Shri Vinubhai V. Navadia, Surat V. The Dy.CIT, Central Circle-1, Surat

ITA 1941/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6130 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-04-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 25-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M J SHAH
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 50C

Judgement Text

, * ** *CH CHCH CH* ** * IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T.A. NO. 1941/AHD/2014 ( / ASSESSMENT YEAR : 2007-08) SHRI VINUBHAI V. NAVADIA SURAT. VS. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, SURAT. ! PAN/GIR NO. : ABAPN 5068 J ( ' / APPELLANTS ) .. ( #' RESPONDENTS ) '$ APPELLANT BY : SHRI M. J. SHAH, A.R. #'%$ / RESPONDENT BY : SHRI JAMES KURIAN, SR. DR & ' (%) * / DATE OF HEARING 12/04/2017 +,-. %) * / DATE OF PRONOUNCEMENT 26/04/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE IS D IRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS )-II, AHMEDABAD, DATED 05/03/2014 FOR THE ASSESSMENT YEAR (AY) 200 7-08. 2. ASSESSEE HAS BEEN TAKEN FOLLOWING GROUNDS OF APP EALS: (I). THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) HAS ERRED IN LAW AND ON FACTS IN DISMISSING THE APPEAL OF THE AP PELLANT ON THE REASONING THAT THE LEARNED AO HAS TO MAKE THE ADDIT ION ON THE ITA NO.1941/ AHD/2014 SHRI VINUBHAI V. NAVADIA VS. DCIT ASST.YEAR 2007-08 - 2 - BASIS OF THE VALUATION REPORT OF THE IMPUGNED PROPE RTY ISSUED BY THE LEARNED DVO. (II). THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.2 4,20,140/- MADE BY THE LEARNED AO U/S. 50C OF THE ACT. (III). IT IS, THEREFORE, PRAYED THAT THE IMPUGNED O RDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE QUASHED AND THE IMPUGNED ADDITION OF RS.24,20,140/- BE DELETED. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE LEARNED AO FOLLOWING THE DIRECTION OF THE CIT(A ) GIVEN VIDE HIS APPELLATE ORDER DATED 23/09/2010 PASSED IN THE APPE LLANTS CASE REFERRED THE CONCERNED PROPERTY FOR VALUATION TO THE LEARNED DEPARTMENTAL VALUATION OFFICER AS REQUIRED U/S. 50C(2) OF THE AC T. 4. ON RECEIPT OF THE VALUATION REPORT FROM THE DEPA RTMENTAL VALUATION OFFICER, THE LEARNED AOS ORDER OF THE VA LUATION MADE BY THE DEPARTMENTAL VALUATION OFFICER OF THE CONCERNED PRO PERTY AND MADE THE ADDITION OF DIFFERENTIAL AMOUNT I.E. DIFFERENCE BET WEEN THE VALUATION OF THE PROPERTY MADE BY THE DEPARTMENTAL VALUATION OFF ICER AND THE SALE CONSIDERATION SHOWN BY THE APPELLANT VIDE THE ORDER GIVING EFFECT TO THE HONBLE CIT(A)S ORDER DATED 23/09/2010. 5. DEPARTMENTAL VALUATION OFFICER VALUED THE IMPUGN ED PLOT AT RS.1,04,71,200/-, WHEREIN THE VALUE OF SHARE OF THE APPELLANT BEING 1/3 RD IN THE PLOT WAS DETERMINED BY THE LEARNED AO AT RS. 34,90,000/- ITA NO.1941/ AHD/2014 SHRI VINUBHAI V. NAVADIA VS. DCIT ASST.YEAR 2007-08 - 3 - 6. ON PERUSAL OF THE VALUATION REPORT ISSUED BY THE DEPARTMENTAL VALUATION OFFICER ON THE BASIS OF WHICH THE LEARNED AO HAS ADOPTED THE ESTIMATED FAIR MARKET VALUE OF THE CONCERNED PROPER TY ON THE DATE OF TRANSFER AT RS.34,90,000/-. 7. AGAINST THE SAID ORDER, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LEARNED CIT(A), BUT CIT(A) DECLINE THE A PPEAL OF THE ASSESSEE. 8. LEARNED DR RELY ON THE ORDER OF THE CIT(A). ON T HE OTHER HAND LEARNED AR STATED THAT DEPARTMENTAL VALUATION OFFIC ER HAS NOT GIVEN ANY OPPORTUNITY TO THE APPELLANT TO SUBMIT HIS OBJECTIO N AND COMMENTS IN THIS REGARD TO THE PROPOSED ADOPTION OF VALUE OF THE CON CERNED PROPERTY. 