TMI Blog2009 (12) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... -trade, what accrues to the assessee is accruing as per the sale deed executed by the assessee. The assessee has declared the income on the basis of sale deed executed by it. There is no provision in section 28 to substitute the accrued consideration for market value of such consideration. Assessing Officer has simply applied the Wealth-tax Rules for valuing the property but has neither examined the purchaser nor has independently found out whether the assessee has received any consideration over and above the stated consideration. Except the suspicion or an opinion that the property is undervalued, no material is available to the Assessing Officer to presume that any on money was received by the assessee or that anything over and above the stated consideration accrued to the assessee. Where the asset sold by the assessee is a capital asset, the income from which is chargeable as capital gain. Prior to insertion of section 50C there was no provision to substitute the fair market value for the consideration accruing as a result of transfer for the purpose of capital gain under section 48 of the Act. While considering those provisions the hon'ble Delhi High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , dated April 20, 2009, for the assessment year 2005-06 in an appeal against the assessment order framed under section 143(3) of the Income-tax Act, 1961 (the Act). The Revenue has raised the following ground before us: "On the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) has erred in deleting the addition of Rs. 2,00,00,000 on account of undervaluation of sale price of the property based on rent capitalisation method." The assessee is engaged in the business of real estate, i.e., as builders/ estate and property developer. The assessee filed a return of income declaring income of Rs. 19,43,380. The Assessing Officer noted that the assessee was owning one property as its stock-in-trade, which was sold for a sum of Rs. 100 lakhs. The said property was purchased on October 30, 2003, for a sum of Rs. 80 lakhs. The purchase price and other expenses incurred for acquiring this property were worked out at Rs. 96,65,300. The property was given on rent to M/s. Joy International Management Academy P. Ltd. for a monthly rent of Rs. 2 lakhs with effect from August 1, 2004. Later on the assessee sold the property for a sum of Rs. 100 lakhs. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e us. Whereas the learned Departmental representative Shri Manish Gupta sought to rely upon the finding of the Assessing Officer, learned counsel for the assessee Shri Amitoj Aneja reiterated the submissions made before the Commissioner (Appeals) and his findings thereon. We have considered the relevant facts, arguments advanced and the case law cited. The following three dates are important. (i) The property under consideration was purchased on October 30, 2003, for a sum of Rs. 80 lakhs. (ii) The property was let out vide lease deed dated July 15, 2004, effective from August 1, 2004, at a monthly rent of Rs. 2 lakhs. (iii) The property was sold on February 17, 2005, for a sum of Rs. 1 crore. The Assessing Officer has made an addition in the sale price adopting the report of the Valuation Officer in some other case of rented property, taking rent capitalisation as the basis and adopting a multiplier of 12.5. The purchase price of Rs. 80 lakhs stands accepted in the assessment year for the year 2004-05, i.e., immediately preceding assessment year. Besides alleging that the fair market value exceeds his estimation of the value that the property could be sold for, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substitute the accrued consideration for market value of such consideration. The Assessing Officer has simply applied the Wealth-tax Rules for valuing the property but has neither examined the purchaser nor has independently found out whether the assessee has received any consideration over and above the stated consideration. Except the suspicion or an opinion that the property is undervalued, no material is available to the Assessing Officer to presume that any "on money" was received by the assessee or that anything over and above the stated consideration accrued to the assessee. Where the asset sold by the assessee is a capital asset, the income from which is chargeable as capital gain. Prior to insertion of section 50C there was no provision to substitute the fair market value for the consideration accruing as a result of transfer for the purpose of capital gain under section 48 of the Act. While considering those provisions the hon'ble Delhi High Court in the case of Smt. Nilofer I. Singh [2009] 309 ITR 233 held that the Revenue is not justified in substituting actual sale consideration in agreement to sell by the value arrived at by the Departmental Valuation Officer. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
