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Income Tax Appellate Tribunal, JAIPUR BENCHES ‘A’ JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 65/JP/2020
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES ‘A’ JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 65/JP/2020 fu/kZkj.k o"kZ@Assessment Year :2014-15 cuke Trimurty Colonizers and Builders ITO, Vs. Private Limited, Ward 6(2), Jaipur 601 Geeta Enclave, Vinoba Marg, C- Scheme, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACT6613K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Rohan Sogani (CA) jktLo dh vksj ls@ Revenue by : Ms. Chanchal Meena (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 21/09/2020 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 23/09/2020 vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M.
This is an appeal filed by the assessee against the order of ld. CIT(A), Ajmer dated 19.11.2019 wherein the assessee has taken following grounds of appeal:- “(1) In the facts and circumstances of the case and in law ld. CIT(A) has erred in confirming the action of ld. AO in making addition u/s 43CA of Rs. 7,84,600/-. The action of ld. CIT(A) is illegal, unjustified and arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 7,84,600/-. (2) In the facts and circumstances of the case and in law ld. CIT(A) has erred in confirming the action of ld. AO in making disallowance of Rs. 2,98,890/- by invoking provision of section 14A of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified and
ITA No. 65/JP/2020 Trimurty Colonizers and Builders Private Limited, Jaipur vs. ITO, Jaipur arbitrary and against the facts of the case. Relief may please be granted by quashing the said disallowance of Rs.2,98,890/-.”
Regarding Ground No. 1, the ld AR submitted that during the relevant previous year, assessee company sold a piece of land situated at Sunrise City, Niwaru, Jaipur for total consideration Rs. 9,00,000/-. Since there were certain irregularities, the land was sold by the assessee company at Rs. 9,00,000/- whereas the DLC Value as per the prescribed rates was Rs. 16,84,600/-. The assessee company also got the land valued from the a registered valuation officer who has valued the land at Rs. 8,76,000/-. During the course of assessment proceedings, the valuation Report, obtained from the registered valuer substantiating the price at which the land was sold was submitted before the Assessing officer. Such valuation report factored in the various reasons for the lower sales value of the land vis-à-vis its DLC Value. The Ld. AO referred the matter apropos the valuation of the land to the Departmental Valuation Officer (“DVO”) in terms of the provisions of Section 43CA, r.w. Section 50C(2) of the ITA. The DVO did not taking cognizance of the various factors, as considered in the valuation report, qua reduced valuation of the land. The DVO determined the value of land by simply considering its DLC value. The Ld. AO on receiving the report of DVO and without proper application of mind considered the DLC Value for determining the gain on sale of land and added Rs. 7,84,600 in the hands of assessee company by invoking the provisions of Section 43CA of the Act and which has been confirmed by the ld CIT(A) and against the said findings, the assessee is in appeal before the Tribunal.
During the course of hearing, the ld. AR submitted that in order to substantiate the value of the land, as determined by the Registered Valuation Officer, various physical and other attributes of the land were put forth, 2
ITA No. 65/JP/2020 Trimurty Colonizers and Builders Private Limited, Jaipur vs. ITO, Jaipur which were also submitted to the DVO. However, such factors were totally ignored by the DVO, for the purpose of valuing the land. The Ld. AO without application of mind, considered the value of the land at DLC value, as also determined by the DVO in his report. If the assessee, as in the present case, is able to put forth physical and other attributes of the land which resulted in fetching value lower than the DLC value of its sale, then ld. AO is duty bound to consider those attributes. If the ld. AO is of the view that those factors were not considered by the DVO in its report then the ld. AO can consider those factors and determine the true value of the land. The Ld. AO is not always obligated to follow the report of DVO and has to apply his own independent mind to the facts and circumstances persistent to the sale transactions and in support, reliance was placed on the following decisions:-
� CIT v. Rameshwar Prasad Kacholia (DBITA 51/2014 dated 15.10.2015 – Raj High Court) � DCIT v. Bajaj Chemicals [2017] 59 ITR(T) 132 (Kolkata - Trib.) � Chandra Bhan Agarwal vs. ACIT [2012] 51 SOT 440 (Kolkata) � ITO vs. Ms. Kumudini Venugopal [2011] 48 SOT 182 (Chennai)(URO) � Suresh C. Mehta [2013] 158 TTJ 821 (Mumbai-Trib.)
It was submitted that in the present case, physical and other attributes of the land, sold by the assessee, has not been challenged by the taxing authority nor have they been found to be false. Under such circumstances, the ld. AO was duty bound to consider the value adopted by the assessee company and the actual sales consideration.
