9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (2) TMI 159 - AT - Income TaxComputing long term capital gain - adoption of value of property - reference to DVO - Held that - The Hon ble Delhi High Court in the case of CIT V/s. Sadna Gupta 2013 (3) TMI 418 - DELHI HIGH COURT held that unless and until there was some other evidence to indicate that extra consideration had flowed in transaction for purchase of property, report of DVO could not form basis of any addition on part of revenue. In absence of any evidence no reliance could be placed on the report of DVO for making addition. Thus, in view of the fact that the difference between sale consideration and the market value determined by the DVO is not substantial and is approximately little over 2 per cent of the actual sale consideration, we find no reason for rejecting actual sale consideration mentioned in the Sale Deed for determining long term capital gain. Accordingly, the ground No.1 raised in appeal by the assessee is allowed. The Assessing Officer is directed to adopt actual sale consideration as mentioned in the Sale Deed as a fair market value for determining the long term capital gain. Addition of Part of sale consideration alleged to have been directly paid by purchaser - Held that - A perusal of the orders of the Authorities below reveal that the Authorities below without verifying the fact whether the amount of ₹ 23 Lacs have actually been paid by the purchaser to the Mr. Mansoor Abdul Gani Aaga and Smt. Shagufta M. Aaga, has out rightly rejected the contentions of assessee. We deem it appropriate to remit the issue back to the file of Assessing Officer for the limited purpose to ascertain whether the amount of ₹ 8 Lacs and ₹ 15 Lacs have been actually received by Mr. Mansoor Abdul Gani Aaga and Smt. Shagufta M. Aaga, as has been mentioned in the Sale Deed. If the said amount has been received by the aforesaid persons, the same is to be allowed as expenditure u/s 48 of the Act in the hands of assessee from total sales consideration. Accordingly, ground No. 2 raised in the appeal by the assessee is allowed for statistical purposes.
Issues Involved:
1. Adoption of property value for computing long term capital gain. 2. Addition of ? 23,00,000 to the sale consideration. Issue-wise Detailed Analysis: 1. Adoption of Property Value for Computing Long Term Capital Gain: The primary issue revolves around whether the value certified by the District Valuation Officer (DVO) should be adopted as the full value consideration instead of the Agreement Value. The assessee declared a total sale consideration of ? 3,07,71,470/- in the Sale Deed but the Assessing Officer adopted the stamp duty valuation rate of ? 5,75,81,250/- for determining long term capital gain. The DVO later determined the fair market value at ? 3,14,86,000/-. The tribunal found merit in the assessee's submission that the difference between the actual sale consideration and the value determined by the DVO was marginal, approximately 2% of the total value. Citing precedents, including the case of Rahul Constructions V/s. DCIT, where differences of less than 10% were deemed negligible, the tribunal concluded that the actual sale consideration mentioned in the Sale Deed should be adopted. The tribunal directed the Assessing Officer to use the actual sale consideration of ? 3,07,71,470/- for computing long term capital gain. 2. Addition of ? 23,00,000 to the Sale Consideration: The second issue pertains to the addition of ? 23,00,000/- to the sale consideration, which was directly paid by the purchaser to Mr. Mansoor Aaga and Mrs. Shagufta Aaga. The assessee contended that this amount was not received by him and should not be taxable in his hands. The payment was made as part of a compromise to settle litigation and remove encumbrances on the property. The tribunal noted that the Commissioner of Income Tax (Appeals) had selectively referred to clauses in the Sale Deed to reject the assessee's contention. However, a comprehensive reading of the Sale Deed, including Clause-9 and Clause-12, indicated that the payments to Mr. Mansoor Aaga and Mrs. Shagufta Aaga were part of the sale agreement and necessary to resolve litigation. The tribunal referenced the Bombay High Court's decision in CIT V/s. Shakuntala Kantilal, which held that expenses incurred to remove encumbrances for transferring land are deductible. The tribunal remitted the issue back to the Assessing Officer to verify whether the amounts were actually received by Mr. Mansoor Aaga and Mrs. Shagufta Aaga. If confirmed, the amounts should be allowed as deductions under Section 48 of the Income Tax Act. Conclusion: The tribunal allowed the appeal partly, directing the adoption of the actual sale consideration for computing long term capital gain and remitting the issue of the ? 23,00,000/- payment back to the Assessing Officer for verification and appropriate deduction. The order was pronounced on January 30, 2017.
|
