ACIT, Circle-5(1), Hyd, Hyderabad V. Aditya Waghray, Hyd, Hyderabad

ITA 1423/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5868 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: G KALYAN DAS
• Keywords: Reopening of assessment; Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1422/HYD/2015 ASSESSMENT YEAR: 2007-08 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 5(1), HYDERABAD. VS. ARPAN WAGHRAY, HYDERABAD PAN AAGP W 9375 A (APPELLANT) (RESPONDENT) ITA NO. 1423/HYD/2015 ASSESSMENT YEAR: 2007-08 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 5(1), HYDERABAD. VS. ADITYA WAGHRAY, HYDERABAD. PAN AAGP W9376 D (APPELLANT) (RESPONDENT) C.O. NO. 48/HYD/16 (IN ITA NO. 1422/HYD/2015 ASSESSMENT YEAR: 2007-08) ARPAN WAGHRAY, HYDERABAD PAN AAGP W 9375 A VS. ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 5(1), HYDERABAD. (CROSS OBJECTOR) (RESPONDENT) C.O. NO. 49/HYD/2016 (IN ITA NO. 1423/HYD/2015 ASSESSMENT YEAR: 2007-08) ADITYA WAGHRAY, HYDERABAD. PAN AAGP W9376 D VS. ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 5(1), HYDERABAD. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SMT. U. MINICHANDRAN ASSESSEE BY : SHRI G. KALYANDAS & A. HARISH DATE OF HEARING 16-11-2016 DATE OF PRONOUNCEMENT 30-12-2016 2 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY O R D E R PER S. RIFAUR RAHMAN, A.M.: BOTH THESE APPEALS FILED BY REVENUE PERTAINING TO TWO ASSESSES(WHO ARE BROTHERS), ARE DIRECTED AGAINST TH E ORDERS OF CIT(A) 4, HYDERABAD, BOTH DATED, 19/10/2015 FOR ASSESSM ENT YEAR 2007- 08. THE ASSESSEES HAVE ALSO FILED C.OS. AGAINST THE VERY SAME ORDERS OF CIT(A). AS IDENTICAL ISSUES ARE INVOLVED IN TH ESE APPEALS, THEY WERE CLUBBED AND HEARD TOGETHER, THEREFORE, A COMMO N ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. TO DISPOSE OF THESE APPEALS, WE REFER TO THE FAC TS IN THE CASE OF ARPAN WAGHRAY. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSE E FILED HIS RETURN OF INCOME FOR THE A.Y. 2007-08 ON 07-05-2007 DECLAR ING A TOTAL INCOME OF RS. 1,40,01,539/- INCLUDING HIS SHARE OF NET LONG TERM CAPITAL GAINS OF RS. 1,39,55,157/- ON PROPERTY SOLD AT JUBILEE HILLS, HYDERABAD. AND INCOME FROM HOUSE PROPERTY THE CASE WAS SELECTED FOR SCRUTINY AND ORIGINALLY THE ORDER U/S 143(3) R. W.S 147 WAS PASSED AND THE LONG TERM CAPITAL GAINS OF THE ASSESSEE'S SHARE WAS DETERMINED AT 2,58,59,974/- AS AGAINST RS. 1,39,55, 157/- RETURNED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS ARRIVED AT THE LONG TERM CAPITAL GAINS BY WORKING THE COST OF PROPERTY AT RS. 3,875/- PER SQ. YARD AS PER VALUATION REPORT AND THE AO REJECTED THE SAME AS TH E ASSESSEE COULD NOT FILE ANY EVIDENCE FOR THE MARKET VALUE AND INST EAD ADOPTED THE SRO RATE OF RS. 8 PER SQ. YARD AND ARRIVED AT THE C APITAL GAINS. 