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TMI Blog2017 (7) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. iii) The learned Commissioner of Income Tax (Appeals) has erred in confirming a non-existent income of Rs. 1,00,000/- without having any proof or valid evidence but on suspicion only. iv) The learned Commissioner of Income Tax (Appeals) has erred in confirming the adoption guideline value of Rs. 2,77,10,000/- as sale consideration instead of Rs. 2,10,00,000/- in spite of the jurisdictional High Court decision that market value is different from guideline value. v) The ld.CIT(A) ought to hae appreciated the fact that the property that was transferred consists of two categories i.e.(i) commercial (ii) school (Residential) and should have adopted two different values for the same. vi) The ld.CIT(A) erred in justifying the completion of assessment without receiving the DVO report which is mandatory as per sec.50C(2) & (3) and against the ratio laid down by the jurisdictional High Court." 3. Brief facts of the case are that the assessee is an individual deriving income from house property and capital gains filed his return of income on 11.11.2009 admitting total income of Rs. 1,59,28,400/-. The case was taken up for scrutiny and notice under section 143(2) was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012 proposing to estimate the value of the property at Rs. 2,77,10,000/-. After taking into account the arguments of the assessee as well as the preliminary report of the valuation officer, the AO took the market value of the property to compute capital gains as per sec.50C(1) of the Act. The AO also observed that the purchaser of the property did not object to the value adopted by the stamp valuation authority nor any reference has been made before any other authority, Court or the High Court. It is to be observed here that the valuation fixed by the stamp valuation authority is not an arbitrary one. It is fixed after following the prescribed procedure under the Stamps Act. The constitutional validity of sec.50C of the Act was upheld by the Madras High Court in the case of Palanisamy KR vs Union of India (2005) 306 ITR 61. In this case, two independent authorities came to the same conclusion about the value of the property i.e. stamp valuation authority and the valuation officer of the Department fixed the value at Rs. 2,77,10,000/-. The assessee's argument that the property is situated in a school zone and fetched a lessor price is not tenable because the purchaser did not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in connection with the transfer of property. It was also claimed that the school was 100 years old and the assessee is a honorary correspondent of the school which is an aided school. Perusal of a letter written by Headmistress of Sri Arangiah Naidu Middle School to the AO reveals that the school has been functioning on plot A and plot B at Door No.81&82, Konnur High Road, Ayanavaram, Chennai. It was also stated that the assessee proposed to sell the plot A and the school agreed to vacate the Plot A on the condition that the landlord has to construct a new school building in the back side of plot A measuring 5468 sq.ft. as the school cannot be closed without Government permission. It was also stated that the school Headmistress insisted the landlord to construct an AC sheet shed in the second floor over the existing school building in plot B to enable them to shift the premises functioning in plot A. 4.4 The letter clearly shows that the assessee misused his position as the correspondent of the school and wanted to sell the part of the property which was given to the school by his forefathers. In order to facilitate his wish to part with the property of the school, a letter wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,00,000/- on legal expenses, no evidence was produced either before the AO or before the undersigned. The AR in his letter dated 05.11.2013 stated as under: "With regard to legal fees the amount was paid at the time of drafting the partitions and settlement made by my relatives. Hence it is part of the cost of acquisition. The legal fees for drafting the sale deed was neither paid by me nor I claimed it as a deduction while computing the capital gain." But in the computation of capital gains worked out by the assessee a sum of Rs. 25,80,883/- was claimed as expenses on legal and brokerage which included a sum of Rs. 1,00,000/- on legal opinion on consulting and drafting charges. It is clear that the claim of the assessee is contradictory and not allowable and therefore the disallowance is confirmed. 4.7 Regarding the brokerage paid at Rs. 3,15,000/-, the assessee was asked as to why the same should not be disallowed. In response two persons who received the brokerage were produced before the undersigned. They were examined. They are not aware of land transaction between the assessee and the buyers. They are persons of no means. They could not get involved in this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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