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TMI Blog2015 (8) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax (Appeals) has given logic why the valuation adopted by the Assessing Officer for valuing the building at ₹ 30 lakhs is not correct because buildings would generally depreciate over a period of time. He has also rightly observed that if depreciation at 25 per cent. was granted, then the value of the machinery would be ₹ 41,13,281 which is less than the value for which the machinery has been transferred. Further perusal of the assessment order clearly shows that the Assessing Officer has substituted his valuation without referring the matter to the Valuation Officer or bringing any material on record to show that the assessee has received any consideration in excess of the amount shown in the sale deed which is not permissible under the law. - Decided against revenue. - ITA No. 1281/CHD/2010 - - - Dated:- 13-3-2015 - SHRI BHAVNESH SAINI AND SHRI T.R.SOOD, JJ. For the Appellant : Shri Manjit Singh For the Respondent : Shri Sudhir Sehgal ORDER T. R. Sood (Accountant Member).- In this appeal, the Revenue has raised the following grounds : 1. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of assets by the firm to the new company was to be construed as transfer of asset as per section 47(viii). This finding has been confirmed by the learned Commissioner of Income-tax (Appeals) also against the assessee and since the assessee has not filed any appeal or cross-objection, therefore, we are not dealing with this issue in detail. 3. It was further noticed that land, building and machinery were transferred at the book value and not at the market value. The assessee has itself shown the market value which becomes clear from the following chart : Book value as on 1-4-2005 Appreciation Appreciated value as on 31-3-2007 (i) Land 5,80,480 28,90,520 34,70,480 (ii) Building 11,79,520 62,74,480 74,54,000 (iii) Machinery 44,93,873 91,91,676 1,32,19,550 4. It was further noticed that the land was registered in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,30,11,469 58,50,000 7. From the above, he concluded that the registered valuer reduced the value to much lower figure in the report filed with the Department and therefore, according to the Assessing Officer, the same could not be relied on. The Assessing Officer adopted the value of land at ₹ 20,82,712, value of building at ₹ 30,00,000, value of machinery at ₹ 66,00,602 and the total value of the assets, according to him was ₹ 1,16,83,314. Since the assessee has shown the value for the purpose of transfer at ₹ 53,89,833, the balance sum of ₹ 62,93,481 was held to be the amount paid outside the books of account and was added to the income of the assessee. 8. On appeal before the learned Commissioner of Income-tax (Appeals), it was mainly submitted that the Assessing Officer has referred to the valuation report given to the bank but he has ignored the facts that such report was given in the assessment year 2007-08 whereas transfer took place in the assessment year 2006-07. Further, it was stated that since the assessee wanted higher limits from the bank, therefore, net worth was shown on the higher side. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igher consideration has been paid. Therefore, the learned Commissioner of Income-tax (Appeals) has correctly deleted the addition. 12. We have considered the rival submissions carefully. The learned Commissioner of Income-tax (Appeals) has adjudicated this issue vide paras 4.11 to 4.16, which are as under : 4.11. Regarding value of assets it is seen from the assessment order that the Assessing Officer has adopted the value of land at ₹ 20,82,712 adopting the circle rate of ₹ 900 per sq. yd. which is applicable to commercial land in village Lakhewal where the factory building is situated. In this regard the authorised representative has submitted that the aforesaid value adopted by the Assessing Officer is erroneous inasmuch as the land in question is agricultural and not commercial. The authorised representative has drawn my attention to page 53 of the paper book which is a purchase deed dated December 17, 2002 of the aforesaid factory comprising land and building for ₹ 17,60,000 on which stamp duty of ₹ 1,05,600 is stated to have been paid at 6 per cent. The authorised representative has stated that 6 per cent. stamp duty is applicable to agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, is highly excessive without any substance. In fact the building was constructed long ago and has depreciated over the years. Regarding the valuation made by the valuer showing high value of the land, building and machinery the same is for the purposes of bank which has been certified by the valuer. Therefore, no reliance can be placed on the same in view of the various decisions relied upon by the authorised representative in his submissions. 4.15 Regarding valuation of machinery, same has been adopted by the Assessing Officer at ₹ 66,00,602 by reducing the depreciation at 10 per cent. from the value of machinery of ₹ 90,54,324 in the year 2002. The valuer has valued the machinery at ₹ 1,30,11,469 as on March 31, 2007 for the purpose of bank which in my opinion cannot form valid basis for making addition, for the reasons discussed above. In fact in the second valuation report, the valuer has valued the machinery at ₹ 58,50,000 on the basis of the rates of old machinery as on December 30, 2008 as noted by the Assessing Officer at page 10 of the assessment order. In this regard authorised representative has referred to the approved valuer's report d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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