Shri Mahesh Naginbhai Patel, Surat V. The Income Tax Officer, Ward-2(3)(3), Surat

ITA 1070/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6356 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 03-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Keywords: Value adopted by valuation officer; Cost of acquisition; Fair market value; Valuation report
• Section: 54F; 250

Judgement Text

PAGE 1 OF 6 MAHESH NAGINBHAI PATEL V. ITO 2(3) (3) SURAT/I.T.A. NO. 1070/AHD/2017/A.Y.2012-13 , , IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO.1070/AHD/2017 / ASSESSMENT YEAR: 2012-13 SHRI MAHESH NAGIN BHAI PATEL, PATEL FALIYA, AT & POST : SANIYA KANDE , TALUKA: CHORYASI, DISTRICT-SURAT PAN: ASCPP 6022 D V. INCOME TAX OFFICER, WARD- 2(3)(3) AAYAKAR BHAVAN SURAT APPELLANT / RESPONDENT ASSESSEE BY SHRI BHARAT JHAVERI, ADVOCATE REVENUE BY SHRI R. P. RASTOGI, SR. D.R. DATE OF HEARING 1 6 .07.2019 DATE OF PRONOUNCEMENT 18 .07.2019 /ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1; SURAT (IN SHORT THE CIT (A)) DATED 23.02.2017 FOR THE ASSESSMENT YEAR 2012-13. 2. GROUND NO. 1 TO 4 ARE RELATES LD. CIT (A) HAS ERRED IN REJECTING GOVERNMENT APPROVED VALUER REPORT FOR COMPUTING FAIR MARKET VALUE AS ON 01.04.1981 @ 250 PER SQ. METER FOR THE LAND SITUATED AT VILLAGE KARADVA AND @ 200 FOR THE LAND SITUATED AT SANIA KANDE SURAT BY ADOPTING RIM PAGE 2 OF 6 MAHESH NAGINBHAI PATEL V. ITO 2(3) (3) SURAT/I.T.A. NO. 1070/AHD/2017/A.Y.2012-13 REVERSE INDEX METHOD AND BY ADOPTING AGAINST THE SAME THE FAIR MARKET VALUE @ 30 PER SQ. METER FOR BOTH LANDS. 3. SUCCINCT FACTS ARE THAT THE ASSESSEE HAS SHOWN LONG-TERM CAPITAL LOSS AT RS. 5,54,842 IN RESPECT OF HIS SHARE IN SALE OF LAND AT VILLAGE KARADVA, SURAT BY ADOPTING FAIR MARKET VALUE AS ON 01.04.1981 @ 250 PER SQ. METER AND IN RESPECT OF LAND SOLD AND SITUATED AT VILLAGE SANIYA KANDE, SURAT BY ADOPTING FAIR MARKET VALUE @ 200 PER SQ. METER AS PER GOVERNMENT REGISTERED VALUER. HOWEVER, THE AO HAS OBTAINED A VALUATION REPORT DATED 20.03.2015 UNDER SECTION 55A FROM DVO WHO VALUED THE LAND BY ADOPTING FAIR MARKET VALUE @ 14.18 PER SQ. METER FOR LAND AT VILLAGE KARADVA AND AT 5.59 PER SQ. METER FOR LAND AT VILLAGE SANIA KANDE AS ON 01.04.1981. THE ASSESSEE VIDE HIS REPLY DATED 25.03.2015 STATED THE DVO HAS TAKEN SALE INSTANCES OF LETTER PERIOD AND APPEAL BACKWARD INDEX METHOD ON PRESUMPTION BASIS. THE BOTH LANDS ARE SITUATED AT DIFFERENT VILLAGE HENCE; AVERAGE RATE COMPARING VALUE OF AGRICULTURAL LAND IS NOT JUSTIFIED. IT IS SETTLED LAW THAT WHEN TWO EQUALLY EFFICACIOUS AND ACCEPTABLE DATA FOR THE PURPOSE OF VALUATION ARE AVAILABLE, ONE WHICH IS BENEFICIAL TO THE ASSESSEE SHOULD BE PREFERRED. THE ASSESSEE HAS ALSO MADE CLAIM FOR DEDUCTION UNDER SECTION 54F OF THE ACT. HOWEVER, THE AO AFTER DISCUSSING OBJECTION OF THE ASSESSEE HAS ADOPTED THE RATE AT 14.18 PER SQ. METER IN RESPECT OF LAND AT KARADVA AND RS. 5.59 PER SQ. METER FOR LAND AT SANIA KANDE AS PER DVO REPORT, AND DENIED THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT IN ABSENCE OF COMPLETE DETAILS AND ALSO DISREGARDED THE RATIO OF HONBLE GUJARAT HIGH PAGE 3 OF 6 MAHESH NAGINBHAI PATEL V. ITO 2(3) (3) SURAT/I.T.A. NO. 1070/AHD/2017/A.Y.2012-13 COURT IN THE CASE OF SHANTI DEVI GAEKWAD V. DCIT WHICH HELD THAT WHEN TWO EQUALLY EFFICACIOUS AND ACCEPTABLE DATA FOR THE PURPOSE OF VALUATION ARE AVAILABLE, ONE WHICH IS BENEFICIAL TO THE ASSESSEE SHOULD BE PREFERRED. THE AO ALSO DISCUSSED THAT REFERENCE ASPER AMENDED PROVISIONS UNDER SECTION 55A CAN BE MADE AFTER 01.07.2012, BUT EARLIER FIGURES OF ILLEGAL REFERENCE CAN BE CONSIDERED. ACCORDINGLY, MADE ADDITION OF RS. 25,12,250 AS LONG- TERM CAPITAL GAIN. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). BEFORE CIT (A), IT WAS CONTENDED THAT REFERENCE UNDER SECTION 55A COULD NOT BE MADE FOR THAT YEAR UNDER CONSIDERATION, AS AMENDED PROVISIONS ARE EFFECTIVE FROM 01.07.2012. HOWEVER, THE CIT (A) OBSERVED THAT REFERENCE UNDER SECTION 55A COULD BE VERY WELL MADE WHERE THE AO CONSIDERED THAT IT IS AT VARIANCE. AS REGARDS VALUATION MADE BOTH GOVERNMENT REGISTERED VALUER AND DVO, THE CIT (A) OBSERVED THAT BOTH VALUER HAVE SOME INFIRMITIES AND NEITHER OF THE VALUATION IS EXACT OR PERFECT IN ALL RESPECT, SO CANNOT BE TAKEN ON ITS FACE VALUE AND APPLIED AS IT IS FOR DETERMINATION OF FMV AS ON 01.04.1981. THEREFORE, AFTER OBSERVING THAT ITAT IN THE CASE OF VIJAY KUMAR M SHAH V. DCIT [I.T.A. NO. 457& 452/MUM DATED 26.02.2009 HAS AFTER REJECTING BOTH THE REPORTS OF DVO REGISTERED VALUER HAVE ADOPTED AVERAGE OF BOTH VALUATION. CONSIDERING THESE FACTS, THE CIT (A) ADOPTED FMV @ 30 PER SQ. METER BY TAKING ONE-SALE INSTANCES AT RS. 29.99 AS CONSIDERED BY THE DVO. PAGE 4 OF 6 MAHESH NAGINBHAI PATEL V. ITO 2(3) (3) SURAT/I.T.A. NO. 1070/AHD/2017/A.Y.2012-13 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SUBMITTED A VALUATION REPORT OF FAIR MARKET VALUE AS ON 01.04.1981, FROM GOVERNMENT REGISTERED VALUER, HENCE, THE AO CAN MAKE A REFERENCE TO THE VALUATION OFFICER UNDER SECTION 55A(B) CAN BE MADE ONLY IN A CASE WHERE THE ASSESSEE HAS NOT FURNISHED A VALUATION REPORT. THE AO CANNOT IGNORE THE VALUE ADOPTED BY THE ASSESSEE ON THE BASIS OF GOVERNMENT REGISTERED VALUER. IN THE INSTANT CASE, SINCE THE VALUE AS ON 1 APRIL 1981 WAS TAKEN BY THE ASSESSEE ON THE BASIS OF THE REPORT OF A REGISTERED VALUER, THE AO DID NOT HAVE THE POWER TO MAKE A REFERENCE UNDER SECTION 55A(B) OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. CIT (A) HAS REFERRED ITAT DECISION IN THE CASE OF VIJAY KUMAR M SHAH V. DCIT [457 &552/MUM} AND ITAT AHMEDABAD IN THE CASE OF PARIKH RAJESH R HUF V. ITO [I.T.A. NO. 1578/AHD/2011 AND ARRIVED AT CONCLUSION OF FMV @30 WHICH IS NOT CORRECT. THE CIT (A) OUGHT TO HAVE TAKEN AVERAGE VALUE OF BOTH THE LAND AFTER CONSIDERING VARIOUS FACTORS OF THE LAND MADE BY THE BOTH VALUER. ACCORDINGLY, THE AO'S REFERENCE TO THE DVO IS INVALID EVEN UNDER SECTION 55A (B) OF THE ACT. IT WAS FURTHER SUBMITTED THAT VALUE ADOPTED BY THE DVO ON REVERSE INDEX METHOD IS NOT JUSTIFIED WHEN THE VALUATION DONE BY THE GOVERNMENT REGISTERED VALUER HAS BEEN FILED BEFORE THE AO. 6. PER CONTRA, THE LD. SR. D.R. RELIED ON THE ORDER OF LD. CIT (A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE OBSERVE THAT THE HON`BLE HIGH COURT IN GAURANGIBEN PAGE 5 OF 6 MAHESH NAGINBHAI PATEL V. ITO 2(3) (3) SURAT/I.T.A. NO. 1070/AHD/2017/A.Y.2012-13 S. SHODHAN INDL [2014] 367 ITR 238 (GUJARAT) / [2014] 45 TAXMANN.COM 356 (GUJARAT) HAS SPECIFICALLY HELD THAT AMENDMENT IN SECTION 55A WITH EFFECT FROM 01.07.2012 IN A CASE, THE VALUE OF ASSETS CLAIMED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER, IF THE AO WAS OF THE OPINION THAT THE VALUE SO CLAIMED WAS LESS THAN THE FAIR MARKET VALUE AS ON 01.04.1981 THEN REFERENCE CAN BE MADE. IF THE VALUE ADOPTED BY THE ASSESSEE ON THE BASIS OF REGISTERED VALUER WAS NOT LESS THAN FAIR MARKET VALUE RATHER IT WAS ON HIGHER SIDE. THE AO WANTS TO REDUCE THE VALUE I.E. COST OF ACQUISITION AS ON 01.04.1981. IT IS NOT PERMISSIBLE PRIOR TO AMENDMENT CARRIED OUT IN SECTION 55A OF THE ACT. WHETHER THIS AMENDMENT CAN BE TAKEN INTO CONSIDERATION FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. WE FIND THAT THE GOVERNMENT REGISTERED VALUER HAS CONSIDERED THE RATE OF LAND AT VILLAGE KARADVA @250 PER SQ. METER AND FOR LAND AT VILLAGE SANIA KANDE @200 PER SQ. METER AS AGAINST WHICH THE DVO HAS ADOPTED THE RATE @ 14.18 AND 5.59 PER SQ. METER RESPECTIVELY. WHEREAS LD. CIT (A) HAS CONSIDERED THE RATE FOR BOTH LAND @ 30 PER SQ. METER. CONSIDERING, THE VARIATION IN THREE AUTHORITIES, AND CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT IT WOULD BE FAIR, REASONABLE AND LOGIC IF THE AVERAGE RATE OF ADOPTED BY THE GOVERNMENT REGISTERED VALUER OF THE ASSESSEE AND DVO AND LD. CIT (A) IS CONSIDERED FOR AVERAGE VALUATION OF FMV AS ON 01.04.1981 CONSIDERING THE RATIO LAID DOWN BY THE ITAT MUMBAI IN THE CASE OF THE CASE VIJAY KUMAR M SHAH (SUPRA) AS CITED BOTH LD. CIT (A) AS WELL AS THE LEARNED COUNSEL FOR THE ASSESSEE. ACCORDINGLY, THE ARRIVING RATE COMES TO PAGE 6 OF 6 MAHESH NAGINBHAI PATEL V. ITO 2(3) (3) SURAT/I.T.A. NO. 1070/AHD/2017/A.Y.2012-13 RS.99.95 ROUNDED TO RS. 100 PER SQ. METER I.E. [250+200+30] FOR BOTH LAND UNDER CONSIDERATION. ACCORDINGLY, THE AO IS DIRECTED TO WORKED OUT LONG-TERM CAPITAL GAIN BY TAKING ARRIVE RATE @ 100 AS FMV AS ON 01.04.1981 FOR BOTH IMPUGNED THE LAND UNDER CONSIDERATION. IN VIEW OF THIS MATTER, GROUND NO. 1 TO 4 OF THE APPEAL ARE THEREFORE, PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.07.2019. SD/- SD/- (H. S. SIDHU) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: 18 TH JULY, 2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, SURAT