JYOTI CONSTRUCTION COMPANY, KALYAN V. ITO WD 3(2), KALYAN

CO 225/MUM/2015

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3271 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2015
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Assessee Lawyers: RAJEEV KHANDAWAL
• Keywords: Cost of acquisition; Fair market value; Valuation report

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI BEFORE SHRI R.C.SHARMA , A M & SHRI AMARJIT SINGH , J M ./ ITA NO . 2393 /MUM /20 14 ( / ASSESSMENT YEAR : 20 0 9 - 20 10 ) ITO , WARD - 3(2), KALYAN, 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN(W) - 421301, DISTRICT THANE VS. M/S JYOTI CONSTRUCTION CO. NO.11, NEW GURUKRUPA SOCIETY, OPP. AGRA ROAD, SHIOVAJI CHOWK, KALYAN(W) - 421301 ./ ./ PAN/GIR NO. : A A GFJ 3752 N ( / APPELLANT ) .. ( / RESPONDENT ) AND CROSS OBJECTION NO . 225 /MUM/201 5 (ARISING OUT OF ITA NO.2393/MUM/2015) ( / ASSESSMENT YEAR :2009 - 2010 ) M/S JYOTI CONSTRUCTION CO. NO.11, NEW GURUKRUPA SOCIETY, OPP. AGRA ROAD, SHIOVAJI CHOWK, KALYAN(W) - 421301 VS. ITO, WARD - 3(2), KALYAN, 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN(W) - 421301, DISTRICT THANE ./ ./ PAN/GIR NO. : A AGFJ 3752 N ( / APPELLANT ) .. ( / RESPONDENT ) /REVENU E BY : SHRI K.MOHANDAS /ASSESSEE BY : SHRI RAJEEV KHANDAWAL / DATE OF HEARING : 10 / 02 / 2016 / DATE OF PRONOUNCEMENT 27/04 /201 6 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - I, THANE , FOR THE ASSESSMENT YEAR 200 9 - 2010. ITA NO. 2393/14 CO NO.225/15 2 2. THE REVENUE IN ITS APPEAL IS AGGRIEVED FOR DELETION OF ADDITION BY THE CIT(A) WHILE COMPUTING LONG TERM CAPITAL GAIN WHERE AS THE ASSESSEE HAS FILED CROSS OBJECTION IN RESPECT OF PART ADDITION SUSTAINED BY THE CIT(A). 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BUILDERS & DEVELOPERS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD A PROPERTY AT CTS. NO. 2883, 2884 & 2885 AT SURVEY NO. 144A, HISSA NO. 4, 5 & 6 ADMEASURING 4188 SQ. MTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WORKED OUT LONG TERM CAPITAL GAINS (LTCGS) O N THE SALE OF THIS PROPERTY AND FILED A COMPUTATION OF THE SAME BEFORE THE A.O. SHOWING THE LTC LOSS OF RS. 1,38,585/ - . THE PROPERT Y WAS SOLD FOR AN AMOUNT OF RS. 45,00,000/ - ON 29.07.2008. THE VALUE OF THE PROPERTY FOR THE PURPOSE OF STAMP DUTY WAS FIXED AT RS.2,09,40,000/ - . THE ASSESSEE WORKED OUT THE COST OF ACQUISITION OF THE PROPERTY AS ON 1.4.1981 AT RS.825/ - PER SQ.MT. ON THE BASIS OF A VALUATION REPORT PREPARED BY A GOVERNMENT APPROVED VALUER. THE LONG TERM CAPITAL LOSS WORKED OUT BY THE ASSESSEE WAS AS UNDER : - SALE CONSIDERATION OF THE PROPERTY RS. 2,09,40,000/ - LESS: FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 AS DETERMINED BY THE APPROVED VALUER RS. 36,12,750/ - INDEXED COST OF ACQUISITION = 36,12,750 X 582 = RS.2,10,78,585/ - 100 LONG TERM CAPITAL LOSS RS.1,38,585/ - THE A.O. DID NOT ACCEPT THE FMV OF THE PROPERTY AS ON 1.04.1981 AS DETERMINED BY THE APPROVED VALUER AT RS. 825/ - PER SQ.MT. AND OBSERVED ITA NO. 2393/14 CO NO.225/15 3 THAT THE VALUE DETERMINED BY THE APPROVED VALUER WAS ON A HIGHER SID E. THE A. O . ASKED THE ASSESSEE TO EXPLAIN WHY THE VALUATION ADOPTED BY THE APPROVED VALUER SHOULD NOT BE REJ ECTED AND THE VALUATION OF THE PROPERTY SHOULD BE ADOPTED AT RS. 6/ - PER SQ.MT. AS ON 1.4.1981, AS DONE BY THE JOINT DISTRICT REGISTRAR, THANE . T HE A.O. DID NOT ACCEPT THE APPELLANT'S EXPLANATION AND REFERRED THE VALUATION OF THE PROPERTY TO THE DEPARTMENTAL VALUATION OFFICER, THANE ON 23.12.2011 FOR ASCERTAINING THE VALUATION OF THE PROPERTY AS ON 1.4.1981. THE A.O. DID NOT ACCEPT THE VALUATION REPOR T OF THE APPROVED VALUER ON THE GROUND THAT THOUGH T HE LAND UNDER CONSIDERATION WAS RESERVED FOR RECREATION SPACE, PRIMARY SCHOOL, COMMUNITY CENTRE AS WELL AS HOUSING FOR DISHOUSED, IN THE VALUATION REPORT, THE VALUER HAD REPORTED THE LAND TO BE OPEN AND F REEHOLD WITHOUT ANY ENCUMBRANCE. FURTHER, THE REGISTERED VALUER HAD NOT REPORTED ANY COMPARABLE SALE INSTANCES OF THE NEARBY LAND AS ON 1.4.1981. WITH REGARD TO THE SALE INSTANCES QUOTED BY THE ASSESSEE , THE AO OBSERVED THAT THE SALE INSTANCES QUOTED BY TH E ASSESSEE WERE FOR COMMERCIAL - CUM - RESIDENTIAL PROPERTIES AND THEREFORE THE RATES WERE NOT COMPARABLE WITH THE ASSESSEE 'S CASE. ON THE BASIS O F THE PURCHASE AGREEMENT OF THE LAND BY THE ASSESSEE IN THE YEAR 1970 AND 1972, THE PURCHASE COST OF THE LAND WAS ADOPTED AT RS.60,000/ - AND 20% ESCALATION WAS PROVIDED FROM THE YEAR 1972 TO 1981 AND THE VALUE OF THE LAND WAS ARRIVED AT RS.115/ - PER SQ.MT. 4. AFTER MAKING THESE OBSERVATIONS, THE AO WORKED OUT THE LONG TERM CAPITAL GAIN FROM THE SALE OF THE PROPERTY AS UNDER : - ITA NO. 2393/14 CO NO.225/15 4 SALE CONSIDERATION AS PER STAMP VALUATION AUTHORITY RS.2,09,40,000/ - LESS:INDEXED COST OF ACQUISITION VALUATION AS 01.04.1981 ADOPTED AT RS.115/ - PER SQ.MTR. 115X4390X582/100 RS.29,38,227/ - LONG TERM CAPITAL GAIN RS.1,80,01,773/ - 5. BY THE IMPUGNED ORDER THE CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF RS. 20,33,148/ - AFTER HAVING THE FOLLOWING OBSERVATION : - 17. I HAVE CONSIDERED THE APPELLANT'S SUBMISSIONS, THE OBSERVATIONS OF THE A.O. IN THE ASSESSMENT ORDER AND THE FACTS OF THE CASE. AS FAR AS THE SALE CONSIDERATION IS CONCERNED, THERE IS NO DISPUTE REGARDING THE SAME BECAUSE THE APPELLANT HAS ITSELF ADOPTED THE VALUE AS DETERMINED FOR THE STAMP VALUATION PURPOSES AT RS. 2,09,40,000/ - . THE ONLY DISPUTE IS WITH REGARD TO VALUATION OF THE PROPERTY AS ON 01.04.1981. THE APPELLANT HAD BOUGHT THIS PROPERTY IN THE YEAR 1970 AND 1972 FOR A TOTAL AMOUNT OF RS.60,000/ - I.E. @ RS. 13.67 PER SQ.MT. THE APPELLANT CLAIMED THE VALUE OF THIS PROPERTY AT RS. 825/ - PER SQ.MT. AS ON 01.04.1981 ON T HE BASIS OF THE REPORT OF A GOVERNMENT APPROVED VALUER. THE A.O. DID NOT ACCEPT THIS VALUATION BY HOLDING THAT THIS WAS AT A MUCH HIGHER RATE AS COMPARED TO SOME OF THE SALE INSTANCES WHICH HAVE BEEN QUOTED BY THE A.O. IN THE ASSESSMENT ORDER, ACCORDING TO WHICH THE VALUE OF SALE INSTANCES AS ON 01.04.1981 WAS ABOUT RS. 30/ - PER SQ.MT. THE A.O. FURTHER OBSERVED THAT THE SAME REGISTERED VALUER HAD VALUED CERTAIN OTHER LANDS @ RS. 200/ - PER SQ.MT. AS ON 01.04.1981. THE A.O., THEREFORE, ADOPTED THE RATE OF RS. 115/ - PER SQ.MT. BY STARTING FROM THE PURCHASE PRICE OF THE LAND IN THE YEAR 1972 AT RS.15/ - PER SQ.MT. AND APPLYING AN INCREASE OF20% PER YEAR TILL 1981. 18. THE A.O. ALSO REFERRED THE PROPERTY FOR VALUATION TO DVO U/S. 55A OF THE IT. ACT. THE D V O SUBMIT TED HIS REPORT AFTER COMPLETION OF THE ASSESSMENT I.E. VIDE HIS REPORT DATED 31.05.2012 DETERMINING T HE VALUE OF THE PROPERTY AT RS. 4,65,000/ - AS ON 01.04.1981 I.E. RS. 106/ - PER SQ.MT. THE APPELLANT HAS OBJECTED TO THIS REFERENCE TO THE DVO ON THE GROUND THAT THE A.O. COULD HAVE REFERRED THE PROPERTY TO DVO ONLY IF THE APPELLANT HAD CLAIMED THE VALUE OF THE PROPERTY AT A LESSER AMOUNT THAN ITS FMV WHEREAS IN THE APPELLANT'S CASE, THE VALUE SHOWN BY HIM WAS HIGHER THAN THE FMV. THEREFORE, ACCO RDING TO THE A PPELLANT A REFERENCE U/S. 55A(A) OF THE LT. ACT COULD NOT HAVE BEEN MADE TO THE D.VO. IN THIS REGARD, IT IS SEEN THAT AS PER CLAUSE (C) OF SECTION 55A, THE A.O. CAN REFER A PROPERTY FOR VALUATION TO THE DVO, WHERE HE IS OF THE OPINION THAT IT WAS NECESSARY TO DO SO, HAVING REGARD TO THE NATURE OF THE ASSET AND THE RELEVANT CIRCUMSTANCES. AS THE VALUE DETERMINED BY THE APPROVED VALUER IN HIS REPORT WAS NOT BASED ON ANY COMPARABLE SALE INSTANCES IN THE ITA NO. 2393/14 CO NO.225/15 5 YEAR 1981, THE A.O. HAD NO WAY OF KNOWING THE CORRECT VAL UE OF THE LAND AS ON 0L.04.198L. THEREFORE, THE A.O. WAS JUSTIFIED IN REFERRING THE PROPERTY FOR VALUATION TO THE DVO. VARIOUS CASE LAWS RELIED UPON BY THE APPELLANT ARE IN RESPECT OF CLAUSE (A) & (B) OF SECTION 55A OF THE I T. ACT AND ARE NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION AS IT HAS BEEN HELD THAT THE REFERENCE BY THE A.O. TO THE DVO HAS BEEN MADE ON CLAUSE (C) OF SECTION 55A OF THE I T ACT. 19. HOWEVER, IT IS SEEN THAT THE REPORT OF THE DVO ALSO CANNOT BE RELIED UPON BECAUSE OF VA RIOUS OBJECTIONS RAISED BY THE APPELLANT AS REPRODUCED ABOVE. THE DVO IN HIS REPORT, WHILE STATING THE METHOD OF VALUATION, .HAS OBSERVED THAT THE RATES APPLIED BY HIM WERE DERIVED FROM THE STATE GOVERNMENT READY RECKONER RATES AS ON 1989 AFTER TAKING INTO CONSIDERATION VARIOUS FACTORS LIKE PHYSICAL LOCATION OF THE LAND. HOWEVER, NO WORKING HAS BEEN ATTACHED BY THE DVO WITH THE REPORT TO SHOW HOW HE HAD ARRIVED AT THE FMV AND WHAT WAS THE BASIS OF THE REVERSE WORKING OF THE VAL UATION FROM 1989 TO 1981. WITH REGARD TO THE SALE INSTANCES QUOTED BY THE APPELLANT, THE ONLY REASON WHY THE DVO HAS NOT TAKEN THESE INSTANCES INTO CONSIDERATION IS THAT THE SALE INSTANCES WERE IN RESPECT OF CONSTRUCTED PROPERTIES I.E. THE PROPERTIES COMPRISED OF BOTH LAND AND BUILDING AND IN THE ABSENCE OF DETAILS OF BUILT UP AREA, THE DVO WAS NOT IN A POSITION TO FIND OUT THE VALUE OF THE LAND. (M OR EOVER, WHILE ARRIVING AT VALUATION OF THE PROPERTY, THE DVO, IN HIS REPORT AT POINT NO.6.1. MENTIONED THAT HE HAD GIVEN DUE CONSIDERATION FOR VARIOUS FACTORS INFLUENCING THE VALUE OF THE PROPERTY REGARDING ITS PHYSICAL, LEGAL, SOCIAL AND ECONOMICAL ASPECTS, AS S H OWN IN ANNEXURE - A. HOWEVER, ON A PERUSAL OF A NNE XURE A IT IS SEEN THAT NO SUCH FACTORS ARE LISTED TO THROW LIGHT AS TO WHAT HAD INF LUENCED THE DVO'S MIND WHILE ARRIVING AT THE VALUATION OF THE PROPE RTY . AT POINT NO. 9.1. THE DVO HAS SIMPLY STATED THAT HE WAS DETERMINING THE FMV OF THE PROPERTY AS ON 0L.04.1981 AT RS. 4,65,000/ - BY APPLYING THE RATE OF RS. 106/ - PER SQ.MT. HOWEVER, NO BASIS HAS BEEN POINTED OUT BY THE DVO FOR ADOPTING THE RATE OF RS.106/ - PER SQ.MT. FOR ALL THESE REASONS, THE REPORT OF THE DVO ALSO CANNOT BE RELIED UPON. 20. THUS, THE REPORTS OF BOTH THE DVO AS WELL AS APPROVED VALUER OF THE APPELLANT, CANNOT BE RELIED UPON FOR THE REASONS DISCUSSED ABOVE. THE ONLY BASIS THEREFORE LEFT WAS THE COMPARISON OF THE COMPARABLE INSTANCES OF SALE. THE INSTANCES LISTED BY THE AO IN THE ASSESSMENT ORDER ARE IN RESPECT OF LAND SITUATED AT A DISTANCE OF MORE THAN 5 KMS., AS HAS BE EN POINTED OUT BY THE APPELLANT FROM A COPY OF THE MAP PLACED AT ANNEXURE - 13 PAGE NO. 111 OF THE PAPER BOOK, WHEREAS THE SALE INSTANCES POINTED OUT BY THE APPELLANT ARE WITHIN KM. OF THE LAND SOLD BY THE APPELLANT. EVEN, THE DVO IN HIS REPORT HAS NOT MA DE ANY ADVERSE OBSERVATION WITH REGARD TO THESE INSTANCES POINTED OUT BY THE APPELLANT. THE ONLY REASON, THE DVO HAD NOT TAKEN INTO ACCOUNT THESE SALE INSTANCES, WAS THAT THESE INSTANCES WERE IN RESPECT OF CONSTRUCTED BUILDINGS AND IN THE ITA NO. 2393/14 CO NO.225/15 6 ABSENCE OF THE DE TAILS OF BUILT UP AREA, THE DVO WAS NOT IN A POSI TION TO FIND THE VALUE OF THE LAND. IT IS A KNOWN FACT THAT THE VALUE OF ANY PROPERTY IS PRIMARILY AND TO A LARGE EXTENT ON ACCOUNT OF VALUE OF LAND, WHEREAS THE COST OF CONSTRUCTION REMAINS ALMOST THE SAME IRRESPECTIVE OF WHERE THE LAND IS SITUATED. IN THE APPELLANT'S CASE, THE LAND WAS SITUATED VERY NEAR TO RAILWAY STATION BEING AT A WALKABLE DISTANCE FROM KALYAN RAILWAY STATION, SITUATED IN A BUSY COMMERCIAL - CUM - RESIDENTIAL LOCALITY AS STATED BY THE APPELL ANT AND AS HAS ALSO BEEN CONFIRMED BY THE DVO IN HIS REPORT AT POINT NO.3.3 SPECIFICATIONS. THE THREE SALE INSTANCES POINTED OUT BY THE APPELLANT IN HIS SUBMISSIONS ARE AS UNDER - CS NO. SURVEY NO. TOTAL AREA IN SQ.MTRS. FMV AS ON01.04.1981 PER SQ.MT.I N CASE OF APPELLANT ACTUAL SALE RATE IN CASE OF SALE INSTANCES RELIED UPON DISTANCE FROM APPELLANTS PROPERTY 2883 TO 2885 144 RS.825/ - - - 3269/ & 9 253C 80.44 -- RS.497/ - KM. 2895 140/3 231 -- RS.1330/ - KM. 3329 260 916.66 -- RS.1278/ - KM. 21 . THE WEIGHTED AVERAGE VALUE OF PER SQ.MT. OF THE CONSTRUCTED PROPERTY FROM THE ABOVE MENTIONED SALE INSTANCES WORKS OUT AT RS. 1237.3 PER SQ.MT. EVEN, IF 40% OF THIS VALUE IS HELD TO BE IN RESPECT OF BUILDING / CONSTRUCTION (THOUGH AS ALREADY OBSERVED ABO VE THE VALUE OF A PROPERTY MAINLY AND TO A LARGE EXTENT IS ON ACCOUNT OF THE VALUE OF THE LAND, S TILL THE AVERAGE VALUE OF LAND AS PER THESE INSTANCES WILL BE RS. 742.38 PER SQ.MT. AS THESE INSTANCES ARE LOCATED VERY NEAR TO THE APPELLANT'S LAND I.E. WITHI N KM , THE AVERAGE RATE OF LAND AS WORKED OUT FROM THESE SALE INSTANCES IS APPLIED TO THE APPELLANT'S LAND AND IT IS THEREFORE HELD THAT THE FAIR MARKET VALUE OF THE LAND AS ON 01.04.1981 WAS RS. 740 PER SQ.MT. BASED ON THIS VALUATION, THE LONG TERM CAPIT AL GAINS RESULTING TO THE APPELLANT FROM THE SALE OF PROPERTY IS WORKED OUT AS UNDER - SALE CONSIDERATION RS. 2,09,40,000 / - VALUE OF PROPERTY AS ON 01.04.1981 740 X 4390 RS. 32,48,600 / - APPLYING INDEXATION 32,48,600 / - X 582 = RS.1,89,06,85 2/ - 100 LONG TERM CAPITAL GAIN RS. 20,33,148/ - THEREFORE, THE ADDITION ON ACCOUNT OF LTCGS IS RESTRI CTED TO RS. 20,33,148/ - . THE AO IS DIRECTED ACCORDINGL Y. ITA NO. 2393/14 CO NO.225/15 7 6. AGAINST THE ABOVE ORDER OF CIT(A), REVENUE IS IN APPEAL BEFORE US AND ASSESSEE HAS F ILED CROSS OBJECTION AGAINST UPHOLDING OF ADDITION OF RS.20,33,148/ - . 7. IT WAS ARGUED BY LD. A R THAT ISSUE WITH REGARD TO MAKING REFERENCE TO THE VALUATION OFFICER IS COVERED BY THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF PUJA PRINTS, 360 ITR 697, WHEREIN THE HON BLE HIGH COUR T HELD THAT REFERENCE U/S.55A(A) COULD BE MADE TO THE DVO ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE. AS PER THE HON BLE HIGH COURT WHEN VALUE OF PROPERTY ADOPTED BY THE ASSESSEE WAS M UCH MORE THAN FAIR MARKET VALUE EVEN AS DETERMINED BY THE DVO, INVOCATION OF SECTION 55A(A) WAS NOT JUSTIFIED. THE COURT FURTHER HELD THAT CBDT CIRCULAR DATED 25 - 11 - 1972 HAS NO APPLICATION AS THE UNDERSTANDING OF THE STATUTORY PROVISIONS BY THE REVENUE AS FOUND IN THE CIRCULAR ISSUED BY THE CBDT IS NOT BINDING UPON THE ASSESSEE AND IT IS OPEN TO AN ASSESSEE TO CONTEND TO THE CONTRARY. RELIANCE WAS ALSO PLACED ON THE DECISION OF COORDINATE BENCH IN THE CASE OF MUKESH BHAWARLAL SHARMA, ITA NO.1470/MUM/2012, DATED 19 - 2 - 2014, WHEREIN IT WAS HELD THAT REFERENCE TO THE DVO CAN BE MADE ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE IS LESS THAN THE FAIR MARKET VALUE. SINCE THE FAIR MARKET VALUE WAS MORE THAN AS COMPARED TO THE VALUE ADOPTED BY THE ASSESSEE, IT WAS H ELD THAT REFERENCE TO MADE TO THE DVO WAS NOT SUSTAINABLE. RELIANCE WAS ALSO PLACED BY LD. AR ON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF HIABEN JAYANTILAL SHAH, 310 ITA NO. 2393/14 CO NO.225/15 8 ITR 31. RELIANCE WAS ALSO PLACED ON THE DECISION OF ITAT DELHI BENCH IN T HE CASE OF URMILA BAWA , 11 SOT 661. 8. ON THE OTHER HAND, LD AR RELIED ON THE ORDER OF AO AND CONTENDED THAT CIT(A) HAD REDUCED THE ADDITION WITHOUT ANY COGENT REASON. 9. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW AND FOUND FROM THE RECORD THAT ASSESSEE IS A BUILDER AND DEVELOPER. THE LAND SOLD DURING THE YEAR WAS ACCEPTED BY THE AO AS INVESTMENT AND NOT AS STOCK - IN - TRADE. ACCORDINGLY, ASSESSEE WAS DIRECTED TO FILE COMPUTATION OF LONG TERM CAPIT AL GAIN O N THE SALE OF PROPERTY. THE ASSESSEE WORKED OUT LONG GERM CAPITAL GAIN BY ADOPTING COST OF ACQUISITION OF PROPERTY AS ON 1 - 4 - 1981 AT RS. 825/ - PER SQ.MTR. ON THE VALUATION OF REPORT PREPARED BY THE GOVERNMENT APPROVED VALUER. HOWEVER, THE AO DID NOT AGREE W ITH THE VALUA TION SO OFFERED BY THE ASSESSEE AND THE AO MADE A REFERENCE TO THE VALUATION OFFICER. FINALLY THE AO COMPUTED CAPITAL GAIN BY ADOPTING RS. 6/ - PER SQ.FT. AS ON 1 - 4 - 1981 AS DONE BY THE JOINT DISTRICT REGISTRAR, THANE. THE AO OBSERVED THAT THE RE GISTERED VALUER HAD NOT REPORTED ANY COMPARABLE SALE INSTANCES OF THE NEARBY LAND AS ON 1 - 4 - 1981. BY THE IMPUGNED ORDER THE CIT(A) REWORKED OUT THE LONG TERM CAPITAL GAIN BY OBSERVING THAT THE LAND WAS SITUATED VERY NEAR TO THE RAILWAY STATION EVEN AT A WA LKABLE DISTANCE. THE CIT(A) OBSERVED THAT VALUATION MADE BY THE DEPARTMENT VALUATION OFFICER CANNOT BE RELIED UPON BECAUSE OF THE VARIOUS OBJECTION RAISED BY THE ASSESSEE WERE NOT CONSIDERED BY HIM. IT WAS OBSERVED BY THE CIT(A) THAT DVO HAS NOT GIVEN ANY WORKING WHILE APPLYING THE RATES FROM STATE GOVERNMENT ITA NO. 2393/14 CO NO.225/15 9 READY RECKONER. IT WAS ALSO OBSERVED THAT DVO HAS NOT GIVEN ANY WORKING TO SHOW HOW HE HAD ARRIVED AT FAIR MARKET VALUE AND WHAT WAS THE BASIS OF THE REVERSE WORKING OF THE VALUATION FROM 1989 TO 1981. THE CIT(A) FURTHER FOUND THAT THE DVO HAS NOT TAKEN SALE INSTANCES POINTED OUT BY THE ASSESSEE AND REGISTERED VALUER IN HIS REPORT. IT WAS OBSERVED THAT THE VALUE OF ANY PROPERTY IS PRIMARILY AND TO A LARGE EXTENT ON ACCOUNT OF VALUE OF LAND, WHEREAS THE COST OF CONSTRUCTION REMAINS ALMOST THE SAME IRRESPECTIVE OF WHERE THE LAND IS SITUATED. AFTER TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS SALE INSTANCES QUOTED AND THE ALLOCATION OF LAND, THE CIT(A) ARRIVED AT VALUATION OF R S. 740/ - PER SQ.MTR., AFTER APPLYING INDEXATION THE LONG TERM CAPITAL GAIN WAS WORKED OUT AT RS. 20,33,148/ - . 10. THE ISSUE WITH REGARD TO MAKING A REFERENCE TO THE DVO FOR ASCERTAINING VALUE OF PROPERTY AS ON 1 - 4 - 1984 IS COVERED BY THE DECISION OF HONBLE B OMBAY HIGH COURT IN THE CASE OF PUJA PRINTS, 224 TAXMAN 22, WHEREIN THE HONBLE HIGH COURT HELD THAT REFERENCE CAN BE MADE TO THE DVO ONLY IF VALUE DECLARED BY THE ASSESSEE IS IN THE OPINION OF AO IS LESS THAN ITS FAIR MARKET VALUE. IN THE INSTANT CASE BEF ORE US, APPARENTLY THE VALUE DISCLOSED BY THE ASSESSEE AS ON 1 - 4 - 1981 IS MUCH MORE THAN THE FAIR MARKET VALUE, THEREFORE, REFERENCE TO THE VALUATION OFFICER WAS NOT CORRECT. THE ITAT MUMBAI BENCH IN THE CASE OF MUKESH BHAWARLAL SHARMA, ITA NO.1470/MUM/2012 , ORDER DATED 19 - 2 - 2014, AFTER FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PUJA PRINTS(SUPRA) HELD THAT REFERENCE TO THE DVO CAN BE MADE ONLY WHEN ITA NO. 2393/14 CO NO.225/15 10 VALUE ADOPTED BY THE ASSESSEE IS LESS THAN THE FAIR MARKET VALUE. IT WAS FURTH ER OBSERVED BY THE TRIBUNAL THAT THE FIRST APPELLATE AUTHORITY HAD HELD THAT REFERENCE BY THE AO TO THE VALUATION OFFICER WAS AGAINST THE PROVISIONS OF LAW. UNDER SUCH CIRCUMSTANCES, HE SHOULD NOT HAVE REFERRED TO THE VALUATION REPORT OF THE VALUATION OFFI CER. IN THE INSTANT CASE BEFORE US, THE ASSESSEE HAS GOT A VALUATION REPORT FROM THE GOVERNMENT REGISTERED VALUER AS ON 1 - 4 - 1981 , WHICH WAS MORE THAN THE FAIR MARKET VALUE, ACCORDINGLY THE CIT(A) WAS NOT JUSTIFIED IN GIVING COGNIZANCE TO THE DVOS REPOR T. IN VIEW OF THE ABOVE DISCUSSION, WE DIRECT THE AO TO COMPUTE CAPITAL GAIN AS PER THE VALUATION REPORT OF THE REGISTERED VALUER AS ON 1 - 4 - 1981, WHICH IS APPARENTLY MORE THAN THE FAIR MARKET VALUE IN TERMS OF THE DECISION OF HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF PUJA PRINTS(SUPRA). 11 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED, WHEREAS CROSS OBJECTION OF THE ASSESSEE IS ALLOWED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27/04 / 201 6 . SD/ - SD/ - ( AMARJIT SINGH ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 27/04 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//