Shri Gaurav Chawla, Indore V. The ITO Ward 2(2), Indore

ITA 196/IND/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4855 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S SHEETAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Question of law; Fair market value; Valuation report
• Section: 143(3); 50C; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ABKPC5596Q I.T.A.NO. 195 /IND/201 3 A.Y. : 2008-09 SHRI JAI KUMAR CHAWLA , 8,GULMOHAR COLONY, INDORE. VS. INCOME - TA X OFFICER, WARD 2(2), INDORE. APPELLANT RESPONDENT PAN NO. : AEIPC7108K I.T.A.NO. 196/IND/2013 A.Y. : 2008-09 SHRI GAURAV CHAWLA, 8,GULMOHAR COLONY, INDORE. VS. INCOME - TAX OFFICER, WARD 2(2), INDORE. APPELLANT RESPONDENT APPELLANT S BY : SHRI S.S.SHEETAL, ADV. RESPONDENT BY : SHRI R.A.VERMA, SR. DR DATE OF HEARING : 01 . 0 8 .201 3 DATE OF PRONOUNCEMENT : 26 . 0 8 .201 3 -: 2: - 2 O R D E R PER R. C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 23.1.2013, FOR THE ASSESSMENT YEAR 2008- 09 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961. 2. BOTH THE ASSESSEES ARE FATHER AND SON BY RELATION A ND ADDITIONS HAVE BEEN MADE WITH RESPECT TO SALE OF AG RICULTURAL LAND OWNED BY THEM JOINTLY, BY INVOKING PROVISIONS OF SECTION 50C OF THE INCOME-TAX ACT, 1961. SINCE THE COMMON G ROUNDS HAVE BEEN TAKEN BY BOTH THE ASSESSEES, BOTH THE APP EALS WERE HEARD TOGETHER AND ARE NOW DISPOSED OF BY THIS CONS OLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. THE RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. FACTS IN BRIEF ARE THAT DURING THE YEAR UN DER CONSIDERATION, THE ASSESSEE SOLD AGRICULTURAL LAND AND DECLARED CAPITAL GAINS IN THE RETURNS FILED BY THEM. FROM TH E RECORD, WE FOUND THAT THE ASSESSEE GAURAV CHAWLA JOINTLY WITH HIS FATHER SHRI JAI KUMAR CHAWLA SOLD LAND SITUATED AT GRAM -: 3: - 3 NIRANJANPUR (INDORE) ADMEASURING 3594.26 MTR., FOR A CONSIDERATION OF RS. 2.96 CRORES ON 15 TH OCTOBER, 2007, TO GOVIND CHAWLA, SMT. NIMMI DEVI CHAWLA & SAGAR CHAWL A. THIS LAND WAS PURCHASED ON 19 TH FEBRUARY, 2007, FOR RS. 2,88,33,000/-. SINCE THE SHARE OF ASSESSEE WAS 50%, SHORT TERM CAPITAL GAIN OF RS. 2,83,500/- ON THEIR RESPEC TIVE SHARES WAS OFFERED IN THE RETURN OF INCOME FILED BY BOTH A SSESSEES FOR THE ASSESSMENT YEAR 1988-89 UNDER CONSIDERATION. AS PER THE VALUATION DONE BY THE STAMP DUTY AUTHORITY, THE SAM E WORKED OUT AT RS. 4,56,35,000/- ON 10 TH OCTOBER, 2008. ASSESSEE RAISED OBJECTION BEFORE THE STAMP DUTY AUTHORITY WI TH RESPECT TO VALUE OF LAND ADOPTED BY HIM. ASSESSEE ALSO REQU ESTED THE ASSESSING OFFICER TO REFER THE MATTER TO DVO. HOWEV ER, THE ASSESSING OFFICER ISSUED COMMISSION U/S 131(1)(D) O F THE INCOME-TAX ACT, 1961, TO THE DVO TO DETERMINE THE F AIR MARKET VALUE OF THE SAID PROPERTY U/S 50-C. THE DVO VIDE H IS ORDER DATED 24.12.2010 DETERMINED THE VALUATION OF THE PR OPERTY AT RS. 3,65,25,500/-. BEFORE THE ASSESSING OFFICER, TH E ASSESSEE RAISED OBJECTION ON THE VALUATION BY DVO AND GAVE S OME -: 4: - 4 SUBSTANTIAL REASONS FOR THE SALE OF PROPERTY AT LES SER RATE. THE OBJECTION SO RAISED WAS AS UNDER :- A) THAT THE PURCHASER AND SELLER BELONG TO THE SAM E FAMILY AND THIS WAS NOT A COMMERCIAL SALE BUT WAS O NLY A FAMILY ARRANGEMENT LEGALLY. B) THERE WAS A PROPOSED ROAD IN THE IMPUGNED LAND AND THUS THE SALEABLE LAND AREA WAS MUCH LESS ( AS PER APPROVED VALUERS REPORT AND COURTS DOCUMENTS ). C) THE CONSTRUCTION MADE WAS OF NO USE SINCE ROAD WAS PROPOSED ON THE SAID LAND AND THUS IT HAD TO BE DEMOLISHED SOONER OR LATER. THUS IT HAD NO MARKET V ALUE FOR SALE PURPOSES. 4. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEE S CONTENTIONS AND TAKING THE MARKET VALUE AT RS. 3,68 ,25,000/- AS DETERMINED BY THE DVO, MADE THE ADDITION OF RS. 36,12,750/- AND ASSESSED THE TOTAL INCOME AT RS. 39 ,26,920/- AS AGAINST THE RETURNED INCOME OF RS. 3,14,170/-. T HE CIT(A) ALSO DISMISSED THE ASSESSEES APPEAL. AGAINST THE O RDER OF THE ASSESSING OFFICER/CIT, THE ASSESSEE IS IN FURTHER A PPEAL BEFORE US. -: 5: - 5 5. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE CHALL ENGED THE REFERENCE MADE BY THE ASSESSING OFFICER U/S 131 (1)(D) AND CONTENDED THAT THERE IS A SEPARATE PROVISION FOR RE FERENCE TO VALUATION OFFICER U/S 55A FOR ASCERTAINING THE FAIR MARKET VALUE OF THE PROPERTY, WHICH IS NOT COVERED U/S 131(1)(D) . THUS, THE REFERENCE ITSELF IS ILLEGAL AND WITHOUT JURISDICTIO N AND ANY REPORT OBTAINED BY MAKING AN ILLEGAL REFERENCE IS A LSO ILLEGAL AND CANNOT BE ACTED UPON. NOT ONLY THIS BUT THE ORD ER PASSED BY THE DVO U/S 55C OF THE INCOME-TAX ACT, 1961, IS ALSO WITHOUT JURISDICTION AS THERE IS NO SECTION 55C IN THE INCOME- TAX ACT, 1961. THUS, ANY ORDER PASSED UNDER THE SEC TION WHICH DOES NOT STAND ON THE STATUTE BOOK IS ILLEGAL AB INITIO AND ASSESSMENT MADE ON THE BASIS OF SUCH ILLEGAL OR DER IS ALSO VOID AND ILLEGAL AB INITIO AND DESERVES TO BE ANNUL LED. THE ADDITION MADE BY THE ASSESSING OFFICER IS ILLEGAL A ND WITHOUT JURISDICTION AND THEREFORE DESERVES