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Acit, Cc-3, New Delhi Room No. 354, Ara Centre, E-2, Jhandewalan Extn.,New Delhi Vs. M/s Mahagun Technologies Pvt. Ltd., B-66, Vivek Vihar, Delhi 92
December, 09th 2015
                                                       ITA No. 4969/Del/2011 &
                                                            CO No. 37/Del/2012


            IN THE INCOME TAX APPELLATE TRIBUNAL
                  DELHI BENCH "E", NEW DELHI
        BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
                          AND
       SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER

                    I.T.A.No. 4969/DEL/2011
                         A.Y. : 2008-09
ACIT, CC-3, NEW DELHI              M/S MAHAGUN TECHNOLOGIES
                              VS.
ROOM NO. 354, ARA CENTRE,          PVT. LTD.,
E-2, JHANDEWALAN EXTN.,            B-66, VIVEK VIHAR,
NEW DELHI                          DELHI ­ 92
                                   (PAN: AACCB3143L)
                        C.O. No. 37/DEL/2012
                    (IN ITA NO. 4969/DEL/2011)
                            A.Y. : 2008-09
M/S MAHAGUN TECHNOLOGIES                ACIT, CC-3, NEW DELHI
PVT. LTD.,                         VS. ROOM      NO.   354,   ARA
B-66, VIVEK VIHAR,                      CENTRE,
DELHI ­ 92                              E-2, JHANDEWALAN EXTN.,
(PAN: AACCB3143L)                       NEW DELHI
(APPELLANT)                             (RESPONDENT)

                Assesse by :         Shri Rakesh Gupta, Adv.,
                                     Sh. Somil Aggarwal, Adv. & Sh.
                                     Prakash Gupta, Adv.

                Department by : Shri Balwan Chaudhary, CIT(DR)

                     Date of Hearing      : 27-11-2015
                     Date of Order        : 08-12-2015

                                ORDER

PER H.S. SIDHU, JM


     Revenue has filed the Appeal and Assessee has filed Cross
Objection against the Order    passed by the Ld. Commissioner of
Income Tax (Appeals)-II, New Delhi dated 16.8.2011       pertaining to
assessment year 2008-09. Since the issues involved in the Appeal and


                                 1
                                                          ITA No. 4969/Del/2011 &
                                                               CO No. 37/Del/2012


Cross Objection are common and identical, hence, we are consolidated
the same by this common order for the sake of convenience.

2.   The grounds raised in Revenue's Appeal No. 4969/Del/2011 (AY
2008-09) read as under:-

     1.         That the Ld. CIT(A) has erred in law and in fact of the
                case in deleting the addition of Rs.54,64,000/ - made
                on account of suppressed sale consideration property
                bearing No. A-29 Sector-63, Noida disregarding the
                fact that the valuation as adopted by the Assessing
                Officer was duly getting supported with the valuation
                as worked out by the Departmental Valuation Officer.



     2.         That the Ld. CIT(A) has erred in fact and in law in
                deleting the addition made by just making reference
                to provisions of Section 50C whereas the addition
                made by the AO was duly supported by the valuation
                arrived at by the DVO?

     3.         That the Ld. CIT(A) has erred in fact and in law in
                holding that prior to insertion of section 50C addition
                for   suppression       sale   consideration     was       not
                permissible.

     4.         The Ld. CIT(A) has erred in fact and in law in not
                considering the remand report submitted by the AO
                where AO had made out a clear case with the help of
                Valuation Report that the sale consideration had
                been grossly suppressed by the assessee.

     5.         (a)   The order of the CIT(A) is erroneous and not
                tenable in law and on facts.


                                    2
                                                         ITA No. 4969/Del/2011 &
                                                              CO No. 37/Del/2012


                (b)   The appellant craves leave to add, alter or
                amend any / all of the grounds of appeal before or
                during the course of the hearing of the appeal."

3.   The   grounds    raised   in   Assessee's   Cross   Objection        No.
37/Del/2012
(AY 2008-09) read as under:-

     1.    That having regard to the facts and circumstances of the
           case Ld. CIT (A) has rightly deleted the addition of
           Rs.54,64,0001- on account of alleged suppressed sale
           consideration for the property bearing No. A-29, Sector 63,
           Noida.

     2.    The Ld. CIT (A) is erred under the law while holding that
           A.O. has a valid jurisdiction uls 153A of the Act.

     3.    That the Ld. A.O. has grossly failed to submit remand
           report on time in spite of repeated reminders by the Ld. CIT
           (A) which is apparent from the appellate order.

     4.    That it is unfair on the part of A.O. to allege Ld. CIT (A)
           that he has not considered the remand report alongwith
           report of DVO, contrary to the fact, that the impugned
           remand report was never received by the CIT (A) before
           framing the appellate order.

     5.    That the A.O. is erred under the law while, making
           reference to the DVO after completion of the impugned
           assessment order and that to without rejecting the books of
           accounts so maintained by the appellant.

     6.    That the reference to DVO is also arbitrary, in view of the
           fact that no incriminating material was found during the




                                    3
                                                        ITA No. 4969/Del/2011 &
                                                             CO No. 37/Del/2012


           search to suggest that the appellant has received any
           consideration over and above as declared in the ITR.

     7.    That the cross objector craves the leave to add, amend,
           modify, delete any of the grounds(s) of cross objection
           before or at the time of hearing.

4.   The brief facts of the case are that the original return declaring
net taxable income of Rs. 7,37,640/- was e-filed on 29.8.2008. The
return was duly processed u/s 143(1) of the Income Tax Act and AO
held that the difference of Rs. 56,64,000/- has been received by the
assessee over and above the sale consideration shown which is added
to the income of the assessee being undisclosed receipt on sale of the
property vide order dated 28.12.2010 passed u/s. 153A read with
Section 143(3) of the I.T. Act, 1961.

5.   Against the aforesaid assessment order dated 28.12.2010,
assessee appealed before the Ld. CIT(A) who vide impugned order
dated 16.8.2011 partly allowed the appeal of the Assessee.

6.   Aggrieved, Revenue is in appeal before the Tribunal.

7.   Ld. DR relied upon the order of the AO and reiterated the
contentions raised in the grounds of appeal.

8.   On the contrary, Ld. Counsel for the assessee relied upon the
order of the Ld. CIT(A) and requested that the same may be upheld.




9.   We have heard both the parties and perused the records
especially the orders of the authorities below.   We find that the Ld.
CIT(A) has elaborately discussed the issue in dispute in his impugned
order from pages 9 to 11 vide para nos. 8 to 10. For the sake of
convenience, we are reproducing herewith the relevant paras as
under:-




                                    4
                                                   ITA No. 4969/Del/2011 &
                                                        CO No. 37/Del/2012


"8. As regards ground no 4, it relates to addition of Rs.
54,64,000/- on account of unaccounted receipts on sale of
property by the appellant company during the year. The AO. while
framing the assessment order has made the following remarks:-

     "As per the computation of income, the assessee has shown

     long' term capital gain of Rs.9,20,8571- on sale of property

     i.e. A-19, Sector-63, Noida and as peer the annexure, cost

     indexation has been made. The sale consideration of this

     property is RS.1.88 Crores. As per information downloaded

     from the website of Elite Realty Consultants Pvt. Ltd. the

     circle rate of the plot in Sector-63 Noida is Rs. 12,000/- per

     sq. mtrs. On this basis, the sale rate of the property is

     worked out as under:

           Land Circle Rate - Rs. 12,000/- per sq. mtr x 1000 sq.

