Nalanda Builders Pvt. Ltd. Vs DCIT (ITAT Kolkata)
The case of Nalanda Builders Pvt. Ltd. Vs DCIT was heard by the Income Tax Appellate Tribunal (ITAT) Kolkata concerning the assessment year 2013-14. The primary issue was the difference in the fair market value (FMV) of property sales under Section 50C of the Income Tax Act. The assessee sold two flats for ₹3 crore, but the Assessing Officer added ₹3.26 crore to the income, arguing that the FMV exceeded the sale price. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this addition. However, ITAT Kolkata ruled in favor of Nalanda Builders, noting that the difference in FMV and sale value fell within the permissible range of ±10%. This allowed the relief for the assessee based on precedents set by other tribunal cases, including Sandeep Patil and John Flower India Ltd..
A secondary issue involved disallowing a short-term capital loss of ₹3.19 crore from the sale of equity shares, which the Assessing Officer deemed a pre-arranged, bogus transaction based on market manipulation. The shares involved were part of a list of penny stocks under SEBI scrutiny. Despite the assessee providing documentation, including bank records and demat accounts, the Assessing Officer relied on reports from SEBI and the Investigation Wing to conclude that the loss was fictitious. ITAT Kolkata upheld the disallowance, referencing prior cases such as PCIT Vs Swati Bajaj, indicating that the transactions were not genuine. The assessee’s contention that no direct evidence or cross-examination was presented in its defense was dismissed, confirming the disallowance of the capital loss.