TO BE DELETED I N FULL. 6. ON MERITS, IT WAS CONTENDED BY THE LD. AUTHORIZED REPRESENTATIVE THAT THE ASSESSING OFFICER/CIT(A) FA ILED TO CONSIDER THAT THE SALEABLE AREA WAS MUCH LESS SINCE ROAD WAS PROPOSED BY THE IDA WHICH WAS GOING THROUGH THE LAN D OF THE -: 6: - 6 ASSESSEE AND THUS NO PRUDENT PERSON WOULD PURCHASE THE LAND AT ITS CURRENT MARKET VALUE WHEN COURT CASE AND ACQ UISITION PROCEEDINGS ARE PENDING. THE TRANSACTION WAS MORE O F FAMILY SETTLEMENT RATHER THAN ACTUAL SALE. THE PURCHASERS AND THE SELLERS ARE FROM THE SAME FAMILY AND THEIR MAIN BUS INESS IS THAT OF BUILDERS AND DEVELOPERS. THIS PROPERTY WAS ALSO PURCHASED WITH THE ONLY INTENTION OF CONSTRUCTING A MULTI- STORIED BUILDING ON THE SAID LAND. MEANWHILE THERE WERE DISPUTES BETWEEN THE BROTHERS AND FINALLY THEY SEPA RATED THEMSELVES AND THE PROPERTIES WERE DIVIDED WITH MUT UAL SETTLEMENT. ACCORDINGLY, THE ALLEGED PROPERTY WAS T RANSFERRED BY THE FAMILY OF ONE BROTHER TO THE FAMILY MEMBERS OF OTHER BROTHER. OTHERWISE NO PRUDENT BUSINESSMAN WOULD HAV E INCURRED REGISTRATION EXPENSES OF MORE THAN 33 LAKH FOR A SHORT PERIOD OF NEAR ABOUT 8 MONTHS. THE IMPUGNED L AND WAS PURCHASED BY THIS ASSESSEE JUST 8 MONTHS BACK, PRIO R TO ITS SALE. THIS LAND WAS PURCHASED FOR RS. 2,55,30,000/- ON 19 TH FEBRUARY, 2007. THE MARKET VALUE AT THE TIME WAS DE TERMINED AT RS. 3,18,00,000/-. THEREAFTER, ON 15 TH OCTOBER, 2007 (JUST AFTER LESS THAN 8 MONTHS) THE IMPUGNED LAND WAS TRA NSFERRED -: 7: - 7 TO THE FAMILY MEMBERS FOR A CONSIDERATION OF RS.2,9 6,00,000/-. THE MARKET VALUE OF THE SAME WAS DETERMINED AT RS. 4,56,35,000/-. CAN IT BE SAID THAT THERE WAS SUCH A N ABNORMAL INCREASE IN MARKET VALUE OF THE IMPUGNED L AND WITHIN A SHORT SPAN OF LESS THAN 8 MONTHS ( FROM FE BRUARY 07 TO OCTOBER 2007) PARTICULARLY CONSIDERING THE PROCE EDINGS FOR PROPOSED ROAD AND COURT CASE PENDING. FURTHER THESE FACTS AND VALUATION OF THE IMPUGNED PROPERTY IS ALSO SUPP ORTED BY THE VALUATION REPORT OF THE APPROVED VALUER. THE CO NSTRUCTION MADE WAS OF NO USE SINCE ROAD WAS PROPOSED ON THE S AID LAND AND THUS IT HAD TO BE DEMOLISHED SOONER OR LATER. T HUS, IT HAD NO MARKET VALUE FOR SALE PURPOSE. FURTHER, WHEN THE DVO HIMSELF HAS CONSIDERED THE MARKET VALUE OF THE IMPU GNED LAND AT A MUCH LESSER FIGURE THAN AS ASSESSED BY THE STA MP AUTHORITIES, IT INDICATES THAT STILL THERE IS A WID E SCOPE OF DIFFERENCE IN ASSESSING THE MARKET VALUE OF THE PRO PERTY AND THUS IT IS SUBMITTED THAT THE ACTUAL VALUE OF TRANS ACTION SHOULD BE CONSIDERED AS THE REAL ASSESSABLE VALUE. IN THE CASE OF RAVI KANT VS. ITO, (2007) 110 TTJ DELHI 297, IN PARA 9 OF THE ORDER, IT HAS BEEN COMMENTED BY THE HON'BLE BEN CH THAT -: 8: - 8 THE VALUATION BY THE STAMP VALUATION AUTHORITY IS BASED ON THE CIRCLE RATES. THESE CIRCLE RATES ADOPT UNIFORM RATE OF LAND FOR AN ENTIRE LOCALITY, WHICH INHERENTLY DISREGARDS PECULIAR FEATURES OF A PARTICULAR PROPERTY. EVEN IN A PARTIC ULAR AREA, ON ACCOUNT OF LOCATION FACTORS AND POSSIBILITIES OF CO MMERCIAL USE, THERE CAN BE WIDE VARIATIONS IN THE PRICES OF LAND. HOWEVER, CIRCLE RATES DISREGARD ALL THESE FACTORS AND ADOPT A UNIFORM RATE FOR ALL PROPERTIES IN THAT PARTICULAR AREA. IF THE CIRCLE RATE FIXED BY THE STAMP VALUATION AUTHORITIES WAS TO BE ADOPTED IN ALL SITUATIONS, THERE WAS NO NEED OF REFERENCE TO T HE DVO UNDER SECTION 50C(2). 7. THE LD. AUTHORIZED REPRESENTATIVE ALSO RELIED ON T HE DECISION OF COORDINATE BENCH IN THE CASE OF PUSHPA JAIN AND OTHERS IN I.T.A.NO. 551/IND/2010 IN WHICH IT WAS HE LD THAT IN THE CASE OF OPEN LAND, THE FAIR MARKET VALUE IS DET ERMINED BY TAKING INTO CONSIDERATION THE ADVANTAGES AND DISADV ANTAGES ATTACHED TO THE LAND AND IN CASE OF FINDING ADVANTA GES, THE VALUE OF LAND WILL INCREASE WHEREAS IN CASE OF FIND ING DISALLOWANCE-ADVANTAGES, FAIR MARKET VALUE OF THE P ROPERTY WILL GO DOWN. SIMILARLY, RELIANCE WAS PLACED ON THE DECI SION OF -: 9: - 9 COORDINATE BENCH IN THE CASE OF AJIZ AHMED SIDDIQUE IN I.T.A.NO. 166/IND/2012, WHEREIN IT WAS HELD THAT WH ERE THE LAND WAS IN ADVERSE POSSESSION, THE MARKET VALUE OF THE LAND WILL GO DOWN SUBSTANTIALLY AS NOBODY WOULD DARE TO BUY SUCH LAND. 8. ON THE OTHER HAND, THE LD. SENIOR DR RELIED ON THE ORDERS OF LOWER AUTHORITIES AND CONTENDED THAT AS PER PROV ISIONS OF SECTION 50C, THE ASSESSING OFFICER WAS JUSTIFIED IN TAKING THE VALUATION ARRIVED AT BY THE DVO, WHICH WAS LOWER TH AN THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITY. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS VALUATION REPORT PREPARED BY THE DVO AND ALSO VALUA TION REPORT OF CHARTERED ENGINEER (APPROVED VALUER) SUBM ITTED BY THE ASSESSEE. WE HAD ALSO GONE THROUGH THE OBJECTIO NS FILED BY THE ASSESSEE WITH REGARD TO SHORTCOMINGS IN THE LAN D WHILE ARRIVING AT THE VALUATION BY THE DVO/STAMP DUTY AUT HORITY. FROM THE RECORD, WE FOUND THAT THE ASSESSEE WAS JOI NTLY OWNING THE AGRICULTURAL LAND ALONGWITH HIS FATHER M EASURING 3594.26 MTRS. THIS LAND WAS PURCHASED ON 19 TH FEBRUARY, -: 