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2019 (11) TMI 594 - AT - Income TaxCalculation of the fair market value for the land sold by the assessee u/s.55(2) (b) - assessee has challenged the value adopted by the CIT(A) @ ₹ 20/- per sq.ft. as fair market value as against ₹ 50/- per sq.ft claimed by the assessee on the basis of report of approved valuer - HELD THAT - In the instant case before us, it is admitted and undisputed fact that there was no reference made either by the Assessing Officer or by the CIT(A) to DVO for determination of the fair market value of the land. In absence of the DVO s report, the rejection by the Revenue Authorities of the registered valuer s report submitted by the assessee is not justifiable, rather, arbitrary, un-judicious, such action is required to be discarded. We set aside the order of the CIT(A) and direct the AO to take fair market value @₹ 50/- per square feet as provided in the registered valuer s report submitted by the assessee. Thus, ground No.1 raised in appeal by the Revenue is dismissed. Allowing deduction u/s. 50 when there was no construction on the said land - HELD THAT - main basis of addition on this ground was that existence of poultry farm building was not emerging from the sale deed, however, the other vital evidences submitted by the assessee in support of existence of poultry farm building were not considered by the AO. But those were taken into consideration by the CIT(A). That further in the record, it is stated that the assessee had availed bank loan from Central Bank of India for construction of the poultry farm building and in support thereof the assessee has placed before the CIT(A), the copies of certificates issued by the Central Bank of India, civil Lines Branch, Raipur. CIT(A) had adjudicated the issue regarding existence of building constructed right from the time when survey took place, a declaration by the assessee was made before the survey team regarding the construction of the poultry farm building and the bank loan was taken by the assessee for construction of the said poultry farm building. All these were analyzed by the Ld.CIT(A) and therefore, existence of poultry farm building cannot be doubted. Thus, relief provided to the assessee in view of provisions of Section 50 of the Act is thereby sustained and there is no need for any interference to the findings of the CIT(A). Thus, ground No.2 raised in appeal by the Revenue is dismissed. Addition on account of brokerage/commission paid for sale of land - grievance of the Revenue is that the CIT(A) has granted relief to the assessee relying on all these evidences but these evidences were not confronted before the AO for his comments - HELD THAT - Notwithstanding anything contained in this particular Rule, the Commissioner (Appeals) shall have power to direct the production of any document or examination of any witness to enable him to dispose of the appeal. Therefore, it was well within the jurisdiction of the Ld. CIT(A) to admit those evidences produced before him and provide relief to the assessee. That mostly, Rule 46(A)(3) pertains to a when any doubt arises in the mind of the CIT(A) regarding additional evidences furnished before him then he can call for a remand report from the AO - It is not in all cases and not for all additional evidences, the Ld. CIT(A) has to call for remand report from the AO. This is absolutely clear from Rule 46(A) (4) of the Income Tax Rule, 1962 - relief provided to the assessee by the CIT(A) is sustained. Thus, ground No.3 raised in appeal by the Revenue is dismissed. Allowing deduction not claimed by the assessee in its return of income u/s.54B - HELD THAT - Revenue Authorities have not contradicted the facts and circumstances in this case regarding claim of exemption u/s.54B of the Act by the assessee. Meaning thereby ingredients required for the exemption u/s.54B of the Act have been duly complied with by the assessee. Even in the paper book filed before us, evidences are included in the form of purchase deed wherein the land is recorded as agricultural land. Similarly, when the land was repurchased, it was also recorded as agricultural land. There are also copies of Land Revenue records filed in the paper book where it is shown that crops were grown on the said land. Therefore, ingredients and the facts and circumstances for getting exemption u/s.54B of the Act were duly complied with by the assessee. The only omission, the assessee made was that he did not include the same in the return of income claiming exemption u/s.54B and as we have already taken that the Income Tax laws are welfare in nature and the very purpose of welfare legislation is that there should not be any cohesive action by the quasi-judicial Authority. It is the duty of the quasi-judicial authority, the AO or the Ld. CIT(A) to guide the assessee to enable him to get benefit whether or not claimed by him for which he is legally eligible. We do not find any infirmity with the findings of the Ld. CIT(A) and relief provided to the assessee is hereby sustained.
Issues Involved:
1. Calculation of fair market value for the land sold by the assessee. 2. Deduction under Section 50 of the Income Tax Act, 1961. 3. Deletion of addition on account of brokerage/commission paid for the sale of land. 4. Allowing deduction under Section 54B of the Income Tax Act, 1961. Issue-Wise Analysis: 1. Calculation of Fair Market Value for the Land Sold by the Assessee: The primary issue revolved around the fair market value (FMV) of the land sold by the assessee as of 01.04.1981. The Assessing Officer (AO) calculated the FMV at ?0.60 per sq. ft. based on an estimated annual increase of 20% from the purchase price in 1977. The assessee, however, claimed an FMV of ?50 per sq. ft. based on a registered valuer's report. The CIT(A) estimated the FMV at ?20 per sq. ft. without referring the matter to the Departmental Valuer (DVO). The Tribunal noted that neither the AO nor the CIT(A) referred the valuation to the DVO, which was necessary. The Tribunal cited precedents, including the case of Smt. Pramila M. Desai, HUF Vs. DCIT, which established that a registered valuer’s report cannot be ignored without a DVO's report. Consequently, the Tribunal directed the AO to adopt the FMV of ?50 per sq. ft. as claimed by the assessee. 2. Deduction Under Section 50 of the Income Tax Act, 1961: The second issue concerned the deduction of ?65,776 under Section 50 for the cost of construction on the land. The AO denied the deduction, claiming there was no construction on the land. However, the CIT(A) found substantial evidence, including statements from a survey operation and bank loan documents, supporting the existence of a poultry farm building constructed between 1977 and 1986. The CIT(A) allowed the deduction based on the written down value (WDV) of the building and cages. The Tribunal upheld the CIT(A)’s decision, confirming the deduction of ?65,776. 3. Deletion of Addition on Account of Brokerage/Commission Paid for the Sale of Land: The AO disallowed ?10,00,000 claimed as brokerage due to lack of detailed evidence. The assessee later provided complete details to the CIT(A), who accepted the evidence and allowed the deduction. The Revenue argued that these details were not presented to the AO for verification. The Tribunal referenced Rule 46A of the Income Tax Rules, 1962, which allows the CIT(A) to admit additional evidence if necessary for disposing of the appeal. The Tribunal found that the CIT(A) acted within his jurisdiction and upheld the deletion of the addition. 4. Allowing Deduction Under Section 54B of the Income Tax Act, 1961: The assessee did not initially claim a deduction under Section 54B for the reinvestment in agricultural land. This claim was first made before the CIT(A), who allowed it after obtaining comments from the AO. The Tribunal noted that the Income Tax laws are welfare-oriented, and it is the duty of the AO to guide the assessee in claiming eligible deductions. The Tribunal found that the conditions for Section 54B were met, and the CIT(A) was correct in allowing the deduction. Therefore, the Tribunal dismissed the Revenue's appeal on this ground. Conclusion: The Tribunal allowed the assessee's appeal regarding the FMV of the land and upheld the CIT(A)'s decisions on the other issues, thereby dismissing the Revenue's appeal. The judgments emphasized the importance of following procedural requirements, such as referring valuation disputes to the DVO and considering additional evidence to ensure fair adjudication.
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