Income Tax Appellate Tribunal - Delhi
M/S. Kisaan Engineering Works Pvt. ... vs Jcit, Ghaziabad on 31 October, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'C', NEW DELHI
Before Sh. N. K. Choudhary, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
ITA No. 3575/Del/2014 : Asstt. Year : 2010-11
M/s Kisaan Engineering Works Pvt. Vs JCIT,
Ltd., Pradeep & Co., Tax Advocates, 7, Range-2, Hapur, Chungi
Navyug Market, Ghaziabad (U.P.) Ghaziabad
(APPELLANT) (RESPONDENT)
PAN No. AAACK5966G
Assessee by : Sh. Satyajeet Goel, CA
Revenue by : Sh. Ravi Kant Choudhary, Sr. DR
Date of Hearing: 30.08.2022 Date of Pronouncement: 31.10.2022
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. CIT(A), Ghaziabad dated 19.02.2014.
2. Following ground s have been raised by the assessee:
"1. That the Ld . CIT[A] has grossly erred in confirming addition of Rs. 13,73,116/- being disputed payment of electricity expenses crystallized in assessment year 2010-11.
2. That the Ld. CIT[A] has erred in holding that there is no comment on the fact that these expenses have already been claimed in earlier year and if these are allowed in this year it will amount to double deduction, in the facts and circumstances of the case that electricity expenses are inclusive of surcharge meaning thereby that no payment has been made to them in earlier year.
3. That the addition confirmed by the Ld. CIT [A] does not mention provisions of the Act under which the said addition has been made.2 ITA No. 3575/Del/2014
Kisaan Engineering Works Pvt. Ltd.
4. That the Ld. C1T[A] has erred in confirming the addition of Rs. 17,15,000/ - in the facts and circumstances of the case by applying provisions of section 50C of the Act whereas the sale consideration is excluded from the definition of Capital Asset of section 2[14] of the Act as stock in trade.
5. That the Ld . C1T[A] has erred in confirming addition of Rs. 125,502/- being legitimate business expenditure.
6. That the order of the Ld . CIT[A] is arbitrary, unjust and against principles of natural justice and income returned may be restored."
3. The assessee company is engaged in the business of manufacturing of flanges, ring s, shafts rolls, etc. The company has two units viz. M/s Sushila Steels which was closed on 05.07.2007 and the other M/s. C.D. Industries taken over by M/s Kisaan Engineering Works P vt. Ltd. on 01.04.2006. The return of income for A.Y. 2010-11 was filed on 28.09.2010 declaring therein income of Rs. 38,18,430/-. The Assessing Officer completed assessment on a total income of Rs.77,22,050/- vide an order passed u/s 143(3) of the Act dated 28.12.2012 which includes addition of on following counts:
(1) Rs. 13,73,116/- on account of prior period expenses. (2) Rs. 17,15,000/- on account of application of Section 50C of the Act.
(3) Rs. 1,25,502/- on account of disallowance of expenses. (4) Rs.6,90,000/ - on account of additional amount surrendered
4. The above additions were confirmed by the Hon'ble CIT(A), Ghaziabad.3 ITA No. 3575/Del/2014
Kisaan Engineering Works Pvt. Ltd.
Prior Period Expenses:
5. In the course of framing assessment order, the Assessing Officer had treated the prior period expenses to b e crystallized in A.Y. 2000-2001 whereas said expenses were under litigation as the electricity department raised the bills for peak hours creating additional charges of Rs.11,72,160/-, the said demand was challenged in the Civil Court, Ghaziabad by the appellant and as such no provision was made in the books of accounts, the electricity department also levied surcharge of Rs.
24,50,986/- and Rs. 6,42,773/- on the above demand. Later on U.P. Power Corporation Ltd. vide an order No. 273 dated 06.02.2010 offered one time settlement scheme where in it was stated that if the disputed demands are paid off, then the entire surcharge would be waived off, the appellant to avoid und ue hardship and uncertainty of the decision of the court opted for the scheme and department also agreed and revise the demand of Rs. 3,81,155/- to an amount of Rs. 1,89,441/-. This way the appellant deposited an amount of Rs. 13,73,116/- which crystallized in A.Y. 2010-11.
6. Further, the Ld. CIT(A) on page 28 of the appellate order observed that appellant has not denied and is silent on the facts that the amount of Rs. 10,25,800/- paid in earlier year out of total demand was not claimed in earlier year and further if these allowed in this year, it will be amount to double deduction. The Ld. CIT(A) has grossly erred in confirming addition of Rs. 13,73,116/- being disputed payment of electricity expenses crystallized in A.Y. 2010-11.
7. We have gone throug h the contents, we are in principle agree that the amount paid under One Time Settlement (OTS) scheme is to be allowed in the year in which the payments have 4 ITA No. 3575/Del/2014 Kisaan Engineering Works Pvt. Ltd.
been made. The ld. C IT(A) categorically held that the assessee has not denied and a silent on the fact that the amount of Rs.10,25,800/- paid in earlier year out of the total demand was not claimed by the assessee in the earlier year as well. Hence, we remand this issue to the file of the AO to examine whether the similar claim has been made and debited in the P&L account for the relevant Assessment Years. In case the assessee has not claimed this amount earlier, we direct that the benefit should be accorded during the current year.
Additio n u/s 50C:
8. During the year, the assessee sold land on 01.09.2010 to the tune of Rs.11,42,660/-, the circle of which was Rs.28,57,000/-. The Assessing Officer brought to tax the difference of the amount between the circle rate and sales price after invoking provisions of Section 50C. It was submitted that the factory near Dankaur Railway Station was closed in September 1995 and the company decided to sale the land after developing the same into residential plots. The assessee submitted that during the year 2001-02, wherein the assessee sold land @ Rs.485/- per sq. yrd. whereas the circle rate being Rs.800/- and in that year the ld. C IT(A) has directed the AO to consider rate of Rs.525/- per sq. yrd. against the report of the valuer determining the rate at Rs.550/- per sq. yrd.
9. The ld. CIT(A) held that the provisions of Section 50C were not inforce for the A.Y. 2001-02 and they have been brought to statute only w.e.f. 01.04.2003. The provisions of Section 50C(2) mandates that the AO may refer the valuation of the capital asset to a valuation officer for determining the fair market value. In this case, the Assessing Officer failed to do so.
5 ITA No. 3575/Del/2014Kisaan Engineering Works Pvt. Ltd.
10. The ld. AR argued that the said land was near to the railway track and also near cremation ground and is very far from the main road and always water lodged. The sale of such land was also under protest and the case has been filed against the sale.
11. Heard the arguments of both the parties and perused the material availab le on record.
12. The similar issue has been ad jud icated by the Co-ordinate Bench of ITAT in the case of Amarshiv Construction Pvt. Ltd . Vs. DC IT in ITA No. 3061/Ahd/2015 vide order dated 29.12.2017. The relevant part of the order is as under:
"2 . W e c om e to t he re lev a nt f ac ts no w. T he as s es s e e c om pa ny h ad s o ld its c ap it a l a s s et s in q u es t i on i .e. a p l ot m eas ur ing 378 3 8s q .ft . c om p ris ed in la nd s urv ey n o.9 74 /27 f or c ons id erat ion of Rs .7 5 ,6 7, 600 /- at T im ba , R . S. N o. 97 4 /14 a dm ea s urin g 40 ,7 7 2s q .ft . f or Rs .81 ,5 4 ,4 00/- a nd R .S. No . 97 4 /2 6 a d m ea s urin g 3 962 5 s q. ft . f or Rs .79 ,2 5 ,0 00 / -; r es p ec t iv ely . T h e s ai d tr a ns a c t io ns a ls o a tt ra c t ed a d d it iona l s t a m p d ut ies . N et ef fec t t h er eo f wa s t hat t he t ot a l c ons id era t io n a m o unt s t o od not iona ll y inc r ea s ed t o Rs .95 ,6 9 ,2 73 /- , Rs .1 ,0 3, 08 ,58 4 /- a nd Rs .99 ,9 1 ,0 20 /- ; r es pec t iv el y. T h e As s es s in g O ffic e r a dop t ed t he ab ov e e nh a nc e d c o ns id e ra t io n(s ) t o inv ok e Sec t io n 5 0 C of t he Ac t res ult ing in l ong t e rm c ap ita l ga in s in ad d it ion in qu es t ion o f Rs .6 2 ,2 1,8 77 / - in as s es s m e nt o rd e r d at ed 2 6. 0 3.2 01 4 .
3. T h e CI T (A ) a ff irm s t he im p ug ne d ad d it ion a s u nd e r:
"5 .2 .3 . F r om t he d et a ils f urn is he d b y t h e a p p e lla nt d u ring t he c o urs e of t he a p p ella t e p roc e ed ings a nd t h e s ub m is si ons m a d e a lo ng w it h t h es e , it is s e en t ha t t he m a rk et v a lu e of t he la nd f ix ed b y t he St a m p D ut y O ff ic e r ha d b e en d is put ed by t h e p urc has er a nd ac c ord in gly , t hey ha d ap p r oa c h ed in a p p e a l t o t he Co lle c t o r, St a mp D ut y Va lu at ion D iv is ion , Pa nc hm a ha ls f or c o rrec t v a lua t i on as pe r the m a rk et pric e . T he t ra ns lat ion of t he l ett er is s ue d b y t he Sub R e gis t ra r , Go dh ra t o t h e pu rc ha s er as k i ng f o r t h e p a y m e nt s of ad d it ion a l St am p D ut y i n re ga rd of on e of t h es e p lot s is r ep rod uc ed b e low :6 ITA No. 3575/Del/2014
Kisaan Engineering Works Pvt. Ltd.
"W e ha v e t o in fo rm yo u t hat a d oc um e nt f or ch a n ge of o w ne rs h ip /s a le wa s rec e iv ed o n 0 7 .09 .2 0 10 v id e Ac k n ow led gem e nt N o.6 0 0/ 201 0 f or Rs .7 5 ,6 7, 60 0 /- f or re gis t ra t io n. T h e p ric e a s p e r the Ja nt ri rec o rd a s on d at e is Rs . 1 , 87 ,2 9 ,90 0 /-. O n t he s a id p r ic e t h e s ta mp d ut y pa y a b le is Rs . 9 ,17 ,7 6 6 / -. I n t he d oc um e nts s ub m it t e d by y ou t he St a m p D u ty pa i d is R s . 3, 71 ,00 0 /- .
In v iew of t h is the s hort fa ll in St a mp D ut y w or ks out to Rs . 5,4 6 ,7 66 /- w hic h is d es ired b y y o u t o b e p a id t he s a m e s h ould b e pa id w i t hi n t he p e riod of 3 0 da ys f rom t he rec eipt of t his not ic e . Aft e r th e rec ei pt o f t he pa y m ent t h e nec es s a ry e nt ries w o uld b e m ad e in th e s a l e d e ed a nd t he s a m e w o uld b e ret u rned .
If t he s a id St am p D ut y is not p a id w it hi n a p e riod of 3 0 d a y s t he s a id doc um ent w ou ld b e r ef er red t o t he Col lec t or St am p D ut y Va lua t i on D iv is io n - 1 /2 , P a nc hm a ha ls f or c orr ec t va lua t io n o f m a rk et p ric e as pe r t h e p r ov is ions o f Sec t io n 32 (k a )(1 ). "
5.2 .4 . T hus , t h e S ta mp D ut y a s p er th e j a nt ri ra t e h as not b e en ac c ept ed in t h is c a s e a nd t h e sa m e h ad be en a pp ea l ed a ga ins t a nd , ac c o rd i ngly , a f res h m a rk e t v a lu e w a s de t e rm ined b y t h e Co llect or , St am p D ut y V a luat i on w h ic h w as s ub s t a nt ia lly lo w e r t ha n t he va lua t i on of t he la nd as p er t he j a nt r i ra t e . F o r e. g. in c as e of R. S. No. 97 4 /27 , t he s a le c ons id e ra t io n s how n b y t he a pp ella nt is R s. 75 ,6 7, 600 /- as a ga ins t w hic h t he j a nt ri rat e wa s Rs .1 ,8 7 ,2 9, 90 0 /-. A ft e r f ilin g ap p e a l a ga ins t t his j a nt ri r at e, t he ma rk et va lue w as d e t erm ined at Rs . 95 ,7 3 ,10 2 /- on w hi ch t h e St am p D ut y w as pa id f or t h e re gist ra t io n of t he s a le d eed . T hus , t he a pp ell a nt ha d al rea dy b e en g iv e n s ub s ta nt ia l re lie f b y t he Col lec t or St a m p D ut y Va l u at ion D iv is ion a nd henc e, a s p e r t he p ro v is i ons of c laus e ( b ) of s ub s ec t ion (2 ) of Sec t io n 5 0 C o f t h e I t Ac t , 196 1 , the AO wa s no t ob li ge d to ref e r t he m at te r fo r fr es h v a lua t i on t o t h e D is tr ic t Va lua t io n Off ic er .
5.2 .5 H e nc e , it is he ld t ha t s i nc e t he m a rk et va lue of t he la nd ha s a lre ad y b ee n d e t erm ined b y t he hi ghe r a ut ho rit y as p e r t he a pp ea l fil ed by t he p urc ha s e r o f t he la nd a nd m a rk et v a lu e of t h e la nds ha v e a lre ad y be en s ub st a nt ia lly red uc ed as c om p a red t o t he m a rk et v a lu e as p e r j an t ri ra t e , he nc e , t h e A O wa s c o rrec t in ad opt ing s uc h m a rk et va lue of 7 ITA No. 3575/Del/2014 Kisaan Engineering Works Pvt. Ltd.
t he la nd s a s d et er m i ned b y t he Collec t o r a s t he sa le c o ns id erat ion rec eiv ed b y t h e a p p e lla nt as p e r t he p rov is io ns of Sec t io n 50 C of t h e IT Ac t , 196 1 . Ac c ord ing ly , t here is no req uir em en t of rem a nd ing t he m at t e r bac k t o t h e A O for ref er ring t he v a lu at ion of t h e la nd t o t he D is t r ic t Va l uat io n Off ic er . T h e ad d it ion ma d e b y t h e A O i s a s p er la w an d he nc e, t h e ap p e lla nt is no t ent it led t o r ec ei v e a ny f u rt h er r elie f . Ac c ord ing ly , t his gro und of ap p ea l is d is m is s ed ."
4. H ea rd b ot h t h e p art i es . Ca s e fil e p er us ed . T her e is n o d is put e f ro m t h e a b ov e na rra t ed fac t s an d ci rc um s ta nc es t hat b ot h t he lo w er a ut ho rit ies ha v e g one b y t h e red uc ed j a nt r i p ric e f or t he p urp os e of in v ok in g Sec t io n 50 C of t h e Ac t s o a s to ma k e t h e im p ug ned lo ng t er m c a p it a l ga ins a dd it io n. T h e CI T ( A ) p a rt ic ula rly is of t he op inio n t ha t t he a b ov e red uc ed j an t r i p r ic e i n St a m p Ac t Ap p e lla t e pr oc eed in gs c omin g t o Rs .9 5 ,7 3, 10 2 /- is j us t a nd pro p er. We how ev er s ee n o r ea so n t o c onc ur w it h t he ab ov e e xt ra ct ed fin d in gs as the im p ug ned ad d it ion u /s .5 0 C(2 ) of the Ac t m a nd at es ref ere nc e t o th e D V O in c as e a n as s es s e e cont es ts th e j a nt ri pr ic e i n q u es t ion t o b e h igh er t ha n f a ir m a r k et v a lu e o f t he re le va nt c ap it a l as s et. H o n' b le Ca lc ut t a hi gh c ou rt 's j ud gm ent in (2 0 15 ) 3 72 I T R 83 (Ca l. ) Sun il K um a r A g a rw a l vs . CI T ho lds t ha t s uc h a r ef e renc e is m a nd at ory ev en i f a n a s s es s ee does n ot m a k e a ny s uch p ra y e r. W e t her ef or e ac c ep t a s ses s ee 's s ol e s ub s ta nt iv e gr iev ance f or s ta t is t ic a l pu rp os es a nd r em it th e is s ue ba c k t o th e As s es s ing O ff ic e r t o p r oc eed a fr es h a s p er la w u/ s.5 0 C(2 ) of t he A ct by m a k ing re fe re nc e t o t h e D V O. "
13. Since, a princip le has been laid down that as per Section 50C(2), the reference to the DVO is mandated , for substantial justice, we remit the issue back to the AO with direction that any addition can be made only after making the reference to the DVO as per the provisions of Section 50C(2).
Disallowance of Rs.1,25,502/-:
14. This d isallowance has been made by the revenue on the grounds that there is no business of the assessee, however we find that the expenses incurred in relation with employment of 8 ITA No. 3575/Del/2014 Kisaan Engineering Works Pvt. Ltd.
security guard and others cannot be d isregarded. Hence, the disallowance mad e is liable to be deleted .
15. In the result, the appeal of the assessee is allowed for statistical purpose.
Order Pronounced in the Open Court on 31/10/2022.
Sd/- Sd/-
(N. K. Choudhary) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 31/10/2022
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR