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TMI Blog2023 (5) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 96/Hyd/2019. For the sake convenience, both the appeals as well as the cross objections were heard together and are being decided by this common order. 2. There is a delay of '88' days in filing of the cross objection by the assessee in CO.No.14/Hyd/2019. The assessee has filed a condonation application along with an affidavit explaining the reasons for such delay in filing of the Cross Objection. After considering the contents of the condonation application filed along with the affidavit and after hearing both the sides, the delay in filing of the cross objection by the assessee is condoned and the cross objection is admitted for adjudication. 3. First we take-up ITA No.2236/Hyd/2018 for AY 2012-13 as the lead case. 4. Facts of the case, in brief, are that the assessee is an individual and a member of the Legislative Council of Andhra Pradesh. He derives income from salary and income from hiring of vehicles. He also derives agricultural income. He filed his return of income for the impugned assessment year on 28.06.2013 by admitting total income of Rs.4,22,180/- and agricultural income of Rs.14,20,400/-. 5. In this case, information was received from office of the DDIT (Inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er noted that the land owners forfeited 1881.30 sq.yds or 16931.69 sq.ft to the developer. He therefore computed the value of 16931.70 sq.ft of land which is equal to 50,881 sq.ft of super structure allotted to three land owners. The value of such super structure @Rs.2,286/- on 50,881 sq.ft worked out to Rs. 11,63,13,966/-. Finally, the AO computed the taxable short term capital gain in the hands of the assessee at Rs. 73,71,660/- by observing as under:- 8.2 the built up area of each flat and the total no flats and total super structure of land owners are as under:- Flat No. Built up area in Sq.ft No.of flats S.V.S.K.Reddy Flats M.Bhagya Lakshmi Flats B.Preethi Reddy 1 2513 2 5026 2 5026 2 5026 2 2960 1 2960 1 2960 1 2960 3 2870 2 5740 1 2870 4 2362 1 2362 1 2362 5 2957 1 2957 1 2957 1 2957 6 2359 2 4718 Total in sq.ft 6 16683 6 16175 7 18023 Ratio 100 32.788 31.790 35.422 8.3 Out of 4172.32 sq.yds land given for Development, profit on sale of part of land is chargeable under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs.1,92,78,128/- (i.e. 12500000+5000000+1647465+130663). The difference of Rs. 36,95,045/- between the value shown in Balance sheet of Rs.22973173/- and calculated as above of Rs.19278128/- was neither explained by the assessee nor produced the relevant information. Hence, the cost of acquisition of assets were taken as per the value reported in purchase documents.) The cost of acquisition of 1042.07 Sq.Yds of land vide General Power of Attorney in Regd.Document No.55/2009 dated 03.02.2009 of SRO, Banjara Hills, Hyderabad for a consideration of Rs.1,50,00,000/- and the registration expenses incurred is Rs.3,91,990/-. The cost of acquisition of the land to the landlords is worked out to Rs. 1,53,91,990/-. The cost of acquisition of undivided share of land i.e.45.09% of 1072.32 sq.yds is works out to Rs. 69,40,248/@ 45.09% of Rs.1,53,91,990/-. The cost of acquisition of land to each land lord is Rs.23,13,416/-. Accordingly, the Short Term Capital Gain (STCG) chargeable in the hands of landlords works out as under. S.V.S.K.Reddy 1 Sale Consideration Rs.96,85,076 2 Cost of acquisition (Rs.15391990*45.09%)/3 Rs.23,13,416 3 Taxable STCG(1-2) Rs.73,71, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in (0213) 33 taxmann.com 212 held that for the purpose of deduction u/s 54F any number of flats can be contained in one building. This view is adopted by the Hon'ble ITAT, Hyderabad in the case of Vittal Krishna Conjeevaram vs. ITO dt. 10.07.2013 reported in (2013) 36taxman.com 542 and in the case of Sri Syed Irfan Jaffer, j Hyderabad Vs. ITO, Ward 6(1), Hyderabad in ITA No.465/Hyd/2013 and also in the case of ACIT vs, Smt. Fazlunnisa Begum reported in ITA No.66/Hyd/2017. 5.7 I have carefully considered the submissions made by the appellant. As per the information available on record the appellant is not in possession of any other residential house. The appellant entered Development Agreement cum GP A on 03 day of December, 2011 and as per the agreement the appellant along with two others entered into development agreement according to which the sharing ratio of the constructed area would be 55% to owners and 45% to the developers. As per the supplementary agreement was made on 29th June, 2013 the appellant was allotted 6 flats measuring 16683 Sq.ft in the constructed area. The development agreement was entered into for construction of residential house. The permissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd AO had no occasion to examine the same. 5. Whether Ld. CIT(A) is right in directing the AO to adopt cost of construction at Rs.1,370/- per sq.ft as against the Rs.2,286/- per sq.ft. adopted by the AO, under the facts and the circumstances of the case 6. The Ld.CIT(A) erred, under the facts and the circumstances of the case, in deleting the addition of Rs.50,66,508/- made u/s. 68 of the IT.Act as the appellant had not discharged his onus of establishing the creditworthiness and genuineness of the transaction as required. Reliance is placed on the decision of the jurisdictional AP HC in the case of Dhanalakshmi Steel Retroling vs CIT AP 228 ITR 780 7. Any other additional ground that may be urged at the time of appeal hearing. 11. The assessee has raised the following ground in the Cross Objection. 1. The learned Commissioner of Income-Tax (Appeals) erred in adopting the consideration at the rate of Rs.1,370 per sft. Without adopting the rate as per SRO. 12. The grounds of No.1 and 7 by the revenue being general in nature are dismissed. 13. Grounds of appeal No. 2,3 and 4 by the revenue relate to the order of the ld.CIT(A) in allowing the exemption u/s.54F of the I.T.Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istical purposes. 