K. Ashok Kumar, Hyderabad V. ITO, Ward 8(1), Hyderabad

ITA 1526/HYD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7617 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: G KALYAN DAS
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Cost of acquisition; Fair market value; Valuation report
• Section: 50C; 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER SL.NO. ITA NO. AY APPELLANT RESPONDENT 1 1524/H/13 2009-10 K. RAMA SWAMY, HYDERABAD PANAJBPK 9583A INCOME TAX OFFICER, WARD 8 (1), HYDERABAD. 2 1525/H/13 2009-10 K. AMARNATH, HYDERABAD. PAN-AKFP9479E -DO- 3 1526/H/13 2009-10 K. ASHOK KUMAR, HYDERABAD. PAN- AHGPK0438F -DO- ASSESSEE BY SHRI G. KALYANDAS REVENUE BY SHRI R. MOHAN REDDY DATE OF HEARING 30-06-2014 DATE OF PRONOUNCEMENT 20-08-2014 O R D E R PER SAKTIJIT DEY, J.M.: THESE APPEALS BY THREE DIFFERENT ASSESSEES ARE AGAI NST SEPARATE ORDERS, ALL DATED 24/10/2013 OF THE CITY(A ), VIJAYAWADA PERTAINING TO AY 2009-10. SINCE ISSUES ARE COMMON AND FACTS ARE IDENTICAL ALL THESE APPEALS ARE CLUBBED AND HEARD T OGETHER AND THEREFORE WE FIND IT CONVENIENT TO DISPOSE OFF THES E APPEALS BY WAY OF CONSOLIDATED ORDER. 2. THE GROUNDS RAISED BY THE ASSESSEE, WHICH ARE CO MMON IN ALL THE APPEALS, ARE AS UNDER: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO L AW AND THE FACTS. 2 ITA NO. 1524 TO 1526/HYD/2013 K. RAMA SWAMY AND OTHERS 2. THE LEARNED CIT(A) ERRED IN SUSTAINING THE ORDER S OF THE AO IN DETERMINING CAPITAL GAINS ON SALE OF AGRICULTURE LAND TO THE SHARE OF THE APPELLANT AT RS. 1,22,56,980/-. 3. AUTHORITIES BELOW OUGHT TO HAVE CONSIDERED THAT THE AGRICULTURAL LAND SOLD IS A PART OF FAKE SUGAR LAKE AND IS A WATER BODY AND THE FACT IS EVIDENCED BY THE CERTIFICATES OF URBAN DEVELOPMENT AUTHORITY AND REVENUE DIVISIONAL OFFICE R AND THAT AGRICULTURAL OPERATIONS ARE POSSIBLE ONLY WHEN THER E IS NO WATER IN THE LAKE. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND D ISPUTES AMONG 14 OWNERS, AUTHORITIES BELOW OUGHT TO HAVE UP HELD THAT FAIR MARKET VALUE OF THE LAND DETERMINED BY THE VAL UER AT RS. 26.15 LAKHS PER ACRE IS CORRECT AGAINST ESTIMATED V ALUE OF THE DEPARTMENTAL VALUATION OFFICER AT RS. 43.41 LAKHS P ER ACRE AND OF THE AO AT RS. 82.00 LAKHS. 5. AUTHORITIES BELOW OUGHT TO HAVE NOTED THAT IN QU ICK SUCCESSION OF, ABOUT TWO YEARS, GUIDELINE VALUE OF THE LAND FROM RS. 10 LAKHS PER ACRE ON 01/10/2006 WAS ESTIMATED A T RS. 82 LAKHS PER ACRE AT REGISTRATION ON 31/10/2008 WHICH IS HIGHLY UNREALISTIC AND HYPOTHETICAL. 