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2013 (5) TMI 551 - AT - Income TaxValuation of flats sold - assessee, a company in the business of construction of property sold flats to its directors and principal shareholders - sale to a related party - assessee for the purpose of accounting follows project completion method - whether Assessing authority has competence to disturb the sale consideration as reflected in the assessee's regular books of account maintained in respect of the transactions of the business carried on by him during the relevant year - Held that:- On going through the facts of case there is the vast difference between the stamp valuation as per the Stamp Duty Authorities and the price at which the sales have been made. As such, though in agreement in principle with the AO that the assessee's declared sale rate is artificial and totally unexplained, so that it cannot find acceptance, yet cannot, in the absence of complete details, also accede to the AO's estimation thereof, and the matter is indeterminate and requires a composite review. True, genuine and bona fide transactions, even if made below par, the fair market valuation would not have any tax implication, being only undertaken in the normal course of business and in its interest. The caveat in the foregoing proposition, however, is extremely important, and it is this which remains to be satisfied in the facts and circumstances of the case. The transaction is between related parties, being only to the directors and principal share-holders of the assessee-company, and the difference in values is significant. Under the circumstances, therefore, it is fit and proper to, while setting aside the impugned order, restore the assessment back to the file of the AO to make a fresh assessment of the profit qua the three flats constructed from 2001 to 2005, and sold during the relevant previous year, by taking all the relevant facts and circumstances of the case into account, per a speaking order, and after allowing the assessee a proper opportunity of hearing. The assessed sale consideration for the flats on the first five floors, though, stands confirmed. Revenue's appeal is partly allowed and partly allowed for statistical purposes.
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