Pavanchandra Chit Funds (P) Ltd. Vs ACIT (ITAT Visakhapatnam)
ITAT Visakhapatnam held that addition made by application of provisions of section 50C of the Income Tax Act justifiable since SRO rates rightly adopted in absence of any objection from assessee company.
Facts- During the course of assessment proceedings, AO observed that the assessee company had purchased land and thereafter entered into a “Memorandum of Understanding” (MOU) with M/s. Pawan Constructions on 27.11.2010 for development of the landed property. Vide the present appeal, appellant has mainly contested that is not justified in sustaining the addition of Rs.66,67,806 made by the assessing officer towards profit on sale of asset by erroneous application of the provisions of S.50C of the Income Tax Act.
Conclusion- Held that ostensibly, as the assessee company, in the course of the assessment proceedings, had not objected to the adoption of the SRO value of the subject land by the A.O. for determining the capital gain arising on the transfer of the same to the five parties, therefore, we find no infirmity in the determining of the same under Section 50C of the Act by the A.O at Rs.66,67,806/-. However, we find substance in the Ld. AR’s claim that the A.O., without giving any cogent reason, had declined the specific claims for deduction of certain expenses that were considered by the assessee company while computing the capital gain on the transfer of 967.32 sq. yards of the subject property, viz. (i) building UDA development (licence charges) – 2010-11: Rs.3,66,471/-and (ii) building conversion charges (2011-12): Rs.1,95,130/-.