The ld DR is heard who has supported the findings of the AO. It was submitted that once the matter has been referred to the DVO and DVO determines a particular value of the land, the AO is duty bound to follow the 3
ITA No. 65/JP/2020 Trimurty Colonizers and Builders Private Limited, Jaipur vs. ITO, Jaipur report of the DVO who is a technical expert in the matter of valuation. It was further submitted that the AO has applied the lower of the DVO and the stamp duty valuation and the addition of the differential amount over and above the declared sale consideration is in conformity with the provisions of section 43CA of the Act.
We have heard the rival contentions and perused the material available on record. We find that during the course of assessment proceedings, the matter regarding determination of Fair market value of commercial plot no. CM 77, Sunrise City, Niwaru, Jaipur as on the date of sale was referred to the DVO. The DVO after considering the sale deed of the property, site plan, valuation report as furnished by the assessee and after physically inspecting the property had determined a preliminary estimate of the valuation of the property and the same was shared with the assessee vide letter dated 21.12.2016 in order for the assessee to examine the same and submit any objections, if any by 23.12.2016. In response, the assessee had chosen not to raise any objections for reasons best known to the assessee and has not even responded to such communication sent by the DVO. Thereafter, the DVO determined the fair market value of the property at Rs 16,84,600/- as against Rs 9,00,000 declared by the assessee and a valuation report dated 28.12.2016 was issued and shared with the assessee and the AO. Thereafter, the AO on receipt of the valuation report issued a show-cause as to why the value so determined by the DVO should not be applied and in response, the assessee had filed a written submission on 29.12.2016 objecting to the valuation so determined by the DVO. The AO thereafter, considering the differential between the declared sale consideration and lower of the stamp duty and DVO valuation, made the addition of Rs 7,84,600 invoking the provisions of section 43CA of the Act. We therefore find that the assessee didn’t raise any objections before the 4
ITA No. 65/JP/2020 Trimurty Colonizers and Builders Private Limited, Jaipur vs. ITO, Jaipur DVO where he shared the preliminary estimate with the assessee for reasons best known to it and has raised its objections for the first time before the AO on receipt of the DVO report and the secondly, the AO has proceeded to follow the report the DVO. We therefore donot find any infirmity in the action of the DVO as the assessee failed to raise any objections before him. Secondly, we also donot find any infirmity in the action of the AO in following the report of the DVO. Once the AO has referred the matter to the DVO for his expert opinion and the latter has submitted his report, the AO is duty bound to follow the said report and doesn’t have any discretion in that regard. The AO cannot entertain any objections so raised by the assessee against the valuation so determined by the DVO. Therefore, we are unable to accede to the contention so advanced on behalf of the assessee that the AO is not always obligated to follow the report of DVO and has to apply his own independent mind to the facts and circumstances persistent to the sale transaction. We have also gone through the decisions relied upon by the ld A/R at the Bar and find that none of the decisions support the contention so advanced on behalf of the assessee. In the result, the ground of appeal is dismissed. 7. Regarding Ground No. 2, briefly stated the facts of the case are that the AO, during the course of assessment proceedings, on noticing the facts that assessee company has investment, amounting to Rs.2,77,63,530/- in various companies, made disallowance of Rs. 2,98,890/- u/s 14A r/w rule 8D, and which has been confirmed by the ld CIT(A). 8. During the course of hearing, the ld. AR submitted that assessee company earned exempt income of Rs. 5,635/- against which ld. AO disallowed Rs. 2,98,890, under section 14A, by invoking Rule 8D. It is a settled proposition that disallowance under section 14A cannot in any way exceed the exempt income and in support, reliance was placed on the following decisions:- 5
ITA No. 65/JP/2020 Trimurty Colonizers and Builders Private Limited, Jaipur vs. ITO, Jaipur • Caraf Builders & Constructions (P.) Ltd. [2019] 261 Taxman 47 (Delhi) • Pragathi Krishna Gramin Bank [2018] 256 Taxman 349 (Karnataka) • M/s Mahindra World City (Jaipur) Ltd. (ITA No. ITA 697/JP/2018 dated 4.09.2019)
We have heard the rival contention and perused the material available on record. Following the settled legal proposition and various decisions cited supra, the disallowance u/s 14A r/w Rule 8D is restricted to the extent of dividend income claimed exempt by the assessee amounting to Rs 5,635/- and the remaining addition is hereby directed to be deleted. The ground is thus partly allowed.
In the result, the appeal of the assessee is disposed off in light of above directions.
Order pronounced in the open Court on 23/09/2020.
Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vijay Pal Rao) (Vikram Singh Yadav) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 23/09/2020 *Ganesh Kr. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Trimurty Colonizers & Builders Pvt. Ltd, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward 6(2), Jaipur 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 65/JP/2020} vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेज. त्महपेजतंत