TMI Blog2016 (11) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... is illegal and not allowable as per law. Allowability of deduction u/s 80P - Held that:- there is loss during the year from the business activities of the society which includes all types of income relating to marketing of agricultural produce grown by its members as well as income from letting out godown/warehouse, assessee is not eligible for any deduction u/s 80P(2)(iii) and 80P(2)(e) of the Act for the lack of positive income Deduction of claim of assessee as unabsorbed depreciation and also claim of the current depreciation by applying the provisions of section 14A for the purpose of computing total income - Held that:- We observe that depreciation is claimed as per the provisions of section 32 of the Act and sub-section (2) of section 32 allows the assessee to claim unabsorbed depreciation of earlier years. Further in order to compute the business income of the assessee society the computation of income has to pass through the provisions of section 32 of the Act so as to arrive at the correct business income. Sec. 14A of the Act refers to income which are not included in total income i.e. exempt income dividend, for example tax free interest etc. Whereas in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advance and in Asst. year 2006-07 the same was adjusted against sale consideration. In Asst. year 2006-07 a deposit of ₹ 12,47,20,000/- in the bonds of National Bank for Agricultural and Rural Development (NABARD) and also ₹ 6,17,30,000/- as deposit in the national housing bank have been shown. On further gathering of relevant documents and details it was observed by Assessing Officer that during the year under appeal assessee has sold 35,336 sq.m. land for ₹ 25,47,49,129/- and exemption u/s 54EC of the Act claimed for investment in specified assets i.e NABARD and national housing bank of ₹ 18,64,50,000/-. These information were furnished through revised computation of income filed on 6.11.2008 i.e. during the course of assessment proceedings. On further examination of details of capital gain ld. AO s main focus was on sale consideration. As per the registered valuer s report fair market value of impugned land was ₹ 5,800/- per sq.m. in the year 2003. Jantri rate as per Stamp Duty Authority during F.Y. 2005-06 was at ₹ 8000/- per sq.m.. Market value of the land as estimated by ld. Assessing Officer on the basis of comparative sale instances was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 01-04-1931 the value adopted is ₹ 450/- per sq. mtr i.e. 3.28 times of the comparable sale instance of ₹ 136/- per sq. mtr. whereas in the valuation report of the same valuer the sale rate as on 2-12-2003 has been adopted at ₹ 5800/- per sq. mtr. i.e. only 1.37 times of the comparable sale instance of ₹ 4238/- per sq. mtr., which is absolutely inconsistent and adopting the basis of valuation as per the report giving the cost as on 1-4-81, i.e. 3.28 times of the comparable sale instance the market rate would work out to ₹ 13900/- per sq. mtr. (i.e ₹ 4238 x 3.28 times), as against which the AO has adopted a rate of ₹ 10,000/- per sq. mtr. which is most fair and reasonable and does not call for any interference. Out of the total land of 35,336 sq. mtrs, sold during the year only 1,519 sq. mtrs of land was occupied by the tenants which is very negligible and the AO has accepted the sale price as shown by the assessee in respect of the said 1,519 sq. mtrs. of land and only for the balance non tenated land of 33817 sq. mtrs. the sale rate of ₹ 10,000- per. sq. mt. has been adopted by him. Further, it is also sent that the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. and thus, it gets established that the actual value of land prior to 01-04-2008 was also much higher. As regards the assessee's argument that the Revenue has not discharged the onus of proving the under statement and its reliance on the decision of the Hon'ble Supreme Court in the case of K.P. Varghese (supra), I am of the opinion that the AO has fully discharged the onus of proving understatement not only from the valuation reports submitted by the assessee, adopting different basis but also from other comparable instances and even the stamp duty valuation and thus, the decision as relied upon by the assessee is not applicable to the facts of the case. Hence, I hold that the AO has been fair and reasonable in adopting the sales rate at ₹ 10,000/- per sq. mt. and computing long term capital gain on the said basis and therefore, the grounds of the assessee regarding adoption of sale rate of ₹ 10,000/- per sq. mt. and computing long term capital gain on the said basis are hereby dismissed. 8. Ld. AR submitted that as per valuation report of registered valuer the value of the land has been valued at ₹ 5,800/- per sq. m. whereas the sale price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erused the material on record and also gone through the decions/judgments referred and relied on by the assessee. Through this ground assessee has challenged the order of ld. CIT(A) sustaining the addition towards long term capital gain by way of applying sale price at ₹ 10,000/- per sq.m. as against ₹ 7,301/- per sq.m. shown by the assessee. We find that during the year under appeal assessee has sold 35,336 sq.m. of land situated at Varachha road, Surat out of which1519 sq.m. land was occupied by tenants. The sale consideration of 1519 sq.m. of land has been accepted by the Revenue as shown by the assessee so there is no dispute with regard thereto. As far as remaining land portion of land 33817 sq.m. assessee has shown sale price of ₹ 7,301/- per sq.m. Jantri price as per the Stamp Duty authorities ₹ 8,000/- per sq. m. As per registered valuer s report dated 2.12.2003 the fair market value rate has been shown at ₹ 5,800/- per sq. m. DVO who was requested by Assessing Officer to provide the valuation report vide letter dated 7.11.2008 is still pending for action as no report has been received till date. Ld. Assessing Officer on the basis of comparativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the value so adopted or assessed [or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. [Explanation 1].-For the purposes of this section, Valuation Officer shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). [Explanation 2.