Smt. Kanak Lata Jain, Agra V. I.T.O.-2(1), Agra

ITA 141/AGR/2011

• Counselvise Citation: 14120314 RSA 2011
• Duration Of Justice: 1 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 10-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: K K JAIN
• Keywords: Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 141/AGRA/2011 ASSTT. YEAR : 2005-06 SMT. KANAK LATA JAIN, VS. INCOME-TAX OFFICER, 24/180, BAGH RAM SAHAI, 2(1), AGRA. LOHAMANDI, AGRA. (PAN : AKLPJ 6612N) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. JAIN, ADVOCATE. RESPONDENT BY : SHRI A.K. SHARMA, JR. D.R. DATE OF HEARING : 16.07.2012 DATE OF PRONOUNCEMENT OF ORDER : 20.07.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A)-I, AGRA DATED 23.12.2010 FOR THE ASSESSMENT YEAR 2005- 06 ON THE FOLLOWING GROUNDS : 1. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN NOT ACCEPTING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.198 1 AS DETERMINED BY THE REGISTERED APPROVED VALUER AT RS.2,68,853/- FOR WORKING OUT THE CAPITAL GAIN ON THE SALE OF PROPERTY. 2. BECAUSE BOTH THE LOWER AUTHORITIES HAVE ERRED I N CALCULATING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.198 1 ACCORDING TO THEIR OWN CALCULATIONS AND ACCEPTING THE REGISTERED APPRO VED VALUERS REPORT IN PIECE MEAL. ITA NO. 141/AGRA/2011 2 3. BECAUSE THE LD. CIT(A) ERRED IN DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY AT RS.2,15,974/- AS AGAINST R S.2,68,853/- DETERMINED BY THE REGISTERED APPROVED VALUER. 2. THE LD. COUNSEL FOR THE ASSESSEE ON THE ABOVE GR OUNDS OF APPEAL, REFERRED TO PARA 5.1 TO 5.4 OF THE APPELLATE ORDER. THE LD. CIT (A) BRIEFLY NOTED THAT THE ASSESSEE OBJECTED TO THE FAIR MARKET VALUE OF THE PROPERTY A DOPTED BY THE AO AS ON 01.04.1981 AT RS.1,66,842/- AS AGAINST THE VALUE SH OWN BY THE ASSESSEE AT RS.2,68,853/- BASED ON THE REPORT OF THE REGISTERED VALUER. THE ASSESSEE SUBMITTED THAT THE RECALCULATION DONE BY THE AO AT RS.1,66,84 2/- IS WITHOUT ANY BASIS AND THE AO IS NOT EXPERT IN THE MATTER OF VALUATION. THEREF ORE, THE REPORT OF REGISTERED VALUER SHOULD BE ACCEPTED AND THE COST WORKED OUT B Y THE AO IS INCORRECT. THE AO WAS ASKED TO COLLECT COMPARABLE SALE INSTANCES FROM THE REGISTRAR OFFICE. THE AO VIDE REPORT DATED 07.12.2010 SUBMITTED THE SALE DOC UMENTS OF PROPERTY SOLD ON 15.06.1981 AND POINTED OUT IN HIS LETTER THAT THE S ALE DOCUMENT IS THE ONLY DOCUMENT AVAILABLE PERTAINING TO LOCALITY OF BAGH R AM SAHAI, LOHAMANDI, AGRA FOR THE PERIOD 01.04.1981 TO 31.12.1981. THE LD. CIT(A) , CONSIDERING THE EXPLANATION OF THE ASSESSEE AND THE MATERIAL ON RECORD, PARTLY ALLOWED THE APPEAL OF THE ASSESSEE ON THE ABOVE ISSUE. THE FINDINGS OF THE LD. CIT(A) IN PARAS 5.2 TO 5.4 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER :- 5.2. THE SALE DOCUMENT SUBMITTED BY THE AO VIDE HI S ABOVE MENTIONED LETTER DATED 7.12.2010 WAS CONSIDERED. AS PER THIS SALE DOCUMENT, IT HAS BEEN FOUND THAT THE PROPERTY WAS S OLD AT RS.30,000/- ITA NO. 141/AGRA/2011 3 HAVING TOTAL AREA OF 45.985 SQ. METER. THE AREA OF THE PROPERTY OF THE APPELLANT IS 669.05 SQ. METER. AFTER APPLYING THE R ATE OF VALUATION OF PROPERTY AS PER THIS SALE DOCUMENT, THE VALUE OF TH E PROPERTY OF THE APPELLANT COMES TO ABOUT RS.4,36,520/- WHICH IS SUB STANTIAL HIGHER THAN THE VALUE OF RS.2,66,853/- DETERMINED BY THE R EGISTERED VALUER IN THE VALUATION REPORT SUBMITTED BY THE APPELLANT AND HENCE THE VALUE DETERMINED ON THE BASIS OF THIS SALE DOCUMENT CANNO T BE ADOPTED BECAUSE THE PROPERTY SOLD IN THIS SALE DOCUMENT WAS NOT FOUND TO BE COMPARABLE WITH THE PROPERTY OF THE APPELLANT. 5.3. FURTHER, I HAVE SCRUTINIZED THE COMPUTATION O F VALUATION GIVEN IN THE ASSESSMENT ORDER. AS PER THE DETAILS P ROVIDED BY THE APPELLANT AND AS PER THE INFORMATION AVAILABLE IN T HE VALUATION REPORT OF THE REGISTERED VALUER (SHRI A.M. JAIN) SUBMITTED BY THE APPELLANT AT THE TIME OF ASSESSMENT PROCEEDINGS, THE PROPERTY UNDER CONSIDERATION WAS PURCHASED IN 1968 FOR RS.20,000/- . SOME CONSTRUCTED PART EXISTED IN THE PROPERTY AT THE TIM E OF ITS PURCHASE IN 1968. FURTHER CONSTRUCTION WAS CARRIED OUT IN THIS PROPERTY IN 1980. BASED ON THESE INFORMATION, THE AO COMPUTED THE VAL UE OF THE PROPERTY (AS ON 1.04.1981) ON ESTIMATED BASIS IN WH ICH APPRECIATION FOR THE PROPERTY HAS BEEN TAKEN 25% FOR EACH YEAR F ROM 1968 TO 1981 (I.E., 12 X 5000 = RS.60,000/-) BUT NO BASIS FOR TH IS CALCULATION HAS BEEN DISCUSSED IN THE ASSESSMENT ORDER. VALUE OF CO NSTRUCTION AFTER PURCHASE WAS SHOWN AT RS.86,842/- WHICH WAS TAKEN F ROM THE VALUATION REPORT. AFTER ADDING UP RS.20,000/- (ORIG INAL COST OF THE PROPERTY IN 1968), RS.60,000/-) BUT NO BASIS FOR TH IS CALCULATION HAS BEEN DISCUSSED IN THE ASSESSMENT ORDER. VALUE OF CO NSTRUCTION AFTER PURCHASE WAS SHOWN AT RS.86,842/- WHICH WAS TAKEN F ROM THE VALUATION REPORT. AFTER ADDING UP RS.20,000/- (ORIG INAL COST OF THE PROPERTY IN 1968), RS.60,000/- (ENHANCEMENT IN THE VALUE OF PROPERTY FROM 1968 TO 1981 COMPUTED BY THE AO ON ESTIMATE BA SIS) AND RS.86,842/- (VALUE OF CONSTRUCTION AS DETERMINED IN VALUATION REPORT OF THE REGISTERED VALUER), TOTAL VALUE DETERMINED B Y THE AO COMES TO RS.1,66,842/-. THEREFORE, IT APPEARS THAT PART OF T HE VALUATION REPORT WAS ACCEPTED BY THE AO, WHICH PERTAINS TO THE VALUE OF THE CONSTRUCTION DONE IN THE PROPERTY IN 1980. IT IS NO T CLEAR THAT IF THE AO HAS ACCEPTED THE VALUE OF CONSTRUCTION DONE IN THE PROPERTY IN 1980, WHY VALUE OF THE LAND IS NOT TAKEN AS SHOWN IN THE VALUATION REPORT AND INSTEAD OF THIS VALUE, WHY HE CONSIDERED APPREC IATION IN THE PROPERTY AT THE RATE OF 25% FROM 1968 TO 1981 AND T HEN CALCULATED HIS ITA NO. 141/AGRA/2011 4 OWN VALUE AT RS.60,000/- WITHOUT ANY BASIS. THEREFO RE, THE VALUE OF PROPERTY AS COMPUTED BY THE AO DOES APPEARS TO BE E RRONEOUS AND WITHOUT ANY BASIS AS CONTENDED BY THE APPELLANT. 