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TMI Blog2013 (10) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... ort made for obtaining the bank loan and made the addition - Decided in favour of Revenue. - ITA No.5302/Del./2010, ITA No.5303/Del./2010, ITA No.5304/Del./2010 - - - Dated:- 20-6-2013 - Shri B. C. Meena And Shri C. M. Garg,JJ. For the Petitioner : Shri Adesh K. Jain, FCA For the Respondent : Smt. Anuradha Misra, CIT DR ORDER Per B. C. Meena, Accountant Member :- In all these three appeals, the issue involved is common. Therefore, these are being disposed off by this common order. 2. All the three assessees are individuals. They were the shareholders of M/s. Superior Builders Limited. The details is as under :- Name No. of Shares (i) Shri Deepak Aggarwal 2,46,500 (ii) Shri Ankit Aggarwal 1,93,500 (iii) Smt. Reeta Aggarwal 1,95,390 The total shares were 6,36,550. 1160 shares were held by others. The value of land and building as per balance sheet as on 31.03.2006 were of Rs.4,40,12,000/- and Rs.13,12,51,142/- respectively. The reserves and surpluses as on 31.03.2006 and 31.03.2005 were of Rs.98,24,064/- and Rs.87,73,126/- respectively. A search operation u/s 132 of the Income-tax Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company but also the assets of the company. The ld. DR also submitted that to arrive at the intrinsic value of the share, one has to take into account the market value of the property on the date of transfer of the shares. The valuation report dated 28.11.2005 obtained from the bankers of M/s. Superior Builders Limited represent the market value, hence it has to be taken into account while determining the intrinsic value of the shares. She submitted that the assessee's contention that the valuation report dated 28.11.2005 was only for limited purpose of availing the bank loan should not be accepted. Although the valuation report was prepared for bank loan but it reflects the market value of land and building as on 26.11.2005. She also submitted that the valuation report dated 14.11.2009 submitted by the assessee during the assessment proceedings to justify the market value of land and building should not be accepted. The valuer has stated that it has been prepared for the purpose of market value as on 31.03.2006 but it was prepared on behest of the assessee. Therefore, the same does not represent the market value on the date of transfer. She also submitted that the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopting value at Rs.33,000/- was clearly arbitrary and without any basis. The ld. AR also submitted that actual expenditure incurred on the construction of the building by M/s. Superior Builders Limited was available in audited accounts of company and that should be adopted as the cost of construction for valuation rather than estimating the cost of construction taking arbitrarily rates. No incriminating evidence or corroborative document was found during the search and seizure operation u/s 132 and survey u/s 133 at the premises of sellers (Aggarwal Group) and the buyers (Mittal Group) which could show that any thing more than shown in books is invested in the building. Mittal Group also got prepared a valuation report dated 14.11.2009 wherein the value of the property has been valued at Rs.22.06 crores. This valuation report is based on the circle rate and cost of construction on the basis of market rate during relevant period. The valuer, Ld. Col. A.K. Sanghi (Retd.) has stated that both the values were made for different purposes - one was prepared on the behest of the bank for granting the loan and the other was prepared on behalf of Mittal Group for valuing the market value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e III and Rule 1D recognizes break up value method for determining value of unquoted equity shares. The Central Board of Direct Taxes has also recognized the break up value method for determining value of unquoted equity shares in its Notification No.23 dated 08.04.2010. Neither the Income-tax Act nor the Wealth-tax Act recognizes the method of valuation of unquoted equity shares of intrinsic value. Therefore, the Assessing Officer was not justified in adopting such method. The AO's observation that property fetching monthly rent of Rs.55 lakhs per month was sold for Rs.79.59 lakhs was not correct. The value of 6,36,550 shares @ Rs.67.50 per share also comes to Rs.4.29 crores, therefore, this is factually incorrect. Ld. AR also submitted that there were huge liabilities on the company whose shares were transferred. Total liability as on 31.03.2006 was Rs.42,68,28,007/-. Net value of assets were in negative, hence net asset value of shares comes to minus (7.91). The value of per share by adopting circle rate of Rs.6,900/- per sq. meter as on31.03.2006 comes to Rs.53.02 per share. Thus, the valuation adopted by assessee at Rs.67.50 per share was most realistic valuation and it reflec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meter. The basis stated was market survey. The value of the plot has been worked out at Rs.39,60,00,000/-. The valuation was referred that this rate was based on market survey but no sale instance is quoted for this survey. The published circle rate at this time was Rs.6,900/- per sq.meter. The other valuation report dated 14.11.2009 was prepared on the basis of the published circle rates of Rs.6,900/- per sq. meter. As per this valuation report, the value of plot was taken at Rs.8,28,00,000/-. The land value as per balance sheet as on 31.03.2006 was of Rs.4,40,12,000/-. The market value of the building in the valuation report dated 28.11.2005 had been worked out at Rs.19,92,902/- but there appears to be no yardstick on what basis the value of the building has been so arrived. In valuation report dated 14.11.2009, the value of the building has been worked out at Rs.13,78,19,402/-. The cost of building as per balance sheet is of Rs.13,12,51,142/-. The purpose of this valuation was to arrive at the market value as on 31.03.2006. This valuation report was prepared on the behest of Mittal Group. The method of the valuation was land and building. No incriminating document with regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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