Veluri surya Prakasam , Rajahmundry V. Assistant Commissioner of Income Tax, Circle-1(1), Rajahmundry

ITA 105/VIZ/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8829 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 13-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P S MURTHY
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 50C; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNA L VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER ITA NO. 105 / VIZ /201 8 (ASST. YEAR: 20 0 8 - 0 9 ) SMT. VELURI SURYA PRAKASAM, W/O VENKATESWARA SOMAYAJULU, D.NO. 80 - 32 - 7, SARADA NAGAR, A.V. APPA RAO ROAD, RAJAHMUNDRY. V S . A CIT, CIRCLE - 1(1), RAJAHMUNDRY . PAN NO. ABQPV 8090 E (APPELLANT) (RESPONDENT) ITA NO. 106 /VIZ/2018 (ASST. YEAR : 2008 - 09) VELURI VENKATA RAMAYYA , D.NO. 80 - 32 - 7, SARADA NAGAR, A.V. APPA RAO ROAD, RAJAHMUNDRY. VS. ACIT, CIRCLE - 1(1), RAJAHMUNDRY. PAN NO. ABQPV 8091 E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI P.S. MURTHY SR. DR DATE OF HEARING : 26 / 12 /201 8 . DATE OF PRONOUNCEMENT : 28 / 12 /201 8 . O R D E R THESE APPEAL S BY THE DIFFERENT ASSESSEE S ARE DIRECTED AGAINST THE SEPARATE ORDER S OF COMMISSIONER OF INCOME TAX (APPEALS) - 12 , HYDERABAD , BOTH DATED 04 /0 1 /201 3 FOR THE ASSESSMENT YEAR 2008 - 0 9 . SINCE THE FACTS AND ISSUES ARE COMMON, CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER . 2 ITA NO S . 105 & 106 / VIZ/2018 ( SMT. VELURI SURYA PRAKASAM & ANO. ) ITA NO. 106/VIZ/2018 2. FACTS OF THE CASE IN BRIEF ARE THAT ASSESSEE HAS SOL D A VACANT LAND ON 22/11/2007 FOR A CONSIDERATION OF RS. 25.00 LAKHS. THE VALUE OF THE PROPERTY AS PER SRO IS RS. 43,80,750/ - . THE ASSESSING OFFICER HAS A S KED THE ASSESSEE AS TO WHY SRO VALUE OF RS. 43,80,750/ - SHOULD NOT BE APPLIED AS PER THE PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT'). IN REPLY, ASSESSEE FILED A LETTER DATED 11/08/20 15 REQUESTED THE ASSESSING OFFICER TO REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER (DVO) TO ASCERTAIN THE FAIR MARKET VALUE OF THE PROPERTY. ACCORDINGLY, THE ASSESSING OFFICER REFERRED THE MATTER TO THE DVO , AND AFTER CALLING THE OBJECTIONS FROM THE ASSESSEE, THE DVO ESTIMATED THE FAIR MARKET VALUE OF THE PROPERTY AT RS. 37,23,600/ - . THE ASSESSING OFFICER AFTER RECEIVIN G VALUATION REPORT, ASKED THE ASSESSEE TO FURNISH OBJECTION S , IF ANY . ACCORDINGLY, THE ASSESSEE HAS RAISED THE FOLLOWING OBJECTIONS: - (1) THE VALUATION OFFICER ARRIVED AT THE ABOVE RATE BY TAKING THE SRO RATE AS BASIC. (2) THE SRO RATE ADOPTED BY THE VALUATION OFFICER IS ON HIGHER SIDE. THE SRO ADOPTED UNIFORM RATE FOR ALL THE LANDS UNDER THE SAME SURVEY NUMBER. (3) THE SRO RATE IS FOR DEVELOPED LANDS. (4) THE VALUATION OFFICER HAS GIVEN ONLY 5% REDUCTION TOWARDS HT LINES PASSING OVER THE SITE AND THIS IS VERY LOW. THERE ARE NO BUYERS FOR THE PROPERTY ON WHICH THE HT LINES ARE PASSING. (5) THE VALUATION OFFICER HAS GIVEN ONLY 5% REDUCTION 3 ITA NO S . 105 & 106 / VIZ/2018 ( SMT. VELURI SURYA PRAKASAM & ANO. ) 'PROPERTY FAR FROM THE VILLAGE'. THIS IS ALSO VERY LOW. (6) THE VALUATION OFFICER HAS GIVEN ONLY 10% REDUCTION TOWARDS THE LOCATION OF THE PROPERTY NEARED TO CEMETERY AND THIS IS VERY LOW. THERE ARE NO BUYERS FOR THE PROPERTY DUE TO NEARER TO CEMETERY. (7) THE VALUATION OFFICER IN HIS LETTER DATED 18.11.2015 VIDE POINT NO.2.01 CLEARLY OBSERVED THAT THIS PARTICULAR LAND IS NOT FIT TO CONVERT INTO PLOTS. HAVING OBSERVED THIS HE IS NOT JUSTIFIED TO CONSIDER THE 'SRO RATE' WHICH IS APPLICABLE FOR LANDS FIT FOR HOUSING PLOTS. THIS LAND IS NOT FIT FOR AGRICULTURE ALSO AS THERE IS NO WATER FACILITY. THE ASSESSING OFFICE R AFTER CONSIDERING THE OBJECTIONS RAISED BY THE ASSESSEE, HE HAS ADOPTED THE DVO VALUATION OF RS. 37,23,600/ - AS FAIR MARKET VALUE BY OBSERVING TH A T THE OBJECTIONS RAISED BY THE ASSESSEE HAVE BEEN CONSIDERED BY THE DVO AND FIXED THE FAIR MARKET VALUE. 3 . ON APPEAL, LD. CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4 . ON BEING AGGRIEVED , ASSESSEE IS IN APPEAL BEFOR E THIS TRIBUNAL. 5. LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS RAISED THE OBJECTION S BEFORE THE DVO WITH REGARD TO THE PROPERTY IS ADJACENT TO THE CEMETERY, THEREFORE, ITS VALUE IS VERY MUCH LESSER THAN THE OTHER PROPERTIES. THEREFORE, THIS FACT HAS TO BE CONSIDERED AS NEGATIVE FACTOR AND THE DVO CONSIDERED THE SAME AND GRANTED ONLY 10% DEDUCTION. HE SHOULD HAVE BEE N 4 ITA NO S . 105 & 106 / VIZ/2018 ( SMT. VELURI SURYA PRAKASAM & ANO. ) GRANTED 20% . HE ALSO POINTED OUT THAT THE DEDUCTION IN RESPECT OF HIGH TENSION ELECTRICAL WIRES PASSING OVER THE PROPERTY, THE DVO HAS CONSIDERED ONLY 5% DEDUCTION AND HE SHOULD HAVE BEEN CONSIDERED 10%. 6 . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS PASSED BY THE ASSESSING OFFICER AS WELL AS LD.CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER HAS NO OPTION EXCEPT TO ADOPT FAIR MARKET VALUE DETERMINED BY THE DVO. 7 . I HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD . 8 . THE ASSESSEE SOLD THE PROPERTY ON 22/11/2007 FOR A SALE CONSIDERATION OF RS. 25.00 LAKHS. ACCORDING TO THE ASSESSING OFFICER, SRO S VALUE OF THE PROPERTY IS RS. 43,80,750/ - , THEREFORE HE ASKED THE ASSESSEE WHY SECTION 50C CANNOT BE APPLIED IN HIS CASE . IN RESPONSE TO THAT, THE ASSESSEE HAS REQUESTED THE ASSESSING OFFICER TO REFER THE MATTER TO THE DVO. ACCORDINGLY, THE ASSESSING OFFICER HAS MADE A REFERENCE. BEFORE THE DVO THE ASSESSEE HAS RAISED CERTAIN POINTS VIZ. FAIR MARKET VALUE CANNOT BE CONSIDERED ON THE BASIS OF THE SRO FOR THE REASON THAT THE PROPERTY IS ADJACENT TO CEMETERY ; HIGH TEN S ION ELECTRICAL WIRES ARE PASSING OVER THE SITE ; AND THE PROPERTY IS FAR FROM VILLAGE. THE DVO HAS CONSIDERED THE OBJECTIONS RAISED BY THE ASSESSEE AND 5 ITA NO S . 105 & 106 / VIZ/2018 ( SMT. VELURI SURYA PRAKASAM & ANO. ) GIVEN A DEDUCTION SO FAR AS ADJACENT TO CEMETERY AT 10%, HIGH TENSION ELECTRICAL WIRES AT 5% AND PROPERTY IS FAR FROM VILLAGE AT 5%. ACCORDINGLY, BY CONSIDERING THE SRO RATES AVAILABLE DURING THE PERIOD, HE AS C ERTAINED THE FAIR MARKET VALUE OF THE PROPERTY AT RS. 37,23,600/ - . THE ONLY OBJECTION RAISED BY THE ASSESSEE BEFORE US IS , THE DVO HAS GRANTED DEDUCTION TO THE LAND ADJACENT TO CEMETERY AT 10%, HE SHOULD HAVE BEEN GRANTED 20%. SO FAR AS PASSING OF ELECTR ICAL WIRES, THE DVO GRANTED ONLY 5%, HE SHOULD HAVE BEEN GRANTED 10%. INSOFAR AS PROPERTY IS AWAY FROM VILLAGE, THE DVO HAS GRANTED 5%, HE SHOULD HAVE BEEN GRANTED 10%. I FIND THAT THERE IS A MERIT IN THE ARGUMENT OF THE ASSESSEE IN RESPECT OF THE LAND A DJACENT TO CEMETERY , INSTEAD OF 10%, 15% SHOULD HAVE BEEN GRANTED. INSOFAR AS PASSING OF ELECTRICAL WIRES, DVO CONSIDERED 5%, IN MY OPINION, HE SHOULD HAVE BEEN GRANTED 10%. SO FAR AS PROPERTY IS AWAY FROM VILLAGE, THERE IS NO MERIT IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. IN THIS RESPECT, I FIND THAT 5% DEDUCTION CONS IDERED BY THE DVO IS FAIR AND REASONABLE. THE DVO OVERALL BY CONSIDERING THE NEGATIVE FACTORS, HE HAS CONSIDERED 20% DEDUCTION WHILE ASCERTAINING THE FAIR MARKET VALUE , IN MY OPI NI ON , BY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO NEGATIVE FACTS, HE SHOULD HAVE BEEN GRANTED OVERALL 30% DEDUCTION. I FIND IT IS JUST AND FAIR TO 6 ITA NO S . 105 & 106 / VIZ/2018 ( SMT. VELURI SURYA PRAKASAM & ANO. ) ALLOW 30% DEDUCTION INSTEAD OF 20% GRANTED BY THE DVO BY CONSIDERING THE NEGATIVE FACTORS TO THE LAND. THEREFORE, THE ORDER PASSED BY THE LD. CIT(A ) IS SET ASIDE AND DIRECT THE ASSESSING OFFICER TO CALCULATE THE CAPITAL GAINS IN VIEW OF THE ABOVE FINDING . ORDERED ACCORDINGLY. THUS, THIS APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . ITA NO. 105/VIZ/2018 9. GROUND NO.1 RAISED , IS NOT PRESSED B Y THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SAME IS DISMISSED AS NOT PRESSED. 10 . GROUND NO.2 RAISED , IS SIMILAR TO THE GROUND RAISED IN ITA NO. 106/VIZ/2018 , THEREFORE , THE DECISION IN ITA NO. 106/VIZ/2018 SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. 11 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 8 T H DAY OF DEC., 201 8 . S D / - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 2 8 T H DEC. , 201 8 . VR/ - 7 ITA NO S . 105 & 106 / VIZ/2018 ( SMT. VELURI SURYA PRAKASAM & ANO. ) COPY TO: 1. THE ASSESSEE - SMT. VELURI SURYA PRAKASAM, W/O VENKATESWARA SOMAYAJULU, D.NO. 80 - 32 - 7, SARADA NAGAR, A.V. APPA RAO ROAD, RAJAHMUNDRY. 2. THE REVENUE ACIT, CIRCLE - 1(1), RAJAHMUNDRY. 3. THE PR. CIT , RAJAMAHENDRAVARAM. 4. THE CIT(A) - 12, HYDERABAD. 5. THE D.R . , VISAKHAPATNAM . 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.