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TMI Blog2019 (3) TMI 1714X X X X Extracts X X X X X X X X Extracts X X X X ..... The market value of said piece of land as per stamp duty valuation was ₹ 49,940/-. The sale consideration has been accepted by the AO in toto and adopted for working the income in the hands of assessee. However, if we consider the totality of facts, we find that the market value as determined by stamp duty and sale consideration received by the assessee had huge difference in value. The fair market value of the property was much higher than the Government / Stamp duty valuation. On such simile, plot which was purchased by the assessee for ₹ 1.75 crores as negotiated and for business needs of assessee, wherein on its sale (partial), the assessee had already received ₹ 17.85 crores, it cannot be said that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering to submission made. 2] The learned Commissioner of Income Tax Appeals-1 was not justified in confirming the disallowance u/s 40A(2)(b) amounting to ₹ 4557905/- paid to Ranjit Shitole, as the consideration paid is at fair market value prevailing the said area. 3] The learned Commissioner of Income Tax Appeals-1 failed to appreciate that - a. The purchase transaction of land situated at Kurungawadi, Taluka Bhor, District-Pune, made by the appellant with one of its directors namely Shri Ranjit Shitole, amounting to ₹ 1,75,00,000/- is at correct value as per the prevailing market condition in the said area. b. The company has subsequently developed the said land and divided into various plots of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and show cause notice in this regard was issued to the assessee. The assessee explained that there were instances of sale of small plots where the consideration received by assessee was higher than the purchase price paid to the Director. It was further pointed out that provisions of section 40A(2)(b) of the Act covered only transactions relating to goods, services and facilities. It was further pointed out that term goods was not defined under the Act and as per the Sale of Goods Act, the definition of goods did not cover immovable property and hence, the said provisions of the Act were not applicable. The assessee also pointed out that the value adopted by the Government Valuer was not acceptable. The submissions of assessee were not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the consideration for purchase of plot of land. The learned Authorized Representative for the assessee drew our attention to the written submissions filed before the CIT(A), which are incorporated in his order and pointed out that purchase consideration paid by it was as per market conditions and was to be accepted in toto. He further pointed out that out of large plot of land purchased by assessee, the assessee had developed 264 plots of various sizes on the said land, out of which 207 plots were sold for total consideration of ₹ 17.85 crores as against total purchase cost of land which was ₹ 2.16 crores. This is where 57 plots have yet to be sold by the assessee. Another point which was raised by the learned Authorized Rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defines the related parties. 9. Now, coming to the facts of present case, the assessee during the year had purchased land worth ₹ 1.75 crores from one of the Directors namely Ranjit Shitole. The said land situated at Post Kurungwadi, Tal:Bhor, Dist: Pune was subsequently developed by the assessee company and sub-divided into various plots of various sizes and were sold to customers at large. The assessee had developed 264 plots of various sizes on the said land, out of which till date of filing written submissions before the CIT(A), the assessee had sold 207 plots for total consideration of ₹ 17.85 crores. The assessee had paid ₹ 1.75 crores to the Director and further acquired another piece of land from non Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e market value as determined by stamp duty and sale consideration received by the assessee had huge difference in value. The fair market value of the property was much higher than the Government / Stamp duty valuation. On such simile, plot which was purchased by the assessee for ₹ 1.75 crores as negotiated and for business needs of assessee, wherein on its sale (partial), the assessee had already received ₹ 17.85 crores, it cannot be said that the assessee has paid more than the market value of plot of land to the Director and hence, provisions of section 40A(2)(b) of the Act are attracted / applied. There is no merit in the stand of authorities below in this regard. 10. Another aspect which needs to be kept in mi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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