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TMI Blog2016 (4) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... correct the mistake which had occurred due to offering the capital gain of Rs. 3,02,93,202/- which was wrongly offered to tax in this year instead of AY 2009-10. 3. The facts of the case in brief are that the assessee filed its return of income on 24.9.2008 declaring total income at Rs. 3,02,93,202/- by way of capital gain on sale of land. The return was processed u/s 143(1) on 8.10.2010 and a demand of Rs. 87,65,930/- was raised. The assessee did not pay the said demand but moved an application for rectification u/s 154 of the Act on 1.11.2010 requesting for rectification of mistake committed in the return of income by offering for tax the capital gain on sale of land in the current year which related the subsequent year i.e AY 2009-10. 4. The AO came to the conclusion that the mistake u/s 154 of the Act could be rectified only, if such mistake was not liable for debate or discussion and could easily be rectified on the facts prima facie. The AO held that there was no mistake which was proposed to be rectified u/s 154 of the Act as the assessee itself has declared "Long Term Capital Gains" (LTCG) of Rs. 3,02,93,202/- in the return of income which was accepted as on processing u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any order passed by it under the provisions of this Act: [b) amend any intimation or deemed intimation under sub-section (1) of section 143/} [(c) amend any intimation under sub-section (1) of section 200A.] It can be seen from the provisions that authority mentioned u/s 116 of IT.Act, 1961 may amend orders passed by them to rectifying any mistake apparent from record. Various decisions of Hon'ble High Court and Supreme Court have observed that a mistake apparent from the record is a mistake that is manifest, plain or obvious, a mistake that can be realized without a debate or dissertation. A mistake which can be discovered by a process of elucidation or argument or a debate, cannot be considered to be a mistake apparent from the record. Further, it is also to be pointed out that the Hon'ble Supreme Court in the case of ITO vs. Volkart Bros (82 ITR 50) observed as under: "A mistake apparent from the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record", ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the builder vide deed dated 29.9.2007 and both the contracting parties mutually agreed to cancel the original agreement and two sale deeds were executed on 17.4.2008 and the money of Rs. 3,05,00,000/- already received was appropriated towards the sale considerations. Thus, the capital gain arose to the assessee in the assessment year 2009-10 and not in the AY 2008-09 as was wrongly returned by the assessee. In the AY 2009-10 the assessee revised his return of income u/s 139(5) offering the capital gain on the said land for taxation. Upon realization of the mistake, the assessee filed rectification application u/s 154 before the AO to rectify the mistake committed by the assessee by offering the amount of capital gain to tax in the assessment year 2008-09 which was offered for taxation in the AY 2009-10 correctly and thus the AO was grossly mistaken and erred in rejecting the rectification application u/s 154 of the Act on the ground that the issue involved was debatable and involved long drawn discussion and was not prima facie apparent mistake from record, whereas, as a matter of fact, the income from long term capital loss on sale of property could not be taxed twice as was don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in AY 2009- 10. We are,therefore, of the opinion that the income offered by the assessee in the current year i.e AY 2008-09 under the head capital gain be rectified as the said income accrued and was assessed in the AY 2009-10. The both the authorities below had failed to appreciate that if the same income was assessed to tax in two assessment years it would be bad in law and also would be a mistake apparent liable for rectification u/s 154 of the Act regardless of the fact that it might had happened be due to assessee's mistake. Accordingly we delete LTCG of Rs. 3,02,93,202/- from the current year Rs. 3,02,93,202/- as apparent mistake from records and direct the AO accordingly. 8. In the result, the appeal filed by the assessee is allowed. . 9. Now, we shall take up the appeal bearing ITA No.3276/Mum/2013 by the revenue. The only issue raised in the appeal is against the deletion of addition of Rs. 1,20,00,000/- by the ld. CIT(A) as made by the AO under the head "income from other sources". 10. The facts of the case are that the assessee filed its return of income on 30.7.2009 declaring net loss of Rs. 11,53,864/-. Subsequently, the said return was revised declaring income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m other sources", but its taxability had to be considered under the head "capital gains". The ld. CIT(A) allowed the appeal of the assessee subject to quantification that the same would be dealt with under head capital gain and accordingly deleted the addition under the head income from other sources and treated the same under the head Income from capital gains. Aggrieved by the decision of the ld.CIT(A), the revenue is in appeal before the Tribunal. 11. Before us, the ld. DR submitted that the assessee did not file a copy of the sale deed in respect of plot at survey No.132 and the amount involved in the said transaction was Rs. 1,20,00,000/- and therefore, the AO had no option but to add the same to the total income of the assessee under the head "income from other sources". The ld. DR further pointed out that the sale deed in respect of plot in dispute was produced before the ld. CIT(A) who did not seek comments of the AO on the same thereby committed violation of provisions of Rule 46A of the Income Tax Rules, 1962 (the Rules) and accordingly, the ld. DR requested the Bench to set aside the order of ld. CIT(A) and restore the issue to the file of the AO for examination of docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from house property of Rs. 23,21,775/- by estimating the rent of property at Rs. 28,23,840/-. 16. The facts of the case are that the assessee disclosed rental income of Rs. 15,808/- and claimed water tax of Rs. 4,92,982/- and property tax of Rs. 54,532/-. During the course of assessment proceedings, the AO found that the assessee had let out its properties to one Mohan Dyeing and Printing and Monica Vazirali and total let out area to these two persons was approximately 5000 sq.ft . The AO further observed that 5 flats were occupied by the partners of the assessee-company and his relatives/family members the carpet area area of which was 7844 sq.ft.. Thus in all the area occupied by the persons other than the assessee was 13,344 Sq. fts. In respect of the total area occupied by the partners and tenants , the AO observed that the rent shown by the assessee was very meager and the market rent in the Khar are is about Rs. 40,000 to Rs. 45,000/- per month and came to the conclusion that the market rate per st.ft was ranging between Rs. 30 to Rs. 50 per sq.ft. Accordingly, rent from the property was worked at Rs. 2,35,320/- per month. The assessee was given show cause notice as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of house property income at Rs. 23,21,775/-. 4.3.3 It iss quite clear from the facts of the case that assessee has let out its valuable assets consisting of seven flats at Union Park, Khar,Mumbai for paltry sums and disclosed al income of Rs. 15,808/- only. section 23 of IT. Act, 1961 speaks about rent received or receivable, whichever is higher, and when market inquiries revealed that market rent was much higher than the rent received by the assessee in respect of seven flats let out to partners and persons related/known to assessee, Assessing officer invoked the provisions of section 23 of IT. Act, 1961 and recalculated the income from house property at Rs. 23,21,775/-. These seven flats are given on to persons related to partners of firm and partners of firm for a nominal rent of Rs. 1/- per square foot as against Rs. 40/- per square foot prevailing in the area and in addition Incurs expenditure of Rs. 4,94,282/- on water charges and property tax of Rs. 54,532/-. Thus assessee has conferred undue benefits on its relatives and partners by not only letting out the residential property in Khar, Mumbai has incurred extra expenses for maintaining the same. In light of these facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed standard deduction of 30% u/s 24 of the Act and worked out the total income from house property at Rs. 23.,21,775/- which was confirmed by the ld.CIT(A) on the ground that low rent was charged by the assessee from the partners and his family members. As it is clear from the above the AO has failed to prove/bring on record by any cogent evidence that the rent of comparable properties in the vicinity where the assessee's property was located and we find that the estimation of rent by AO is a purely guess work and based on estimation, conjecture and surmises, which in our opinion, cannot be sustained. We, therefore, delete the addition by allowing the appeal of the assessee and the AO is directed accordingly. 20. Grounds No. 2 to 5 is against the enhancement of assessment by taking long term capital gains of Rs. 3,00,35,936/- as computed by the ld. CIT(A) after taking fair market value as on 1.4.1981 at Rs. 79,736/-. 21. The facts in brief are that the assessee vide agreement dated 4.4.2007 entered into an agreement with developer M/s Tarunika Gaur Housing and Construction Co. Ltd for a total consideration of Rs. 3,05,00,000 in respect of plot at survey No.68 and 132 on Mumbai - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order while the sale consideration in respect of plot at survey No.132 of Rs. 1,20,00,000/- under the head "income from other sources" . The AO rejected the capital loss as computed by the assessee at Rs. 21,08,907/- and the plot area was taken as 1,38,303 sq.ft. and thus total cost as on 1.4.1981 was calculated at Rs. 4,03,845/- which was index cost of Rs. 23,50,378/-. Aggrieved by the order of the AO, the assessee has filed an appeal before the ld.CIT(A) who in turn deleted the addition made under the "income from other sources" at Rs. 1,20,00,000/- by taxing the same under the head capital gains. The ld. CIT(A) brought the entire sale consideration to tax under the head capital gains by taking the indexed cost of acquisition at Rs. 4,64,063/.- and thus worked out LTCG at Rs. 3,00,35,936/-. The ld. CIT(A) rejected the FMV as taken by the assessee as on 1.4.1981 as calculated on the basis of reverse valuation method stating the same to be not recognized in the Act. The ld. CIT(A) further observed that on 19.12.2012, the authorized signatory Shri S G Koshti, appeared for the hearing and he has informed that the fair market value as on 1.4.1981 should have been arrived at by applyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation officer but he was not taking the value as proposed by the valuation officer as the said valuation report had not reached finality. The ld counsel also argued reverse valuation method is a recognized method of valuation .Finally the AR prayed before us that valuation as calculated by reverse valuation method be directed to be followed.The DR per contra relied on the order of CIT(A) and requested for upholding the same 24. We have considered the rival submissions and perused the materials on records and after going through the orders of authorities below, we find that the two plots no 132 & no 68 were given to M/s Tarunika Gaur Housing and Construction Ltd for a consideration of Rs. 30,5,00,000/-( plot no 132 for Rs. 1,20,00,000/- and plot no 68 for Rs. 1,85,00,000/- ) vide agreement dated 4th April,2007 which could not see the light of the day as the developers took the matter to the Arbitration in the District Court on the ground that the title of the land was not clear. Pending the adjudication by the court , both the parties reached a out of court settlement cancelling all the previous commitments and as a result of the said settlement two sale deeds were executed on 07. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indexed cost at Rs. 4,64,063/- and thus enhanced the assessment accordingly. Now the issue before us how to determine the capital gain in these circumstances when assessee, AO and CIT(A) had taken different method of valuation to in order to ascertain the FMV on 1.4.1981. It was also pointed out that there was a building in the plots sold. Under the present circumstances and facts, we are of the view that the ends of justice would be met if the assessee is supplied the copy of final valuation report by the valuation officer and after allowing the opportunity to the assessee the matter is decided afresh and de nova as per law. We therefore set aside the matter to the file of AO with the direction to supply a copy of the valuation report to the assessee and after allowing reasonable opportunity decide the matter afresh as per law.
25. The appeal of the assessee is allowed for statistical purpose.
26. In sum and substance, ITA No.739/Mum/2013 is allowed, the appeal bearing No.3276/Mum/2013 is allowed for statistical purposes and the appeal No.2671/Mum/2013 is also stands allowed for statistical purposes.
Order pronounced in the open court on 9th March, 2016 X X X X Extracts X X X X X X X X Extracts X X X X
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