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2016 (11) TMI 662 - ITAT AHMEDABAD

2016 (11) TMI 662 - ITAT AHMEDABAD - TMI - Adoption of price for sale consideration - adoption of sale rate for land - Held that:- 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 jantr .....

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ting off business loss of earlier years against current year’s income from other sources 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 .....

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e 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 marketin .....

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2009, ITA No. 1789/Ahd/2009 - Dated:- 14-10-2016 - Shri S. S. Godara, JM And Shri Manish Borad, AM Appellant by : Shri M. K. Patel, AR Respondent by : Shri Jagdish, CIT, DR ORDER Per Manish Borad, Accountant Member These cross appeals by the assessee and the the Revenue for Asst. Year 2006-07 are directed against the order of ld. CIT(A)-V, Surat, dated 13.02.2009 in appeal No.CAS-V/143/2008-09 passed against order u/s 143(3) of the IT Act, 1961 (in short the Act) for Asst. Year 2006-07 on 11.12. .....

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sion and income from other sources after claiming deduction of ₹ 60,70,436/- u/s 80P(2)(d) of the IT Act. The case was selected for scrutiny and notice u/s 143(2) of the Act was issued on 24.12.2007 followed by notice u/s 142(1) along with questionnaire was duly served upon the assessee. During the course of assessment proceedings, it came to the notice of Assessing Officer that assessee has sold land of the co-operative society and building associated with it and got income and no such in .....

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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 .....

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port was awaited till finalization of the assessment. Ld. Assessing Officer went ahead to calculate capital gain by applying the rate of ₹ 10,000/- per sq.m. on 33,817/- sq.m. land and as regards remaining part of 1519 sq.m. land occupied by tenants sale consideration shown by assessee was accepted. Accordingly addition towards long term capital gain was calculated at ₹ 8,34,45,225/-. 3. The Assessing Officer also disallowed the deduction of unabsorbed depreciation of ₹ 53,90,9 .....

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disallowance of depreciation and deduction u/s 80P(2)(d) of the Act income was assessed at ₹ 9,44,55,900/-. 4. Aggrieved, assessee went in appeal before ld. CIT(A) and partly succeeded, 5. Assessee and Revenue both are now in appeal before the Tribunal. 6. First we take up assessee s appeal in ITA No.1395/Ahd/2009. Ground no.1 reads as under :- 1. The ld. CIT(A(-V, Surat has grievously erred in confirming the action of the Assessing Officer in adopting the sale rate of ₹ 10,000/- pe .....

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ntained in the assessment order as also the materials and evidences on record however, the arguments of the assessee are not acceptable since- In the valuation report of the Govt. approved valuer for the cost of acquisition of the land as on 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 .....

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e. 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 property of the assessee is situated in a very commanding location at Varach .....

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s back. Hence, considering this factor the valuation of the land of the assessee which is on the main Varachha Road and much nearer to the railway station at ₹ 5,800/- per sq. mt. that too after three years in the year 2003 cannot be accepted. Further, the AO has also given another comparable instance of sale rate of around ₹ 40,000/- per sq, mt. in the case of Mangukia Brothers of land in nearby vicinity which also the assessee not been able to rebut. Another important fact is that .....

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s been ultimately been revised to ₹ 14,000/- per sq. mt. w.e.f. 01-04-2008 and accordingly, I am of the opinion that the AO has been quite fair and reasonable in adopting the bare minimum value of ₹ 1Q,000/- per sq. mt. The assessee's argument that it has not received any notice of additional stamp duty and hence the value as per the sale deed has to be accepted is also not acceptable since the stamp duty value of all the lands in the state of Gujarat has been revised with effect .....

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nus 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 hol .....

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e shown by assessee is ₹ 7301/- per sq.m.. Further no notice on additional stamp duty has been received from the Stamp Duty Authorities which strengthens the case of assessee that value as per sale deed has to be accepted. Further no report of the Departmental Valuation Officer has been received till date which might have justified the impugned addition made by the Assessing Officer. 9. Ld. AR further submitted that advertisement for sale of the land was given in different local news paper .....

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r ld. Assessing Officer applied estimated rate of ₹ 10,000/- per sq.m. for 33817 sq.m. which was not having any basis. In these circumstances sale consideration of ₹ 7301/- per sq.m. should have been accepted by the lower authorities. Ld. AR referred and relied on the decision of the Co-ordinate Bench in the case of Surat Dist. Co- op. Spinning Mills Ltd. vs. ACIT in ITA No.3381/Ahd/2008 dated 17.2.2009 and another decision of the Co-ordinate Bench in the case of DCIT vs. Surat Dist. .....

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same Varachha road 4-5 kms. away from assessee s land. On the other hand, assessee s land which is situated just 200 metres from the Railway Station and having a prime location has been valued by the same registered valuer at ₹ 5,800/- per sq.m. in the year 2003. This itself shows that in three years there has been no increase in the land price. 11. We have heard the rival contentions and perused the material on record and also gone through the decions/judgments referred and relied on by .....

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e 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 f .....

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#8377; 5948/- per sq.m. by the same registered valuer who has valued the land of assessee in the year 2003 at ₹ 5,800/- per sq.m. even when it was having locational advantage in comparison of the land owned by Surat District Spinning Mills Pvt. Ltd. as the land was very close to the Railway Station. These two reports of the same registered valuer in the year 2000 and 2003 indicate that there has been no increase in the fair market value of land and therefore the registered valuer s report .....

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r seems to fulfill the conditions envisaged u/s 50C of the Act which reads as below :- 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority" ) for the purpose of payment of stamp duty in respect of such transfer, the value .....

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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, s .....

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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 in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.] (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed [or asses .....

