2018 (12) TMI 1380 - AT - Income Tax

Disallowance of deduction claimed towards market value of Floor Space Index (FSI) sold prior to the sale of land and building - discharge of onus by assessee - Held that - It is relevant to observe, during the course of proceedings before the DVO, though, the assessee had taken the aforesaid plea of sale of FSI, however, the DVO after due enquiry with the TMC has found that no such sale of FSI of 15,000 sq. ft was effected by the assessee, which is evident from the fact that FSI sanctioned at the time of sale of land by the assessee was considering the area of 2550 sq. mts. The DVO has observed, had it been the fact that the assessee had sold FSI of 15,000 sq. ft. in 1986, the TMC definitely would have deducted the area of 15,000 sq. ft. from the total plot area while sanctioning FSI on the plot of land sold by the assessee. If the assessee claims that it has sold FSI of 15,000 sq. ft in the year 1986, the onus is entirely on the assessee to prove such facts through cogent evidence. The assessee has failed to discharge such onus. When the assessee is not in a position to furnish any cogent evidence to prove its claim of sale of FSI of 15,000 sq. ft., such claim cannot be accepted on mere face value. When the assessee has failed to prove its claim at the stage of departmental proceedings as well as before us by furnishing any cogent documentary evidence, we do not find any reason to interfere with the decision of CIT(A) on this issue. Applying the provisions of section 50C(2) after completion of the assessment proceedings - Held that - As could be seen from the material on record, before the AO also the assessee has not raised any objections on the issue of reference being made u/s. 50C(2) of the Act to the DVO. In any case of the matter, before the first appellate authority, the assessee has specifically raised the issue of non referral of valuation to the Assessing Officer u/s. 50C(2). CIT(A) has directed the DVO to determine the value of the asset and the assessee has also participated in such proceedings. In any case of the matter, by referring the valuation to the DVO, the assessee is in no way prejudiced, since, the value determined by the DVO is much less than the value determined by Stamp Valuation Authority for the purpose of stamp duty. Therefore, we do not find any merit in the ground raised. Addition being the scrap value of factory shed - Held that - As could be seen from the facts emanating from record, assessee itself has credited aforesaid amounts to the Profit & Loss account. Therefore, as a natural corollary the amounts were required to be offered as income, unless, the assessee through proper evidence proves that it has not received such income. The assessee having not done so, the Assessing Officer was justified in making the addition of the aforesaid amounts. - Assessee appeal dismissed.

Summary

Issues:
1. Disallowance of deduction claimed towards market value of Floor Space Index (FSI) sold prior to the sale of land and building.
2. Application of provisions of section 50C(2) after completion of assessment proceedings.
3. Addition of scrap value of factory shed and sale value of furniture and fixtures.

Issue 1: Disallowance of deduction claimed towards market value of FSI sold prior to the sale of land and building:
The assessee appealed against the disallowance of a deduction claimed for the market value of FSI sold prior to the sale of land and building. The Tribunal noted that the assessee had failed to provide conclusive evidence of the sale of FSI of 15,000 sq. ft. in 1986. Despite the claim made by the assessee, the Departmental Valuation Officer (DVO) found no basis for the sale of FSI based on information from the Thane Municipal Corporation. The Tribunal emphasized that the burden of proof lay with the assessee, who could not substantiate the claim with adequate evidence. As a result, the Tribunal upheld the decision of the CIT(A) to disallow the deduction.

Issue 2: Application of provisions of section 50C(2) after completion of assessment proceedings:
The assessee challenged the application of section 50C(2) after the completion of assessment proceedings. The Tribunal observed that the assessee did not raise specific objections on this ground before the Assessing Officer. However, the CIT(A) directed the DVO to determine the value of the asset under section 50C(2), which the assessee participated in. The Tribunal found that the assessee was not prejudiced by the valuation process, as the value determined by the DVO was lower than the Stamp Valuation Authority's value for stamp duty purposes. Consequently, the Tribunal dismissed the ground raised by the assessee.

Issue 3: Addition of scrap value of factory shed and sale value of furniture and fixtures:
The assessee contested the addition of the scrap value of the factory shed and the sale value of furniture and fixtures. The Tribunal noted that the amounts in question were credited to the Profit & Loss account by the assessee. Since the assessee failed to provide evidence to prove that it did not receive such income, the Assessing Officer was deemed justified in making the additions. Therefore, the Tribunal dismissed the grounds related to the addition of the scrap value of the factory shed and the sale value of furniture and fixtures.

In conclusion, the Tribunal upheld the disallowance of the deduction claimed for the market value of FSI sold prior to the sale of land and building, dismissed the challenge to the application of section 50C(2) after assessment proceedings, and upheld the additions of the scrap value of the factory shed and the sale value of furniture and fixtures. Consequently, the assessee's appeal was dismissed.