9. IT IS STATED THAT HAS PER THE LAYOUT PLAN CLEARL Y SHOWS THAT THE AREAS OF FINAL PLOT NO.3 OF BLOCK NO. 114 BEARING SURVEY NO.S 84/1 + 84/2 AS PER TP SCHEME NO.19 IS 24,432.80 SQ.MT. ONLY. 10. IT IS ALSO STATED THAT WHILE VALUING THE IMPUGN ED PROPERTY THE AREA OF PLOT SHOULD BE CONSIDERED AS 24,432 SQ.MT. ONLY. 11. AGAINST 34,904 SQ.MT. ADOPTED BY THE DEPARTMENT AL VALUATION OFFICER VIDE HIS VALUATION REPORT DATED 24/12/2011. OUT OF WHICH 30% OF THE AREA OF THE PLOT PURCHASED IS GOING TO BE CO MPULSORILY ACQUIRED AND THAT HE WILL BE ABLE TO USE ONLY 70% OF THE AREA OF THE PLOT, THE PURCHASER WOULD PAY MARKET RATE ONLY 70% OF THE AREA WHICH IN THE INSTANT CASE IS ITA NO.1941/ AHD/2014 SHRI VINUBHAI V. NAVADIA VS. DCIT ASST.YEAR 2007-08 - 4 - 24,432 SQ. MTS. ONLY. WHEREAS DEPARTMENTAL VALUATIO N OFFICER HAS ADOPTED 34,904 SQ.MTS., WHICH IS AGAINST THE FACTS. 12. THE TOTAL SALE PRICE OF THE IMPUGNED LAND WAS D ETERMINED BETWEEN THE PARTIES AT RS. 33,97,858/- FOR WHICH THE AGREEM ENT TO SELL WAS ALSO EXECUTED ON 21/11/2006. 13. LEARNED AR FURTHER STATED THAT DEPARTMENTAL VAL UATION OFFICER HAS DETERMINED THE FAIR MARKET VALUE OF THE PLOT FOR 09 /03/2007, WHERE IT SHOULD HAVE BEEN DETERMINED FOR THE MONTH OF DECEMB ER 2006. 14. AS PER THE LEARNED AR, DEPARTMENTAL VALUATION O FFICER HAS ALSO MADE EXCEEDINGLY HIGHER ESTIMATE OF SALE RATE OF RS .300/- PER SQ.MT., WHEN THE COMPARABLE SALES INSTANCES SHOW THE AVERAG E SALE RATE OF ONLY RS.58.83/- PER SQ.MT. 15. HE ALSO DREW OUR ATTENTION THAT SAID PLOT LAND FALLS UNDER DEVELOPMENT PLAN OF SMC AND APPROXIMATELY 30% LAND IS CURTAIL IN TPS NO.19 SCHEME PROPOSAL, SAID LAND NOT HAVING EXCESS FROM THE ROAD. 16. WE HAVE HEARD THE RIVAL SUBMISSION; THE SHORT Q UESTION IN CONTROVERSY IS CORRECTNESS OF VALUE OF THE PLOT UND ER SALE FOR THE PURPOSE OF DETERMINATION OF CAPITAL GAIN WITH REFERENCE TO SECTION 50C OF THE IT ACT. HAVING REGARD TO THE ALLOWANCE OF 30% CLAIMED TOWARDS CURTAILMENT OF LAND AS REFERRED TO BY CIT(A) IN PARA 3.2 OF THE CIT(A) ORDER AND ALSO ITA NO.1941/ AHD/2014 SHRI VINUBHAI V. NAVADIA VS. DCIT ASST.YEAR 2007-08 - 5 - HAVING REGARD TO THE COMPARABLE RATES AVAILABLE AT THE TIME OF SALE COUPLED WITH OTHER DEFICIENCIES SUCH AS LACK OF DIR ECT ACCESS TO THE PLOT UNDER SALE AND PANCITY OF CIVIC AMENITIES ETC. WE D EEM IT APPROPRIATE THAT THE SHARE OF THE ASSESSEE IN THE SALE CONSIDERATION BE TAKEN AT RS.17,45,000/- INSTEAD OF RS. 34,90,000/- DETERMINE D BY THE REVENUE. ACCORDINGLY, ASSESSEE GETS RELIEF TO THE EXTENT OF 50% IN THE DEEMED SALE CONSIDERATION. THE AO IS ACCORDINGLY DIRECTED TO RE -COMPUTE THE TAXABLE CAPITAL GAIN IN TERMS OF THE DIRECTION NOTED ABOVE. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 17. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 26/04/2017 SD/- SD/- IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K IZNHI DQEKJ DSFM;K EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRADIP KUMAR KEDIA) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 26/04/2017 PRITI YADAV, SR. PS ITA NO.1941/ AHD/2014 SHRI VINUBHAI V. NAVADIA VS. DCIT ASST.YEAR 2007-08 - 6 - !'# $#! COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) 45 / THE CIT(A)-II, AHMEDABAD. 5. 67 8)'12 *12. 0 / DR, ITAT, AHMEDABAD 6. 8 9: ( GUARD FILE. % & / BY ORDER, # 6)) //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY