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Victory Alloys Steels Ltd Versus Dy. Commissioner ofIncome Tax

2015 (6) TMI 920 - ITAT HYDERABAD

Revision u/s 263 - directing the AO to determine the sale consideration at ₹ 10,93,55,600 - Held that:- This issue is covered in case of Venkatappaiah Naidu, Vaddineni, Mahendra Vaddineni Versus DCIT, Circle 3(3), Hyderabad [2015 (1) TMI 732 - ITAT HYDERABAD ] wherein held that the stand of CIT cannot be supported. First of all, the agreement with VAPL is a GPA agreement without handing over possession. This stand gets support by the stamp duty paid and accepted by Registration authority. .....

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sale of property and it did not acquire the property. Therefore, stand of CIT that the land/property in question was sale cannot be accepted. Lastly, the CIT himself accepted that gains on sale of Medchal land has to be assessed under the head "Long term capital gains". The gain is taxable at the rate of 20% only. Whether it is taxed in A.Y. 2007-08 or in later years, the tax rate is at 20% only. Thus, there is no prejudice caused to Revenue. Therefore, the twin conditions for invoking jurisdict .....

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IT - III Hyderabad dated 25th March, 2013 passed for A.Y 2007-08. 2. The assessee herein M/s Victory Alloys Steels Ltd alongwith Shri Mahindra Vaddineni & Smt. Devasena Vaddineni and ShriVenkatappaiah Naidu Vaddineni owned land admeasuring ac.85.25gts between F.Y. 2000-01 and 2003-04 at Medchal for an aggregate consideration of ₹ 2,35,36,015. It was seen that the assessee along with three other land owners promoted a venture by the name of 'Fabel County' with an intention to de .....

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sq. yds and the same was sold/ agreed to sale and the details are as under : Land in sq.yards Whom the land was sold to Sale consideration 60743 Victory Avenue P Ltd @ ₹ 1800oer sq. yard Rs.10,93,55,600 67563 i.Sri V. Brahmananda Reddy(20706 sq.yards) ii.M/a.Lakshmi Venkateswara Estates P Ltd (26,879 sq.yards) iii. Sri P. Srinivasa Sarma (19978 sq.yards) iv. Other curstomers (834sq.yds) Rs.5,35,00,000 3. Survey operation under section 133A were conducted in the business premises of M/s. Vi .....

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e and why the gain on agreement with M/s Victory Avenues Ltd., (VAPL) should not be taxed entirely in the year under consideration as against the income offered to the extent of sales made by VAPL. Even though, Ld. CIT raised the issue of taxing the gains as business income on the sale of lands at Medchal, he, however, accepted that the same has to be taxed under the head "Long Term Capital Gains" only. To that extent, A.O. stand was accepted. However, on assessing the quantum of gains .....

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ow in the business of real estate. Hence, the assessment order u/s 143(3) r.w.s.147 dt.19.11.201O is found to be in order as far as the sale of 67563 sq. yds to Mr. V. Brahmananda Reddy and others for a consideration of ₹ 5,35,00,000 is concerned. However, as mentioned earlier, there is a second limb to this land transaction. Vide agreement for sale-cum-GPA, the assessee and his group have sold 60742 sq. yds of land to a company incorporated with express purpose of developing the land, plo .....

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55,600. This transaction clearly falls within the ambit of transfer as defined under sec.2(47)(v) ITA. No. 1034 & 1035/Hyd/2014 Mr. Venkatappaiah Naidu Vaddineni & Mr. Mahendra Vaddineni of the I.T. Act, 1961. It is clear that 60745 sq. yds of land was sold to VAPL on a price which was determined in the agreement for sale-cum-GPA, possession was handed over to the buyer company and part of the consideration was received as advance. If the assessee was intending to trade in the plots of l .....

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his capital asset being his share in 60742 sq. yds of [end to VAPL. The assessee and his group has however offered surplus from sale of only 19574 sq. yds of land instead of the entire sales consideration for 60742 sq. yds of lend, The' Assessing Officer has accepted this computation of capital gains and hence his order is held to be erroneous in as much as it is prejudicial to the interests. of revenue. The assessment order dt.29.11.201O is hence set-aside with a direction to the Assessing .....

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ent order dt.29.11.2010 should be allowed . 5. Aggrieved, the assessee raised the following grounds of appeal: 1. The order of the ld CIT is erroneous both on facts and in law. 2. The ld CIT erred in holding that there is any error in the order of assessment passed u/s 143(3) r.w.s. 147 of the I.T. act by the Dy. Commissioner of Income Tax, Circle 3(3) Hyderabad. The ld CIT ought to have seen that there is neither an error nor any prejudice caused to the department so as to enable him to invoke .....

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