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TMI Blog2012 (12) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The assessee's ground on this issue is allowed. Re-computation of capital gains on transfer of land - AO rejected computation of capital gain as per sale deed - make reference to DVO for fair market valuation of the said land u/s 55A r.w.s.sec 16A of Wealth Tax Act,1957 - assessee do not object to vauation as per DVO report - AO, instead of adopting the valuation of land as per the DVO’s report, recomputed capital gains by making a mark up of 40% on sale consideration of Rs.1,46,47,100(as per DVO), as per the Journal Publication of Estimated Market Value of Immovable Properties & Buildings for Registration Bangalore (Urban) District as it was a commercial property - held that:- Action of AO to add a sum of Rs.58,58,840 to the valuation of the said land as per DVO’s report on account of 40% for commercial property and then proceeded to compute the capital gains was without any basis on facts or the provisions of law and argued that the capital gains ought to computed as done by the assessee and adopting the estimated value of the land at Rs.1,46,47,090 as per the DVO’s report - This action of AO and CIT(A)’s sustenance of this are, in our considered opinion, erroneous and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Assessing Officer has erred in disallowing the brokerage expense on the ground that it is covered under general deductions under section 24(1). On proper appreciation of the law brokerage charges paid is to be reduced at a prior charge while computing the annual value of the property under section 22. The disallowance, as confirmed by CIT (Appeals) is on a wrong premise and is to be disregarded and the deduction as claimed is to be allowed. 3.1 The learned Assessing Officer has erred in disallowing the business loss claimed by the appellant holding that the appellant has not started its business operations and the learned CIT (Appeals) has erred in confirming the same. On the facts and circumstances the case, the appellant having set up its business, the disallowance of business loss being erroneous is to be deleted and business loss as claimed is to be allowed. 3.2 The authorities below have failed to appreciate the fact that appellant company has set up its business operations and the expenditure claimed is bonafide and incurred for the purpose of business and is to be accepted as such. 4.1 The learned Assessing Officer had erred in : a) Rejecting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that a similar issue on the treatment to be given to payment of brokerage charges while computing income from house property has been considered and adjudicated upon by a co-ordinate bench of this Tribunal in the case of Equity Financial Services Pvt Ltd (supra). The conclusion / finding of the Tribunal in this case at para 8 on pages 4 5 thereof is extracted hereunder : " 8. Having heard both the parties and having considered the rival contentions, we find that sections 23 24 of the IT Act relate to the mode of computation of income from house property. Under section 23 as rightly pointed out by the learned CIT (Appeals), the rental income is to be computed by computing the annual value of the property by taking into consideration the monthly rental income for which the property can be let out and when the actual rent received is more, then such actual rent received as the annual value of the property. In the case before us, the assessee's actual rent received is not in dispute. Only the deduction to be allowed under section 24 is to be considered. As rightly pointed out by the learned DR and also as followed by the CIT (Appeals), the issue of payment of brokerage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment Year 2008-09. The learned counsel for the assessee pointed out that the Schedule evidences that in the relevant period the assessee held lands at Gandhi Bazar, Bangalore for which it had entered into a Joint Development Agreement on 7.10.2005 with M/s. Bagadia Estate Developers P. Ltd. for developing the said property into a commercial building and towards which object it put up a building construction to the extent of Rs.1,74,86,625. It was submitted that the assessee also held lands at Hosur. These facts on record as per the audited financial statements of the assessee for the relevant period, it is submitted by the learned counsel for the assessee clearly established with irrefutable evidence that the assessee had commenced its real estate business operations in the relevant period and the expenses incurred for salaries, wages, brokerage, professional fees, rent, registration fees, audit fees, bank charges, etc were genuinely incurred for the bona fide conduct of business operations. The learned counsel for the assessee submitted that in the light of these factual evidences on record, the resultant business loss of Rs.16,18,288 was to be allowed. 6.2 Per contra, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an adhoc basis. 7.2 The learned counsel for the assessee submitted that in the relevant period, the assessee had declared capital gains of Rs.59,29,616 on sale of land. It was submitted that the assessee owned land at No.84, Gandhi Bazar, Bangalore and had entered into a Joint Development Agreement with M/s. Bagadia Estate Developers Pvt Ltd as per which the super built up area was to be shared between the assessee and M/s. Bagadia Estate Development Pvt Ltd. in the ratio of 57.5% and 42.5% respectively. In pursuance thereof, when the construction of the property was completed, the assessee transferred 42.5% of the share of land to M/s. Bagadia Estate Pvt Ltd vide sale deed dt.7.4.2007 for a consideration of Rs.1,43,75,000 which was @ Rs.2,866 per sq. ft of land. The learned counsel for the assessee submitted that the Assessing Officer, not being satisfied with the sale consideration in the sale deed, made a reference to the DVO for fair market valuation of the said land. The DVO by his report dt.24.10.2010 valued the said land was at Rs.1,46,47,090. It is submitted that the Assessing Officer by letter dt.28.12.2010 informed the assessee that he proposed to adopt the value as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any basis on facts or the provisions of law and argued that the capital gains ought to computed as done by the assessee and adopting the estimated value of the land at Rs.1,46,47,090 as per the DVO s report. 7.3 The learned Departmental Representative supported the orders of the authorities below. 7.4 We have heard both parties and carefully perused and considered the material on record. It is seen that not being satisfied with the stated consideration of Rs.1,43,75,000 of the said land in the sale deed, the Assessing Officer made a reference under section 55A of the Act on 10.12.2010 to the DVO for ascertaining the fair market value of the land. The DVO vide his report dt.24.12.2010, estimated the FMV of the said land at Rs.1,46,47,090. There was no objection from the assessee for adoption of the estimated value of Rs.1,46,47,090 as per DVO s report. We find that instead of adopting this value of Rs.1,46,47,090 in accordance with the provisions of section 55A of the Act r.w.s. 16A(b) of the Wealth Tax Act, 1957, which warrants that the Assessing Officer shall so far as the valuation of this asset is concerned, proceed to complete the assessment in conformity with the estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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