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TMI Blog2017 (8) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the year under consideration, the market value cannot be substituted by the A.O. merely on ipsi dixit. There is no provision under the Act, applicable for the A.Y. 2008-09, under which the A.O. can substitute the market value to the rate at which the assessee sold the property. Therefore, set aside the orders of the A.O. as well as the CIT(A) and hold that only the value at which the assessee sold the land should be taken into consideration for the purpose of computing the assessable income and the provisions of Section 50C are not applicable in the instant case. - Decided in favour of assessee. - ITA. No. 391/Hyd/2017 - - - Dated:- 27-7-2017 - Shri D. Manmohan, Vice President For Assessee : Shri K.A. Sai Prasad For Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... real estate and construction activities. As part of the activity, company acquired land during the assessment year 2006-2007 from two different parties with an intention to develop a lay out and divide the land into suitably saleable plots and thus, the land was considered as stock-in-trade and shown under the head current assets in the balance sheet, from the date of purchase till date of sale. Since, it was stock-in-trade, on the sale thereof, the loss arising from the transactions was shown as business loss only. 5. It was also explained that though it was shown as stock-in-trade, the company having received legal notice from different parties, challenging the title of the land boundary issues, the company did not want to enter in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration. Accordingly, the assessment was completed by the Assessing Officer which was also confirmed by the Ld. CIT(A) without adding any further reasons. Para 6 of the order of the Ld. CIT(A) is based only on the fact that no assessee could have sold the land for a lesser value; the said para is extracted for immediate reference. 6. I have carefully considered the facts of the case, assessment order and the submissions of the appellant. The Assessing Officer mainly added ₹ 29,79,200/- as sale consideration, since the appellant has sold at a price lesser than the market value. During the course of appellate proceedings also the appellant has submitted the same facts which were submitted before the Assessing Officer and explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade at the time of sale but, it was deliberately brought into force from 01.04.2014 and hence, it is not applicable to the year under consideration. He relied upon the following decisions wherein, an identical issue was considered by various High Courts viz., (i) CIT vs. Neelkamal Realtors Erectors India (P) Ltd [2017] 79 taxmann.com 238 (Bombay); (ii) CIT vs. Mukesh Kishor Barot Co-owners [2013] 091 DTR 0220 (Guj-HC) and (iii) CIT vs. Thiruvengadam Investments (P) Ltd [2010] 320 ITR 345 (Mad.). 8. In the case of Neelkamal Realtors Erectors India (supra), the Hon ble High Court brought out distinction between the capital gains and income arising on business assets, which was reflected as work-in-progress (WIP) and in this regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n.com 381. Similarly, the Madras High Court in CIT vs. Thiruvengadam Investments (P) Ltd [2010] 320 ITR 345 has also held that section 50C of the Act cannot be invoked to arrive at full consideration of sale of business asset. We see no reason not to adopt the view of the above two High Courts to the present facts. 9. Even in the other two cases, the Hon ble High Courts categorically observed that section 50C has no application in the case of sale of land which was reflected as WIP and there is nothing on record to suggest that the assessee has sold at higher price but declared lower price for the purpose of avoiding tax. The Ld. Counsel for the assessee submitted that the A.O. as well as the Ld. CIT(A) assumed that the business men ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01-04-2014 which clarifies that for the year under consideration, the market value cannot be substituted by the A.O. merely on ipsi dixit. Having regard to the ratio laid down by the Hon ble High Courts, cited supra, which are applicable on all fours, I am of the firm view that there is no provision under the Act, applicable for the A.Y. 2008-09, under which the A.O. can substitute the market value to the rate at which the assessee sold the property. I therefore, set aside the orders of the A.O. as well as the CIT(A) and hold that only the value at which the assessee sold the land should be taken into consideration for the purpose of computing the assessable income and the provisions of Section 50C are not applicable in the instant case. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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