Kanha Villa LLP Vs ITO (ITAT Kolkata)
Whether addition under Section 56(2)(x) for alleged understatement of consideration is justified where property is purchased from a State Government entity?
The Assessee LLP engaged in renting and real estate purchased commercial property at Synthesis Business Park from West Bengal Housing Infrastructure Development Corporation Ltd. (WBHIDCO) a State Government entity by paying Rs. 4,76,50,200 whereas the market value of the property was determined at Rs. 11,36,27,400 and the AO treated difference Rs. 6,59,77,200 as deemed income u/s 56(2)(x). Upon challenge by the Assessee, the Tribunal allowed the appeal by upholding the arguments of the assessee interalia that No undervaluation was possible because seller is WBHIDCO (Govt. entity).
It is seen that the whole transaction took place with an entity of the State Govt. of West Bengal. Thus, we find no reason to infer any substance in the allegation of suppression of purchase price.
We also do not find any reason to believe that the State Govt. would be selling any property at anything less than the circle rate. Accordingly, the contention of the assessee is acceptable and the impugned addition is directed to be deleted.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
