9911796707
TMI Blog2012 (12) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... In this order of assessment, the Assessing Officer made the following additions / disallowances : i) Disallowance of brokerage charges paid in computing income from house property Rs.10,10,024 ii) Additions made in computing capital gains Rs.61,30,940 iii) Disallowance of losses claimed Rs.16,18,288 2.2 Aggrieved by the order of assessment for Assessment Year 2008-09 Dt.31.12.2010, the assessee went in appeal before the learned CIT(Appeals) who dismissed the assessee's appeal by order dt.14.11.2011. 3.0 Aggrieved by the order of the CIT(Appeals) dt.14.11.2011, the assessee is now in appeal before us. In the grounds of appeal raised, it is contended as under : "1. The learned Assessing Officer had erred in passing the order in the manner passed by him and the learned CIT (Appeals) has erred in confirming the same. The orders passed being bad in law are liable to be quashed. 2. The learned 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 computin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess loss be allowed and the additions made in computing capital gains be deleted and the consequential interest levied also be deleted." 4.1 The grounds raised at S.Nos.1 and 6 being general in nature, no adjudication is called for thereon. 5.1 The ground raised at S.No.2, challenges the order of the learned CIT(Appeals) confirming the disallowance of brokerage expenses while computing income from house property on the ground that it is covered under general deductions under section 24(1) of the Act. It is contended that on proper appreciation of law, brokerage charges paid is to be reduced as a prior charge while computing the annual value of the property under section 22 of the Act. At the outset of the hearing itself, the learned counsel for the assessee fairly conceded that this issue is squarely covered against the assessee by the decision of a coordinate bench of this Tribunal in the case of M/s. Equity Financial Services Pvt Ltd Vs. ACIT in ITA No.1016(Bang)/2010 dt.26.8.2011. 5.2 The learned Departmental Representative was also heard in the matter. 5.3 We have heard both parties and carefully perused and considered the material on record and the judicial decision cited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss operations and the resultant business loss was bona fide. The learned counsel for the assessee submitted that both before the Assessing Officer and the learned CIT(Appeals) the assessee has urged that business operations had commenced and the expenses incurred such as salary to Directors, depreciation claimed, professional charges, etc., were in connection with its business operations only and were germine and in order to achieve the objects of the assessee. The learned counsel for the assessee pointed out that the learned CIT(Appeals) dismissed the assessee's ground on this issue at para 12 on page 5 of his order stating through some expenditure has been incurred, it does not reflect that such expenses have been incurred as advance payment for acquisition of lands or construction of Multiplex or similar activity. In order to demonstrate that contrary to the learned CIT(Appeals)'s finding the assessee had in fact commenced its business operations in the relevant period, the learned counsel for the assessee drew our attention to page 30 of the paper book filed on 12.06.2012 which is the Schedule C of Fixed Assets, forming part of the Balance Sheet for the previous year ending 31. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.1,74,86,625 in the relevant period. We also note from the Schedule of fixed assets that the assessee also held lands at Hosur. All this, in our considered opinion, goes to establish that the assessee had in fact commenced and carried on its business of real estate operations in the relevant period disproving the findings of the authorities below to the contrary. In this factual matrix, we hold that the expenditure incurred by the assessee, as debited in its profit and loss account and the Schedule's thereto, have been incurred in the normal course of business operations and the resultant business loss of Rs.16,18,288 is to be allowed. The assessee's ground on this issue is allowed. 7.1 In the grounds raised at S.No.4.1 and 4.2, the assessee challenges the Assessing Officer's action in recomputing the capital gains on transfer of land by increasing the sale consideration of land, rejecting the sale value of land as per sale deed dt.7.4.2007; not accepting the value arrived at by the District Valuation Officer (DVO); not appreciating the fact that the sale value as per the assessee and valuation as per DVO's report have only a slight variation and in increasing the value as ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 16A of the Wealth Tax Act and particularly sub-section (6) of that section, that on receipt of the valuation report of the DVO, the Assessing Officer shall, so far as the valuation of the asset in question is concerned, proceed to complete the assessment in conformity with the estimate of the valuation officer. In these circumstances, the learned counsel for the assessee contended that the Assessing Officer was bound to adopt the value of the said land at Rs.1,46,47,090 as estimated in the DVO's report dt.24.12.2010 to the adoption of which the assessee had no objection, in place of the value of Rs.1,43,75,000 as per sale deed. Instead of doing so, as was warranted under the provisions of section 55A of the Act r.w.s. 16A of the Wealth Tax Act, 1961, the learned counsel for the assessee brought to our notice that the Assessing Officer went on 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. The learned counsel for the assessee strongly contended that such an adhoc increase of the cost of the property by 40% for commercial property by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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