2017 (11) TMI 854 - AT - Income Tax

Deduction u/s 54B - claim denied on the ground that no agriculture activities were conducted on Khasra No.890 & 886 in two preceding years prior to the date of sale - Held that - There is no evidence in support of the contentions raised in the submissions by the ld AR. It is admitted fact that there was no agriculture activity on these lands in the two preceding years from the sale of the land. Therefore, have no alternate but to confirm the findings recorded by the ld. CIT(A) on this issue. Ground No. 1 of both these appeals stand dismissed. Sale consideration lower than the stamp duty valuation - additions made U/s 50C - Held that - There is no choice with the Assessing Officer but to adopt the value U/s 50C of the Act as provided in the law. The law provides that if the assessee claims that the value adopted/assessed by the Stamp Valuation Authority under sub-Section (1) of Section 50C exceeds the fair market value of property as on the date of transfer then the Assessing Officer may refer the valuation of the capital asset to the Valuation Officer. The assessee has not sought relief under this provision of the law. Therefore, have no alternative but to confirm the findings recorded by the ld. CIT(A) while dismissing this ground of appeal. However, in the case of Surendra Singh, it was claimed that the Stamp Duty Authority has determined the value at ₹ 25,29,641/- while the Assessing Officer has taken it at ₹ 26,02,211/-. The relief shall be granted to that extent, which is apparently a mistake in adopting the value. Disallowing claim of Dalali payment and the fencing expenses incurred - Held that - Admittedly, the assessee has not produced any evidence before the authorities below in support of the claim of payment of Dalali as well as claim of expenditure incurred on fencing. No expenditure can be allowed without any supporting documents. Therefore CIT(A) has rightly sustained the addition of disallowing the expenditure in the form of payment of Dalali and making of fencings in both these cases.

Summary

Issues Involved:
1. Disallowance of deduction under Section 54B of the Income Tax Act.
2. Adoption of sales consideration under Section 50C of the Income Tax Act.
3. Disallowance of dalali payment and fencing expenses in computing capital gain.

Issue-wise Detailed Analysis:

1. Disallowance of Deduction under Section 54B:
The primary issue was the disallowance of the deduction under Section 54B due to the non-utilization of agricultural land for agricultural purposes in the two years preceding the sale. The assessees sold agricultural land and claimed deductions under Section 54B. The Assessing Officer (AO) observed that no agricultural activities were conducted on Khasra Nos. 886 and 890 in the two years prior to the sale, leading to the disallowance of ?9,01,322 and ?8,05,540 for the respective assessees. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed the AO's decision, stating that the mandatory condition under Section 54B was not fulfilled. The Tribunal upheld the CIT(A)'s findings, noting the lack of evidence supporting the assessees' claims of agricultural use, despite the argument of adverse conditions preventing such use. Consequently, the Tribunal dismissed the appeals on this ground.

2. Adoption of Sales Consideration under Section 50C:
The second issue involved the AO's adoption of the higher value determined by the Stamp Valuation Authority under Section 50C, instead of the actual sales consideration. For one assessee, the AO adopted a deemed sale consideration of ?29,32,189 against the actual sale consideration of ?26,95,500, resulting in an addition of ?2,36,689. The CIT(A) upheld this, distinguishing the case from precedents cited by the assessee, as those involved disputes over valuations by the District Valuation Officer (DVO). The Tribunal confirmed the CIT(A)'s decision, emphasizing the statutory requirement to adopt the higher value unless the assessee sought a DVO valuation, which was not done. However, a correction was noted for one assessee where the Stamp Duty Authority's value was lower than the AO's adopted value, granting relief to that extent.

3. Disallowance of Dalali Payment and Fencing Expenses:
The third issue pertained to the disallowance of claimed expenses for dalali (brokerage) and fencing. The assessees claimed ?75,000 and ?35,000 for dalali, and ?2,10,000 and ?2,15,000 for fencing expenses, respectively. The AO disallowed these expenses due to the lack of supporting evidence. The CIT(A) upheld the AO's decision, noting the absence of credible evidence during both the assessment and appellate proceedings. The Tribunal agreed with the CIT(A), reiterating that no expenditure could be allowed without supporting documents, and thus, dismissed the appeals on this ground.

Conclusion:
The Tribunal dismissed ITA No. 302/JP/2017 and partly allowed ITA No. 303/JP/2017, with specific relief granted for the correction in the adoption of the stamp duty valuation. The judgment emphasized the importance of fulfilling statutory conditions and providing adequate evidence to support claims for deductions and expenses.