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Kamala Brothers Versus ITO 24 (2) (1) , C-13 Bandra Kurla, Complex, Bandra (E) , Mumbai and Vica-Versa and Kamala Brothers Versus ITO 24 (2) (1) , Mumbai and Via-Versa

2016 (8) TMI 853 - ITAT MUMBAI

Lease rent estimation - Determination of the value as assessed by Stamp Valuation Officer - Held that:- It is clear that full value of consideration of the impugned asset has been determined at ₹ 3,22,334/- based upon value as was assessed by the stamp valuation authority. The action of Ld. CIT(A) has been accepted by the assessee. Under these circumstances, once the amount of sales consideration has been determined keeping in view particular provisions of law which were applicable in a gi .....

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ng that the assessee firm did not transfer full-fledged rights and interest in the said land to the lessee. Detailed discussion in this regard has been made by us at Para 7.1. of this order, which should read here also. Thus, keeping in view these facts also, we find that estimation of lease rent in substitution of actual lease rent received by the assessee was not justified in the given facts and circumstances of the case. Keeping in view the decision of Ld. CIT(A) in determining the full value .....

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it has been noted by the Ld. CIT(A) that lease deed is properly registered and stamp duty was paid as per Bombay Stamp Act, 1958. The lease deed was approved by BMC and State Government Authorities. The title of the property continued to remain in the name of the assessee. Nothing has been brought before us to negate the detailed findings of the Ld. CIT(A). The transactions cannot be held to be sham merely on the basis of some doubts and apprehensions. Duly registered documents cannot be brushed .....

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operty on the basis of stamp value of the lease deed as was assessed by the Stamp Valuation Authority as per Bombay Stamp Duty Act, 1958 - Held that:- Lease Deed has been registered on which Stamp Valuation Officer has assessed the value for the purpose of ascertaining amount of stamp duty payable and therefore the same value should be adopted in the case before us. The clear mandate of the law is that the value adopted or assessed by the Stamp Valuation Authority shall be adopted for determinin .....

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of deduction u/s 80- IB(10) - Held that:- It is well known fact that no project can be started without requisite approval. Under these circumstances, it has been held by the Ld. CIT(A) that it cannot be inferred that housing project was commenced prior to 1st October 1998. During the course of hearing before us, Ld. Counsel has drawn our attention to the commencement certificate exhibited in the paper book showing that the same was granted by the local authority on 15.03.2002 and a separate noti .....

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been incurred only after the commencement, development and construction of the project. We find that findings recorded by the Ld. CIT(A) are in accordance with law and facts on this issue. - During the course of hearing before us it has been submitted that the requirement of the law is that project should be on the size of plot of land of minimum one acre, and here the area ‘project’ means project as proved by the local authority. It was shown to us on the basis of the document enclosed in t .....

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n amenities then that portion of land should also to be considered as part of the project. It has been further submitted that limits on the extent of commercial area of housing project was inserted w.e.f. 01.04.2005 and does not apply to projects approved before that date, and since project of the assessee was approved prior to 01.04.2005, therefore, these restrictions were not applicable on the case of the assessee. - Decided against revenue - ITA NO.1139/Mum/2011, ITA NO.1334/Mum/2011, C.O. No .....

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als), Mumbai {(in short CIT(A) }, for the assessment years 2003-04, 2006-07 and 2007-08 decided against the assessment order passed by the Assessing Officer (in short AO ) u/s 143(3) of the Act. 2. During the course of hearing, arguments were made by Shri Dr. K. Shivram, Shri Devang Shah & Mrs. Neelam Jadhav, Authorised Representative (AR) on behalf of the Assessee and by Shri B. Yadagiri, Departmental Representative (DR) on behalf of the Revenue. First we take up ITA No.1139/Mum/2011 for A. .....

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uld be covered u/s 50C, this ground is dismissed. 4. Ground No.2: In this ground the assessee has challenged the action of Ld. CIT(A) in confirming the estimate made by the AO of lease rent at ₹ 13,74,353/- as against the actual amount received by the assessee. 4.1. The brief facts are that the assessee is partnership firm which was formed for the purpose of developing and constructing the building at Malad, Mumbai. During the year under consideration, the assessee firm had shown lease ren .....

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alia held by Ld. CIT(A) that value of consideration was to be taken as the value as was adopted by the Stamp Valuation Officer. However, Ld. CIT(A) also estimated the lease rent on the basis of fair market value in substitution of the lease rent actually received by the assessee. 4.3. Being aggrieved, the assessee has filed an appeal before the Tribunal challenging the order of Ld. CIT(A). 4.4. During the course of hearing, it has been argued by the Ld. Counsel that once it has been accepted by .....

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Palace Hotels & Motels Ltd. 83 TTJ 1031 which was later confirmed by Hon ble Rajasthan High Court reported at 321 ITR 165, for the proposition that there is no provision under the law to tax notional amount of lease rent on deemed or presumptive basis. 4.5. On the other hand, Ld. DR has submitted that impugned transaction is a transaction of sale, which has been disguised as a lease transaction. It was also submitted that lower authorities have rightly treated the transaction as transactions .....

