaged in the business of chit funds had filed its return of income on 30.09.2014, declaring an income of Rs. 78,88,127/-. The return of income was initially processed as such under Section 143(1) of the Act, on 29.12.2014. Subsequently, the case of the assessee company was selected for scrutiny assessment under Section 143(2) of the Act. 3. During the course of assessment proceedings, it was observed by the A.O. that the assessee company had purchased land admeasuring 967.32 sq. yards, situated at Door No. 5-87-126, Main Road, Lakshmipuram, Guntur, vide an agreement to sell cum General Power of Attorney dated 07.08.2009 ....
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.... the aforesaid facts, observed that the total value of the developed property sold by the assessee company, along with the aforementioned Builder/Developer, viz, M/s. Pawan Constructions, as per the SRO rates worked out at Rs. 44,37,70,000/-, as under : 8. The A.O., for computing the sale consideration of the property sold by the assessee company along with the Builder/Developer, adopted the value of the land as per SRO/segment rate i.e. @ 25,000/- per square yard. Accordingly, the A.O. computed the profit/gain on the sale of the subject property developed by the assessee company along with the Builder/Developer, viz. M/s. Pawan Constructions at Rs. 66,77,806/- as under. 9. Also, the A.O. observed that the land admeasuring 82.28 sq. yards that was earlier sold by the assessee company to M/s. VEC (supra), vide registered sale deed No. 3682/2010 dated 16.04.2010, was transferred back in its name. The A.O., considering the value of the said property as per the SRO records, determined the same at Rs. 20.57 lacs and called upon the assessee company to explain as to why an addition towards unexplained investment made for acquiring the said property during the subject year may not b....
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.... Ld. AR submitted that as the assessee company owed certain amounts to M/s. VEC (supra), therefore, the latter had initially sought for adjustment of the said amount against the sale consideration for the subject property. The Ld. AR submitted that in the sale deed, there was no mention of any cash having been received at the time of registration, and it was only mentioned that the amount was already given. Carrying his contention further, the Ld. AR submitted that as the subject property was a corner plot (triangular shape), therefore, the purchaser, i.e. M/s. VEC (supra), had rejected the land and backed out of the adjustment of the sale consideration against the amount that was receivable by it from the assessee company. Carrying his contention further, the Ld. AR submitted that the assessee company had thereafter agreed to take back the land and had cancelled the registered sale deed vide a cancellation deed dated 15.04.2013 (Pages 65-78 of APB). The Ld. AR submitted that as the sale transaction of 82.28 sq. yards (supra) to M/s. VEC (supra) did not involve any payment of consideration, but was initially executed based on a mutual understanding that the amount owed by the asses....
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....i) building conversion charges (2011-12): Rs.1,95,130/-. 18. At this stage, we deem it apposite to cull out the calculation of the capital gain on the transfer of the subject property as was disclosed by the assessee company in its return of income at Rs. 20,81,044/- (supra), as under: 19. We thus, in terms of our aforesaid observations, set aside the matter to the file of the A.O. with a specific direction to re-adjudicate the claim of the assessee company for deduction of the aforementioned expenses. Needless to say, the A.O. shall, in the course of the set-aside proceedings, afford a reasonable opportunity of being heard to the assessee company, which shall remain at liberty to substantiate its claim based on fresh documentary evidence, if any. 20. Apropos the Ld. AR's claim that as the assessee company had got back 82.28 sq. yards of land transferred in its name from M/s. VEC (supra), we are of the view that the A.O. had failed to properly deal with the aforesaid claim of the assessee company and summarily concluded that it had made an unexplained investment for getting the land transferred back in its name. We say so, for the reason that the assessee company had suppo....
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....n received by the aforementioned concern, M/s. VEC (supra) from the assessee company. 21. We have deliberated at length on the aforesaid issue, and are of a firm conviction that the A.O. was not justified in summarily concluding that the assessee company had made an unexplained investment under Section 69 of Rs. 20.57 lacs for the purchase of the subject property. Insofar as the reference to the registered sale deed dated 16-04-2010, whereby 82.28 sq. yards of land was transferred by the assessee company to M/s VEC (supra), we are of the view that though the same makes a reference to the fact that M/s VEC (supra) had paid the entire sale consideration of Rs. 16.29 lacs to the assessee company, but the claim of the assessee company that the same was in lieu of the adjustment of the amount outstanding by it towards M/s VEC (supra) could not have been summarily discarded. 22. In fact, the aforesaid claim of the assessee company is supported by the confirmation letter dated 09-01-2018 of M/s. VEC (supra), wherein it had stated that it had not made any cash payment at the time of purchase of the subject property, vide registered purchase deed dated 16-04-2010. Also, the copy of th....
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....y applied the stamp duty value of non-property .In made addition of Rs.66,67,806/- to the total income of the assossoo ao por the provini re ni section 50C of the Act. In view of the facts (I.v., Lased above, the contention of the appellant is rejected and addition made of Rs.66,67.";/ to the total income of the assessee as per the provisions of section 50C of the Act is cor -med. Accordingly, Ground No. 1 is dismissed. 5.3. Ground No. 2 moises by the appellant pertain to the Issue of addition of Rs.20,57,000/- on account rf unexplained investment and the same is adjudicated as under .- During the year unck consideration, the assessee company purchased the land admeasuring 967.32 Squar :. Vards Door No.5-87-126, Main Road, Lakshmipuram, Guntur from Shri. Reyapati Venkala Koteswara Prasad vide Sale Agreement cum General Power of Attorney vide Doc. No.5771/2009 on 07/08/2009 for a total sale consideration of Rs.2,11,80,000/-, Out of 987.30 Square Yards, the assoseco company sold 82.28 Square yards of land to M/s Vishoel: Engineering Company on 16/04/2010 vide Registered Sale Deed No.3628/2010 for a total sale consideration of.Rs.17,57.775/- which was paid in cash. However th....