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2021 (9) TMI 959 - AT - Income TaxLTCG - Application u/s 50C - re-compute the long term capital gain after providing benefit for cost inflation indexation to the Assessee - HELD THAT - Assessee submitted before the Revenue authorities that the assessee sold the shop at market price to a close relative with a guarantee that it would fetch good rent, however, it was lying vacant and the AO applied Section 50C of the Act. The assessee transferred the said shop in the assets and not claimed it as stock year after year. The genuineness of the transaction was never doubted by the Assessing Officer, and the buyer Smt. Upasna Devi is the daughter-in-law of elder brother of the Assessee. AO has applied Section 50C of the Act, but the CIT(A) has not given any finding as to why the Cost Inflation Index Benefit has to be given to the assessee. Therefore, it needs verification of the entire issue. Thus, we are remanding back this issue to the file of the AO for proper adjudication and decide the same afresh as per law. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 1 of the Revenue s appeal is partly allowed for statistical purpose. Addition u/s 68 - Unexplained cash credit - HELD THAT - We find merit in the contention of Assessee Company that the premium is worth by looking the orders in hand, the assets in possession and the workings of the tear results. The details of the issued capital and the confirmations were provided by the assessee to the AO. The copy of Bank Statement of the Share applicants along with ITR acknowledgments, the set of balance sheets were also forwarded to the AO. - change in the address of Investor Companies were also informed to the Assessing Officer. Thus, the assessee company had discharged the burden by proving the genuineness of the transactions by submitting the bank statements, the creditworthiness of the investors by submitting the set of balance sheets of the investor companies and also proved identity while submitting the details of their income tax acknowledges, the certificate of incorporations and the copy of addresses from the site of Ministry of Company Affairs. Merely stating that how the book value of shares was increased without any cogent evidence brought on record by the Assessing Officer the Assessing Officer cannot suspect the genuineness creditworthiness of the transactions. The decision of the Tribunal in case of Emm Vee Infrastructures 2017 (6) TMI 1353 - ITAT DELHI relied by the Ld. AR is apt in the present case Thus, there is no need to interfere with the finding of the CIT(A). Hence, Ground No. 2 is dismissed. Addition being the land development expenses allegedly paid by the assessee for the works contract stated to have been received from Era Land Mark (India) Ltd. - no TDS was made on contract payment, and the entire expenses were unverifiable - CIT- A deleted the addition - HELD THAT - Payments related to labour charges were paid to labourers on a daily basis were noted on the acquaintance sheets for each day as per the documents produced by the Assessee before the Revenue authorities. The acquaintance sheets were bunched together and the aggregate payments were debited to the accounts as one single sum of the day, because the individual payments were not in excess of the prescribed limits for TDS and that the payments to the several labourers were individually much below the TDS limits. Therefore, the CIT(A) was rightly deleted the said addition as department could not point out any factual error or deficiency in the order of the CIT(A). Thus, there is no need to interfere with the findings of the CIT(A). Ground No. 4 is dismissed. Agricultural income - Whether CIT(A) has erred in treating the income from agriculture against the income assessed under the head other sources ignoring the fact that the assessee failed to establish any activity relating to agriculture? - HELD THAT - The assessee has given/produced letters and documents including copies of Khasara and Khatauni, bills of diesel, copy of bills of seeds, use of tractor and electricity bills. The assessee has proved before the Authorities that activity on land was purely agricultural in nature. Therefore, the CIT(A) has rightly held the said income to be agricultural income. There is no need to interfere with the findings of the CIT(A).
Issues Involved:
1. Addition under Section 50C for sale of shop below market price. 2. Addition under Section 68 for unexplained share capital/share premium. 3. Addition for sale of business property below market price. 4. Addition for unverifiable land development expenses without TDS deduction. 5. Classification of income as agricultural income versus income from other sources. Issue-wise Detailed Analysis: 1. Addition under Section 50C for sale of shop below market price: The Revenue contended that the CIT(A) erred in directing the AO to give the benefit of Cost Inflation Index and tax the surplus as long-term capital gain on the sale of shop G-6. The AO had added ?5,97,000 due to the difference between the market price and the actual sale price. The assessee argued that the property was sold at market price to a close relative and should not be subjected to Section 50C. The Tribunal observed that the CIT(A) did not provide a clear rationale for granting Cost Inflation Index benefits and remanded the issue back to the AO for proper adjudication. 2. Addition under Section 68 for unexplained share capital/share premium: The AO added ?2,50,00,000 under Section 68, alleging that the share capital/share premium transactions were not genuine. The CIT(A) deleted the addition, citing that the identity, creditworthiness, and genuineness of the transactions were proven. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had provided sufficient evidence, including confirmations, bank statements, and balance sheets of the investing companies, proving the legitimacy of the transactions. 3. Addition for sale of business property below market price: The AO made an addition for properties sold below market price, treating the difference as undisclosed income. The CIT(A) deleted the addition, relying on the Mumbai Tribunal's decision in Inderlok Hotels Pvt. Ltd. v. CIT, which stated that Section 50C does not apply to stock-in-trade. The Tribunal remanded the issue back to the AO for reconsideration, similar to the decision on Ground No. 1. 4. Addition for unverifiable land development expenses without TDS deduction: The AO disallowed ?2,83,28,690 for land development expenses, citing non-deduction of TDS. The CIT(A) deleted the addition, noting that the payments were made to laborers on a daily basis and were below the TDS threshold. The Tribunal upheld the CIT(A)'s decision, confirming that the payments were genuine and did not violate TDS provisions. 5. Classification of income as agricultural income versus income from other sources: The AO classified ?4,15,250 as income from other sources, doubting the agricultural nature of the income. The CIT(A) reversed this, accepting the assessee's evidence, including Khasra and Khatauni records, bills for seeds, diesel, and electricity, proving the agricultural activity. The Tribunal upheld the CIT(A)'s decision, affirming the income as agricultural. Conclusion: The Tribunal partly allowed the Revenue's appeal for statistical purposes, remanding certain issues back to the AO for further verification and proper adjudication. The Tribunal upheld the CIT(A)'s decisions on share capital addition, land development expenses, and classification of agricultural income.
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