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Showing 201 to 220 of 558 Records
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2012 (2) TMI 539
Disallowance on account of debit balance written off - Held that:- When the mater was carried before the 1st appellate authority, he has perused the details and outstanding balance and has noted that it was a business decision to write off the amount as bad debt for the year under consideration. With this brief background, we have been informed that now this issue stood settled by the Hon’ble Supreme Court in the case of TRF Ltd as reported in (2010 (2) TMI 211 - SUPREME COURT). This ground of the revenue is therefore, dismissed.
Unexplained investment in stock - Held that:- When inventory of stock was taken at the close of the accounting period, the same was not recorded therein. Next, in respect of the other item of controversy, a list of all the sales involved through which the stock was dispatched to various parties along with their names, invoice number, placed on record. As per the said details, the dates of invoices were starting from 28.03.2005 to 31.03.2005 and on this basis, it is claimed that the said stock was not accounted for in the books of account. We are of the view that the reason given by the assessee for non inclusion of these two items in the books of account on account of close of accounting period was genuine as also acceptable. We, therefore, find no fallacy in the relief granted by the Ld. CIT(A). The same is hereby confirmed and this ground of the revenue is dismissed.
Addition on expenditure incurred on foreign raining of the Director’s daughter as employee of the assessee company - Held that:- This issue is squarely covered by the decision of Hon’ble Karnataka High Court rendered in the case of RAS Technologies (2010 (7) TMI 670 - KARNATAKA HIGH COURT ) wherein the expenditure for foreign education of Managing Director’s son was held as business expenditure and therefore, directed to allow the same. Following this decision and the decision referred by Ld. CIT(A), we hereby confirm the relief and resultantly, this ground of the revenue is hereby dismissed.
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2012 (2) TMI 538
Issues involved: Treatment of waived loan amount as income under the head 'income from other sources' u/s 41(1) of the Income Tax Act.
The judgment by the Appellate Tribunal ITAT Mumbai in 2012 involved an appeal by the Revenue against the order of the ld. CIT(A) for the assessment year 2004-05. The case concerned the treatment of a waived loan amount as income under the head 'income from other sources' u/s 41(1) of the Act.
The assessee company, engaged in manufacturing and trading, declared a loss in its return. The AO observed that the assessee credited an amount under 'other income', which included excess liability written back. The assessee claimed reduction for interest provisions disallowed in previous years. The AO added the amount to the income, citing that every income is chargeable to tax, based on the Supreme Court's decision in S.G. Mercantile Corporation P Ltd V/s CIT.
On appeal, the ld. CIT(A) disagreed with the AO's interpretation, stating that the waiver of the loan amount did not fall under sec. 41(1) and no other provision applied to consider it as income. The ld. CIT(A) deleted the addition made by the AO.
The Revenue appealed the CIT(A)'s decision, arguing that the addition made by the AO should not have been deleted. During the hearing, the ld. DR admitted the misplacement of reliance on the S.G. Mercantile Corporation case and cited a different case in support of restoring the AO's order.
The Tribunal analyzed the submissions and found that since sec. 41(1) was not invoked by the AO, the waiver of the loan amount could not be treated as income under 'income from other sources'. Citing relevant case laws, the Tribunal held that the addition made by the AO was not sustainable in law.
The Tribunal distinguished the case relied upon by the ld. DR, stating that there was no evidence that the loan was taken for trading purposes. The Tribunal also noted that the issue in the present case was different from the case cited by the AO.
Ultimately, the Tribunal upheld the decision of the ld. CIT(A) to delete the addition made by the AO, rejecting the grounds taken by the Revenue. The appeal filed by the Revenue was dismissed, and the order was pronounced on 24th Feb., 2012.
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2012 (2) TMI 537
Issues: Application for waiver of pre-deposit of duty, interest, and penalty u/s Cenvat Credit Rules, 2004 based on denial of credit of service tax paid by service provider for after sales service during warranty period.