10: - 10 2007, FOR A CONSIDERATION OF RS. 2,88,33,000/-. ON 15 TH OCTOBER, 2007, THE LAND WAS TRANSFERRED AT A CONSID ERATION OF RS. 2,96,00,000/- TO OTHER FAMILY MEMBERS. BOTH THE ASSESSEES WERE HAVING EQUAL SHARE IN THE LAND, THER EFORE, DECLARED 50 % OF THE PROFIT ARISING OUT OF ITS TRAN SFER, IN THE RETURN OF INCOME SO FILED WITH THE DEPARTMENT. THE LAND WAS PURCHASED WITH THE INTENTION OF CONSTRUCTING MULTI- STORIES BUILDING. MEANWHILE, THERE WAS DISPUTE BETWEEN THE FAMILY MEMBERS OF TWO BROTHERS AND FINALLY THEY SEPARATED AND THE PROPERTY WAS DIVIDED AMONGST THEM WITH MUTUAL SETTL EMENT. IN THIS PROCESS, THIS AGRICULTURAL LAND WAS TRANSFERRE D BY THE FAMILY MEMBERS OF ONE BROTHER TO THE FAMILY MEMBERS OF THE OTHER BROTHER. AS PER CONTENTION OF LD. AUTHORIZED REPRESENTATIVE, THE LAND WAS PURCHASED BY THE FAMIL Y MEMBER FOR CONSTRUCTION OF MULTI-STORIED BUILDING. THE LA ND SO PURCHASED AND SOLD WAS BUSINESS ASSETS, THEREFORE, THE PROVISIONS OF SECTION 50C CANNOT BE APPLIED WHILE C OMPUTING PROFIT ON SALE OF SUCH LAND AND ACTUAL SALE CONSIDE RATION SO RECEIVED IS TO BE TAKEN INTO ACCOUNT FOR COMPUTING THE NET PROFIT IN THE TRANSACTION OF SALE. OUR ATTENTION WA S ALSO INVITED -: 11: - 11 TO THE AMENDMENT BROUGHT IN FINANCE ACT NO.2 OF 201 3, ACCORDING TO WHICH THE PROVISION OF SECTION 50C WAS MADE APPLICABLE IN RESPECT OF THE LAND HELD AS STOCK IN TRADE BY THE PERSONS ENGAGED IN CONSTRUCTION AND DEVELOPMENT OF BUILDING, W.E.F. ASSESSMENT YEAR 2014-15. AS PER LD. AUTHORIZ ED REPRESENTATIVE , EVEN AS PER THE AMENDED LAW, THE P ROVISIONS OF SECTION 50C IS NOT APPLICABLE TO THE ASSESSEE FO R THE ASSESSMENT YEAR 2008-09 UNDER CONSIDERATION, IN SO FAR AS AMENDED PROVISIONS ARE APPLICABLE ONLY W.E.F. ASSES SMENT YEAR 2014-15. 10. CONTROVERSY IN THE INSTANT CASE REVOLVES AROUND COMPUTATION OF CAPITAL GAINS WITH REFERENCE TO THE PROVISIONS OF SECTION 50C. AS PER PROVISIONS OF CLAUSE (A) OF SUB SECTION (2) TO SECTION 50C, WHERE THE ASSESSEE CLAIMS BEFORE TH E ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSE D BY THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET V ALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, THE ASSESS ING OFFICER WILL REFER THE VALUATION OF CAPITAL ASSET U/S 55A T O VALUATION OFFICER. UNDER THESE CIRCUMSTANCES, THE VALUATION O FFICER -: 12: - 12 ESTIMATES THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF THE TRANSFER. 