TMI Blog2016 (4) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... n this ground of appeal raised by the Revenue. The assessee has explained that the source of money has duly been accounted for in his books. The AO has not doubted this source of money. Therefore, he cannot make the addition.- Decided against revenue - ITA No. 1239/Ahd/2012 - - - Dated:- 1-4-2016 - Shri Rajpal Yadav, Judicial Member And Shri Manish Borad, Accountant Member For the Petitioner : Shri James Kurein, Sr.DR For the Respondent : Shri Ramesh Malpani ORDER Per Rajpal Yadav, Judicial Member The assessee is in appeal before us against the order of the ld.CIT(A)-II, Surat dated 23.3.2012 for the Asstt.Year 2008-09. 2. The ground no.1 of the appeal projects the grievance of the assessee as under: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 39,49,320/-made on account of difference in estimated value of shops and actual receipt , without appreciating the fact that on one hand assessee has dissolved firm and distributed shop to partners and the assessee sold these shops, the difference of profit should be treated as income of the assessee. 3. Brief facts of the case are tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istributed to the partners, and at that very moment, the stock ceased to be business asset. The ld.First Appellate Authority examined the values of these shops with help of section 50C. In other words, as per section 50C, if the consideration received or accrued, as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted by an authority of a state government for the purpose of payment of stamp duty, then the consideration received or accruing as a result of such transfer would be deemed equivalent to the value adopted for the purpose of stamp duty payment. By adopting this method, the ld.CIT(A) has observed that the value of all the properties for the purpose of stamp duty was of ₹ 27,52,800/-. The assessee has shown sale value of ₹ 25,83,750/- and the differences deserves to be added for the purpose of computation of capital gain. The finding recorded by the ld.CIT(A) is worth to note. It read as under: 5. I have considered the facts of the case, basis given by AO for making addition and arguments of the appellant. The AO has made addition on the ground that the appellant has made the sale transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of section 50C of I.T. Act. Being business asset, it cannot be referred to valuation authority also u/s. 55A of I.T. Act. Had the AO treated these shops as capital asset, the provisions of section 50C and 55A of I.T. Act could have been applied. As it was held in the case CIT vs. Thiruvengadam Investments (P) Ltd (320 ITR 345) by Hon'ble Madras High Court that since the property was treated as business asset and not as capital asset in the hands of assessee, provision of section 50C could not be invoked and AO was not justified in taking the sale consideration as determined by sub registrar against actual sale consideration shown by assessee. Similarly, Hon'ble Delhi High Court in the case of CIT vs. Smt. Nilofer I. Singh (309 ITR 233), following the judgments of Hon'ble Supreme Court in the cases CIT vs. Gillenders Arbuthnot and Co. (87 ITR 407) and CIT vs. George Henderson and Co. Ltd (66 ITR 622) has held that in the case of sale price of asset, there would be no question of any market value and all that one has to see that what is the consideration bargained for. In view of these legal provisions, if a property has been held as business asset not the capital as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no comparability between the two. Moreover, the structure and design of shops of both the markets are totally different. However, these arguments given by appellant during the assessment proceedings, have not been controverted by AO. Since the location of complexes, structure and business viability of shops being business- assets are different and no comparison can be made, the rates applied to the shops of Millennium Market cannot be applied to the shops of appellant. 5.4 In view of the above discussion, it is held that the market rate i.e. @ ₹ 2,500/- per sq. ft. applied by AO is presumptive, without any basis and misplaced. He is not having any credible evidence to ascertain the rates of shops at such high rate in absence of valuation report of the Departmental Valuation Officer or Stamp Valuation Officer or any other statutory authority for that matter. He is not even having the comparable rates of adjoining shops or any credible evidence in his possession to show that the appellant has received any amount over and above the sums disclosed in the return of income. In such situation, estimating the rates of shops at ₹ 2,500/- per sq. ft. is presumptive, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,49,320/-. In the first show cause notice, the AO has asked the explanation of the assessee as to why this estimated addition should not be made, and due to this reason, in the ground of appeal, the Revenue has restricted the challenge to ₹ 39,49,320/-. Though, ultimately in the computation of the income, the AO has not restricted himself for the addition to that extent he has issued show cause notice. He made addition of ₹ 1,61,16,250/-. We have made the above observation only in order to explain as to how the amount mentioned in the ground of appeal has been given at ₹ 39,49,320/-. 6. On due considerations of the facts and circumstances, we find that the ld.CIT(A) has examined the issue lucidly and that too of all possible angles. The firm was disallowed w.e.f. 1-4-2006. On dissolution of the firm, assets must have been distributed. Unsold stocks represented shops/offices space fallen to the assessee. The moment the firm was dissolved, this stock was converted into capital assets of the partners. The AO could have taken action as per section 45(4) of the Income Tax Act against the firm on its dissolution in that assessment year. The ld.First Appellate Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X
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