Mrs.Leela Muralidharan, Trivandrum V. ITO, Trivandrum

ITA 137/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73818 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 12-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2013
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: PANKAJAKSHAN C GOVIND
• Keywords: Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 137/COCH/2013 ASSESSMENT YEAR : 2008-09 MRS. LEELA MURALIDHARAN, LAVANYA, VH-52, VIKRAMAPURA HILLS, KURAVANKONAM, THIRUVANANTHAPURAM-695 003. [PAN:ACYPL 7212M] VS. INCOME-TAX OFFICER, WARD -1(4), THIRUVANATHAPURAM. (REVENUE-RESPONDENT) ASSESSEE BY SHRI PANKAJAKSHAN C. GOVIND, CA REVENUE BY SHRI K.K. JOHN, SR. DR DATE OF HEARING 12/11/2013 DATE OF PRONOUNCEMENT 10/01/2014 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 28- 01-2013 PASSED BY LD CIT(A), TRIVANDRUM AND IT RELA TES TO THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE IS ASSAILING THE DECISION RENDERED BY LD. CIT ON THE FOLLOWING ISSUES:- (A) CONFIRMATION OF ADDITION OF RS. 73,092/-, OUT OF THE ADDITION RELATING TO CASH SHORTAGE. (B) CONFIRMATION OF ASSESSMENT OF CAPITAL GAIN ARI SING OUT OF SALE OF ERNAKULAM PROPERTY. (C) CONFIRMATION OF ASSESSMENT OF CAPITAL GAIN AR ISING OUT OF SALE OF THIRUVANANTHAPURAM PROPERTY. I.T.A. NO. 137/COCH/2013 2 3. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS A HOUSEWIFE. THE ASSESSEE DERIVES INTEREST INCOME FR OM DEPOSITS KEPT WITH BANKS. DURING THE YEAR UNDER CONSIDERATION, SHE DECLARED L OSS FROM SALE OF THREE PROPERTIES IN THE RETURN OF INCOME FILED BY HER. SU BSEQUENTLY, THE RETURN OF INCOME OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED A CA SH FLOW STATEMENT AND NET WEALTH STATEMENT AND AGREED TO OFFER ADDITIONAL INC OME OF RS. 4,85,575/- UNDER OTHER SOURCES, SINCE THERE WAS INCREASE IN THE NE T WEALTH DURING THE YEAR UNDER CONSIDERATION. IN THE CASH FLOW STATEMENT FILED BY THE ASSESSEE, THE MONEY DRAWN FOR PERSONAL AND HOUSEHOLD EXPENSES WAS SHOWN AT RS. 2,14,000/-. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE DID NOT DISCLOSE CERTAIN ITEMS OF CASH OUTFLOW IN THE CASH FLOW STATEMENT. ACCORDINGLY, T HE ASSESSING OFFICER PREPARED A REVISED CASH FLOW STATEMENT ON HIS OWN AND WHICH RESULTED IN CASH DEFICIT OF RS. 9,31,911/-. THE ASSESSING OFFICER ASSESSED THE CASH DEFICIT CITED ABOVE AS THE INCOME OF THE ASSESSEE. IT IS TO BE NOTICED TH AT THE ASSESSEE HAD EARLIER AGREED TO OFFER A SUM OF RS.4,85,575/-, BUT THE AO HAS ENHANCED THE SAME TO RS.9,31,911/-. 3.1 THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DECLARED LOSS ON SALE OF PROPERTIES LOCATED AT ERNAKULAM AND THIRUVANANTHA PURAM BY ADOPTING THE FAIR MARKET VALUE AS ON 1.4.1981 AT A HIGHER FIGURE. T HE AO, HOWEVER, ADOPTED A LOWER FIGURE FOR BOTH THE PROPERTIES AND ACCORDINGL Y ASSESSED THE INCOME FROM LONG TERM CAPITAL GAINS ON SALE OF ABOVE SAID TWO P ROPERTIES. 4. IN THE APPELLATE PROCEEDINGS BEFORE LD. CIT(A), THE ASSESSEE ACCEPTED THE ADDITION RELATING TO THE CASH SHORTAGE TO THE EXTEN T OF RS.5,98,394/-, I.E., RS.4,85,575/- PLUS A FURTHER SUM OF RS.1,12,819/-. OUT OF THE BALANCE AMOUNT OF RS.3,33,517/-, THE ASSESSEE SOUGHT RELIEF TO THE EX TENT OF RS.1,87,092/- RELATING DONATIONS /LOANS /PAYMENTS MADE TO VARIOUS ORGANIZA TIONS/PARTIES, ON THE I.T.A. NO. 137/COCH/2013 3 GROUND THAT SHE HAS INCLUDED THE SAME IN THE DRAWIN GS OF RS.2,14,000/- SHOWN IN THE CASH FLOW STATEMENT. SHE FURTHER SUBMITTED THAT SHE IS ONLY A HOUSEWIFE AND ALL HER PERSONAL EXPENSES WERE MET BY HER HUSBA ND WHO IS A RETIRED IAS OFFICER. THE LD. CIT(A) WAS NOT FULLY CONVINCED WI TH THE CONTENTIONS ACCORDINGLY GAVE A PARTIAL RELIEF TO THE TUNE OF RS.1,14,000/- OUT OF RS.1,87,092/- AND CONFIRMED THE ADDITION OF BALANCE AMOUNT OF RS.73,0 92/-. THE ASSESSEE IS AGGRIEVED BY THE SAID DECISION OF THE LD. CIT(A). 4.1 WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISS UE AND CAREFULLY PERUSED THE RECORD. ADMITTEDLY, THE ASSESSEE HAS SHOWN A S UM OF RS. 2,14,000/- AS CASH WITHDRAWAL TOWARDS PERSONAL EXPENSES IN THE CASH FL OW STATEMENT PREPARED BY HER. THE ASSESSING OFFICER HAS ALSO SHOWN THE ABOV E SAID AMOUNT AS CASH OUTFLOW IN THE CASH FLOW STATEMENT PREPARED BY HIM. THE FACTS THAT THE ASSESSEE IS A HOUSEWIFE AND HER HUSBAND IS A RETIRED IAS OFF ICER ARE NOT DISPUTED. HENCE, IT WAS SUBMITTED BY THE ASSESSEE THAT HER PERSONAL EXPENSES ARE MET BY HER HUSBAND AND ACCORDINGLY IT WAS CLAIMED THAT THE AMO UNT OF RS. 1,87,092/-, REFERRED ABOVE, HAS ALREADY BEEN INCLUDED IN THE DR AWINGS OF RS.2,14,000/- SHOWN IN THE CASH FLOW STATEMENT. 4.2 WE NOTICE THAT THE TAX AUTHORITIES HAVE NOT CON SIDERED THE CLAIM OF THE ASSESSEE THAT THE DOMESTIC EXPENSES ARE MET OUT OF THE INCOME OF HER HUSBAND, WHO IS A RETIRED IAS OFFICER. HAVING ACCEPTED THE FACT THAT THE ASSESSEE IS A HOUSE WIFE AND IS HAVING INTEREST INCOME ONLY, IN O UR VIEW, IT IS NOT CORRECT TO REJECT THE SAID CONTENTIONS WITHOUT BRINGING ANY MA TERIAL ON RECORD TO DISPROVE THE SAID CLAIM. THE CLAIM OF THE ASSESSEE IS THAT T HE SUM OF RS.1,87,092/-, REFERRED ABOVE, WAS INCURRED OUT OF SUM OF RS. 2,14 ,000 SHOWN AS DRAWINGS IN THE CASH FLOW STATEMENT. CONSIDERING THE STATUS OF THE ASSESSEE AND ALSO CONSIDERING THE FACT THAT HER HUSBAND IS MEETING DO MESTIC EXPENSES FROM OUT OF HIS OWN SOURCE OF INCOME, WE DO NOT FIND ANY REASON TO REJECT THE SUBMISSIONS OF THE ASSESSEE. WE HAVE ALREADY NOTICED THAT THE LD. CIT(A) HAS ALLOWED THE CLAIM I.T.A. NO. 137/COCH/2013 4 TO THE EXTENT OF RS. 1,14,000/-. IN VIEW OF THE FO REGOING, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT THE ASSE SSING OFFICER TO TREAT THE AMOUNT OF RS. 1,87,092/- AS HAVING BEEN MADE OUT OF DRAWINGS OF RS. 2,14,000/- SHOWN IN THE CASH FLOW STATEMENT. 5. THE NEXT ISSUE RELATES TO THE COMPUTATION OF CAPITAL GAIN. THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE AO IN ADOPTING THE F AIR MARKET VALUE AS ON 1.4.1981 AT A DIFFERENT FIGURE THAN THAT DISCLOSED BY THE ASSESSEE IN RESPECT OF BOTH TRIVANDRUM AND ERNAKULAM PROPERTIES. THE ASSES SEE HAD ADOPTED THE FOLLOWING RATES AS ON 1.4.1981 FOR THE LAND AND BUI LDING AS FAIR MARKET VALUE, ON THE BASIS OF A VALUATION REPORT OBTAINED FROM A REG ISTERED VALUER. PROPERTY LAND BU ILDING TRIVANDRUM PROPERTY RS.70000/- PER CENT RS.7,30,000/- ERNAKULAM PROPERTY RS.2,00,000/- PER CENT RS.12,20,427/- THE ASSESSING OFFICER NOTICED THAT THE REGISTERED V ALUER HAS ARRIVED AT THE ABOVE SAID VALUES ON ESTIMATE ONLY, I.E., HE DID NOT RELY UPON ANY COMPARABLE CASE TO ARRIVE AT THE VALUE AS ON 1.4.1981. HENCE, THE AO MADE ENQUIRIES WITH SUB REGISTRAR OFFICER AND DETERMINED THE VALUE AS ON 1. 4.1981 AS UNDER:- PROPERTY LAND BU ILDING TRIVANDRUM PROPERTY RS.2000/- PER CENT RS.7,30,000/- ERNAKULAM PROPERTY RS.2000/- PER CENT RS.4,61,700/- THUS, IT IS NOTICED THAT THE ASSESSING OFFICER HAS ADOPTED THE VALUE OF LAND @ RS.2,000/- PER CENT FOR BOTH THE PROPERTIES. IN RE SPECT OF BUILDING PORTION OF THE TRIVANDRUM PROPERTY, THE REGISTERED VALUER HAD ADOP TED THE RATE OF RS.150/- PER SQ. FT AND THE SAME WAS FOUND REASONABLE BY THE AO. HOWEVER, IN RESPECT OF ERNAKULAM PROPERTY, THE BUILDING VALUE WAS FOUND TO HAVE BEEN ADOPTED AT THE RATE OF RS.396/- PER SQ.FT., WHICH WAS CONSIDERED O N THE HIGHER SIDE BY THE AO. ACCORDINGLY, HE DETERMINED THE BUILDING VALUE BY AD OPTING THE RATE OF RS.150/- I.T.A. NO. 137/COCH/2013 5 PER SQ. FT FOR ERNAKULAM PROPERTY ALSO. THE LD CIT (A) ALSO CONFIRMED THE VALUES DETERMINED BY THE AO IN RESPECT OF BOTH THE PROPERT IES. 6. BEFORE US, THE LD A.R PLACED HEAVY RELIANCE ON THE VALUATION REPORT OBTAINED BY THE ASSESSEE FROM THE REGISTERED VALUER . HOWEVER, WE NOTICE THAT THE LD CIT(A) AS WELL AS THE AO HAS REJECTED THE SA ME FOR THE REASON THAT THE REGISTERED VALUER HAS SIMPLY GIVEN HIS OWN ESTIMATE WITHOUT ANY BASIS. IN RESPECT OF TRIVANDRUM PROPERTY, THE ASSESSEE HAS FI LED A CERTIFICATE OBTAINED FROM TEHSILDAR. HOWEVER, THE LD CIT(A) HAS FOUND T HE SAME AS NOT RELIABLE. THE OBSERVATIONS MADE BY THE FIRST APPELLATE AUTHORITY IN THIS REGARD ARE EXTRACTED BELOW FOR THE SAKE OF CONVENIENCE:- BEFORE CONSIDERING THE GROUND ON WHICH THE FMV AS AT 1.4.1981 WAS TAKEN BY THE ASSESSING OFFICER AND THE REASONING GI VEN BY HIM IN REJECTING THE CLAIM OF APPELLANT. SINCE THE ASSESS EE HAS PLACED STRONG RELIANCE ON THE REPORT OF THE REGISTERED VALUER AND ALSO THAT OF TELISIDAR OF PATTOM VILLAGE AND MADE A PRAYER BEFORE THE UNDE RSIGNED THAT VALUATION AS PER REPORT OF APPROVED VALUER SHALL BE ADOPTED, IT IS NECESSARY TO EXAMINE THE SAID DOCUMENTS. THE REPORT OF VALUATION FOR THE PROPERTY HAS BEEN MA BY SHRI G. VISWANATHAN, RE GISTERED VALUER. MOST IMPORTANT PART OF THE REPORT IS THE BASIS OF V ALUATION OF THE PROPERTY. THIS PART IS UNDER THE HEAD SALES WHIC H IS REPRODUCED AS UNDER:- 37. LAND RATE ADOPTED IN THE VALUATION: RS. 70,000 /- PER CENT (1981) 38. IF THE SALE INSTANCES ARE NOT AVAILABLE OR NOT RELIED UPON, THE BASIS OF ARRIVING AT TH E LAND RATE. : BOARD VIDE NOTIFICATION NO. 214 OF 2007 DTD. AUGUST, 3. THERE IS NO OTHER COLUMN FOR THE BASIS OF VALUATION IN THE REPORT. AS IS CLEAR FROM THE ABOVE THE LAND RATE OF RS. 2,00,000/ - PER CENT FOR 1981 WAS ADOPTED BY THE VALUER. HOWEVER, HE HAS JUST SK IPPED OF ANSWER THE MOST IMPORTANT QUESTION REGARDING BASIS FOR ARRIVIN G AT THE SAID RATE. H HAS IN FACT NOT GIVEN ANY BASIS FOR ARRIVING AT THE AFORESAID LAND RATE. AGAINST THE QUESTION THAT IF THE SALE INSTANCES ARE NOT AVAILABLE OR NOT RELIED UPON WHAT IS THE BASIS OF ARRIVING AT THE LA ND RATE, HE HAS JUST MENTIONED REFERENCE NO. OF BOARD NOTIFICATION NO. 2 14 DTD. 3.8.2007. I.T.A. NO. 137/COCH/2013 6 NOW THE QUESTION IS WHETHER THE CBDT HAS GIVEN ANY BASIS FOR VALUATION OF PROPERTY IN THE SAID NOTIFICATION. BY THIS NOTI FICATION, THE COST INFLATION INDEX FOR F.Y. 2007-08 AT 551 WAS INCLUDED IN THE E ARLIER NOTIFICATION S.O. 709(E) DTD. 20.8.1998 AS SL. NO. 27 AFTER THE SL. NO . 26 OF THE EARLIER NOTIFICATION. IT IS QUITE OBVIOUS THAT JUST BY LOOK ING AT THE COST INFLATION INDEX OF F.Y. 2007-08 IT IS IMPOSSIBLE TO ARRIVE AT THE FMV IF ANY PROPERTY. IT IS THEREFORE, CLEAR THAT ABSOLUTELY N O BASIS HAS BEEN GIVEN BY THE REGISTERED VALUER FOR ESTIMATING THE FMV OF THE PROPERTY AS AT 1.4.1981. THE AFORESAID COLUMN ALSO SHOW THAT SAL E INSTANCES SHALL BE PREFERRED FOR ARRIVING AT THE LAND RATE AND ONLY IN CASE WHEN SALE INSTANCES ARE NOT AVAILABLE OR NOT RELIED UPON OTHE R JUSTIFIABLE BASIS CAN BE ADOPTED FOR VALUATION. IN THIS CASE ASSESSING O FFICER HAS BASED ITS VALUATION AFTER CONSIDERING SALE INSTANCES OF NUMBE R OF PROPERTIES. THE REGISTERED VALUER HAS MADE THE VALUATION OF BUI LDING EXISTING ON THE SAID ALSO FOR THE YEAR 1981. THE PROPERTY WAS 28 Y EARS OLD BY THE YEAR 1981. TOTAL PLINTH AREA HAS BEEN MENTIONED AT 3078 SQ. FT. IN THE VALUATION REPORT. THE TOTAL VALUE OF THE BUILDING HAS BEEN MENTIONED AT RS. 7,30,000/-. THERE IS ABSOLUTELY NO MENTION OF TYPES OF CONSTRUCTION OR FITTINGS IN THE BUILDING, TYPE OF FLOORING, BOUN DARY WALL ETC. THERE IS NO MENTION OF ANY PWD/CPWD RATE OF PER SQ. FT. COST OF CONSTRUCTION OR ANY OTHER BASIS FOR VALUATION OF THE CONSTRUCTION. IN FACT EXCEPT FOR PLINTH AREAS OF FLOORS AND TOTAL VALUE NOTHING ELSE ABOUT THE TYPE OF CONSTRUCTION HAS BEEN MENTIONED IN THE REPORT. EVEN IN THE RELEVANT COLUMNS, N.A. HAS BEEN MENTIONED. THE RELEVANT C OLUMNS ARE REPRODUCED BELOW:- IMPROVEMENTS: 22. ATTACH PLANS AND ELEVATIONS OF ALL STRUCTURES STANDING ON THE LAND AND A LAYOUT PLAN : N.A. 23. FURNISH TECHNICAL DETAILS OF THE B UILDING ON A SEPARATE SHEET (THE ANNEXURE TO THIS FORMAT BE USED) : N.A. UNDER THE HEADING COST OF CONSTRUCTION ALSO NO I NFORMATION HAS BEEN GIVEN FROM WHICH ANY ESTIMATION OF THE COST OF CON STRUCTION CAN BE MADE. ALL THE COLUMNS UNDER SAID HEADING ARE REPRODUCED BELOW:- COST OF CONSTRUCTION: 39. YEAR OF COMMENCEMENT OF CONSTRUCTI ON AND YEAR OF COMPLETION : 1995-1957 I.T.A. NO. 137/COCH/2013 7 40. WHAT WAS THE METHOD OF CONSTRUCTI ON, BY CONTRACT/BY EMPLOYING LABOUR DI RECTLY/BOTH? : EMPLOYING LABOUR DIRECTLY 41. FOR ITEMS OF WORK DONE ON CONTRAC T PRODUCE COPIES OF AGREEMENTS : N.A. 42. FOR ITEMS OF WORK DONE BY ENGAGIN G LABOUR DIRECTLY, GIVE BASIC RATE OF MA TERIAL AND LABOUR SUPPORTED BY DOCUMENTARY PROOF : N.A. THEREFORE, EVEN FOR FINDING FMV OF THE BUILDING EXI STING ON THE LAND ABSOLUTELY NO BASIS HAS BEEN GIVEN BY THE REGISTERE D VALUER. UNDER THESE CIRCUMSTANCES THE REPORT OF THE VALUER IS NOT EVEN WORTH OF ANY SERIOUS CONSIDERATION. COMING TO THE VALUATION CERTIFICATE OF TEHSILDAR, IT IS SEEN THAT NO BASIS FOR VALUATION HAS BEEN GIVEN IN THIS CERTIFIC ATE ALSO. IT IS A HALF PAGE DOCUMENT AND JUST STATES THAT LAND HAVING SUCH AND SUCH AREA AND LOCATION HAS ESTIMATED VALUE OF RS. 16,50,000/-. FURTHER, THE CERTIFICATE IS IN RESPECT OF LAND IN OF PATTOM VILLAGE WHEREAS THE PROPERTY OF THE APPELLANT IS IN KAWDIAR VILLAGE. THE WORD AS AT 1 981 ARE WRITTEN IN A HAND WRITING WHICH IS DIFFERENT FROM HAND WRITING I N WHICH THE CERTIFICATE HAS BEEN FILLED UP. THEREFORE THE GENUINENESS OF T HE CERTIFICATE ITSELF IS IN DOUBT. UNLESS THE REASONING FOR THE VALUATION I S GIVEN IN ANY DOCUMENT, THE SAME IS NOT WORTH OF ANY CONSIDERATIO N. WE FULLY AGREE WITH THE VIEW EXPRESSED BY THE LD CI T(A) ON THE VALUATION REPORT AS WELL AS THE CERTIFICATE OBTAINED FROM TEHSILDAR FOR THE REASONING GIVEN BY HIM. ACCORDINGLY, WE UPHOLD HIS ORDER ON THIS ISSUE. 7. WE SHALL FIRST CONSIDER THE ISSUE RELATING T O TRIVANDRUM PROPERTY. IN RESPECT OF THIS PROPERTY, THE ASSESSEE HAD ADOPTED THE FAIR MARKET VALUE OF THE LAND AS ON 1.4.1981 AT RS.70,000/- PER CENT, WHERE AS THE A O HAS ADOPTED THE SAME AS RS.2,000/- PER CENT ON THE BASIS OF INSTANCES OF SA LE OF PROPERTIES THAT TOOK PLACE IN THE NEARBY AREAS. ACCORDING TO THE LD A.R, THE LOCATION, FRONTAGE AND POSITIONING OF THE PROPERTY INCLUDING THE ELEVATION FROM THE MAIN GROUND COULD SUBSTANTIALLY INFLUENCE THE VALUE OF THE PROPERTY. ACCORDINGLY, HE CONTENDED THAT I.T.A. NO. 137/COCH/2013 8 THE AO WAS NOT JUSTIFIED IN PLACING RELIANCE ON THE SRO RATES. THE LD A.R FURTHER SUBMITTED THAT THE KERALA HOUSING BOARD, A WHOLLY O WNED GOVERNMENT OF KERALA UNDERTAKING, HAS ALLOTTED PLOTS IN PANDITS COLONY, WHICH IS ABOUT 1 KM AWAY FROM THE IMPUGNED LAND, AT THE RATE OF RS.20,000/- PER CENT DURING THE PERIOD FROM 1980-82. HE FURTHER SUBMITTED THAT THE ASSESS EE HAS OBTAINED A FRESH VALUATION REPORT FROM ANOTHER VALUER, WHO HAS FIXED FAIR MARKET VALUE AS ON 1.4.1981 AT RS.29,500/- PER CENT. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSING OFFICER HAS MADE ENQUIRIES WITH THE S RO AND ACCORDINGLY ARRIVED AT THE RATE OF RS.2,000/- PER CENT. 7.1 WE HAVE HEARD RIVAL CONTENTIONS ON THIS ISS UE. THE FAIR MARKET VALUE IS NOTHING BUT A PRICE THAT MAY BE AGREED BETWEEN A WI LLING PURCHASER AND A WILLING SELLER. THE FAIR MARKET VALUE IS NOT A CONSTANT FIG URE. IT MAY DIFFER DEPENDING UPON THE CIRCUMSTANCES AND FACTORS WHICH ARE NECESS ARILY TO BE CONSIDERED. IN THIS CONNECTION, THE SRO RATES ARE ONE OF THE FACTO RS THAT REQUIRE CONSIDERATION, BUT THAT ALONE, IN OUR VIEW, CANNOT BE CONSIDERED A S THE SOLE BASIS FOR DETERMINING THE FAIR MARKET VALUE. AS CONTENDED BY THE LD A.R, THE FACTORS SUCH AS LOCATION OF THE PROPERTY, THE FRONTAGE, THE ELEV ATION, THE VANTAGE POINT ETC. WOULD INFLUENCE THE VALUE OF A PROPERTY. HOWEVER, THE ASSESSEE HAS PLACED HEAVY RELIANCE ON THE VALUATION REPORTS OBTAINED FR OM REGISTERED VALUERS. THE FIRST VALUATION REPORT WAS REJECTED BY THE TAX AUTH ORITIES AND WE HAVE ALSO UPHELD THE SAME. THE SECOND VALUATION REPORT WAS PRODUCED BEFORE US FOR THE FIRST TIME AND IT WAS NOT PRODUCED BEFORE THE TAX AUTHORITIES. HENCE WE ARE UNABLE TO RECOGNIZE THE SAME. THOUGH THE ASSESSEE HAS SUBMIT TED THAT THE KERALA HOUSING BOARD HAS SOLD PROPERTIES IN A NEARBY AREA @ RS.20,000/- PER CENT, YET NO MATERIAL WAS PLACED BEFORE US TO SUBSTANTIATE TH E SAID CLAIM. 7.2 THE ASSESSEE HAS SUBMITTED THAT THE TRIVANDR UM PROPERTY IS LOCATED IN BELAHAVEN GARDENS AREA NEAR KOWDIAR JUNCTION. BOTH THE PARTIES HAVE ACCEPTED THAT THE KOWDIAR JUNCTION IS ONE OF THE PROMINENT L OCATIONS IN TRIVANDRUM. I.T.A. NO. 137/COCH/2013 9 HENCE, IN OUR VIEW THE FAIR MARKET VALUE AS ON 1.4. 1981 FIXED BY THE AO @ RS.2000/- PER CENT IS ON THE LOWER SIDE. AT THE VE RY SAME TIME, THE RATE OF RS.70,000/- ADOPTED BY THE ASSESSEE IS ON THE HIGHE R SIDE. IN THE WRITTEN SUBMISSIONS FILED BEFORE US, THE LD A.R HAS PRAYED FOR ADOPTION OF RS.29,500/- PER CENT ON THE BASIS OF SECOND VALUATION REPORT. HENCE, AFTER CONSIDERING ALL THE FACTORS, THE TRIBUNAL IS OF CONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD BE MET, IF THE FAIR MARKET VALUE IS ADOPTED AT THE RAT E OF RS.20,000/- PER CENT AS ON 1.4.1981. ACCORDINGLY, WE SET ASIDE THE ORDER OF L D CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE CAPITAL GAINS BY ADOPTING THE FAIR MARKET VALUE OF TRIVANDRUM PROPERTY AT RS.20,000/- PER CENT. 8. WE SHALL NOW CONSIDER THE ISSUES RELATING TO ERNAKULAM PROPERTY. ACCORDING TO THE ASSESSEE, THIS PROPERTY IS SITUATED IN M G R OAD, NEAR COCHIN SHIPYARD, A VERY PROMINENT LOCALITY. THE LD A.R SUBMITTED THAT THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF A.P. ASHITH AND SMT. LEELA KARUNAKARAN (ITA NO.218/COCH/2004 AND ITA NO.219/COCH/2004) HAS DETE RMINED THE FAIR MARKET VALUE AS ON 1.4.1981 AT RS.2.00 LAKHS PER CENT IN R ESPECT OF A PROPERTY LOCATED IN M.G. ROAD. THE LD COUNSEL SUBMITTED THAT THE PROPE RTY SOLD BY THE ASSESSEE IS LOCATED ABOUT 1-1/2 KMS., AWAY FROM THE ABOVE SAID PROPERTY AND ACCORDINGLY PRAYED THAT THE SAME RATE MAY BE ADOPTED. ON THE C ONTRARY, THE LD D.R SUBMITTED THAT THE LD CIT(A) HAS SPECIFICALLY REJEC TED THE SIMILAR CLAIM MADE BEFORE HIM ON THE REASONING THAT THE LOCATION AND P ROMINENCE OF BOTH THE PROPERTIES DIFFER ALTOGETHER. THE LD D.R SUBMITTED THAT THE PROPERTY SOLD BY THE ASSESSEE IS LOCATED IN THEVARA AREA, WHICH DOES NOT HAVE MUCH IMPORTANCE AS THAT ONE CONSIDERED IN THE CASE OF SMT. LEELA KARUN AKARAN. THE LD D.R FURTHER SUBMITTED THAT THE AO HAS ADOPTED THE RATE OF RS.20 00/- PER CENT ON THE BASIS OF COMPARABLE CASES OBTAINED FROM SRO. 8.1 WE HAVE HEARD RIVAL CONTENTIONS ON THIS ISS UE. WE NOTICE THAT THIS BENCH OF TRIBUNAL HAS CONSIDERED AN IDENTICAL ISSUE IN TH E CASE OF MRS. SUDHA I.T.A. NO. 137/COCH/2013 10 RAMACHANDRAN IN ITA NO. 384/COCH/2013. IN THAT CAS E, THE PROPERTY SOLD BY THE ASSESSEE THEREIN WAS LOCATED IN BANNERJI ROAD, ABET TING M.G ROAD. THE TRIBUNAL, VIDE ITS ORDER DATED 22.11.2003, FIXED TH E FAIR MARKET VALUE AS ON 1.4.1981 AT RS.1,50,000/- PER CENT. THE OPERATIVE PORTION OF THE ORDER PASSED BY THE TRIBUNAL IS EXTRACTED BELOW, FOR THE SAKE OF CONVENIENCE:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL ON RECORD. AS RIGHTLY SUBMITT ED BY THE LD. COUNSEL FOR THE ASSESSEE, FAIR MARKET VALUE IS NOTHING BUT A PR ICE THAT MAY BE AGREED BETWEEN A WILLING PURCHASER AND A WILLING SELLER. T HE FAIR MARKET VALUE IS NOT A CONSTANT FIGURE. IT MAY DIFFER DEPENDING UPON TH E CIRCUMSTANCES AND FACTORS WHICH ARE NECESSARILY TO BE CONSIDERED. IT IS WELL SETTLED PRINCIPLES OF LAW THAT THE FAIR MARKET VALUE WOULD DEPEND UPON VARIOUS FACTORS SUCH AS LOCATION OF THE PROPERTY, EXTENT OF THE PROPERTY, I NFRASTRUCTURES AVAILABLE AROUND THE LOCALITY, ACCESS TO THE INFRASTRUCTURE F ROM THE LAND IN QUESTION, THE GUIDELINE VALUE FIXED BY THE GOVERNMENT FOR SAL E OF THE PROPERTY, COMMERCIAL IMPORTANCE, ETC. IN THIS CASE, THE ASSES SING OFFICER HAS TAKEN ONLY SOME COMPARATIVE CASES FROM THE REGISTERED SAL E DEEDS WHICH ARE CLAIMED TO BE NEARER TO THE VICINITY. THE OTHER FA CTORS SUCH AS AVAILABLE INFRASTRUCTURE, ACCESS TO THE INFRASTRUCTURE, COMME RCIAL IMPORTANCE ETC. WERE NOT TAKEN INTO CONSIDERATION. IT IS AN ADMITTE D FACT THAT BANERJI ROAD IS NEARER TO M.G. ROAD. M.G. ROAD IS A VERY IMPORTANT COMMERCIAL AREA EVEN IN THE YEAR 1981. THEREFORE, BANERJI ROAD WHICH IS NEARER TO M.G. ROAD HAS ITS OWN COMMERCIAL VALUE AND HAD ACCESS TO THE INFR ASTRUCTURE AND COMMERCIAL ESTABLISHMENTS. THEREFORE, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE FAIR MARKET VALUE FIXED BY THE ASS ESSING OFFICER AT RS. 75,000 IS VERY LOW. AT THE VERY SAME TIME, THE FAI R MARKET VALUE FIXED BY THE VALUATION OFFICER AT RS. 2 LAKHS PER CENT IS VE RY HIGH AND HE HAS NOT TAKEN INTO CONSIDERATION THE FACTORS WHICH ARE REFE RRED ABOVE WHILE FIXING THE VALUE AT RS. 2 LAKHS. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT AFTER TAKING INTO CONSIDERATION THE COMMERCIAL IMPO RTANCE OF THE PROPERTY AND THE INFRASTRUCTURES AVAILABLE IN THE VICINITY, THE ENDS OF JUSTICE WOULD BE MET IF THE FAIR MARKET VALUE OF THE PROPERTY IS ADO PTED AT RS. 1,50,00 PER CENT AS ON 01-04-1981. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT ESTIMATING THE VALUE OF THE PROPERTY AS ON 01- 04-1981 AT RS. 1,50,000 WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, THE O RDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE FAIR MARKET VALUE AS ON 01-04-1981 AT RS. 1,50,000 PER CENT AND COMPUTE THE CAPITAL GAIN ACCORDINGLY. I.T.A. NO. 137/COCH/2013 11 8.2 THE PROPERTY SOLD BY THE PRESENT ASSESSEE IS LOCATED IN ANOTHER END OF THE M.G ROAD. ACCORDING TO LD A.R, THE ENTIRE STRETCH OF THE M.G ROAD HAD EQUAL COMMERCIAL IMPORTANCE. FURTHER THE IMPUGNED PROPER TY WAS LOCATED VERY NEAR TO M/S COCHIN SHIPYARD. IN THE CASE OF MRS. SUDHA RAMACHANDRAN (SUPRA), THE TRIBUNAL HAS TAKEN NOTE OF THE FACT THAT THE FAIR M ARKET VALUE WOULD DEPEND UPON MANY FACTORS. HENCE, CONSIDERING THE LOCATION OF T HE PROPERTY SOLD BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE VALUE OF RS.2 ,000/- PER CENT FIXED BY THE AO IS VERY MUCH ON THE LOWER SIDE. IN OUR VIEW, TH E ENDS OF JUSTICE WOULD BE MET, IF THE FAIR MARKET VALUE AS ON 1.4.1981 IS ADO PTED AT THE RATE OF RS.1,50,000/- PER CENT FOR THE PRESENT PROPERTY ALS O. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ADOPT THE FAIR MARKET VALUE AS ON 1.4.1981 AT RS.1,50,000/- PER CENT AND COMPUTE THE CAPITAL GAIN ACCORDINGLY. 9. THE ASSESSEE IS ALSO DISPUTING THE VALUE OF BU ILDING ADOPTED BY THE AO. AS STATED EARLIER, THE ASSESSEE ADOPTED THE RATE OF RS .396/- PER SQ. FT. FOR THE VALUING THE BUILDING AS ON 1.4.1981, WHILE THE AO A DOPTED THE RATE OF RS.150/- PER SQ. FT. ACCORDING TO THE ASSESSEE, THE BUILDIN G WAS HAVING FULL TEAK WOOD AND HENCE THE COST OF CONSTRUCTION WOULD HAVE BEEN MORE AT THAT POINT OF TIME. HOWEVER, WE NOTICE THAT THE SAID ORAL SUBMISSIONS W ERE NOT SUBSTANTIATED. THOUGH THE LD A.R PLACED RELIANCE ON THE VALUATION REPORT, WE HAVE ALREADY UPHELD THE DECISION TAKEN BY LD CIT(A) TO REJECT TH E SAME. HENCE, WE ARE NOT INCLINED TO PLACE RELIANCE ON THE ABOVE SAID VALUAT ION REPORT. SINCE THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUBSTANTI ATE THE VALUE OF RS.396/- PER SQ. FT., WE DO NOT FIND ANY INFIRMITY IN THE DECISI ON OF THE TAX AUTHORITIES IN DETERMINING THE COST AT RS.150/- PER SQ. FT. ACCOR DINGLY, WE UPHOLD THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. I.T.A. NO. 137/COCH/2013 12 10. IN THE RESULT, THE APPEAL FILED BY THE ASSE SSEE IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 1 0-01-2014. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 10TH JANUARY, 2014 GJ COPY TO: 1. MRS. LEELA MURALIDHARAN, LAVANYA, VH-52, VIKRAMA PURA HILLS,KURAVANKONAM, THIRUVANANTHAPURAM-695 003. 2. THE INCOME-TAX OFFICER, WARD-1(4), THIRUVANANTHA PURAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), TRIVAND RUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN