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TMI Blog2016 (10) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... action. Thus, we reverse the action of lower authorities in applying the provisions of section 50C and in substituting any value other than the amount of actual sales consideration received by the assessee. It is also noted by us that for the assessment year under consideration there is no other provisions on the statute which permit the AO to substitute any other value with the full amount of consideration actually received by the assessee, while computing income under the head of capital gains. - Decided in favour of assessee Trade guarantee provision made for expenses to be incurred during the warranty period as business expenditure allowed. - ITA No.5330/Mum/2009, ITA No.5331/Mum/2009, ITA No.5320/Mum/2009 - - - Dated:- 16-9-2016 - Shri Amit Shukla, Judicial Member, and Shri Ashwani Taneja, Accountant Member For The Appellant : Shri Dinesh Vyas (AR) For The Revenue : Shri Asghar Zain (DR) ORDER Per Bench: These appeals pertain to same assessee involving identical issues and therefore these were heard together and being disposed of by this common order for the sake of convenience. 2. During the course of hearing, arguments were made by Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant Company. 1.4. The CIT(A) ought to have considered and relied on the registered Valuer's reports submitted by the Appellant Company for computing the Long Term Capital Gains on transfer of Development Rights of 2 plots of land at Thane. The Appellant Company therefore prays that the relevant facts and circumstances be duly considered and the AO be suitably directed in the matter. (Refer page 11 to 14, para 7.1 of the Assessment order and page 6 to 9, para 4.1 to 4.13 of the CIT(A) order) GROUND NO 2: SHORT TERM CAPITAL GAIN ON SALE OF RESIDENTIAL FLAT 2.1 The learned CIT(A) erred in upholding the AO's action of computing the short term capital gains based on the Stamp Duty value instead of actual consideration received by the Appellant Company on sale of a residential flat at Joyti Darshan Building, Mumbai. 2.2 The CIT(A) failed to appreciate that the building 'Joyti Darshan' was a 40 year old building and not well maintained. The condition of the flat was bad due to heavy water leakage during monsoon season and there was continuous leakage due to the water tank being just above the flat. The CIT(A) also failed to appreciate that the flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d consequently, the AO could not thereafter rely upon the Report of the DVO for the purpose of making the Assessment. It is therefore prayed that the addition made in relation to the Capital Gains on transfer of land be deleted. 1.7. The reference to the DVO made by the AO is bad in law and illegal in the absence of any recording of his opinion on the basis of material on record that it is necessary to make such reference. Since the very initiation of reference is invalid, the addition made in relation to the Capital Gains on transfer of land is bad in law and illegal and therefore the same should be deleted. 1.8. Without prejudice, the valuation report made by DVO is bad in law and illegal since it is not passed in terms of section 55A (as it stood before its amendment by Finance Act 2012) and within its statutory limits and jurisdiction and therefore, it should be totally ignored. The DVO had no jurisdiction to ascertain the valuation of the land as on 1/4/1981 and therefore, his order is totally vitiated. Therefore, it is prayed that addition made in relation to Capital Gains on transfer of land be deleted. 1.9 The CIT(A) abdicated his duty and jurisdiction by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmental valuer i.e. DVO. 3.2. Brief background of the issues involved in these grounds is that the assessee disclosed long term capital gains on sale of development rights with regard to plot of land located at Panchpakdi, Thane, on the basis of Development Agreement dated 8th June 2004 entered into by the assessee with M/s Sheth Developers Private Ltd. During the course of assessment proceedings, the AO asked the assessee that why not sales consideration should be substituted with the value adopted by the stamp valuation authority in view of section 50C of the Act. In response, the assessee objected to the value adopted by the stamp valuation authority and also objected to the very invoking of section 50C of the Act upon the impugned transaction of sale of development rights. The AO referred the matter to district valuation officer for valuation of the sales consideration as well as cost of acquisition of the property. But, Valuation Report of the DVO was not received by the AO till conclusion of the assessment proceedings and therefore the AO adopted value of stamp valuation authority and substituted it with actual sales consideration shown by the assessee and computed the lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of determination of sales consideration on the ground that the expression full value of consideration cannot be construed as having reference to the market value of assets transferred but only means full value of consideration actually received by the transferor. In this regard reliance was placed on the judgment of Hon ble Delhi High Court in the case of CIT Vs. Smt Nilofer I Singh 309 ITR 233 and also upon Dev Kuamr Jain vs. ITO Anr., 309 ITR 240 (Del). It was also submitted that in section 55A, power to make reference for valuation for ascertaining cost of acquisition as on 01.04.1981 is not available. Reliance in this regard has been placed on the judgment of Hon ble Bombay High Court in the case of CIT v. Puja Prints 360 ITR 697 (Bom) Amiya Bala Paul 262 ITR 407(SC). 3.6. Lastly, it was submitted without prejudice to the above submissions that in any case transaction of sale of Development Rights is not covered u/s 50C. In support of this argument, Ld. Counsel drew our attention on other allied provisions of the Act such as section 269A of the Act. Ld Counsel vehemently argued that on this ground itself addition made by the AO becomes illegal and deserves to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly understood and treated as independent from each other. Thus, the perusal of the definitions given in these sections when compared with section 50C shows that legislature was conscious about the proper expression to be used as per its intention, scope, object and purpose of the section 50C, wherein it has been expressly mentioned that capital asset should be land or building or both . It has not been mentioned that any type of rights shall also be included in the definition of capital assets to be transferred by an assessee. 3.11. The provisions of section 50C are deeming provisions. It is settled law and well accepted rule of interpretation that deeming provisions are to be construed strictly. Thus, while interpreting deeming provisions neither any words can be added nor deleted from language used expressly. We should apply the Rule of Strict Interpretation as well as Rule of Literal Construction while understanding the meaning and scope of deeming provisions. In our opinion, under the given facts and circumstances, Ld. Counsel has rightly contended that since the impugned capital asset transferred by the assessee upon which long term capital gain has been computed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the file of the AO. The assessee shall be free to raise all legal and factual issues and to submit requisite details and documentary evidences. In case AO is keen to invoke provisions of section 50C, then he must first refer the matter to the valuation officer. The valuation officer shall also give adequate opportunity of hearing to the assessee before giving its report. The AO shall provide a copy of the valuation report to the assessee to seek its reply and shall give adequate opportunity of hearing to the assessee and after considering the entire material held on record on objective basis, this issue shall be decided afresh. These grounds may be treated as allowed for statistical purposes. 5. Ground No.3: In this ground, the assessee has challenged the action of AO in making the disallowance u/s 14A. 5.1. It is noted from the perusal of the order of the Ld. CIT(A) that Ld. CIT(A) has directed the AO to follow the order of the Tribunal in assessee s own case for A.Y. 2003-04. It is requested during the course of hearing that direction given by the Ld. CIT(A) should be reinforced. Accordingly, we direct the AO to follow the directions given by the Ld. CIT(A) and follow the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) further erred in upholding the actions of the AO in considering the Fair Market Value (FMV) as on 1.4.1981 as ascertained by the DVO in respect of the aforesaid plots of land. 1.2. The CIT(A) ought to have appreciated that the 2 plots of land certain negative factors and impediments and should have considered the actual facts and circumstances and consideration received by the Appellant company for transfer of 2 plots of land on as is where is basis. The CIT(A) ought to have also considered the relied on the registered valuer s reports submitted by the Appellant Company. The DVO had not considered all the relevant factors and impediments attached to the 2 plots of land in question and made his own assumptions for determining the FMV of the land. The AO passed a Rectification order u/s 154 based on the values assigned by the DVO and ignored the facts submitted by the Appellant Company. 7. During the course of hearing it was submitted by the Ld. Counsel of the assessee that in case relief is provided in the identical grounds of ITA No.5330/Mum/09, then this appeal may be treated as infructuous. 7.1. Since we have allowed the relief in identical grounds of ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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