CIT Vs. ARENS DEVELOPERS

JUDGEMENT

(1.) This appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('Act', for short) impugns the order dated 21.04.2011 passed by the Income Tax Appellate Tribunal ('Tribunal', for short) in the case of Arens Developers and Engineers Ltd., the assessee. This appeal relates to the assessment year 2002-03. Only one contention has been raised before us by the Revenue. Ld. senior standing counsel for the Revenue submits that the Assessing Officer was justified in making additions on the ground of understatement of sale consideration and computing the same by capitalizing the annual rent. He submits that the method adopted by the Assessing Officer was justified and in support of his submission has relied upon the decision of Madras High Court in Rane (Madras) Ltd. v. CIT, 2003 259 ITR 307.

(2.) The CIT(Appeals) deleted the said addition of Rs. 3,52,66,096/-after referring to the factual matrix. Search operations were conducted during the relevant year but no incriminating material/document regarding understatement sale transaction was found. The documents/material did not indicate that the properties were sold for higher consideration, than the amount mentioned in the agreements. The parties to whom the properties were sold had affirmed the said transaction and the consideration paid. The CIT(Appeals) held that the rent capitalization method is not a proper method for determining the deemed sale consideration for the properties as there was no material to show that there was understatement and thus rent capitalization method cannot be the basis to hold and compute the alleged understatement of the sale consideration.

(3.) The aforesaid findings recorded by the CIT(Appeals) have been affirmed by the Tribunal, who have stated as under: