ITO, Nashik V. Late Abdul Latif Ismail Kagdi, Nashik

ITA 1262/PUN/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2504 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K R SUBHASH
• Keywords: Capital asset; Retrospective amendment; Question of law; Cost of acquisition; Fair market value; Valuation report
• Section: 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1262/PN/2013 #& & / ASSESSMENT YEAR : 2009-10 ITO, WARD-1(3), NASHIK . / APPELLANT V/S LATE ABDUL LATIF ISMAIL KAGDI, L/H IQBAL LATIF KAGDI, 14, SARGAM APARTMENT, MAULANA AZAD ROAD, NASHIK PAN NO. ABKPK8485K . / RESPONDENT / ASSESSEE BY : SHRI NIKHIL PATHAK / REVENUE BY : SHRI K.R. SUBHASH / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 28-03-2013 OF THE CIT(A)-I, NASHIK RELATING TO ASS ESSMENT YEAR 2009-10. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 31-03-2010 DECLA RING TAXABLE INCOME OF RS.4,29,970/-. DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAS SOLD A LAND BEARING GUT NO.111 AT MAHADEVPUR, NASHIK. THE VALUE OF TH E / DATE OF HEARING :14.01.2016 / DATE OF PRONOUNCEMENT: 18.03.2016 2 ITA NO.1262/PN/2013 PROPERTY FOR STAMP DUTY PURPOSE IS RS.1,04,43,500/- WHER EAS THE ACTUAL SALE CONSIDERATION WAS FOR RS. 5 CRORES AS PER TH E SALE EXECUTED. THE ASSESSEE IN THE RETURN OF INCOME HAS T AKEN THE COST OF THIS LAND AS ON 01-04-1981 AT RS.1,13,55,000/- AND ACCO RDINGLY AFTER INDEXATION THE INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN WAS WORKED OUT AT NIL. ON GOING THROUGH THE NOTINGS IN THE 7/12 EXTRACTS THE AO NOTED THAT GRASS WAS GROWN ON THE LA ND FROM 2002-03 TO 2004-05 AND THEREAFTER THE LAND IS NOT CULTIVATED. EVEN THE SUBSEQUENT OWNER HAS NOT CULTIVATED THE LAND. THE AO NOTED THAT THE ASSESSEE HAS CLAIMED THE LAND TO BE AGRICULTURA L LAND SITUATED BEYOND 8 KMS FROM THE NASHIK MUNICIPAL LIMIT. IT W AS ACCORDINGLY STATED THAT THE LAND IS NOT A CAPITAL ASSET AS PER THE INCOME TAX ACT AND THEREFORE NOT LIABLE TO CAPITAL GAIN. 3. THE AO OBTAINED A CERTIFICATE FROM TOWN PLANNING OFFICE WHEREIN IT WAS CERTIFIED THAT DISTANCE OF THE LAND IS 6.2 K MS FROM THE NASHIK MUNICIPAL LIMIT. HE, THEREFORE, REJECTED THE CONTE NTION OF THE ASSESSEE THAT THE LAND IS SITUATED BEYOND 8 KMS FRO M NASHIK MUNICIPALITY. 4. SO FAR AS THE VALUE OF THE PROPERTY AS ON 01-04-19 81 IS CONCERNED IT WAS CLAIMED THAT AS PER SUB REGISTRAR THE VALUE OF THE JIRAYAT LAND PER ACRE AS ON 01-04-1989 WAS RS.60,000/-. HOWEVER, THE VALUE OF THE SAID LAND HAS TO BE CONSIDERED @ RS.1,20,000/- PER ACRE SINCE THE LAND IN QUESTION IS BAGAY AT LAND AS THERE ARE TWO WELLS IN THE SAID LAND. IT WAS CLAIMED T HAT THE VALUE OF THE LAND ADMEASURING 9.76 HECTARES, I.E. 24.4 ACRES AS ON 01-04-1989 IS RS.29,28,000/-. IT WAS ARGUED THAT THE VA LUE OF THE LAND AS ON 01-04-1981 HAS TO BE WORKED OUT CONSIDERING THE ABOVE 3 ITA NO.1262/PN/2013 VALUE OF LAND AND THE SAME IS TO BE INCREASED 5 TIMES TO ARRIVE AT CORRECT MARKET VALUE OF THE LAND AS ON 01-04-1981. AS THE MARKET VALUE OF THE LAND IS 5 TIMES MORE THAN THE VALUE AS PER SUB REGISTRARS OFFICE IT WAS SUBMITTED THAT THE IMPUGNED LAND HAS BEEN SOLD FOR RS.5 CRORES WHEREAS THE VALUE AS PER SUB REGISTRAR OFFICE IS ONLY RS.1,04,43,500/-. IT WAS ACCORDINGLY ARGUED T HAT THE TAXABLE CAPITAL GAIN WORKS OUT TO NIL IF THE VALUE OF THE LA ND AS ON 01-04-1981 IS CONSIDERED TO BE RS.86 LAKHS. THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CI T VS. CHANDANI BUCHAR REPORTED IN 229 ITR 190 AND THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF JAVVAJI NAGNATH VS . ITO REPORTED IN 4 SCC 595 WERE RELIED UPON. 5. HOWEVER, THE AO WAS NOT SATISFIED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE. HE NOTED THAT THE ASSESSE E HAS NOT CARRIED OUT ANY AGRICULTURAL OPERATION ON THE SAID LAND AND ONLY GRASS WAS GROWN AND THEREFORE IN VIEW OF THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF SARIFABIBI MOHMED IBRAHIM VS . CIT REPORTED IN 204 ITR 631 THE LAND CANNOT BE HELD AS AGR ICULTURAL LAND. 6. SO FAR AS THE CLAIM OF THE ASSESSEE IN RESPECT OF THE VALUE OF THE LAND AS ON 01-04-1981 IS CONCERNED THE AO NOTED T HAT IN THE YEAR 1981 THE CITY OF NASHIK WAS VERY SMALL AND NOT DEV ELOPED AND THE VALUE OF THE LAND WAS VERY LESS AND EVEN THE TRANS PORTATION FACILITIES WERE NOT AVAILABLE. NASHIK TOWN HAS DEVELOPED SINCE LAST DECADE ONLY. THE AO, THEREFORE, HELD THAT THE CLAIM OF THE ASSESSEE THAT IN THE YEAR 1981 TO 1989 THE MARKET VALUE OF THE AGRICULTURAL LAND IS 5 TIMES OF THE VALUE AS PER SUB REGISTRAR CANNOT BE 4 ITA NO.1262/PN/2013 ACCEPTED. THE AO FURTHER NOTED THAT IN THE 7/12 EXTRA CT ONLY ONE WELL IS MENTIONED AND NOT TWO WELLS AS CLAIMED BY THE ASSES SEE. HE FURTHER NOTED THAT THE ASSESSEE HAS GROWN GRASS A ND HENCE THE LAND WAS JIRAYAT AS CLASSIFIED BY THE REVENUE AUTHORITIES HA VING MARKET VALUE OF RS.60,000/- AS ON 01-04-1989. REJECTING THE VARIOUS CONTENTIONS OF THE ASSESSEE THE AO WORKED OUT THE CAPITAL GAIN ON SALE OF THE LAND AT RS.4,70,90,000/- BY CONSIDERING T HE VALUE OF THE LAND AS ON 01-04-1981 AT RS.5 LAKHS AND INDE XED COST OF ACQUISITION AT RS.29,10,000/- AS AGAINST THE SALE CONSID ERATION OF RS. 5 CRORES. AFTER ALLOWING THE SET OFF OF SHORT TERM CA PITAL LOSS CLAIMED BY THE ASSESSEE AT RS.1,35,008/- FROM THE LONG TER M CAPITAL GAIN OF RS.4,70,90,000/-, THE AO MADE ADDITION OF RS.4,69,54,992/- TO THE TOTAL INCOME ON ACCOUNT OF LONG TER M CAPITAL GAIN. 7. THE AO ARRIVED AT THE VALUE OF AGRICULTURAL LAND AS ON 01-04- 1981 AS UNDER : THE VALUE OF THE LAND AS ON 01-4-1989 AT RS.60,000 PER ACRE FOR 9.76 HECTARES, I.E. 24.4 ACRES RS.14,70 ,000 VALUE AS ON 01-4-1981 CONSIDERED TO HAVE INCREASED BY ABOUT 3 TIMES UPTO 01-04-1989 RS.14,70,000 X 1/ 3 = RS.4,90,000/-. ROUNDED OFF TO RS.5,00,000 RS.5,00,000 8. IN APPEAL THE LD.CIT(A) REJECTED THE CONTENTION OF T HE ASSESSEE THAT THE LAND IS SITUATED BEYOND A DISTANCE OF 8 KMS FROM NASHIK FOR WHICH THE ASSESSEE IS NOT IN APPEAL BEFORE US. 9. SO FAR AS VALUE OF THE LAND AS ON 01-04-1981 IS CONCE RNED THE LD.CIT(A) DIRECTED THE ASSESSEE TO FILE A VALUATION REPO RT FROM A GOVERNMENT APPROVED REGISTERED VALUER WHO VALUED THE S AID LAND AS ON 01-04-1981 AT RS.48,80,000/-. THE CIT(A) FORWARDED THE 5 ITA NO.1262/PN/2013 SAID VALUATION REPORT TO THE AO FOR HIS COMMENTS. AFTER O BTAINING THE REMAND REPORT FROM THE AO AND THE SUBMISSION OF THE ASSESSEE TO SUCH REMAND REPORT AND CONSIDERING THE VALUERS REP ORT VALUING THE LAND AS ON 01-04-1981 AT RS.48,80,000/-, THE CIT(A) CONSIDERED THE INDEXED COST OF ACQUISITION AT RS.2,84,01,600 /- ON THE DATE OF SALE. THE LD.CIT(A) ACCORDINGLY DETERMINED T HE LONG TERM CAPITAL GAIN AT RS.2,15,98,400/- AS AGAINST RS.4,70,90,00 0/- DETERMINED BY THE AO. THE RELEVANT OBSERVATION OF THE C IT(A) ON THIS ISSUE FROM PARA 10 READ AS UNDER : 10. THE SECOND ISSUE TO BE DECIDED AS STATED ABOVE IS WH AT IS THE VALUE OF THE IMPUGNED LAND AS ON 01/04/1981 SITUATED AT MAHADEOPUR VILLAGE. THE AO. HAS ESTIMATED THE VALUE OF THE SAID LAND CONSIDERING THE LAND TO BE JIRAYAT AS AGAINST THE BAGAYAT LAND CL AIMED BY THE APPELLANT. IT HAS BEEN NOTICED THAT THE REVENUE AUT HORITIES HAS ESTIMATED THE VALUE OF JIRAYAT LAND AT RS. 60,000/- P ER ACRE AND BAGAYAT LAND AT RS. 1,20,000/- PER ACRE IN THE AREA OF MAHAD EOPUR VILLAGE. THE APPELLANT HAS CLAIMED THAT THE REVENUE AUTHORITIES HA VE INCORRECTLY CONSIDERED THE LAND AS JIRAYAT, WHEREAS THE SAME IS BAG AYAT, AS THERE ARE TWO WELLS IN THE SAID LAND. THE A.O. IN THIS REGAR D HAS CLAIMED THAT AS PER 7/12 EXTRACT, THERE IS ONLY ONE WELL IN THE SAI D LAND AND THE REVENUE AUTHORITIES HAVE CORRECTLY CLASSIFIED THE LAND OF THE APPELLANT AS JIRAYAT LAND. THE APPELLANT HAS ALSO CLAIMED THAT A S THE ACTUAL VALUE OF THE LAND SOLD IS RS.5,00,00,000/- AS AGAINST THE VALU E OF THE LAND AS PER THE OFFICE OF SUB-REGISTRAR RS. 1,04,43,500/-, TH E VALUE OF THE IMPUGNED AGRICULTURAL LAND AS ON 1/4/1981 IS TO BE EST IMATED AT 5 TIMES OF THE VALUE ESTIMATED BY SUB-REGISTRAR'S OFFICE WHICH WORKS OUT TO RS.86,00,000/- AND CONSEQUENTIAL CAPITAL GAIN WORK S OUT AT RS. NIL. IN THIS REGARD THE AO. HAS CONTENDED THAT THE NASHIK H AS DEVELOPED DURING LAST DECADE AND IN 1989 AND 1981, NASHIK WAS SMA LL CITY AND THE VALUE OF THE AGRICULTURAL LAND WAS MEAGER. 10.1 IN VIEW OF THE ABOVE RIVAL CONTENTIONS IT BECAM E NECESSARY TO ARRIVE AT CORRECT VALUE OF THE LAND AS ON 01/04/1981 . THEREFORE, IN TERMS OF SECTION 250(4) OF THE ACT, THE APPELLANT WAS ASKED TO PRODUCE VALUATION REPORT OF GOVT. APPROVED REGISTERED VALUER IN RESPECT OF THE IMPUGNED LAND, FOR DETERMINING THE CORRECT VALUE OF THE LAND AS ON 1/4/1981. THE APPELLANT HAS FILED VALUATION REPORT D ATED 26/11/2012 OF GOVT. APPROVED REGISTERED VALUER SHRI RAMNATH CH AVANKE AND SHRI DEEPAK B. MAGAR, VALUING THE IMPUGNED LAND AS ON 1/4 /1981 AT RS: 48,80,000/- AFTER INSPECTING THE PROPERTY ON 5/11/20 12. THE COPY OF THE SAID VALUATION REPORT HAS BEEN FORWARDED TO THE AO. VIDE LETTER DATED 3/1/2013 FOR HIS COMMENTS. THE AO. HAS FILED HIS COMMENTS VIDE LETTER DATED 4/2/2013. IN RESPECT OF THE CONTEN TION THAT THE SALE OF THE IMPUGNED AGRICULTURAL LAND IS LIABLE TO CAPIT AL GAIN TAX, THE AO. HAS REITERATED HIS CONTENTIONS IN THE ASSESSMENT ORDER AN D THE EARLIER REPORT DATED 4/5/2012. FURTHER IN RESPECT OF VALUAT ION REPORT OF THE 6 ITA NO.1262/PN/2013 GOVT. APPROVED REGISTERED VALUER, THE AO. HAS STATED THAT THE VALUATION REPORT FILED BY THE APPELLANT IS SELF SERVING EVIDENC E AND IS NOT PROPERLY PREPARED BY CONSIDERING VARIOUS FACTORS, WHER EAS THE A.O. HAS COGENTLY CONSIDERED THE VALUE OF THE LAND AS ON 1/4/1 981 AT RS. 5,00,000/- ON THE BASIS OF PROPER REASONING MENTIONED IN THE ASSESSMENT ORDER. THE A.O. HAS FURTHER REQUESTED TO ALLO W HIM TO REFER THE MATTER OF VALUATION TO DVO. 10.2 THE REPORT OF THE AO. DATED 4/2/2013 HAS BEEN F ORWARDED TO THE APPELLANT FOR HIS COUNTER COMMENTS. THE APPELLANT HAS FILED HIS COUNTER COMMENTS AS UNDER: '1. IN THE ABOVE MENTIONED REPORT, AS REGARDS CAPITA L GAIN LIABILITY, THE A.O. HAS REITERATED THE CONTENTS OF THE ASSESSMENT ORDER AND THE EARLIER REPORT DATED 4/5/2012. FURTHER AS REGARDS THE VALUATION OF THE LAND MADE BY GOVT. APPROVED VALUERS SHRI RAMNATH CH AVANKE AND SHRI DEEPAK B. MAGAR, THE AO. HAS COMMENTED THAT THE VALUATION REPORT HAS NOT BEEN PROPERLY DONE AND THE ESTIMATE MA DE BY THE A.O. OF THE VALUE OF THE LAND AS ON 1/4/1981 AT RS.5,00,00 0/- IS PROPER. IN THIS REGARD IT IS WORTH MENTIONING HERE THAT THE AO. IS NOT AN EXPERT IN THE FILED OF VALUATION AND HENCE THE VALUE ARRIVED AT BY THE GOVT. APPROVED REGISTERED VALUER AT RS. 48,80,000/- IS TO BE ACCEPTED. IT IS ALSO PERTINENT TO NOTE HERE THAT THE SAID VALUE OF RS. 48,80,000/- IS IN FACT MUCH LESS THAN THE VALUE CLAIMED BY THE APPELLAN T AT RS.1,13,55,000/- AS ON 1/4/1984 I.E. THE DATE ON WHIC H THE APPELLANT HAS RECEIVED THE IMPUGNED LAND BY SUCCESSION. 2. AS REGARDS THE CONTENTION OF THE AO. THAT THE IMPU GNED LAND IS TO BE REFERRED TO THE DVO FOR VALUATION OF THE LAND AS ON 1/4/1981, IT IS WORTH MENTIONING HERE THAT THE A.O. HAS MISSED THE BUS AS HE SHOULD HAVE REFERRED THE LAND TO THE DVO FOR VALUATION AS O N 1/4/1981 DURING ASSESSMENT PROCEEDINGS BEFORE COMPLETION OF THE A SSESSMENT. IN THIS REGARD THE DECISION OF HON'BLE BOMBAY HIGH C OURT IN THE CASE OF RALLIES INDIA LTD. VS. DCIT (2006) 284 ITR 159 (BO M) A.Y. 2002-03 IS RELEVANT, WHEREIN IT HAS BEEN LAID DOWN THAT A.O. CANNOT REFER THE VALUATION OF THE PROPERTY U/S.55A TO THE VALUATION O FFICER AFTER HE HAS ALREADY ASSESSED THE INCOME OF THE ASSESSEE AND PASSED THE ASSESSMENT ORDER. IN THE ABOVE MENTIONED DECISION THE HON'BLE BOMBAY H IGH COURT HAS HELD THAT SEE. 55A PROVIDES THAT THE AO. MAY REFER T HE VALUATION OF CAPITAL ASSET TO A VALUATION OFFICER WITH A VIEW TO A SCERTAIN THE FAIR MARKET VALUE FOR THE PURPOSES OF CHAPTER IV. THIS CHAP TER DEALS WITH COMPUTATION OF TOTAL INCOME. IN OTHER WORDS, REFEREN CE TO THE VALUATION OFFICER FOR ASCERTAINING THE VALUE OF CAP ITAL ASSET IS FOR THE PURPOSE OF COMPUTATION OF TOTAL INCOME OF THE ASSESSEE. HAVING ALREADY COMPLETED THIS EXERCISE AND DETERMINED THE VA LUE OF THE CAPITAL ASSETS AS ON IST A PRIL, 1981 AND PASSED AN ASSESSMENT ORDER ON 24 TH MARCH, 2005, IT WAS NOT OPEN TO THE AO. TO REFER TH E MATTER TO THE VALUATION OFFICER FOR DETERMINATION OF FAIR MAR KET VALUE OF THE SAID PROPERTY. THE ENTIRE EXERCISE OF REFERENCE TO THE VA LUATION OFFICER FOR ASCERTAINING THE FAIR MARKET VALUE OF THE CAPITAL ASSE TS OF AN ASSESSEE IS FOR THE PURPOSES OF COMPUTATION OF INCOME FROM CAPI TAL GAINS AND FOR COMPLETION OF ASSESSMENT ORDER AND ONCE THAT HAS BE EN DONE, THE A.O. HAS NO COMPETENCE TO REFER TO THE VALUATION OFF ICER. THEREFORE, THE REFERENCE MADE BY THE AO TO THE VALUATION OFFIC ER FOR 7 ITA NO.1262/PN/2013 DETERMINATION OF THE FAIR MARKET VALUE OF THE PROPE RTY IS WITHOUT COMPETENCE AND AS A CONSEQUENCE THEREOF, THE NOTICE I SSUED U/S. 55A IS RENDERED BAD IN LAW. 3. IT IS ALSO WORTH MENTIONING HERE THAT THE LD. CIT( A) HAS POWER U/S.250(4) TO DIRECT THE ASSESSEE TO FURNISH NECESSARY MATE RIAL AND PAPERS WHICH ARE REQUIRED FOR DECIDING THE ISSUE UNDER APPEAL AND IN SUCH CASE IT IS NOT EVEN NECESSARY TO CONFRONT THE SAID M ATERIAL TO THE AO. WHERE THE CIT(A) HAS USED HIS DISCRETION U/S.250(4) OF THE ACT. THE ABOVE PROPOSITION OF LAW IS SUPPORTED BY FOLLOWING DECISIONS: 1) ITO VS. INDUSTRIAL ROADWAYS (2008)112 ITD 293 (MUM ) 2) LATE SHRI MUKUND V. KAPADIA VS. ITO ( 2002) 82 IT D 489 (MUM) 3) SMT. PRABHAVATI S. SHAH VS. CIT (1998) 231 ITR 1 (BOM). 4. FURTHER THE CONTENTION OF THE APPELLANT THAT TH E VALUATION OF THE IMPUGNED LAND MADE BY THE GOVT. AP PROVED REGISTERED VALUER AS ON 01/04/1981 IS TO HE FOLLOWED', THE LD, AR. OF THE APPELLANT HAS RELIED ON THE DECISION OF ACIT CIRC LE-1 VS. SHRI DASHRATH K. MANDLIK, I.T.A NO.1322/PN/2009'. THE ID. A.R. OF THE APPELLANT, RAISING THE ABOVE MEN TIONED CONTENTIONS HAS REQUESTED TO DELETE THE ADDITION. 10.3.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND RIVAL CONTENTIONS FOR DECIDING THE SECOND ISSUE INVOLVED IN A PPEAL ABOUT THE VALUE OF IMPUGNED LAND SOLD AS ON 1/4/1981 TO BE CONSI DERED FOR ARRIVING AT CAPITAL GAIN. THE APPELLANT HAS CLAIMED THAT THE VALUE OF THE LAND AS ON 1/4/84 I.E. THE DATE ON WHICH HE RECEIVED THE LAND BY SUCCESSION, AT RS.1,13,55,000/- AND HAS ACCORDINGLY WOR KED OUT THE INDEXED COST OF THE SAME AT MORE THAN RS. 5 CRORES AND WORKED OUT THE CAPITAL GAIN AT RS. NIL. THE A.O., IN PARA 11, HAS EST IMATED THE VALUE OF THE SAID LAND AT RS. 5,00,000/- AND ARRIVED THE CAPITAL G AIN AT RS. 4,70,90,000/- STATING AS UNDER : 'AS PER THE CHART AVAILABLE FOR STAMP DUTY PURPOSE, TH E RATE PER ACRE OF SUCH LAND WAS RS.60,000/- AS ON 1/4/1989. ACCORDINGLY, THE VALUE OF THE LAND AS ON 1/4/1989, WORKS OUT TO APPROXIMATELY RS.14, 70,000/-. ASSUMING THAT THE COST OF THE LAND MUST HAVE NEARLY TRI PLED IN THE SPAN OF 8 YEARS ( 1/4/81 TO 31/3/89), THE APPROXIMATE COST OF THE LAND AS ON 1/4/81 WILL BE AROUND RS. 5,00,000/-. ACCORDINGLY, T HE COST OF THE LAND AS ON 1/4/81 IS ADOPTED AT RS.5,00,000/- AND INCOME UN DER THE HEAD LONG TERM CAPITAL GAINS WORKED OUT AS BELOW: SALE CONSIDERATION RS.5,00,00,000 INDEXED COST OF ACQUISITION RS.5,00,000 X 5.82 RS.29,10,000 --------------------- INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN RS.4,70,90,000 --------------------- 8 ITA NO.1262/PN/2013 10.3.2 IN RESPECT OF THE ABOVE CONTENTION OF THE AO ., OF ARRIVING AT VALUE OF IMPUGNED LAND ON THE BASIS OF THE VALUE FOR STAMP DUTY PURPOSE, THE APPELLANT HAS CLAIMED THAT THIS VALUE IS APPARENTL Y INCORRECT AS EVEN ON THE DATE OF SALE OF THE LAND IN THE YEAR UNDER AP PEAL THE VALUE OF THE LAND FOR STAMP DUTY PURPOSE IS RS.L,04,43,500/-, WHEREA S, THE ACTUAL SALE VALUE IS RS. 5,00,00,000/-, WHICH IS ABOUT 5 TIMES MORE THAN THE SAID VALUE FOR STAMP DUTY PURPOSE. THE LD. AR. FURTHER CLA IMED THAT THE LAND IS BAGAYAT (IRRIGATED) AND NOT JIRAYAT (NON IRRIGATED) AND THE VALUE OF BAGAYAT LAND IS MORE THAN DOUBLE OF THE VALUE OF JIR AYAT LAND. THE LD. A.R. ACCORDINGLY CLAIMED THAT THE VALUE ESTIMATED BY THE AO. IS TO BE CONSIDERED AT LEAST 12 TIMES MORE THAN THE VALUE ARRIV ED AT BY THE AO. AS ON 1/4/1981. 10.3.3 IN VIEW OF THE ABOVE RIVAL CONTENTIONS IT HAS BECAME NECESSARY TO ARRIVE AT THE CORRECT VALUE AS ON 1/4/1981 OF THE IMPUGNED LAND IN ORDER TO ARRIVE AT TAXABLE CAPITAL GAIN, AS NEITHER AO. NOR THE APPELLANT ARE EXPERT IN THE FIELD OF VALUATION OF IMMOVABLE P ROPERTY. IN VIEW OF THE RIVAL CONTENTIONS AND THE ABOVE FACTS AND IN VIEW OF THE PROVISIONS OF SECTION 250(4), THE APPELLANT WAS ASKED TO FURNISH VALU ATION REPORT OF GOVT. APPROVED REGISTERED VALUER, VALUING THE IMPUGN ED LAND AS ON 1/4/1981. THE APPELLANT HAS FURNISHED THE SAID VALUATI ON REPORT OF GOVT. APPROVED REGISTERED VALUER, VALUING THE IMPUGNED LAN D AS ON 1/4/1981 AT RS.48,80,000/-. THE SAID VALUATION REPORT HAS BEEN FORWARDED TO THE A.O. FOR HIS COMMENTS. IN RESPECT OF THE VALUATION MADE BY THE GOVT. APPROVED REGISTERED VALUER, THE AO. HAS STATED THAT T HE SAID VALUATION IS EXCESSIVE AND HAS NOT BEEN PROPERLY ARRIVED AT. THIS CO NTENTION OF THE AO CANNOT BE ACCEPTED AS THE GOVT. APPROVED REGISTERE D VALUERS ARE EXPERTS IN THE FIELD OF VALUATION AND THEIR VALUATIO N IS THEREFORE REQUIRED TO BE ACCEPTED. 10.3.4 FURTHER THE SAID VALUATION OF THE IMPUGNED LAND ON 1/4/1981 AT RS. 48,80,000/- IS FOUND TO BE REASONAB LE IN VIEW OF THE FACT THAT THE APPELLANT HAS CLAIMED THE VALUE OF TH E LAND AT ABOUT RS. 1 CRORE, WHEREAS THE AO. HAS ESTIMATED THE VALUE OF T HE LAND AT RS. 5 LACS. FURTHER THE AO. HAS NOT REFERRED THE IMPUGNED LAND FOR VALUATION AS ON 1/4/1981 TO THE DVO DURING ASSESSMENT PROCEEDINGS AND HENCE THE AO. CANNOT REFER THE IMPUGNED LAND FO R VALUATION BY OVG DURING APPELLATE PROCEEDINGS. THE ABOVE PROPOSI TION OF LAW IS SUPPORTED BY THE DECISION OF HON'BLE BOMBAY HIGH CO URT IN THE CASE OF RALLIES INDIA LTD. VS. DCIT (2006) 284 ITR 159 ( BOM)-AY. 2002- 03. IN THIS DECISION THE HON'BLE JURISDICTIONAL HIG H COURT HAS LAID DOWN THAT AO. CANNOT REFER THE VALUATION OF THE PRO PERTY U/S.55A TO THE VALUATION OFFICER AFTER HE HAS ALREADY ASSESSED THE INCOME OF THE ASSESSEE AND PASSED THE ASSESSMENT ORDER. 10.3.5 THE APPELLANT, ON THIS ISSUE, HAS ALSO RELIED ON THE DECISION OF ACIT CIRCLE-I, VS. SHRI DASHRATH K. MANDLIK I.T.A NO. 1322/PN/2009 DATED 27/11/2012. THE RELEVANT PARA 4, 5 AND 6 OF T HE ABOVE MENTIONED DECISION OF HON'BLE ITAT, PUNE IS EXTRACTED BELOW. 4. THE ASSESSEE RAISED THE PLEA BEFORE THE LD. CIT(A) THAT WHILE ARRIVING AT CAPITAL GAINS, THE AO SHOULD HAVE A LLOWED ENTIRE COST OF THE LAND AS ON 01 /04/ 1981. THE ID. CIT(A) HAS OB SERVED THAT THE AO IN HIS REMAND REPORT DATED 03 OCTOBER 2008 HAS ACC EPTED THAT THE DEDUCTION OF INDEX COST OF SAID LAND SHOULD BE ALLOWED FROM THE SALE 9 ITA NO.1262/PN/2013 CONSIDERATION. THE ASSESSEE FILED THE VALUATION REPORT O F THE APPROVED REGISTERED VALUER DETERMINING THE FAIR MARKET VALUE OF THE SAID PROPERTY AS ON 01/04/1981 AND AS PER THE SAID VALUATI ON REPORT, THE FAIR MARKET VALUE OF LAND IS DETERMINED AS AT RS.20,76 ,400/-. THE LD. CIT(A), THEREFORE. CONSIDERED THE INDEX AT 351 WHICH IS APPLICABLE TO THE YEAR OF SALE AND DIRECTED THE AO TO ALLOW THE DE DUCTION OF RS.72,88,164/- AS AN INDEX COST OF ACQUISITION FROM TH E SALE CONSIDERATION OF RS.1,24,27,000/- THE GRIEVANCE OF TH E REVENUE IS THAT THE LD. CIT SHOULD HAVE REFERRED THE MATTER OF THE V ALUATION TO THE DEPARTMENTAL VALUER. 5. WE HAVE HEARD THE LD. D.R. THE D.R. WAS DIRECTED TO FILE THE COPY OF THE VALUATION REPORT. AS PER THE DIRECTI ONS OF THE BENCH, THE AO HAS FILED THE COPIES OF THE VALUATION REPORT A S WELL AS REMAND REPORT WHICH ARE PLACED ON RECORD. WE HAVE EXAMINED THE VALUATION REPORT OF ONE SHRI D.P. MADIWALE, WHO IS THE GOVERNM ENT APPROVED VALUER OF THE AGRICULTURAL LAND DATED 12TH JANUARY 2008. THE REGISTERED VALUER HAS GIVEN THE DETAILS OF THE LAND A ND HAS ALSO CONSIDERED THE LOCATION AND OTHER ACCESS TO THE SAID LA ND. HE HAS ADOPTED THE RATE AT RS.116/- PER SQ. METER AND ACCOR DINGLY WORKED OUT THE FAIR MARKET VALUE OF THE SAID LAND AS ON 01/0 4/1981 AT RS.20,76,400/-. NOTHING HAS BEEN POINTED OUT BEFORE U S WHY THE LD. CIT(A) SHOULD NOT HAVE ACCEPTED THE VALUATION REPORT FILED BY THE ASSESSEE. 6. AFTER CONSIDERING THE MATTER AT ENTIRETY, WE DO NOT FIND ANY FAULT IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE . WE, ACCORDINGLY, CONFIRM THE SAID ORDER AND DISMISS ALL THE GROUNDS OF TH E REVENUE'. 10.3.6 IN VIEW OF THE RATIO LAID DOWN IN THE ABOVE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT AND I.T.A.T., PUNE AND ALSO CONSIDERING THE REASONABLE VALUATION OF THE IMPUGNED PROPERTY MADE B Y THE GOVT. APPROVED REGISTERED VALUER, I DIRECT THE AO. TO CONSI DER THE VALUE OF THE IMPUGNED LAND AS ON 1/4/1981 AT RS. 48,80,000/- AS AGA INST RS.1,04,43,500/- CLAIMED BY THE APPELLANT AND RS. 5,0 0,000/- CONSIDERED BY THE AO. WHILE CALCULATING CAPITAL GAIN ON SALE OF IMPUGNED LAND. THE CAPITAL GAIN ON SALE OF THE IMPUGNED LAND AFTER CONSI DERING THE ABOVE VALUE OF THE LAND AS ON 1/4/1981 WORKS OUT AS UNDER: SALE CONSIDERATION RS.5,00,00,000 LESS : INDEXED VALUE OF THE LAND VALUE OF THE LAND AS ON 1/4/1981 RS.48,80,000 INDEXED COST RS.48,80,000 X 582/100= RS.2,84,01,600 --------------------- LONG TERM CAPITAL GAIN RS.2,15,98,400 --------------------- THE A.O. IS ACCORDINGLY DIRECTED TO TAX THE LONG TER M CAPITAL GAIN IN RESPECT OF THE IMPUGNED LAND AT RS.2,15,98,400/- AS AG AINST TAXED BY THE A.O. AT RS.4,70,90,000/- AND DECLARED BY THE AP PELLANT AT RS. NIL. THE SUBSTANTIVE AND EFFECTIVE GROUND OF THE APPELLANT IS PARTLY ALLOWED. 10 ITA NO.1262/PN/2013 10. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN DELETING THE ADDI TION OF RS.2,54,91,600/- OUT OF THE TOTAL ADDITION MADE BY T HE AO AT RS.4,69,54,992/-. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN ACCEPTING THE VAL UATION OF VALUER REGARDING VALUE OF LAND SOLD AS ON 01-04-1981 WHICH W AS DISPUTED BY THE ASSESSING OFFICER, FOR REASON MENTIONED IN HIS REMAND REPORT. 3. WHETHER THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN NO T ACCEPTING THE REQUEST OF THE ASSESSING OFFICER FOR REFERRING THE M ATTER OF VALUATION OF PROPERTY AS ON 01-04-81 TO DVO. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT( A)-I, NASHIK MAY BE PLEASE BE CANCELLED AND THE ORDER OF THE ASSESSIN G OFFICER MAY PLEASE BE RESTORED. 5. THE APPELLANT PRAYS LEAVE TO ADD, ALTER, CLARIFY, AMEND AND OR WITHDRAW ANY GROUNDS OF APPEAL AS AND WHEN THE OCCASIO N DEMANDS. 11. THE LD. DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE ORDER OF THE AO. HE SUBMITTED THAT AT THE TIME OF APP EAL BEFORE CIT(A) THERE WERE 2 ISSUES TO BE DECIDED, I.E. (1) WHETHER TH E AGRICULTURAL LAND SOLD IS SITUATED BEYOND 8 KMS FROM THE LOC AL LIMITS OF NASHIK MUNICIPAL CORPORATION AND HENCE IS NOT A CAP ITAL ASSET U/S.2(14) OF THE ACT AND NOT LIABLE TO CAPITAL GAIN TAX AND (2) WHAT WAS THE VALUE OF THE AGRICULTURAL LAND SOLD AS ON 01- 04-1981 WHICH SHALL DETERMINE THE QUANTUM OF CAPITAL GAIN. 12. SO FAR AS THE FIRST ISSUE IS CONCERNED THE CIT(A) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE SINCE THE TOWN PLANNING O FFICE HAS CERTIFIED THAT THE LAND IS 6.2 KMS FROM THE MUNICIPAL LIMIT AND THE ASSESSEE IS NOT IN APPEAL BEFORE THE TRIBUNAL. THEREFORE, THE ISSUE RELATING TO THE DISTANCE OF THE AGRICULTURAL LAND BEYOND 8 KMS IS SETTLED WHICH IS AGAINST THE ASSESSEE. 11 ITA NO.1262/PN/2013 13. SO FAR AS THE SECOND ISSUE IS CONCERNED, I.E. REGARDING THE VALUATION OF THE PROPERTY AS ON 01-04-1981 AT RS.48,80,00 0/- IS CONCERNED HE SUBMITTED THAT INSTEAD OF OBTAINING A REPO RT FROM THE DVO THE CIT(A) ACCEPTED THE VALUATION REPORT FURNISHED B Y THE ASSESSEE. THEREFORE, UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE THE CIT(A) WAS NOT JUSTIFIED IN ACCEPTING THE VALUATION OF TH E VALUER DETERMINING THE VALUE OF THE LAND SOLD AS ON 01-04-1981 A T RS.48,80,000/-. HE SHOULD HAVE CONSIDERED THE OBJECTIONS RAISED BY THE AO DURING ASSESSMENT PROCEEDINGS. HE ACCORDINGL Y SUBMITTED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE AO BE RESTORED. 14. REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF RALLIES INDIA LTD. VS. CIT REPORTED IN 374 ITR 462 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT WHERE THE AO FAILS TO MAKE ENQUIRY U/S.55A WHILE PASSING THE ASSESSMENT ORDER, THE CIT(A) DURING APPEAL PROCEEDINGS BEFORE HIM CAN MAKE SUCH ENQUIRY EITHER BY HIMSELF OR DIRECT THE AO TO DO SO IN TERMS OF SECTION 250(4) OF THE I.T. ACT. 15. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAN D WHILE SUPPORTING THE ORDER OF THE CIT(A) REFERRED TO PAGE 4 OF THE PAPER BOOK AND DREW THE ATTENTION OF THE BENCH TO THE 7/12 EXTRACTS AND SUBMITTED THAT APART FROM GRASS, WHEAT, PULSES, JAWAR AND GROUND NUTS ETC ARE GROWN IN THE LAND SOLD BY THE ASSESSEE. FURTHER, THE LAND IS SITUATED AT VILLAGE GANGAPUR WHICH IS NEAR TO THE GANGAPUR DAM. HE SUBMITTED THAT THE LAND SOLD BY THE ASSESSEE IS AN IRRIGATED ONE AND THEREFORE ITS VALUE IS MUCH MORE THAN T HE VALUE OF NON-IRRIGATED OR BARREN LAND, RATE OF WHICH HAS BEEN C ONSIDERED 12 ITA NO.1262/PN/2013 BY THE AO. REFERRING TO THE COPY OF THE APPROVED VALU ERS REPORT PLACED IN THE PAPER BOOK PAGES 18 TO 23 HE SUBMITTED T HAT THE VALUER AFTER INSPECTION OF THE LAND HAS STATED THAT THE L AND IS AGRICULTURAL LAND AND ITS SURROUNDING AREA IS ALSO WELL DEVELO PED FOR AGRICULTURAL PURPOSES WITH ALL INFRASTRUCTURAL FACILITIES LIKE R OAD, LIGHT AND WATER ETC. HE HAS ALSO CONSIDERED SALE INSTANCE S OF SIMILAR LAND IN THE VICINITY AND ACCORDINGLY VALUED THE LAND A T RS.2 LAKHS PER ACRE AS ON 01-04-1981. 16. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT RE ADY RECKONER RATES ARE AVAILABLE FROM 1989 ONLY. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF S ATHE BISCUIT AND CHOCOLATE LTD. VIDE ITA NO.1568/PN/2008 AND I TA NO.1329/PN/209 ORDER DATED 06-09-2010 FOR A.YRS. 2005-0 6 AND 2007-08 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISIO N HAS HELD THAT FOR VALUING THE CAPITAL ASSET AS ON 01-04-1981 40% OF THE VALUE OF 1989 CAN BE CONSIDERED AS REASONABLE. HE ACCOR DINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BEING WELL REASONED SHOULD BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 17. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PUJA PRINTS, HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT A REFERENCE COULD BE MADE TO THE DVO ONLY IF THE VALUE DECLARED BY THE ASSES SEE, IN OPINION OF THE AO, IS LESS THAN ITS FAIR MARKET VALUE. WHEN THE VALUE OF THE PROPERTY DECLARED BY THE ASSESSEE WAS MUC H MORE THAN THE FAIR MARKET VALUE EVEN AS DETERMINED BY THE DE PARTMENTAL VALUATION OFFICER, INVOCATION OF SECTION 55A(A) WAS NOT JUSTIFIED. HE 13 ITA NO.1262/PN/2013 ACCORDINGLY SUBMITTED THAT IN THE INSTANT CASE THE AO C ANNOT REFER THE MATTER TO THE DVO. THEREFORE, THE GROUNDS RAISED B Y THE REVENUE ON THIS ISSUE BEING DEVOID OF ANY MERIT HAS TO BE DISMISSED. 18. THE LD. DEPARTMENTAL REPRESENTATIVE IN HIS REJOINDER SUBMITTED THAT THE REPORT OF THE REGISTERED VALUER IS AR BITRARY IN ABSENCE OF ANY SALE INSTANCES. THE DVO HAS ONLY MADE A GENERAL REMARK BUT NOT GIVEN ANY PARTICULAR SALE INSTANCE. SO FA R AS THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF S ATHE BISCUIT AND CHOCOLATE LTD. (SUPRA) IS CONCERNED HE SUBMITTE D THAT THE SAME IS NOT APPLICABLE TO THE PRESENT CASE BECAUSE THE FACTS OF THE PRESENT CASE ARE DIFFERENT FROM THAT OF THE CASE DEC IDED BY THE TRIBUNAL. HE SUBMITTED THAT IN THAT DECISION IT WAS FOR PU NE AND THE GROWTH STORY OF PUNE IS NOT APPLICABLE TO NASHIK TOWN . THEREFORE, THE SAID DECISION IS NOT APPLICABLE. 19. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. WE FIND IN THE INSTANT CASE THE ASSESSEE SOLD A PIECE OF LAND BEARING GUT NO.111 AT MAHAD EOPUR, NASHIK. THE VALUE OF THE PROPERTY FOR STAMP DUTY PURPOSE S IS RS.1,04,43,500/- WHILE THE ACTUAL SALE AS EXECUTED IS FOR RS .5 CRORES. IN THE RETURN OF INCOME THE ASSESSEE CONSIDERE D THE COST OF LAND AS ON 01-04-1984 AT RS.1,13,55,000/- AND ACCORDINGLY DETERMINED THE LONG TERM CAPITAL GAIN AT NIL TREATING THE LA ND AS NOT CAPITAL ASSET ON THE GROUND THAT THE SAID LAND IS SIT UATED BEYOND 8 KMS FROM NASHIK MUNICIPAL LIMIT. WE FIND THE AO DUR ING 14 ITA NO.1262/PN/2013 THE COURSE OF ASSESSMENT PROCEEDINGS OBTAINED A CERTIFICA TE FROM TOWN PLANNING OFFICE OF NASHIK ACCORDING TO WHICH THE LAND IS SITUATED AT A DISTANCE OF 6.2 KMS FROM THE MUNICIPAL LIMIT OF NASHIK. THEREFORE, THE CLAIM OF THE ASSESSEE THAT IT IS AN AGRICULTURAL LAND SITUATED BEYOND 8 KMS FROM THE MUNICIPAL LIM IT OF NASHIK AND THEREFORE IS NOT A CAPITAL ASSET WAS REJEC TED BY THE AO. 20. SO FAR AS THE VALUATION OF LAND IS CONCERNED THE AO V ALUED THE LAND AS ON 01-04-1989 AT RS.14,70,000/- ASSUMING THA T THE COST OF LAND MUST HAVE INCREASED THREE TIMES IN THE SPA N OF 8 YEARS, I.E. 01-04-1981 TO 31-03-1989. HE ACCORDINGLY DET ERMINED THE COST OF LAND AS ON 01-04-1981 AT RS. 5 LAKHS. AFTER CALCULATING THE INDEXED COST OF ACQUISITION IN THE YEAR OF SALE THE AO DETERMINED THE LONG TERM CAPITAL GAIN AT RS.4,69,54,992/- AFT ER ALLOWING SET OFF OF SHORT TERM CAPITAL LOSS OF RS.1,35,008/-. WE FIND IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO IN HOLDIN G THAT THE LAND IS SITUATED WITHIN 6.2 KMS FROM NASHIK TOWN. THE ASSESSEE IS NOT IN APPEAL AGAINST THIS ISSUE AND THEREFORE , WE ARE NOT CONCERNED WITH THIS. 21. SO FAR AS THE VALUE OF THE LAND AS ON 01-04-1981 IS CONCERNED, WE FIND THE LD.CIT(A) CONSIDERING THE VALUATION RE PORT OF THE REGISTERED VALUER WHICH WAS FILED DURING APPEAL PROC EEDINGS AT HIS DIRECTION ADOPTED THE VALUE AT RS.48,80,000/- AS ON 01-04- 1981. IT IS THE GRIEVANCE OF THE REVENUE THAT THE CIT(A )SHOULD NOT HAVE ACCEPTED THE REPORT OF THE REGISTERED VALUER AND HE SHOULD HAVE REFERRED THE MATTER TO THE DVO FOR VALUING THE PRO PERTY. IT IS THE CASE OF THE ASSESSEE THAT THE AO CANNOT REFER THE MATTER TO THE 15 ITA NO.1262/PN/2013 DVO SINCE THE VALUE DECLARED BY THE ASSESSEE IS MUCH MO RE THAN THE FAIR MARKET VALUE DETERMINED BY THE AO. FURTHER THE LAND IS AN IRRIGATED LAND HAVING 2 WELLS AND NEARBY TO A RESERVOIR AND THEREFORE ITS VALUATION IS MUCH MORE THAN THE VALUE DETER MINED BY THE AO. ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE THE LAND IS A BAGAYAT LAND AND NOT A JIRAYAT LAND AS HELD BY THE AO. IT IS ALSO THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT T HE GROUND RAISED BY THE REVENUE IN GROUND OF APPEAL NO.3 FOR REFERRI NG THE MATTER TO THE DVO CONCERNED IS ALSO DEVOID OF ANY MERIT SINCE THE VALUE OF THE LAND GIVEN BY THE ASSESSEE WAS MORE THAN THE FAIR MARKET VALUE. 22. WE FIND SUFFICIENT FORCE IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE. SO FAR AS THE REFERENCE OF THE MATTER TO THE DVO IS CONCERNED WE FIND THE ISSUE HAS TO BE DEC IDED AGAINST THE REVENUE. THE HONBLE BOMBAY HIGH COURT IN T HE CASE OF PUJA PRINTS (SUPRA) HAS HELD THAT PRIOR TO 01-07-2012 NO SECTION 55A VALUATION IF VALUE OF THE ASSET GIVEN BY THE ASSESSE E WAS MORE THAN ITS MARKET PRICE. THE RELEVANT OBSERVATION OF THE HONBLE HIGH COURT AT PARA 7 TO 10 OF THE ORDER IS AS UNDER : 7. WE FIND THAT SECTION 55A(A) OF THE ACT VERY CL EARLY AT THE RELEVANT TIME PROVIDED THAT A REFERENCE COULD BE MA DE TO THE DEPARTMENTAL VALUATION OFFICER ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THEN THE FAIR MARKET VALUE. IN THE PRESEN T CASE, IT IS AN UNDISPUTED POSITION THAT THE VALUE ADOPTED BY THE RESPONDENT- ASSESSEE OF THE PROPERTY AT RS.35.99 LAKHS WAS MUCH MORE T HAN THE FAIR MARKET VALUE OF RS.6.68 LAKHS EVEN AS DETERMINED BY THE DEPARTMENTAL VALUATION OFFICER. IN FACT, THE ASSESSING OFFICER REFERRED THE ISSUE OF VALUATION TO THE DEPARTMENTAL VALUATION OFFICER ONLY BECAUSE IN HIS VIEW THE VALUATION OF THE PROPERTY AS O N 1981 AS MADE BY THE RESPONDENT-ASSESSEE WAS HIGHER THEN THE FAIR MARKE T VALUE. IN THE AFORESAID CIRCUMSTANCES, THE INVOCATION OF SECTION 55A(A) OF THE ACT IS NOT JUSTIFIED. 16 ITA NO.1262/PN/2013 8. THE CONTENTION OF THE REVENUE THAT IN VIEW OF TH E AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012 BY WHICH THE WORDS 'IS LESS THEN THE FAIR MARKET VALUE' IS SUBSTITUTED BY THE WORDS ' 'I S AT VARIANCE WITH ITS FAIR MARKET VALUE' IS CLARIFACTORY AND SHOULD BE GIVEN RETROSPECTIVE EFFECT. THIS SUBMISSION IS IN FACE OF THE F ACT THAT THE 2012 AMENDMENT WAS MADE EFFECTIVE ONLY FROM 1 JULY 2012. THE PARLIAMENT HAS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, THE LAW TO BE APPLIED IN THE PRESENT CASE IS SECTION 55A( A) OF THE ACT AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT Y EAR 2006-07. AT THE RELEVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTAL VALUATION OFFICER ONLY IF THE VALUE DE CLARED BY THE ASSESSEE IS IN THE OPINION OF ASSESSING OFFICER LESS THAN ITS F AIR MARKET VALUE. 9. THE CONTENTION OF THE REVENUE THAT THE REFERENC E TO THE DEPARTMENTAL VALUATION OFFICER BY THE ASSESSING OFFICER IS SUSTAINABLE IN VIEW OF SECTION 55A(A) (II) OF THE ACT IS NOT ACC EPTABLE. THIS IS FOR THE REASON THAT SECTION 55A(B)OF THE ACT VERY CLEARL Y STATES THAT IT WOULD APPLY IN ANY OTHER CASE I.E. A CASE NOT COVERED BY SECTION 55A(A) OF THE ACT. IN THIS CASE, IT IS AN UNDISPUTABLE POSITION THAT THE ISSUE IS COVERED BY SECTION 55A(A) OF THE ACT. THEREFO RE, RESORT CANNOT BE HAD TO THE RESIDUARY CLAUSE PROVIDED IN SECTION 55 A(B)(II) OF THE ACT. IN VIEW OF THE ABOVE, THE CBDT CIRCULAR DATED 25 NOVEMBER 1972 CAN HAVE NO APPLICATION IN THE FACE OF THE CLEAR PO SITION IN LAW. THIS IS SO AS THE UNDERSTANDING OF THE STATUTORY PROVISIONS BY TH E REVENUE AS FOUND IN CIRCULAR ISSUED BY THE CBDT IS NOT BINDING UP ON THE ASSESSEE AND IT IS OPEN TO AN ASSESSEE TO CONTEND TO THE CONTRARY . 10. THE CONTENTION OF THE REVENUE THAT THE ASSESSING O FFICER IS ENTITLED TO REFER THE ISSUE OF VALUATION OF THE PROPE RTY TO THE DEPARTMENTAL VALUATION OFFICER IN EXERCISE OF ITS POW ER UNDER SECTIONS 131, 133(6) AND 142(2) OF THE ACT IS E NTIRELY BASED UPON THE DECISION OF THE GUWAHATI HIGH COURT IN SMT. AMIYA BALA PAUL (SUPRA). HOWEVER, THE APEX COURT IN SMT. AMIYA BALA PAUL (SUPRA) HAS REVERSED THE DECISION OF THE GUWAHATI HIGH COURT AND HELD THAT IF THE POWER TO REFER ANY DISPUTE WITH REGARD TO THE VALUAT ION OF THE PROPERTY WAS ALREADY AVAILABLE UNDER SECTIONS 31(1), 136(6) AND 142(2) OF THE ACT, THERE WAS NO N EED TO SPECIFICALLY EMPOWER THE ASSESSING OFFICER TO DO SO IN CIRCUMSTANCES SPE CIFIED UNDER SECTION 55A OF THE ACT. IT FURTHER HELD THAT WHEN A SPECIFIC PROVISION UNDER WHICH THE REFERENCE CAN BE MADE TO T HE DEPARTMENTAL VALUATION OFFICER IS AVAILABLE, THERE IS NO OCCASION F OR THE ASSESSING OFFICER TO INVOKE THE GENERAL POWERS OF ENQUIRY. IN VIEW OF THE ABOVE AND PARTICULARLY IN VIEW OF CL EAR PROVISIONS OF LAW AS EXISTING DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2006-07, WE ARE OF THE VIEW THAT QUESTIONS (A) AND (B) DO NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. 23. SINCE THE ASSESSMENT YEAR INVOLVED IN THE IMPUGNED A PPEAL FILED BY THE REVENUE IS 2009-10, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE C IT(A) 17 ITA NO.1262/PN/2013 COULD NOT HAVE REFERRED THE MATTER TO THE DVO FOR VALUA TION OF THE PROPERTY AS ON 01-04-1981. GROUND OF APPEAL NO.3 BY T HE REVENUE IS ACCORDINGLY DISMISSED. 24. SO FAR AS GROUND OF APPEAL NO.1 AND 2 BY THE REVENU E IS CONCERNED, I.E., REGARDING THE JUSTIFICATION OF THE RELIEF GRANTE D BY THE CIT(A), WE ALSO DO NOT FIND ANY INFIRMITY IN THE SAME. WE FIND THE LD.CIT(A) IN THE INSTANT CASE HAS ACCEPTED THE VALUAT ION GIVEN BY THE REGISTERED VALUER WHICH WAS FILED BY THE ASSESSEE AS PER THE DIRECTION OF THE CIT(A). IT IS THE SETTLED PROPOSITION OF LAW THAT THE POWERS OF THE CIT(A) IS COTERMINOUS WITH THAT OF THE POWER S OF THE AO. THEREFORE, HE IS WELL WITHIN HIS POWERS TO DIRECT THE AS SESSEE TO FILE THE REPORT OF A REGISTERED VALUER VALUING THE LAND A S ON 01- 04-1981. WE FIND THE REGISTERED VALUER HAS GIVEN VALUATION REPORT BASED ON THE LOCATION AND COMPARING MARKET RATES AND S ALE INSTANCES OF SIMILAR LANDS IN THE VICINITY. NO SUCH COMPARA BLE SALE INSTANCE WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT SIMILAR LAND SITUATED IN NEARBY AREAS WERE SOLD AT MUCH LES SER PRICE THAN THE MARKET VALUE AS DETERMINED BY THE DVO. WE FURTHER FIND FROM PARA 3 OF THE ASSESSMENT ORDER WHEREIN THE AO HAS MENTIONED THE GUT NO. AS 111 AT MAHADEVPUR, NASHIK. HOWEVER, THE 7/12 EXTRACTS AND VARIOUS OTHER DETAILS FILED BY THE ASSESSEE SHOW THE GUT NO. AS 116. WE FURTHER FIND THE AO PROCEEDED ON THE GROUND THAT THE LAND IN QUESTION IS ILL- IRRIGATED LAND WHEREAS THE VARIOUS DETAILS FURNISHED BY THE LD. COU NSEL FOR THE ASSESSEE SHOW THAT THE LAND IS WELL IRRIGATED HAVING 2 WELLS AND SITUATED NEAR GANGAPUR DAM WHICH IS A VERY BIG RESERVOIR. 18 ITA NO.1262/PN/2013 25. THE OBSERVATION OF THE REGISTERED VALUER AT CLAUSES 12 AND 13 OF THE REPORT ARE ALSO RELEVANT WHICH ARE REPRODUCED AS UNDE R : 12. ANY COMPARABLE CASE OF SALES RELIED UPON A) WHETHER SIMILAR PROPERTY OF GENERALLY. SIMILAR PROPERTY (GIVE DETAILS OF SIMILARITY OR DIFFERENCE. B) IN THE SAME LOCALITY OR IN THE DIFFERENT, LOCALITY HOW FAR THE DISTANCE C) DATE OF TRANSACTION D) SALE PRICE AND VALUE THE LAND UNDER VALUATION IS AGRICULTURAL LAND SITUATED AT JALALPUR (MAHADEVPUR) WHICH IS NEAR FROM NASHIK CITY. THE SURROUNDING OF THIS LAND ALSO WELL DEVELOPED FOR AGRICULTURE PURPOSE WITH ALL INFRASTRUCTURAL FACILITIES LIKE ROAD LIGHT & WATER ETC. CONSIDERING THE LOCATION AND COMPARING MARKET RATES & SALES INSTANCES OF THE SIMILAR LANDS IN THE VICINITY. THE MARKET RATE VARIES FROM RS.2.00 LAKH PER ACRE TO 5.00 LAKH PER ACRE AND THE AVERAGE RATES ARE ABOUT RS.3.50 LAKH PER ACRE. 13. UNIT VALUE ADOPTED (HERE THE REGISTERED VALUER SHOULD DISCUSS IN DETAILS HIS APPROACH TO THE VALUATION OF THE LAND & INDICATE HOW THE VALUATION HAS BEEN ARRIVED AT. THE PROPERTY UNDER REFERENCE IS AGRICULTURE LAND WITH WELL IRRIGATION FOR THROUGH OUT THE YEAR. CONSIDERING ITS YIELDING CAPACITY OF AGRICULTURAL PRODUCE AND READY MARKET AT NASHIK CITY FOR AGRICULTURAL PRODUCE. WITH WELL CONNECTED ROAD FACILITY FOR TRANSPORTATION.ALL OTHER INFRASTRUCTURAL FACILITIES ARE AVAILABLE AT THE LAND UNDER REFERENCE. THE LAND HAS GOOD POTENTIAL TO BECAME A SUB-ARB OF NASHIK CITY. HENCE, CONSIDERING THE ADVANTAGES AND DISADVANTAGES OF THE UNDER REFERENCE WITH THE NATURE LOCATION, AREA AND MARKET RATES OF SIMILAR PROPERTIES IN THE VICINITY, I CONSIDER RS.2,00,000/- PER ACRE, I.E. RS.5,00,000/HECTOR WOULD BE THE FARE AND REASONABLE FOR VALUATION PURPOSE. 26. IN VIEW OF THE ABOVE AND IN VIEW OF THE DETAILED REASON ING GIVEN BY THE LD.CIT(A) WE FIND NO INFIRMITY IN HIS ORDER IN AC CEPTING THE VALUATION REPORT OF THE REGISTERED VALUER VALUING THE LAND SOLD AS ON 01-04-1981 AT RS.48,80,000/-. THEREFORE, THE ORDER O F THE CIT(A) DELETING THE ADDITION OF RS.2,54,91,600/- IS UPHELD AND T HE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 19 ITA NO.1262/PN/2013 27. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18-03-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 18 TH MARCH, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) - I, NASHIK 4. 5. 6. THE CIT-I, NASHIK $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE