Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: HON’BLE KUL BHARAT & HON’BLE MANISH BORAD, ACCOUNTANT
the orders of Ld. Commissioner of Income Tax-II (in short ‘Ld. CIT], Indore dated 12.03.2019 which is arising out of the order u/s Hanif Sheikh 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 22.12.2017 framed by ACIT-5(1)-2, Indore.
Assessee has raised following grounds of appeal:-
1.That the learned CIT(A) erred in maintaining disallowance of brokerage paid of Rs.3,60,000/-. That the brokerage paid was a genuine expenditure, credit for the same ought to have been allowed.
WITHOUT PREJUDICE TO THE ABOVE
2.That the learned CIT(A) erred in maintaining addition of Rs.14,11,600/- made u/s 50C of the IT Act. That on valuation, the difference between value determined by DVO and assessee was 10.53% only. The addition so made, may very kindly be deleted. 2. The appellant craves leave to add, amend, alter or delete the said grounds of appeal.
Brief facts of the case as culled out from the records are that the assessee is a senior citizen deriving income from Long Term Capital Gain. Assessee filed his return of income on 30.11.2015 u/s 139(1) declaring total income of Rs.61,37,400/-. The case was selected for limited scrutiny by CASS. Notice u/s 143(2) and 142(1) served upon the assessee. Assessment u/s 143(3) of the Act was completed at total income of Rs.79,09,900/- after making addition u/s 50C at Rs.14,11,600/- and Disallowance of brokerage expenses at Rs.3,60,000/-.
Aggrieved assessee preferred appeal before Ld. CIT(A) and partly succeeded.
Now the assessee is in appeal before the Tribunal.
We have heard rival contentions and perused the records placed before us and carefully gone through the submissions made by both the authorities and paper book filed by Ld. Counsel for the assessee.
As regards Ground No.1 relating to disallowance of brokerage expenses at Rs.3,60,000/-, we find that the assessee claimed the brokerage expenses @ 3% paid to broker on the sale consideration of Rs.1,20,00,000/- received from sale of immoveable property.
Evidence to prove the genuineness of brokerage expenses were filed.
Ld. A.O was not satisfied and he insisted on producing the person who received the brokerage. In absence there of brokerage expenses was disallowed and his action was confirmed by Ld. CIT(A).
7A. We however on going through the records find that the brokerage was paid through account payee cheque and copy of 3 Hanif Sheikh bank statement is filed. Complete detail of broker including his address, mobile number were filed along with confirmation letter before the Ld. A.O. In our view the assessee has duly discharged his onus to prove the genuineness of the expenses. Ld. A.O failed to find any adversities in these evidence nor he made any effort to call the broker. In these given facts and circumstances of the case the action of the Ld. A.O is unjustified, we therefore set aside the finding of Ld. CIT(A) and delete the disallowance of brokerage expenses of Rs.3,60,000/-. Ground No.1 of the assessee is allowed.
As regards Ground No.2 which relates to addition of Rs.14,11,600/- made u/s 50C of the Act we observe that the assessee sold leased property at Rs.1,20,00,000/-. Assessee claimed it to be a disputed property. The guideline value of the same was Rs.1,80,00,000/-. Assessee challenged this valuation contending that the fair market value of the property is much less and provision of Section 50C of the Act are not applicable on leased property. Ld. A.O referred the valuation to the Departmental Valuation Officer (In short ‘DVO’), who valued the property at Rs.1,34,11,600/- as against the guideline rate of Rs.1,80,00,000/-.
Hanif Sheikh The difference between the actual sale consideration received and the valuation done by the DVO is 11.6%. This difference amounting to Rs.14,11,600/- was added to the income of the assessee u/s 50C of the Act by the Ld. A.O and subsequently was confirmed by Ld. CIT(A) also.
From the above stated facts we find that the claim of the assessee that leased property in question was disputed and the fair market value is much lower than the guideline rate is confirmed by the report of DVO who has valued the property at Rs.1,34,11,600/- as against the value of property as per guideline rate at Rs.1,80,00,000/-. It is also a known fact that valuation by the DVO is also an estimate. The value adopted by the DVO is higher by 11.6% to actual sale consideration received by the assessee. The situation needs examination in light of proviso to Section 50C of the Act which provides that “where the value adopted or assessed or assessable by the Stamp Valuation Authority does not exceed 110% of the sale consideration or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer, assessee for the purpose of Section 48 be admitted to be the full Hanif Sheikh value of consideration”. So in case the sale consideration received is within the range of 110% of the value adopted by the Value Adopting Authority (in this case value as per the DVO report in place of the value as per the guideline rate) no addition is called for u/s 50C of the Act.
In the instant case looking to the facts and circumstances of the case where the property being leased and also disputed, which is not commanding the guideline rate in the open market and this fact is further supported by the report of DVO who has valued the property in question much lower than the guideline rate are sufficient enough to prove that the claim of assessee having received the sale consideration at Rs.1.20 crore is correct and thus making the addition for Rs.14,11,600/- u/s 50C of the Act is uncalled for. We therefore set aside the finding of Ld. CIT(A) and delete the addition made by Ld. A.O u/s 50C of the Act at Rs.14,11,600/-. Ground No.2 of the assessee is allowed.
In the result appeal of the assessee is allowed.