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M/s. Gabriel India Ltd. Versus ACIT- 5 (1) , Mumbai

Capital gain computation - fair market value - reference to DVO - Held that:- There is no dispute on the year of taxability by the assessee as well as the tax department. So far as invocation of Section 50C is concerned, the AO was correct in invoking the same. Since Stamp Duty value was more than fair market value, the AO referred the matter to the DVO. Assessee give limited power of attorney in August 2007 to Runwal Developers to represent the matter in the Court. Since the matter was disputed .....

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ile computing the long term capital gains - Held that:- As per our considered view even if an assessee exercises his option to substitute the market value of the asset instead of the actual cost price, under Section 55(2)(i), deduction of any type of expenditure whether it is connection with the transfer or in connection with improvement to the capital assets, is allowable. Accordingly, we direct the AO to allow the legal expenses incurred and paid by Runwal Developers, while computing capital g .....

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k Ltd., 366 ITR 505 and Reliance Utilities & Power Ltd.[2009 (1) TMI 4 - BOMBAY HIGH COURT] if assessee is having sufficient own funds, no disallowance of interest is warranted. We also found that against the exempt income of ₹ 1.66 lakhs the assessee suo-moto worked out the disallowance as per Rule 8D at INR 49,66,962 as against the disallowance of INR 62,87,173 worked out by the AO. Accordingly, we direct the AO to restrict disallowance u/s 14A of ₹ 49,66,962/-. - Disallowance .....

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paid in the earlier years which was always well within limits prescribed by the Companies Act,1956. - We also found that in respect of Mr. Prakash Kulkami, waiver was granted from recovery of excess remuneration amounting to INR 18,40,868/-. As such, entire amount paid to him was allowed by the MCA and nothing was recoverable. However, AO has disallowed the differential amount of ₹ 47,16,866/- i.e. difference between total remuneration paid to Mr. Kulkami of ₹ 65,57,734 less wai .....

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r The Assessee : Shri Rakesh Mohan with Shri Prasad Bapat For The Revenue : Shri K. Krishna Murty ORDER PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 2009-2010, in the matter of order passed u/s. 143(3) of the I.T. Act wherein the following grounds have been taken by the assessee. Being aggrieved by the order passed under section 250 of the Income tax Act, 1961 ('the Act') by the learned Commissioner of Income tax (Appea .....

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d sales made during the year and net result of these adjustment on the profit of the year would be Nil. 2. The learned CIT(A) erred in not directing the Assessing Officer (' AO') to adopt value of ₹ 13,26,03,000/- being fair market value of the property as determined by the DVO as on 6 May 2008 being the full value of consideration of Mulund property sold by the appellant. 3. The learned CIT(A) erred in not granting deduction of ₹ 5.70 crores being amount paid by Runwal Devel .....

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submission of the appellant that it has sufficient own fund and therefore, no disallowance towards interest cost ought to be made. Without prejudice to the above, he erred in not directing th AO to consider the gross value of fixed assets as well as current assets for the purpose of computing disallowance as per Rule 8D; 5. The learned CIT(A) erred-in confirming the disallowance of ₹ 1,54,15,493/- under section 37(1) of the Act on the ground that the appellant paid excess managerial remune .....

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luding a sum of ₹ 6,97,806 while granting deduction under section 80IC of the Act. The Appellant craves leave to add or amend any or all of the above grounds of appeal, if necessary. 2. Rival contentions have been heard and record perused. 3. Facts in brief are that assessee is engaged in manufacturing and sale of Ride Control Products and Bearings. During the year under consideration AO made addition u/s. 145A which was confirmed by the CIT(A). At the outset, learned AR fairly conceded th .....

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rty. 5. Rival contentions have been heard and record perused. 6. Facts in brief are that assessee agreed to sell total land admeasuring 32,863 sq.mtr in Mulund to Runwal developers in 2006 for a total consideration of INR 85 crores, out of which land admeasuring 25,425 sq.mtr was transferred in A.Y.2007-08 for a consideration of INR 75 crores. The same had been offered for tax in AY 2007-08 under the head Long-term Capital Gains which was also accepted in the assessment order u/s.143(3). The bal .....

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plot of land admeasuring 7438.10 aq.mtr should be considered for the purpose of Section 50C. 7. We have considered rival contentions and found from record that there is no dispute on the year of taxability by the assessee as well as the tax department. So far as invocation of Section 50C is concerned, the AO was correct in invoking the same. Since Stamp Duty value was more than fair market value, the AO referred the matter to the DVO. Fair market value - per the DVO's report dated 27.12.2012 .....

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recompute the addition u/s. 50C, taking the value at ₹ 13,26,03,000/-. We direct accordingly. 9. Next grievance of assessee relates to allowing legal expenditure incurred by Runwal Development for vacating the property after having out of court settlement, while computing the long term capital gains. 10. We have considered rival contentions and found that since Runwal Developers had reached out of court settlement with third party and incurred expenses on litigation, while computing the ca .....

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ember 2006, according to which Runwal Developers paid 75 crores to Assessee and the Assessee was under obligation, among others, to ensure, the following for conclusion of the sale: (i) Removal of machines from factory. (ii) Factory Closure Certificate from Govt of Maharashtra. (iii) NOC from Labour Commissioner, Govt of Maharashtra. (iv) Settlement with Sitaram Dharam Bond and Others - (Writ Petition No. 5416 of2004 filed by Gabriel before Bombay High Court.) (v) Balance part of the considerati .....

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and legal cost, the same has been adjusted from the balance sales consideration i.e. INR 10 crores. Hence. the payment made by Runwal Developers would be considered as constructive payment being made by the assessee. Therefore, the same should be considered as deductible while computing the capital gains. 13. As per our considered view Even if an assessee exercises his option to substitute the market value of the asset instead of the actual cost price, under Section 55(2)(i), deduction of any t .....

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ad earned exempt income of ₹ 1.66 lacs. The said investments were made out of the Own Fund i.e. Share Capital and Reserves. As of 31 st March 2008, these are stated at INR 13,264.7 lacs and Investment of INR.1333.10 lakhs is only 10.08 % of the Net Worth. As per the decision of Jurisdictional High Courts in case of HDFC Bank Ltd., 366 ITR 505 and Reliance Utilities & Power Ltd., 313 ITR 340, if assessee is having sufficient own funds, no disallowance of interest is warranted. We also f .....

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xcess remuneration so paid was approved by the shareholders in their General Meeting held on 28th July, 2009. The shareholder also approved application to the Central Government for the same. This fact was also duly disclosed at Sub-Note No.17(b) under Note No.20 Notes forming part of Accounts of Audited Annual Accounts. Accordingly, Assessee filed a waiver application in Form 25A for the approval from the Ministry of Corporate Affairs for the excess managerial remuneration paid to the company o .....

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llowed as per the MCA - Rs.18,40,868/- (ii) Remuneration disallowed (to be recovered) - Nil c. Mr. K.N. Subramanian vide letter no.A71767636/2010-CL-VII dated 21st July, 2010. (i) Remuneration Allowed as per the MCA - NIL (ii) Remuneration disallowed (to be recovered) - Rs.59,77,968/- 17. We also found that in light of rejection of applications in the case of Mr. Arvind Walia and Mr. K N Subramaniam as mentioned above, Assessee Company filed a Review Application' vide letter dated 27th Janua .....

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