TMI Blog2023 (6) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Revenue and accordingly, we are of the considered view the jurisdiction exercised by the Ld. Pr. CIT U/s. 263 of the Act is valid in law. Treatment of the income as capital gains or business income arising out of the sale of the industrial land by the assessee by converting it into various parts - From the plain reading of the 3rd proviso to section 50C(1) of the Act, we find that the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and ten percent [110%] of the consideration received or accruing as a result of the transfer. Accordingly, the consideration received shall be deemed to be the full value of consideration for the purposes of section 48 of the Act. In the instant case, the Ld. DVO has valued the property at Rs. 6,96,36,350/- which is less than 110% of the value of sale consideration received by the assessee as declared in the sale deeds. Since the character of the land has not been recategorized and has been sold as a fixed asset by the assessee, we hereby direct the Ld. AO to compute the income of arising out of the sale of the parts of the industrial land as capital gains of the assessee by considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the same. 8. That the Assessing Officer has passed an order U/s. 143(3) r.w.s 263 dated 23/09/2022 reclassifying the profits derived from sale of land as business income and recomputing the business income as per the value determined by the DVO thereby determining the taxable income of Rs. 10,68,19,248/- and raised a demand for Rs. 2,82,15,925/- including interest U/s. 234B of Rs. 1,53,83,292/- and section 220 of Rs. 9,45,066/- after setting off the prepaid taxes of Rs. 1,97,05,399/-. 9. That when we approached our Counsel for filing an appeal against the order passed U/s. 143(3) r.w.s 263 he advised us to file an appeal against the order U/s. 263 passed by the Pr. CIT, Visakhapatnam dated 27/03/2021 with a request for condonation of delay. 10. That the appeal against the order U/s. 263 ought to have been filed on or before 27/05/2021. 11. That the same is not being filed with a delay of 509 days. 3. After hearing the Ld. AR and on perusal of the contents of the petition for condonation of delay along with the affidavit filed by the assessee, we are of the opinion that there is a reasonable and sufficient cause that prevented the assessee in filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o buyers for acquiring the larger extent of land and hence approached the APIIC for sub-division of the land into parts for the purpose of selling to various industrial consumers. Consequent to the approval granted by the APIIC, the assessee sub-divided the plots and sold to various customers for an aggregate consideration of Rs. 6,34,23,000/- whereas the Stamp Valuation Authority valued the land at the fair market value of Rs. 8,59,24,000/-. The Ld. Pr. CIT therefore found that as per the provisions of section 50C of the Act, the assessee should have adopted the valuation as per the Stamp Valuation Authority which stood at Rs. 8,59,24,000/- while calculating the capital gains. Further, the Ld. Pr. CIT also observed that since the assessee has sub-divided the land into plots and sold the same as different plots it is an adventure in nature of trade and hence to be treated as business income of the assessee and not to be taxed as capital gains. The Ld. Pr. CIT considered the order of the Ld. AO as erroneous and also prejudicial to the interest of the of the Revenue as contemplated U/s. 263 of the Act thereby directed the Ld. AO to conduct enquiries and pass an order afresh after aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has failed to adopt the value of assets as per the Stamp Valuation Authority while calculating the capital gains U/s. 50C of the Act. Further, the Ld. DR also submitted that the sale of plots are made in two assessment years but offered to tax in only one assessment year. The Ld. DR further argued that since the assessee has converted the land into stock-in-trade, it is to be considered as business income only. Controverting the arguments of Ld DR, the Ld AR submitted that the assessee has sold fixed assets and is not in the real estate business. 7. We have heard both the sides and perused the material available on record and the orders of the Ld. Revenue Authorities. In the instant case, the assessee has not disputed the value of the estate as per the Stamp Valuation Authority but has preferred to adopt sale consideration actually received at Rs. 6,34,23,000/- as against the value of the Stamp Valuation Authority at Rs. 8,59,24,000/- for the purpose of computing Capital gains. It is also admitted that the Assessing Officer has not looked into these aspects while framing the assessment U/s. 143(3) r.w.s 144C(3) of the Act. Since the Ld. AO has failed to cause any enq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration to the assessee as per the agreement. We also find that it is only as a matter of convenience to avoid duplicity of registration ie., once in favour of Mr. R. Ashok and again in favour of respective buyers, the assessee preferred to enter into an agreement making Mr. R. Ashok responsible for the full value of consideration payable to the assessee. Further, from the financials of the assessee, we observed that the land has been categorized as fixed assets in the books of the assessee. Further, from the submissions of the Ld. AR, we also find that APIIC has granted approval for sub-division of Plot No. 19B, Survey No. 810, IDA, Phase-II, Patancheru, Medak District, Telangana into 22 parts by retaining the character of the land for industrial purposes. We also find merit in the argument of the Ld. AR that since there were no buyers for the entire land of 5.8275 Acres, the assessee has resorted to sell it to difference buyers by sub-dividing it into various parts after obtaining the prior approval from the APIIC. Merely by selling the entire land after dividing it into various parts, without altering the character of land, which is for industrial purposes, cannot be consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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