I.T.O., Guna V. M/s Bagulya Warehouse, Ashok Nagar

ITA 418/AGR/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0404 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 6 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.418/AGR/2011 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, VS. M/S. BAGULYA WAREHOUSE, CANTT ROAD, GUNA (M.P.) GAUSHALA ROAD, ASHOKNAGAR (M.P.) (PAN : AAHFB 7722 K). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : SHRI RAJENDRA SHARMA, ADVOCATE DATE OF HEARING : 26.02.2013 DATE OF PRONOUNCEMENT : 08.03.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 16.08.2011 PASSED BY THE LD. CIT(A), GWALIOR FOR THE ASSESSMEN T YEAR 2007-08. 2. THE EFFECTIVE GROUND IS IN RESPECT OF ADDITION O F RS.1,66,923/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF INTEREST. DURIN G THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS DEBITED INTE REST PAID TO BANK AT RS.7,16,133/. 2 ITA NO.418/AGR/2011 A.Y. 2007-08 THE A.O. FURTHER NOTICED THAT DURING THE YEAR, PART NER SHRI ASHOK KUMAR JAIN HAS WITHDRAWN RS.12,83,042/- FROM HIS CAPITAL ACCOUNT W HEREAS OPENING CREDIT BALANCE IN HIS CAPITAL ACCOUNT WAS ONLY RS.5,76,476/-. THU S, SHRI ASHOK KUMAR JAIN HAS WITHDRAWN MORE AMOUNT BY RS.4,67,628/- THAN CREDIT BALANCE AVAILABLE IN HIS CAPITAL ACCOUNT. THE A.O. ON PERUSAL OF SUNDRY DEB TORS NOTED THAT THERE WAS AN ENTRY IN THE NAME OF BANSAL WARE HOUSE, THE PROPRIE TOR OF WHICH IS SHRI ASHOK KUMAR JAIN. THE AMOUNT APPEARING IN THAT ACCOUNT W AS RS.9,23,400/-. THE A.O. TREATED THIS AMOUNT ALSO WITHDRAWAL BY THE PARTNER SHRI ASHOK KUMAR JAIN. THE A.O. WAS OF THE VIEW THAT THE ASSESSEE SHOULD CHARG E INTEREST @ 12% ON DEBIT BALANCE OF WHICH CALCULATION COMES TO RS.13,91,028/ - (4,67,628 + 9,23,400). THE A.O. CALCULATED THE INTEREST AT RS.1,66,923/- AND T HE SAME WAS DISALLOWED OUT OF THE INTEREST PAYMENT. 3. THE CIT(A) DELETED THE ADDITION FOLLOWING THE JU DGEMENT OF HONBLE M.P. HIGH COURT IN THE CASE OF CIT VS. ALOK PAPER INDUST RIES, 138 ITR 729. BEFORE THE CIT(A) IT WAS SUBMITTED BY THE ASSESSEE THAT THE A. O. DID NOT APPRECIATE THE COMPLETE FACTS OF THE ISSUE THAT THERE WAS CREDIT B ALANCE AND SUBSEQUENTLY CONVERTED INTO DEBIT BALANCE. THE CALCULATION OF I NTEREST WAS FURNISHED BEFORE THE 3 ITA NO.418/AGR/2011 A.Y. 2007-08 CIT(A) WHEREIN NET INTEREST OF RS.43,412/- WAS PAYA BLE TO PARTNER SHRI ASHOK KUMAR JAIN. THEREFORE, THE A.O. IS NOT CORRECT IN MAKING THE ADDITION. 4. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE REVENUE DID NOT DISPUTE ABOUT THE CALCULATION O F EFFECTIVE INTEREST OF RS.43,412/- WHICH WAS TO BE PAID BY THE FIRM WHEREA S THE A.O.S CASE IS THAT THE ASSESSEE SHOULD HAVE CHARGED INTEREST ON DEBIT BALA NCE OF RS.1,66,923/-. IT IS NOT THE CASE OF THE A.O. THAT THE ASSESSEE HAS UTILISED THE BORROWED FUND OTHER THAN BUSINESS PURPOSES. IT WAS FOUND THAT THE BORROWED FUND HAS BEEN UTILISED FOR THE PURPOSE OF INTEREST. THE INTEREST IS ALLOWABLE UND ER SECTION 36(1)(III) OF THE ACT. EVEN OTHERWISE ALSO, THE CIT(A) HAS FOLLOWED THE JU DGMENT OF THE HONBLE M.P. HIGH COURT. IN THE LIGHT OF THE FACT, WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF CIT(A). ORDER OF CIT(A) IS CONFIRMED. 