M/s. Chandra Bhan Agarwal, Kolkata V. Addl.CIT, Range - 31, Kolkata

ITA 1778/KOL/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59626 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 23-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K ROY; S B DEY V
• Assessee Lawyers: S M SURANA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Question of law; Fair market value; Valuation report
• Section: 50C; 260A; 37

Judgement Text

1 , A , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A, KOL KATA [ , . . , ! ] BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & SRI C.D. RAO, ACCO UNTANT MEMBER ' ' ' ' / ITA NOS. 1778/KOL/2009 #$ %& / ASSESSMENT YEAR 2006-07 CHANDRA BHAN AGARWAL KOLKATA, ( PAN-ACUPA5677R ) - # - VERSUS ADDL.COMMISSIONER OF INCOME - TAX RANGE-31, KOLKATA. ( '( / APPELLANT ) ( )*'( / RESPONDENT ) '( + , / FOR THE APPELLANT: / SRI S.M. SURANA )*'( + , / FOR THE RESPONDENT: / SRI S.K. ROY, SR. D.R. & SRI S.B. DEY, VALUATION OFFICER -#. + ! /DATE OF HEARING : 02/02/2012 /% + ! /DATE OF PRONOUNCEMENT : 14/03/2012 0 / ORDER ( ,) (MAHAVIR SINGH), JUDICIAL MEMBER : THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDE R OF CIT(A)-XIX, KOLKATA IN APPEAL NO 352/CIT(A)-XIX/ADDL.CIT-RANGE-31/KOL/08-0 9 DATED 2/7/09. ASSESSMENT WAS FRAMED BY ADD C.I.T., RANGE-31, KOLKATA U/S. 14 3(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSME NT YEARS 2006-07 VIDE ORDER DATED 30/12/2008. 2. AT THE OUT SET, IT IS TO BE NARRATED THAT HONB LE CALCUTTA HIGH COURT IN ITAT NO.199 OF 2010 (GA NO.2879 OF 2010) IN ASSESSEES C ASE HAS FORMULATED FOLLOWING SUBSTANTIAL QUESTION OF LAW:- WHETHER THE LEARNED TRIBUNAL IS JUSTIFIED IN ACCEP TING THE VALUATION MADE BY THE ASSESSING OFFICER AS CONFIRMED BY THE COMMISSIO NER OF INCOME TAX (APPEAL) WITHOUT CONSIDERING THE MATERIALS PRODUCED BY THE ASSESSEE ? THE HONBLE HIGH COURT HAS SET ASIDE THIS APPEAL TO TRIBUNAL TO DECIDE AFRESH AFTER CONSIDERING THE MATERIAL PLACED BEFORE IT EARLIER, BY HOLDING AS UNDER:- 2 THIS MATTER IS TAKEN UP AFTER ADMITTING FOR FINAL H EARING ITSELF. IT APPEARS FROM THE IMPUGNED JUDGMENT AND ORDER OF THE LEARNED TRIB UNAL THAT THOUGH THE ASSESSEE ARGUED WITH THE MATERIALS, THAT THE VALUAT ION ARRIVED AT BY THE ASSESSING OFFICER WAS NOT PROPER AND JUSTIFIED, LEA RNED TRIBUNAL, IT APPEARS TO US HAS NOT CONSIDERED THIS ASPECT OF THE MATTER. W HEREFORE, ARE OF THE VIEW THAT THIS MATTER NEEDS TO BE RECONSIDERED. ACCORDINGLY, THE OPERATION OF JUDGMENT AN D ORDER IS KEPT IN ABEYANCE AND THE SAME IS REMANDED FOR FRESH HEARING BY THE LEARN ED TRIBUNAL, WHO WILL HEAR AFRESH CONSIDERING THE MATERIALS PLACED BEFORE IT E ARLIER, AND WILL TAKE A FRESH DECISION. IF IT IS FOUND THAT THE PRESENT JUDGMENT IS REQUIRED TO BE CHANGED OR VARIED THE SAME MAY BE DONE WITH AN OPEN MIND AND W ITHOUT BEING INFLUENCED AND/OR SWAYED BY THE EARLIER OBSERVATION. AFTER CONSIDERING ALL THE ASPECTS IF IT I S FOUND THAT THIS JUDGMENT DOES NOT REQUIRE ANY CHANGE, IN THAT EVENT STAY GRANTED BY T HIS COURT WILL STAND AUTOMATICALLY VACATED. 3. BRIEF FACTS RELATING TO THIS CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2006-07 ON 31/8/20 06 AND ASSESSMENT WAS FRAMED AFTER ISSUING NOTICE U/S 143(2) OF THE ACT AND COMP LETED VIDE ORDER DATED 30/12/2008 U/S143(3) OF THE ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION SOLD ONE PROPERTY WITH LAND AND BUILDING SITUATED AT HOLDING NO.1472 (PART) BASUDEVPUR, HPL LINK ROAD, P.S. DURGA CHAK, HALDIA TO SMT. YOGINI B . CHOTAI FOR A TOTAL SALE CONSIDERATION OF RS.65,00,101/- AND PAID STAMP DUTY OF RS.71,591/- AND STAMP CHARGES AT RS.5,20,100/-. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ISSUED LETTER TO REGISTRAR, SUTAHATA, DIST. MIDNAPU R (EAST), WEST BENGAL VIDE LETTER NO.388 DATED 28/8/2008 TO ASCERTAIN THE VALUATION O F PROPERTY AS PER STAMP VALUATION RATES FIXED BY THE STATE GOVERNMENT. REGISTRAR, SU TAHATA REPLIED VIDE LETTER NO. 92 DATED 04/9/2008 THAT THE RELEVANT SALE DEED NO. P-5 722/05 WAS NOT REGISTERED WITH THE REGISTRAR, SUTAHATA ADSR OFFICE. THE AO MADE R EFERENCE TO REGISTRAR OF ASSURANCE, 5, GOVT. PLACE (NORTH), KOLKATA, WHO VID E LETTER DATED 26/9/2008 INFORMED THAT THIS PROPERTY WAS ASSESSED AT RS.1,24,14,400/- ONLY. IN VIEW OF THESE FACTS, THE AO REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY LONG- TERM CAPITAL GAIN (LTCG) SHOULD NOT BE COMPUTED BY ADOPTING DEEMED FULL VALUE OF CO NSIDERATION AT RS.1,24,14,400/- U/S 50C OF THE ACT. THE ASSESSEE OBJECTED TO THE V ALUATION MADE BY REGISTRAR OF ASSURANCE. HENCE AO REFERRED THE MATTER TO VALUATI ON OFFICER OF INCOME-TAX DEPARTMENT U/S 50C(2)(B) OF THE ACT. THE VALUATION OFFICER VALUED THE PROPERTY AT RS.1,24,13,670/- AND VALUATION REPORT RECEIVED VIDE LETTER DATED 29/12/2008. THE AO 3 ASSESSED THE DEEMED FULL VALUE OF CONSIDERATION AT RS.1,24,13,670/- AND COMPUTED LTCG ACCORDINGLY. AGGRIEVED, ASSESSEE PREFERRED AP PEAL BEFORE CIT(A), WHO CONFIRMED THE ACTION OF THE A.O. BY GIVING FOLLOWIN G FINDING IN PARAS 6 TO 8 OF HIS APPELLATE ORDER:- (6) I HAVE CONSIDERED THE SUBMISSION OF THE APPE LLANT AND ALSO GONE THROUGH THE ASSESSMENT MADE BY THE A.O. THE SECTION 50C OF THE I.T, ACT, WHICH WAS INTRODUCED, BY THE FINANCE ACT, 2002 W.E. F. 01.04.2003, CONTAINS FOR A SPECIAL PROVISION FOR VALUATION OF CONSIDERAT ION IN CERTAIN CASES. SECTION 50C(1) PROVIDES THAT WHERE CONSIDERATION RECEIVED O R ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, CONSIST ING OF LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (REFERRED TO AS STAMP VALUATION AUTHORIT Y) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY FOR SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSE OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER. IN OTHER WORDS, WHEN THE STATED SALE CONSIDERATION OF A LAND OR HOUSE PROPERTY IS LESS THAN STAMP DUTY VALUATION FOR THE SAID PROPERTY, IT IS THE STAMP DUTY VALUATION WHICH SHALL PREVAIL FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAIN U/S. 48 OF THE ACT. (7) THE PROVISION IS, HOWEVER, SUBJECT TO AN IMPO RTANT EXCEPTION SCHEME OF WHICH IS SET OUT IN SUB-SECTION (2) & (3) OF SECTIO N 50C. SECTION 50C(2) PROVIDES THAT WHERE ASSESSEE CLAIMS BEFORE THE A.O. THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, U/S. 50C(L), EXCE EDS FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, AND UNLESS SUCH VALUATION IS SUBJECT MATTER OF LITIGATION BEFORE ANY. AUTHORITY OR COURT , THE A.O. MAY REFER THE MATTER FOR DETERMINATION OF FAIR MARKET VALUE OF TH E PROPERTY IN QUESTION TO THE D.V.O. AND THE SAME SHALL BE TAKEN INTO ACCOUNT FOR COMPUTATION OF CAPITAL GAIN. SECTION 50C(3), HOWEVER, PROVIDES THAT WHEN F AIR MARKET VALUATION SO DETERMINED BY THE D.V.O. IS HIGHER THAN THE VALUATI ON OR ASSESSMENT AS PER THE STAMP VALUATION AUTHORITY, THE COMPUTATION OF C APITAL GAIN IS TO BE DONE WITH REFERENCE TO THE VALUATION OR ASSESSMENT AS PE R THE STAMP VALUATION AUTHORITY. IN