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TMI Blog2016 (11) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the head business & profession and income from other sources after claiming deduction of Rs. 60,70,436/- u/s 80P(2)(d) of the IT Act. The case was selected for scrutiny and notice u/s 143(2) of the Act was issued on 24.12.2007 followed by notice u/s 142(1) along with questionnaire was duly served upon the assessee. During the course of assessment proceedings, it came to the notice of Assessing Officer that assessee has sold land of the co-operative society and building associated with it and got income and no such income figured under the head income from capital gain. On further verification it was observed that during Asst. Year 2005-06 a deposit of Rs. 25.47 crores was shown as advance and in Asst. year 2006-07 the same was adjusted against sale consideration. In Asst. year 2006-07 a deposit of Rs. 12,47,20,000/- in the bonds of National Bank for Agricultural and Rural Development (NABARD) and also Rs. 6,17,30,000/- as deposit in the national housing bank have been shown. On further gathering of relevant documents and details it was observed by Assessing Officer that during the year under appeal assessee has sold 35,336 sq.m. land for Rs. 25,47,49,129/- and exemption u/s 54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirming the addition to capital gains income. 7. In the appeal against the impugned addition by way of applying sale price at Rs. 10,000/- per sq.m. on the land measuring 33817 sq.m. made by Assessing Officer, and ld. CIT(A) sustained the impugned addition by observing as under :- I have considered the submissions made by the assessee, the findings of the AO as contained in the assessment order as also the materials and evidences on record however, the arguments of the assessee are not acceptable since- In the valuation report of the Govt. approved valuer for the cost of acquisition of the land as on 01-04-1931 the value adopted is Rs. 450/- per sq. mtr i.e. 3.28 times of the comparable sale instance of Rs. 136/- per sq. mtr. whereas in the valuation report of the same valuer the sale rate as on 2-12-2003 has been adopted at Rs. 5800/- per sq. mtr. i.e. only 1.37 times of the comparable sale instance of Rs. 4238/- per sq. mtr., which is absolutely inconsistent and adopting the basis of valuation as per the report giving the cost as on 1-4-81, i.e. 3.28 times of the comparable sale instance the market rate would work out to Rs. 13900/- per sq. mtr. (i.e Rs. 4238 x 3.28 times), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny notice of additional stamp duty and hence the value as per the sale deed has to be accepted is also not acceptable since the stamp duty value of all the lands in the state of Gujarat has been revised with effect from 01-04-2008 and as per the revised stamp duty valuation the sales rate of the said land is Rs. 14,500/- per sq. mt. This increase in the stamp duty valuation clearly indicates that overnight the value of land cannot increase by 2 to 3 times i.e. from Rs. 5,800 per sq. mt. to Rs. 14,500/- per sq. mt. and thus, it gets established that the actual value of land prior to 01-04-2008 was also much higher. As regards the assessee's argument that the Revenue has not discharged the onus of proving the under statement and its reliance on the decision of the Hon'ble Supreme Court in the case of K.P. Varghese (supra), I am of the opinion that the AO has fully discharged the onus of proving understatement not only from the valuation reports submitted by the assessee, adopting different basis but also from other comparable instances and even the stamp duty valuation and thus, the decision as relied upon by the assessee is not applicable to the facts of the case. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 in the case of Surat District Co-op. Spinning Mills located on the same Varachha road 4-5 kms. away from assessee's land. On the other hand, assessee's land which is situated just 200 metres from the Railway Station and having a prime location has been valued by the same registered valuer at Rs. 5,800/- per sq.m. in the year 2003. This itself shows that in three years there has been no increase in the land price. 11. We have heard the rival contentions and perused the material on record and also gone through the decions/judgments referred and relied on by the assessee. Through this ground assessee has challenged the order of ld. CIT(A) sustaining the addition towards long term capital gain by way of applying sale price at Rs. 10,000/- per sq.m. as against Rs. 7,301/- per sq.m. shown by the assessee. We find that during the year under appeal assessee has sold 35,336 sq.m. of land situated at Varachha road, Surat out of which1519 sq.m. land was occupied by tenants. The sale consideration of 1519 sq.m. of land has been accepted by the Revenue as shown by the assessee so there is no dispute with regard thereto. As far as remaining land portion of land 33817 sq.m. assessee has shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to be the full value of the consideration received or accruing as a result of such transfer. (2) Without prejudice to the provisions of sub-section (1), where- (a) the assessee claims before any Assessing Officer that the value adopted or assessed 16[or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed [or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made 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 sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (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 sub-section (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O has not filed valuation report till date. It is not a disputed fact that the assessee has closed its business in the year 1999 and has not done any other business tillITA No.3384 and 1612/Ahd/2010 With CO No.41/Ahd/2011 the year 2007-2008. It is also undisputed fact that during the period from 1999 to 2007, the assessee has sold out its machinery and has also demolished all the factory building, and cleared the land. The assessee was under heavy liability of payment of dues to its ex-employees. The matter has travelled till the level of the Hon'ble High Court, which has directed and empowered the President of the Employees' Union to sell the land in question. In the facts of the case, there seems to be no justification for substituting the apparent sale consideration of the land in question with an estimate of the fair market value of the land in question, and particularly so, in view of absence of any material brought on record to suggest the understatement of the sale consideration or charging of any on-money by the assessee. Power of attorney, as per the direction of the Hon'ble high Court was given in favour of the Chairman of Labour Union, Shri N.B. Desai, to sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The net effect of this provision is as if a statutory best judgment assessment of the actual consideration received by the assessee is made, in the absence of reliable materials. The onus of establishing that the conditions of taxability are fulfilled is always on the revenue." In view of the above, respectfully following the aforesaid decision of Hon. Supreme Court, we allow the claim of the assessee. Thus, this ground raised by the assessee is allowed." 