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TMI Blog2013 (12) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the subsequent year would have no bearing on the value of closing stock as on March 31, 2006. 2. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in deleting the addition of Rs. 75,00,000 made by the Assessing Officer on account of undervaluation of closing stock of land as the assessee has not given any basis as how he arrived at this figure. 3. That the order of the learned Commissioner of Income-tax (Appeals) be set aside and that of the Assessing Officer be restored. 4. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed of." 3. In the cross-objection, the assessee has raised the following grounds of appeal : "1. That the worthy Commissioner of Income-tax (Appeals), Ludhiana has very rightly deleted the addition of Rs. 75 lakhs made by the Assessing Officer on account of alleged undervaluation of closing stock of land. 2. That the addition was deleted on the basis of facts and circumstances of the case, since there was a dispute with regard to the very ownership of land in March, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 75 lakhs, by which the closing stock was undervalued. 5. The learned authorised representative, on the other hand, referred to various pages of the paper book, such as 4, 25 to 28, 33, 51 and 94. He, also, referred to map in the first paper book. The learned authorised representative further contended that due to dispute or litigation, market value of the land in question had a downward slide. The appellant had made huge investment by way of advances paid in respect of lands, just at the back of the land in question and the appellant was not in a position due to civil suit, to develop that land and convert the same into a colony. The learned authorised representative, further, placed reliance on the decision of the hon'ble Punjab and Haryana High Court in the case of Pirthipal Singh v. Gurdev Singh, Civil Revision No. 156 of 1998 dated August 7, 2000. The learned authorised representative, stated that civil suit was filed, as is evident from page 31 of the paper book on March 11, 2006. It was, further, pointed out by the learned authorised representative that the stay order dated April 5, 2006 in the case of Amritsar Rayon and Silk Mills P. Ltd. was passed by the competent Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills P. Ltd. filed a suit against the assessee stating that they had already paid a sum of Rs. 70 lakhs as byana for the same property and therefore, claimed that the registration executed in the assessee's favour was not correct. On the strength of the agreement M/s. Amritsar Rayon and Silk Mills P. Ltd. made further agreement to sell the same land to M/s. Futuristic Solutions Ltd. and received a sum of Rs. 70 lakhs from them. A stay was granted to M/s. Amritsar Rayon and Silk Mills P. Ltd. by virtue of which the assessee was debarred from making the sales of any land. The assessee paid Rs. 70 lakhs and a further sum of Rs. 70 lakhs was kept in bank fixed deposit receipt. Later on the court and then the hon'ble Punjab and Haryana High Court confirmed the stay. As a result of above legal problems, the assessee could not develop the colony as the disputed land was at the front. In view of the above, the assessee paid Rs. 2,30,000 (as per the assessee it is actually Rs. 2.30 crores) to M/s. Futrustic Solutions Ltd. in 2007 and they in turn agreed to withdraw all the suits and not to pursue the case before the hon'ble Punjab and Haryana High Court. It was under above circumstances tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on March 18, 2006 and there was no verdict up to March 31, 2006 and therefore filing of suit had no impact on the value of the impugned land, the same in my opinion is not tenable. The assessee has stated that immediately after the suit was filed on March 18, 2006, the land became a disputed property. The fact of dispute was reported in newspapers. Legal dispute in my opinion has adversely impacted the price of land. Now, coming to the issue of undervaluation of Rs. 75 lakhs the assessee has already explained that it had paid Rs. 70 lakhs to M/s. Amritsar Rayon and Silk Mills P. Ltd. and finally the matter was settled at Rs. 2.30 crores. In fact, M/s. Amritsar Rayon and Silk Mills P. Ltd. had filed a suit for recovery of Rs. 1,08,00,000 being the double of advance amount paid as earnest money to the tune of Rs. 54 lakhs. In view of the above discussion, I am of the opinion the assessee has rightly valued the closing stock of the aforesaid land less by Rs. 75 lakhs. Now coming to the issue of method of valuation of the closing stock which the Assessing Officer says was cost price, in the earlier years, the assessee has stated that there is no change in the method of valuing of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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