3.1 AGGRIEVED WITH THIS ORDER OF THE AO, THE ASSES SEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) VIDE HIS OR DER DATED 01-12- 2011 UPHELD THE REOPENING PROCEEDINGS AND ALSO DIRE CTED THE AO TO ADOPT THE SRO RATE AT RS. 12 SQ. YARD INSTEAD OF RS . 8 PER SQ.YARD. 3 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY FURTHER, THE ASSESSEE AGGRIEVED WITH THE ORDER OF T HE CIT(A), FILED AN APPEAL BEFORE THE HON'BLE ITAT WHICH IS COMBINED OR DER IN THE CASE OF ASSESSEE AS WELL AS HIS BROTHER ADITYA WAGHRAY, SUSTAINED THE CIT(A) ORDER WITH REGARD TO REOPENING OF ASSESSMENT PROCEEDINGS AND SET ASIDE THE ISSUE OF DETERMINATION OF FAIR MARKET VALUE AS ON 01-04- 1981 TO THE FILE OF THE AO WITH A DIRECTION TO WORK OUT THE FAIR MARKET VALUE OF THE PROPERTY IN QUESTION, INTER-ALIA AFTER BRINGING BASIC FACTS RELATING TO THE COMPARABLE TRANSACTIONS AT THE RELE VANT TIME, IF AVAILABLE. THE ASSESSEE WAS ALSO DIRECTED BY THE TR IBUNAL TO FURNISH THE RELEVANT MATERIAL LIKE COMPARABLE CASES AND THE COST OF ACQUISITION OF THE PROPERTY BY THE ORIGINAL OWNER I N 1970 IN SUPPORT OF ITS CASE. ITAT ALSO OBSERVED THAT, THE REVENUE SHALL NOT RES ORT TO THE SRO VALUE, WHICH DOES NOT AMOUNT TO MARKET VALUE OF THE PROPERTY AS THE SAME ARE NOT ARRIVED AT BASED ON SCIENTIFICALLY GENERATED DATA. THE ASSESSING OFFICER SHALL RESORT TO OTHER M ETHODS FOR ARRIVING AT THE FMV AS ON 1-04-1981, OTHER THAN THE METHOD BASED ON COMPARABLE TRANSACTIONS, ONLY IF THERE ARE NO COMPARABLE TRANSACTIONS. THE ASSESSING OFFICER SHAL L RE-DECIDE THE ISSUE IN ACCORDANCE WITH LAW AND AFTER GIVING R EASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE' 3.2 AGGRIEVED WITH THE ITAT ORDER, THE ASSESSEE FI LED A MISC. PETITION BEFORE THE ITAT RAISING SIMILAR GROUNDS OF APPEAL AND THE ITAT VIDE ITS ORDER DATED 17-07-2012 REJECTED THE M ISC. PETITION FILED BY THE ASSESSEE. WHILE REJECTING THE MISC. PETITION FILED BY THE ASSESSEE, THE HONBLE ITAT HELD AS UNDER: 10. AT THE COST OF REPETITION, WE WOULD LIKE TO RE ITERATE THAT ON GOING THROUGH THE ORDER PASSED BY THE TRIBUNAL, WE ARE CONVINCED THAT THE TRIBUNAL PASSED THE ORDER DATED 17-07-2012, AFTER MARSHALLING ALL THE FACTS CONSIDERING THE SUB MISSIONS MADE BEFORE IT AND APPLYING ITS MIND TO THE DECISIONS CI TED BEFORE IT WE DO NOT FIND ANY MISTAKE IN THE ORDER OF THE TRIBUNA L OF THE NATURE AS ENVISAGED UNDER SECTION 254(2) OF THE ACT. PERMI TTING THE ASSESSEE TO RAISE THE SAME ISSUES OVER AGAIN IN THE GUISE OF RECTIFICATION WILL AMOUNT TO RECALLING THE APPEAL O RDER IN ITS ENTIRETY AND RE-HEARING IT AFRESH, WHICH IS NOT WIT HIN THE SCOPE AND AMBIT OF SECTION 254(2) OF THE ACT CONSEQUENTLY , THE PRESENT 4 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY APPLICATIONS OF THE ASSESSES ARE DEVOID OF MERIT, A ND AS SUCH THEY ARE LIABLE TO BE REJECTED. WE REJECT THE SAME ACCORDINGLY'. 4. FURTHER, THE ASSESSEE FILED AN APPEAL BEFORE THE HON'BLE HIGH COURT OF ANDHRA PRADESH AND THE HON'BLE HIGH COURT OF ANDHRA PRADESH VIDE ITS ORDER DATED 19/06/2013 IN ITTA NO. 533 OF 2012 HELD AS UNDER: AFTER HEARING THE LEARNED COUNSEL FOR THE PARTIES A ND AFTER PERUSING THE IMPUGNED JUDGMENT AND ORDER OF THE LEA RNED TRIBUNAL, WE ARE OF THE VIEW THAT THIS MATTER IS NO T REQUIRED TO BE ADMITTED FOR HEARING AS THE IMPUGNED ORDER HAS BEEN PASSED REMANDING THE MATTER FOR FRESH HEARING. BUT, FRESH HEARING HAS BEEN DIRECTED TO BE MADE BASED ON CERTAIN OBSERVATI ONS AS RECORDED BY THE TRIBUNAL. WE MODIFY SLIGHTLY THE ORDER OF THE LEARNED TRIBUNA L TO THE EXTENT THAT HEARING ON REMAND BACK SHALL TAKE PLACE AFRESH AND NOT BASING ON THE OBSERVATIONS OF THE LEARNED TRIBUNAL. THE APPEAL IS ACCORDINGLY DISPOSED OF. THERE WILL B E NO ORDER AS TO COSTS. 5. CONSEQUENT TO THE ABOVE ORDER OF THE HON'BLE HI GH COURT OF ANDHRA PRADESH, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) RWS 254 OF THE I.T. ACT ON 31-12-2014 BY ADO PTING THE COMPARABLE VALUES AND BY ADOPTING THE RATE AT RS. 1 3.36 PER SQ. YARD AS ADOPTED IN THE COMPARABLE CASE AS THE FAIR MARKE T VALUE OF THE LAND IN 1981 AND COMPLETED THE ASSESSMENT BY WORKIN G OUT THE CAPITAL GAINS AT RS. 5,17,47,817/-OUT OF WHICH 50% OF THE SHARE OF THE ASSESSEE IS OF RS. 2,58,73,908/ AND ALLOWED EXEMPTI ON U/S 54 OF RS. 30,500/- AND REMAINING 50% OF RS. 2,58,73,908/- TO SRI ADITYA WAGHRAY, THEREBY THE LONG TERM CAPITAL GAIN ARRIVED AT RS. 2,58,43,408/-. 6. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A). 7. THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN EXTRAC TED BY THE CIT(A) IN HIS ORDER AT PAGES 7 TO 10 OF HIS ORDER. AFTER CONSIDERING THE 5 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY SUBMISSIONS OF THE ASSESSEE, THE CIT(A) DIRECTED TH E AO TO ADOPT RS. 3,875/- PER SQ.YARD AS FMV AS ON 01/04/1981 AND CAL CULATE THE CAPITAL GAINS BY OBSERVING THAT THE ASSESSEE DISCLO SED THE SAME VALUE AS FMV IN THE ORIGINAL ASSESSMENT. THE FINDIN GS OF THE CIT(A) ARE AS UNDER: 14. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, ASSESSMENT ORDER AND SUBMISSIONS OF THE ASSESSEE. H ERE THE MAIN ISSUE OF THE ASSESSEE IS WITH REGARD TO THE FM V ADOPTED AS ON 1-04-1981. AS PER THE ASSESSEE'S SUBMISSIONS THE PROPERTY WAS INHERITED ON 2-04-1970. THE ASSESSEE HAS INHERI TED AS RESIDENTIAL PROPERTY WHICH WAS ORIGINALLY ACQUIRED ON 4-02-1970 AND BECOME THE CO-OWNER OF THE PROPERTY ALONG WITH HIS BROTHER SRI ADITYA WAGHRAY EACH HOLDING 50% OF SHARE IN THE PROPERTY. THE SAME PROPERTY WAS SOLD ON 16-12-2006 AND OF THE SALE PROCEEDS OF RS. 2,67,97,500/- WERE SHOWN AND THE CA PITAL GAINS ARRIVED WERE DISCLOSED IN THE RETURN OF INCOME. THE PROPERTY IS ACQUIRED ON 4-02-1970 THEREBY THE FMV OF THE PROPER TY AS ON 1- 04-1981 WAS ADOPTED BY THE ASSESSEE AS RS. 49.55 LA KHS OUT OF WHICH 50% OF SHARE OF THE ASSESSEE IS RS. 24.76 LAK HS AS PER THE REGISTERED VALUER. THIS IS THE ISSUE OF THE VALUE A S ON 1-04-1981 WHICH WENT TO TRIBUNAL AND HON'BLE HIGH COURT ALSO AND WHICH WAS DISCUSSED IN DETAIL IN ABOVE PARAS. 14.1 AS PER THE ASSESSEE, THE VALUE OF THE PROPERTY AS ON DATE OF SALE ON 16-12-2006 AS PER THE SRO FOR REGISTRATION PURPOSE OF RS. 33,000 PER SQ. YARDS WHEREAS THE ASSESSEE ADOPT ED RS. 45000 PER SQ. YARD IN THE SALE DEED AS EXECUTED AND PAID CAPITAL GAINS ACCORDINGLY. THEREFORE, THE ASSESSEE'S MAIN S UBMISSION WAS THAT WHEN THE REGISTERED VALUE WAS OF RS. 33,00 0/- PER SQ. YARD, BUT IT WAS ADOPTED AS RS. 45,000/- PER SQ. YA RD AS PER THE VALUATION REPORT AND THEREBY THE SAME VALUE AS ON 1 -04-1981 AT . RS. 3875 PER SQ. YARD AS PER THE SAME VALUATION REP ORT, TO BE ALLOWED AS REASONABLE. FURTHER, THE ASSESSEE RELIED ON HONBLE ITAT IN THE CASE OF ASHVEN DATLA WHEREIN THE VALUE ADOPTED AT RS. 750 PER SQ. YARD AS ON 1-04-1981 WHEN THERE IS GUIDELINE VALUE OF RS. 3700 PER SQ. YARD IN THE YEAR 2006. WH EREAS, THE PROPERTY SITUATED AT JUBILEE HILLS, THE VALUE AS PE R THE REGISTERED VALUER AS ON 1-04-1981 WAS RS. 3875 PER SQ. YARD AN D AS ON THE DATE OF SALE, THE VALUE WAS RS. 33000 PER SQ. YARD AS PER SRO. AS PER THE ORDERS OF THE ITAT, THE COST OF THE PROP ERTY ADOPTING AT RS. 750 PER SQ. YARD AND THE SRO VALUE AT RS. 37 00 FOR COMPARISON WITH THE PROPERTY LOCATED AT HYDERANAGAR , KUKATPALLY, THE COST OF PROPERTY AT JUBILEE HILLS ON THE DATE O F SALE WORKS OUT TO RS. 6689 PER SQ. YARD AS FMV AS ON 1-04-1981 AND IF THE SALE VALUE OF THE PROPERTY AS PER SALE DEED IS TAKEN AT RS. 45,000/- PER SQ. YARD THEN THE FMV WORKS OUT TO RS. 9121 PER SQ. YARD. BUT THE ASSESSEE ADOPTED ONLY FMV AS ON 1-04-1981 I .E., RS. 6 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY 3875 WHICH IS LOWER SIDE WHEN COMPARED. THEREFORE, THE ASSESSING OFFICER IN ORIGINAL ASSESSMENT ORDER ALSO ADOPTED THE SRO RATE AT RS. 8 PER SQ. YARD AND AGAIN IN THIS OR DER ADOPTED RS. 13.36 PER SQ. YARD. THE ASSESSING OFFICER HAS F AILED TO NOTICE THAT THE SUBMISSIONS OF THE ASSESSEE THAT WHEN THER E IS SRO SALE VALUE IS OF RS. 33,000/- PER SQ. YARD THE ASSE SSEE HAS DISCLOSED RS. 45,000 PER SQ. YARD BASED ON THE VALU ATION REPORT DATED 18-10-2006. THEREFORE, I FELT THAT AS PER THE SAME VALUATION REPORT TAKING FMV AT RS. 3875 PR SQ. YARD IS JUSTIFIABLE. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUND OF APPEAL, W HICH IS COMMON IN BOTH THE APPEALS UNDER CONSIDERATION, EXCEPT THE QU ANTUM OF ADDITION. THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,19,34,957/- MADE TOWARDS LONG TERM CAPITAL GAIN ON TRANSFER OF PROPERTY WHICH THE AO HAD COMPUTED ADOPTING THE COST OF ACQUISITION BASED ON COMPARABLE SALE INSTANCES AS A GAINST THAT WORKED OUT BY THE ASSESSEE BASED ON A VALUATION REP ORT. 9. THE ASSESSEE ALSO FILED THE FOLLOWING CROSS OBJE CTIONS AGAINST THE ORDER OF CIT(A): 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) IN THE FACTS OF THE CASE IS NOT CORRECT IN DIRECTING THE A SSESSING OFFICER TO ADOPT FMV OF LAND AT RS. 3875/- PER SQ. YARD AS ON 01.04.1981 AS AGAINST RS.912L PER SQ. YARD. 2. THE ID CIT(A) OUGHT TO HAVE NOT RESTRICTED THE F MV OF THE LAND SITUATED AT JUBILEE HILLS AT RS. 3875/- PER SQUARE YARD AS ON 01.04.1981 BASED ON THE VALUE ADMITTED BY THE RESPO NDENT. 3. THE LD CIT(A) IS NOT JUSTIFIED IN NOT ADOPTING C OST OF ACQUISITION OF LAND BASED ON THE DECISION OF ASHVIN DATLA WHERE IN COST OF LAND IN HYDERNAGAR IS DETERMINED AT RS.750/- PER SQ UARE YARD. 4. THE LD CIT(A) OUGHT TO HAVE DETERMINED THE VALUE OF THE LAND BASED ON THE SALE DEED VALUE RS.45000/- PER SQUARE YARD, AFTER INDEXATION OF THE COST AS ON 01.04.1981 AT RS.9121/ - PER SQUARE YARD FOR COMPUTATION OF CAPITAL GAINS. 5. WITHOUT PREJUDICE TO THE ABOVE, THE RESPONDENT C ONTENDS COST OF LAND AFTER INDEXATION BASED ON SRO VALUE AT RS.3 3000/- PER SQUARE YARD WORKS OUT TO RS.6689/- PER SQUARE YARD. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED, H ON'BLE TRIBUNAL MAY KINDLY UPHOLD THE COST OF ACQUISITION OF LAND AFTER 7 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY INDEXATION AT RS.9121/- PER SQUARE YARD AS ON 01.04 .1981 FOR COMPUTATION OF CAPITAL GAINS AND OBLIGE. 10. LD. DR SUBMITTED THAT THE CIT(A) HAS RELIED ON THE CASE OF ASHWIN DATTA (SUPRA) AND ADJUDICATED IN FAVOUR OF T HE ASSESSEE. SHE SUBMITTED THAT THIS CASE OF ASHWIN DATTA (SUPRA) IS FACTUALLY DIFFERENT, AS THE HONBLE HIGH COURT HAS ORDERED FOR FRESH HEA RING IN THE CASE OF ASHWIN DATTA WITHOUT BASING ON THE OBSERVATIONS OF THE TRIBUNAL. SHE FURTHER RELIED ON THE ORDER OF THE AO. 11. LD. AR SUBMITTED THAT THE SAID PROPERTY WAS ACQ UIRED IN THE YEAR 1970. HE BROUGHT TO OUR NOTICE THAT AS PER SEC TION 55(2)(B)(II), WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BY ANY OF THE MODE SPECIFIED IN SECTION 49 AND THE CAPITAL ASSET BECAME PROPERTY OF THE PREVIOUS OWNER BEFORE 01/04/1981, M EANS THE COST OF THE CAPITAL ASSET TO THE PREVIOUS OWNER OR THE FAIR MARKET VALUE OF THE ASSET AS ON 01/04/1981, AT THE OPTION OF THE ASSESS EE, BY WHICH THE ASSESSEE HAS THE OPTION TO ADOPT ANY METHOD WHICH I S BENEFICIAL TO HIM. IN THE GIVEN CASE, THE ASSESSEE HAS ADOPTED TH E COST OF THE PROPERTY BASED ON THE VALUATION REPORT, WHICH IS WI THIN THE RIGHTS EXTENDED BY THE STATUTE UNDER SECTION 55(2)(B)(II) OF THE ACT. HE SUBMITTED THAT EVEN THOUGH THE MARKET PRICE AT THE TIME OF TRANSFER IS AT RS. 33,000/- PER SQ.YD. BUT THE ASSESSEE CHOSE T O ADOPT AT RS. 45,000/- AS PER THE VALUATION REPORT. THE ASSESSEE HAS ADOPTED VALUATION REPORT CONSISTENTLY IN SELLING PRICE AS W ELL AS COST OF ACQUISITION. 