16. In the above referred decision of the Co-ordinate Bench in the case of Surat District. Co-op. Spinning Mills reliance was placed on the judgment of Hon. Supreme Court in the case of K.P. Varghese vs. ITO (supra) and relevant provisions of section 52 of the Act. We find that section 52 of the Act was deleted by Finance Act, 1987 w.e.f. 1.4.1988 and certainly will not squarely apply to the case of assessee. 16.1 However, drawing inference from the above cited decision of the Co-ordinate Bench and in view of the provisions of section 50C of the Act, we are of the considered view that in the given facts and circumstances of the case wherein assessee has shown sale consideration @ Rs. 7,301/- per sq.m., registered valuer valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 72(1) of the I.T. Act, it is held that the claim of the assessee in setting off business loss of earlier years against current year's income from other sources is illegal and not allowable as per law and the assessee's ground of appeal on this issue is dismissed. 21. We further observe that in the case of Surat Dist. Co-op. Spinning Mills vs. ACIT for Asst. Year 2005-06 (supra) similar issue was adjudicated and decided against the assessee by observing as under :- "3. We have considered the rival submissions and perused the material on record. We agree with the findings given by the CIT(A) that as per the provisions of section 72(1), business loss other than loss speculation business can be set off against any head of income in the year in which it is incurred and the amount of such business loss which cannot be set off, can be carried forward for being set off in the subsequent years. However, in the subsequent year, such carried forward business loss is allowed to be set off only against business income of the same business or of any other business but not against income under any other head. We, therefore, do not find any infirmity in the order of the CIT(A) and uphold his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its members u/s 80P(2)(a)(iii) of the Act and Rs. 10,800/- claimed u/s 80P(2)(iii) for income earned out of godown/warehouse rent marketing of commodities. 26.2 We further observe that ld. CIT(A) only granted relief for Rs. 1 lacs u/s 80P(2)(c)(i) of the Act and held the action of ld. Assessing Officer to be correct for not allowing deduction of Rs. 19,16,663/- u/s 80P(2)(iii) of the Act and Rs. 10,800/- by observing as under :- I have considered the facts of the case, the submissions made by the assessee and the findings of the AO as contained in the assessment order. The contention of the assessee that the business income of Rs. 19,16,663/-is eligible for deduction u/s. 80P(2)(a)(iii) is not acceptable since, the deduction u/s. 80P under chapter VIA is allowable on net income and not on gross income as per the clear provisions of sec. 80AB of the Act. It is seen that the income of Rs. 19,16,663/- under the head business income gets set off under other current year's business loss and in the event of there being no income under the head business income, there is no question of claiming deduction in respect of the amount of Rs. 19,16,663/- /s. 80P(2)(a)(iii). As regards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciating the facts of the case and intent of the law. It is, therefore, prayed that the order of the CIT(A) be set aside and that of the assessing officer be restored. 30. Ld. Assessing Officer denied deduction of claim of assessee of Rs. 53,90,948/- as unabsorbed depreciation and also claim of Rs. 458320/- of the current depreciation by applying the provisions of section 14A of the Act for the purpose of computing total income under this chapter and taking a view that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. The ld. CIT(A) deleted the disallowance. 31. Revenue is now in appeal before the Tribunal. 32. Ld. DR supported the order of Assessing Officer. 33. Ld. AR relied on the order of ld. CIT(A). 34. We have heard the rival contentions and perused the material placed before us. Through this ground Revenue has challenged the order of ld. CIT(A) allowing the depreciation claim of Rs. 58,49,268/- which includes Rs. 53,90,948/- as unabsorbed depreciation and Rs. 458320 of current depreciation. Reason for the said disallowance by Assessing Officer was mainly fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be entitled to set off the said depreciation loss against income under the head income from other sources and long term capital gain. Hence, in view of the clear provisions of section 32(2) of the I.T. Act, It is held that the claim of the assessee in setting off depreciation loss of earlier years as also current year's depreciation against current year's income from other sources and long term capital gain is in order and is allowable as per law and the assessee's ground of appeal on this issue is allowed. 36. We observe that depreciation is claimed as per the provisions of section 32 of the Act and sub-section (2) of section 32 allows the assessee to claim unabsorbed depreciation of earlier years. Further in order to compute the business income of the assessee society the computation of income has to pass through the provisions of section 32 of the Act so as to arrive at the correct business income. Sec. 14A of the Act refers to income which are not included in total income i.e. exempt income dividend, for example tax free interest etc. Whereas in the case of assessee deduction has to be claimed u/s 80P of the Act. Further as per section 80P(2)(a)(iii) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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