Both income tax and accounting confusion

Well the true value of the land was 3 crore. It is only on default that an extra 7 crores were paid which in no way increase the valuation of the land. The extra 7 crore may include interest portion plus default payment on account of harrasment faced by the lending company. So the land value should remain at 3 crore only.

Regarding tax deduction, perhaps a tax expert can advice.

Primarily the Historical cost concept says,

"All the costs incurred to bring the asset made available to work, must be jointly considered as the cost of asset", But here in your case you should not go by accounting it as Rs. 10 Crores, It is advised to do the actual valuation through any expert. and then record the value as per the valuation done. Further if the valued amount is less than the Rs. 10 Crs, then you have to charge it against any reserves if there are no ample reserves then charge it as miscellaneous otherwise your profits will drastically fall down.

On the other hand if the value exceeds Rs. 10 Crs, then consider create any reserve or capital reserve.

Further in my opinion TDS will not deducted on sale of land.