TMI Blog2018 (3) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... hey raise objection before the stamp valuation authority for adopting higher valuation or go to courts. Therefore, it is proper and wise to adopt the actual FMV existed as on 1981. Therefore, we are inclined to remit this issue also to the file of AO to determine the FMV as on 1981. Therefore, ground raised by the assessee on this issue is allowed. With regard to adhoc disallowance of expenditure of ₹ 1 lakh, we notice that AO has disallowed ₹ 1 lakh against the claim of expenditure to the extent of ₹ 6,47,621/-, which may be reduced to 10% of the expenditure claimed since all the expenditures are relating to running of the assessee’s business. Accordingly, this ground is partly allowed. - ITA No. 2128/Hyd/2017 - - - Dated:- 28-2-2018 - SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Shri A.V. Raghuram For The Revenue : Smt. Suman Malik ORDER PER S. RIFAUR RAHMAN, A.M.: This appeal is preferred by the assessee against the order dated 18/09/2017 of CIT(A) 1, Hyderabad, for the AY 2013-14. 2. Briefly the facts of the case are, assessee, proprietor of M/s S.K. India Industries, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised several grounds before the CIT(A) objecting for initiating proceedings u/s 147, adopting 50C valuation, not referring to the valuation officer, particularly, when assessee objects for adoption of 50C valuation, adopting cost of acquisition at SRO value as on 1981 and disallowance of ₹ 1 lakh from the expenditure debited to P L A/c. Ld. CIT(A) dismissed the appeal of the assessee. 4. Aggrieved with the above order, assessee preferred an appeal before us raising the following grounds of appeal: 1. On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals)-l, Hyderabad, erred in dismissing the Appeal of the Appellant. 2. The Commissioner (Appeals) erred in upholding the action of the Assessing Officer in invoking jurisdiction under section 148 of the Act when the time was available for making regular assessment as per the procedure prescribed under the Act. 3. The Commissioner (Appeals) erred in upholding the action of the Assessing Officer in reopening the assessment under section 148 of the Act for the purpose of applying the provisions of section 5OC of the Income Tax Act. 4. The Commissioner (Appeals) further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (DVO) for proper valuation, as this is against 50C(2) of the Act. He submitted that AO cannot apply 50C valuation without referring to valuation officer as per section 50C(2) and for this proposition, he relied on the decision in the case of R. Suhasini Bheemunipatnam Vs. DCIT, [2013] 38 CCH 16 (Vizag Trib.) and further relied on the following cases: 1. Mrs. Manjula Singhal Vs. ITO, [2011] 46 SOT 149 2. K.K. Nag Ltd., Vs. Addl. CIT, [2012] 52 SOT 381 (Pune Trib.) 5.1. With regard to ground No. 10, he objected that AO has adopted SRO value as on 1981 for the purpose of cost of acquisition instead of adopting Fair Market Value (FMV). He submitted that SRO value is only a guideline value and not FMV. 5.2 With regard to ground No. 9, he submitted that AO has disallowed an amount of ₹ 1 lakh on adhoc basis. He submitted that it is too high considering the expenses claimed by the assessee, which are relating to the business run by the assessee. He prayed for reduction of the above disallowance. 6. Ld. DR relied on the orders of revenue authorities and further submitted that assessment was completed u/s 144 of the Act as the assessee has not produced any deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluation officer, even though, AO objected for adopting SRO value. In this connection, we refer to the decision of the coordinate bench of ITAT, Vishakhapatnam in the case of R. Suhasini Bheemunipatnam (supra), wherein the coordinate bench has held as under: 7. We have considered the rival arguments and examined the record as placed before us. There is no dispute with reference to raising the objection before the assessing officer itself by the assessee. The assessing officer is duty bound to refer the valuation to the valuation officer. Once the assessee has disputed the value adopted by the stamp valuation authority, even though the same was not disputed before the stamp valuation authority, the coordinate benches were consistently holding that with reference to DVO under sub-section 2 of section 50C is mandatory. 8. In the case of Meghraj Baid Vs. ITO, the Jodhpur Bench has held as under: In case the AO does not agree with the explanation of the assessee with regard to lower consideration disclosed by him then he should refer the matter to DVO for getting its market rate established as on date of the sale to arrive at the correct sale consideration. If this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith a direction to refer this matter to the DVO and redo the income from capital gains de-novo. 7.2 Coming to the adoption of SRO value for cost of acquisition as on 1981 instead of FMV as on that date, we notice that SRO value is a guideline value, which is to be applied for calculation of stamp duty only and the same is borne by the purchaser. As far as seller is concerned, what is relevant is the fair market value that could have been received by him. In few cases, they raise objection before the stamp valuation authority for adopting higher valuation or go to courts. Therefore, it is proper and wise to adopt the actual FMV existed as on 1981. Therefore, we are inclined to remit this issue also to the file of AO to determine the FMV as on 1981. Therefore, ground raised by the assessee on this issue is allowed. 7.3 With regard to adhoc disallowance of expenditure of ₹ 1 lakh, we notice that AO has disallowed ₹ 1 lakh against the claim of expenditure to the extent of ₹ 6,47,621/-, which may be reduced to 10% of the expenditure claimed since all the expenditures are relating to running of the assessee s business. Accordingly, this ground is partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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