6. AUTHORITIES BELOW OUGHT TO HAVE CONSIDERED THAT ON SALE AGREEMENT IN SEPTEMBER 2007 OWNERS RECEIVED ADVANCE RS. 83 LAKHS THROUGH 10(TEN) ACCOUNT PAYEE CHEQUES WHEN GU IDELINE VALUE WAS RS. 35 LAKHS PER ACRE AGAINST RS. 82.00 L AKHS ADOPTED FOR CAPITAL GAINS. 7. AUTHORITIES BELOW ERRED IN NOT FOLLOWING THE DEC ISIONS, OF SUPREME COURT, JURISIDICTIONAL HIGH COURT AND HYDER ABAD BENCH TRIBUNAL, RELIED UPON, THAT GUIDELINE VALUE HAS NO SANCTITY OF LAW AND IS NOT THE FAIR MARKET VALUE FOR ASSESSMENT OF CAPITAL GAINS. 8. WITHOUT PREJUDICES TO THE ABOVE THE APPELLANT CO NTENDS THAT DEPARTMENTAL VALUATION REPORT IS BINDING ON THE AO AND ERRED IN NOT ACCEPTING THE VALUE. 9. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APP ELLANT DID NOT DISPUTE GUIDELINE VALUE U/S 50C OF THE ACT BEFORE A NY COURTS AND THEREFORE VALUATION OFFICERS REPORT DOES NOT FI ND ANY MERIT. 10. AUTHORITIES BELOW DID NOT PLACE ANY EVIDENCE TO SUPPORT THAT THE APPELLANT RECEIVED SALE CONSIDERATION MENTIONED FOR STAMP DUTY PURPOSE, WHILE THE VALUE U/S 50C WAS ADOPTED D ISLODGING REAL CONSIDERATION RECEIVED. 11. THE LD. AO HAVING ARRIVED ACQUISITION COST ON 0 1/04/1981 AT RS. 5.16 LAKHS ERRED IN NOT ALLOWING INDEXATION AND CONSEQUENT DEDUCTION TO THE SHARE OF THE APPELLANT AT RS. 2.50 LAKHS INSTEAD RS. 43,020/- ALLOWED. 12. AUTHORITIES BELOW ARE NOT CORRECT IN DENYING EX EMPTION OF INVESTMENT OF RS. 35 LAKHS MADE IN BONDS U/S 54EC O F THE ACT. 13. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL G ROUNDS BEFORE THE DISPOSAL OF THE APPEAL AND PRAYS THAT TH E SALE VALUE RECEIVED BY THE APPELLANT BE DIRECTED TO BE ACCEPTE D. 3 ITA NO. 1524 TO 1526/HYD/2013 K. RAMA SWAMY AND OTHERS 3. AS FACTS ARE IDENTICAL, WE WILL DEAL WITH FACTS AS TAKEN FROM THE FOLDER IN ITA NO. 1524/HYD/2013. GROUND NOS. 1 & 13 BEING GENERAL IN NATURE ARE NOT REQUIRED TO BE ADJUDICATED UPON. GRO UND NOS 2 TO 10 RELATE TO THE COMMON ISSUE OF COMPUTATION OF CAPITA L GAIN U/S 50C(1) OF THE ACT, BY ADOPTING FMV DETERMINED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF STAMP DUTY. 4. BRIEFLY THE FACTS RELATING TO THE AFORESAID ISSU E ARE, THE ASSESSEE IS AN INDIVIDUAL. FOR THE IMPUGNED ASSESSM ENT YEAR ASSESSEE FILED ITS RETURN OF INCOME ON 09/10/2009 D ECLARING INCOME OF RS. 3,22,640/- BESIDES AGRICULTURAL INCOME OF RS. 1 ,31,473/-. DURING THE SCRUTINY ASSESSMENT PROCEEDING, THE AO NOTICED THAT THE ASSESSEE HAS ADMITTED INCOME FROM LONG TERM CAPITAL GAINS AMOUNTING TO RS. 34,99,624/-, BUT, HAS CLAIMED EXEM PTION OF THE SAID AMOUNT U/S 54EC OF THE ACT. AFTER CALLING FOR INFO RMATION FROM THE ASSESSEE IN RESPECT OF CAPITAL GAIN, AO NOTICED TH AT THE ASSESSEE ALONG WITH 13 OTHERS JOINTLY OWNED 18 ACRES OF LAND AT SURVEY NOS. 111, 112 AND 155 SITUATED AT KOMPALLI VILLAGE, KUTU BULLAPUR MANDAL, RR DISTRICT, WHICH THEY SOLD UNDER FOUR REGISTERED SALE DEEDS ALL EXECUTED ON 30/10/2008 FOR A TOTAL CONSIDERATION OF RS. 4,50,00,000/-. FURTHER, IT WAS NOTICED THAT AS PER THE FAMILY SETT LEMENT DATED 11/06/2001, THE ASSESEES SHARE IN THE PROPERTY IS 1/12TH. ACCORDINGLY, THE ASSESSEE AFTER DEDUCTING INDEXED C OST OF ACQUISITION AND DEVELOPMENT COST HAD COMPUTED HIS SHARE OF CAPI TAL GAINS AT RS. 34,99,624/- AND CLAIMED THE SAME EXEMPT U/S 54EC TO WARDS INVESTMENT IN REC BONDS ON 30/06/2009. THE AO ON V ERIFYING THE REGISTERED SALE DEEDS FOUND THAT THE SUB-REGISTRAR, MEDCHEL, BEFORE WHOM THE DOCUMENTS WERE REGISTERED, HAS DETERMINED THE VALUE OF THE PROPERTY FOR THE PURPOSE OF STAMP DUTY AT RS. 1 4,76,00,000/-. ACCORDINGLY, THE ASSESSEES 1/12 TH SHARE WORKED OUT TO RS. 1,23,00,000/-. AS THE TOTAL SALE CONSIDERATION SHOW N BY THE ASSESSEE WAS RS. 4,50,00,000/- AS AGAINST RS. 14,76,00,000/- DETERMINED BY 4 ITA NO. 1524 TO 1526/HYD/2013 K. RAMA SWAMY AND OTHERS THE STAMP VALUATION AUTHORITY, THE AO PRIMA-FACIE WAS OF THE VIEW THAT THERE BEING UNDERSTATEMENT OF SALE BY THE ASSE SSEE PROVISIONS OF SECTION 50C(1) GETS ATTRACTED AND CAPITAL GAIN HAS TO BE COMPUTED ACCORDINGLY. THEREFORE, THE AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE. THOUGH THE AO OBJECTED TO THE ADOPTION O F VALUE DETERMINED BY THE SRO, BUT, THE AO REJECTING THE O BJECTION OF THE ASSESSEE CONCLUDED THAT PROVISIONS OF SECTION 50C(1 ) IS APPLICABLE AND ACCORDINGLY COMPUTED THE CAPITAL GAIN BY ADOPTI NG THE FMV DETERMINED BY THE REGISTERING AUTHORITY FOR STAMP D UTY PURPOSE AT RS. 14,76,00,000/-. ON THE BASIS OF SUCH SRO VALUE, AS SESSEES SHARE IN THE SALE CONSIDERATION WAS CONSIDERED AT RS. 1,23,0 0,000/- AFTER ALLOWING DEDUCTION TOWARDS INDEXED COST OF ACQUISIT ION AT RS.43,020/-, THE LONG TERM CAPITAL WAS COMPUTED AT RS. 1,22,56,9 80/-. BEING AGGRIEVED OF ASSESSMENT ORDER, SO PASSED, THE ASSE SSEE PREFERRED APPEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE ASSESSEE APART FROM CONT ESTING THE FINDING OF THE AO WITH REGARD TO ADOPTION OF SRO VA LUE ALSO RAISED ADDITIONAL GROUND TO THE EFFECT THAT THE AO SHOULD HAVE CONSIDERED THE VALUATION MADE BY THE DVO IN THE REPORT SUBMITT ED BY HIM BY DETERMINING THE VALUE OF THE PROPERTY AT RS. 43.41 LAKHS PER ACRE AS AGAINST SRO VALUE OF RS. 82 LAKHS PER ACRE. 6. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EXAMINING THE FACTS AND MATERIALS ON RECORD NOT ED THAT THE AO INDEED HAD MADE A REFERENCE TO THE VALUATION CELL O N 30/12/2011. HOWEVER, BEFORE THE VALUATION REPORT WAS RECEIVED O N 25/10/2012 WHEREIN THE DVO HAD ESTIMATED THE VALUE OF LAND AT RS. 7,93,80,483/- , THE ASSESSMENT ORDER WAS PASSED ON 30/12/2011 ITS ELF. THE CIT(A) ON INTERPRETING THE PROVISION CONTAINED U/S 50C(1) OF THE ACT, WAS OF THE VIEW THAT THE VALUATION REPORT SUBMITTED BY THE DVO HAS NO RELEVANCE AS SECTION 50C(2) IS NOT ATTRACTED. THE C IT(A) NOTED THAT AS THE ASSESSEE HAS NOT DISPUTED THE VALUE DETERMINED BY THE SRO 5 ITA NO. 1524 TO 1526/HYD/2013 K. RAMA SWAMY AND OTHERS INTERMS WITH 50C(2)(B) IN ANY APPEAL OR REVISION OR REFERENCE BEFORE ANY OTHER AUTHORITY, COURT OR THE HIGH COURT, THE R EFERENCE MADE BY THE AO TO VALUATION OFFICE IS DEVOID OF MERIT. THE CIT(A) CONCLUDED THAT AS PER SUB-SECTION (3) OF 50C IN A CASE WHERE THE VALUE ASCERTAINED BY THE VALUATION OFFICER EXCEEDS THE VA LUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY, THE VALU E SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE TAKEN AS THE F ULL VALUE OF THE CONSIDERATION RECEIVED ACCRUING AS A RESULT OF TRAN SFER. ACCORDINGLY, IT WAS HELD BY THE CIT(A) THAT AS THE VALUE DETERMI NED BY THE DVO IS LESS THAN THE VALUE ADOPTED BY THE SRO THE PROVISIO NS OF SUB-SECTION (3) TO SECTION 50C WILL NOT APPLY. ON THE AFORESAI D BASIS, THE CIT(A) CONFIRMED THE COMPUTATION OF CAPITAL GAIN MADE BY T HE AO AS PER SECTION 50C(1) OF THE ACT. 7. THE LEARNED AR SUBMITTED BEFORE US THAT THE LAND SOLD BY THE ASSESSEE AND OTHER CO-OWNERS WAS NOT ONLY AGRICULTU RAL LAND, BUT, WAS A PART OF FAK SAGAR LAKE AND IS A WATERBODY. IN THIS CONTEXT, HE REFERRED TO THE LETTER DATED 08/06/2005 OF VICE-CHA IRMAN, HUDA AND LETTER DATED 13/05/2008 OF SPECIAL DEPUTY COLLECTOR AND REVENUE DIVISIONAL OFFICER, RANGA REDDY, EAST DIVISION. IT WAS SUBMITTED THAT AS THE LAND WAS PART OF THE WATER BODY NO DEVELOPME NT COULD BE MADE EITHER BEFORE THE SALE OR AFTER THE SALE BY THE PUR CHASERS. IT WAS SUBMITTED THAT AS THERE WERE DISPUTES AMONG THE CO- OWNERS FOR SALE OF THE LAND, WITH A VIEW TO AVOID MISUNDERSTANDING AMONGST THEM, THEY GOT THE LAND VALUED THROUGH A REGISTERED VALUE R AND AS PER THE REPORT OF THE REGISTERED VALUER THE VALUE OF LAND W AS RS. 26.50 LAKHS PER ACRE. IT WAS SUBMITTED THAT ON THE BASIS OF THE VALUE DETERMINED BY THE REGISTERED VALUER, THE COOWNERS NEGOTIATED F OR SALE AND FINALLY SOLD THE PROPERTY AT THE RATE OF RS. 25 LAKHS PER A CRE ON 04/09/2007 ON RECEIVING ADVANCE OF RS. 83 LAKHS THROUGH 10 ACC OUNT PAYEE CHEQUES. IT WAS SUBMITTED THAT DURING THE SAME CALE NDAR YEAR UPTO 01/11/07 THE CO-OWNERS RECEIVED FURTHER AMOUNT OF RS. 93 LAKHS THROUGH 14 ACCOUNT PAYEE CHEQUES. IT WAS SUBMITTED THAT AFTER RECEIPT 6 ITA NO. 1524 TO 1526/HYD/2013 K. RAMA SWAMY AND OTHERS OF TOTAL SALE CONSIDERATION OF RS. 4,50,00,000/- TH E DEEDS WERE REGISTERED AND POSSESSION WAS DELIVERED ON 30/01/20 09. IT WAS SUBMITTED THAT WHILE AT THE TIME OF SALE OF LAND ON 04/09/2007 THE LAND VALUE AS PER SRO GUIDELINE WAS RS. 35.00 LAKHS PER ACRE BUT AT THE TIME OF REGISTRATION OF TRANSFER DEEDS ON 30/10/200 9 THE LAND VALUE AS PER SRO GUIDELINE HAD INCREASED TO RS. 82 LAKH PER ACRE. IT WAS SUBMITTED THAT THOUGH THE ASSESSEE HAD OBJECTED TO SRO VALUE DURING THE ASSESSMENT PROCEEDING AND EVEN THOUGH THE AO HA D MADE A REFERENCE TO THE DVO BUT REJECTING THE OBJECTIONS O F THE ASSESSEE, THE AO HAD COMPUTED CAPITAL GAIN BY ACCEPTING THE SRO V ALUE OF RS. 14,76,00,000/-. IN THIS CONTEXT, THE LEARNED AR RE FERRED TO THE VALUATION REPORT OF THE REGISTERED VALUER, DVO AND SRO VALUE AS ON 01/01/2007 AS PER THE CERTIFICATES ISSUED IN SOME O THER CASES. THE LEARNED AR SUBMITTED THAT AS THE ASSESSEE HAS RECEI VED THE ENTIRE SALE CONSIDERATION THROUGH A/C PAYEE CHEQUES AND TH ERE IS NO MATERIAL IN THE POSSESSION OF THE DEPARTMENT TO SHO W THAT THE ASSESSEE AND OTHER COOWNERS HAVE RECEIVED ANY AMOUN T OVER AND ABOVE THE RECORDED SALE CONSIDERATION THERE CANNOT BE ANY PRESUMPTION WITH REGARD TO THE SALE CONSIDERATION R ECEIVED BY THE ASSESSEE. THE LEARNED AR SUBMITTED THAT THE SRO VAL UE HAS NO SANCTITY OF LAW AS HELD BY THE HONBLE SUPREME COUR T, JURISDICTIONAL HIGH COURT AND ITAT HYDERABAD BENCH. IN THIS CONTE XT, LEARNED AR REFERRED TO THE DECISION OF HYDERABAD ITAT BENCH IN CASE OF ASHVEN DATLA ITA NO. 107/HYD/09, 29/10/2010. FINALLY, IT W AS SUBMITTED BY THE LEARNED AR THAT IF AT ALL THE GUIDELINE VALUE F IXED BY THE SRO IS TO BE ADOPTED, THEN, THE VALUE OF THE PROPERTY SHOULD BE TAKEN AT RS. 35 LAKHS PER ACRE AS PER SRO GUIDE LINE AS ON 01/01/20 07. 8. THE LEARNED DR ON THE OTHER HAND STRONGLY SUPPO RTING THE ORDER OF THE CIT(A) AND AO SUBMITTED THAT THE ASSES SEES CONTENTION THAT THE LAND IS PART OF A WATER BODY/LAKE IS NOT C ORRECT. IT IS AN AGRICULTURAL LAND SITUATED IN URBAN AREA WHERE REGU LARLY AGRICULTURAL OPERATION WAS CONDUCTED. IT WAS SUBMITTED THAT SECT ION 50C(1) BEING 7 ITA NO. 1524 TO 1526/HYD/2013 K. RAMA SWAMY AND OTHERS A DEEMING PROVISION THE SRO VALUE PREVAILING ON THE DATE OF TRANSFER HAS TO APPLY. THUS, IT WAS SUBMITTED THAT AS THE AO HAS ADOPTED THE SRO VALUE IN TERMS WITH PROVISIONS CONTAINED U/S 50 C(1) OF THE ACT, THE COMPUTATION OF CAPITAL GAIN MADE BY AO IS CORRE CT. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OT HER MATERIALS ON RECORD. AT THE OUTSET, WE MAY OBSERVE THAT THERE IS NO DISPUTE TO THE FACT THAT LAND SOLD IS A CAPITAL ASSET AS DEFINED U /S 2(14) OF THE ACT. THOUGH, THE ASSESSEE HAS DISCLOSED THE TOTAL CONSID ERATION RECEIVED ON SALE OF PROPERTY BY ALL THE COOWNERS AT RS. 4,50 ,00,000/- BUT THE REGISTERING AUTHORITY HAS VALUED THE PROPERTY FOR S TAMP DUTY PURPOSE AT RS. 14,76,00,000/-. THEREFORE, UNDERSTATEMENT IN SALE VALUE IN TERMS OF SECTION 50C(1) IS PRIMA-FACIE ESTABLISHED. HOWEVER, AS REVEALED FROM FACTS ON RECORD, CONSIDERING THE OBJE CTIONS RAISED BY THE ASSESSEE AGAINST ADOPTION OF SRO VALUE, THE AO IN TERMS WITH SECTION 50C(2) DID REFER THE VALUATION OF THE PROPE RTY TO THE DVO. IT IS ALSO A FACT THAT DVO SUBMITTED A REPORT TO THE AO O N 25/10/2012 BY DETERMINING THE VALUE OF THE PROPERTY AT RS. 7,93,8 0,483 BY ESTIMATING THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DAT E OF REGISTRATION AT RS. 43.41 LAKH PER ACRE. SURPRISINGLY, THE AO IGNOR ING THE STATUTORY MANDATE AS CONTAINED U/S 50C(2) AND (3) COMPLETED T HE ASSESSMENT ON THE VERY SAME DAY HE REFERRED THE VALUATION TO T HE DVO BY ADOPTING THE VALUE OF PROPERTY AT RS. 14.76 CRORES AS DETERMINED BY THE SRO FOR STAMP DUTY PURPOSE. IN OUR VIEW, AOS A CTION CANNOT BE APPROVED. WHEN THE ASSESSEE HAS OBJECTED TO THE SRO VALUE AND THE VALUATION OF THE PROPERTY HAS BEEN REFERRED TO THE DVO, THE AO IS DUTY BOUND TO TAKE INTO ACCOUNT THE VALUATION MADE BY TH E DVO AND THEREAFTER COMPUTE THE CAPITAL GAIN IN TERMS WITH S ECTION 50C(3). UNFORTUNATELY, THOUGH THE CIT(A) WAS AWARE OF THE A FORESAID FACTUAL POSITION, SHE HAS CONFIRMED THE ASSESSMENT BY MISIN TERPRETING THE PROVISIONS CONTAINED U/S 50C. A PLAIN READING OF SE CTION 50C WOULD MAKE IT CLEAR THAT THOUGH SUB-SECTION (1) POSTULATE S ADOPTION OF SRO 8 ITA NO. 1524 TO 1526/HYD/2013 K. RAMA SWAMY AND OTHERS VALUE WHERE THE CONSIDERATION SHOWN BY THE ASSESSEE IS LESS BUT SUB- SECTION (2) CARVES OUT AN EXCEPTION BY PROVIDING TH AT IF THE ASSESSEE OBJECTS TO THE SRO VALUE AND HE HAS NOT DISPUTED TH E SRO VALUE BEFORE ANY AUTHORITY OR COURT, THEN THE AO MAY REFE R THE VALUATION TO VALUATION OFFICER. SUB-SECTION (3) PROVIDES THAT IF THE VALUATION MADE BY THE DVO EXCEEDS THE SRO VALUE THEN AO SHALL ADOP T THE SRO VALUE. CBDT CIRCULAR NO. 8/2002, DT. 27/08/2002 HAS CLARIFIED THE ISSUE FURTHER BY STATING THAT WHERE VALUE DETERMINE D BY THE DVO IS LESS THAN SRO VALUE, THE AO HAS TO ADOPT THE DVO VA LUE. IN THE PRESENT CASE, THERE IS NO DISPUTE THAT ASSESSEE HAS COMPLIED TO THE PROVISIONS OF SECTION 50C(2) AND AO HAS REFERRED TH E VALUATION TO DVO. HENCE, ADOPTION OF SRO VALUE BY COMPLETELY IGN ORING THE VALUATION MADE BY THE DVO, IN OUR VIEW, IS TOTALLY WRONG AND IN VIOLATION OF STATUTORY MANDATE OF SECTION 50C. IN T HE AFORESAID CIRCUMSTANCES, VALUE DETERMINED BY SRO CANNOT BE CO NSIDERED AS THE FAIR MARKET VALUE OF THE PROPERTY FOR COMPUTATI ON OF CAPITAL GAIN. HAVING HELD SO, WE WILL NOW DEAL WITH ASSESSEES OB JECTION EVEN IN RESPECT OF VALUE DETERMINED BY DVO, WHICH BROADLY A RE AS UNDER: I) THE PROPERTY IS WITHIN A WATER BODY AND WAS USED FOR AGRICULTURAL PURPOSE. HENCE, IT WILL NOT BE COMPARE D THE VALUE ADOPTED BY SRO FOR STAMP DUTY PURPOSE. II) GUIDELINE VALUE OF SRO HAS NO SANCTITY OF LAW, THEREFORE, CANNOT BE CONSIDERED AS FAIR MARKET VALUE. III) REGISTERED VALUER HAVING DETERMINED THE VALUE AT RS. 26.50 LAKHS PER ACRE AND THERE BEING NO EVIDENCE BEFORE T HE DEPARTMENT THAT ASSESSEE RECEIVED MORE THAN THE CON SIDERATION SHOWN IN THE SALE DEED, AMOUNT DISCLOSED BY ASSESSE E SHOULD BE ACCEPTED. IV) EVEN AS PER THE SRO GUIDELINE THE VALUE OF THE PROPERTY IN SAME SURVEY NO. AS ON 01/01/2007 BEING RS. 35 LAKHS PER ACRE, SAME SHOULD BE ADOPTED. 9 ITA NO. 1524 TO 1526/HYD/2013 K. RAMA SWAMY AND OTHERS 10. HOWEVER, IN OUR VIEW, SECTION 50C BEING A DEEMI NG PROVISION, ASSESSEE IS REQUIRED TO ESTABLISH THAT SALE CONSIDE RATION SHOWN BY HIM IS THE ACTUAL FAIR MARKET VALUE AS ON THE DATE OF EXECUTION OF AGREEMENT OF SALE CUM GPA ON 30/10/2008. ON A PERUS AL OF REGISTERED VALUERS REPORT, A COPY OF WHICH IS AT P AGE 4 OF ASSESSEES PAPER BOOK, SHOWS THAT VALUE OF RS. 26.50 LAKH PER ACRE ADOPTED BY HIM IS PURELY ON ESTIMATE BASIS WITHOUT SUPPORTED BY ANY EVIDENCE. SIMILARLY, DVOS VALUATION AT RS. 43.41 LAKHS PER A CRE IS ALSO ON ESTIMATE ONLY. NEITHER THE ASSESSEE NOR THE DEPARTM ENT HAS BROUGHT ANY SUBSTANTIVE EVIDENCE ON RECORD TO JUSTIFY THE V ALUE ADOPTED BY THEM. IN THESE CIRCUMSTANCES, WE ARE LEFT WITH NO O THER OPTIONS BUT TO REMIT THE MATTER BACK TO THE FILE OF THE AO FOR DEC IDING THE ISSUE AFRESH AFTER MAKING NECESSARY ENQUIRY FOR ASCERTAIN ING THE FAIR MARKET VALUE OF THE PROPERTY AND EXAMINING ALL MATERIALS O N RECORD. STILL, IF THERE ARE NO EVIDENCE TO INDICATE THE ACTUAL FAIR M ARKET VALUE OF THE PROPERTY AS ON THE RELEVANT DATE THEN THE AO MAY ES TIMATE THE FAIR MARKET VALUE OF THE ASSET REASONABLY BY TAKING INTO CONSIDERATION ASSESSEES SUBMISSIONS. HOWEVER, WE MAKE IT CLEAR T HAT IN NO CASE THE FMV SHOULD EXCEED THE VALUATION MADE BY THE DVO . THE AO MUST AFFORD A REASONABLE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE BEFORE DECIDING THE ISSUE. 11. GROUND NO. 11 IS IN RESPECT OF COST OF ACQUISIT ION OF PROPERTY ON 01/04/1981 AS ARRIVED BY THE AO. 12. NEITHER, LEARNED AR HAS ADVANCED ANY ARGUMENT I N THIS REGARD NOR THERE IS ANY MATERIAL TO JUSTIFY THE CLAIM OF T HE ASSESSEE, HENCE, THIS GROUND IS DISMISSED. 13. GROUND NO. 12 IS IN RESPECT OF DENIAL EXEMPTION U/S 54EC OF THE ACT. 10 ITA NO. 1524 TO 1526/HYD/2013 K. RAMA SWAMY AND OTHERS 14. THOUGH, AT THE TIME OF HEARING, LEARNED AR HAS NOT ADVANCED ANY SPECIFIC ARGUMENT IN SUPPORT OF THE AFORESAID G ROUND, HOWEVER, CONSIDERING THE FACT THAT WE HAVE DIRECTED THE AO T O DETERMINE CAPITAL GAIN AFRESH AFTER ASCERTAINING THE FAIR MARKET VALU E OF THE PROPERTY ON THE DATE OF SALE, WE ALSO REMIT THIS ISSUE TO THE F ILE OF THE AO FOR CONSIDERING AFRESH IN ACCORDANCE WITH LAW AFTER AFF ORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 15. THE FACTS AND GROUNDS BEING SIMILAR, THE DIRECT IONS ABOVE WILL EQUALLY APPLY TO OTHER APPEALS AS WELL. 16. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 20/08/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTI JIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 20 TH AUGUST, 2014 KV COPY TO:- 1. K. RAMA SWAMY, HYDERABAD. C/O. KALYANDAS & CO., CAS., #15, VENKATESHWARA COLONY, NARAYANGUDA, HYDERABAD 500 029 2.K. AMARNATH, HYDERABAD. 3. K. ASHOK KUMARHYDERABAD. 4. ITO, WARD 8(1), HYDERQABAD 17. CIT(A), VIJAYAWADA 18. CIT(A)-VII, HYDERABAD 19. CIT-II, HYDERABAD 20. DR, ITAT, HYDERABAD 11 ITA NO. 1524 TO 1526/HYD/2013 K. RAMA SWAMY AND OTHERS DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S. 2. DRAFT PLACED BEFORE AUTHOR SR.P.S 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER VP 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P S. 7. FILE SENT TO THE BENCH CLERK SR.P.S. 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER