9911796707
TMI Blog2013 (2) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Deed which is duly registered with the Sub-Registrar and in the circumstances the value mentioned by the assessee for transferring of 13500 sqy is not less as compared to the value adopted by the State authorities for stamp duty valuation, the addition cannot be sustained on this count. Accordingly, this addition is deleted. Addition towards indexed cost of acquisition - AO took the SRO value as on 1.4.1981 at Rs. 25 per sqy and on the other hand, the assessee submitted that a valuation report from a private valuer stating that the cost of land as on 1.4.1981 was Rs. 300 per sqy - Held that:- The value is to be considered at Rs. 300 per sqy which is based on the Registered Valuer report which is very reasonable as compared to the value of the property as on the date of sale at Rs. 11,000 per sqy. Considering the Registered Valuer report and by applying the reverse indexation method, the value is to be considered at Rs. 300 per sqy as on 1.4.1981 is very reasonable, thus agreeing with the assessee. Addition towards compensation paid with whom agreement for sale was entered into by the assessee in the year 1993 which was not honoured - Held that:- AO has no grievance for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to appreciate that (a) Initially the Appellant had executed a document of sale in respect of 15,311 Sq. Yards of land, while physically, on the ground, land to that extent was not available. (b) Subsequently on realizing the actual area available the Appellant had executed a Rectification Deed rectifying the sale deed originally executed and substituting revised extent of land in the sale deed. (c) That upon execution of such Rectification Deed original sale deed stood modified from the date of its execution. (d) That to the whole world the title of the transferee was only referable to 13,500 Sq. Yards of land and not 15,311 Sq. Yards. (e) And consequently the value as per the register maintained by the stamp authority had to be computed with reference to 13,500 Sq. Yards and not 15,311 Sq. Yards. In this behalf the learned Commissioner of Income Tax (Appeals)-V erred in giving hypothetical findings without any evidence and consequently the order of the learned Commissioner of Income Tax (Appeals)-V is bad in law. 5. The learned Commissioner of Income Tax (Appeals)-V failed to appreciate that the Rectification Deed modifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 13,500 Sq. Yards based on the link documents. (d) The fact that the property was under the cloud of proceedings under Urban Land (Ceiling and Regulation) Act, 1976 having been in excess of limit of 1000 Sq. Mts., prescribed under the said Act. 10. The District Valuation Officer also had committed serious error in relying upon three sale deeds of comparatively smaller plots and that too in Jubilee Hills without having regard to the fact that the Jubilee Hills land was more valuable and also while plotting the effective land available for actual sale would be reduced to 60%. 11. The Learned Commissioner of Income Tax (Appeals)-V erred in declining to grant relief with respect to market value of the property as on 1.4.1981 and in confirming the value at Rs. 25/- per Sq. Yard as determined by the assessing officer based on the alleged value as per the stamp authority's registers. In this behalf the Learned Commissioner of Income Tax (Appeals)-V ought to have accepted the value of Rs. 300/ - per Sq. Yard as on 01.04.1981 which was shown by the Appellant, duly supported by the valuation report of the government approved valuation officer. The Learned Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in view of their foregoing right to receive the property by payment of consideration. 16. In any event the Learned Commissioner of Income Tax (Appeals)-V failed to appreciate that the Appellant had to give a representation / warranty in the sale deed executing in favour of the 3,,1 party to the effect that there were no prior agreements of sale in respect of the property that was sold and the Appellant would have made deliberate false statements had these agreements been suppressed. Consequently the payment of compensation which as a fact having not been disbelieved in as much as the payments were made through crossed cheques in favour of the Agreement holders. The Learned Commissioner of Income Tax (Appeals)-V ought to have summoned the payees who are agreement holders to question them about the TDS (which is obvious mistake made by the payee while acknowledging demand) and ought to have put the said fact against the Appellant. 17. The statement in para 7.6 of the order of the learned Commissioner of Income-tax (Appeals)-V that the Appellant created a web of false evidence was uncalled for and is not based on fact but on the surmises of the Commissioner and consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration offered by the assessee is Rs. 13,50,00,000/- only. The Authorized Representative was asked vide order sheet entry dated 23.11.2009 to explain why the sale consideration should not be adopted at Rs. 15,31,10,000/- as per the provisions of section 50C of the I.T. Act. Section 50C reads as under: "where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer." The assessee had not furnished the explanation till date. Hence, it is deemed that he has no objection for adopting the sale consideration as per the provisions of section 50C of the I.T. Act. Hence the difference of Rs. 1,81,10,000/- is treated as Capital Gains in the hands of the assessee as per the provisions of section 50C." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is an old lady of 86 years old and she is not aware of the income-tax law. On behalf of the assessee, assessee s son B. Vikram Reddy has been appearing before the Revenue authorities. The mistake mentioned in the area in the sale deed was found at a later stage and on this count rectification deed was executed on 11.12.2009 and registered on 16.12.2009. Further on calling the Remand Report by CIT(A) from the Assessing Officer, the Assessing Officer observed as follows: "1.2 The assessee filed a copy of rectification deed dated 11.12.2009 registered as document No. 3842/09 and requested the CIT(A) to admit the same as additional evidence. I have called for the Original Deed and examined the same. On verification of the deed, it is noticed that the rectification deed was executed for the purpose of recording the correct extent of the land area transferred to the purchaser. As per the Original Deed the site area was 15,311 sq. yds where as the site area transferred as per rectification deed is 13,500 sq. yds. 1.3 It is explained that the difference of 1,811 sq yds is due to the fact that the site of 977 sq yds belonged to Late Aziz Ahmed Khan owners if neighbo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, the assessee submitted that a valuation report from a private valuer stating that the cost of land as on 1.4.1981 was Rs. 300 per sqy. The Assessing Officer did not accept the plea of the assessee and made an addition of Rs. 2,18,52,625 by giving the following reasons: "The assessee claimed the cost of land as on 1.4.1981 at Rs. 300 per sq. yards as per the valuation report of a private valuer. The SRO value as on 1.4.1981 is only Rs. 25 per sq. yard. The Authorised Representative could not give proper reasons for adopting the value at a higher price than the value of SRO. Hence, the cost of acquisition is taken at Rs. 25/- per sq. yard and the excess indexed cost of acquisition of Rs. 2,18,52,625 is disallowed." 5.1 The AR submitted that as per registered valuer report dated 2.8.2007 the market value of the property as on 1.4.1981 being at Rs. 300 per sqy and the same has to be followed. He submitted that the property is located at a prime locality in the heart of the city and at any stretch of imagination it cannot be considered at Rs. 25 per sqy. The assessee s land is situated at Sy. No. 129-31, Banjara Hills Road No. 12, Hyderabad. The valuation report from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractor whom he had contacted. It is also worth noting that he is stated to have visited the site on 30.07.2007 and has collected all the relevant information, without stating any details of any information collected. 5.3 We have heard both the parties on this issue. The Assessing Officer adopted the FMV of the land as on 1.4.1981 at Rs. 25 per sqy. The assessee wants to substitute it at Rs. 300 per sqy as per SRO rate. In our opinion, the value is to be considered at Rs. 300 per sqy which is based on the Registered Valuer report which is very reasonable as compared to the value of the property as on the date of sale at Rs. 11,000 per sqy. Considering the Registered Valuer report and by applying the reverse indexation method, in our opinion, the value is to be considered at Rs. 300 per sqy as on 1.4.1981 is very reasonable and we agree with the assessee. This ground is allowed. 6. The third ground is with regard to disallowance of compensation at Rs. 2.36 crores paid to various persons and Rs. 28 lakhs paid to Mr. B. Rajendra Prasad. Brief facts of the issue are that the during the course of assessment proceedings, it was noticed that the assessee had shown as paid an amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... She had committed breach of agreements and had to pay compensation aggregating to Rs. 2,36,00,000 to those parties. She had explained that she had committed breach of contract and was legally liable to compensate the parties before she could go ahead with the present deal. Actually she had obtained confirmations from the parties and approached the Assessing Officer to furnish the same. The Assessing Officer without giving opportunity had disallowed the entire claim of Rs. 2,36,00,000 paid towards compensation. The compensation of Rs. 2.36 crores was paid and confirmation letters were obtained from three recipients namely K. Jayasree, P. Pratap Reddy and K.V. Narasimha Reddy. The assessee could not furnish confirmation from Mr. M. Narasimha Reddy, as that person has expired. The AR submitted that the entire compensation of Rs. 2.36 crores was paid through account payee cheques only. The addresses of persons to whom compensation was paid are on record. 6.2 The AR submitted that the assessee had paid a compensation of Rs. 28,00,000 to Mr. B. Rajendra Prasad towards his claims on the land, which was agreed to vide agreement dated 10.3.2006. The assessee claimed the compensation of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s book of the assessee and the entries regarding the debit of these payments. Inspector of Income Tax of this office was deputed to enquire from the persons who have received the compensation paid by the assessee. A copy of the Enquiry report of the Inspector and the letters along with copies of Bank Accounts obtained from the S/Sri K. Jayashree, Dr. Chandra Lekha Reddy and K. V. Narasimha Reddy are forwarded herewith. A copy of confirmation letter from The Senior Manager, The Federal Bank Ltd, Sultan Bazar Branch, Hyderabad dated 26-5-2011 showing the realisation of cheque issued by the assessee to Sri P. Pratap Reddy is enclosed. In view of the above facts and after verifying the confirmation and the Bank statement, payment of an amount of Rs. 1,72,00,000/- is acceptable. As far as payment of Rs. 64,00,000/- to late M.M. Narasimha Reddy by the assessee is not acceptable in the absence of confirmation letter by the payee. 3. Disallowance of compensation paid to Sri B. Rajendra Prasad: 3.1 During the course of assessment proceedings, the assessee was asked to furnish the confirmation from Sri B. Rajendra Prasad regarding the payment of compensation. As the assessee fail ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
