Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (11) TMI 251 - ITAT DELHI

2016 (11) TMI 251 - ITAT DELHI - TMI - Addition made on account of full value consideration enhanced by AO on sale of building on estimate basis - estimation is on the basis of the interim report of the Assistant District Valuation Officer - assessee trust - Held that:- The value of the consideration declared by the assessee as full value consideration received in accrued cannot be substituted by the value estimated by the DVO. The assessee has submitted necessary evidence in the form of confirm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on under section 11 - AO assessing the assessee club as AOP - AO has withdrawn the exemption on the ground that the assessee has sold the flat for the benefit of person referred to in subsection 3 of Section 13 and thus violated the provisions of section 13 - Held that:- Though the property was purchased by the assessee, but it could not be registered in the name of the assessee and the seller gave a power-of-attorney in the name of Sh. Surender Sharma. Moreover, the Government of Delhi also ref .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

131 of the Act, he stated the facts and circumstances under which the property was sold to Sh. Surender Sharma and justified that the property was sold at market value. Relevant part of the statement has already been reproduced by the Assessing Officer in the assessment order . In view of above circumstances, we find that there is no violation of provisions of section 13(2) (f) of the Act in the case of the assessee and accordingly the benefit of exemption under section 11 of the Act cannot be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

disallowance purely on ad hoc manner, which is not permitted by law. Disallowance has been made in ad hoc manner without any justified reasons, therefore the disallowance made by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals) is deleted. See State of Orissa Versus Maharaja Shri BP Singh Deo [1969 (12) TMI 2 - SUPREME Court ] wherein held that even in case of best judgment, the Assessing Officer does not have an arbitrary power and the assessment must be b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ad-hoc manner cannot be sustained.- Decided in favour of assessee - Addition on account of membership fees - Held that:- The membership and subscription amounts received by the applicant-trust/society from its members cannot be characterized as "voluntary contribution" within the meaning of the said expression under section 12 of the Incometax Act, 1961. The entire income of the trust is exempted under section 11 of the Income-tax Act, 1961. No justification in treating the receipt of subscr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ected against order dated 22/03/2010 passed by the learned Commissioner of Income-tax (Appeals)-XI, New Delhi, for assessment year 2002-03 raising following grounds: 1. The appellant, Rajasthan Club is engaged in charitable activity during the Financial year 2001-02. The appellant is a regular Income Tax assessee and assessed to Income Tax for the last several years. All income, assets and investments are disclosed to Income Tax Department in regular Income Tax returns. 2. On the facts and in th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

3,400/- instead of value of the property of ₹ 2,30,000/- for which the property was sold. 4. On the facts and in the circumstances of the case and in law the learned Assessing Officer and Commissioner of Income Tax (Appeal) erred in holding of denying the exemption u/s 11 without any reason basis and evidence. 5. On the facts and in the circumstances of the case and in law the learned Assessing Officer and Commissioner of Income Tax (Appeal) was incorrect and unjustified in assessing the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the total expenses of ₹ 3,44,614/- on estimate basis even though there is no case for any such disallowance. 8. On the facts and in the circumstances of the case and in law the learned Assessing Officer and Commissioner of Income Tax (Appeal) erred in holding that treating the income of ₹ 11,60,400/- on sale of flat whereas as a matter of fact, the assessee has not earned any such income. 9. On the facts and in the circumstances of the case and in law the learned Assessing Office .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the case and in law the learned Assessing Officer was incorrect and unjustified in issuing penalty notice and also in charging interest. 2. The appeal of the assessee was dismissed for non-prosecution by the Tribunal in its order dated 17/06/2011 but subsequently on miscellaneous petition filed by the assessee, the order has been recalled by the Tribunal in its order dated 01/02/ 2016. 3. The facts in brief of the case are that the assessee society has been registered under section 12A of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

appeal of the assessee was dismissed. Aggrieved, the assessee is in appeal before the Tribunal, raising the grounds as reproduced above. 4. The grounds number No. 1, 2 and 6 are general in nature and, therefore, not required to be adjudicated upon by us. 5. The grounds No. 3 and 8 of the appeal are regarding addition made of ₹ 11,60,400/- on account of full value consideration enhanced by the Assessing Officer on sale of building on estimate basis. 5.1 The facts in respect of issue in dis .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng Officer did not accept the sale consideration shown by assessee and estimated the full value of consideration at ₹ 13,93,400/- and after reducing the cost of ₹ 2,30,000/- he computed the capital gain at ₹ 11,60,400/-. Before the Assessing Officer, it was submitted on behalf of the assessee (i) that in financial year 1994-95 , the seller sold the flat to the assessee club and given the power of attorney in the name of Sh. Surender Sharma, son of late Sh. Bal Kishan Vaid, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. 5.3 The Assessing Officer referred the property to the valuation cell under section 55A(b) of the Act for determining the fair market value as according to the Assessing Officer the sale value was grossly undervalued. 5.4 Subsequently, it was submitted by the assessee that the flat was purchased by Sh. Ashish Sharma, son of Sh. Surender Sharma and payment of ₹ 2,30,000/- was made out of his saving account and, therefore, Sh. Ashish Sharma was legal and de-facto owner of the flat. Accordi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ressed to the assessee club, he had estimated an interim value of the flat sold by the assessee club at ₹ 13,93,400/- and the final value was yet to come. On the basis of interim finding of the Asst. Valuation Officer, the Assessing Officer issued a final show cause notice wherein the assessee was asked, as why the estimated value of ₹ 13,93,400/- be adopted instead of ₹ 2,30,000/- declared by the club and as to why the provisions of section 13(3) not applied as the trust throu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the Act, but no report was received from the Assessing Officer concerned. The Ld. Commissioner of Income-tax (Appeals) on the basis of the interim report of Assistant Valuation Officer upheld the addition with following findings: 2.6 I have observed that in this case reason best known to itself the appellant has not complied with any of the notices of the Deptt. i.e. from the side of the AO and also from the side of the Valuation Officer. The Deptt. has no authority to comply attendance of a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on of the Deptt. at the assessment stage and to comply only at the appellate stage and to raise ground which was never raised before the A.O. The record reveals that before framing of the assessment order sufficient opportunities were adduced by the A.O. As the A.O. is not an expert on valuation matter, as per the provisions of the law the matter was referred to the competent authority for this purpose i.e. Valuation Officer and I find no discrepancy in the approach of the. AOLln view of constan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

le under section 48 of the Act, is the full value of consideration received or accrued to the assessee, which was only ₹ 2,30,000 as evident from the confirmation given by the buyer Sh. Ashish Sharma as well as the statement of Sh. Dinesh Chandra Gupta, who was president of the assessee club, at the time of assessment proceeding; (ii) that expression full value consideration denotes actual consideration and not notional or deemed consideration, placing reliance on the judgment reported in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ersus Shakuntala Devi and other decisions; (v) that no final report of DVO was submitted by the Assessing Officer in spite of the direction of the learned Commissioner of Income-tax (Appeals) in remand proceedings under section 250(4) of the Act; (vi) that the report of the Inspector also cannot be made basis for enhancing the full value consideration, relying on 215 taxmann 11 (Del) (Mag) in the case of CIT versus Delhi housing and finance Corporation and other decisions; (vii) that the section .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eeping in view the full value of consideration of ₹ 13,93,400/-, estimated on the basis of the interim report of the Assistant District Valuation Officer . We find that in the case of CIT versus Smt. Nilofer (supra), it has been held as under: 7. These decisions make it more than clear that the expression full value of consideration that is used in s. 48 of the present Act does not have any reference to the market value but only to the consideration referred to in the sale deeds as the sal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

29.03.2005, Sh. B.S. Jindal, C.A. attended and filed a letter signed by him and contents of which were confirmed by Sh. Ashish Sharma s/o- Sh. Surender Sharma by putting his signatures on the same. This letter in para 1 stated as under: Shri Ashish Sharma has purchased the property at B-27 Flatted Factory Complex New Delhi from Rajasthan Club for ₹ 230000/- and amount was paid by cheques no. 985356 out of my saving account no. 17908 with The Bank of Rajasthan Club Ext. Counter, PM Hospita .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rected to be deleted on the first proposition of the assessee, we are not discussing the other proposition of the assessee on the issue in dispute. The grounds no. 3 & 8 of the appeal are accordingly allowed. 6. The ground Nos. 4 and 5 are related to denial of exemption under section 11 of the Act and the assessment in the status of AOP. According to the Assessing Officer, the flat sold to Sh. Surinder Sharma, who was the President of the assessee club at the time of sale and, therefore, pro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

less than the adequate value and the addition of ₹ 11,60,400/- itself was not tenable, thus , the denial of exemption was not valid. The learned Authorized Representative further submitted that the flat was transferred to Sh. Ashish Sharma , through Sh. Surender Sharma because of compelling circumstances of prohibition of transfer by the Delhi government and the assessee was having no option other than to dispose off the said flat. On the other hand, the Ld. senior departmental representat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

charitable purpose is applied directly or indirectly for the benefit of the persons, whose list is mentioned in subsection 3 of section 13 of the Act. The list of such persons is reproduced as under: 3) The persons referred to in clause (c) of sub-section (1) and sub-section (2) are the following, namely :- (a) the author of the trust or the founder of the institution; (b) any person who has made a substantial contribution to the trust or institution, that is to say, any person whose total cont .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

provisions of section 11 are also not applied wherein there is a violation of section13(2)(f) of the Act. The relevant section is reproduced as under: Section 13(2)…………….. a…………………………… b…………………………… c………………………….… d……&hell .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to the then President of the assessee club or his son is undisputed. The only issue whether the consideration on which it is transferred was adequate or not, in terms of the provisions of section 13(2)(f) of the Act . While deciding the ground Nos. 3 and 8 of the appeal, we have already held that there are no other materials or evidence which could establish that the property has been transferred at a value more than what is recorded in the return of income. We have already referred to the comp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

for the office. In view of the restriction on the use of the property and lack of title in the favour of the assessee, the assessee was compelled to transfer the property to Sh. Surender Sharma in absence of any buyer as stated by Sh. Dinesh Chand Gupta, President of the club at the time of assessment proceeding. In his statement recorded on 18/02/2005 under section 131 of the Act, he stated the facts and circumstances under which the property was sold to Sh. Surender Sharma and justified that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

incorrect and not according to the law. The grounds No. 4 & 5 of the appeal are accordingly allowed. 7. In ground No. 7, the assessee challenged the disallowance of ₹ 3,44,614/- @ 20%, out of expenditure incurred of ₹ 17,23,075/- under the head cultural and sports expenses. The Assessing Officer observed that the assessee had incurred following expenses totaling to ₹ 17,23,075/-: 1. Mehandi Rache Hath 9,63,638 2. Sharad Purnima Programme 1,14,330 3. Play 7,858 4. Gazal San .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce. 8.1 Before us, the learned Authorized Representative of the assessee referred to para 1 of the assessment order and submitted that books of accounts were produced before the Assessing Officer and same were examined on the test check basis. He also submitted that the Assessing Officer has not pointed out any specific expenses, vouchers corresponding to which, were not produced and he made disallowance in ad-hoc manner without pointing out any specific faults in the vouchers or the books of ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g Officer has not pointed out any specific vouchers or bill in respect of the expenses which were not found with assessee or not produced before him and he has made disallowance purely on ad hoc manner, which is not permitted by law. In the case of state of Orissa Vs. Maharaja s BP Singh Deo (supra), the Hon ble Supreme Court has held that even in case of best judgment, the Assessing Officer does not have an arbitrary power and the assessment must be based on some relevant material. In the case .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eted. The ground No. 7 of the appeal is accordingly allowed. 8.4 In ground No. 9 of the appeal, the assessee challenged disallowance of ₹ 75,000/- out of the expenses of ₹ 2,32,946/- on account of annual general meetings and members meeting. The Assessing Officer noted that those expenses are unverifiable and in the nature of personal nature, and therefore he disallowed the expenses of ₹ 75,000 out of ₹ 2,32,946/- claimed by the assessee. The learned Commissioner of Incom .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

any specific defects either in the vouchers or bills or in books of accounts in respect of the expenses claimed by the assessee. The Assessing Officer has not also given any reasoning how the part of expenses were personal in nature. In view of above, the disallowance made by the Assessing Officer in ad-hoc manner cannot be sustained. Following our findings, in case of ground No. 7 of the appeal, we hold that disallowance of expenses in arbitrary manner cannot be allowed, and thus same is delete .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he action of the Assessing Officer. 9.1 Before us, the learned Authorized Representative of the assessee submitted that there was no valid legal justification for making addition of membership fee as same was exempt from tax in view of the following judgments: 1. 138 DTR 145 (Bom) CIT Vs. Shree Parleshwar Cooperative Housing Society Ltd. 2. 209 ITR 396 (Bom) Trustees of Sh. Kot Hindu Stree Mandal Vs. Commissioner of Income Tax 9.2 On the other hand, the learned Sr. Departmental Representative re .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version