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TMI Blog2016 (4) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... uantum of disallowance as well as a specific prayer of the assessee that the quantum of disallowance may be fixed at 1/10th, we feel that it would serve the interest of justice if the disallowance is restricted to 1/10th of the total telephone expenses. - Decided in favour of assessee Value of sales consideration for the purposes of section 50C - capital gain computation - Assessing Officer as well as the Ld. CIT(A) have doubted the veracity of the ‘Ikrarnama’ or the ‘Agreement’ on the ground that the same is signed by only one person whereas the land has been finally sold to three parties - Held that:- In the case of K.K. Nag Ltd. vs. ACIT (2012 (6) TMI 184 - ITAT PUNE ) after detailed discussion of the provisions laid down u/s 50C of the Act has held that the discretion granted in such a situation is required to use in a judicious manner. Section 50C is a deeming provision and ostensibly involves creation of an additional tax liability on the assessee and, therefore, notwithstanding the presence of the expression ‘may’ in section 50C (2)(a), the AO in this case ought to have referred the matter to the valuation officer for ascertaining the value of the capital asset in quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee could not substantiate that the sum of ₹ 1.00 lakh was paid to Panipat College of Textile Tech. Pvt. Ltd. for business purposes. Regarding the loan of ₹ 4.5 lakhs to M/s Victory Enterprises, the Ld. CIT (A) observed that no evidence was brought on record to prove that the capital of the Proprietor was available for making the said interest free loan. Here also the assessee, as per the Ld. CIT (A), could not substantiate his claim that the interest free advance was for the purposes of the business of the assessee. Supporting his ground of appeal relating to the disallowance of interest, the Ld. AR submitted that as far as the loan to Panipat College of Textile Tech. Pvt. Ltd. was concerned, it was an investment in the shares of the company which was formed by a group of textile exporters with the object of providing Bachelor s Degree in Textile Engineering. Since the assessee is a manufacturer and exporter of home furnishings, durries and mats, the investment was very much for commercial expediency and hence the disallowance of pro-rata interest was not legally tenable. He also drew our attention to pages 17 and 18 of the paper book which contain copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) also but he has not specifically dealt with them in the impugned order. Therefore, on an overall view of the facts of the case and the judicial pronouncements referred to above, we direct the Assessing Officer to delete the disallowance of ₹ 54,477/- on account of interest. Hence this ground of the assessee s appeal is allowed. 5. Ground no. 2 relates to the disallowance of ₹ 21,132/- on account of 1/5th of the telephone expenses by the Assessing Officer and confirmed by the Ld. CIT(A). The Ld. AR submitted that all the telephones were used for business purposes only. However, the assessee could not submit any evidence either before the Assessing Officer or the Ld. CIT (A) to justify his contention. However, looking into the quantum of disallowance as well as a specific prayer of the assessee that the quantum of disallowance may be fixed at 1/10th, we feel that it would serve the interest of justice if the disallowance is restricted to 1/10th of the total telephone expenses. Hence, this ground of the assessee s appeal is also allowed. 6. The third ground of the assessee s appeal pertains to addition of ₹ 20,32,177/-. It is seen that the assessee had decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly show that there were three purchasers and the so claimed Ikramama signed by only one purchaser has no authenticity. In view of the above it is evident that the so claimed Ikramama is concocted and an after thought of the assessee. Even otherwise for the purpose of sale consideration the date of execution of the sale deed is relevant and not the date of Ikramama. As such the contention of the assessee that the deal of the property was started on 18th Jan. 2007 is not acceptable specially when there is no mention in the sale deed about the so claimed Ikramama dated 18.01.2007. 7. Based on this reasoning, the Assessing Officer took the value of sales consideration at ₹ 39,52,177/- for the purposes of section 50C of the Act as against ₹ 19,20,000/- declared by the assessee and an addition of ₹ 20,32,177/- was made under the head Capital Gain . On appeal, the Ld. CIT (A) confirmed the addition. 8. Ld. AR submitted that Plot No. 154 measuring 481.25 sq. Meters and Building thereon was sold for a consideration of ₹ 19,20,000/- vide Sale Deed dated 21/08/2007 to Sh. Pawan Kumar, Ashish kumar Girish Kumar. The Sale consideration was received by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually and actually never in existence and neither emerging out of the transactions between the two contracting parties. 4. The intent and scope of the provisions is towards checking and working the tax evasion as discernible from confiscatory measure declining the benefits emerging out of it which will not be available since the excess/differential unavailable for set off under the provisions of section 54 to 54ED which is being said so since the Income Tax Act, 1961 is an integrated code and has to be read in totality. 5. The section is merely substituting the valuation of the stamp valuation authority within the words of the Act total income resulting altering the subject matter of the Income Tax Act itself where in the chargeability rates and heads impacted too are unspecified for the year concerned. More so the chargeability is of the Net of the Income Tax whereby tangent to it the whole amount is being deemed accrued/arising which renders erroneous application of Law. 6. The concept of 'Total Income' is altercated with the valuation of Stamp Valuation Authority, hence cuts through the issue. 