5.4. NOW THE VALUATION OF THE PROPERTY DONE IN THE VALUATION REPORT IS EXAMINED. ON GOING THROUGH THE ASSESSMENT ORDER AND VALUATION REPORT OF THE REGISTERED VALUER, I FIND T HAT VALUE OF THE PROPERTY COMPUTED AS ON 1.4.81 ARE IN THREE PARTS A S UNDER :- 1. VALUE OF LAND 1,29,132/- 2. VALUE OF CONSTRUCTION OF 1964 52,879/- 3. VALUE OF CONSTRUCTION OF 1980 86,842/- 2,68,853/- IN THE ASSESSMENT ORDER, THE AO HAS DISCUSSED THAT THE PROPERTY WAS PURCHASED BY THE APPELLANT IN 1968. AS PER PURC HASE DOCUMENT FILED BY THE APPELLANT ALONG WITH THE RETURN OF INC OME, DATE OF PURCHASE IS WRITTEN AS 16.4.1968 AND THIS PROPERTY WAS PURCHASED FOR CONSIDERATION OF RS.20,000/-. THEREFORE, FOR COMPUT ING THE COST OF THE PROPERTY TO THE APPELLANT CONSTRUCTION BEFORE 1968 CANNOT BE TAKEN AS IT HAS BEEN RIGHTLY HELD BY THE AO IN THE ASSESSMEN T ORDER BECAUSE THIS CONSTRUCTION WAS NOT DONE BY THE APPELLANT AND WHOLE PROPERTY WAS PURCHASED BY THE APPELLANT FOR ONLY RS.20,000/- WHICH MAINLY CONSISTED OF LAND. THEREFORE, FOR COMPUTING THE COS T OF PROPERTY TO THE APPELLANT FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN, COST OF LAND AS ON 1.4.81 AND COST OF CONSTRUCTION AFTER PURCHAS E OF PROPERTY BY THE APPELLANT CAN ONLY BE TAKEN. THEREFORE, THE COST OF PROPERTY TO THE APPELLANT BASED ON THE VALUATION REPORT OF THE REGI STERED VALUER IS TO BE CALCULATED AS UNDER : 1. COST OF LAND AS ON 1.4.81 (AS DETERMINED BY THE REGISTERED VALUER) 1,29,132 2. COST OF CONSTRUCTION IN 1980 86,842 2,15,974/- THEREFORE, THE COST OF PROPERTY FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN IS TO BE TAKEN AS RS.2,15,974/- INS TEAD OF RS.1,66,842/- ADOPTED BY THE AO IN THE ASSESSMENT ORDER OR RS.2,6 8,853/- DECLARED BY THE APPELLANT IN THE RETURN OF INCOME. THEREFORE , GROUND NOS. 3 & 4 ARE PARTLY ALLOWED. ITA NO. 141/AGRA/2011 5 3. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE LD. CIT(A) SHOULD HAVE ACCEPTED THE REPORT OF THE REGISTERED VALUER FOR THE PURPOSE OF DELETING THE ADDITION OF RS.52,879/-, BEING THE VALUE OF CONSTRUCTION OF 196 4. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE ON THE ABOVE GROUNDS. ON ALL THE ABOVE GROUNDS, THE ASSESSEE SOLELY CHALLENGED THE ADDITION OF RS.52,87 9/- BEING THE VALUE OF CONSTRUCTION OF 1964. THE AO, CONSIDERING THE VALUA TION REPORT OF REGISTERED VALUER, SPECIFICALLY NOTED THAT THE SAID REPORT SUB MITTED BY THE ASSESSEE IS NOT CORRECT BECAUSE THE PROPERTY WAS PURCHASED IN 1968 AND, THEREFORE, WHATEVER CONSTRUCTION MIGHT HAVE BEEN MADE, IT SHOULD BE AFT ER 1968. THEREFORE, THE COST OF CONSTRUCTION OF 1964 AS PER REPORT IS NOT LIABLE TO BE CONSIDERED FOR DETERMINATION OF VALUATION AS ON 01.04.1981. THERE IS NO ANSWER B Y THE ASSESSEE TO THE FINDING GIVEN BY THE AO IN THE ASSESSMENT ORDER BECAUSE WHA TEVER IS DONE PRIOR TO PURCHASE OF PROPERTY WOULD NOT BE CONSIDERED IN THE HANDS OF THE ASSESSEE. THE VALUATION OF THE PROPERTY HAS RIGHTLY BEEN DONE AFT ER THE PROPERTY PURCHASED BY THE ASSESSEE. THEREFORE, THE CLAIM OF ASSESSEE FOR VALU ATION OF CONSTRUCTION OF 1964 IS INCORRECT AND HAS BEEN RIGHTLY REJECTED BY THE AUTH ORITIES BELOW. THE LD. CIT(A) ON ITA NO. 141/AGRA/2011 6 PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY COMPUTED THE COST OF PROPERTY FOR THE PURPOSE OF CAPITAL GINS. THERE IS, THUS, NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). WE, THEREFORE, DISMISS THESE GROUND S OF APPEAL OF THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS, ACCORDINGLY, DISMISSED. 5. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY