TMI Blog2011 (1) TMI 1474X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociate concerns is liable to be disallowed to the extent it is found to be excessive. 3. On the facts and in the circumstances of the case and in law, the ld CIT (A) erred in not considering the fact that the provision of section 92 93 of the I.T.Act, 1961 is clearly applicable in the case of assessee company since the assessee has brought the properties at excessive price generating exempt income in the hands of Group company. Further the assessee company was also claiming the interest expenses which was not available to the group company Hence, it was clear that the properties bought at the excessive price attracts the provisions of Chapter X of the I.T.Act though the transaction is not an international transaction but the modus operandi of the assessee company is the same to whom the provision of chapter X is applicable. 4. On the facts and in the circumstances of the case and in law, the ld CIT (A) erred in deleting the disallowance made on account of property tax without considering the fact that the payment was made by the HDFC Ltd to THDC Ltd towards maintenance and property tax and further in the certificate issued by THDC Ltd, nowhere the name of the assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by the assessee company to the HDFC Property Fund. The same amount has been claimed by the assessee company as a deduction while computing income from house property. Since the assessee has paid excess consideration to the extent of ₹ 65,27,61,019, the proportionate interest component of ₹ 3,25,33,488 on the excess consideration amount paid is disallowed and added to the income from house property. The working of excess consideration paid interest disallowance is given below: Registration Receipt No. dt. Market value (Rs.) Amount paid as per agreement(Rs.) Excess amount(Rs.) % of excess amount paid to market value 7136 dt.12.7.05 15,63,76,000 41,48,25,012 25,84,49,012 165% 7135 dt. 12.7.05 20,30,35,560 59,73,47,567 39,43,12,007 194% Total 35,93,11,560 101,21,72,579 65,27,61,019 182 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be disallowed. Valuation or fixation of market value for stamp duty purpose is for the prime purpose of determination of stamp duty and at the same time to ensure that properties are not undervalued so as to defraud revenue. The Income tax Act enables that AO to substitute the value as declared if the sale consideration is less than the value adopted for the payment of stamp duty. Thus the market value as fixed by the state government for the purpose of payment of stamp duty, is open to be adopted by the AO only in situation, whenever in the computation of income under the head capital Gain , it is found that when there is transfer of land or building or both, the sale consideration shown is less than value adopted for payment of stamp duty. There is no enabling provision permitting the AO to substitute the actual consideration paid with the stamp duty valuation so as to limit or restrict the interest paid on capital borrowed for the purpose of the declared investment in impugned properties. The prevailing prices of properties are factored in by various economic and other factors and it also the result of negotiation between the interested parties, hedged in by the principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground is allowed. 6. The Assessing Officer is not satisfied and is in appeal before us. 7. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 8. We have noted that there is no dispute that a borrowing by way of debentures, in respect of which interest is claimed as deduction, is duly utilized for the purposes of purchase of the property. There is also no dispute that there is no specific legal provision enabling disallowance of interest in respect of excess consideration, even if that be so, paid for purchase of property. In any event, neither stamp duty valuation is a conclusive proof of value of property, nor a valuer s report, as is submitted by the assessee in support of the purchase price, can be simply brushed aside. We are unable to see any merits in the action of the Assessing Officer. The transfer pricing regulations and the provisions under section 40A(2), which have been referred to in the grounds of appeal, have no application to the facts of this case either. In our considered view, learned CIT (A) was fully justified in deleting the impugned disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duly considered factual matrix of the case as also the applicable legal position. 12 We find that there is no dispute about the fact that the assessee had become owner of the property on 29.6.2005 and that the assessee paid proportionate municipal taxes in respect of the period for which he was owner to HDFC Limited. The mere fact that the record shows the name of HDFC Limited cannot be a ground of disallowance for municipal taxes because the CIT (A) has rightly noted, it is not inseisin after that entry regarding change in ownership in the municipal records because it takes some time and that unless such entries are effected, the receipts are issued in the name of the person who is owner as per municipal records. On the facts of the present case, there is reasonable explanation for the receipts not being in the name of the assessee and the payment made by the assessee is not disputed either. On consideration of these facts as also entirety of the case, we uphold the order of the CIT (A) and decline to interfere in the matter. 13. Ground No.4 is thus dismissed. 14. In the result, appeal filed by the revenue is dismissed. Pronounced in the open court on 28th January, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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