Shri Mitesh Babhubhai Desai, Vapi V. The Income tax Officer,Ward-1, Vapi

ITA 1245/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1388 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P K
• Keywords: Capital asset; Cost of acquisition; Fair market value; Valuation report

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO.1245/AHD/2013 / ASSTT. YEAR: 2008-2009 MIT E SH BABHUBHAI DESAI JAIN STREET SIDHDHNATH MAHADEV ROAD OPP: JAIN UPASRYA DESAIWAD, VAPI 396 191. VS ITO, WARD - 1 VAPI. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI HARDIK VORA REVENUE BY : SHRI B.P.K. PANDA, SR.DR / DATE OF HEARING : 02/06/2016 / DATE OF PRONOUNCEMENT: 06/06/2016 $%/ O R D E R THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAI NST THE ORDER OF THE LD.CIT(A), VALSAD, DATED 15.3.2013 PASSED FOR T HE ASSTT.YEAR 2008- 09. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.12,50,330/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 31.7.2008 DECLARING TOTAL INCOME AT RS.1, 87,910/-. THE ASSESSEE ALONG WITH HIS BROTHER HAS INHERITED THE L AND MEASURING 71,557 SQ.METERS FROM HIS FATHER. THE SHARE OF THE ASSESSEE WAS 1860 SQ.METERS. THIS LAND IS SITUATED AT SURVEY NO.65/3- D, VILLAGE RINGANWADA, NANI-DAMAN. THE ASSESSEE HAS SOLD THIS LAND DURING THE YEAR FOR A CONSIDERATION OF RS.15 LACS. HE HAS S HOWN COST OF ACQUISITION AT RS.16,91,019/-. THUS, THE LONG TER M CAPITAL LOSS SHOWN BY THE ASSESSEE WAS AT RS.1,91,019/-. THE C ASE OF THE ITA NO.1245/AHD/2013 2 ASSESSEE IS THAT HIS FATHER HAS ACQUIRED THIS LAND SOMEWHERE IN THE YEAR 1930. FOR THE PURPOSE OF COMPUTATION OF COST OF AC QUISITION AS ON 1.4.1981, THE ASSESSEE TOOK THE RATE AT RS.165 PER SQ.METER. THE LD.AO HAS CALLED FOR A REPORT FROM THE SUB-REGISTRA R OFFICE WHO HAS SUBMITTED THAT THE RATES WERE RANGING IN BETWEEN RS .33/- TO RS.53/- PER SQ.METER FOR THIS TYPE OF LAND IN THE YEAR 1981 . THE AO TOOK THE RATE FOR ACQUISITION OF LAND AS ON 1.4.81 AT R.43/- AND CALCULATED THE COST OF ACQUISITION AT RS.4,40,689/- AS AGAINST RS. 16,91,019/- COMPUTED BY THE ASSESSEE. THE WORKING GIVEN BY THE AO READS AS UNDER: COST OF ACQUISITION 43X551/100=RS.236.93 PER SQ.MTR. TOTAL COST OF ACQUISITION ON AREA OF 1860 SQ.METERS 1860X236.93=4,40,689 TOTAL COST OF ACQUISITION AS PER FAIR MARKET VALUE GIVEN BY SUB- REGISTRAR IS WORKED OUT AT RS.4,40,69/-. ACCORDING LY, THE CAPITAL GAIN IS WORKED OUT AS UNDER: SALE PRICE RS.15,00,000/- COST OF ACQUISITION AS ABOVE RS.4,40,689/- TAXABLE LT CAPITAL GAIN RS.10,59,311/- THUS, THE LONG TERM CAPITAL GAIN COMES TO RS.10,59, 311/- AS AGAINST THE LONG TERM CAPITAL LOSS OF RS.1,91,019/- WORKED OUT BY THE ASSESSEE. THE ASSESSEE HAS SHOWN EXCESS COST O F ACQUISITION OF SAID LAND BY RS.12,50,330/- 4. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT HIS BROTHER HAS ALSO SOLD THE LAND FROM THIS VERY KASARA NUMBER. HE ALSO ADOPTED THE MARKET VALUE AS ON 1.4.1981 AT RS. 165/- PER SQ.METER. THE AO HAS APPLIED THE RATE OF RS.33/- P ER SQ.METER. WHEN THE DISPUTE CAME TO THE TRIBUNAL IN ITA NO.373/AHD/ 2012, THE TRIBUNAL HAS DIRECTED THE AO TO ADOPT THE RATE AT RS.102/- P ER SQ.METER AND COMPUTE THE CAPITAL GAIN. HE PLACED ON RECORD COPY OF THE TRIBUNAL ITA NO.1245/AHD/2013 3 ORDER. IN THIS WAY, ACCORDING TO THE LD.COUNSEL FO R THE ASSESSEE, THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF THE ASSESS EE. THE LD.DR WAS UNABLE TO CONTROVERT THIS CONTENTION OF THE LD.COUN SEL FOR THE ASSESSEE. 6. I HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GON E THROUGH THE RECORD CAREFULLY. THE DISCUSSION MADE BY THE TRIBU NAL IN THE CASE OF THE ASSESSEES BROTHER READ AS UNDER: 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS PAPE R BOOK AND SUBMISSIONS MADE BY THE ASSESSEE AND SUBMISSIONS OF LD. DR. FROM THE PERUSAL OF RECORDS, THIS IS A FACT THAT TH ERE HAVE BEEN DIFFERENT RATES AVAILABLE AS ON 1.4.1981 IN RELATIO N TO ARRIVE AT THE COST OF ACQUISITION OF THE PIECE OF LAND SOLD BY TH E ASSESSEE. THESE RATES CAN BE SUMMED UP 1. RATE GIVEN BY SUB-REGISTRAR, DAMAN VIDE LETTER 15.9.2010 IN REPLY TO LETTER OF AO DT. 3.9.2010 BETWEEN RS.33 TO 53/- PER SQ.METER 2. RATE OBTAINED FROM SUB- REGISTRAR, DAMAN VIDE CERTIFICATE OF VALUATION DATED 22.1.2007 RS.165/- PER SQ. METER. 3. RATE GIVEN BY THE GOVT. APPROVED VALUER PAREKH & ASSOCIATES, AS PER VALUATION REPORT DATED 28.2.2008 RS.108/- PER SQ.METER FROM THE ABOVE, IT SEEMS THAT ON ONE HAND THE REPOR T OF SUBREGISTRAR, DAMAN, IS RANGING FROM MINIMUM RS.33 PER SQ.METER TO A MAXIMUM OF RS.165/- PER SQ. METER WHE REAS THE REPORT OF REGISTERED VALUER WHO IS A PERSON WITH TE CHNICAL EXPERTISE FOR THE PURPOSE OF VALUATION HAS GIVEN TH E RATE OF RS.108/- PER SQ.METER FOR THE PURPOSE OF VALUATION BY CONSIDERING MORE THAN ONE INSTANCES OF SALE/TRANSFER OF LAND AT RINGANWADA, NANI DAMAN. IN OTHER WORDS THE GOVT.APPROVED VALUER HAS TRIED TO ARRIVE AT QUITE CLOSE TO THE FAIR MARKET VALUE OF T HE SAID LAND DUE TO HIS ADOPTION OF SCIENTIFIC AND TECHNICAL METHOD. WE FURTHER NOTICE THAT AO HAS RELIED PURELY ON THE AVERAGE RAT E GIVEN BY SUB-REGISTRAR, DAMAN EVEN WHEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED T HAT HE HAS ITA NO.1245/AHD/2013 4 ADOPTED THE RATE OF RS.165/- PER SQ.METER ON THE BA SIS OF A CERTIFICATE OF VALUATION BY SUB-REGISTRAR, DAMAH. I N SUCH CIRCUMSTANCES, IT WAS REQUIRED ON THE PART OF THE A O TO MAKE A REFERENCE TO THE VALUATION OFFICER UNDER SECTION 55 A OF THE ACT IN ORDER TO ASCERTAIN THE FAIR MARKET VALUE OF THE ASS ET BECAUSE VALUATION OFFICER IS A PERSON OF TECHNICAL KNOWLEDG E FOR THE PURPOSE OF SUCH VALUATION. IN THE PRESENT CASE NO S UCH REFERENCE WAS MADE BY THE AO TO APPROACH THE VALUATION OFFICE R. WE, THEREFORE, FIND IT APPROPRIATE TO GIVE COGNIZANCE T O VARIOUS RATES AS REFERRED TO ABOVE IN SUCH A WAY SO AS TO COVER T HE RATES FOR THE PURPOSE OF VALUATION GIVEN BY SUB-REGISTRAR, DAMAN TO THE AO, RATES GIVEN BY SUB-REGISTRAR, DAMAN TO THE ASSESSEE AS WELL AS THE RATE GIVEN BY THE GOVT. APPROVED VALUER. WE, TH EREFORE, DECIDE TO APPLY THE AVERAGE OF THREE RATES I.E. MIN IMUM RATE GIVEN BY SUBREGISTRAR, DAMAN AT RS.33, MAXIMUM RATE GIVEN BY SUB-REGISTRAR, DAMAN AND THE RATE GIVEN BY THE GOVT . APPROVED VALUER AT RS.108/-. THE AVERAGE RATE WILL WORK OUT AT RS.102/- PER SQ.METER (RS.33 + RS.165 + RS.108 = RS.306/3 = RS.1 02/-). IN THE CIRCUMSTANCES, WE DIRECT THE AO TO ADOPT THE FA IR MARKET VALUE OF THE ASSET AS ON 1.4.1981 AT RS.102/- ONLY. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 10. NOW WE TAKE UP ITA NO.479/AHD/2012 (REVENUES A PPEAL). THE REVENUE HAS RAISED THE FOLLOWING GROUND IN THIS APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN OF RS.13,55,724/- . 11. THE FACTS OF THE CASE HAVE ALREADY BEEN DEALT W ITH BY US IN OUR ORDER IN ITA NO.373/AHD/2012 AGAINST THE ADDITI ON MADE BY THE AO AT RS.46,33,231/- DUE TO APPLICATION OF FAIR MARKET VALUE OF THE PIECE OF LAND AS ON 1.4.1981 AT RS.43/- PER SQ. METER AGAINST RATE OF RS.165/- PER SQ. MTR. CLAIMED BY TH E ASSESSEE IN HIS RETURN OF INCOME. AGGRIEVED, ASSESSEE WENT IN A PPEAL BEFORE THE CI(T(A) WHO WAS PROVIDED A COPY OF GOVT. APPROV ED VALUERS REPORT GIVING THE RATE OF RS.108/- PER SQ. METER. T HE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY ADOPTI NG FAIR MARKET VALUE ON 1.4.1981 AT RS.76 PER SQ. METER WHICH WAS WORKED OUT BY AVERAGING THE RATES TAKEN BY AO AT RS.43/- AND T HE RATE GIVEN BY GOVT. APPROVED VALUER AT RS.108/- (RS.43 + RS.10 8)/2 = RS.75.5 PER SQ. METER SO RS.76/-. AGGRIEVED, THE RE VENUE HAS PREFERRED THE APPEAL BEFORE THE TRIBUNAL. ITA NO.1245/AHD/2013 5 7. SINCE IT IS THE COMMON LAND INHERITED BY BOTH TH E BROTHERS FROM THEIR FATHER, THE TRIBUNAL HAS ADOPTED THE RATE OF RS.102/- ON THE BASIS OF AVERAGE RATE TAKEN FROM TWO DIFFERENT SOURCES I. E. SUB-REGISTRARS OFFICE, REGISTERED VALUERS VALUATION. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESS EES BROTHER, I DIRECT THE AO TO RE-COMPUTE THE CAPITAL GAIN ON SALE OF AG RICULTURE LAND BY ADOPTING THE RATE FOR ACQUISITION AS ON 1.4.1981 AT RS.102/- PER SQ.METER INSTEAD OF RATE OF RS.43/- ADOPTED BY HIM. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 6 TH JUNE, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 06/06/2016