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findings from the order of Ld. CIT(A) are reproduced below: From the above, it is again clear that out of the total stamp duty paid by the appellant to the tune of ₹ 3,420/- first ₹ 1250/- pertains to the value of ₹ 2,50,000/- and the rest of ₹ 2,170/- is 3% of the value of ₹ 72,233.33 and in this way the total value to arrive at the stamp duty of ₹ 3,420/- adopted by the stamp valuation authority is ₹ 3,22,334/- only. It is a conscious decision of the p .....

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amp valuation authority, court or high court. Since the value adopted by the stamp duty authority to the tune of ₹ 3,22,334/- for arriving at stamp duty © ₹ 1250/- plus 3% of the value excess over ₹ 250,000/- of the total value is not challenged or disputed in any appeal or revision before any authority under the Bombay Stamp Act 1958 or court or High Court, the value of the impugned land for the purposes of stamp valuation is freezed with the amount of ₹ 3,22,333/- .....

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duty is paid and the rates of stamp duty in the instant case are not challenged by any person before any court of law or any appellate authority under the state legislature. Therefore, I find that the value of the impugned land adopted by the stamp valuation authority at ₹ 3,22,334/- on which stamp duty of ₹ 3,420/- is paid becomes final and cannot be tinkered with. Accordingly, the Assessing Officer is directed to re-compute the capital gains by taking the full value of consideratio .....

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eaning of Sec. 49 of the IT Act, 1961 except the stamp duty paid to the tune of ₹ 3,420/-Accordingly, this ground is partly allowed. 4.7. From the above findings, it is clear that full value of consideration of the impugned asset has been determined at ₹ 3,22,334/- based upon value as was assessed by the stamp valuation authority. The action of Ld. CIT(A) has been accepted by the assessee. Under these circumstances, once the amount of sales consideration has been determined keeping i .....

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struction of school building. The assessee firm was not able to construct the school building and develop play ground upon the said land. The partners of the assessee firm felt that they did not have requisite experience to run an educational institute or school and they found it appropriate for a charitable trust to do this job. Under these circumstances, the assessee firm gave said land to charitable trust that could run school effectively. It is further noted that the said lease was approved .....

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ven facts and circumstances of the case. 4.9. Thus, taking into account all the facts and circumstances of the case and the judgments in the case of Lake Palace Hotels & Motels Ltd. (supra) and also keeping in view the decision of Ld. CIT(A) in determining the full value of consideration of the asset at ₹ 3,22,334/-, we find that action of the Ld. AO in estimating the lease rent at ₹ 13,74,353/- was self contradictory and unjustified, and therefore the same is reversed. Ground no .....

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O in this regard has been reversed by us and action of Ld. CIT(A) in adopting full value of consideration at ₹ 3,22,334/- for the purpose of computation of capital gains has been upheld, and therefore, we find there is no grievance left to be addressed, as has been raised in its cross objection by the assessee. The same is treated as infructuous and dismissed as such. ITA No. 1334/Mum/2011 Revenue s appeal for A.Y. 2003- 04: 7. Ground No.1: In this ground, the Revenue has challenged the ac .....

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uty was paid as per Bombay Stamp Act, 1958. The lease deed was approved by BMC and State Government Authorities. The title of the property continued to remain in the name of the assessee. Nothing has been brought before us to negate the detailed findings of the Ld. CIT(A). The transactions cannot be held to be sham merely on the basis of some doubts and apprehensions. Duly registered documents cannot be brushed aside or rewritten by the revenue authorities that too without bringing any contrary .....

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A), we find that no interference is called for in the order of Ld. CIT(A) and same is upheld on this issue. Ground no.1 of Revenue s appeal is dismissed. 8. Ground No.2: In this ground, the Revenue has challenged the action of Ld. CIT(A) in directing the AO to adopt the market value of the property at ₹ 3,22,334/- on the basis of stamp value of the lease deed as was assessed by the Stamp Valuation Authority as per Bombay Stamp Duty Act, 1958. 8.1. During the course of hearing, it has been .....

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have already held that the impugned transaction is a transaction of lease, executed through a Lease Deed duly registered with the concerned authorities after payment of stamp duty as determined by the Stamp Valuation Authority according to Bombay Stamp Act, 1958. In the earlier part of this order, it has been mentioned that the assessee has accepted the action of the AO in holding that impugned lease transaction would be covered under the provisions of section 50C. Thus, we have refrained oursel .....

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way of sale . As per the AO, the value should be adopted as if it was a case of transfer by way of sale , whereas as per the Ld. CIT(A), the value would be that as has been actually adopted for the lease deed actually registered. In our considered view, the provisions of section 50C are clear. It lays down that the value adopted or assessed by the Stamp Valuation Authority shall be deemed to be full value of consideration in a given case. Section 50C creates a deeming fiction. Law is well settle .....

