Case Law Details
Swadeshi Polytex Limited Vs DCIT (ITAT Delhi)
ITAT Delhi held that failure to call for DVO report and discrediting the valuation report of the assessee without substantial reasons is unsustainable and bad in law.
Facts- Assessee company is into the real estate development by converting the leasehold land as Stock in trade and selling the plots of smaller sizes after proper development and approval from UPSIDC. AO noticed that assessee had sold a total of 16976.5 sq. Mtr. of land. As per the MOU, the assessee is entitled to receive Rs. 8,200/- per sq. Mtr. for land sold. AO considered that the Market rate of the property is Rs. 10,000/- Sq. Mtr. as per the valuation report submitted by the assessee company.
AO was not satisfied with the fair market value of Rs. 10,000/- taken by the assessee in the year of conversion of fixed asset to stock-in-trade i.e. F.Y. 2010-11 while the fair market value as on 01.04.1981 has been presumed by the assessee at Rs.100 per sq. Mtrs. which AO considered was arbitrary.
Assessee has taken the land on lease for a total land consideration of Rs. 20,02,904/- as per the lease deed. The total area of the land on lease is 3,32,909.69 Sq. mts. Therefore, per Sq. mts. Cost of plot of land 1970-71 arrived at Rs. 6.01/- only.
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