Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (3) TMI 1714 - AT - Income TaxDisallowance u/s 40(A)(2)(b) - assessee during the year had purchased land worth ₹ 1.75 crores from one of the Directors namely Ranjit Shitole - payment made in excess to the fair market value of the land - HELD THAT:- Undoubtedly, the plots which are so developed are smaller in size and would fetch higher price as compared to the price paid for the large plots of land. There is no dispute to the same. However, we must consider the sale transaction entered into by the assessee, wherein the said plot of land measuring 300 square meters was sold for ₹ 9,90,165/- i.e. sale price agreed upon between the parties. 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 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. Another aspect which needs to be kept in mind is that person Shri Ranjit Shitole from whom the said plot of land was purchased was taken as Director / shareholder and also given option to share the profits by the assessee company, since it was not in a position to pay huge amount to the said person. No merit in the orders of authorities below in applying the provisions of section 40A(2)(b) of the Act on the ground that transaction is with related party as defined in section 40A(2)(b). - Decided in favour of assessee.
|