TMI Blog2023 (4) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... mption by the assessee that those three plots were intended for further sale and therefore those were stock in trade, is not sufficient and it has to be proved by way of evidences, which the assessee has failed, therefore, no error in the order of the CIT(A) on the issue in dispute in upholding the applicability of section 56(2)(vii)(b) in the case of the assessee. Accordingly, we dismiss the ground No. 1 of the appeal of the assessee. Valuation report of Departmental Valuation Officer - assessee contested the valuation report of the Departmental Valuation Report before the Ld. CIT(A) but he did not any cognizance to those submission of the assessee - HELD THAT:- On perusal of Departmental Valuation Report we find that Ld. DVO has taken into consideration the fact of encroachment and construction of Sulabh toilet on the land, which is evident from specifications of the property under description. Departmental Valuer has relied on for instances of the sale happened in the proximate period, but there is no remark, whether those lands were also subjected to encroachment. If those lands were not subjected to encroachment, then he is required to consider impact of adverse posses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act 1961, due to difference between the actual purchase consideration of 3 N.A. plots of land situated at village Navghar, Taluka Vasai, Dist. Palghar, by adopting the value determined by the Asst. Valuation officer, Thane, vide order dt. 31.10.2017, which substantially ignored the various reasons. determining the actual purchase consideration and therefore the addition was not justified. 3. The Hon. CIT(A) erred in not considering the sum of Rs.66,00,000/- paid in cash for purchase of plots at village Navghar, Taluka Vasai, Dist. Palghar, as part of actual purchase consideration for working out the addition u/s 56(2)(vi)(b(i) of the I.T. Act 1961 and therefore the addition to that extent was not appropriate. 2. Briefly stated facts of the case that the assessee, an individual, was engaged in the business of undertaking small civil construction work. For the year under consideration, the assessee filed return of income on 16/11/2015, declaring total income of ₹11,43,220/-. The Ld. CIT(A) has noted that the assessee had shown to have income from salary and income from house property. The return of income filed by the assessee was selected for scrutiny assessment an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Assessing Officer rejected the contention of the assessee of non-applicability of section 56(2)(vii)(b) of the Act. The Ld. CIT(A) considered the fair market value of the plots determined by the Departmental Valuation Officer (DVO) at ₹1,25,51,000/- and after subtracting the value of ₹9 lakh declared by the assessee in the registered agreement, sustained the difference amount of ₹1,16,51,000/- as a addition u/s 56(2)(vii)(b) of the Act. The contention of giving credit of ₹66 lakhs while determining addition under section 56(2)(vii)(b) was also rejected by the Ld. CIT(A). Aggrieved, the assessee is in appeal before the Income-tax Appellate Tribunal (ITAT), raising the grounds as reproduced above. 3. Before u/s the assessee filed a paper book containing pages 1 to 205 inter alia, copy of submissions filed before the Ld. CIT(A), copy of remand report, copy of purchase deed etc. 4. We have heard rival submissions of the parties on the issue in dispute and perused the relevant material on record. 4.1 In ground No. 1, the assessee has challenged applicability of section 56(2)(vii)(b) of the Act, claiming that provision is not applicable because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see were stock in trade and thus upheld the action of Assessing Officer of property being capital asset in the hands of the assessee. 4.4 Before us, though the assessee contested that plots were purchased for further sale to Sh Rajeev Y Patil, and therefore same were stock in trade in the hands of the assessee. The facts of the case of the assessee, shows that prior to this transaction of purchase, he was never engaged in trading of plots of land. This was an isolated transaction of purchase. Whether any transaction of sale (purchase) will fall under the head profit and gains of the business of profession or under the head capital gain , depends on overall appreciation of multiple factors including intention of holding, frequency of transactions, volume of transactions, treatment in books of accounts etc. The Hon ble Supreme Court in the case of CIT (Central), Calcutta v. Associated Industrial Development Company (P) Ltd. (82 ITR 586) observed that whether a particular holding of shares is by way of investment or forms part of the stock-in-trade, is a matter within the knowledge of the assessee, when holds the share and it should, in normal circumstances, be in position to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 1,25,10,000/- 6.1 The assessee filed copy of valuation report by registered valuer M/s Apte associates, Virar (a copy of which has been placed on paper book page 183 to 199. The Ld. CIT(A) adopted the value of the property for the purpose of section 56(2)(vii)(b) as determined by the departmental valuer as against the stamp duty value adopted by the Assessing Officer and reduced the amount of addition accordingly. 7. Before u/s the Ld. counsel of the assessee assailed that the sale instances relied upon by the Ld. Departmental Valuer for determining the fair market value of plots are not correct, in view of following: (a) the plot in reference were encroached by slum dwellers and unauthorized chawls ( hutments) were constructed on the land including a Sulabh Toilet and for vacating of those unauthorised encroacher and demolishing the illegal construction of chawls , the assessee would be required to incur substantial expenditure, and therefore valuation based on sale instances are not comparable with the lands acquired by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. On perusal of Departmental Valuation Report, a copy of which is placed on paper book pages 177 to 182, we find that Ld. DVO has taken into consideration the fact of encroachment and construction of Sulabh toilet on the land, which is evident from specifications of the property under description, which reads as under: 3.3. Specification All the three properties are situated at Mauje- Navghar. Dist. Palghar about 3KM away from Vasai Road Railway station. Chawls are constructed on the entire plot. There is no boundary wall defining the actual position of the subject property. The subject property is surrounded by Flats and Buildings i.e. Eastern side by Vartak College and Andy Burger building. Western side by Vartak Engineering College. Northern side by Sulabh toilet etc. and Southern side by Engineering College road. All requisite amenities are available in the vicinity of the subject property and is located in developed location. 9.1 The Ld. Departmental Valuer has relied on for instances of the sale happened in the proximate period, but there is no remark, whether those lands were also subjected to encroachment. If those lands were not subjected to encroachment, then ..... X X X X Extracts X X X X X X X X Extracts X X X X
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