11.1 FURTHER, THE LD. AR SUBMITTED THAT THE CASE OF ASHWIN DATTA (SUPRA) IS SIMILAR TO THE PRESENT CASE AND THE HON BLE TRIBUNAL HAS HELD AS UNDER: 10. THIS DESCRIPTION OF LOCATION WAS NOT DISPUTED B Y THE REVENUE. HYDERABAD IS ONE OF THE FASTEST GROWING CI TY IN INDIA AND KUKATPALLY IS SITUATED NEAR HITECH CITY WHERE S EVERAL MULTI- NATIONAL SOFTWARE COMPANIES ARE LOCATED. BY TAKING INTO CONSIDERATION THE LOCATION OF THE PROPERTY AND IT I S BOUNDED BY ROADS ON TWO SIDES, THE INFRASTRUCTURE FACILITIES, EDUCATIONAL INSTITUTIONS, ACCESS TO NATIONAL HIGHWAY WHICH GOES TO MUMBAI 8 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY AND THE FUTURE POTENTIAL FOR DEVELOPMENT, CLEARLY S HOWS THAT THE LAND IN QUESTION IS AN IMPORTANT PIECE OF LAND IN T HAT VICINITY. GUIDELINE VALUE/BASIC VALUE / REGISTER IS ALSO ONE OF THE FACTORS TO BE TAKEN INTO CONSIDERATION. HOWEVER, THE GUIDELINE VALUE, AS/' RIGHTLY SUBMITTED BY THE LEARNED REPRESENTATIVE FOR THE ASSESSEE WOULD NOT REFLECT THE FMV. GUIDELINE VALUE/BASIC VA LUE REGISTER IS ONLY FOR THE GUIDANCE OF REGISTRATION AUTHORITIES F OR THE PURPOSE OF FIXING THE MARKET VALUE AND COLLECTING THE STAMP DU TY THEREON. THEREFORE, IN OUR OPINION, TAKING THE GUIDELINE VAL UE WHICH WAS FIXED IN THE YEAR 1976 AS FMV AS ON 1.4.1981 IS NOT JUSTIFIED. THOUGH THE GUIDELINE VALUE IN THE YEAR 2006 WAS RS. 3700 PER SY, THE VALUATION OFFICER AFTER TAKING INTO CONSIDE RATION THE LOCATION OF THE PROPERTY, AVAILABILITY OF INFRASTRU CTURE FACILITIES, POTENTIAL FOR FUTURE DEVELOPMENT, AVAILABILITY OF T HE EDUCATIONAL INSTITUTIONS AND BANKS HAS ESTIMATED THE VALUE AS O N 1.4.1981 AT RS.750 PER SY. IN OUR OPINION, THE VALUE ESTIMATED BY THE VALUATION OFFICER IS VERY REASONABLE. IN THE ABSENC E OF ANY COMPARATIVE SALE INSTANCES IN THE LOCALITY, IN OUR OPINION, IT IS SAFE ON THE PART OF THE LOWER AUTHORITIES TO ESTIMA TE THE FMV AS ON 1.4.1981 ON THE BASIS OF THE VALUATION OFFICER. THEREFORE, IN OUR OPINION, THE PROPERTY WOULD DEFINITELY FETCH RS . 750 PER SY IF IT IS SOLD IN THE OPEN MARKET AS ON 1.4.1981. THERE FORE, THE ASSESSEE HAS REASONABLY ESTIMATED THE FMV AS ON 1.4 .1981 AT RS.750 PER SY. IN VIEW OF THE ABOVE DISCUSSION, THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN FIXING THE FMV AS ON 1.4.1981 AT RS.8 PER SY. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO TAK E THE FMV AS ON 1.4.1981 AT RS.750 PER SY AND THEREAFTER COMPUTE THE CAPITAL GAIN TAX. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. 12. CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL F ACTS ON RECORD. THE ASSESSEE HAS UTILIZED THE SERVICES OF REGISTERE D VALUATION OFFICER TO VALUE THE FAIR MARKET VALUE ON THE DATE OF TRANS FER AND FOR THE FAIR MARKET VALUE AS AT 01/04/1981. THE VALUATION OFFICE R ARRIVED THE VALUATION OF THE ASSET AS AT CURRENT MARKET VALUE A ND APPLIED REVERSE INDEXATION METHOD TO ARRIVE THE VALUE OF THE PROPER TY AS AT 01/04/1981. THE ASSESSEE CHOSE TO APPLY THE VALUATI ON FOR THE SALE AS WELL AS FOR THE VALUE AS AT 01/04/1981. THE RELEVAN T POINT TO BE NOTED IS THAT THE SRO VALUE AS ON THE TRANSFER DATE WAS R S. 33,000/- BUT AS PER VALUATION OF FMV IS RS. 45,000/-. THE ASSESSEE PREFERRED THE HIGHER VALUE OF RS. 45,000/- AND AT THE SAME TIME A DOPTED THE COST OF THE PROPERTY AS AT 01/04/1981 ALSO THE FMV AS ARRIV ED BY THE 9 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY VALUATION OFFICER. AS PER THE PROVISIONS OF SECTIO N 55(2)(B)(II), THE ASSESSEE HAS THE OPTION TO ADOPT THE FMV OF THE ASS ET AS AT 01/04/1981 OR THE ACTUAL VALUE AS AT THAT DATE. IN THE GIVEN CASE, ASSESSEE PREFERRED TO ADOPT THE FMV AS THE VALUE OF ASSET AS AT 01/04/1981. THE ASSESSEE HAS ADOPTED THE FMV FOR TH E SALE VALUE AS WELL AS THE COST OF THE ASSET. THE AO REJECTED THE VALUATION REPORT. AS PER THE DIRECTION OF ITAT, NOT TO ADOPT SRO VALU E, THE AO GATHERED THE COMPARATIVE SALE VALUES DURING 1981 & 1982. HE COULD GATHER ONLY THREE SALE VALUES. DUE TO OBJECTIONS FROM ASSE SSEE, HE HAS REJECTED TWO SALE VALUES AND LEFT WITH THE ONE SALE VALUE, WHICH IS BETWEEN JUBILEE HILLS COOPERATING HOUSING SOCIETY A ND MR. TYAGI, WHICH WILL NOT GIVE ACTUAL MARKET VALUE. SINCE THER E IS NO PROPER TRANSACTION VALUE AVAILABLE FOR THAT PERIOD, WE MAY HAVE TO DEPEND ON THE WISDOMS OF EXPERT. IN THIS LINE, THE REGISTERED VALUERS ARE THE BEST OPTION. SINCE, THE AO HAS DOUBT ABOUT THE METHOD AD OPTED BY THE REGISTERED VALUER, HE COULD VERY WELL HAVE REFERRED THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER (DVO). HE FAILED TO EXERCISE THIS OPTION. 12.1 THE COURTS HAVE HELD THAT IN CASE COMPARABLE C ASES ARE NOT AVAILABLE TO DETERMINE THE FMV, THE VALUATION OF RE GISTERED VALUER CAN BE ADOPTED WHERE THERE IS NO MISTAKE FOUND IN THE V ALUATION REPORT. IN THE GIVEN CASE, AO HAD EXPRESSED HIS DOUBT ON THE V ALUATION REPORT. WE HAVE CHECKED THE OTHER CASES, IN CASE, IF THERE IS ANY TRANSACTION IN THE NEARBY PLACE. WE COULD NOT FIND ANYTHING IN THE VICINITY OF THE PROPERTY UNDER CONSIDERATION. THE AO HAS ADOPTED RS . 13.81 PER SQ.YD. WHEREAS THE VALUATION DONE BY THE ASSESSEE A T RS. 3,875/-, WHICH ARE AT EXTREMES. THE CIT(A) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE BECAUSE THE ASSESSEE HAD ADOPTED THE V ALUATION DONE BY A REGISTERED VALUER ON SALES AS WELL AS FMV AS O N 01/04/1981. IN THE ABSENCE OF ANY COMPARATIVE SALE DURING THE PERI OD, THE VALUE ADOPTED BY THE ASSESSEE SEEMS TO BE HIGHER SIDE COM PARED TO THE VALUE ADOPTED BY THE AO. THIS APPEAL IS SECOND ROUN D OF APPEAL AND 10 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY THERE IS NO POSSIBILITY OF REMITTING BACK TO THE AO FOR RECALCULATION AS THERE WILL NOT BE ANY BENEFIT TO EITHER SIDE. IN OU R CONSIDERED VIEW, WE NEED TO FIND A VIA MEDIA SO THAT IT COULD BE BENEFI CIAL TO EITHER SIDE. THE REGISTERED VALUER HAS DISCOUNTED THE VALUE OF S ALE PRICE I.E. RS. 45,000/- IN THE YEAR 2006 TO ARRIVE AT THE VALUE AS AT 01/04/1981 AT RS. 3,875/-. WE CAN ADOPT THE SAME DISCOUNTED METHO D TO ARRIVE THE SRO VALUE OF RS. 33,000/- IN 2006 TO ARRIVE THE SRO VALUE AS AT 01/04/1981. IT MAY GIVE SOME RELIEF TO THE ASSESSEE AS WELL AS TO THE DEPARTMENT. THE VALUATION IS DONE AS UNDER; THE RES ULTANT VALUE COMES TO RS. 2841/-. YEAR STARTING RATE REDUCTION FACTOR REDUCED RATE 2006 33,000 0.91 30,030 2005 30,030 0.91 27327 2004 27327 0.91 24868 2003 24868 0.91 22630 2002 22630 0.91 20593 2001 20593 0.91 18740 2000 18740 0.91 17053 1999 17053 0.91 15518 1998 15518 0.91 14121 1997 14121 0.91 12850 1996 12850 0.91 11694 1995 11694 0.91 10642 1994 10642 0.91 9684 1993 9684 0.91 8812 1992 8812 0.91 8019 1991 8019 0.91 7297 1990 7297 0.91 6640 1989 6640 0.91 6042 1988 6041 0.91 5498 1987 5498 0.91 5003 1986 5003 0.91 4553 1985 4553 0.91 4143 1984 4143 0.91 3770 1983 3770 0.91 3431 1982 3431 0.91 3122 1981 3122 0.91 2841 11 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY IN VIEW OF THE ABOVE DISCUSSION, WE DIRECT THE AO TO ADOPT THE FMV AT RS. 2,841/- PER SQ.YD. AND CALCULATE THE LONG TE RM CAPITAL GAINS ACCORDINGLY. 13. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED AND C.O. OF THE ASSESSEE IS DISMISSED. 14. AS THE FACTS IN THE CASE OF ADITYA WAGHRAY ARE MATERIALLY IDENTICAL TO THAT OF ARPAN WAGHRAY, FOLLOWING THE C ONCLUSIONS THEREIN, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED AND THE C.O. FILED BY THE ASSESSEE IS DISMISSED. 15. TO SUM UP, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED AND C.OS. OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2016. (P. MADHAVI DEVI) (S. RIFAUR RA HMAN) JUDICIAL MEMBER AC COUNTANT MEMBER HYDERABAD, DATED: DECEMBER, 2016 KV COPY TO:- 1. THE ACIT, CIRCLE 5(1), 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. SRI ARPAN WAGHRAY, C/O P. RAMAKRISHNA & CO., H.N O. 5-9-35/5, BASHEERBAGH, HYDERABAD. 3. SRI ADITYA WAGHRAY, C/O P. RAMAKRISHNA & CO., H.NO. 5-9-35/5, BASHEERBAGH, HYDERABAD. 4. CIT(A) 4, HYDERABAD 5. PR. CIT 4, HYD. 6. DR, ITAT, HYD 7. GUARD FILE 12 ITA NO. 1422 & 1423/H/15 AND COS 48 & 49/H/16 SHRI ARPAN WAGHRAY AND ADITYA WAGHRAY S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER