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TMI Blog2007 (5) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... yards at a consideration of ₹ 45 lakhs on 19th May, 2000. The property was, however, registered at a value of ₹ 1,19,80,000 as per the valuation of DIG Stamps [Collector (Stamps)]. Reference was made to the DVO of estimating fair market value of the property as on date of sale as well as on 1st April, 1981 under s. 55A of the Act in the case of the seller, India Motors (P) Ltd. The total land sold by India Motors (P) Ltd. was of the area of 2,793 sq. yards and structure. Out of this land, the seller had sold plots of different areas and size to the assessees and others like Smt. Maya Moolani and Smt. Pushpa Moolani, etc. In cases of Smt. Maya Moolani and Smt. Pushpa Moolani, their plots were registered @ ₹ 20,000 per sq. yd. The buyer K.S. Apparels (P) Ltd. (one of the assessees) had also got its plot registered and on appeal, the value was determined at ₹ 11,000 per sq. yard by Board of Revenue (Rajasthan), Ajmer. Based on DVO's report, the fair market value of the land in the case of Swami Complex (P) Ltd. was valued at ₹ 14,783 per sq. yard, which comes to ₹ 1,24,50,538 as against disclosed purchase consideration of ₹ 45 lakhs. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of the assessee transaction has been recorded in the books of account. The AO has no power to enhance the purchase price unless he has any evidence to contradict the value shown by the assessee. 5. Similar arguments have been advanced in the cases of other assessees against the additions made on enhanced value of the properties in their hands. The material facts in cases of those assessees areas Shri Bal Mukand Parihar had purchased a piece of land admeasuring 802 sq. yards with structure thereon from India Motors (P) Ltd. for a consideration of ₹ 47 lakhs. Based on DVO's report in the case of India Motors (P) Ltd., the fair market value of the land in the case of Shri Bal Mukand Parihar was valued at ₹ 14,783 per sq. yard, which was worked out at ₹ 1,18,55,966. The amount in difference, i.e., ₹ 71,55,966 was added under s. 69 of the Act in the hands of Shri Bal Mukand Parihar as undisclosed investment. In this case also besides the other contentions, the contention about abnormal size of the plot was raised with the submission that it was of 50 feet width and 154 feet depth. The plot was not commercially viable. A big drainage about 20 foot w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as against ₹ 25 lakhs shown by the assessee and ₹ 38,64,080 valued by the AO. 7. In support of the grounds on the issue in the appeals preferred by the Revenue, the learned Departmental Representative has placed reliance on the assessment orders, whereas relief given by the learned CIT(A) has been justified by the learned Authorised Representative. 8. The learned Authorised Representative, while reiterating the arguments advanced on behalf of the assessees before the learned CIT(A), submitted that DVO has taken average of two values, the one is of Pandit Deen Dayal Marg of ₹ 11,000 per sq. yard and another was of Kutchery Road of ₹ 20,000 per sq. yard on the basis of so-called DLC rates; the DLC rates are always more than the market value, since these are taken on the basis of the rates arrived at during the course of public auction; as per the decision of Hon'ble Supreme Court in the case of CWT vs. P.N. Sikand 1977 CTR (SC) 253 : (1977) 107 ITR 922 (SC), the valuation of property should always be made after giving effect to all the disadvantages attached to it; the AO has failed to appreciate the application of belting method for estimating the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdictional High Court in the case of CIT vs. Raja Narendra (1995) 123 CTR (Raj) 459 : (1995) 210 ITR 250 (Raj) has also been referred. The learned Authorised Representatives submitted that recently amended law under s. 50C by the Finance Act, 2000 w.e.f. 1st April, 2003, i.e., asst. yr. 2003-04 has also made the position clear, though at a later date. 10. Considering the above submissions as well as the decisions relied upon by the learned Authorised Representatives, we are of the view that in absence of a positive evidence that the assessees had actually paid more than the consideration shown in the sale deeds for the purchase of their plots, the AO was not justified to value the properties on higher amount as per DVO's report in the case of seller and the value adopted by Sub-Registrar for the purpose of stamp duty. In this regard, we find support from the decisions of Hon'ble jurisdictional High Court in the cases of Krishna Kumar Rawat vs. Union of India, CIT vs. Raja Narendra and the decisions of other Hon'ble High Courts besides, Hon'ble Supreme Court in the case of K.P. Verghese, relied upon by the learned Authorised Representatives. The sale consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as explicit proviso in this regard. 15. The learned Authorised Representatives, on the other hand, has justified the first appellate order with this submission that the AO was of the view that the creditworthiness of the squared up creditors was not proved. 16. During the year, the assessee has received cash credits of ₹ 1,26,000 from the following seven persons: 1. Shri Alpash Gandhi ₹ 19,000 2. Shri Neeraj Arya ₹ 19,000 3. Shri Hari Chandani ₹ 19,000 4. Shri Anand Ji ₹ 19,000 5. Smt. Anju Bohra ₹ 19,000 6. Shri Raj Kumar Bohra ₹ 19,000 7. Shri Sunil Kumar Bohra ₹ 12,000 ------------ ₹ 1,26,000 ------------ The assessee had submitted confirmations from all the seven persons before the AO with their complete addresses and submission that all the seven accounts were squared up during the year. The AO was of the view that the creditors could not prove the source of income and have merely confirmed the fact of deposits, therefore, their creditworthine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deleting the addition of ₹ 2,80,340 made on account of disallowance of interest on borrowed capital. 20. In support of this ground, the learned Departmental Representative has placed reliance on the assessment order, whereas the first appellate order has been justified by the learned Authorised Representative. 21. After having gone through the orders of the lower authorities, we find that the AO disallowed ₹ 2,80,340 on account of interest claimed to have been paid on borrowed capital. During the year, the assessee had purchased a piece of land admeasuring 802 sq. yards with structure thereon from India Motors (P) Ltd. for a consideration of ₹ 47 lakhs. The assessee claimed to have paid interest of ₹ 2,80,340 on the loans raised for the purchase of the said land and claimed the expenditure as business expenditure. The AO denied the claim on the basis that the land and structure so purchased were not put to use and claim of depreciation, accordingly, was not allowed. On the same analogy, payment of interest on loans was also not considered as admissible. The disallowance was opposed before the learned CIT(A) by the assessee by pointing out the evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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