Summary:
The applicant filed an application seeking waiver of pre-deposit of duty amounting to Rs. 2,59,72,450, interest, and penalty, as the demand was confirmed due to denial of credit of service tax paid by the service provider for providing after sales service during the warranty period. The main contention was whether the after sales service activity could be considered as an input service, as the credit was denied on the basis that it was a post-manufacturing activity.
The applicant argued that the after sales service activity was part of their contractual obligation with the customer and should be considered as an input service, falling within the definition provided under Rule 2(1) of the Cenvat Credit Rules, 2004. They cited precedents where similar demands were contested and pre-deposit was waived by the Tribunal and High Court.
On the other hand, the Revenue contended that since the TVs were already manufactured and cleared before the service tax was paid by the service provider, the activity could not be classified as an input service.
After considering the arguments, the Tribunal found that the applicant, being the recipient of the taxable service, had a strong case for waiver of pre-deposit based on the definition of input service provided in the Cenvat Credit Rules, 2004. Therefore, the pre-deposit of duty, interest, and penalty was waived, and recovery was stayed during the appeal process. The stay petition was allowed.
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2012 (2) TMI 536
Determination of unaccounted investments - Held that:- Deletion of addition on the reason that there is no seized material to estimate the turnover and thereby estimate the income. Similarly, for determination of expenditure which was claimed in the regular returns cannot be disallowed in the block assessment consequent to the search action as the disallowance is only could be subject matter in regular assessment not in the block assessment.
Estimation of the income at 15% of the undisclosed turnover and disallowing net cash expenditure at 7% - Held that:- Assessing Officer has not only enhanced the gross profit rate but also increased the estimate and increased the quantum of turnover. The assessee has not disputed the quantum of suppressed turnover. However, the assessee challenged the rate of net profit and filed a chart as above. As regards the net profit, we find that in earlier years records and past history could be the basis to determine the rate of profit provided if the book results are actually accepted by the Department in earlier years. In the present case all the assessments from 2002-03 to 2008-09 are subject matter of dispute before us and we cannot take the result of these assessment years as base to determine the net profit. In our opinion, considering the nature of industry and prevailing market conditions, it is reasonable to estimate net profit at 8% of the suppressed turnover. Accordingly, we direct the Assessing Officer to estimate the income of the assessee at 8% of the suppressed turnover in addition to the income from regular business. The ground raised by the assessee for these three assessment years i.e., 2006-07, 2007-08 and 2008-09 is partly allowed.
Disallowance on chance of inflation of expenditure under the head production expenditure, employee benefits and administrative expenditure - Held that:- The assessee is a subcontractor. Assessee is engaging labour at site at far flung places. In such circumstances, it is difficult to have documents for such expenditure, to the satisfaction of the assessing officer. It is also difficult to verify the identity of the labour, after lapse of many years. The accounts of the assessee have been audited and auditor's certificate under section 44AB has also been furnished. The assessing officer has not analysed the expenses compared to the turnover for the earlier years. A search has been made in the premises of the assessee and no incriminating evidence in this regard has been found. Only an ad hoc disallowance of expenditure claimed by the assessee has been made. However, from the observations of the lower authorities it can be inferred that full details of expenditure have not been properly documented. Hence, the possibility of some inflation of such expenses cannot be ruled out. Considering totality of facts and circumstances of the case, we are of the opinion that disallowance of 5% of labour and site expenses are reasonable
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2012 (2) TMI 535
Deduction u/s 10A - Netting of Income and Expenditure - Income received by the assessee from liquidated damages recovered from suppliers, write back of retention moneys, sales tax recoveries, exchange fluctuation gain, write back of credit balance in customer accounts were disallowed - HELD THAT:- Assessee is in the course of export business. While calculating the profit of the eligible business the expenses and income of the same unit are required by netting the expenses and the income are eligible to the same nature. Therefore, when there is a direct nexus between the export business and the aforesaid income, that should be treated as profits and gains from exports and deduction u/s 10A of the Act is allowed.
Decision in favour of the assesse.
Discontinuation of Business - Assessee business was discontinued, therefore the assessee’s valuation was not accepted and the loss was disallowed by AO as the items were imported and they are presumably of high value. - HELD THAT:- Once the principal himself in carrying on the business and that the agent has discontinued the business the chances of anybody approaching the agent to get those product is remote and once the assessee closed his account discontinuing the business, the products which were in stock naturally would not have any value. Also, technological obsolence and cannibalization of equipment to spare parts due to non supply appears plausible in the realm of business and such occurrence is not rare. Therefore, the loss claimed by the assessee is allowable as deduction.
Decision in favour of the Assesses.
Payment of Gratuity and PF - Covered u/s 36(1)(va) & 2(24) or not? - Deduction u/s 43B - Payment of provident fund and gratuity was not considered as allowable deduction u/s 43B by Tribunal - HELD THAT:- Relying on the judgement of COMMISSIONER OF INCOME-TAX VERSUS SABARI ENTERPRISES [2007 (7) TMI 169 - KARNATAKA HIGH COURT], they are liable for deduction u/s 36(1)(va) read with section 2(24) (x), the same can be claimed deduction by the assessee only if the contribution is paid within the due date for claiming exemption.
Decision in favour of Assessee.
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2012 (2) TMI 534
TDS u/s 195 - Held that:- When the equipments were not operated, used or under the control of the assessee, then the payments made for availing the services of Rackspace cannot be said as royalty. When the payments are not in the nature of royalty as per Indo-USA DTAA as well as per Explanation 2 (via) of Sec. 9(1) of the I T Act, then recipient of the said payments being non-resident having no PE is not liable to tax in India. Therefore, the payments in the hands of Rackspace are not taxable in India and consequently, no tax required to be deducted u/s 195 on such payment/remittance by the assessee as held by the Hon’ble Supreme Court in the case of GE India Technology Centre P. Ltd. v. Commissioner of Income-tax reported in [2010 (9) TMI 7 - SUPREME COURT OF INDIA ].
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2012 (2) TMI 533
Issues involved:
1. Whether insurance claim paid should be included for computing deduction u/s 80IB of the Income Tax Act, 1961.
2. Disallowance under Section 14A for exempt dividend income.
Issue 1: Insurance claim for deduction u/s 80IB:
The High Court referred to a previous decision in Commissioner of Income Tax Vs. Spotking India Ltd. where it was concluded that insurance claim paid should be included for computing deduction u/s 80IB. The Revenue argued that if the insurance claim was for raw material, the previous decision would not apply. However, the assessee clarified that the insurance claim was for loss of goods in transit, which were manufactured by the eligible undertaking. The CIT (Appeals) wrongly assumed the loss was related to stock-in-trade without proper reasoning. The tribunal confirmed that the insurance claim was not for raw material. The Revenue cited a different view from Punjab and Haryana High Court, but the High Court upheld the previous decision without referring the matter to a larger Bench.
Issue 2: Disallowance under Section 14A:
Regarding disallowance under Section 14A for exempt dividend income, the assessee had disallowed an amount of &8377; 1,73,038, which included indirect expenses. The Assessing Officer did not analyze the direct and indirect expenses or comment on the deduction made by the assessee. The Assessing Officer applied Rule 8D, but the High Court clarified that this rule, inserted in 2008, is not retrospective and does not apply to the assessment year 2007-08.
In conclusion, the High Court found no merit in the appeal and dismissed it.
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2012 (2) TMI 532
Deduction of maintenance charges for the purpose of computing net annual value u/s.23 - CIT (A) held that maintenance charges are eligible for deduction within the limit of 30% u/s.24 - Held that:- ITAT, Mumbai in the case of Sharmila Tagore (2004 (6) TMI 591 - ITAT MUMBAI) in the said case it is held that the maintenance charges paid by the assessee have to be deducted even determining the annual value of the property u/s.23. We, accordingly, following the decision of the co-ordinate Bench allow the grounds taken by the assessee and direct the A.O. to re-compute the income under the head ‘income from house property’. Assessee’s appeal is allowed.
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2012 (2) TMI 531
The High Court dismissed the appeal filed by the Commissioner of Customs against the Customs Excise and Service Tax Appellate Tribunal's decision. The Tribunal upheld the view of the Commissioner (Appeals) regarding a discrepancy in the invoice and lack of evidence to initiate proceedings against the importer-respondent. The Court found no grounds to interfere as these were factual findings, and there was no question of law to be adjudicated.
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2012 (2) TMI 530
Issues involved: Appeal against the order of the ld. CIT(A) confirming the assessee's income as income from house property instead of income from business and profession.
Summary:
Issue 1: Classification of Income
The sole issue in this appeal was the classification of the assessee's income as income from house property instead of income from business and profession. The ld. CIT(A) confirmed the income as income from house property based on previous Tribunal orders and the facts of the case.
The ld. CIT(A) referred to a previous order of the ITAT in the assessee's own case for the assessment year 2001-02, which decided in favor of the Revenue. The issue was found to be covered by the jurisdictional Bench of the ITAT, Chennai, against the appellant. The appeal filed by the appellant was dismissed, upholding the Assessing Officer's treatment of the income from letting out house property.
Issue 2: Previous Tribunal Orders
The ld. AR of the assessee acknowledged that the issue had been decided against the assessee in previous Tribunal orders for assessment years 2002-03, 2003-04, and 2005-06. The Assessing Officer treated the rental income as income from house property, which was confirmed by the ld. CIT(A) based on the earlier Tribunal orders. The ld. AR argued that the facts in the present year were identical to those in previous years, leading to the confirmation of the ld. CIT(A)'s order.
No other points were raised by the assessee, and the appeal was ultimately dismissed by the ITAT Chennai.
This summary provides an overview of the judgment, highlighting the key issues, decisions, and arguments presented in the case.
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2012 (2) TMI 529
Addition u/s 68 - bogus investors - Held that:- The finding recorded is essentially of fact and particularly that the persons who are alleged to be the bogus investors have been traced and identified. Once the authorities have got all the details, including the names and addresses of the shareholders, their PAN/GIR number, so also the name of the Bank from which the alleged investors received money as share application, then, it cannot be termed as "bogus". Tribunal's finding that there is no justification in the addition made under Section 68 of the Income Tax Act, 1961 neither suffers from any perversity nor gives rise to any substantial question of law.
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2012 (2) TMI 528
Unexplained Cash Credits u/s 68 - Assessee has failed to prove the identity of the share applicants, the share application money as received by the assessee, is liable be added to the income u/s 68 - Before CIT, assessee filed detailed written submissions, including address, PAN and has referred to further documentary evidences filed and compliances made by such share applicants before AO is in response to notice u/s.133(6) issued.
HELD THAT:- We observed that summons were issued to the share applicants, requiring certain information u/s 131, the share applicants duly confirmed that they gave share application money to assessee through cheque, meaning thereby the identity of the share applicants was proved. Other documents were also furnished by them acknowledging the return. All these documents clearly prove their identity if the summons would not have been received or the addresses of the share applicants would have been fake, there was no question of service of summons and consequent reply by such share applicants. In view of these facts, the decision from Hon'ble Apex Court in the case of COMMR. OF INCOME TAX VERSUS M/S LOVELY EXPORTS (PVT) LTD [2008 (1) TMI 575 - SC ORDER], clearly comes to the rescue of the assessee, where it was held that even if such share applicants are bogus, but their identity is proved, then no addition is warranted in the case of the assessee.
In the present appeal, since the identity of such share subscribers, as we have discussed above, was established, therefore, no addition u/s 68 is warranted in the case of the assessee company- Decision in favour of Assessee.
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2012 (2) TMI 527
Issues involved: Whether provision for maintenance costs can be claimed as an expense u/s 37 of the Income Tax Act, 1961.
Summary:
The High Court heard appeals by the Revenue for assessment years 2003-04 and 2005-06 regarding the claim of maintenance costs as an expense u/s 37 of the Income Tax Act. The Tribunal found no merit in the Revenue's grounds, noting the consistency in the assessee's accounting principles over the years. The Tribunal upheld the order of the Ld. CIT (A) based on the principle of consistency. The Revenue confirmed that they did not appeal against adverse orders in earlier assessment years where similar additions were made and later deleted by the CIT (Appeals).
The Revenue mentioned that the assessee changed their accounting method from assessment year 2007-08 onwards, no longer making provisions for maintenance costs to avoid confusion or litigation. The Court, after examining the Tribunal's reasoning, declined to admit the appeal, emphasizing that the provision for maintenance was based on flying hours undertaken in the relevant year. It was noted that aircraft require maintenance after prescribed flying hours, and interfering with the established accounting practice on a piecemeal basis could create difficulties.
In conclusion, the appeal by the Revenue was dismissed, considering the consistent accounting practice followed by the assessee and the rationale behind the provision for maintenance costs based on flying hours undertaken.
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2012 (2) TMI 526
Deemed dividend addition - payments for business exigencies/purposes - loans and advances - Held that:- The assessee has filed the copy of agreements and memorandum of undertaking executed by the parties and other connected papers beside order of the party for the relevant assessment year also filed. The assessee has also explained the business exigencies under which such amount were paid. The assessee has in support relied upon the decisions in the case of Smt. Nigam Chawala (2009 (1) TMI 534 - HIGH COURT OF DELHI), Bombay Oil Industries Ltd. (2009 (1) TMI 519 - ITAT MUMBAI ).
The Assessing Officer did not dispute or contest the said contention of the respondent-assessee in the first appellate proceeding in the said remand report. In view of the aforesaid, we do not find any merit in the present appeal and the same are dismissed - Decided against revenue
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2012 (2) TMI 525
Issues Involved:
The judgment involves the issue of the allowability of deduction u/s. 80IB for different units of a business claimed by the assessee as independent units.
Comprehensive Details:
Issue 1: Allowability of Deduction u/s. 80IB for Unit V
The dispute revolved around the deduction u/s. 80IB claimed by the assessee for Unit V, along with other units. The Assessing Officer (AO) disallowed the deduction for Unit V based on a search operation that concluded the units, except Unit IV, were not independent. The CIT(A) allowed the claim, citing previous Tribunal decisions in the assessee's favor for similar assessment years.
The Tribunal examined the records and noted that previous Tribunal decisions favored the assessee's claim of treating the units as separate and independent. The Tribunal referred to the search operation and the unity of control observed by the AO. The Tribunal upheld the CIT(A)'s decision based on the consistency of facts with previous assessment years.
The Tribunal highlighted that in previous assessment years, the Tribunal had allowed the claim of deduction u/s. 80IB for the assessee's units treated as separate and independent. Given the identical facts, the Tribunal found no merit in the Revenue's appeal and upheld the CIT(A)'s decision in favor of the assessee regarding Unit V.
Therefore, the Tribunal dismissed the appeal of the Revenue, affirming the CIT(A)'s decision to allow the deduction u/s. 80IB for Unit V as an independent unit.
The judgment was pronounced on 9th February 2012.
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2012 (2) TMI 524
Denial of deduction u/s 80-IA(4) - income derived by the assessee from development of eligible infrastructural facilities - Held that:- On the requirements of clause (c) of sec. 80-IA(4)(i) requiring it to be harmoniously read with the main sec. 80-IA(4), we do not find substance in the objection raised by the Revenue. We thus respectfully following the decision of the Hon’ble Bombay High Court on the issue in the case of CIT vs. ABG Heavy Industries Ltd & Ors (2010 (2) TMI 108 - BOMBAY HIGH COURT ) decide the matter in favour of the assessee with this finding that assessee is eligible to claim the deduction in question u/s 80-IA (4). The issue is thus decided in favour of the assessee.
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2012 (2) TMI 523
Business income under Section 28(iv) - Held that:- The Tribunal has recorded a finding to the effect that the holding Company had initially advanced funds to the assessee in 1998 as share application money. This was later on transferred as an unsecured loan. The Tribunal has held that the loan availed of for acquiring a capital asset (shares) was waived and cannot be treated as assessable income for invoking the provisions of Section 28. The original receipt being of a capital nature, its waiver did not have the quality of changing its character into a revenue receipt. No substantial question of law would arise. The appeal is accordingly dismissed.
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2012 (2) TMI 522
Addition on account of ‘profits on sale of investments’ - Deduction for Investments written off - Deduction for amortization of Premium on Investment debited to Profit & Loss A/c - Benefit of Exemption under section 10(38) in respect of Profit on sale of investments, Rebate under section 88E and concessional rate of tax under section 111A - Availability of Section 10 Exemption - Non applicability of provisions of section 14A - Non-applicability of provisions of section 115JB i.e. MAT - Higher Interest charged under section 234C.
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2012 (2) TMI 521
Trading addition - applying GP rate of 25.5% or 25.01% - Held that:- Where provisions of section 145(3) is attracted, then addition should be made taking into consideration the past history of the case. Past history is that assessee declared 24.92% in the last year and in this year GP rate declared is 25.01%. Taking into consideration this aspect and taking into consideration that certain purchases remained unverifiable, we are of the view that if a trading addition of ₹ 4,00,000/- is sustained that will meet the ends of justice. We order accordingly. Ground of the assessee is allowed in part and ground of the department fails.
Disallowance of commission expenses - appeal of the assessee was allowed in part by the ld. CIT (A) as he restricted the disallowance of commission @ 20% to the parties whose summons under section 131 could not be served - Held that:- In the year under consideration, there are five parties which were involved for assessment year 2006-07 to whom the commission was paid. Total commission paid to these parties was ₹ 5,83,763/- as ld. CIT (A) restricted the disallowance @ 20% on this commission on the basis of his finding for A.Y. 2006-07. Order of ld. CIT (A) for A.Y. 2006-07 was confirmed by the Tribunal. Facts are similar for the year under consideration. Accordingly we confirm his finding on this issue. The ground of the assessee as well as ground of the department fails.
TDS u/s 194H - Disallowance under section 40(a)(ia) - non deduction of tax on service fees retained by the bank on credit card transaction - Held that:- There is no such relation between the bank and the shop keeper which establishes the relationship of a Principal and Commission Agent. Technically it may be written that bank will charge certain percentage of commission but this is not a commission because assessee sells its goods against credit cards, and on presentation of bills, the bank has to make the payment. It is not the case that bank has advised the assessee to sell their goods to its customers then he will pay the commission. It is reversed in a situation as bank issued credit cards to the credit card holders on certain fees or whatever the case may be and the card holder purchases material from the market through his credit card without making any payment and that shop keeper presents the bill to the bank against whose credit card the goods were sold and on presentation of bill as stated above the bank makes the payment. Therefore, in our considered view, provisions of section 194H are not attracted in this type of transaction. Therefore, we hold that addition made and confirmed by ld. CIT (A) was not justified. Appeal of the department is dismissed.
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2012 (2) TMI 520
Sale value in respect of transfer of tenancy rights for the purpose of computation of capital gain - stamp duty value adoption - sec 50C applicability - Held that:- Assessee had shown value of ₹ 55.00 lacs in respect of transfer of tenancy rights relating to about 1800 sq.ft. area of factory godown. Capital gain has to be computed on the basis of sale consideration received or accruing to the assessee. Even if the document was not registered, the capital gain has to be computed on the basis of the sale consideration shown and received by the assessee unless there was material to show that the sale consideration was understated. Market value cannot be substituted for sale consideration while computing capital gain. Only for the limited purpose of computation of capital gain in respect of sale of land and building, stamp duty value has to be substituted for sale consideration in view of specific provisions of section 50C. Therefore, provisions of section 50C can not be applied in case of transfer of tenancy rights in respect of land or building or both.
In this case, admittedly the document was not registered and no stamp duty had been paid. Therefore stamp duty value can not be adopted for the purpose of computation of capital gain and the value shown in the agreement has to be adopted as there is no material to show that the assessee had understated the sale consideration. We, therefore, see no infirmity in the order of CIT(A) and the same is, therefore, upheld.
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