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2019 (3) TMI 893 - AT - Income TaxBusiness income - adopting the sale price @ circle rate for the purpose of computing the assessee s income - holding properties as stock-in-trade - HELD THAT - Ld. CIT(A) has rightly held that there is a document evidencing the sale and there is nothing on record to prove that the assessee has received anything more than stated in the said document evidencing the sale, then the sale consideration shall be full value of consideration stated in the document sale and not any other value. Ld. CIT(A) further rightly held that the AO has erred in adopting the sale price @ circle rate for the purpose of computing the assessee s income. Accordingly, the additions was deleted by the Ld. CIT(A) and AO was directed to allow the consequential relief. Income from house property - notional rental income u/s. 22 - vacancy allowance - Rental Value of house properties lying vacant or used by the assessee for his business - HELD THAT - the case of Sh. Sachin R. Tendulkar vs. DCIT 2018 (8) TMI 847 - ITAT MUMBAI is also applicable in the present case, wherein it was held that in case property has remained vacant for whole year the income assessable would be NIL u/s. 23(1)(c) of the Act. - reject the ground raised by the Revenue.
Issues Involved:
1. Deletion of addition of ?1,90,59,000/- based on the value taken by the Registrar of Stamps. 2. Determination of whether the assessee is a builder/developer or using properties as stock-in-trade to evade taxes. 3. Deletion of addition of ?8,88,089/- based on notional Annual Letting Value (ALV) due to properties being vacant or used for business purposes. Issue-wise Detailed Analysis: 1. Deletion of addition of ?1,90,59,000/-: The Revenue contended that the CIT(A) erred in deleting the addition of ?1,90,59,000/- without appreciating that the AO had rightly enhanced the property value based on the Registrar of Stamps' prevailing circle rates. The CIT(A) held that the AO's inference of understatement of sale consideration was based solely on the difference between the circle rate and the sale deed value. The CIT(A) referenced the Supreme Court's judgment in K.P. Varghese Vs. ITO, which places the onus on the Revenue to prove any understatement of consideration. The CIT(A) concluded that the provisions of section 50C were not applicable as the properties were held as stock-in-trade, not as assets. The CIT(A) further cited various case laws, including the Delhi High Court's decisions in Smt. Nilofer I. Singh and Dev Kumar Jain, which supported the view that the full value of consideration should be the sale price stated in the document unless proven otherwise by the Revenue. Consequently, the addition of ?1,90,59,000/- was deleted. 2. Determination of Assessee's Status: The Revenue argued that the CIT(A) failed to appreciate that the assessee was not a builder/developer but was using properties as stock-in-trade to evade taxes by selling them below the circle rate. The CIT(A) rejected this argument, stating that the assessee demonstrated that the sale price was in line with other properties sold in the same Mall. The CIT(A) emphasized that no adverse material was brought on record by the AO to substantiate the claim of higher consideration received. The CIT(A) relied on judicial precedents indicating that the full value of consideration should be the sale price stated in the document unless there is evidence to the contrary. Thus, the CIT(A) upheld the assessee's status as a builder/developer and deleted the addition. 3. Deletion of addition of ?8,88,089/- based on notional ALV: The AO made an addition of ?8,88,089/- based on notional rental income under section 22 of the Act, arguing that in the absence of documentary evidence, the properties were not vacant or used for business purposes. The CIT(A) found that the house at Ranjeet Nagar was occupied for business purposes and deleted the addition of ?1,20,000/- for this property. For the other properties, the CIT(A) referenced the ITAT, Delhi's decision in Dr. Prabha Sanghi, which held that if properties remained vacant for the entire year, the annual value would be NIL under section 23(1)(c). The CIT(A) concluded that the AO had not provided any material evidence to contradict the assessee's claim that the properties were vacant. Therefore, the CIT(A) deleted the addition of ?8,88,089/-. Conclusion: The Tribunal upheld the CIT(A)'s findings, stating that the CIT(A) had rightly concluded that the sale consideration should be the value stated in the sale document unless proven otherwise. The Tribunal also agreed with the CIT(A)'s deletion of notional rental income, as the properties were either used for business purposes or remained vacant. Consequently, the Revenue's appeal was dismissed, and the CIT(A)'s order was upheld. Order Pronounced: The Revenue's appeal was dismissed, and the order was pronounced on 13/03/2019.
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