-For the purposes of this section, the expression assessable means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry building, and cleared the land. The assessee was under heavy liability of payment of dues to its ex-employees. The matter has travelled till the level of the Hon'ble High Court, which has directed and empowered the President of the Employees' Union to sell the land in question. In the facts of the case, there seems to be no justification for substituting the apparent sale consideration of the land in question with an estimate of the fair market value of the land in question, and particularly so, in view of absence of any material brought on record to suggest the understatement of the sale consideration or charging of any on-money by the assessee. Power of attorney, as per the direction of the Hon'ble high Court was given in favour of the Chairman of Labour Union, Shri N.B. Desai, to sell the land and under that power of attorney, the land was sold by plotting the said land The issue before us is covered in favour of the assessee with the decision of the ITAT, Ahmedabad in assessee's own case for A.Y.2005-2006 (supra) and 2006-2007 (supra) wherein in identical facts, the issue was decided in favour of the assessee, and the addition made by substituting the sale co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow the claim of the assessee. Thus, this ground raised by the assessee is allowed. 16. In the above referred decision of the Co-ordinate Bench in the case of Surat District. Co-op. Spinning Mills reliance was placed on the judgment of Hon. Supreme Court in the case of K.P. Varghese vs. ITO (supra) and relevant provisions of section 52 of the Act. We find that section 52 of the Act was deleted by Finance Act, 1987 w.e.f. 1.4.1988 and certainly will not squarely apply to the case of assessee. 16.1 However, drawing inference from the above cited decision of the Co-ordinate Bench and in view of the provisions of section 50C of the Act, we are of the considered view that in the given facts and circumstances of the case wherein assessee has shown sale consideration @ ₹ 7,301/- per sq.m., registered valuer valued it at ₹ 5,800/- per sq.m., ld. Assessing Officer estimated rate at ₹ 10,000/- per sq.m. no report from the DVO and jantri price of ₹ 8,000/- per sq.m., we are of the view that in order to meet the ends of justice, it will be justified to adopt the jantri price of ₹ 8,000/- per sq.m. for the sale consideration towards the sale of 33817 sq.m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st. Co-op. Spinning Mills vs. ACIT for Asst. Year 2005-06 (supra) similar issue was adjudicated and decided against the assessee by observing as under :- 3. We have considered the rival submissions and perused the material on record. We agree with the findings given by the CIT(A) that as per the provisions of section 72(1), business loss other than loss speculation business can be set off against any head of income in the year in which it is incurred and the amount of such business loss which cannot be set off, can be carried forward for being set off in the subsequent years. However, in the subsequent year, such carried forward business loss is allowed to be set off only against business income of the same business or of any other business but not against income under any other head. We, therefore, do not find any infirmity in the order of the CIT(A) and uphold his order in this regard. Thus, the ground raised by the assessee stands dismissed. 22. As the issue before us in this ground is squarely covered against the assessee by the decision of the Co-ordinate Bench cited above, respectfully following the same we find no reason to interfere with the order of ld. CIT(A). W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c)(i) of the Act and held the action of ld. Assessing Officer to be correct for not allowing deduction of ₹ 19,16,663/- u/s 80P(2)(iii) of the Act and ₹ 10,800/- by observing as under :- I have considered the facts of the case, the submissions made by the assessee and the findings of the AO as contained in the assessment order. The contention of the assessee that the business income of ₹ 19,16,663/-is eligible for deduction u/s. 80P(2)(a)(iii) is not acceptable since, the deduction u/s. 80P under chapter VIA is allowable on net income and not on gross income as per the clear provisions of sec. 80AB of the Act. It is seen that the income of ₹ 19,16,663/- under the head business income gets set off under other current year's business loss and in the event of there being no income under the head business income, there is no question of claiming deduction in respect of the amount of ₹ 19,16,663/- /s. 80P(2)(a)(iii). As regards the claim of ₹ 1,00,000/- u/s. 80P(2)(c)(i) it is seen that the assessee is a consumer co-op, society is hence eligible for the same. As regards, deduction of ₹ 10,800/- u/s. 80P(2)(e) in respect of godown rent it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ld. Assessing Officer denied deduction of claim of assessee of ₹ 53,90,948/- as unabsorbed depreciation and also claim of ₹ 458320/- of the current depreciation by applying the provisions of section 14A of the Act for the purpose of computing total income under this chapter and taking a view that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. The ld. CIT(A) deleted the disallowance. 31. Revenue is now in appeal before the Tribunal. 32. Ld. DR supported the order of Assessing Officer. 33. Ld. AR relied on the order of ld. CIT(A). 34. We have heard the rival contentions and perused the material placed before us. Through this ground Revenue has challenged the order of ld. CIT(A) allowing the depreciation claim of ₹ 58,49,268/- which includes ₹ 53,90,948/- as unabsorbed depreciation and ₹ 458320 of current depreciation. Reason for the said disallowance by Assessing Officer was mainly focused on his view of application of provisions of section 14A of the Act on the basis of which inference was drawn that no deduction should be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain. Hence, in view of the clear provisions of section 32(2) of the I.T. Act, It is held that the claim of the assessee in setting off depreciation loss of earlier years as also current year's depreciation against current year's income from other sources and long term capital gain is in order and is allowable as per law and the assessee's ground of appeal on this issue is allowed. 36. We observe that depreciation is claimed as per the provisions of section 32 of the Act and sub-section (2) of section 32 allows the assessee to claim unabsorbed depreciation of earlier years. Further in order to compute the business income of the assessee society the computation of income has to pass through the provisions of section 32 of the Act so as to arrive at the correct business income. Sec. 14A of the Act refers to income which are not included in total income i.e. exempt income dividend, for example tax free interest etc. Whereas in the case of assessee deduction has to be claimed u/s 80P of the Act. Further as per section 80P(2)(a)(iii) of the Act, the deduction is allowable for the amount of profits and gain of business attributable to marketing of agricultural produce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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