The Delhi High Court ruled that no tax evasion is made by the appraised as it is up to the parties to settle the consideration of the sale for the transfer of the respective shares of the property.
Income challenged the ITAT order in which it was held that it was up to the parties to settle the consideration for the sale for the transfer of the respective shares in the property while the ITAT did not note that the parties were closely related and that there was no suitable basis for the settlement of the consideration for the sale between them and this was done for the purpose of evading payment of tax.
The valuation agent, by the valuation order of 03.31.2015, considered that the respondent had the exclusive right of ownership on the land and should therefore have received the minimum amount of the consideration for the sale at the rate circular of Rs. 27 60 03 387 / -. The valuation officer therefore added an amount of Rs. 9 60 03 387 / – to the respondent’s income under section 50C of the Income Tax Act, 1961.
The appellant submits that under section 48 of the Act, all of the consideration for the sale should have been declared as income by the respondent and that, subsequently, the amount paid to M / s ESS ESS Metals and Electricals could have been claimed as a deduction. She further casts doubt on the separation of the amount between the Respondent and M / s ESS ESS Metals and Electricals, arguing that the Respondent is the daughter-in-law of the sole owner of M / s ESS ESS Metals and Electricals, whom is, Mr. Banarsi Lal Pasricha.
The valuation agent had in fact invoked Section 50C of the law, claiming that the consideration for the sale of Rs. The 18 crore received by the respondent was less than the Circle Rate. This clearly ignored the fact that the consideration for the sale was in fact Rs. 35 crores. CIT (A) and ITAT have reached competing conclusions on the above. It is also not denied that M / s ESS ESS Metals and Electricals held a 99 year lease on the land and that the seller paid a consideration of Rs. 17 Crores for the cancellation of said lease. In this case, the seller did not have an encumbered right on the land and M / s ESS ESS Metals and Electricals certainly had a perpetual lease right on the land, a right also extinguished by virtue of the deed of sale. .
The divisional bench of Judge Navin Chawla and Judge Manmohan held that in a case where, from a given set of circumstances, two inferences of fact are possible, the one drawn by the lower court of appeal will not be interfered with. by the High Court in the second appeal. Any other approach is not allowed. It has also been held that there is a difference between a question of law and a “substantive question of law”.
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