14. Ground of appeal No.5 by the revenue and the only ground raised by the assessee in the cross objection relates to the cost of construction at Rs. 1370 per sq.ft by the ld.CIT(A) as against Rs. 2286/- per sq.ft adopted by the AO. 14.1 After hearing both the sides, we find the AO adopted the cost of construction per sq.ft at Rs.2286/-, the details of which are given at para No.5 of this order. We find the ld.CIT(A) reduced such cost of construction per sq.ft to Rs. 1,370/- by observing as under:- 5.6 Ground Nos.4 and 5 are with regard to determination of sale consideration. The assessing Officer in the assessment order arrived at the cost of construction of the property at Rs.2286/- per sft. It is also found by the Assessing Officer that 92,670/- sft. was constructed and that the total cost was Rs.21,19,49,090/- and that each sft would be of the value of Rs.2286/-. The working made by the Assessing Officer is based on the value of the constructed area if sold in the open market. The plea of the appellant is that the cost of construction alone is to be taken into consideration and not the market value of the property. The appellant in his submissions arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee produced the details of sundry creditors and confirmation letter from the creditor M/s. V. Paveen Kumar Reddy & Co, Kadapa for Rs. 50,66,508/- and copy of the acknowledgment of the income tax return filed for AY 2012-13, however, the assessee did not substantiate the commercial expediency and utilization of loan for business, date of borrowal, mode of receipt and genuineness of transaction etc. We find the ld.CIT(A) deleted the addition, the reasons of which are already reproduced in the preceding paragraph. It is the submission of the ld.counsel for the assessee that the above amount is outstanding since 01.04.2010 and therefore, the same should not have been added in the AY 2012- 13. Since the confirmation letter filed before the AO shows that the same amount is the opening balance as on 01.04.2010, therefore, addition of the same for the impugned assessment year for non-submission of date of borrowal and purpose of utilization of the same cannot be a ground for making the addition during the year. Further, the ld.CIT(A) he also given a finding that the above amount was received from the partnership firm M/s. V.Praveen Kumar Reddy & Co. Since the amount was outstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in directing the AO to adopt cost of construction at Rs.1,370/- per sq.ft as against the Rs.2,286/- per sq.ft. adopted by the AO, under the facts and the circumstances of the case 6. whether the CIT(A) is right in directing the AO to delete the creditors of Rs.1,01,99,767/- under the facts and circumstances of the case. 7. whether the ld.CIT(A) is right in directing the AO to disallow only 30% of the agricultural income claimed by the appellant, under the facts and circumstances of the case, since the agricultural income claimed by the appellant is significantly higher than the agricultural income claimed by the appellant for preceding and succeeding assessment years. 8. Any other additional ground that may be urged at the time of appeal hearing. 20. The grounds raised by the assessee in cross objection are as under: - 1.The learned Commissioner of Income-tax (Appeals) erred in adopting the consideration at the rate of Rs.1370 per sft. Without adopting the rate as per SRO 2. The learned Commissioner of Income tax (Appeals) erred in confirming addition of Rs.11,40,000/- being the sundry creditors treated as the income of the assessee. 21. After hearing both the sides, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent of Rs. 1,01,99,767/- belong to the earlier year and are brought forward balances for which addition u/s. 68 cannot be made on account of creditors of the preceding years, therefore, in absence of any contrary material brought to our notice, we do not find any infirmity in the order of the ld.CIT(A) on this issue. Accordingly, the ground raised by the revenue on this issue is dismissed. 24. Ground of appeal No.7 relates to the order of the ld.CIT(A) in directing the AO to disallow only 30% of the agricultural income. 24.1 After hearing both the sides, we find the AO made addition of Rs. 9,25,000/- out of the agricultural income of Rs. 12 lakhs shown by the assessee by observing as under:- 9. The assessee admitted agricultural income of Rs. 12,00,000 in the ITR filed and produced a certificate from the Tehsildar, Vempalli on 20.12.2016 stating that the assessee is in possession of 4.15 acres of agricultural lands and getting annual income of Rs.14,50,000/- out of the above lands. But, no sale receipts of agricultural produce and incurrence of expenditure in agricultural activity were produced. Whereas, the agricultural income shown in AY.2010-11, AY.2011-12 and in AY.2013- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural income in absence of any details for sale of the produce and towards expenses for earning agricultural income will meet the ends of justice. We therefore direct the AO to restrict the disallowance to 50% of the agirucltural income as against 30% restricted by the ld.CIT(A). The ground raised by the revenue on this issue is partly allowed. 27. There is one more issue raised by the assessee in the cross objection i.e. confirming the addition of Rs. 11,40,000/-. So far as the addition of Rs. 11,40,000/- is concerned, the ld.CIT(A) sustained the same on the ground that creditors to the tune of Rs. 11,40,000/- relate to AY 2012-13. However, he has not given any reason as to whether the assessee produced the details which are not sufficient or otherwise. Before the ld.CIT(A), the assessee had submitted that all the credits were duly recorded in the books in respective assessment years, all the amounts were received through cheque except certain cash amounts from the farmers and assessee had given all the details. It is also the submission of the ld.counsel for the assessee that given an opportunity the assessee is in a position to substantiate with evidence to the satisfaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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