TMI Blog2015 (11) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... would apply and onus would be upon revenue to establish that sale consideration declared by the assessee was understated with clinching evidence. The property in question has been transferred by executing an agreement which was not registered with registering authority, therefore, in our view Sec. 5OC could not have come into operation and the addition in dispute has rightly been deleted by the Ld. CIT(A) - Decided against revenue. Disallowance of car running expenses & telephone expenses - CIT(A) deleted the addition - Held that:- The car running for personal use is totally against the provision of Income Tax Act because it is made on the basis of assumption and presumption. Similarly, for telephone expenses debited to the profit and loss account are only in respect of the telephone which is situated at the business premises of the assessee. The assessee furnished full details of telephone bills and this addition was also made on the basis of assumptions and presumptions only. We also find that the AO examined the complete books of account and found no defect in the same, hence, the action of the CIT(A) for estimation of disallowances are against the principles of Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses inspite of the fact that the assessee had not maintained any call registers? 6. In the facts and circumstances of the case, the order of the Ld. CIT(A) may be set aside and that of the AO be restored. 3. The grounds raised in the Assessee s Cross Objection read as under:- 1. That the AO as well as Ld. CIT(A) is in error in invoking provision of section 50C of the Income Tax Act by ignoring the fact that circle rate on the transfer of 1st Land and was ₹ 2000/- per sq.meter. However, purchaser has wrongly paid ₹ 3800/- per meter. 2. That the assessee has right to add/ delete or modify any grounds of appeal. REVENUE S APPEAL NO. 2269/DEL/2010 4. The facts in brief are that the assessee filed return of income dated 28.10.2005 of ₹ 38,96,057/-. The case was selected for scrutiny and notice u/s. 143(2) of the IT Act dated 14.6.2007 was duly served on the assessee. The assessee is engaged in the manufacturing and sales of carom boards and atheletic items. In response to the statutory notice Sh. TL Mahajan appeared on behalf of the assessee and filed reply from time to time. Books of accounts were produced and put to random test check. Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Id. First Appellate Authority who vide impugned order dated 16/2/2010 has partly allowed the appeal of the assessee. Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal. 6. At the time of hearing Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in the grounds of appeal. 7. On the contrary, Ld. Counsel of the assessee relied upon the order of the Ld. First Appellate Authority. In addition to that, he has filed the Synopsis alongwith its Annexures. For the sake of clarity, the Synopsis is reproduced hereunder:- 1) The Assessee sold the following two agricultural lands situated in Khasra No. 204 to 207 in a village namely Hafizabad Mewla, District Meerut by declaring long term capital gain of ₹ 33,68,941/- as per copy of computation of total income placed at pages 12-13 of the paper book: b) Agricultural land situated on the main Meerut - Delhi Road, near Amar Ujala Newspaper Office, Meerut (Khasra No. 207) measuring 625.92 Sq. mtrs was sold for ₹ 15,OO,000 vide registered sale deed dated 20/07/2004, copy placed at pages 14-32 of the paper book. From such sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Copy of Khatauni to prove ownership of the above mentioned agricultural land sold by the Assessee at pages 37-38 of the paper book. 4. Copy of sanctioned plan dated 28/09/2004. for proposed residential colony i.e. Shyam Enclave, Meerut is placed at pages 47 of the paper book from which it is evident that part of Khasra No. 207 is touching the main Meerut-Delhi Road. 5. Agricultural land measuring 625.92 sq. mtr. which was touching the main Delhi - Meerut Road, near Amar Ujala Newspaper Office, Meerut (part of khasra No. 207) was sold for ₹ 15,00,000 vide registered sale deed dated 20/07/2004, copy placed at pages 14-32 of the paper book. From such sale deed, it is evident that stamp duty was paid on circle area rate of ₹ 23,78,498/- which works out to ₹ 3,8001- per sq. mtr. 6. The price of agricultural land measuring 5104 sq. mtr situated at the back side of agricultural land measuring 625.92 sq. mtr (touching the main Delhi-Meerut Road) could not be the same as that of land touching the main road as explained before the Ld. CIT(A) and also reproduced in the appellate order: (i) Agricultural land situated at Khasra No. 204 and part of Khasra No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pages 13 to 18 are reproduced hereunder:- 6.7. Decision Reasons therefor: I have gone through the relevant facts emanating from the assessment order, the Remand Report the Rejoinder to the Remand Report carefully. Regarding the 2nd piece of land, the basic reasons for holding the view as the A.O. has done are as under: i) The two plots contained in Khasra No. 204 and 207 constitute one single piece of land the assessee's contentions that the plot at the front which was transferred by a registered deed was commercial while the plot at the back which was transferred by unregistered agreement was agricultural had no commercial value are not correct. The A.O. has stated that an on-the-spot enquiry by the Inspector showed no sign of agriculture. ii) The case of Jodhpur Bench as well as the Allahabad High Court relied upon by the A.R. don't apply to the assessee's case as regards provisions of section 50C. iii) The A.O. felt that both the buyer and the seller have evaded tax in two ways, one by selling a property whose value has been determined by Stamp Valuation Authority as per Circle Rates vide an unregistered agreement to sell and seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is clearly applicable in the appellant s case with reference to the second land sold through an unregistered agreement wherein it has been held that section 50C of Income Tax Act would not come into operation unless property transferred has been registered by sale deed and for that purpose value has been assessed and stamp duty has been paid by parties . It was further held by the court that in such a situation position existing prior to section 50C would apply and onus would he upon revenue to establish that sale consideration declared by the assessee was understated with some clinching evidence. As ruled by the Tribunal in the instant case, the assessee transferred the property in question by executing an agreement which was not registered with the registering authority. In such a case, section 50C could not have come into operation and the resultant application of section 55A, by which the Assessing Officer got the property valued and adopted the report of the Valuation Officer as the sole basis for making the impugned addition, was wholly invalid. As the Assessing Officer had not embarked upon making enquiries from the purchaser about the actual sale consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue. The A.O. tried to compare first land which is industrial plot just adjacent to the main road. However, this agricultural land is approximately at ₹ 1100/- per sq. meter behind the main road. Therefore, the circle rate of the rear portion cannot be equated to the main road value. In support of his contentions, the A.R. has adduced following evidences: i. Copy of different Bainamas (Purchase Deeds) ii. Copy of Khatauni showing the land as Agricultural in revenue records in February' 2008 iii. Copy of Khasra showing the crop grown on the above land as on March' 2008 iv. Copy of Circle rate applicable to the second land in Annexure-7 issued by the District Authorities. In the light of the above facts and evidences on record; I hold as under:- (i) Regarding the AO's observation that by transferring the land without a registered deed for evading stamp duty, I hold no merit in the comments of the A.O. The appellant was not under any obligation to press the buyer for entering into a sale deed and no benefit has passed to him by not making a sale deed. Secondly, the provisions of section 50C, as held below, are not attracted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat sale consideration declared by the assessee was understated with clinching evidence. I was further held by the Hon'ble court that where the assessee transferred property in question executing an agreement which was not registered with registering authority, Sec. 5OC could not have come into operation. Therefore, addition made on the basis of deemed sale value is uncalled for. It is held that section 50C is not applicable in respect of the transfer of second land (6103.39 sq.yards) and the addition is deleted. 8.1 We have heard both the parties and perused the relevant records available with us, especially the orders of the authorities below alongwith the Written Synopsis filed by the Ld. Counsel for the assessee, we are of the considered view that Ld. CIT(A) has thoroughly gone through the assessment order alongwith the Remand Report and Rejoinder to the Remand Report as well as the other evidences filed by the assessee. Ld. CIT(A) has decided the issue in favour of the assessee by respectfully following the order of the ITAT, Jodhpur Bench reported in (2008) 110 ITD 525 (Jodhpur) which is clearly similar to the facts and circumstances of the present case. The ITAT, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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