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by the legislature that if no deed is registered by the parties, then in such a case if the deed would have been registered then whatever value would have been adopted, the same shall be adopted u/s 50C. But in the case before us, Lease Deed has been registered on which Stamp Valuation Officer has assessed the value for the purpose of ascertaining amount of stamp duty payable and therefore the same value should be adopted in the case before us. The clear mandate of the law is that the value ado .....

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aluation Authority under the Bombay Stamp Act 1958, for the purpose of determining full value of consideration is justified, and the same is upheld. Ground no. 2 of Revenue s appeal is dismissed. 9. Ground No.3: This ground is general does not require any specific adjudication, and therefore dismissed. ITA No. 1140/Mum/2011 Assessee s Appeal for A.Y. 2006- 07: 10. The Grounds raised and issues arising in this appeal are identical to A.Y. 2003-04. No distinction has been made out by either party .....

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residential housing project, which was only completed in December 2006, and hence the income arising from the project accrued only in A.Y. 2007 - 2008 i.e. subsequent year and not in the impugned year. Hence, the addition of Rs,62,39,236/- may be deleted. Without prejudice to above, assessee has undertaken housing project which is the eligible for deduction u/s 80-IB(10) and hence, if the amount of ₹ 62,39,236/- is held to be taxable in the impugned year i.e. A.Y. 2006 - 2007, then the con .....

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n of Hon ble Supreme Court in the case of NTPC 229 ITR 383, this ground is admitted. It is noted by us that there is no adjudication or application of mind by the lower authorities on this issue. Therefore, in the interest of justice and fair play, we send this issue back to the file of the AO for deciding the same in accordance with law and facts. The AO shall give adequate opportunity of hearing to the assessee before deciding this issue. The assessee shall also extend requisite cooperation to .....

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04 here also. Assessee s appeal in ITA No.1160/Mum/2011 & CO No.182/Mum/2013 for A.Y. 2007-08: 13. It is noted that grounds raised in assessee s appeal and Cross Objection filed by it are identical to the grounds raised for A.Y. 2003-04. The AO is directed to follow our order for A.Y. 2003-04 here also. 14. The assessee has raised additional ground as under: Without prejudice to above, assessee has undertaken housing project which is the eligible for deduction u/s 80IB(10) and hence, if the .....

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tistical purposes. ITA No.1336/Mum/2011 Revenue s Appeal for A.Y. 2007- 08: 16. Ground No.1: In this ground, the Revenue has challenged the action of Ld. AO in allowing the claim of deduction u/s 80- IB(10). 16.1. During the course of hearing, it has been submitted by the Ld. DR that assessee did not fully comply with the requirements of section 80-IB(10) and therefore, it was not eligible for claiming the deduction and Ld. CIT(A) has wrongly allowed the same. It has been submitted that the proj .....

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uction was denied under some confusion and wrong understanding of facts. He has relied upon the order of Ld. CIT(A) and detailed findings contained therein and requested for upholding the order of Ld. CIT(A) on this issue. 16.3. We have heard both the sides and gone through the orders of lower authorities. It is noted by us that Ld. CIT(A) has gone through all the facts and circumstances of the case and has examined all the documentary evidences, and thereafter only he has recorded detailed find .....

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xpenses were incurred during the F.Y. 1996-97. The Ld. CIT(A) analysed these observations and found that requisite plans were approved by MCGB on 15th March 2002. It is well known fact that no project can be started without requisite approval. Under these circumstances, it has been held by the Ld. CIT(A) that it cannot be inferred that housing project was commenced prior to 1st October 1998. During the course of hearing before us, Ld. Counsel has drawn our attention to the commencement certifica .....

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incurred from A.Y. 2002-03 on words. It is further shown that payment to BMC or property tax or architect fee etc. have been incurred only after the commencement, development and construction of the project. We find that findings recorded by the Ld. CIT(A) are in accordance with law and facts on this issue. Our view finds support from the decisions of the Tribunal in the case of Smt. Manju Gupta vs. ACIT 134 ITD 503 (Mum) and Nirmiti Constructions v. DCIT 4 SOT 383 (Pune). 16.4. Other objection .....

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d here the area project means project as proved by the local authority. It was shown to us on the basis of the document enclosed in the paper book that entire plot admeasuring 8612.40 sq. mts. was approved by the local authority as housing project , and commencement certificate was issued in respect of the entire plot. It was further shown to us that plot was sub-divided by BMC and some portion out of the total land was segregated for the purpose of common amenities in terms of rules and regulat .....

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ons were not applicable on the case of the assessee. It is noted that reliance in this regard has been rightly placed on the judgment of Hon ble Bombay High Court in the case of CIT vs. Happy Home Enterprise 372 ITR 1 (BOM) which has been affirmed by the Supreme Court in a subsequent judgment in the case of CIT vs Sarkar Builders 375 ITR 392. These judgments apply on the facts of the case before us. 16.5. It is further noted by us that Ld. CIT(A) has observed that it was wrongly presumed by the .....

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