TaxTMI 
TaxTMI 
2026 (9) TMI 1952
X X X X Extracts X X X X
X X X X Extracts X X X X
....ever, the assessee did not continue the business from the year 2014 onwards. The assessee filed the return of income for the AY 2016-17 on 30.09.2016 declaring a total income of Rs. 2,82,43,270/-. The return of income was selected for limited scrutiny under CASS. Accordingly, statutory notices were issued to the assessee calling for details in support of the return of income filed. The assessee had declared long term capital gains of Rs. 6,79,05,888/-. In support of the capital gains, the assessee furnished sale deeds executed on 07.12.2015 at Kaveripattinam between the assessee and M/s.DITI Resources Private Limited, Ahmedabad for sales consideration amounting to Rs. 7,95,00,000/- consisting of Rs. 1,67,26,500/- towards land Rs. 6,13,73,500/- towards factory building and properties in the form of trees to the tune of Rs. 14,00,000/-. The assessee filed the guideline value as on the date of transfer, i.e., on 07.12.2015 obtained from the Registration Department of the Tamil Nadu shows that Rs. 3 lakhs per acre for Survey Nos.613/2A and 613/2B. The AO verified the guideline value with the Sub Registrar Office, from whom the details of registration done on 30.03.2016, wherein the gui....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ignored the fact the land sold is agriculture land and, therefore, the gains on its alienation is not chargeable to tax under the head 'capital gains'. In this regard, however, I find that the Appellant has not produced even a single document in support of the ground. The Appellant has not shown that the land was being used for the purpose of agriculture activities. The Appellant has not submitted any evidence of having earned agriculture income from cultivation of such parcels of land. On the other hand, I find that the AO has obtained details from the O/o Sub registrar that the parcels of land sold by the Appellant are classified as 'dry' land in revenue records i.e. such land are not fit for cultivation. This fact coupled with the fact that Appellant has failed to submit even a single evidence of having used the land for agriculture purpose and having earned any agriculture income, I hold that the parcels of land sold by the Appellant is not agriculture land and, therefore, gains on sale of such land is liable for taxation under the head 'capital gains'. Ground is, thus, dismissed. 5.4. Vide Grounds 4 and 5, the Appellant has raised thr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Appellant failed to justify the same. Thus, it is evident from the assessment order that the Appellant has nowhere disputed the valuation by the AO and has not made any request to refer the valuation of the property to the DVO. Thus, in absence of any such dispute raised by the Appellant about valuation of the property and in absence of any specific request for making reference to the DVO, in my considered, the AO has not contravened any provisions under the Act by not making reference to the DVO. As regards various case laws relied upon by the Appellant, I find that the facts being distinguishable, these case laws have no relevance in case of the Appellant. iii. The AO should have applied the guiding value to 1.72 acres of land instead of 1.92 acres. Though, the Appellant has not furnished any evidence in this regard, in the interest of justice, the AO is directed to verify the area of property under Survey No.613/2A and 613/2B on which the rate of Rs. 180/- per square feet is to be applied. The Appellant is directed to furnish online before the AO all relevant details. In view of the above, the grounds are partly allowed." 5. Aggrieved by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of Natural Justice The appellant was not granted adequate opportunity to produce evidence and explain the genuineness of the sale consideration, and the entire assessment was completed in violation of the principles of natural justice. 6 Denial of Opportunity to Justify Sale Consideration The lower authorities failed to appreciate the appellant's genuine business situation and bonafide reasons for the sale below guideline value, including absence of ongoing business and commercial distress. 7 Incorrect Understanding of Scrutiny Scope The appellant submits that the Assessing Officer enlarged the scope of limited scrutiny without obtaining necessary approvals or providing reasons, thereby [9:40 am, 11/9/2026] G Devadas: exceeding the jurisdictional limits set by CBDT Instruction No. 20/2015 dated 29-12-2015. B PRAYER In view of the above grounds, the appellant humbly prays that the Hon'ble Tribunal may be pleased to: Set aside or modify the impugned order, Direct the AO to adopt correct fair market value, Or refer the valuation to the DVO, And grant such o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tor General of Registration for the impugned immovable property sold on the date of registration, i.e., on 07.12.2015. Therefore, the ld.DR prayed that the appeal of the assessee needs to be dismissed as there is no reason to interfere in the order of the ld.CIT(A). 8. We have heard the rival submissions, perused the material available on record and carefully gone through the orders of the authorities below as well as the documents placed in the paper book. The controversy before us essentially revolves around: (i) whether the land transferred by the assessee could be regarded as agricultural land so as to fall outside the ambit of capital asset; (ii)whether the AO was justified in invoking the provisions of section 50C of the Act and adopting the guideline value of Rs. 180/- per sq.ft.; (iii) whether non-reference of the valuation to the Departmental Valuation Officer (DVO) vitiates the assessment; (iv) the extent of land to which the guideline value has to be applied; and (v) whether the AO travelled beyond the permissible scope of limited scrutiny. 9. The undisputed facts are that the assessee is a company which was carrying on the business of spinning and weaving of cotto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts. These circumstances materially weaken the subsequent contention that the property transferred was agricultural land simpliciter. 12. We also cannot lose sight of the manner in which the assessee itself treated the transaction in its return of income. The assessee declared long-term capital gains arising from the transfer of the immovable property and offered the same to tax. It is only upon the AO invoking section 50C that the assessee sought to contend that the land was agricultural land and consequently outside the ambit of capital gains taxation. Though an assessee cannot be taxed merely because of an erroneous position adopted in the return if the receipt is otherwise not taxable under law, a contrary claim subsequently raised must nevertheless be established by cogent evidence. In the facts before us, the material relied upon by the assessee does not satisfactorily establish that the property transferred, particularly in the factual setting of an existing factory property, was agricultural land falling outside the definition of capital asset. 13. We, therefore, find no infirmity in the conclusion of the ld.CIT(A) that the assessee has failed to establish its claim th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t such determination by the competent registration authority was subsequently reversed, modified or declared inapplicable to the subject transfer. Section 50C creates a statutory deeming fiction whereby, where the consideration received or accruing as a result of transfer of land or building is less than the value adopted or assessed or assessable by the stamp valuation authority for the purpose of payment of stamp duty, such value shall, subject to the provisions of the section, be deemed to be the full value of consideration for computation of capital gains. Once the competent stamp valuation authority has determined the value applicable to the subject property and the consideration disclosed for the land is lower than such value, the AO cannot be faulted for invoking section 50C of the Act, subject of course to the safeguards contained in sub-section (2). We, therefore, find no reason to interfere with the finding of the ld.CIT(A) upholding the adoption of Rs. 180/- per sq.ft. for the purpose of section 50C of the Act. 17. The assessee has further contended that the AO was mandatorily required to refer the property to the DVO u/s. 50C(2) of the Act. On examination of the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e computation under section 50C to the correct extent so determined. 20. The assessee has also alleged violation of the principles of natural justice and denial of adequate opportunity to explain the sale consideration. We do not find merit in this ground. The material on record shows that the AO issued statutory notices and specifically called upon the assessee to justify the sale consideration and furnish the guideline value. The assessee participated in the assessment proceedings and furnished its explanation and documents. The AO further made independent enquiries with the registration authorities. 21. Likewise, before the ld.CIT(A), the assessee was permitted to raise its contentions regarding agricultural character of the land, guideline value, reference to the DVO and the extent of the property. Indeed, the ld.CIT(A) granted partial relief by directing verification of the correct extent of land. Therefore, the material placed before us does not establish any prejudice arising from denial of reasonable opportunity warranting interference with the assessment. 22. The assessee has further raised a ground that the AO travelled beyond the scope of limited scrutiny withou....