ITAT remands back matter to consider pending DVO Report to calculate income from Sale of Land [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Kolkata Bench remanded back matter to consider pending District Valuation Officer (DVO) Report to calculate income from sale of land.

The assessee, M/s. BHP (1981) Pvt Ltd is a private limited company engaged in the business of manufacturing of pharmaceutical goods. Return of income was filed reporting total income of Rupees thirty-three lakhs. During the year under consideration, assessee had sold a piece of land and tin shed structure on it, to S.R. Trexim Pvt Ltd. vide registered sale deed. Market value of the said property on the date of execution of sale through registered deed was assessed at Rupees seven crores.

The total value of the property was accounted in the books of accounts of the assessee for FY 2007-08 relevant to AY 2008-09. The assessee converted the said capital asset into stock-in-trade and reported the same as part of its stock-in-trade in its audited balance sheet.

The Assessing Officer (AO) completed the assessment by treating the impugned property as capital asset instead of treating it as stock in trade as done by the assessee and the AO gave credit for the amount of business income of Rupees eighty-seven lakhs by reducing it from the business income declared by the assessee to compute the assessed total income for the year.

The CIT(A) left the calculation of income on the sale transaction of impugned land property midway, owing to non-availability of fair market value of impugned land property on the date of conversion and while giving relief to the assessee has accepted the income from the sale transaction of the impugned land as business income as claimed by the assessee in its return.

A Bench consisting of Sanjay Garg, Judicial Member and Girish Agrawal, Accountant Member observed that “We find that in the present set of facts, it is proper to set aside the order of CIT(A) on the issue of income from sale transaction of land property and remit the matter back to the file of CIT(A) to call for and obtain the pending valuation report from the DVO for which he had directed the AO.”

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