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2021 (7) TMI 196 - AT - Income TaxRevision u/s 263 - case of the assessee was selected for scrutiny and assessment u/s.143(3) - as per CIT AO failed to examine the admissibility of the interest expenses deducted under the head income from business - valuation officer had determined the fair market value of the sold property at ₹ 2,32,04,000/-, however, the Assessing Officer has taken the sale consideration of ₹ 2,02,50,000/- as per the sale deed instead of ₹ 2,32,04,000/- determined by the DVO - HELD THAT:- As noticed that during the course of assessment proceedings vide notice u/s. 142(1) Assessing Officer has made specific investigation and verification on the issue of claim of interest expenditure AO has asked the assessee in the notice u/s. 142(1) to furnish the copies of ledger accounts detail of lenders and purpose for which borrowed funds have been used. Again vide notice u/s. 142(1) AO has also asked the assessee to prove nexus between deduction claimed of and income earned. In response to query raised by the AO the assessee has duly furnished the copies of ledger account of interest paid on borrowed fund along with copies of ledger account of all the parties to whom the interest was paid -assessee has specifically explained that funds were utilized for the business purpose and also filed copies of balance sheet and ledger account for verification. It is noticed that again vide letter dated 9th March, 2015 the assessee has pointed out that he has submitted copies of balance sheet, confirmation of all the persons from whom the funds were borrowed and also given the break-up of the gross income before deducting any expenses. The assessee has also explained that many of the borrowed funds were carried forward from the earlier years and in all these earlier years he has claimed the deduction of interest on borrowed funds. Pr. CIT has failed to substantiate how the Assessing Officer has not examined the admissibility of interest expenses, therefore, the ld. Pr. CIT is unjustified in treating the interest payment as not allowable. Correct sale consideration adoption while determining the capital gain in the order u/s. 143(3) - We have gone through the report of the DVO and it is noticed that nowhere in his report the DVO has discussed the encroachment of the land which compelled assessee to sell the land at the price which was only less by about 12% from the value determined by the DVO in his report. - AO has considered the material facts of the existence of encroachment on the land and the finding since the variation in the value shown in the sale deed and the value reported in the DVO report was only 12.73% which was within the tolerable limit of 15% variation as recognized by the Hon’ble Supreme Court in the case of C.B. Gautam [1992 (11) TMI 1 - SUPREME COURT] .We consider that judicial findings as discussed in this order articulate the fact that small variation within the tolerable limit of 15% as held by Hon’ble Supreme Court as elaborated supra between the value shown by the assessee and the value of the DVO is liable to be ignored because of element of estimation involved in valuation of immoveable property. Thus we consider that order passed under section 263 of the act is not sustainable - Decided in favour of assessee.
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