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2015 (8) TMI 85 - ITAT CHENNAI

2015 (8) TMI 85 - ITAT CHENNAI - TMI - Determination of the value of the land for the purpose of computation of capital gains in the hands of the assessee - Held that:- The value of the land has to be taken only as ₹ 10.50 Crores. In case the value shown in the sale agreement as ₹ 10.50 Crores is less than the value determined by the stamp authorities, then at the best, the guideline value can be taken as value of the land. Therefore, the lower authorities are not justified in estima .....

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ssee received more than ₹ 10.50 Crores as disclosed in the sale agreement dated 1.04.2008. Therefore, the lower authorities are not correct in estimating the value of the land on the basis of the materials relating to M/s Coromandel Cables Pvt. Ltd. this Tribunal is of the considered opinion that in the absence of any other material, the lower authorities have no other way except to accept the value of the land at ₹ 10.50 Crores as disclosed in the sale agreement dated 1.04.2008. Acc .....

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e sharing ratio would continue in 2008 also. By efflux of time, the cost may increase, accordingly the price may also increase, it does not mean that the share in constructed area would also increase due to efflux of time. This Tribunal is of the considered opinion that the CIT(Appeals) has rightly reduced the sharing ratio to 40% as against the ratio determined by the Assessing Officer at 45%. Therefore, this Tribunal do not have any reason to interfere with the order of the CIT(Appeals) and ac .....

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earlier part of this order, while considering the quantum addition made by the Assessing Officer, this Tribunal found that there cannot be any addition on the basis of the material relatable to M/s Coromandel Cables Pvt. Ltd. In the absence of any material in respect of the present assessee other than the agreement for sale dated 1.04.2008, which discloses the sale consideration at ₹ 10.50 Crores, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the pena .....

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2009-10, 2010-11 and 2011-12. The Revenue also filed appeals against the order of the CIT(Appeals) on penalty levied under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act'). Since common issue arises in all the appeals, we heard the appeals together and disposing of the same by this common order. 2. First, let's take the assessee's appeals for assessment years 2009-10, 2010-11 and 2011-12 in I.T.A. Nos.1880, 1881 & 1882/Mds/2013. 3. Sh. B. Ramakrishnan, the L .....

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period of holding of the property, determined the short term capital loss instead of long term capital loss on mutual funds. In fact, according to the Ld. representative, the assessment was reopened only for the purpose of assessing the capital loss on mutual funds by issuing notice under Section 148 of the Act. During the course of assessment proceedings, no income was found to have escaped in respect of capital loss on mutual funds. However, the Assessing Officer made addition in respect of ca .....

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or issuing notice under Section 148 has expired for assessment years 2009-10 and 2010-11. Therefore, the reassessment proceeding initiated under Section 148 of the Act for assessment years 2009-10 and 2010-11 is not valid. 4. Coming to the merit of the appeal, the Ld. representative for the assessee submitted that there was a survey in the business premises of the assessee on 24.1.2012 and no material was found during the course of survey operation. The entire assessment was made on the basis of .....

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Ltd., the Assessing Officer came to a conclusion that the assessee also might have received the same amount for transfer of its land. According to the Ld. representative, no material is available on record to suggest that the assessee has received any money over and above the amount shown in sale deed. Merely because the assessee's land happened to be adjacent to the land of Coromandel Cables Pvt. Ltd., it does not mean that the assessee has received the same money on sale of the said land. .....

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ption. According to the Ld. representative, the addition made by the Assessing Officer, which was confirmed by the CIT(Appeals), is not justified. 5. On the contrary, Sh. Pathlavath Peerya, the Ld. Departmental Representative, submitted that the assessee owns a factory and land at Perungudi. The assessee-company entered into an agreement with M/s Doshi Housing to develop a residential project, namely, "Etopia-II". In fact, the land belonging to the assessee is situated adjacent to the .....

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.4.2007 in which one Shri M.G. Surendranath was introduced as partner with a share profit at 35%. However, he was not given any share of loss. According to the Ld. D.R., all the three entities, namely, M/s Coromandel Cables Pvt. Ltd., M/s Coromandel Oils Pvt. Ltd. (the present assessee) and M/s Doshi Housing Pvt. Ltd. are all belonging to one group, namely, Doshi Group in which Shri Harshad V. Doshi was at the helm of affairs having absolute control in all the spheres of activities. During the c .....

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Coromandel Cables Pvt. Ltd. was found to be ₹ 35 Crores approx. as against the value of ₹ 10 Crores disclosed in the sale deed. In fact, according to the Ld. D.R., M/s Coromandel Cables Pvt. Ltd. disclosed the value as per guideline value determined by the Sub-Registrar. In the assessment of M/s Coromandel Cables Pvt. Ltd., the Assessing Officer found that M/s Coromandel Cables Pvt. Ltd. is entitled for 37.54% of the value of saleable area in the project. Based upon that agreement, .....

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found in the case of M/s Coromandel Cables Pvt. Ltd. on the basis of the material found during the course of survey operation was adopted on estimation. On an enquiry from the Bench - whether any material was found during the course of survey or during the course of enquiry in the course of assessment proceeding relating to the assessee? The Ld. D.R. very fairly submitted that no material was available on record in the case of present assessee other than the material relating to M/s Coromandel .....

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as that of M/s Coromandel Cables Pvt. Ltd. on estimation. According to the Ld. D.R., there is no other material is available on record. 7. We have considered the rival submissions on either side and perused the relevant material on record. The only issue arises for consideration is with regard to determination of the value of the land for the purpose of computation of capital gains in the hands of the assessee. Admittedly, the assessee-company entered into an agreement with M/s Doshi Housing fo .....

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, it appears from the assessment order that the Assessing Officer came to a conclusion in the case of M/s Coromandel Cables Pvt. Ltd. that the value of the land may be higher than ₹ 35 Crores. In the case before us, the assessee entered into agreement for sale and disclosed the value at ₹ 10.50 Crores and offered to long term capital gains accordingly. During the course of survey operation, it was found that one Smt. Rani Gopinath admitted that in the case of M/s Coromandel Cables Pv .....

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omandel Cables Pvt. Ltd., came to a conclusion that the value of the land transferred by M/s Coromandel Cables Pvt. Ltd. was more than ₹ 35 Crores. By applying same yardstick, the Assessing Officer estimated the value of the assessee's land at ₹ 35 Crores. 8. Now the question arises for consideration is in the absence of any material found in the case of the assessee, can incriminating material found in respect of M/s Coromandel Cables Pvt. Ltd. be relied upon for estimation of v .....

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the money over and above the value shown in the sale agreement. 9. As repeatedly held by the Apex Court, market value is nothing but the price agreed between the willing purchaser and the willing seller. There may be several factors/reasons for agreeing to a particular price by the parties. One of the reasons presumably the assessee may be compelled to sell the property or transfer the property in any one of the possible mode agreed between the parties. Whatever may be the reasons when two part .....

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f stamp duty, the value adopted by the stamp authorities shall be deemed to be the full value of the consideration received or accrued to the assessee as a result of such transfer. 10. We have also carefully gone through the sale agreement entered between the assessee and M/s Doshi Housing, a copy of which is available in page 11 of the paper-book. The agreement clearly says that the assessee agreed to transfer the land to the extent of 1,06,196 sq.ft. for a total consideration of ₹ 10.50 .....

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idered opinion that no reliance could be placed on those incriminating materials found in the case of M/s Coromandel Cables Pvt. Ltd. This Tribunal is of the considered opinion that the value of the land has to be taken only as ₹ 10.50 Crores. In case the value shown in the sale agreement as ₹ 10.50 Crores is less than the value determined by the stamp authorities, then at the best, the guideline value can be taken as value of the land. Therefore, the lower authorities are not justif .....

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that the assessee received more than ₹ 10.50 Crores as disclosed in the sale agreement dated 1.04.2008. Therefore, the lower authorities are not correct in estimating the value of the land on the basis of the materials relating to M/s Coromandel Cables Pvt. Ltd. this Tribunal is of the considered opinion that in the absence of any other material, the lower authorities have no other way except to accept the value of the land at ₹ 10.50 Crores as disclosed in the sale agreement dated 1 .....

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eas the present assessee entered into agreement in the year 2008. Therefore, due to efflux of time, the developed area in the year 2008 in comparison to 2005 would be naturally more, therefore, the CIT(Appeals) ought to have confirmed the addition made by the Assessing Officer. 12. We have heard Shri B. Ramakrishnan, the Ld. representative for the assessee also. By efflux of time, the cost of construction or cost of land might have increased. However, the percentage of the share would not increa .....

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er at 45%. Therefore, this Tribunal do not have any reason to interfere with the order of the CIT(Appeals) and accordingly, the same is confirmed. 13. In the result, these appeals of the Revenue are dismissed. 14. Now coming to the Revenue's appeals with regard to penalty in I.T.A. Nos.1938, 1940 & 1942/Mds/2013, Sh. Pathlavath Peerya, the Ld. D.R. submitted that the Assessing Officer levied penalty. During the course of survey operation, certain incriminating material found, including t .....

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lars with regard to sale value of the land, the Assessing Officer levied penalty under Section 271(1)(c) of the Act. 15. On the contrary, Sh. B. Ramakrishnan, the Ld. representative for the assessee, submitted that no material is available on record to suggest that the assessee has suppressed any part of the income arising out of the transfer of the land to M/s Doshi Housing. According to the Ld. representative, the only document available on record is the agreement of sale entered between the a .....

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