7. The valuation under different Statue is be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of payment of stamp duty in respect of transfer, then value so adopted or assessed by them shall be deemed to be the full value of consideration; (3) It is also provided that where the assessee claims that the value adopted or assessed for stamp duty purposes is more than the fair market value of the property as on the date of transfer and he has not disputed this value before the appellate authorities or the Court under Stamp Duty Act then the Assessing Officer may refer the valuation of such property under transfer to the Valuation Officer in accordance with Section 55Aof the Income-tax Act, 1961. If the fair market value so determined by the Valuation Officer is less than the value adopted for stamp duty purposes the Assessing Officer may take such fair market value to be the full value of consideration. On the other hand, if the fair market value determined by the Valuation Officer is more than the value adopted or assessed for stamp duty purposes the Assessing Officer shall adopt such fair market value determined by the Stamp Valuation Authorities as full value of consideration and he shall not adopt the valuation done by the Valuation Officer as full value consideration; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before any other authority, Court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of subsections (2), (3), (4), (5) and (6) of Section 16A, clause (i) of sub-section (1) and subsections (6) and (7) of Section 23A, subsection (5) of Section 24, Section 34AA, Section 35 and Section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under subsection (1) of Section 16Aof that Act. Explanation1. - For the purposes of this section Valuation Officer shall have the same meaning as in clause (r) of Section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2 - For the purposes of this section, the expression assessable means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed if it were referred to such authority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is more than the valuation done by the Stamp Valuation Authorities (SVA) then valuation done by the SVA would be taken as full value of consideration and capital gains will be calculated accordingly; -If valuation done by the Valuation Officer is less than the valuation done by the SVA then valuation done by the Valuation Officer would be adopted as full value of consideration as against the apparent consideration shown by the assessee or the valuation done by the SVA and capital gains be calculated accordingly; -If valuation done by the Valuation Officer is less than the valuation done by the SVA as well as sale consideration shown by the assessee in the sale deed then apparent consideration shown in the sale deed would alone be accepted as full value of consideration and capital gains be calculated accordingly, i.e. as shown by the assessee; -With effectfrom1.10.2009, applicable for the assessment year 2010-11 the Finance Act, 2009 (No.2) has enabled the assessing officer to find out Stamp Duty Value assessable by the SVA in cases where agreements to sale were executed, consideration changed hands and possession of the property was handed over to the buyer but without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation Officer. A perusal of the submissions dated 28.10.2010 filed before the Assessing Officer shows that in para (j) of the reply, the AR of the assessee has submitted as under:- (j) u/s 50C(2) the rights of the assessee an duty of revenue are prescribed wherein the provision commences as without prejudice to the ..where . meaning thereby the provision is an isolated code wherein the matter can be referred to the Valuation Officer where the value adopted/assessed, undisputed which presently is being prayed to be invoked before determining the conditions and considering the logistics relatable to the place and timing of the property under valuation. 13. This submission of the assessee, though not expressed with crystal clarity, is a specific request for making a reference to the Valuation Officer. Both the Assessing Officer as well as the Ld. CIT (A) have not specifically given their finding on the issue but the same was pleaded before us during the course of hearing of this appeal. It has been held by the Mumbai Bench of ITAT in Kalpataru Industries vs ITO in I.T.A. No. 5540/Mum/07 that it is mandatory on the part of the Assessing Officer to make reference to Valua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the State Government for the purposes of payment of stamp duty in respect of such transfer, then the value so adopted by the State Government authority shall be deemed to be the full value of consideration received or accruing as a result of such transfer. The said provisions of sub-section (1) of section 50C are further circumscribed by sub-section (2) of section 50C. In terms of clause (a) of sub-section (2) of section 50C, it is provided that where an assessee claims before the Assessing Officer that the value adopted or assessed by the Stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer, then the Assessing Officer may refer valuation of the capital asset to the Valuation Officer. In instant case, factually it is evident that the assessee had claimed in the return of income itself that the value adopted by the stamp valuation authority exceeded the fair market value as on the date of transfer as provided in section 50C(2)(a). Under these circumstances, the Assessing Officer ought to have referred the matter to the Valuation Officer instead of straightaway deeming the value adopted by the stamp valuation a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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