OTHER WORDS, VALUATION OF PROPERTY BY D.V.O. CANNOT ACT TO DETRIMENT TO THE ASSESSEE; THE ASSESSEE CANNOT BE P UT TO ANY DISADVANTAGE IN CASE THE MATTER IS REFERRED TO THE D.V.O. THE SCHEME OF SECTION 50C CAN BE SUMMARIZED AS FOLLOWS. THE NORMAL RULES THUS IS THAT WHERE STAMP DUTY VALUATIO N IS HIGHER THAN THE STATED CONSIDERATION ON TRANSFER, THE SAME IS TO BE ADOPTE D FOR THE PURPOSES OF COMPUTING THE CAPITAL GAIN. THE EXEMPTION IS THAT I N CASE THE ASSESEE CAN DEMONSTRATE THAT THE FAIR MARKET VALUATION IS LESS THAN THE STAMP DUTY VALUATION, THE FAIR MARKET VALUE IS TO BE ADOPTED. IN THE CASE OF APPELLANT, THE STAMP VALUATION AUTHORITY HAS ADOPTED THE VALUE FOR THE PURPOSES OF STAMP DUTY AT RS.1,24,14,400/-. ON THE OTHER HAND, ON A R EFERENCE MADE BY THE A.O. TO THE D.V.O., THE FAIR MARKET VALUE OF THE PROPERT Y WAS DETERMINED BY HIM AT RS.L,24,13,670/-. IN VIEW OF PROVISIONS OF SECTION 50C(2), THE A.O. HAS ADOPTED THE VALUE OF THE PROPERTY AT RS.1,24,13,670 /- FOR THE PURPOSES OF COMPUTATION OF CAPITAL GAIN U/S. 48 OF THE I.T. ACT AS AGAINST THE VALUE OF RS. 1,24,14,400/- ADOPTED BY THE STAMP VALUATION AUTHOR ITY. 4 (8) UNDER THE CIRCUMSTANCES, I AM OF THE OPINION THAT THE A.O. HAS ACTED AS PER THE PROVISIONS OF SECTION 50C OF THE I.T. ACT A ND ACCORDINGLY HE WAS JUSTIFIED IN ADOPTING THE SALE CONSIDERATION OF THE PROPERTY AT RS,1,24,13,670/- AS AGAINST THE SALE CONSIDERATION SHOWN BY THE APPE LLANT AT RS.65,00,101/-. THE ACTION OF THE A.O. IS UPHELD IN THIS REGARD. TH E GROUND NO. 1 IS DISMISSED. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE TRIBUNA L AND TRIBUNAL VIDE ORDER DATED 07/5/2010 DISMISSED THE APPEAL OF THE ASSESSEE AND UPHELD THE ORDERS OF LOWER AUTHORITIES, AGAINST WHICH ASSESSEE PREFERRED APPEA L BEFORE THE HONBLE CALCUTTA HIGH COURT U/S. 260A OF THE ACT AND HONBLE HIGH CO URT HAS SET ASIDE THE MATTER TO THE FILE OF TRIBUNAL TO RECONSIDER IN THE LIGHT OF THE DIRECTION REPRODUCED AS ABOVE. 4. THIS APPEAL WAS FIXED FOR HEARING BEFORE US, IN VIEW OF THE DIRECTION OF HONBLE CALCUTTA HIGH COURT, FIRST TIME ON 11/01/2012 AND O N THAT DATE, THE MATTER WAS PARTLY HEARD. ON 20/1/2012, THE MATTER WAS FURTHER TAKEN UP FOR HEARING AND DURING THE COURSE OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE , SRI S.M. SURANA, FIRST OF ALL DESIRED TO PRODUCE THE COPY OF VALUATION REPORT MAD E BY THE OFFICE OF ADSR, SUTAHATA, DATED 08/9/2008, WHICH READS AS UNDER :- GOVERNMENT OF WEST BENGAL OFFICE OF THE A.D.S.R. SUTAHATA MARKET VALUE/CHARGEABILITY ASSESSMENT SLIP QUERY NO./YEAR 007552 / 2008 DATE 08/09/2008 APPLICANT NAME LAKSHMI KANTA MAITY APPLICANT STAT US OTHERS TYPE OF DEED [0101] SALE DOCUMENT MARKET VALUE RS. 76,18,872/- STAMPDUTY PAYABLE RS. 5,33,321/- STAMP DUTY: SCHE DULE 1A, ARTICLE-23 REGISTRATION FEE PAYABLE RS. 83,798/- SCH NO. PLOT NO. PROPOSED LAND USE AREA SET FORTH VALUE(RS.) MARKET VALUE(RS.) DEPRECIATION/ APPRECIATION DIST. PURBA MEDINAPAORE, P.S.-DURGACHAK, MIN I.-HALDIA, MOUZA- BASUDEVPUR 1 1472 BASTU 17 DEC. 5,00,000/- 19,73,624/- AR OPT. SCH NO. STR. NO. FLOOR NO. USE TYPE AREA SQ.FT. FLOOR TYPE AGE (YRS) ROOF TYPE SET FORTH MARKET DEPR/ APRC. 1 1 GR RESIDENTIAL 3250 CEMENTED 12 PUCCA 45,50,000 56,45,248 CA-0 SQ.FT. 1 1 1 RESIDENTIAL 3250 CEMENTED 12 PUCCA 1 1 2 RESIDENTIAL 3250 CEMENTED 12 PUCCA 5 1 1 3 RESIDENTIAL 3250 CEMENTED 12 PUCCA GOVERNMENT OF WEST BENGAL OFFICE OF THE A.D.S.R. SUTAHATA MARKET VALUE/CHARGEABILITY ASSESSMENT SLIP QUERY NO./YEAR 007552 / 2008 DATE 08/09/2008 N.B 1. AR-APPROACH ROAD, BD-BARGADAR, DEC-DECIMAL, KTH-KATHA, FL NO-FLOOR NO, DIST-DISTRICT, P.S-POLICE STATION , CROP-CROP. DEPR /APPR-DEPRECIATION/APPRECIATION, STR-STRUCTURE, APT-APARTMENT, SCH-SCHEDULE, MUNI-MU NACIPALITY, CA-CAR PARKING AREA 2. S.D.& REGN. FEES ARE CALCULATED ON THE BASIS OF INFORMATION AND TRANSACTION DESCRIPTION/CODE PROVIDED IN THE REQUISITION FORM. IF THOSE INFORMATION ARE FOUND TO BE GIVEN ISNCORRECT, THE ASSESSMENT MADE STANDS INV ALID. 3. ASSESSED MARKET VALUE IS VALID FOR ONE MONTH. 4. STANDARD USER CHARGES OF RS.175/- (RUPEES ONE H UNDRED SEVENTY FIVE) ONLY INCLUSIVE OF ALL TAXES PER TRANSACTION UPTO 15 (FIF TEEN) PAGES AND RS.6/- (RUPEES SIX) ONLY FOR EACH ADDITIONAL PAGE WILL BE APPLICAB LE. SD/- REGISTERING OFFICE A.D.S.R. SUTAHATA FURTHER, LEARNED COUNSEL FOR THE ASSESSEE TOOK US T O VALUATION OFFICERS REPORT VIDE NO F.NO.1911/DVO/ITD/KOL/07-08-09/654 DATED 29/12/2 008, WHEREBY THE VALUE WAS DETERMINED AT RS.1,24,13,670/- IN RESPECT TO TH IS PROPERTY SOLD BY ASSESSEE. THE RELEVANT ABSTRACT OF THE REPORT READS AS UNDER: - ABSTRACT OF COST DETERMINATION OF FAIR MARKET VALUE OF PROPERTY AT 1 472 BASUDEVPUR, HPL LINK ROAD, HALDIA. THE BUILDING IS G+3 RCC FRAMED STRUCTURE. THE PROPERTY IS LOCATED ON MAIN HPL LINK ROAD AND H AS HUGE COMMERCIAL POTENTIAL VALUE. THE PROPERTY UNDER CONSIDERATION IS COMMERCIAL GOOD AND CONSIDERING THE FACTORS SUCH AS COMMERCIAL AREA, FRONTAGE OF BUILDING, LOCATION TRANSPORTATION FACILITIES AND OTHER AMENITIES BEING VERY GOOD. THE RATE OF BUILDING UNDER CONSIDERATION AS RS.1075 1 PER SQM (PLINTH AREA) PLINTH AREA 1154.76 SQM. @ RS.10750/- SQM. = RS.1,2 4,13,670/-. PLINTH AREA - GF = 310.59 SQM. 1 ST TO 3 RD FLOOR 3 X 323.83` = 971.49 SQM. 1282.08 SQM LESS ALREADY SOLD (-) 127.32 SQM 1154.76 SQM. VALUATION FOR PROPERTY AT 1472, BASUDEVPUR HPL LINK ROAD, HALDIA THE PROPERTY IS LOCATED ON MAIL HPL LINK ROAD PS DU RGACHAK. CONSIDERING THE FACTORS SUCH AS GOOD COMMERCIAL AREA, FRONTAGE OF B UILDING, LOCATION, TRANSPORT FACILITIES AND OTHER AMENITIES BEING VERY GOOD THE RATE ADOPTE D IS RS.10750 PER SQM. SD/- 6 VALUATION OFFICER-VI INCOME TAX DEPARTMENT 54/1, RAFI AHMED KIDWAI ROAD, KOLKATA-700016. 5. WE FIND THAT BY FINANCE ACT, 2002, A NEW SECTIO N 50C HAS BEEN INSERTED IN THE ACT TO MAKE A SPECIAL PROVISION FOR DETERMINING DEE MED FULL VALUE OF CONSIDERATION IN CASE OF TRANSFER OF IMMOVABLE PROPERTY. SUB-SEC. (1 ) OF SEC. 50C OF THE ACT PROVIDES THAT WHERE THE SALE CONSIDERATION DECLARED TO BE RE CEIVED OR ACCRUING AS A RESULT OF TRANSFER OF CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF SATE GOVT. FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALU E SO ADOPTED OR ASSESSED SHALL BE THE DEEMED FULL VALUE OF CONSIDERATION AND CAPITAL GAIN SHALL BE COMPUTED ACCORDINGLY U/S. 48 OF THE ACT. FURTHER, SUB-SEC ( 2) OF SEC 50C OF THE ACT PROVIDES THAT WHERE THE ASSESSEE CLAIMS THAT THE VALUE SO AD OPTED OR ASSESSED FOR STAMP DUTY PURPOSES EXCEEDS THE FAIR MARKET VALUE SO ADOPTED O R ASSESSED HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR REFERENCE BEF ORE ANY AUTHORITY OR COURT, ON THE OBJECTION OF THE ASSESSEE, THE AO MAY REFER THE MAT TER TO DVO TO DETERMINE THE FAIR MARKET VALUE IN ACCORDANCE WITH SUB-SEC (2) OF THIS SECTION. IF THE FAIR MARKET VALUE DETERMINED BY THE DVO IS LESS THAN THE VALUE ADOPTE D FOR STAMP DUTY PURPOSES, THE AO HAS TO TAKE SUCH FAIR MARKET