Income Tax Appellate Tribunal - Ahmedabad
Shilankit Arcade (P) Ltd.,, Ahmedabad vs Department Of Income Tax on 24 January, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "C"
Before SHRI T K SHARMA, JUDICI AL MEMBER
And SHRI N S S AINI, ACCOUNTANT MEMBER
ITA No.1128/Ahd/2008
(Assessment Year:-2005-06)
The Assistant V/s Shilankit Arcade (P) Ltd.,
Commissioner of Income- T-8, Rajni Smruti Society,
tax (OSD), Circle-8, Nr. ATIRA, Polytechnic,
Ahmedabad Ahmedabad
PA No. ABCFS 5012 K
[Appellant] [Respondent]
Appellant by :- Shri K M Mahesh, Sr. DR
Respondent by:- Shri S N Divatia, AR
O R D E R
Per T K Sharma (JM): This appeal by the Revenue is against the order dated 24-01-2008 of the Learned Commissioner of Income-tax (Appeals)-XIV, Ahmedabad [the "CIT(A)"] for Assessment Year (AY) 2005-06. The only effective ground raised by the Revenue reads as under:-
1. The ld. Commissioner of Income-tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of Rs.69,53,000/-
made as unexplained investment u/s 69 of the I.T. Act.
2 Briefly stated, the facts of the case are that the assessee is a Private Limited Company engaged in the business of real estate and construction. The assessee purchased a property admeasuring 2429 sq. mtrs. at Rs.1,00,50,000/-. The assessee filed the valuation report showing the value at Rs.97,16,000/-. The AO referred the matter to District Valuation Officer, who valued it at Rs.1,70,03,000/- and the AO made an addition of Rs.69,93,000/-, being the difference ITA No.1128/Ahd/2008 For AY 2005-06 Silankit Arcade P Ltd.
amount between the market value shown and the market value estimated by the Departmental Valuer.
3 Aggrieved, the assessee preferred an appeal before the CIT(A). The learned CIT(A) deleted the said addition with the following observations:-
"2.2 The appellant, during the course of appellate proceedings, has submitted that the value disclosed by the transferor is much above the jantri price and there is no question of enhancing the value of the property. The DVO has referred sale instance of registered valuer of a bunglow, which is constructed on 202.34 Sq. mtrs. on land having constructed area of 314 sq. mtrs. Value of this Survey No. 695/1 is Rs.12,50,000/- while other two instances gives value of open land which comes to Rs.965/- and Rs.892/- respectively. The DVO has stated in his report that the sale instances as per register deed and jantri do not represent market value. Agreement of sale (banakhat) signed couple of months/year ahead of actual registration of instrument of transfer cannot be considered to be the real price. The property was transferred for Rs.1,35,00,000/- on 01-09- 2005 in subsequent year and this document was also accepted by the "Stamp Valuation Authority". It was further submitted by the appellant that Explanation and notes on clauses of Sec.50C published in the Budget issue, it is mentioned that, "Computation of capital gains in real estate transactions." Sec. 50 C deals with special provision for determining the value of consideration in cases of transfer of immovable property. The value of Banakhat has to be honoured because this agreement is enforceable by law. Detailed judgment on this issue was given by the Hon. Supreme Court in the case of K.P. Varghese Vs. 1TO, reported in 131 ITR P. 597-605. The appellant further relied on the recent judgment of Hon. Gujarat High Court in the case of CIT Vs. Star Builders, 294 ITR 338, wherein it was held that addition could not be made on the basis of valuation officer's report. Reference could be made for the Valuation Officer for the purpose of Sec.55(A), 131, 133(6) & 142(2). The appellant further submitted that it was AO's duty to prove that the appellant has paid more than what was stated in the instrument of purchase deed. The AO has blindly followed the report of D.V.O. without bringing! any evidence on record to prove under hand consideration paid by the appellant. Further, the property was sold in the subsequent year to Dishman Pharmaceuticals & Chemicals! for Rs.1,35,00,000/-, which was a chance price received by the appellant as the property is near to the Director's residence and corporate house is intended to be constructed on the land. The appellant, therefore, contended that the addition made may, therefore, be deleted.2 ITA No.1128/Ahd/2008
For AY 2005-06 Silankit Arcade P Ltd.
2. I have considered the fads of the case and the submission of the appellant «along the case laws as relied upon. I am inclined to agree with the views of the appellant. The .and in question has been purchased at Rs.1,00,50,000/- and sold subsequently sold for Rs.1,35,00,000/-. The value of land purchased is more than the jantri price and the value adopted by the Deptt. Valuer is based on the property, which contained partly built up property, whereas in appellant's case, it is only land. Hence, the valuation made by the Deptt. Valuer is not reasonable. The Valuation Officer has, in fact, not given any comparable case. Further, it is seen that Sec, 50C is only for taking the market price for the purpose of capital gain. Unless there is any independent evidence brought out by the AO that some more money has been paid in addition to the value shown in the Regd. Deed, the addition cannot be made. As per the decisions of Hon. Supreme Court in the case of K.P. Varghese Vs. ITO, reported in 131 ITR P. 597-605 & Hon'ble Gujarat Court in the case of CIT Vs. Star Builders, 294 ITR 338. The addition made by the AO on this count was not justified and hence, the AO is accordingly directed to delete the said addition."
4 Aggrieved by the order of the learned CIT(A), the Revenue is in appeal. At the time of hearing before us, Shri K M Mahesh, learned DR appeared and relying on the reasoning given by the AO in the assessment order, contended that the CIT(A) is not justified in deleting the addition made u/s 69 of the Act.
5 On the other hand, the learned counsel for the assessee vehemently supported the order of the CIT(A).
6 Having heard both the sides, we have carefully gone through the orders of the authorities below. W hile deleting the addition of Rs.69,53,000/- made by the AO u/s 69 of the Act, the learned CIT(A) observed that section 50C is only for taking the market price for the purpose of capital gain. The ITAT Mumbai Bench in the case of Inderlok Hotel P Ltd. reported in 122 TTJ 145 held that section 50C cannot be applied for determining the income under other heads. It is applicable only for the purpose of determining the sale consideration for computation of capital gain only. The said decision is squarely applicable to the facts of the assessee's case. In this 3 ITA No.1128/Ahd/2008 For AY 2005-06 Silankit Arcade P Ltd.
view of the matter we conclude that the CIT(A) has given cogent reasons for deleting the addition of Rs.69,53,000/- made by the AO u/s 69 of the Act. W e are, therefore, inclined to uphold the order of the CIT(A).
7 In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the court today on 13-08-2010 Sd/- Sd/-
(N S S AINI) (T K SHARMA)
ACCOUNTANT MEMBER JUDICI AL MEMBER
Date : 13-08-2010
Copy of the order forwarded to:
1. Shilankit Arcade (P) Ltd., T-8, Rajni Smruti Society, Nr.
ATIRA, Polytechnic, Ahmedabad
2. The ACIT (OSD) Circle-8, Ahmedabad
3. CIT concerned
4. CIT(A)-XIV, Ahmedabad
5. The DR, ITAT, Ahmedabad
6. Guard File BY ORDER Deputy Registrar Assistant Registrar ITAT, AHMEDABAD 4