2018 (4) TMI 1176 - AT - Income Tax

Genuineness of the value assessed / adopted in respect of the building as on 01.04.1981 - value adopted by the Stamp Valuation Authority - Held that - Assessee has taken support from the approved Valuer s report and also the value on which the A.P. State Government has purchased the property in 1980 in near vicinity. The approved Valuer has also determined the cost of built up area by giving reasons thereof. On the other hand, the Assessing Officer has merely relied upon the report of the SRO and he had not even considered the comparable case given by the assessee which was a transaction that took place in 1980. The moment the value adopted by the Stamp Valuation Authority is questioned, it is the duty of the Assessing Officer to refer the matter to the DVO, who is a technical expert on this matter; but the Assessing Officer chooses to merely rely upon the SRO s report which, in our considered opinion, is not in accordance with law. Thus the assessee not only mentioned about the comparable cases but also furnished approved Valuer s report, who is a technical expert. AO merely rejected the contention of the assessee without any material to the contrary. Thus the valuation adopted by the assessee deserves to be upheld.- Decided in favour of assessee. Brokerage paid as allowable as deduction - Held that - Admittedly there is no evidence at any stage to prove the payment of brokerage and the claim of the DR is that the assessee has not even made a claim in the return originally filed. CIT(A) assessee appears to have not pressed this ground. Thus reject Ground of the assessee by holding that the claim of brokerage paid has no legs to stand. Claim exemption u/s 54 - Claim of deduction of cost of items sold - Purchase of semi-finished property within the period of one year from the date of transfer of the property - Held that - In so far as the purchase is concerned the same has to be made within one year from the date of transfer of the property. In the instant case, the assessee ought to have purchased a new property after October 2010 whereas the property was purchased in February 2010 as per the sale deed and the second contention of construction does not apply to an assessee who purchases a property. Though the assessee contends that the possession was taken in December 2010 but sale deed clearly shows that the property was purchased in February 2010 itself and it is an outright purchase of residential house; therefore it cannot be said that the assessee constructed a residential house. Such being the case no infirmity in the orders passed by the Tax Authorities. Therefore Ground no.5 is rejected. Sale of the Golf equipment etc., ought to have been accepted by the Assessing Officer despite the fact that no evidence was produced with regard to the purchase of those items - Held that - Bare perusal of the confirmation letter indicates that the assessee claimed to have sold 4 Air Conditioners for a sum of ₹ 48,000/- i.e., ₹ 12,000/- per AC. It is not stated whether it is a one tonner or 1.5 tonner. A second hand AC ordinarily do not fetch that price in 2011. Similarly it was stated that one Sony Video Recorder was sold without specifying the features etc., to appreciate as to whether the price shown therein is reasonable or not. One Refrigerator was stated to have been sold at ₹ 18,000/- whereas even new Refrigerators are available at lesser cost unless it has special features and in such case it is the duty of the assessee to mention the brand and the features therein. In the absence of any details, the argument of the assessee cannot be accepted merely on the strength of an undated confirmation letter. Claim of the assessee is rejected

Issues Involved:
1. Cost to be adopted as on 01.04.1981.
2. Whether the brokerage paid is allowable as deduction.
3. The claim of deduction of cost of items sold.
4. Whether the assessee is entitled to exemption u/s 54 of the Act on the investment made.

Detailed Analysis:

1. Cost to be adopted as on 01.04.1981:
The assessee provided a valuation report claiming the cost of acquisition at ?29,83,000/-. The Assessing Officer (A.O.) disputed this, relying on the Sub-Registrar's Office (SRO) value of ?200/- per sq. yard. The assessee argued that the valuation report from an approved valuer, which considered local factors and comparable transactions, should be accepted. The A.O. did not refer the matter to the District Valuation Officer (DVO) and relied solely on the SRO's report. The Tribunal held that the A.O. should have referred the matter to the DVO as the valuation by the approved valuer was supported by comparable transactions. Thus, the Tribunal directed the A.O. to accept the valuation adopted by the assessee.

2. Whether the brokerage paid is allowable as deduction:
The assessee claimed a deduction of ?1 lakh towards brokerage. However, there was no evidence provided to substantiate this claim. The assessee did not press this ground before the Commissioner of Income Tax (Appeals) [CIT(A)]. Consequently, the Tribunal rejected the claim for brokerage paid, citing a lack of evidence.

3. The claim of deduction of cost of items sold:
The assessee claimed that ?4,39,000/- deposited in the bank represented the sale proceeds of various household items. The A.O. treated this amount as 'income from other sources' due to a lack of documentary evidence. The assessee provided confirmation letters from purchasers but failed to provide purchase bills or detailed information about the items sold. The CIT(A) and the Tribunal found the confirmation letters unreliable due to their undated nature and lack of specific details. Therefore, the Tribunal upheld the A.O.'s decision to treat the amount as 'income from other sources.'

4. Whether the assessee is entitled to exemption u/s 54 of the Act on the investment made:
The assessee claimed exemption u/s 54 for a residential house purchased before the sale of the property. The A.O. rejected this claim, stating that the property was purchased beyond the stipulated period and the claim was not made in the original return or through a revised return. The CIT(A) upheld this decision, noting that the sale deed showed the property was purchased in February 2010, which was beyond the one-year period before the sale date of October 2011. The Tribunal agreed with the CIT(A) and the A.O., stating that the property purchase did not meet the requirements of section 54 and that the claim was not made within the prescribed time. Thus, the Tribunal rejected the exemption claim.

Conclusion:
The Tribunal upheld the assessee's valuation of the property as of 01.04.1981, rejected the brokerage deduction due to lack of evidence, treated the sale proceeds of household items as 'income from other sources,' and denied the exemption u/s 54 for the residential house purchase. The appeal was partly allowed, primarily on the valuation issue.

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