                            mtrs         =     Rs. 1,20,00,000/-

           Construction circle rate- Rs.6,000/- per sq.mtr x 2044

           sq. mtrs =

                                              Rs.1,22,64,000/-

                                        Total Rs.2,42,64,000/-

As against this, sale consideration shown by the assessee is Rs.

1.88 Crores. As per the provisions of section 142A of the IT Act,

the matter was referred to Department's valuation Cell to

determine the fair market value of the property for the purpose of

                             5
                                                            ITA No. 4969/Del/2011 &
                                                                 CO No. 37/Del/2012


     computation of capital gain. The report has not been received till

     date and since it is time barring matter, the assessment is framed

     by adopting the circle rates as per the information downloaded

     from the website of Elite Realty Consultants Pvt ltd. However, in

     the meantime, the rate is adopted as per the calculations made

     above.

     It is held that the difference of Rs. 54,64,000/- has been received

     by the assessee over and above the sale consideration shown

     which is added to the income of the assessee being undisclosed

     receipt on sale of property. Penalty proceedings u/s 271(1)(c) of

     the IT Act are being initiated separately for furnishing inaccurate

     particulars and concealing the particulars of income.

     Addition    on   account   of   unaccounted   receipts    of    property

RS.54,64,000/-

     9.   The AR vide his written submission dated 06.05.2011 has

     submitted before me as under:-

          "During the year under review, the appellant sold built up

          industrial property A-19, Sector-50, Noida to M/s. Mahagun

          India Pvt. Ltd. vide sale deed dated 03.06.2007 duly

          registered    with    sub-registrar   Ghaziabad     for     a     sale

          consideration of Rs. 1.88 Crores. However, while framing

          the impugned assessment order the Ld. A. O. has adopted


                                     6
                                                   ITA No. 4969/Del/2011 &
                                                        CO No. 37/Del/2012


circle rate from the website of Elite Realty Consultant Private

Limited, a real estate company and has alleged that the sale

consideration as disclosed by the appellant is less than the

applicable   circle    rate.   According   to    the    information

downloaded from the website, the Ld. A.O. has taken circle

rate of the land at Rs. 12,000/- per sq. mtr. as against Rs.

6,500/- applicable circle rate as on date of sale deed, which

is evident from the copy of sale deed itself (PB 35-99) filed

before A.0. vide letter dated 08. 10.2010 (PB32-34) without

affording any opportunity of rebut the same.

      The appellant has also visited the website of "Elite

Realty Consultants Pvt. Ltd." and have downloaded the

information used by the A. O. for the purpose of impugned

assessment     order    (PB100-101).   On       perusal     of    such

information your honour will appreciate the circle rate

/opted by the A.O. is applicable w.e.f. 01.11.2008. Whereas,

the sale has taken /iiace on 03.06.2007. It appears that the

Ld. A. o. by oversight has not noticed the applicability of the

circle rate before alleging that the appellant has under

stated the circle rate. Therefore, the impugned addition is

factually incorrect.




                           7
                                               ITA No. 4969/Del/2011 &
                                                    CO No. 37/Del/2012


     Without prejudice, further the Ld. A. O. 1n the

concluding paragraph of the impugned order has alleged the

difference of Rs.54,64,000/- (difference due to circle rate)

has been received by the appellant over and above the sale

consideration and has treated the same as "unaccounted

receipts on sale of property". The AO has treated the said

impugned income as income from other sources and has

taxed @ 30% as against 20% applicable in the case of long

term capital gain. Your honourwill appreciate that there is no

provisions under the law which permits the AO to change

the nature of receipt of income unless until circumstances so

warrant. It is not case of the AO that the transaction is not

related to a long term assets. The action of the AO clearly

proves his bias about imposition of tax liability on the

appellant whether it is sustainable under the law or not?

Alternatively, without prejudice, it is settled proposition of

law that unless there is evidence that more than what was

stated was received, no higher price can be taken to be the

basis for computation of capital gains. It was further 'held in

number of cases that capital gains tax was intended to tax

the gains of an assessee, not what, an assessee might have

gained. What is not gained cannot be computed as gained.



                         8
                                                       ITA No. 4969/Del/2011 &
                                                            CO No. 37/Del/2012


     Capital gains tax is not a tax on what might have been

     received or could have been taxed.

     Reliance    can     be   placed   on   the    following      judicial

pronouncements:-

     a)    CIT v/s. Nilofar I Singh (2009) 309 ITR 0233 (DEL)

     b)    Dev Kumar Jain vIs. ITO (2009) 309 ITR 0240 (DEL)

     c)    Commissioner of Income Taxrge Henderson and Co.

           Ltd. (1967) 066 ITR 0622 (SC)

     d)    Commissioner of Income Tax vIs. Gillianders Arbuthnot

           and     Co.    Gillanders   Arbuthnot     and       Co.      vIs.

           Commissioner of Income Tax (1973) 087 ITR 0407 (SC)

     e)    CIT vs. Shivakami Co. P Ltd. (1986) 159 ITR 0071 (SC)

     f)    ACIT vs. Nakul Kapoor (2010) TIOL 727 ITAT (Del.)

           Therefore, viewed from any angle whether on factua/s

     or on law, the addition made by the A.O. is liable to be

     deleted."

     10.   I have considered the assessment order and written

     submissions filed by the appellant company alongwith

     annexures thereto, the facts of the case and position of law.

     It appears that while finalizing the impugned assessment

     order the A.O. overlooked the date of applicability of circle





                               9
                                                           ITA No. 4969/Del/2011 &
                                                                CO No. 37/Del/2012


             rate which is clearly mentioned as "w.e.f. 01 Nov. 2008

             which is evident from hard copy of circular furnished by the

             appellant during these proceedings. Therefore, in the

             absence of any other corroborative evidence or material on

             records of unaccounted receipts on sale of property, I have

             no hesitation in deleting the addition so made by the A.O.

             which is otherwise a factual error. The appellant gets relief

             on this account. The grounds taken on this account are

             allowed."

10.   After going through the aforesaid order passed by the Ld. CIT(A)

on the issue in dispute, we are of the considered view that the Ld.

First Appellate Authority has passed a well reasoned order by stating

that the AO has overlooked the date of applicability of circle rate which

is clearly mentioned as w.e.f. 01 Nov. 2008 whereas the sale has taken

place on 3.6.2007. Therefore, in the absence of any other corroborative

evidence or material on records of unaccounted receipts on sale of

property, we find that the Ld. CIT(A) has rightly deleted the addition

in dispute. Therefore, in view of above, we do not see any infirmity in

the order of the Ld. CIT(A) on the issue in dispute, hence, we uphold

the same. Accordingly, the Appeal filed by the Revenue stands

dismissed.




                                    10
                                                         ITA No. 4969/Del/2011 &
                                                              CO No. 37/Del/2012


ASSESSEE'S CROSS OBJECTION


11.   As far as Assessee's Cross Objection is concerned, the same is

only supportive the Ld. CIT(A)'s order. Since we have dismissed the

Appeal of the Revenue as aforesaid, hence, the Cross Objection filed

by the Assessee has become infructuous and dismissed as such.


12.   In the result, the Appeal filed by the Revenue stands dismissed

and Cross Objection filed by the Assessee is also dismissed.


      Order pronounced in the Open Court on 08/12/2015.

           Sd/-                                          Sd/-

[PRASHANT MAHARISHI]                              [H.S. SIDHU]
ACCOUNTANT MEMBER                               JUDICIAL MEMBER

Date: 08-12-2015

"SRBHATNAGAR"
Copy forwarded to: -
1.    Appellant 2.     Respondent        3.   CIT   4.   CIT (A) 5.
           DR, ITAT

                            TRUE COPY                    By Order,



                                                    Assistant Registrar




                                    11

 
 
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