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Income Tax Appellate Tribunal, MUMBAI BENCHES “F”, MUMBAI
Before: Shri Saktijit Dey & Shri Manoj Kumar Aggarwal
O R D E R Per Saktijit Dey, Judicial Member
This is an appeal by the assessee against order, dated 30.09.2016, of learned CIT(A)-14, Mumbai for the assessment year 2007-08.
Ground no.1 is general in nature and does not require adjudication.
Ground nos. 2 & 3 are in respect of disallowance of deduction claimed of ` 57,15,400/- towards market value of Floor Space Index (FSI) sold prior to the sale of land and building. Briefly, facts relating to this issue are the assessee company is a manufacturer and dealer in chemicals and solvents.
For the year under dispute the assessee filed its return of income on Vishal Dye Chem Industries P Ltd 11.10.2007 declaring income of ` 27,905/-. Assessment in case of the assessee was originally completed u/s. 143(3) of the Act determining total income at ` 1,47,67,446/- after making addition of Long term capital gain of ` 1,84,62,000/- and couple of other additions. The assessment order so passed was challenged by the assessee before the CIT(A) and, thereafter, before the Tribunal. The Tribunal after considering the submissions made by the assessee disposed of the appeal, vide order dated 05.06.2013 in restoring all the issues to the Assessing Officer for fresh adjudication. While doing so the Tribunal observed that the CIT(A) should have met the objections of the assessee before adopting the valuation report of the DVO. Accordingly, in pursuance to the directions of the Tribunal, the Assessing Officer took up the assessment proceedings afresh by calling upon the assessee to furnish the details with regard to its claim of deduction against Long term capital gain. The Assessing Officer called upon the assessee to specifically explain its objection to adoption of sale consideration of the asset for the purpose of computation of capital gain at ` 1,04,55,000/- In response, it was submitted by the assessee that it had entered into an agreement with one M/s Narendra Silk Mills Process Department on 27.03.1986 for sale of FSI of the land to the extent of 15,000 sq. ft. @ ` 20/- per sq. ft. It was submitted, on completion of the said transaction, payment of ` 3,00,000/- was received in the bank account. It was submitted, as per the said agreement, it was specifically agreed that the assessee will not be allowed to use the plot of land admeasuring 1,394 sq. mts. equivalent to 15,000 sq. ft FSI out of the total land admeasuring 2750 sq. ft. Thus, it was submitted, while computing capital gain, the market value of FSI of 15,000 sq. ft. as on 14.06.2006 amounting to ` 57,15,400/- should have been reduced from the market value of ` 1,04,55,000/- determined by the DVO. The Assessing Officer after considering submissions of the assessee did not find merit in them. He observed, though, the assessee made the aforesaid claim before the DVO however, the DVO on the basis of information obtained from Thane Municipal Corporation (TMC) has found the claim of sale of FSI of 15,000 sq. ft. to be without any basis considering the fact that FSI of 2,550 sq. mt was available to the assessee when the property was sold in the year 2006. Thus, on the basis of the observations of the DVO, the Assessing Officer rejected assessee’s claim of deduction of ` 57,15,400/-. Though, the assessee challenged the aforesaid decision of the Assessing Officer before the CIT(A), however, the learned CIT(A) sustained the disallowance made by the Assessing Officer.
The learned AR reiterating the stand taken before the departmental authorities submitted that the claim of the assessee that it has sold FSI of 15,000 sq. ft. in the year 1986 has not been considered appropriately by the departmental authorities by conducting necessary enquiry. He submitted, the assessee through an agreement executed in 1986 has sold FSI of 15000 sq. ft. to M/s. Rajashri Builders, who was owner of the adjacent land. In this context, he drew our attention to the agreement dated 27.03.1986. The learned AR submitted, before rejecting assessee’s claim enquiry should have been conducted by the Assessing Officer and CIT(A) with M/s. Rajashri Builders to prove the fact that the assessee has sold FSI of 15,000 sq. ft. In this context, the learned AR drew our attention to letter dated 11.04.1986 addressed to M/s. Rajashri Builders, a copy of which is placed at page 10 of the Paper-book. He submitted, though, the ITAT had directed the Assessing Officer to meet all the objections of the assessee, however, the Assessing Officer has not complied to such directions. Thus, he submitted, assessee’s claim of deduction with regard to sale of FSI of 15,000 sq. ft. should be examined by the Assessing Officer.
The learned DR strongly opposing the contentions of the assessee submitted that in course of assessment proceedings in pursuance to the directions of the Tribunal, the assessee has not filed any fresh evidence or brought to the notice of the Assessing Officer any fresh fact to demonstrate that FSI of 15,000 sq. ft was actually sold. Therefore, the claim made by the assessee remained unproved. Hence, there is no reason to interfere with the decision of the CIT(A).
We have considered rival submissions and perused material on record.
Though, the assessee has claimed that before the sale of land and factory building on 14.06.2006, it has sold FSI to the extent of 15,000 sq. ft. to Rajashri Builders through Narendra Silk Mills, however, except an unregistered agreement, dated 27.03.1986, and letter written to Rajashri Builders on 11.04.1986, the assessee has not brought any other evidence on record to conclusively prove the sale of FSI of 15,000 sq. ft. in March 1986.
It is relevant to observe, during the course of proceedings before the DVO, though, the assessee had taken the aforesaid plea of sale of FSI, however, the DVO after due enquiry with the TMC has found that no such sale of FSI of 15,000 sq. ft was effected by the assessee, which is evident from the fact that FSI sanctioned at the time of sale of land by the assessee was considering the area of 2550 sq. mts. The DVO has observed, had it been the fact that the assessee had sold FSI of 15,000 sq. ft. in 1986, the TMC definitely would have deducted the area of 15,000 sq. ft. from the total plot area while sanctioning FSI on the plot of land sold by the assessee. If the assessee claims that it has sold FSI of 15,000 sq. ft in the year 1986, the onus is entirely on the assessee to prove such facts through cogent evidence.
However, in our view, the assessee has failed to discharge such onus.
Moreover, on perusal of letter dated 04.10.2010 filed before the DVO, it is noticed, the assessee has submitted that though to their belief FSI of 15,000 sq. ft. sold by the assessee to Narendra Silk Mills has been utilised by M/s.
Rajashri Builders, which has constructed Rajashri Industrial Estate in the adjacent plot land, however, the assessee did not have any documentary evidence to prove such fact. When the assessee is not in a position to furnish any cogent evidence to prove its claim of sale of FSI of 15,000 sq. ft., such claim cannot be accepted on mere face value. In these circumstances, when the assessee has failed to prove its claim at the stage of departmental proceedings as well as before us by furnishing any cogent documentary evidence, we do not find any reason to interfere with the decision of CIT(A) on this issue. Accordingly, the grounds raised are dismissed.
In ground no.4, assessee has challenged the decision of the Assessing Officer in applying the provisions of section 50C(2) after completion of the assessment proceedings. At the outset, we must observe that the learned AR has not made any specific argument on this ground. However, as could be seen from the material on record, before the Assessing Officer also the assessee has not raised any objections on the issue of reference being made u/s. 50C(2) of the Act to the DVO. In any case of the matter, before the first appellate authority, the assessee has specifically raised the issue of non referral of valuation to the Assessing Officer u/s. 50C(2) of the Act.
Considering the aforesaid submissions of the assessee, the CIT(A) has directed the DVO to determine the value of the asset and the assessee has also participated in such proceedings. In any case of the matter, by referring the valuation to the DVO, the assessee is in no way prejudiced, since, the value determined by the DVO is much less than the value determined by Stamp Valuation Authority for the purpose of stamp duty. Therefore, we do not find any merit in the ground raised. It is dismissed.
Vishal Dye Chem Industries P Ltd 8. Ground no.5 being consequential is not required to be adjudicated.
In ground no.6, assessee has challenged addition of ` 2,58,011/- being the scrap value of factory shed. It is the claim of the assessee that since no amount was received by the assessee towards scrap value of factory shed, it cannot be added. Same also is the argument of the assessee with regard to the addition of ` 3,00,000/- towards sale value of furniture and fixtures as raised in ground no.7.
We have considered rival submissions and perused material on record.
As could be seen from the facts emanating from record, assessee itself has credited aforesaid amounts to the Profit & Loss account. Therefore, as a natural corollary the amounts were required to be offered as income, unless, the assessee through proper evidence proves that it has not received such income. The assessee having not done so, the Assessing Officer was justified in making the addition of the aforesaid amounts. Accordingly, ground nos. 6 & 7 are dismissed.
In the result, assessee’s appeal is dismissed.
Order pronounced in the open court on this day of 19th September 2018.