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TMI Blog2018 (1) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... has entered into transaction relating to purchase of properties, the Assessing Officer called upon the assessee to furnish the necessary details. On a perusal of the details furnished by the assessee, he found that in the relevant previous year, the assessee and his wife as co-owners have purchased certain immovable properties from M/s. Su Yojana Impex Pvt. Ltd., wherein the assessee is also a director. Further, on verifying the details, he found that as per the stamp duty valuation, the market value of the properties purchased is much higher than the value at which the assessee has purchased the properties. Therefore, the Assessing Officer was of the view that by selling properties at a price lower than the market value the company has given a benefit to the assessee which is in the nature of perquisite as provided under section 17(2)(iii) of the Act. Accordingly, he directed the assessee to explain why the difference between the market value and actual sale value should not be treated as perquisite in lieu of salary given to the assessee. In reply to the query raised by the Assessing Officer, in sum and substance, the assessee submitted that he is not an employee of the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration up-front. Further, the developers did not have sufficient standing and experience which required the assessee to keep a vigil on the affairs of the company to ensure completion of the project as per schedule, since, it was a re-development project involving permission from various statutory authorities as well as existing tenants. He submitted, the assessee was not given any salary as per the contract of appointment and there is no employer / employee relationship between the company and the assessee. Further, in the absence of any contract of employment, by merely becoming a director, the assessee does not become a employee of a company. Learned counsel for the assessee submitted, for attracting the provisions of section 17(2)(iii) of the Act the existence of any benefit is a fundamental fact which the Assessing Officer has to positively establish before treating any sum as perquisite. He submitted, merely because there is a difference between the value adopted for payment of stamp duty and actual sale consideration, ipso-facto it cannot be treated as a benefit accruing to the assessee. He submitted, the Assessing Officer has not made any enquiry to bring on record any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the Assessing Officer importing the fiction created under the deeming provisions of section 50C of the Act has assumed that the fair market value of the property is the value adopted for stamp duty purposes. Hence, he has concluded that the difference between the stamp duty value and actual sale consideration is a benefit given to the assessee as per section 17(2)(iii) of the Act. However, there is nothing on record, either in the assessment proceeding or in the order of the first appellate authority to suggest that the Assessing Officer has made any enquiry to ascertain the fair market value of the property. Even, he has not conducted any enquiry with the company which has sold shops to the assessee to ascertain the fair market value of the property sold to the assessee. In the absence of any enquiry conducted by the Assessing Officer to demonstrate that the value adopted for stamp duty purpose is the actual fair market value of the properties sold, it cannot be said that a benefit in the nature of perquisite as provided under section 17(2)(iii) of the Act has been given to the assessee by the company. 8. The adoption of stamp duty valuation as the fair market value of an immo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) CIT v/s Laxmipati Singhania, 92 ITR 598. 9. Moreover, as observed by us earlier, merely on the basis of the difference between stamp duty valuation and actual sale consideration the Assessing Officer has concluded that a benefit in the nature of perquisite has been given to the assessee by the company. However, there is nothing on record nor any positive finding by the Assessing Officer on the basis of any enquiry to suggest that the fair market value is the value determined for stamp duty purpose. There is no allegation by the Assessing Officer that any consideration over and above the sale value has changed hands. That being the case, the addition made by the Assessing Officer by treating the difference in value between stamp duty valuation and actual sale value cannot be treated as perquisite u/s 17(2)(iii) of the Act. In this context, we may refer to the decision of the Tribunal, Mumbai Bench, in ACIT v/s Sandeep Srivastava, ITA no.6409/Mum./2012 dated 8th July 2015. In any case of the matter, the legal fiction created u/s 50C of the Act insofar as it enables the Assessing Officer to adopt the value for stamp duty purpose as the deemed sale consideration cannot be exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided in the earlier part of the order, except, the fact that in the impugned assessment year the learned Commissioner (Appeals) while upholding the addition made of Rs. 49,72,740 as perquisite in lieu of salary u/s 17(2)(iii) has also upheld the addition on alternative grounds i.e., it is adventure in the nature of trade / business under the head profit and gain of business or profession as per section 28(iv) of the Act. While doing so, he has also enhanced the income of the assessee by concluding that the benefit accruing to a relative of the director should also be treated as income of the director as per section 2(24)(vi) of the Act. Further, he has also observed that the difference between the stamp duty valuation and actual sale value can be added u/s 56(2)(vii)(b) of the Act. 13. We have heard rival submissions and perused material on record in the light of the decisions relied upon. At the outset, we must observe that in view of our decision in ITA no.6023/Mum./2014, the addition made on account of difference in valuation by stamp duty valuation and actual sale consideration deserves to be deleted and the issue relating to applicability of section 28(iv) and 56(2)(vii)(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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