VALUE TO BE THE FUL L VALUE OF CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS U/S 48 OF T HE ACT. HOWEVER, IF THE FAIR MARKET VALUE, SO DETERMINED BY THE DVO, IS MORE THAN THE V ALUE ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES, THE AO SHALL NOT ADOPT SUCH FA IR MARKET VALUE AND SHALL TAKE THE FULL VALUE OF CONSIDERATION TO BE THE VALUE ADO PTED OR ASSESSED FOR STAMP DUTY PURPOSES. IN VIEW OF THE PROVISIONS OF SUB-SEC. (2 ) OF SEC. 50C OF THE ACT, THE AO MAY REFER THE CAPITAL ASSET, I.E. THE LAND AND BUIL DING OR BOTH, FOR VALUATION TO DVO AND WHERE ANY SUCH REFERENCE IS MADE, FOLLOWING PRO VISIONS WILL APPLY:- - SUB-SECTIONS (2), (3), (4), (5) AND (6) OF SEC TION 16A, - CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, - SUB-SECTION (5) OF SECTION 24, - SECTION 34AA, - SECTION 35 AND - SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WITH NECESSARY MODIFICATIONS, APPLY- - IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SECTION 16A(1) OF THAT ACT 27 OF 1957. 7 6. IN THE PRESENT CASE BEFORE US, THE PROPERTY WIT H LAND AND BUILDING WAS SOLD FOR TOTAL CONSIDERATION OF RS.65,00,101/- AND STAMP DUT Y AT RS.5,20,100/- AND RS.71,591/- WERE PAID. THIS PROPERTY WAS SOLD AS O N 29/07/2005 AND SALE DEED WAS EXECUTED ON THIS VERY DATE 29/07/2005. THE AO PROP OSED TO TAKE FULL VALUE OF CONSIDERATION AT RS.1,24,14,400/- IN VIEW OF PROPER TY ASSESSED BY A.D.S.R., SUTAHATA BEING DEEMED SALE CONSIDERATION OF THE PROPERTY AND ACCORDINGLY COMPUTED LTCG ON THE SAME. THE ASSESSEE OBJECTED AND ON THAT BASIS, AND ON OBJECTION OF ASSESSEE AO REFERRED THE MATTER TO DVO, WHO VIDE REPORT DATE D 29/12/2008 ASSESSED THE PROPERTY BY APPLYING PLINTH AREA RATES @ RS.10,750/ - PER SQ.MT. AND ASCERTAINED THE FAIR MARKET VALUE OF THIS PROPERTY AS ON THE DATE O F SALE DATED 29/7/2005 AT RS.1,24,13,620/-. THE AO ASSESSED THE DEEMED SALE CONSIDERATION, AS ASSESSED BY DVO AT RS.1,24,13,670/- AND COMPUTED LTCG ACCORDING LY. THE ASSESSEE BEFORE APPELLATE AUTHORITIES MADE ARGUMENT THAT THERE IS N O FIXED RATE OR THERE IS NO CIRCLE RATE FIXED BY WEST BENGAL GOVERNMENT FOR ASSESSING THE FAIR MARKET VALUE FOR THE PURPOSE OF STAMP DUTY DURING THE RELEVANT PERIOD WH EN PROPERTY WAS SOLD BY ASSESSEE FOR THE AREA WHERE ASSESSEES PROPERTY . HE REFERRED THE MATTER TO GOVT. OF WEST BENGAL, WHO ASSESSED THE FAIR MARKET VALUE OF THIS PROPERTY AS ON 08/9/2008, WHEREAS THE SALE WAS MADE AS ON 29/7/2005, AT RS.76 ,18,872/- REFERRING THE SAME PROPERTY. THE RELEVANT FAIR MARKET VALUE ASSESSED BY A.D.S.R., SUTAHATA HAS BEEN REPRODUCED ABOVE IN PARA 4 PAGE 4 & 5 OF THIS ORDER . 7. IN VIEW OF THE ABOVE FACTS, NOW THE QUESTION AR ISES AS TO WHY THE FAIR MARKET VALUE ASSESSED BY DVO AS PER THE PROVISION OF SEC. 50C(2)(A) OF THE ACT BE ADOPTED.. THE EXPRESSION FAIR MARKET VALUE, IN RELATION TO ANY IMMOVABLE PROPERTY TRANSFERRED, MEANT THE PRICE THE IMMOVABLE PROPERTY ORDINARILY F ETCH ON SALE IN THE OPEN MARKET ON THE DATE OF EXECUTION OF THE INSTRUMENT OF TRANS FER OF SUCH PROPERTY. THE FAIR MARKET VALUE IS THE BEST PRICE WHICH VENDOR CAN REA SONABLY OBTAIN IN THE CIRCUMSTANCES OF A PARTICULAR CASE AND WHAT IS REQU IRED TO BE DONE FOR THE ASCERTAINMENT OF SUCH MARKET VALUE IS TO ASCERTAIN THE PRICE WHICH A WILLING, REASONABLE AND PRUDENT PURCHASER WOULD PAY FOR THE PROPERTY. IN ASCERTAINING THAT, ALL FACTORS HAVING ANY DEPRESSING OR APPRECIATIVE E FFECT ON THE VALUE OF THE PROPERTY HAVE TO BE TAKEN INTO ACCOUNT OR IF IRRELEVANT CONS IDERATIONS HAVE ENTERED THE ENQUIRY, THE FINDING BECOMES VITIATED IN LAW. THERE IS NO D IFFERENCE BETWEEN THE IMPORT OF THE TERMS COST, PRICE AND VALUE. AS A MATTER OF FACT, A PRICE INDICATES A FACT THAT HAS 8 ALREADY OCCURRED IN PRACTICE, A COMPLETED AFFAIR AF TER A PROPERTY HAS BEEN, OR AGREED TO BE SOLD. ON THE OTHER HAND, VALUE INDICATES T HE ESTIMATION OF A PROBABLE PRICE OF THE PROPERTY CONCERNED. THE VALUE OF A PROPERTY CA NNOT BE STATED IN AN ABSTRACT FORM AND IT VARIES FROM TIME TO TIME AND CAN ONLY BE STA TED WITH REFERENCE TO SO MANY FACTORS, I.E. THE LOCALITY, SITUATION, GENERAL APPE ARANCE IN THE AREA, AVAILABILITY OF SHOPPING AND MARKETING FACILITIES, CONDITION OF PUB LIC WAYS AND TRANSPORTATION, AVAILABILITY OF UTILITIES, AND MANY OTHER THINGS. AS FAR AS COST IS CONCERNED, IT INDICATES COST TO THE PURCHASER FOR THE PURCHASE OF THE PROPERTY AFTER THE PURCHASE HAS BEEN COMPLETED OR AGREED TO. THE PROVISIONS OF SEC. 50C OF THE ACT, IN THE PRESENT CONTEXT, STATE THE FAIR MARKET VALUE AND VA LUE IS ESTIMATION OF A PROBABLE PRICE OF THE PROPERTY, I.E. THE DEEMING FICTION. T HE DEEMED VALUE IS TO BE ASCERTAINED AND FOR THAT, AS DISCUSSED ABOVE, SEC. 50C OF THE A CT HAS POSTULATED CERTAIN CONDITIONS. IN THE PRESENT CASE, THE FAIR MARKET V ALUE ESTIMATED BY DVO HAS BEEN CHALLENGED AS DVOS REPORT HAS NO BASIS, BECAUSE IT HAS NOT DISCUSSED ANY OF THE FACTORS, SUCH AS LOCALITY, SITUATION, GENERAL APPEA RANCE IN THE AREA, AVAILABILITY OF SHOPPING AND MARKETING FACILITIES, CONDITIONS OF PU BLIC WAYS AND TRANSPORTATION, AVAILABILITY OF UTILITIES ETC. AND ETC. WE HAVE GO NE THROUGH THE DVO.S REPORT, WHICH IS A CRYPTIC ONE, AND THE ASSESSMENT IS BASED ON VALUE AS ASSESSED BY A.D.S.R., SUTAHATA AND THAT ALSO ON THE BASIS OF ADDITIONAL S TAMP DUTY ASKED FOR. IF SUCH IS THE SITUATION, THERE IS NO PURPOSE FOR REFERRING THE MA TTER TO DVO REASON BEING IF THE DVO IS TO ADOPT THE VALUE TAKEN BY STAMP DUTY AUTHORITY , THEN HE HAS NOT APPLIED HIS INDEPENDENT MIND AND THAT ITSELF IS BASED ON IRRELE VANT CONSIDERATIONS AND GERMANE CONSIDERATIONS HAVE NOT BEEN CONSIDERED WHILE ASSES SING THE VALUE. HONBLE SUPREME COURT HAS RULED FOR DETERMINING THE FAIR MA RKET VALUE, NO DOUBT IN THE CONTEXT OF LAND ACQUISITION ACT, 1894, BUT THE SAME HOLDS THE FIELD EVEN IN THE CASE OF VALUATION TO BE MADE BY THE DVO. HONBLE APEX CO URT HAS CONSIDERED THE ISSUE IN CHIMANLAL HARGOVINDDAS V SPECIAL LAND ACQUISITION O FFICER, AIR 1988 SC 1652, 1656-58, IN SURESH KUMAR V TOWN IMPROVEMENT TRUST, BHOPAL, (1989) 2 SCC 329 (SC) AND IN LAND ACQUISITION COLLECTOR V. SUKHDEV S INGH, AIR 1995 HP 150, 153-54 LAID DOWN FOLLOWING GUIDING FACTORS:- (1) THE MARKET VALUE OF LAND UNDER ACQUISITION HA S TO BE DETERMINED AS ON THE CRUCIAL DATE OF PUBLICATION OF THE NOTIFICATION UND ER SECTION 4 OF THE LAND ACQUISITION ACT (DATES OF NOTIFICATIONS UNDER SECTIONS 6 AND 9 ARE IRRELEVANT). (2) THE DETERMINATION HAS TO BE MADE STANDING O N THE DATE LINE OF VALUATION (DATE OF PUBLICATION OF NOTIFICATION UNDER SECTION 4) AS IF THE VALUE IS A HYPOTHETICAL PURCHASER 9 WILLING TO PURCHASE LAND FROM THE OPEN MARKET AND I S PREPARED TO PAY A REASONABLE PRICE AS ON THAT DAY. IT HAS ALSO TO BE ASSUMED THA T THE VENDOR IS WILLING TO SELL THE LAND AT A REASONABLE PRICE. (3) IN DOING SO BY THE INSTANCES METHOD, THE CO URT HAS TO CORRELATE THE MARKET VALUE REFLECTED IN THE MOST COMPARABLE INSTANCE WHI CH PROVIDES THE INDEX OF MARKET VALUE. (4) ONLY GENUINE INSTANCES HAVE TO BE TAKEN INT O ACCOUNT. (SOMETIMES INSTANCES ARE RIGGED UP IN ANTICIPATION OF ACQUISITION OF LAN D.) (5) EVEN POST-NOTIFICATION INSTANCES CAN BE TAK EN INTO ACCOUNT (1) IF THEY ARE VERY PROXIMATE, (2) GENUINE AND (3) THE ACQUISITION ITSE LF HAS NOT MOTIVATED THE PURCHASER TO PAY A HIGHER PRICE ON ACCOUNT OF THE RESULTANT I MPROVEMENT IN DEVELOPMENT PROSPECTS. (6) THE MOST COMPARABLE INSTANCES OUT OF THE GE NUINE INSTANCES HAVE TO BE IDENTIFIED ON THE FOLLOWING CONSIDERATIONS: (I) PROXIMITY FROM TIME ANGLE (II) PROXIMITY FROM SITUATION ANGLE. (7) HAVING IDENTIFIED THE INSTANCES WHICH PROVI DE THE INDEX OF MARKET VALUE THE PRICE REFLECTED THEREIN MAY BE TAKEN AS THE NORM AN D THE MARKET VALUE OF THE LAND UNDER ACQUISITION MAY BE DEDUCED BY MAKING SUITABLE ADJUSTMENTS FOR THE PLUS AND MINUS FACTORS VIS-A-VIS LAND UNDER ACQUISITION BY P LACING THE TWO IN JUXTAPOSITION. (8) A BALANCE-SHEET OF PLUS AND MINUS FACTORS M AY BE DRAWN FOR THIS PURPOSE AND THE RELEVANT FACTORS MAY BE EVALUATED IN TERMS OF P RICE VARIATION AS A PRUDENT PURCHASER WOULD DO. (9) THE MARKET VALUE OF THE LAND UNDER ACQUISIT ION HAS THEREAFTER TO BE DEDUCED BY LOADING THE PRICE REFLECTED IN THE INSTANCE TAKEN A S NORM FOR PLUS FACTORS AND UNLOADING IT FOR MINUS FACTORS. (10) THE EXERCISE INDICATED IN CLAUSES (7) TO (9 ) HAS TO BE UNDERTAKEN IN A COMMON SENSE MANNER AS A PRUDENT MAN OF THE WORLD OF BUSIN ESS WOULD SO. WE MAY ILLUSTRATE SOME SUCH ILLUSTRATIVE (NOT EXHAUSTIVE) FACTORS:- PLUS FACTORS MINUS FACTORS 1. SMALLNESS OF SIZE. 1. LARGENESS OF AREA 2. PROXIMITY TO A ROAD. 2. SITUATION IN THE IN TERIOR AT A DISTANCE FROM THE ROAD. 3. FRONTAGE ON A ROAD. 3. NARROW STRIP OF LAND WITH VERY SMALL FRONTAGE COMPARED TO DEPTH. 4. NEARNESS TO DEVELOPED AREA. 4. LOWER LEVEL R EQUIRING THE DEPRESSED PORTION TO BE FILLED UP. 5. REGULAR SHAPE. 5. REMOTENESS FROM DEVELOPE D LOCALITY. 6. LEVEL VIS--VIS LAND UNDER ACQUISITION 6. SOME SPECIAL DISADVANTAGEOUS FACTOR WHICH WOULD DETER A PURCHASER. 7. SPECIAL VALUE FOR AN OWNER OF AN - ADJOINING PROPERTY TO WHICH IT MAY HAVE SOME VERY SPECIAL ADVANTAGE. 10 (11) THE EVALUATION OF THESE FACTORS OF COURSE DE PENDS ON THE FACTS OF EACH CASE. THERE CANNOT BE ANY HARD AND FAST OR RIGID RULE. C OMMON SENSE IS THE BEST AND MOST RELIABLE GUIDE. FOR INSTANCE, TAKE THE FACTOR REGARDING THE SIZE. A BUILDING PLOT OF LAND SAY 500 TO 1000 SQ. YDS. CANNOT BE COMPARED WITH A LARGE TRACT OR BLOCK OF LAND OF SAY 10000 SQ. YDS. OR MORE. FIRSTLY WHILE A SMALLER PLOT IS WITHIN THE REACH OF MANY, A LARGE BLOCK OF LAND WILL HAVE TO BE DEVELOP ED BY PREPARING A LAY-OUT, CARVING OUT ROADS, LEAVING OPEN SPACE, PLOTTING OUT SMALLER PLOTS, WAITING FOR PURCHASERS (MEANWHILE THE INVESTED MONEY WILL BE BLOCKED UP) A ND THE HAZARDS OF AN ENTREPRENEUR. THE FACTOR CAN BE DISCOUNTED BY MAKI NG A DEDUCTION BY WAY OF AN ALLOWANCE AT AN APPROPRIATE RATE RANGING APPROXIMAT ELY BETWEEN 20% TO 50% TO ACCOUNT FOR LAND REQUIRED TO BE SET APART FOR CARRY ING OUT LANDS AND PLOTTING OUT SMALL PLOTS. THE DISCOUNTING WILL TO SOME EXTENT ALSO DE PEND ON WHETHER IT IS A RURAL AREA OR URBAN AREA, WHETHER BUILDING ACTIVITY IS PICKING UP, AND WHETHER WAITING PERIOD DURING WHICH THE CAPITAL OF THE ENTREPRENEUR WOULD BE LOCKED UP, WILL BE LONGER OR SHORTER AND THE ATTENDANT HAZARDS. (12) EVERY CASE MUST BE DEALT WITH ON ITS OWN FAC T PATTERN BEARING IN MIND ALL THESE FACTORS AS A PRUDENT PURCHASER OF LAND IN WHICH POS ITION THE JUDGE MUST PLACE HIMSELF. (13) THESE ARE GENERAL GUIDELINES TO BE APPLIED W ITH UNDERSTANDING INFORMED WITH COMMON SENSE. 8. FROM THE ABOVE, WE CAN VISUALIZE THAT DVO HAS N OT DISCUSSED ANYTHING WHILE DETERMINING FAIR MARKET VALUE, RATHER HE HAS BASED HIS OPINION ON THE BASIS OF FAIR MARKET VALUE ASSESSED BY A.D.S.R., SUTAHATA FOR ASC ERTAINING VALUE FOR STAMP VALUATION PURPOSES. EVEN THE DVO WITHOUT DISCUSSIN G ANYTHING HAS APPLIED PLINTH AREA RATE PER SQ. MT. HE HAS NOT DISCUSSED THE MET HOD OF VALUATION, I.E. PRIMARILY LAND AND BUILDING METHOD, CONTRACTORS METHOD OF VA LUATION, RENTAL BASIS OR YIELD BASIS METHOD, MUNICIPAL VALUATION METHOD ETC. IN THIS CAS E, THE DVO HAS NOT ASCERTAINED ANY MARKET VALUE TO WHICH A WILLING, REASONABLE AND PRUDENT PURCHASER WOULD PAY FOR THIS PROPERTY. EVEN THE DVO HAS NOT CONSIDERED THE FACTORS HAVING ANY DEPRESSING OR APPRECIATIVE EFFECT ON THE VALUE OF THE PROPERTY INCLUDING GUIDELINES LAID DOWN BY HONBLE SUPREME COURT, AS NOTED ABOVE. EVEN DVO WAS ASKED TO PRESENT TO SUPPORT HIS VALUATION REPORT AND IN TERMS OF PROVISO TO SEC TION 24 OF WEALTH TAX ACT, 1957, HE WAS ALLOWED OPPORTUNITY. THE DVO, SHRI S.B.DEY WAS PRESENT BUT HE FAIRLY CONCEDED THAT THE VALUATION MADE IS ON THE BASIS OF VALUE DE TERMINED BY STAMP VALUATION AUTHORITY FOR CHARGING STAMP DUTY AND HIS VALUATION IS NOT BASED ON ANY FACTORS AS ENUMERATED BY HONBLE SUPREME COURT IN THE ABOVE-RE FERRED CASES. THESE, ABOVE REFERRED CASES OF HONBLE SUPREME COURT, WERE CONFR ONTED TO DVO. EVEN LD. SR.DR, SHRI S.K.ROY COULD NOT SUPPORT THE VALUATION REPORT AND FAIRLY CONCEDED THAT AT THE TIME OF REGISTRATION OF SALE DEED OF THE ASSESSEES PROPERTY, THERE WAS NO CIRCLE RATES 11 FOR ASSESSING THE FAIR MARKET VALUE FOR THE PURPOSE S OF COLLECTION OR LEVY OF STAMP DUTY IS FIXED. IN SUCH CIRCUMSTANCES, NOW WE HAVE TO DET ERMINE WHAT SHOULD BE THE FAIR MARKET VALUE. AS ARGUED BY LD. COUNSEL FOR THE ASSE SSEE, SHRI S.M.SURANA AND THE VALUATION REPORT AS ASSESSED BY THE STAMP VALUATION AUTHORITY, THE SAME PROPERTY VIDE REPORT DATED 08.09.2008 ASSESSING THE MARKET V ALUE AT RS.76,18,872/- AS FILED BEFORE US CAN BE CONSIDERED. HENCE, AS DIRECTED BY HONBLE CALCUTTA HIGH COURT, CONSIDERING THE FAIR MARKET VALUE DETERMINED BY A.D .S.R., SUTAHATA, GOVT. OF WEST BENGAL, I.E. THE VALUATION AUTHORITY REPORT DATED 0 8/9/2008 ASSESSING THE FAIR MARKET VALUE OF THIS PROPERTY AS ON 08/9/2008 AT RS.76,18, 872/- SEEMS TO BE FAIR AND REASONABLE FOR THE PURPOSE OF COMPUTATION OF LONG-T ERM CAPITAL GAINS BECAUSE WHEN ASSESSEE SOLD HIS PROPERTY, IN QUESTION, THERE WAS NO CIRCLE RATES FIXED BY STAMP VALUATION AUTHORITY OF THE CONCERNED CIRCLE FOR THE PURPOSE OF COLLECTION OR LEVY OF STAMP DUTY AS CONCEDED BY LD. SR DR. WE DIRECT THE AO ACCORDINGLY. 9. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 0 !- 1 -# 2 3 THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 14.03 .2012 SD/- SD/- ( . . ) ! ) ( , ) (C.D. RAO) ACCOUNTANT MEMBER (MAHAVIR SINGH) JUDICIAL MEMBER ( (( (! ! ! !) )) ) DATE: 14 -03-2012 0 + )6 7 6%8- COPY OF THE ORDER FORWARDED TO: 1. '( / THE APPELLANT : CHANDER BHAN AGRAWAL, 17, GANESH CHANDERA AVENUE, KOLKATA-70 0013 2 )*'( / THE RESPONDENT : ADDL CIT, RANGE-31, KOLKATA. 3. 0# ( ) : THE CIT(A)-XIX, KOLKATA. 4. 0# / THE C.I.T., KOL - 5 :2 )# / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 GUARD FILE . *6 ) / TRUE COPY, 0#- / BY ORDER, ASSTT. REGISTRAR .