TMI Blog2014 (7) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... its books of account; and estimated the investment on the basis of average value of land which is erroneous without any evidence on record to substantiate his view that the appellant/ assessee has paid more than what was shown in its books of account - the AO could not have invoked the provisions of section 69B to fasten the addition on the assessee based on doubts/ conjectures and surmises - there was no material or evidence before the AO to conclude that the assessee had paid a consideration over and above the amount mentioned in the registered sale deed – thus, the amount shown as the value of the property in the registered sale deed has been taken as correct, unless the contrary is proved by credible evidence - no opportunity of being heard as required by law has been given by the AO before invoking the provisions of section 69B of the Act – the order of the CIT(A) is upheld – Decided against Revenue. - ITA No. 4544/Del/2011 - - - Dated:- 20-6-2014 - Shri B. C. Meena And Shri A. T. Varkey,JJ. For the Appellant : Satpal Singh, Sr. DR For the Respondent : Sh. Raja Kumar, Adv. K. Sampath, Adv. ORDER Per A. T. Varkey, Judicial Member This appeal filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the property exchanged and reached a conclusion that the monetary value of both the parcels of land, i.e., 1.17 acres in Behrampur and 0.60 acres of maidawas would be equal. The value of exchange of land has been shown at ₹ 76,32,000/- at mutually agreed rates. The assessee company being a real estate company, the assessee has shown the purchase of land in its inventory. Accordingly, this 1.17 acres of land has also been included in the inventory of the assessee as on 31.03.2006. The same value has been shown in the audited Balance Sheet as well as in the detailed Schedule of Inventory having the quantity wise and value wise detail for this land of 1.17 acres also. 7. The Assessing Officer, however, observed that the assessee company has transferred 0.60 acres of land owned by it in village Maidawas and in exchange received 1.17 acres of land at Village Behrampur, and thus, has received 0.57 acres of excess land. In his opinion, there could not be the same price for both the parcels of lands as their quantities were not same. He further held that this excess area of land would not have come without any extra consideration / payment being made by the assessee company t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land at Maidawas, though the assessee company had purchased the land at Maidawas at the market price of ₹ 1,27,00,000/- per acre (Rs. 72,00,000/- for 0.60 acres). The ld DR contended that the average market value of land at village Behrampur worked out to ₹ 1,95,51,581/- (as evident from the purchase deeds of other parcels of land purchased by the assessee at village Behrampur.)Taking this factual aspects into consideration the Assessing Officer asked the assessee to explain as to why the accreditation in the value of its inventory was not to be taxed as income for the year, since it had itself considered the exchange of land as sale as per its P L A/c. According to the ld DR, the Assessing Officer found that the reply of the assessee company in this respect was not satisfactory and so it was held to be untenable and the Assessing Officer was right in holding that the assessee company had acquired 0.57 extra parcel of land at Village Behrampur, Gurgaon; and neither value of the same has not been included in its inventory nor had the investment being fully disclosed in the books of account. So, the Assessing Officer rightly held that the assessee company had suppressed v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee company has not received any kind of income or extra benefits for receiving in exchange the excess 0.57 acres of land as by the Assessing Officer. The ld AR countered the computation of valuation done by the Assessing Officer by submitting that the village Maidawas land exchanged by the appellant was valued at ₹ 76,32,000/- which was its total cost of purchase as it was purchased recently. According to the ld AR, the market value on the date of exchange of land was not more than the total cost of land, i.e., ₹ 76,32,000/- and in fact, the market value of lands in the nearby areas was actually less than this. Hence, ₹ 76,32,000/- was considered as the appropriate valuation of the 0.60 acres of land exchanged by the assessee/appellant. It has been pointed out by the ld AR that the calculation of average value made by the Assessing Officer itself shows that the rates per acre at Behrampur varied from each transaction to transaction. This according to the ld AR, clearly proves that land rate are different for different locations in the vicinity of the same area. And it was a common knowledge that market value of land directly depends upon by its location and pote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o main road, distance from railways station, need of the seller, demand of the buyers etc. The value in town and the value in the village are different. The value of land situated near metropolis is different from that of a property lying inside village without right access to road etc. Therefore the Assessing Officer erred in presuming that the value of excess land received by the assessee company in exchange was valuing more without any material to base his finding on this aspect. The Hon ble Supreme Court in 91 ITR 544 (SC) has held that a business man knows his interest best and nobody has to sermonize how he should conduct his business. 13. Being in the business of real-estate the assessee company has shown its land as stock in trade and it is settled legal position that the valuation of the closing stock is made on the basis of cost or market value, whichever is less. We find that the assessee company in its return of income and in its audited accounts filed for the relevant assessment year has categorically mentioned the method of valuation of stock at cost or market price whichever is lower. As per the mutual agreement between the parties value for exchange of lands was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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