11. IN THE INSTANT CASE BEFORE US, THERE ARE TWO ISSUE S FOR DETERMINATION, NAMELY, :- (I) LEGALITY OF REFERENCE MADE BY THE ASSESSING OFFICER U/S 55A TO THE DVO. (II) CORRECTNESS OF VALUATION ARRIVED AT BY DVO. 12. LEGALITY OF REFERENCE MADE BY ASSESSING OFFICER U/S 55A IS A QUESTION OF LAW. AS PER PROVISIONS OF SECTION 55A WHEN THE ASSESSING OFFICER FINDS THAT VALUE OF THE ASSET AS CLAIMED BY ASSESSEE IS AT A VARIANCE WITH ITS FAIR MARKET VALU E, WITH A VIEW TO ASCERTAIN THE FAIR MARKET VALUE OF A CAPITAL ASS ET FOR THE PURPOSE OF COMPUTING CAPITAL GAINS UNDER CHAPTER IV OF INCOME-TAX ACT, 1961, THE ASSESSING OFFICER MAY REF ER THE VALUATION OF CAPITAL ASSET TO A DVO. SINCE ASSESSIN G OFFICER, WAS COMPUTING CAPITAL GAINS, ISSUE OF COMMISSION U/ S 131(1)(D) TO THE DVO FOR ASCERTAINING THE FAIR MARK ET VALUE U/S 55A WAS JUSTIFIED. THUS, WE DO NOT FIND ANY INFIRMI TY FOR THE REFERENCE MADE TO VALUATION OFFICER U/S 55A FOR ASC ERTAINING -: 13: - 13 THE FAIR MARKET VALUE OF THE PROPERTY. ACCORDINGLY, THE LEGAL GROUND RAISED BY LD. AUTHORIZED REPRESENTATIVE IS DISMISSED. 13. THE QUESTION OF CORRECTNESS OF VALUATION BY DVO, I S A PURELY QUESTION OF FACT. IN A REFERENCE MADE U/S 55 A, THE DVO HAS TO ESTIMATE/DETERMINE FAIR MARKET VALUE OF ASSE TS AS ON THE DATE OF TRANSFER. SUCH ESTIMATION OF FAIR MARKE T VALUE DEPENDS ON THE ADVANTAGE/DISALLOWANCE-ADVANTAGES AT TACHED WITH THE PROPERTY. SINCE IT IS A CASE OF ESTIMATION OF FAIR MARKET VALUE, SO MANY FACTORS ARE THERE, WHICH AFFECT THE ESTIMATION/VALUATION OF SUCH PROPERTY. IN THE INSTA NT CASE BEFORE US, SINCE THE VALUATION ARRIVED AT BY STAMP DUTY AUTHORITY WAS EXCESSIVE, THE ASSESSING OFFICER HAS MADE A REFERENCE TO THE VALUATION OFFICER U/S 55A FOR ASCERTAINING/ESTIMATING THE FAIR MARKET VALUE AS ON THE DATE OF TRANSFER. ON THE BASIS OF SUCH ESTIMATION/VALUE ARR IVED AT BY THE DVO, THE CAPITAL GAIN ON TRANSFER OF PROPERTY I S BEING ASCERTAINED. IN THE INSTANT CASE, WE ARE CONCERNED WITH THE CORRECTNESS OF ESTIMATION ARRIVED AT BY THE DVO IN A REFERENCE MADE BY THE ASSESSING OFFICER TO THE VALUATION OFFI CER U/S 55A OF THE INCOME-TAX ACT, 1961, WHICH IS PURELY A QUES TION OF FACT. -: 14: - 14 NOW WE ANALYZE THE ADVANTAGES AND DISADVANTAGES ATT ACHED WITH THE VALUATION OF PROPERTY IN THE INSTANT CASE. 14. FROM THE RECORD, WE FOUND THAT A ROAD WAS PROPOSE D IN THE IMPUGNED LAND BY THE GOVERNMENT, WHICH REDUCES THE USABLE AREA OF THE LAND. PART OF LAND ATTRIBUTABLE TO SUCH ROAD WAS ALSO UNDER PROCESS OF ACQUISITION BY THE GOVERN MENT AND COURT CASE WAS THERE. IT IS A CASE OF VALUATION OF LAND WHERE VALUE IS EFFECTED BY THE ADVANTAGE/DISALLOWANCE-ADV ANTAGES ATTACHED TO SUCH LAND. THERE WAS SOME CONSTRUCTION WHICH WAS ALSO GOING TO BE DEMOLISHED, WHEN THE ROAD WAS PROPOSED BY GOVERNMENT ON THE SAID AREA OF CONSTRUCTION. FA CT THAT PART OF LAND WAS UNDER ACQUISITION PROCEEDINGS AND COURT CASE WAS ALSO PENDING, THE FAIR MARKET VALUE OF SUCH LAN D IS AFFECTED BY SUCH ADVERSE FACTORS. THE FACT THAT THE LAND WAS TRANSFERRED BY THE FAMILY MEMBERS TO ANOTHER MEMBER , THUS, IT WAS MORE PRECISELY A FAMILY SETTLEMENT AND NOT A CO MMERCIAL TRANSACTION. SINCE IT WAS A FAMILY SETTLEMENT AND T RANSFER OF LAND BY SONS OF ONE BROTHER TO SONS OF OTHER BROTHE R, MARKET PRICE OF LAND CANNOT BE THRUSHED UPON THE FAMILY ME MBERS. FACT THAT PROPOSED CONSTRUCTION OF ROAD BY ACQUIRIN G PART OF -: 15: - 15 LAND BY GOVERNMENT DEFINITELY REDUCES TO TOTAL AREA OF USABLE LAND. ALL THESE FACTORS ARE HAVING DEFINITE BEARIN G ON THE FAIR MARKET VALUE OF LAND. BY TAKING ALL THESE ADVERSE F ACTORS INTO CONSIDERATION, THE APPROVED VALUER HAD VALUED THE L AND AT RS. 2,88,92,540/- AS AGAINST VALUE ARRIVED AT BY THE DV O AT RS. 3,65,25,500/-. HOWEVER, NO DEFECT WAS POINTED OUT B Y ANY OF THE LOWER AUTHORITIES IN THE VALUATION SO ARRIVED A T BY THE APPROVED VALUER. KEEPING INTO ACCOUNT ALL THESE FAC TORS, WHICH ARE GOING TO ADVERSELY AFFECT FAIR MARKET VALUE OF LAND, WE DIRECT THE ASSESSING OFFICER TO REDUCE THE VALUATIO N ARRIVED AT BY THE DVO BY 20 %. ACCORDINGLY, THE ASSESSING OFFI CER IS TO RECOMPUTE THE GAIN AFTER REDUCING THE VALUATION ARR IVED AT BY THE DVO BY 20 % OR THE ACTUAL SALE CONSIDERATION RE CEIVED BY ASSESSEE, WHICHEVER IS HIGHER. THE GAIN SO COMPUTED IS TO BE DIVIDED AMONGST BOTH THE ASSESSEES EQUALLY SINCE LA ND WAS OWNED BY THEM EQUALLY. WE DIRECT ACCORDINGLY. 15. IN THE RESULT, THE APPEALS ARE ALLOWED IN PART IN T ERMS INDICATED HEREINABOVE. -: 16: - 16 THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 26 TH AUGUST, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26 TH AUGUST, 2013. CPU* 202123 -: 17: - 17 CONTROVERSY IN THE INSTANT CASE REVOLVES AROUND COM PUTATION OF CAPITAL GAINS WITH REFERENCE TO THE PROVISIONS O F SECTION 50C. AS PER PROVISIONS OF CLAUSE (A) OF SUB SECTION (2) TO SECTION 50C, WHERE THE ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VAL UATION AUTHORITY EXCEEDS THE FAIR MARKET VALUE OF THE PROP ERTY AS ON THE DATE OF TRANSFER, THE ASSESSING OFFICER WILL RE FER THE VALUATION OF CAPITAL ASSET U/S 55A TO VALUATION OFF ICER. UNDER -: 18: - 18 THESE CIRCUMSTANCES, THE VALUATION OFFICER ESTIMATE S THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF THE TRANSFER. IN THE INSTANT CASE BEFORE US, THERE ARE TWO ISSUE S FOR DETERMINATION, NAMELY, :- (I) LEGALITY OF REFERENCE MADE BY THE ASSESSING OFFICER U/S 55A TO THE DVO. (II) CORRECTNESS OF VALUATION ARRIVED AT BY DVO. 16. LEGALITY OF REFERENCE MADE BY ASSESSING OFFICER U/S 55A IS A QUESTION OF LAW. AS PER PROVISIONS OF SECTION 55A WHEN THE ASSESSING OFFICER FINDS THAT VALUE OF THE ASSET AS CLAIMED BY ASSESSEE IS AT A VARIANCE WITH ITS FAIR MARKET VALU E WITH A VIEW TO ASCERTAIN THE FAIR MARKET VALUE OF A CAPITAL ASS ET FOR THE PURPOSE OF COMPUTING CAPITAL GAINS UNDER CHAPTER IV OF INCOME-TAX ACT, 1961, THE ASSESSING OFFICER MAY REF ER THE VALUATION OF CAPITAL ASSET TO A DVO. SINCE ASSESSIN G OFFICER, WAS COMPUTING CAPITAL GAINS, ISSUE OF COMMISSION U/ S 131(1)(D) TO THE DVO FOR ASCERTAINING THE FAIR MARK ET VALUE U/S 55A WAS JUSTIFIED. THUS, WE DO NOT FIND ANY INFIRMI TY FOR THE REFERENCE MADE TO VALUATION OFFICER U/S 55C FOR ASC ERTAINING -: 19: - 19 THE FAIR MARKET VALUE OF THE PROPERTY. ACCORDINGLY, THE LEGAL GROUND RAISED BY LD. AUTHORIZED REPRESENTATIVE IS DISMISSED. THE QUESTION OF CORRECTNESS OF VALUATION BY DVO, IS A PURELY QUESTION OF FACT. IN A REFERENCE MADE U/S 55A, THE DVO HAS TO ESTIMATE/DETERMINE FAIR MARKET VALUE OF ASSETS AS ON THE DATE OF TRANSFER. SUCH ESTIMATION OF FAIR MA RKET VALUE DEPENDS ON THE ADVANTAGE/DISALLOWANCE-ADVANTAGES AT TACHED WITH THE PROPERTY. SINCE IT IS A CASE OF ESTIMATION OF FAIR MARKET VALUE, SO MANY FACTORS ARE THERE, WHICH AFFECT THE ESTIMATION/VALUATION OF SUCH PROPERTY. IN THE INSTA NT CASE BEFORE US, SINCE THE VALUATION ARRIVED AT BY STAMP DUTY AUTHORITY WAS EXCESSIVE, THE ASSESSING OFFICER HAS MADE A REFERENCE TO THE VALUATION OFFICER U/S 55A FOR ASCERTAINING/ESTIMATING THE FAIR MARKET VALUE AS ON THE DATE OF TRANSFER. ON THE BASIS OF SUCH ESTIMATION/VALUE ARR IVED AT BY THE DVO, THE CAPITAL GAIN ON TRANSFER OF PROPERTY I S BEING ASCERTAINED. IN THE INSTANT CASE, WE ARE CONCERNED WITH THE CORRECTNESS OF ESTIMATION ARRIVED AT BY THE DVO IN A REFERENCE MADE BY THE ASSESSING OFFICER TO THE VALUATION OFFI CER U/S 55A OF THE INCOME-TAX ACT, 1961, WHICH IS PURELY A QUES TION OF FACT. -: 20: - 20 NOW WE ANALYZE THE ADVANTAGES AND DISADVANTAGES ATT ACHED WITH THE VALUATION OF PROPERTY IN THE INSTANT CASE.