5. THE SECOND AMENDED GROUND IS THAT THE CIT(A) HAS ERRED IN RESTRICTING THE ADDITION OF RS.4,26,390/- AS AGAINST THE ADDITION O F RS.25,34,690/-. 6. THE BRIEF FACTS OF THE ISSUE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE FIRM HAS BEEN DISSOL VED W.E.F. 31.03.2007 AND ALL THE 4 ITA NO.418/AGR/2011 A.Y. 2007-08 ASSETS AND LIABILITIES HAVE BEEN TAKEN OVER BY ONE PARTNER SMT. SEEMA JAIN. THE A.O. WAS OF THE VIEW THAT PROVISIONS OF SECTION 45( 4) OF THE ACT IS APPLICABLE. THE A.O. ASCERTAINED THE FAIR MARKET VALUE AS ON 31.03. 2007 OF IMMOVABLE ASSETS OF THE FIRM FROM SUB-REGISTRAR. THE SUB-REGISTRAR HAS DET ERMINED THE FAIR MARKET VALUE OF THE WAREHOUSE BUILDING, ROAD DEVELOPMENT AND LAN D AT RS.1,00,23,300/-. THE ASSESSEE HAS SHOWN WRITTEN DOWN VALUE OF THE ASSETS AS ON 31.03.2007 AT RS.74,88,610/-. THUS, THE SHORT TERM CAPITAL GAIN WORKED OUT AT RS.25,34,690/- (1,00,23,300 74,88,610). THE A.O. MADE ADDITION OF RS.25,34,690/- AS SHORT TERM CAPITAL GAIN. 7. THE CIT(A) RESTRICTED THE SHORT TERM CAPITAL GAI N TO THE EXTENT OF RS.4,26,390/- AGAINST SHORT TERM CAPITAL GAIN DETER MINED BY THE A.O. FOR RS.25,34,690/-. THE RELEVANT FINDING OF CIT(A) IS AS UNDER :- HOWEVER, FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS, A.O. IS NOT FOUND JUSTIFIED IN TAKING THE VALUE OF ASSET S OF THE FIRM AT RS.1,00,23,300/- ON THE BASIS OF DETERMINATION OF T HE SAME BY THE SUB- REGISTRAR, ASHOK NAGAR. IT IS SEEN FROM THE SUB-RE GISTRARS LETTER DATED 02.12.09 IN RESPONSE TO AOS REQUEST U/S 133( 6) THAT THE VALUATION HAS BEEN MADE FOR THE ASSTT. YEAR UNDER C ONSIDERATION AS PER GUIDELINES PREVALENT IN RESPECT OF VALUATION FOR ST AMP DUTY PURPOSES. FOR THE PURPOSES OF SEC.45(4), FAIR MARKET VALUE OF THE ASSETS IS TO BE DETERMINED AND THE TERM FAIR MARKET VALUE HAS BEEN DEFINED IN SEC.2(22B) WHICH MEANS THE PRICE THAT THE ASSET WOU LD ORDINARILY FETCH ON SALE IN THE OPEN MARKET ON THE RELEVANT DA TE AND WHERE SUCH 5 ITA NO.418/AGR/2011 A.Y. 2007-08 PRICE IS NOT ASCERTAINABLE, THEN THE PRICE AS DETER MINED IN ACCORDANCE WITH THE I.T. RULES. NOWHERE THE PROVISIONS OF I.T . ACT OR THE RULES PRESCRIBE SUCH VALUATION TO BE MADE AS PER CIRCLE R ATE DETERMINED FOR THE PURPOSE OF STAMP DUTY. THE SAME IS APPLICABLE FOR PROVISIONS OF SEC. 50C. THE CIRCLE RATES ARE DEEMED TO BE THE FU LL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T RANSFER U/S 50C. SECTION 45(4) NOWHERE STATES THAT THE CIRCLE RATES, AS NOTIFIED, SHALL BE THE FAIR MARKET VALUE OF THE ASSETS UNDER CONSIDERA TION. THE APPELLANT HAS SUBMITTED AFFIDAVITS FROM SHRI MOHAN SINGH, S/O . SHRI AMAR SINGH AND SHRI RAJENDRA SINGH, S/O. SHRI GURDEEP SINGH, W HO HAVE OFFERED TO PURCHASE THE ASSETS UNDER CONSIDERATION FOR RS.6 7 LAKHS AND RS.65 LAKHS RESPECTIVELY. THE SAME HAVE NOT BEEN ACCEPTE D BY THE A.O. WITHOUT ANY FURTHER ENQUIRY. EVEN THE REPORT/CERTI FICATE OF A CHARTERED ACCOUNTANT OF COST INCURRED ON THESE ASSE TS WHEREBY THE VALUATION HAS BEEN DONE AT RS.81.96 LAKHS (INCLUDIN G PRELIMINARY AND PREOPERATIVE EXPENSES) ON THE BASIS OF COMPLETION C ERTIFICATE ISSUED BY CIVIL ENGINEERING HOLDING MUNICIPAL LICENSE HAS NOT BEEN CONSIDERED OR DISCUSSED BY THE A.O. BEFORE REJECTING THE SAME NOR ANY COGNIZANCE BEEN TAKEN OF THE REGD. VALUER REPORT VALUING THE A SSETS AT RS.79.15 LAKHS. IN CASE, A.O. WAS NOT AGREEABLE WITH THIS R EPORT OF A GOVT. APPROVED REGISTERED VALUER, HE WAS DUTY BOUND TO RE FER THE MATTER TO THE DVO FOR DETERMINING FAIR MARKET VALUE OF THE AS SETS AS ON 31.3.07 WHICH HE HAS FAILED TO DO. EVEN NO COMPARATIVE INS TANCE ETC. HAS BEEN BROUGHT ON RECORD BY THE A.O. TO REJECT THE VA LUATION REPORT SUBMITTED BY THE APPELLANT. THE APPELLANT HAS ALSO RAISED VARIOUS OBJECTIONS AND GIVEN CLARIFICATIONS REGARDING CIRCL E RATES TAKEN BY THE SUB-REGISTRAR. AFTER CONSIDERING THESE OBJECTIONS, THE VALUATION OF THE ASSETS COMES TO RS.70,28,626/- AS PER THE APPELLANT . KEEPING IN VIEW THE FACTS ABOVE AND PROVISIONS OF S EC. 45(4) READ WITH SECTION 2(22B), A.O. IS, HEREBY, DIRECTED TO TAKE THE VALUATION OF ASSETS OF THE ERSTWHILE FIRM AS ON 31. 03.07 AT RS.79.15 LAKHS AS PER REGD. VALUER REPORT IN PLACE OF RS.1,0 0,23,300/- TAKEN BY HIM. SINCE THE APPELLANT HAS TAKEN SUCH VALUATION AT WDV FOR RS.74,88,610/-, SHORT TERM CAPITAL GAINS ACCORDINGL Y WORKS OUT TO RS.4,26,390/-. A.O. IS DIRECTED TO COMPUTE TOTAL I NCOME OF THE APPELLANT ACCORDINGLY WHILE GIVING EFFECT TO THIS A PPEAL ORDER. 6 ITA NO.418/AGR/2011 A.Y. 2007-08 8. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE CIT(A) HAS CONSIDERED THE AFFIDAVITS OF SOME PA RTIES FILED BEFORE HIM WHO OFFERED TO PURCHASE THE ASSETS UNDER CONSIDERATION AT A PARTICULAR AMOUNT. THE CIT(A) NOTED THAT THE A.O. DID NOT ACCEPT THE CONTE NTION OF THE ASSESSEE WITHOUT ANY FURTHER ENQUIRY. THE CIT(A) ALSO CONSIDERED TH E REPORT OF THE CHARTERED ACCOUNTANT OF COST INCURRED ON THESE ASSETS WHEREBY THE VALUATION HAS BEEN DONE AT RS.81,96,000/-. THE CIT(A) HAS ALSO CONSIDERED THE VALUATION REPORT OF REGISTERED VALUER WHO HAS VALUED THE ASSETS AT RS.79,15,000/-. THE CIT(A) NOTED THAT EVEN NO COMPARATIVE INSTANCES HAVE BEEN BROUGHT ON RECORD B Y THE A.O. TO REJECT THE VALUATION REPORT SUBMITTED BY THE ASSESSEE. THE CI T(A) CONSIDERED THE VARIOUS OBJECTIONS RAISED BY THE ASSESSEE REGARDING ACCEPTI NG THE CIRCLE RATE. WE FIND THAT THE ORDER OF CIT(A) IS SUPPORTED BY THE REPORT OF R EGISTERED VALUER WHEREIN THE FAIR MARKET VALUE OF THE ASSETS HAS BEEN DETERMINED AT RS.79,15,000/-. UNDER THE FACTS AND CIRCUMSTANCES, THE REVENUE HAS FAILED TO POINT OUT ANY CONTRARY MATERIAL TO THE FINDING OF THE CIT(A) AND ALSO THE MATERIAL OR REASON WHY ONLY CIRCLE RATE OF RS.1,00,23,300/- IS TAKEN, WHEREAS THE REGISTERED V ALUER HAS VALUED THE ASSETS AFTER CONSIDERING THE ASSESSEES SUBMISSION. THE CIT(A) HAS RIGHTLY HELD THAT IF THE A.O IS NOT AGREEABLE WITH THE REGISTERED VALUER, HE SHO ULD HAVE REFERRED THE MATTER TO THE D.V.O. BUT THE A.O. FAILED TO DO SO. AFTER CON SIDERING THE TOTALITY OF THE FACTS 7 ITA NO.418/AGR/2011 A.Y. 2007-08 OF THE CASE, WE FIND THAT THE CIT(A) HAS RIGHTLY DI RECTED THE A.O. TO TAKE THE FAIR MARKET VALUE OF THE ASSETS AT RS.79,15,000/- WHICH IS BASED ON REGISTERED VALUERS REPORT. SINCE THERE IS NO CONTRARY MATERIAL TO THE FINDING OF THE CIT(A), IN THE LIGHT OF THE FACT, WE CONFIRM THE ORDER OF CIT(A). 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY