Vinayak Krishnarao Ratnaparkhi, V. Income-tax Officer,

ITA 1331/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1081 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 16-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Assessee Lawyers: B C MALAKAR
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Valuation report; Competent authority; Reason to believe
• Section: 50C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.1331/PN/2016 / ASSESSMENT YEAR : 2007-08 SHRI VINAYAK KRISHNARAO RATNAPARKHI, POLAS GALLI, JALNA 431 203 MAHARASHTRA PAN : ABBPR3647R . / APPELLANT V/S ITO, WARD - 1, JALNA . / RESPONDENT / APPELLANT BY : SHRI B.C. MALAKAR / RESPONDENT BY : SHRI HITENDRA NINAWE / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30-03-2016 OF THE CIT(A)-I, AURANGABAD RELATING TO THE ASSESSMENT YEAR 2007-08. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND HAS FILED HIS RETURN OF INCOME ON 31-08-2007 DECLARING TOTAL INCOME OF RS.4,67,132/-. AS PER THE INFORMATIO N AVAILABLE WITH THE DEPARTMENT, IT WAS NOTICED THAT THE ASS ESSEE HAD SOLD A PIECE OF LAND JOINTLY WITH HIS BROTHER SHRI PRAKASH KRISHNARAO RATNAPARKHI VIDE REGISTERED DOCUMENT NO.1080/2006 DATED 08-05-2006 TO SHRI RAJESH BHAGWANDAS SONI OF JALNA SIT UATED AT GUT NO.125/1 ADMEASURING AREA TO THE EXTENT OF 0H 90 R EQUAL TO 2 ACRES 10 GUNTHAS FOR A CONSIDERATION OF RS.18,00,000/-. H OWEVER, FOR THE PURPOSE OF STAMP DUTY PURPOSE, THE VALUATION OF T HE SAME / DATE OF HEARING :28.07.2016 / DATE OF PRONOUNCEMENT:24.08.2016 2 ITA NO.1331/PN/2016 LAND WAS AT RS.34,90,000/-. THE AO WAS OF THE OPINION THAT AS PER THE PROVISIONS OF SECTION 50C OF THE I.T. ACT, 1961, FOR THE PURPOSE OF SECTION 48 OF THE I.T. ACT, 1961 VALUE OF PROPERTY ASSESS ED FOR THE PURPOSE OF STAMP DUTY SHALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TR ANSFER. THEREFORE, ASSESSEE WAS REQUIRED TO PAY CAPITAL GAIN TAX ON THE FAIR MARKET VALUE OF PROPERTY ASSESSED BY THE STAMP VALUING AUTHORITY. HOWEVER, THE ASSESSEE HAS NOT FILED HIS RETURN OF INCOME BY DISCLOSING THE AFORESAID INCOME PROPERLY. THEREFORE, THERE WAS A REASON TO BELIEVE THAT THE CAPITAL GAIN ON AMOUNT OF SALE CONSIDERATION OF RS.17,45,000/- (I.E. 50% OF RS.34,90,000/-) HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF EXPLANATION 2(A) O F SECTION 147 OF THE I.T. ACT, 1961. 3. THE AO ACCORDINGLY ISSUED NOTICE U/S.148 OF THE I.T. A CT TO THE ASSESSEE WHICH WAS DULY SERVED ON HIM. HOWEVER, THE A SSESSEE DID NOT FILE ANY RETURN OF INCOME OR REQUISITE INFORMATION DESPITE SERVICE OF SUCH NOTICE U/S.148. SUBSEQUENTLY, THE AO ISSUED NOTIC E U/S.142(1) ALONG WITH A QUESTIONNAIRE TO WHICH THE ASSESSE E FILED WRITTEN SUBMISSION AND OTHER RELEVANT INFORMATION. FROM TH E VARIOUS DETAILS FURNISHED BY THE ASSESSEE THE AO NOTED THAT ASSESSEE HAS SOLD THE LAND OUT OF SURVEY NO.125/1 SITUATED WITHIN T HE JALNA MUNICIPALITY LIMIT TO THE EXTENT OF 0H 90R EQUAL TO 2 ACRE 1 0 GUNTAS FOR A CONSIDERATION OF RS.18 LAKHS JOINTLY WITH HIS BROTHER SHRIPRAKASH KRISHNARAO RATNAPARKHI TO SHRI RAJESH BHAGW ANDAS SONI ON 8-05-2006. THE ASSESSEE HAS ADOPTED THE FIGURE OF COST OF ACQUISITION AT RS. 1 LAKH PER ACRE WITHOUT ANY BASIS. FURT HER THE ASSESSEE HAS ALSO DECLARED COST OF IMPROVEMENT AT RS.8,98,880/- HE, THEREFORE, ASKED THE ASSESSEE TO FURNISH EVIDENCE FOR AD OPTING THE 3 ITA NO.1331/PN/2016 COST OF ACQUISITION AS ON 01-04-1981 AT RS.1 LAKH PER ACR E AND COST OF IMPROVEMENT AT RS.8,98,880/-. 4. THE ASSESSEE SUBMITTED A SALE INSTANCE OF THE LAND FOR THE F.Y. 1992-93 IN RESPECT OF HIS COUSIN SHRI CHANDRASHEKHAR RAT NAPARKHI ACCORDING TO WHICH THE LAND WAS SOLD FOR A CONSIDERATION O F RS.65,000/- FOR 1 ACRE 10 GUNTAS WHICH WORKS OUT TO RS.5 0,980/- PER ACRE. SINCE THE SAME WAS NOT NEARER TO THE PRESCR IBED DATE, I.E. 01-04-1981 THE AO REJECTED THE SAME. SUBSEQUENTLY, T HE ASSESSEE FILED ANOTHER SALE INSTANCE DATED 18-02-1984 IN RESPECT O F THE LAND AT SURVEY NO.171 WITHIN JALNA MUNICIPALITY AREA FOR A CONSID ERATION OF RS.40,000/- EACH FOR 4 ACRES WHICH SHOWS THAT THE LAND WAS SOLD AT RS.10,000/- PER ACRE. ACCORDINGLY, THE AO TOOK SALE IN STANCE AS ON 01-04-1981 AT RS.10,000/- PER ACRE. THE AO FURTHER REJECTED THE CLAIM OF COST OF IMPROVEMENT AT RS.8,98,860/- IN ABSENCE OF ANY DOCUMENTARY EVIDENCE. THE OBJECTION OF THE ASSESSEE AG AINST THE ADOPTION OF THE VALUE OF SALE CONSIDERATION AS PER PROVISIO NS OF SECTION 50C, I.E. AS PER STAMP DUTY VALUATION WAS ALSO REJ ECTED BY THE AO. THE AO ACCORDINGLY DETERMINED THE LONG TERM C APITAL GAIN IN THE HANDS OF THE ASSESSEE AT RS.15,14,089/- THE DETA ILS OF WHICH ARE AS UNDER : SR. NO. DESCRIPTION AMOUNT (RS.) 1 AS PER THE PROVISION OF SECTION 50C OF THE INCOME TAX ACT, 1961, VALUE OF PROPERTY ASSESSED FOR THE PURPOSE OF STAMP DUTY IS AT RS.34,90,000/ - 2 LESS : INDEXED COST OF ACQUISITION AS DISCUSSED IN PARA 9 ABOVE @ RS.10,000/- PER ACRE X 2 ACRES 10 GUNTHAS = RS.22,500/- X 497 INTO 100 = RS.1,11,825/- AS AGAINST RS.19,88,000/- CLAIMED BY THE ASSESSEE RS,1,11,825/ - 3 COST OF IMPROVEMENT OF RS.8,98,860/ - IS TREATED AT RS. NIL IN ABSENCE OF EVIDENCES AS DISCUSSED ABOVE RS.NIL 4 LONG TERM CAPITAL GAINS RS.33,78,178/ - 5 50% ASSESSEES SHARE COMES TO (RS.33,78,178/2 = RS.16,89,089) RS.16,89,089/ - 4 ITA NO.1331/PN/2016 6 LESS. INVESTMENT IN CAPITAL GAIN ACCOUNT WITH BANK OF BARODA, JALNA AT RS.3,50,000/- 50% OF ASSESSEE WORKS OUT TO RS.1,75,000 RS.1,75,000/ - 7 LONG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE RS.15,14,089/ - 5. BEFORE CIT(A) THE ASSESSEE REQUESTED TO MAKE A REFER ENCE TO THE DVO SO AS TO FIND OUT THE FAIR MARKET VALUE OF THE P ROPERTY. IT WAS SUBMITTED THAT THE LAND TRANSFERRED WAS AN AGRICULTU RAL LAND AND TILL DATE THE NA HAD NOT BEEN OBTAINED IN RESPECT OF THE SAID PROPERTY. THE STAMP DUTY AUTHORITY HOWEVER HAD TREAT ED THE LAND IN QUESTION AS COMMERCIAL IN NATURE. RELYING ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF SUNILKUMAR AGA RWAL VS. CIT REPORTED IN 372 ITR 83 IT WAS ARGUED THAT IF STAMP DUTY VALUATION WAS HIGHER THAN THE AMOUNT AS PER SALE DEED, THE AO IN ALL FAIRNESS SHOULD HAVE GIVEN AN OPTION TO THE ASSESSEE TO HAVE THE VALUATION MADE BY THE DVO AS CONTEMPLATED U/S.50C(2) OF TH E I.T. ACT. EVEN IN A CASE WHERE NO SUCH PRAYER HAD BEEN MA DE BY THE ASSESSEE THE AO, DISCHARGING A QUASI JUDICIAL FUNCTION, HAD B OUNDEN DUTY TO ACT FAIRLY AND GIVE A FAIR TREATMENT BY GIVING HIM AN OPTION TO FOLLOW THE COURSE PROVIDED BY THE LAW. 5.1 THE LD.CIT(A) REFERRED THE MATTER TO THE VALUATION OFFICE R, NAGPUR WHO ASSESSED THE FAIR MARKET VALUE OF THE PROPER TY IN QUESTION AT RS.23,41,000/- AS ON 8-5-2006. THE LD.CIT(A) O BSERVED THAT THE VALUATION DONE BY THE DVO FOR SUCH A PROPERTY AT RS.23,41,000/- WAS IN THE CLOSE VICINITY OF ACTUAL SALE CONSIDE RATION OF RS.18 LAKHS AND IT WAS ALMOST 2/3 RD OF THE VALUATION DONE BY THE STAMP DUTY AUTHORITY. IN ADDITION TO THE ABOVE, THE LAN D WAS SITUATED IN THE DEVELOPED AREA, WHICH IS ABOUT 75 METERS FROM RAJUR ROAD. SURROUNDING LOCALITY WAS RAPIDLY DEVELOPED AND MAN Y SCHEMES FOR RESIDENTIAL FLATS HAD COME UP IN THE NEAR VICIN ITY. ALL 5 ITA NO.1331/PN/2016 CIVIC SERVICES WERE AVAILABLE NEARBY WITHIN WALKABLE DISTANCE. THE LAND WAS SITUATED IN THE RESIDENTIAL ZONE AND ALL THE AMENIT IES WERE AVAILABLE. THE LAND IN QUESTION HAD BEEN CONVERTED INTO MA NY SMALL PLOTS AFTER ITS TRANSFER. WITH THIS BACKGROUND HE EXAMINE D THE VALUATION REPORT BY THE DVO AND NOTICED THAT THE VALUAT ION OFFICER HAD COMMITTED CERTAIN BASIC MISTAKES WHILE DOING THE VALUA TION OF THE PROPERTY IN QUESTION. ACCORDING TO HIM THE DISCREPAN CIES THAT HAD CREPT INTO IT ARE AS UNDER : (1) THE PROPERTY IN QUESTION WAS AN OPEN PLOT OF LAND ADMEASURING 9000 SQ.MTRS AND THE SAME HAD BEEN COMPARED WITH SMALL PLOTS OF LAND. HENCE IT HAD BEEN CONVERTED INTO SMALL PLOTS OF LAND AND LAND RATE OF RS.610/- PER SQ.MTR WAS ADOPTED. AS PER THE MUNICIPAL BYE-LAWS AND AREA REQUIRED FOR INTERNAL ROADS/PATHS, THE VALUATION OFFICER HAD ALLOWED DEDUCTION OF 2250 SQ.MTR OF AREA OUT OF TOTA L AREA OF 9000 SQ.MTR. THUS THE LAND VALUE BY APPLYING ABOVE RATE O F RS.610/- PER SQ.MTR FOR 6750 SQ.MTR OF LAND WORKED OUT TO RS.41,17, 500/-. THIS VALUE WAS THEN MULTIPLIED WITH A FIGURE OF 0.845 TO ARRIVE AT A FIGURE OF RS.34,79,411/- CONSIDERING DEFERMENT FOR 1.5 YEARS BRI NG 50% OF TOTAL SALE PERIOD OF 3 YEARS @12 PERCENT PER ANNUM. HOWEVE R THE VALUATION OFFICER HAD ALSO DEDUCTION OF RS.11,90,881/- ON ACCOU NT OF COST OF DEVELOPMENT, ARCHITECT FEES, LEGAL CHARGES AND 15% PR OFIT WHICH WAS NOT PERMISSIBLE. IN THIS CASE, THERE WAS OUTRIGHT SALE OF LAND TO SHRI RAJESH BHAGWANDAS SONI. THE APPELLANT HAD NOT ENTERE D INTO ANY DEVELOPMENT AGREEMENT. (2) THE SECOND PARTY TO THE SALE DEED NAMELY SHRI RAJ ESH BHAGWANDAS SONI OR THIRD PARTY HAD CONVERTED THE LAN D IN QUESTION INTO NA, DO THE PLOTTING INTO VARIOUS PLOTS FOR RESIDENTIAL PURPOSE, DEVELOP THE LAND, SUBMIT LAY OUT PLANS, PAY TAXES/LEVIES/CHARG ES TO THE LOCAL AUTHORITY AND ALL THE EXPENSES WERE TO BE BORNE BY HI M. THEREFORE NO DEDUCTION COULD HAVE BEEN ALLOWED ON ACCOUNT OF SUCH DEVELOPMENT EXPENSES TO THE APPELLANT AS HE HAD NOT BORNE OUT SUCH EXPENSES. 6. IN VIEW OF THE ABOVE DEFECTS, HE HELD THAT THE VALUATION OF THE PROPERTY BY THE DVO WAS INCORRECT AND IMPROPER. HE, THE REFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE VALUATION D ONE BY THE VALUATION OFFICER, NAGPUR SHOULD NOT BE REJECTED AND FAIR MA RKET VALUE OF THE PROPERTY IN QUESTION SHOULD NOT BE ENHANCED FOR COMPUTING CAPITAL GAINS IN HIS HANDS. 6 ITA NO.1331/PN/2016 7. THE ASSESSEE SUBMITTED THAT HE WAS NOT A TECHNICAL PERSON OR EXPERT IN VALUATION OF THE IMMOVABLE PROPERTY. THEREFORE, H E WAS UNABLE TO COMMENT ON THE QUERY AS TO WHY THE DEDUCTIO N OF RS.11,90,881/- ON ACCOUNT OF COST OF DEVELOPMENT, ARCHITECT FEES, LEGAL CHARGES AND 15% PROFIT SHOULD NOT BE DISALLOWED. IT W AS ARGUED THAT ONLY THE VALUATION OFFICER, NAGPUR WAS COMPE TENT TO REPLY OR GIVE CLARIFICATION IN THIS REGARD. 8. THE LD.CIT(A) NOTICED THAT THE LAND IN QUESTION IS NOT A DISTRESS SALE. FURTHER, THERE ARE NO ADVERSE FACTORS WH ICH ARE LIKE TO DEPRECIATE ITS VALUE SUCH AS CLOSE PROXIMITY TO CREMATION AREA, APPROACH THROUGH A SLUM AREA, ADVERSE POSSESSION, NALLAH (SEWAGE WATER) PASSING THROUGH IT ETC. IT CANNOT BE COMPARED W ITH AN AGRICULTURAL LAND CONSIDERING ITS FUTURE POTENTIAL OF BEING PLOT TED. THE ASSESSEE HAS MADE AN OUTRIGHT SALE OF LAND IN THE INS TANT CASE AND HAS NOT ENTERED INTO A DEVELOPMENT AGREEMENT TO D EVELOP THE LAND AND TO CONVERT INTO NON AGRICULTURAL LAND AND DO PLOT TING FOR RESIDENTIAL PURPOSE. THE SALE OF THE PLOTS AFTER CONVERTING THE LAND AS PER LAW AND PLANS WERE TO BE PREPARED BY SHRI RAJE SH BHAGWANDAS SONI OR ANY OTHER THIRD PARTY AT THEIR COST S AND EXPENSES TO THE PROSPECTIVE BUYERS AND TO EVOLVE THE SCHEME FOR THE SAME. THEREFORE, THE ABOVE FACTS CLEARLY SHOW THAT THE EXPENDITURE INCURRED ON THE DEVELOPMENT FROM THE PROCESS OF NA TO T HE SANCTION OF LAYOUT PLAN BY THE COMPETENT AUTHORITY WAS NOT BORNE BY THE ASSESSEE. IN VIEW OF THE ABOVE FACTS, HE HELD THAT THE D EDUCTION OF RS.11,90,881/- ON ACCOUNT OF DEVELOPMENT EXPENSES, ARCHITE CT FEES, LEGAL CHARGES INCLUDING THE STAMP DUTY AND PROFIT MARGIN BY THE VALUATION OFFICER, NAGPUR FROM THE MARKET VALUE OF LAND IS INCO RRECT AND BASED ON WRONG APPRECIATION OF FACTS. SUCH DEDUCTION CANNOT 7 ITA NO.1331/PN/2016 BE ALLOWED TO THE ASSESSEE AS HE WAS NOT THE DEVELOPER. ACCORDING TO HIM, THE ASSESSEE IN NO WAY AS A OWNER CAN CLAIM THE EX PENDITURE ON THE DEVELOPMENT OF LAND. HE ACCORDINGLY DETERMINED T HE FAIR MARKET VALUE OF THE LAND SOLD BY THE ASSESSEE AS ON 8-5 -2006 AT RS.34,79,411/-, THE DETAILS OF WHICH ARE AS UNDER : TOTAL LAND AREA (AS PER RECORD) : 9000.00 SQ.MTR LESS: AREA REQUIRED FOR OPEN SPACE AS PER MUNICIPAL BYE-LAW/STATUTORY REGULATIONS ETC. 10% : (-) 900.00 II. LESS AREA REQUIRED FOR THE INTERNAL ROADS & PATHS ETC. @15% : (-)1350.00 ---------------------------- NET LAND : 6750 SQ.MTR ---------------------------- LAND RATE = RS.610/- PER SQ.MTR LAND VALUE = 6750 X 610 = 41,17,500/- DEFER FOR 1.5 YEARS BEING 50% OF TOTAL SALE PERIOD OF 3 YEARS @12 PER ANNUM = 41,17,500 X 0.84503 = 34,79,411/-. 9. THE LD.CIT(A) HELD THAT THE CONTENTION OF THE ASSESSEE THAT THE LAND SOLD WAS AN AGRICULTURAL LAND HAS BEEN TAKEN CARE OF. HE OBSERVED THAT SINCE THE SELLING RATE ADOPTED BY HIM WAS FOR A PLOT, THEREFORE, THE RATE OF RS.610/- PER SQ.MTR ON THE NET AR EA OF 6750 SQ.MTR IS BEING APPLIED WHEREAS THE LAND SOLD BY THE ASSE SSEE WAS AT 9000/- SQ. MTR. THUS, THE DEDUCTION OF AREA OF 2250 SQ.MTR HAS BEEN ALLOWED TO THE ASSESSEE SINCE THAT MUCH OF LAND HAD TO BE LEFT VACANT FOR THE PURPOSE OF DEVELOPMENT ON THE AGRICULTURA L LAND. RELYING ON VARIOUS DECISIONS THE LD.CIT(A) HELD THAT IN VIEW OF THE VARIOUS DISCREPANCIES IN THE VALUATION REPORT THE REPORT OF THE DVO HAS TO BE REJECTED AND THE FAIR MARKET VALUE OF THE PRO PERTY AS ON 8-5-2006 AT RS.34,79,411/- HAS TO BE ADOPTED FOR COMPU TING THE CAPITAL GAIN. 8 ITA NO.1331/PN/2016 10. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWING GROUNDS : THE APPELLANT WOULD LIKE TO OBJECT TO THE IMPUGNED APPELLATE ORDER ON FOLLOWING GROUNDS OF APPEAL, WHICH ARE RAISED WITHOUT PREJUDICE TO EACH OTHER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED C.I.T.[A] ERRED IN DETERMINING THE FAIR MAR KET VALUE (FMV) OF THE LAND AT SURVEY NO.125/1 SITUATED WITHIN THE JAL NA MUNICIPAL LIMIT AT RS.34,79,411/-, OF WHICH SHARE OF THE APPELLANT, BE ING RS.17,39,705/- REJECTING THE VALUATION MADE BY THE DEPARTMENTAL VA LUATION OFFICER (DVO) OF THE SAID LAND AT RS.23,41 ,000/-, OF WHICH SHARE OF THE APPELLANT BEING RS.11,70,500/- FOR DETERMINING THE T HE SALE VALUE OF THE LAND U/S.50C(2) OF THE INCOME-TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED C.I.T.[A] ERRED IN REJECTING THE VALUATION REPORT OF THE DEPARTMENTAL VALUATION OFFICER (DVO) WHO IS TECHNICA LLY COMPETENT FOR SUCH VALUATION, WHEN HE HIMSELF DIRECTED THE ASSESSING OF FICER TO OBTAIN THE VALUATION REPORT WITHIN THE PROVISIONS OF SECTION 50C(2) OF THE INCOME-TAX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED C.I.T.[A] ERRED IN HOLDING THAT THE DEPARTM ENTAL VALUATION OFFICER (DVO) HAD WRONGLY ALLOWED DEDUCTION OF RS.11 ,90,881/-, OF WHICH SHARE OF THE APPELLANT BEING RS.5,95,440/- ON ACCOUNT OF COST OF DEVELOPMENT, ARCHITECT FEES, LEGAL CHARGES, WHEN SUCH EXPENDITURE WAS RIGHTLY CONSIDERED BY THE DVO FOR DETERMINATION O F THE VALUATION OF THE LAND SOLD ON THE CRITERIA THE DVO DEEMED FIT BEI NG TECHNICALLY COMPETENT TO DO SO. 4. THE APPELLANT DENIES HIS LIABILITY TO PAY ANY INTE REST U/S 234 B AND 234 C OF THE LT. ACT, 1961 AND HENCE THE SAME MA Y PLEASE BE DELETED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL, IF DE EMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL . 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ONLY GRIEVANCE OF THE ASSESSEE IS REGARDING NON DEDUCTION OF 5 0% OF THE DEVELOPMENT EXPENSES CLAIMED BY THE ASSESSEE. HE SUBMIT TED THAT WHEN THE CIT(A) HIMSELF HAS AGREED THAT THE DEDUCTION OF AREA OF 2250 SQ.MTR WHICH IS TO BE LEFT VACANT FOR THE PURPOSE OF DEVELOPMENT ON THE AGRICULTURAL LAND, THEREFORE, NON DEDUCT ION OF DEVELOPMENT EXPENDITURE AS DETERMINED BY THE DVO ON TH E ENTIRE 9 ITA NO.1331/PN/2016 LAND OF 9000 SQ.MTR WAS NOT JUSTIFIED AND WAS A CONTRADICT ORY FINDING OF THE CIT(A) WHO EARLIER HAD HELD THAT NO DEVELOPMEN T EXPENSES ARE REQUIRED. HE SUBMITTED THAT THE MISTAKE P OINTED OUT BY THE CIT(A) IN PARA 5(II) AT PAGE 6 INFACT WAS A MISTAKE RE LATING TO THE VALUATION OF THE PROPERTY. IT WAS MERELY AN OPINION BASED ON NO FACTUAL DATA OR FINDINGS THAT THERE WAS NO DEVELOPMENT EX PENSES. HE SUBMITTED THAT THE DVO IS AN EXPERT IN VALUATION AND BEING A TECHNICAL MAN, THEREFORE, UNLESS THERE IS GROSS DISCREPANCY AND MISTAKE IN VALUATION, IT CANNOT BE CHALLENGED BY A NON-TECH NICAL PERSON, LIKE THE CIT(A) IN THE INSTANT CASE. HE SUBMITTED T HAT THE CIT(A) HAS NOWHERE STATED THAT THE DEVELOPMENT EXPENSE S WERE INCURRED BY THE BUYER SHRI RAJESH BHAGWANDAS SONI. HE HAD MERELY STATED THAT THE BUYER DIVIDED THE LAND INTO VARIO US RESIDENTIAL PLOTS AND CONVERTED THE LAND INTO NA AND SUBMITTED LAYOU TS. SUCH ACTION CAN AND HAS BEEN DONE IN ASSESSEES CASE AFTER THE DEVELOPED LAND WAS PURCHASED BY HIM. HE SUBMITTED THAT THE AVO H AD TAKEN THE SALE INSTANCES OF 5 PARTIES WHILE VALUING THE COST OF TH E PROPERTY. ALL SUCH COSTS WERE TAKEN ON THE DEVELOPED LAND. THERE FORE, THE DVO WAS RIGHT WHEN HE CONSIDERED THE DEVELOPMENT EXPE NSES FOR REDUCING THE COST OF THE LAND IN THE CASE OF THE ASSESSE E. THE ASSESSEE HAS SOLD AN AGRICULTURAL LAND AFTER DEVELOPING THE SAME PROPERLY BY ARRANGING FOR ROADS, DRAINAGE ETC. AND PREP ARING THE SAME FOR RESIDENTIAL LAND BEING SITUATED AT RESIDENTIAL/INDUST RIAL ZONE. HE SUBMITTED THAT UNLESS THE LAND WAS DEVELOPED A ND MADE APPROPRIATE FOR SALE NO BUYER WOULD BE INTERESTED TO BUY THE LAND ESPECIALLY WHEN THE SAME IS AN AGRICULTURAL LAND. TILL THE DAT E OF SALE OF THE LAND IT WAS AGRICULTURAL AND THE BUYER MADE IT NA AND PLOTTING ETC. AS CONTENDED BY THE CIT(A) HAD NOTHING TO DO WITH T HE DEVELOPMENT EXPENSES INCURRED/CALCULATED/DETERMINED BY T HE AVO. 10 ITA NO.1331/PN/2016 HE SUBMITTED THAT THE VARIOUS DECISIONS RELIED ON BY THE CIT(A) ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AND ARE DISTINGUISHABLE. RELYING ON VARIOUS DECISIONS AND CONSIDERING THE SITUATION OF THE LAND HE SUBMITTED THAT 1/3 RD OF THE MARKET VALUE SHOULD BE DEDUCTED FOR DEVELOPMENT OF THE LAND. 12. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THA T THE LD.CIT(A) HAS PASSED A SPEAKING ORDER JUSTIFYING NON-ALLOWA BILITY OF DEVELOPMENT EXPENSES. HE ACCORDINGLY SUBMITTED THAT TH E ORDER OF THE CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE ASSE SSEE SHOULD BE DISMISSED. 13. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PA PER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE V ARIOUS DECISIONS RELIED ON BY BOTH THE SIDES. I FIND THE ASSESSEE IN THE INSTANT CASE HAS SOLD A PIECE OF LAND AT SURVEY NO.125/1 SITUATED WITHIN JALNA MUNICIPALITY AREA TO THE EXTENT OF 0H 90R EQUAL TO 2 ACRES AND 10 GUNTAS FOR A CONSIDERATION OF RS.18 LAKHS JO INTLY WITH HIS BROTHER SHRI PRAKASH KRISHANARAO RATNAPARKHI TO SHR I RAJESH BHAGWANDAS SONI ON 08-05-2006. THE STAMP DUTY VALUATIO N AUTHORITIES HAVE ADOPTED THE VALUE OF THE PROPERTY FOR S TAMP DUTY PURPOSES AT RS.34,90,000/-. THE AO APPLYING THE PROVISION S OF SECTION 50C ADOPTED THE SALE CONSIDERATION AT RS.34,90,000 /-. THE AO REJECTED THE VALUATION OF THE PROPERTY AS ON 01-04- 1981 AT RS.1 LAKH TAKEN BY THE ASSESSEE AND CONSIDERED RS.10,000 PER ACRE AS ON 01-04-1981. AFTER DEDUCTING THE INDEXED COST OF ACQUISITIO N AT RS.1,11,825/- AND REJECTING THE COST OF IMPROVEMENT AT RS.8,98,860/- THE AO DETERMINED THE LONG TERM CAPITAL GAIN AT 11 ITA NO.1331/PN/2016 RS.33,78,178/-. SINCE THE ASSESSEES SHARE IN THE SAID PR OPERTY WAS 50% HE DETERMINED THE LONG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE AT RS.16,89,089/-. AFTER ALLOWING INVESTMENT IN CAP ITAL GAIN ACCOUNT WITH BANK OF BARODA AT RS.1,75,000/- BEING SH ARE OF THE ASSESSEE, THE AO DETERMINED THE LONG TERM CAPITAL GA IN IN THE HANDS OF THE ASSESSEE AT RS.15,14,089/-. IN APPEAL THE L D.CIT(A) ADOPTED THE VALUE OF THE PROPERTY U/S.50C AT RS.34,79,411 /-. HE ALSO UPHELD THE ACTION OF THE AO IN ADOPTING THE INDEXED C OST OF ACQUISITION AT RS.1,11,825/-. HOWEVER, HE DISALLOWED THE DEVELOPMENT EXPENSES AT RS.11,90,825/- AS DETERMINED BY THE DVO FROM THE COMPUTATION OF SUCH LONG TERM CAPITAL GAIN HOLDING T HAT THE DVO HAS WRONGLY TAKEN THESE EXPENSES. ACCORDING TO H IM, THE PROPERTY IN QUESTION WAS AN OPEN PLOT WHICH HAD BEEN CO MPARED WITH SMALL PLOTS OF LAND. SINCE IN THE INSTANT CASE THERE WA S OUTRIGHT SALE OF LAND TO SHRI RAJESH BHAGWANDAS SONI AND SINCE THE ASSESSEE HAD NOT ENTERED INTO ANY DEVELOPMENT AGREEME NT, THEREFORE, THE ASSESSEE HAS NOT INCURRED ANY EXPENDITUR E ON ACCOUNT OF SUCH DEVELOPMENT EXPENSES. ONLY THE SECOND PARTY T O THE SALE DEED NAMELY, SHRI RAJESH BHAGWANDAS SONI OR THIRD PARTY HAD CONVERTED THE LAND IN QUESTION INTO NA, DONE THE PLOTTING INTO VARIOUS PLOTS FOR RESIDENTIAL PURPOSES, DEVELOPED THE LAND, S UBMITTED LAYOUTS/PLANS, PAID TAXES/LEVIES/CHARGES ETC. TO THE LOCAL AUTHORITY AND ALL THE EXPENSES WERE TO BE BORNE BY HIM. THEREFORE , HE REJECTED THE CLAIM OF DEDUCTION OF RS.11,90,881/-. 14. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESS EE THAT SINCE THE DVO WHO IS A TECHNICALLY COMPETENT PERSON FOR SUCH VALUATION, HAS ALLOWED SUCH CLAIM AND SINCE THE REFERENCE WA S MADE BY THE CIT(A) HIMSELF, THEREFORE, HE SHOULD NOT HAVE REJECTE D SUCH 12 ITA NO.1331/PN/2016 DEDUCTION. SINCE THE ASSESSEES SHARE OF EXPENDITURE IN THE SAID PROPERTY COMES TO RS.5,95,440/- ON ACCOUNT OF COST OF D EVELOPMENT, ARCHITECT FEES, LEGAL CHARGES, ETC WHICH WERE CONSIDERED BY THE DVO, THEREFORE, THE SAME SHOULD BE ALLOWED. 15. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE, I FIND THE ASSESSEE IN THE INSTANT CASE HAD CLAIMED DEDUCTION OF RS.8 ,98,860/- TOWARDS COST OF IMPROVEMENT DURING THE COURSE OF ASSESS MENT PROCEEDINGS. I FIND ON THE BASIS OF THE REFERENCE MADE TO THE DVO BY THE CIT(A) THE DVO HAD CONSIDERED THE DEVELOPMENT EXPEN SES AT RS.11,90,881/- WHICH WERE DEDUCTED FROM THE FAIR MARKET V ALUE. HOWEVER, THE CIT(A) DID NOT ALLOW SUCH EXPENSES ON THE GR OUND THAT SUCH EXPENSES SHOULD BE BORNE BY THE PURCHASER AND N OT BY THE ASSESSEE AND THE DVO HAS EXCEEDED HIS LIMIT. I FIND FROM T HE VARIOUS DETAILS FILED THAT THE REFERENCE WAS MADE BY THE C IT(A) TO THE DVO WHO IS A TECHNICAL PERSON AND AFTER CONSIDERING THE V ARIOUS ASPECTS THE DVO HAD ALLOWED SUCH CLAIM. THEREFORE, THE CI T(A) SHOULD NOT HAVE REJECTED SUCH DEVELOPMENT EXPENSES OU TRIGHT. HOWEVER, I FIND THE ASSESSEE IN THE INSTANT CASE HAD INITIA LLY CLAIMED COST OF IMPROVEMENT AT RS.8,98,860/- AS PER ACTUALS WHE REAS THE DVO HAS CONSIDERED THE SAME AT RS.11,90,881/- ON ESTIMA TE BASIS WHICH INCLUDES THE ARCHITECT FEES, LEGAL CHARGES, DEVELOPE RS PROFIT ETC. APART FROM THE COST OF DEVELOPMENT. SINCE THE ASS ESSEE IN THE INSTANT CASE HAD ORIGINALLY CLAIMED DEDUCTION OF RS.8,98,860/- TOWARDS THE COST OF IMPROVEMENT, THEREFORE, THE SUBMISSIO N OF THE LD. COUNSEL FOR THE ASSESSEE TO ALLOW DEDUCTION OF RS.11,90,8 81/- FROM THE SALE CONSIDERATION APPEARS TO BE INCORRECT. CON SIDERING THE TOTALITY OF THE FACTS OF THE CASE, I DIRECT THE AO TO ALLOW DEDUCTION OF RS.8,98,860/- TOWARDS COST OF IMPROVEMENT. SINCE THE ASSE SSEES 13 ITA NO.1331/PN/2016 SHARE BEING 50% COMES TO RS.4,49,430/-, THEREFORE, THE ASS ESSEE IS ENTITLED TO GET DEDUCTION ON ACCOUNT OF COST OF IMPROVEM ENT FROM HIS PORTION OF SALE PROCEEDS AS REDUCED BY THE INDEXED COST OF ACQUISITION. ACCORDINGLY, THE ORDER OF THE CIT(A) IS MODIFIED A ND THE AO IS DIRECTED TO GRANT CONSEQUENTIAL RELIEF TO THE ASSESS EE. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 16. SO FAR AS THE GROUND RELATING TO ALLOWABILITY OF INTERES T U/S.234B AND 234C ARE CONCERNED, THE SAME ARE MANDATO RY AND CONSEQUENTIAL IN NATURE. ACCORDINGLY, GROUND OF APPEAL NO.4 BY THE ASSESSEE IS DISMISSED. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24-08-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 24 TH AUGUST, 2016. '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // // TRUE COPY // // $ % //UE &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - I, AURANGABAD 4. THE CIT-I, AURANGABAD 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.