Commissioner of Income TAx-II, Visakhapatnam. V. Pentakota Nageswara Rao

ITTA/511/2011

AI Insights

The case involves an appeal by the Commissioner of Income Tax-II, Visakhapatnam against Pentakota Nageswara Rao concerning the assessment year 1996-97. The core issue was the determination of the fair market value of land as of 01.04.1981 for capital gains tax purposes. The Appellate Tribunal had set aside the order of the CIT (A) regarding this valuation, which led to the present appeal. The High Court examined whether the Tribunal's findings on the land's fair market value were justified and free from legal errors or misapplication of comparable cases.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 719095 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 08-08-2013
• Assessment Year: misc
• Other Referred Cases: Bhagwathula Samanna and others Vs. Special Tahsildar and Land Acquisition Officer, Visakhapatnam Municipality
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Assessment Year 1996-97; Capital Gains; Fair market value; Land valuation

Judgement Text

"HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND HON’BLE SRI JUSTICE K.C.BHANU I.T.T.A.No.511 of 2011 Date: 08.08.2013 Between: Commissioner of Income Tax-II, Visakhapatnam.. .....Appellant AND Pentakota Nageswara Rao, Visakhapatnam. ...Respondent HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND HON’BLE SRI JUSTICE K.C.BHANU I.T.T.A.No.511 of 2011 JUDGMENT: (per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta ) This appeal is preferred against the judgment and order dated 11.10.2001 passed by the learned Tribunal in I.T.A.No.76/Vizag/2000 in relation to the assessment year 1996-97 and sought to be admitted on the following suggested questions of law: (A) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in setting aside the order of CIT (A), insofar as it relates to adjudication of fair market value of lands, as on 01.04.1981? (B) Whether on the facts and in the circumstances of the case, the findings of the Appellate Tribunal as regards fair market value of the land as on 01.04.1981 is vitiated by perversity? ( C) Whether on the facts and in the circumstances of the case, the findings of the Appellate Tribunal as regards fair market value of the land as on 01.04.1981 is vitiated by error apparent by reason of comparing with incomparable cases for arriving at fair market value as on 01.04.1981? (D) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in fixing fair market value as on 01.04.1981 at Rs.285/- overlooking or ignoring the alternative material adduced by the assessee himself and alternative values put forth by him? We have heard the learned Counsel for the appellant and gone through the judgment and order of the learned Tribunal. The learned Tribunal, in our view, has taken the correct legal position for ascertaining the market value of the particular land. We quote the relevant portion of the findings of the learned Tribunal as follows: “We do not find any logic behind this view. As already stated, fixation of market value, may it be for small piece of land or large extent of land, depends upon so many factors. Therefore, the provision that large area of land cannot possibly fetch a price at the same rate at which small plots are sold is not absolute proposition and in given circumstances, it would be permissible to take into account the price fetched by the small plots of lands. If the larger tract of land because of advantageous position is capable of being used for the purpose for which the smaller plots are used and is also situated in a developed area with little or no requirement of further development, there will be no bar for taking into consideration the market value of small piece of land while adopting the market value for a large piece of land. Our above view lends support from the judgment of the Supreme Court in the case of Bhagwathula Samanna and others Vs. Special Tahsildar and Land Acqusition Officer, Visakhapatnam Municipality reported in AIR 1992 Supreme Court, 2298.” The learned Tribunal further found as follows: “In the present case at hand, the Port Trust authority has agreed to purchase the land at the rate of Rs.800 per square yard though after negotiation, and it is for nothing the Port Trust authorities has agreed to purchase the land at such a higher cost as compared to that for Rs.10 per square yard fixed in the original compensation award. It is not disputed by the Revenue that the Port Trust authorities, for the purpose of constructing their staff quarters, have acquired the land in question in the year 1972 and in fact they have constructed the staff quarters thereon, which is also quite evidence from the order of the Andhra Pradesh High Court in Writ Petition No.771 of 1990 referred to earlier. Acquiring the land in question by the Port Trust even by paying a higher amount of compensation amply proves the potentiality of the land.” Thereafter, the learned Tribunal has directed the Assessing Officer to adopt the prevalent market rate of land at Rs.285/- per square yard for the purpose of cost indexation and recompute the capital gains accordingly. In view of the aforesaid findings of the learned Tribunal, we do not find any element of law is involved, as what would be the value of the particular land in given facts and situation has been correctly adopted by the learned Tribunal. Accordingly, the appeal is dismissed. Miscellaneous petitions, if any pending, shall stand disposed of. No order as to costs. ___________________ K.J. SENGUPTA, CJ _______________ K.C.BHANU, J 08.08.2013 Gsn "