TMI Blog2021 (6) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... the observations in the case of Goetze (india) Ltd [ 2006 (3) TMI 75 - SUPREME COURT] the assessee has to file the revised return of income for such claims before the A.O.But the assessee chooses to file revised computation of income and not revised return of income. We find that the CIT(A) has considered the claim of the assessee and observed that the gains on sale of property shall be allocated among the co-owners. But the point to be considered that the three co-owners have not filed their return of income offering the gains on sale of the property. Further the CIT(A) is not a appellate authority for the three co owners and therefore the CIT(A) findings are not accepted. The assessee should file the revised return of income as per the ratio of the supreme court decision and then the Assessing officers has to determine/assessee the total Income. We set aside the findings of the CIT(A) in this ground of appeal and restore entire disputed issue to the file of the Assessing officer to adjudicate a fresh and the assesses shall file the revised return of income. A.O. shall not be influenced by the observations in the CIT(A) order. A.O. should independently also verify that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of property, when no such objection was submitted before DVO while ongoing process of valuation. 5. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in adopting method for valuation of property sold which suggest the value of property to be same as on 01.04.1981 and during F.Y 2014-15 6. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in valuing the property as on 01.04.1981 instead of sending the matter to the file of AO for verification through DVO violating the rule 46A. 7. The appellate prays that the order of the Ld. CIT(A) on the above ground be reversed and that the AO be restored. 8. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 2. The Brief facts of the case are that the assessee is AOP and owns industrial estate constructed more than 50 years old and industries galas in the estates and has let out on lease and derives rental income. The assessee has filed the return of income on 28.03.2016 with a total income of ₹ 50,75,250/-.Subsequently the case was selected for scrutiny and notices u/s 143(2) and 142(1) of Act were issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the fair market value of the property as determined by the DVO of ₹ 5,19,27,500/- and deducted proportionate cost of properties and assessed the total income of ₹ 5,67,31,580/- and passed order u/s 143(3) of the Act on 12.12.2017. 3. Aggrieved by the order of the A.O, the assessee has filed an appeal before the CIT(A). The Ld. CIT(A) considered the grounds of appeal, findings of the A.O, and the submissions of the assessee referred at para 3.1 of the CIT(A) order on the issue of adopting the fair market value as per DVO of ₹ 5,16,56,333/-.The CIT(A) has observed that the assessee for the first time mentioned that the property ownership is between the three co-owners whose shares are determined. The CIT(A) relied on the submissions and the judicial decisions at para 3.1, page 5 to 11 of the order and observed that the submissions of the assessee are reasonable as there is a mistake in the disclosing of income as per the return of income and also other facts were overlooked by the A.O. The CIT(A) findings on the submissions are categorically dealt at para 4.1 to 4.7 of the order and allowed the ground of appeal of the assessee as under; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of income was filed with the A.O. vide letter dated 12th July, 2017. The revised computation of total Income includes income from property amounting to Rs. 96,139/- and long term capital loss of ₹ 5,32,37,693/- and no income is offered as business income as there is no business activity. This gains on the part property co-owned by members and hence income is allocable amongst co-owners. The appellant has regularly been offering only rental income for taxation for earlier years. Further, I would like to draw your attention to the following write-up at page No. 2754 of Income Tax Law, Fifth Edition, Volume 2 by Chaturvedi Pithisaria s. Where property owned by more than one person is transferred, each co owner is to be separately assessed in respect of that portion of capital gain arising from transfer which pertains to his share in the transferred property /C.G.Ghanshamdas v.CIT(1979) 116 ITR 212 (Mad.)]. The entire capital cannot be taxed in the hands of an association of persons or body of individuals constituted of the co-owners 4.7. It is evident from the records of the assessee that it only earns income derived from properties and does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the DVO who is specialized in valuation of property and further the assessee has not filed objections before the DVO while determining the fair market value. There is violation of the provisions of rule 46A of IT Rules as the CIT(A) himself has valued the property as on 1-4-1981 without referring to the DVO and the Ld.DR relied on the order of the Assessing officer and prayed for allowing the revenue appeal. 5. Contra, he Ld. AR relied on the order of the CIT(A). The contentions of the Ld.AR that the sale of the properties is held by the co-owners and has to be taxed in their hands and not in the status of the AOP. The fair market value determined by the DVO is not applicable considering the legal hurdles with the tenants and prayed for dismissal of the revenue appeal. 6. We heard the rival submissions and perused the material on record. Prima-facie the revenue has filed the appeal on the three disputed issues. (i) whether the income on sale of property is assessable in the hands of co-owners, whereas the agreement has been renewed by AOP.(ii) Adoption of Fair market Value(FMV) determined by the DVO and the assessee was provided opportunity to file objections.(i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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