2015 (10) TMI 1743 - AT - Income Tax

Addition on capital gain allegedly short declared by the appellant - estimation of selling price questioned - Held that - As relying on Smt. Jaimala Agarwal, Jaipur case 2012 (2) TMI 507 - ITAT JAIPUR Assessee has sold the shares of a company and not the land of that company. Therefore, by taking into consideration of the land value owned by that company making any addition in the hands of the assessee, in our view is not justified. There is no provision under the IT Act that value of land owned by a company whose shares has been given to any person and in the hand of that person any capital gain can be assessed on the basis of land or office sold by the company. If any addition can be made that can be made on the basis of value of those shares or taking into consideration that the sale consideration shown by assessee is not correct, if there is any evidence. No such material was there before the AO that assessee has sold the shares below market price and, therefore, in our considered view the basis on which the addition has been made by AO was not correct and, therefore, the ld. CIT (A) was also not correct in confirming the order of AO. Accordingly, we delete the impugned addition made and confirmed. - Decided in favour of assessee.

Summary

Issues Involved:
Appeal against addition in estimating selling price of shares based on DLC rates of office premises owned by companies resulting in short declared capital gain.

Analysis:
The appeal was filed against the order of CIT(A) confirming the addition in estimating the selling price of shares of two companies, resulting in a capital gain allegedly short declared by the appellant. The appellant argued that a similar issue was decided in favor of the assessee in a previous case. The counsel for the assessee provided a copy of the order in support. The Departmental Representative (DR) supported the order of CIT(A) but could not counter the appellant's contention.

The ITAT considered the submissions and the material on record. It noted that a similar issue with identical facts was already adjudicated by the ITAT in a previous case involving the same parties. The ITAT referred to the observations and findings in the previous case where it was held that making an addition in the hands of the assessee based on the land value owned by the company whose shares were sold was not justified. The ITAT emphasized that there is no provision under the IT Act to assess capital gain based on the land or office owned by the company. The ITAT found that the basis for the addition made by the Assessing Officer (AO) and confirmed by CIT(A) was incorrect. Therefore, the ITAT deleted the impugned addition.

Considering the identical facts of the present case to the previous case, the ITAT set aside the order of CIT(A) and deleted the impugned addition. The appeal of the assessee was allowed, and the order was pronounced in court on a specific date.

In conclusion, the judgment addressed the issue of estimating the selling price of shares based on DLC rates of office premises owned by companies. The ITAT ruled in favor of the assessee, emphasizing that making additions based on the land value of the company was not justified under the IT Act. The judgment provided a detailed analysis comparing the present case to a previous case with similar facts, ultimately leading to the deletion of the impugned addition.