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rate then the said jantri rate shall be deemed to be the full valuation of consideration received or accruing as a result of transfer. As per the provisions of sec.50C(2) of the Act the Assessing Officer if not satisfied with the value so adopted then he may refer the valuation of the capital asset to Valuation Officer, which in this case is the impugned land for which reference was made to the DVO but no report has been received. 14.1 We further observe that the Co-ordinate Bench in the case of .....

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ount, over and above, the stated sale consideration in the registered documents, evidencing the sale of immovable property. No such evidence could be brought on record by the Revenue. The DVO has not filed valuation report till date. It is not a disputed fact that the assessee has closed its business in the year 1999 and has not done any other business tillITA No.3384 and 1612/Ahd/2010 With CO No.41/Ahd/2011 the year 2007-2008. It is also undisputed fact that during the period from 1999 to 2007, .....

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n 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 i .....

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ee and the grounds of the appeal of the Revenue in both the years are dismissed. 15. However, the facts of the present case do not fit completely to the above said decision as in the above cited case by the ld. AR the matter travelled upto the Hon. Gujarat High Court which has directed and empowered the President of the Employees Union to sale the land in question. 15.1 We further observe that in the case of Surat District Co-op. Spinning Mills Ltd. vs. ACIT in ITA No.3381/Ahd/2008 for Asst. Yea .....

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en held as under: Which is in fact never accrued or was never received cannot be computed as capital gain under s.48. Sub-section 52 (1) does not deem income to accrue or to be received which in fact never accrued or was never received. It seeks to bring within the net of taxation only that income which has accrued or is received by the assessee as a result of the capital asset. But since it would not be possible for the Income-tax officer to determine precisely how much more consideration is re .....

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of taxability are fulfilled is always on the revenue. In view of the above, respectfully following the aforesaid decision of Hon. Supreme Court, we 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. .....

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r 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. of land. We accordingly do so. Ground no.1 of assessee s appeal is partly allowed. 17. Ground no.2 which reads as under :- 2. That the CIT(A) has grievously .....

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. Through this ground assessee has challenged the action of ld. CIT(A) sustaining the action of Assessing Officer in not allowing the set off of the unabsorbed business loss of ₹ 8,60,125/- of earlier year against the income from other sources of current year. We find that ld. CIT(A) has sustained the action of Assessing Officer by observing as under :- The second issue is the assessee's eligibility to set off the business loss of earlier years against the income from other sources of .....

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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. Hence, in view of the clear provisions of section 72(1) of the I.T. Act, it is held that the claim of the assessee in setting off business loss of earlier year .....

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he 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 .....

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- 3. That the ld. CIT(A) has grievously erred in partially confirming the disallowance of claim of deduction under section 80P of the Act of ₹ 19,16,663/- in respect of business income under section 80P(2)(a)(iii), ₹ 10,800/- under sec.80P(2)(e) in respect of godown rent. 24. During the course of assessment proceedings while examining the allowability of deduction u/s 80P of the Act, ld. Assessing Officer observed that inspite of having negative income under the head business or prof .....

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d assessee has urged for allowability of deduction u/s 80P of the Act at ₹ 19,16,663/- in respect of business income under section 80P(2)(a)(iii), ₹ 10,800/- under sec.80P(2)(e) in respect of godown rent. 26.1 We find that as per the return of income assessee has shown net business loss is of ₹ 85,27,214/- net income from other sources at ₹ 1,72,54,361/- and house property income at ₹ 17107/-. These figures show that assessee incurred losses out of business activiti .....

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al produce grown by its members u/s 80P(2)(a)(iii) of the Act and ₹ 10,800/- claimed u/s 80P(2)(iii) for income earned out of godown/warehouse rent marketing of commodities. 26.2 We further observe that ld. CIT(A) only granted relief for ₹ 1 lacs u/s 80P(2)(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 .....

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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 is held that if the same is offer .....

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0/- u/s. 80P(2)(c)(i) is allowed and in respect of the assessee's claim for deduction of ₹ 10,800/- u/s. 80P(2)(e), the AO is asked to verify as to whether the same is offered under the head 'Income from house property7 and if so, the same is to be allowed and if it is offered under the head 'Business Income' the same is to be rejected. 27. In the given facts and circumstances of the case and the observations of ld. CIT(A), we are of the view that as there is loss during th .....

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, which need no adjudication. 29. Now we take up Revenue s appeal in ITA No.1789/Ahd/2009 wherein following grounds have been raised :- 1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of ₹ 58,49,268/- made by the AO on account of disallowance of depreciation loss of earlier year and current year, without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has e .....

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epreciation 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 .....

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no deduction should be allowed for expenditure incurred by assessee in relation to income which does not form part of the total income under the Act as the assessee is eligible for 100% deduction u/s 80P of the Act for the business income earned from the activities undertaken by assessee society. 35. We further observe that ld. CIT(A) has allowed the claim of assessee of unabsorbed depreciation of earlier years and current year totaling to ₹ 58,49,268/- by observing as under :- As regards .....

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in respect of expenditure incurred by the assessee in relation to income which does not from part of the total income under this Act, however I do not agree with the AO on this count since as per the provisions of sub section (2) of section 32, it is seen that where in the assessment of the assessee full effect cannot be given to any allowance under sub section (l) of section 32 in any pervious year on account of there being no business income or business income being less then the depreciation .....

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he earlier years shall be added to the depreciation allowance of the A.Y. 2006-07 and then shall be deemed to be a part of the current year's depreciation and this process will continuously go on for the succeeding years and as per the provisions of section 71 the assessee would be entitled to set off the said depreciation loss against income under the head income from other sources and long term capital gain. Hence, in view of the clear provisions of section 32(2) of the I.T. Act, It is hel .....

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