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Facts
The assessee is a builder and developer who acquired land from a partner as a capital contribution. The AO and TPO made an upward adjustment to the transaction value, which was upheld by the CIT(A), on the grounds that the arm's length price was not properly determined.
Held
The Tribunal dismissed the appeal due to the assessee's non-appearance and failure to provide valid reasons for delay in filing. Even on merits, the Tribunal found no reason to interfere with the CIT(A)'s order that upheld the AO/TPO's addition.
Key Issues
Whether the Tribunal should entertain an appeal when the assessee is absent and the appeal is delayed without proper condonation, and whether the addition made by AO/TPO regarding the arm's length price of land transfer is justified.
Sections Cited
250, 92CA(3), 10B(1)(a)
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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SMT. ANNAPURNA GUPTA
ORDER
PER SMT. ANNAPURNA GUPTA, AM:
The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), Ahmedabad-13 (hereinafter referred to as “CIT(A)”), dated 30.07.2024 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2015-16.
Grounds raised by the assessee are as under:
[Dhara Developers vs. ITO] A.Y. 2015-16 - 2 – “The CIT Appeal has erred in law and on facts in confirming the action of AO regarding making the addition of Rs. 8320480 on account of upward adjustment as per TPOs order under section 92CA.3 of the Act merely on surmises and conjectures. The appellant has to humbly submit that the specified domestic transaction entered into by the appellant firm with Mrs. Dharmisthaben Thakkar Partner of the firm is in respect of non. agricultural land transferred by Dharmisthaben to the appellant firm. The said land is situated at Survey No. 198.1.2 admeasuring 4522 sq. mtrs at T.P. Scheme No. 32 final Plot No. 141.2 at Mouje Gota Ahmedabad and the Land in question has been shown in the Balance sheet of Dhara Developer is brought into the Partnership firm and the value of the land is same as the value of cost of acquisition of the said land purchased by the owner Smt. Dharmishtaben Thakkar and as per the Clause 8 of the Partnership Deed dated 06.06.2014 Smt. Dharmisthaben to introduce the land in question as a part of her capital contribution. The appellant respectfully submits that DCIT TPO.1 Ahmedabad has also not properly considered the various details and arms length price computed by the appellant firm along with various supporting evidences provided to the TPO. CIT Appeal as well as the Ld. AO as well as the Ld. TPO failed to consider the fact that in the instant case the appellant has computed the arms length price on the basis of jantri value available with the appellant at the time of entering into the transaction. It is further submitted that additionally for the purpose of comparing the said transaction with an uncontrolled transaction the appellant has already brought to the notice of the Ld. AO a s well as the Ld. TPO that this is a standalone transaction entered into by the appellant and no similar transaction has been entered into with an unrelated party. CIT(A) has also not considered the above submission. The only comparison that can be made is with the jantri value and since the transaction price is decided on the basis of jantri value the assessee has taken the same as the arms length price. CIT Appeal failed to properly consider the comparable transaction dated 15.10.2015 on the comparable uncontrolled price transaction between the independent parties for the similar non agricultural land situated at Sub Dist Ahmedabad 8 Sola Taluka Ghatlodia Village Gota. The appellant respectfully submits that in the present case the appellant firm has rightly determined the arms length price as the cost of acquisition of the specified domestic transaction and hence the upward adjustment of Rs. 832 0480 made to the arms length price of payment made towards the purchase of land from AE should be deleted and no adjustment is required to be made. The appellant reserves its right to add amend alter substitute or modify all or any of the grounds stated hereinabove as the facts and circumstance.”
[Dhara Developers vs. ITO] A.Y. 2015-16 - 3 – 3. None appeared on behalf of the assessee, nor any application was filed before us seeking adjournment. Further, the assessee’s appeal is delayed in filing by 23 days and no application seeking condonation of delay has been filed by the assessee before us. Moreover, we have also noted that on the previous two occasions when the matter came up for hearing an application seeking adjournment on behalf of the assessee was filed by one CA Arpan Shah, however, no letter of authority issued by the assessee authorizing him to represent its case was filed. In the light of the above, since, the assessee’s appeal is noted to be delayed for filing by 23 days and no reason has been given for the said delay, we are not inclined to entertain the assessee’s appeal for adjudication. The appeal is dismissed for the aforesaid reason.
Even otherwise, we have noted that even the Ld. CIT(A) had dismissed the assessee’s appeal as non-maintainable on account of delay in filing appeal before him for which again no sufficient cause was adduced by the assessee before the Ld. CIT(A). Further, none appeared before the Ld. CIT(A) also on behalf of the assessee and, therefore, even on merits, the Ld. CIT(A) upheld the order of the AO/TPO finding it to have been passed very judiciously and the order being speaking order. The Ld. CIT(A) accordingly confirmed the addition of Rs.83,20,480/- made in the hands of the assessee. Now, even before us in the absence of any representation on behalf of the assessee, we see no reason to interfere in the order of the Ld. CIT(A) confirming the addition made by the AO/TPO.
[Dhara Developers vs. ITO] A.Y. 2015-16 - 4 – 5. The addition of Rs.83,20,480/-, we have noted from the order of the AO was made on account of upward adjustment made to Specified Domestic Transaction entered into by the assessee with its Associate Enterprise. This, Specified Domestic Transaction related to the transfer of land by a partner in the assessee firm, Dharmishtaben A. Thakkar, to the assessee firm as her capital contribution. The assessee is engaged in the business of builders and property developers. The impugned transaction was recorded to have taken place in the books of the assessee at Rs.5,20,03,000/-. The AO, however, noted from the sale deed that the partner Dharmishtaben A. Thakkar had purchased 7,537 Sq. meters of land for Rs.7,28,01,200/-, out of which, she had transferred 4522 Sq. meters of land to the assessee firm. The per sq. mt. cost of acquisition of the land purchased by the partner was arrived at Rs.9659/- however land was noted to be transferred to the assessee firm by the said partner at the rate of Rs. 11,499/-per Sq. meters. Noting that the assessee had not given any comparable price and benchmarking analysis for establishing the transaction with its AE to have taken place at arms’ length, the TPO showcaused the assessee as to why the cost of acquisition of the land by the partner @ Rs.9,659/- per Sq.meter be not considered as Arms’ Length Price (‘ALP’) of the land transferred to the assessee. The assessee filed reply justifying the transaction to be at ALP stating that the land has been transferred to the assessee firm at cost pointing out that the sale deed itself mentioned the cost of land at Rs.5,20,03,000/- and though land acquired was 7537 sq. mts however it was converted into NA land after paying [Dhara Developers vs. ITO] A.Y. 2015-16 - 5 – premium and the land available for development was only 4522Sq. mts, which fact he stated found mention in the sale deed al.so.at which it had been transferred to the assessee firm. The assessee therefore stated that the partner had acquired land measuring only 4522sq.mts for a cost of 5.20 Crs and at the same cost she transferred said 4522 sq.mts. of land to the assessee firm. The assessee also filed a comparable transaction to demonstrate that the impugned specified domestic transaction had taken place at ALP. The AO, however, rejected both the contention of the assessee noting that the land originally acquired was 7537 Sq. mtrs. by the partner and the contention therefore that only 4522sq.mt land was acquired was incorrect. He held that the assessee, therefore, was not justified in stating that the cost of acquisition of land mentioned in the sale deed of Rs.5,20,00,000/- pertained to cost of acquisition 4522 Sq.meters of land transferred to the assessee firm. He further noted that the comparable transaction furnished by the assessee pertained to A.Y. 2016-17, since the date of transaction was 15.10.2015 and the impugned year being A.Y. 2015-16, he accordingly held that the transaction was not comparable for the purpose of CUP method prescribed in Rule10B(1)(a) of the IT Rules. He accordingly recomputed ALP of the impugned transaction applying rate of Rs.9659/- per Sq.meters to the land ,4522 Sq. meters ,transferred to the assessee by the AE and made an upward adjustment to the impugned specified domestic transaction of Rs.83,20,480/-.
[Dhara Developers vs. ITO] A.Y. 2015-16 - 6 – 6. Before us, in the absence of any representation on behalf of the assessee, the findings of the AO/TPO upheld by the Ld.CIT(A) remain uncontroverted. We see no reason therefore to interfere in the order of the Ld. CIT(A) confirming the addition of Rs.83,20,480/- made to the income of the assessee.
In the result, appeal filed by the assessee is dismissed.
This Order pronounced on 03/09/2025
Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 03/09/2025 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,