CHAITRA FARMS, MUMBAI V. ADDL CIT RG 19(3), MUMBAI

ITA 2184/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4077 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 18-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 02-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Valuation report
• Section: 50C; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . , , BEFORE SHRI B.R. MITTAL, JM AND SHRI RAJENDRA, AM ./I.T.A. NO.2184/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) M/S CHAITRA FARMS A-101,VINTAGE PEARL, 29 TH ROAD, TPS-III, BANDRA (W), MUBMAI-400050 / VS. ADDL. COMMISSIONER OF INCOME TAX -19(3), ROOM NO.31, 3RD H FLOOR, PIRAMAL CHAMBERES, LALBAUG, MUMBAI-400011 ./ ./PAN/GIR NO. : AAFFC6797F ( ' /APPELLANT ) .. ( # ' / RESPONDENT ) ' / APPELLANT BY : SHRI S.C.TIWARI # ' % /RESPONDENT BY : SHRI MOHIT JAIN % ) / DATE OF HEARING : 18.07.2013 % ) /DATE OF PRONOUNCEMENT : 31.07.2013 / O R D E R PER B.R.MITTAL JM: THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2008-09 AGAINST THE ORDER OF LD.CIT(A) DATED 12.1.2012. 2. ONLY GROUND OF APPEAL IS AGAINST CONFIRMATION O F LONG TERM CAPITAL GAINS OF RS.2,27,69,108/- AS AGAINST THE AMOUNT DECLARED BY THE ASSESSEE OF RS.1,92,31,888/-. 3. RELEVANT FACTS GIVING RISE TO THIS APPEAL ARE TH AT THE ASSESSEE IS A PARTNERSHIP FIRM. IT FILED RETURN OF INCOME OF RS.1,87,26,670 /- WHICH IS ON ACCOUNT OF LONG TERM CAPITAL GAINS (LTCG) ON ACCOUNT OF SALE OF LAND SI TUATED AT VILLAGE DAMAT, TAL. KARJAT, DISTRICT RAIGAD ADMEASURING 1,28,400 SQ.FT. IT I S RELEVANT TO STATE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEN THE ASSESSEE ASKED TO FURNISH THE DETAILS OF THE SAID LTCG ALONG WITH PHOTOCOPIES OF PURCHASE AS W ELL AS SALE AGREEMENT, THE ASSESSEE I.T.A. NO.2184/MUM/2012 2 REVISED THE COST OF LAND AT RS.8,96,300/- INSTEAD OF RS.10,00,000/- WRITTEN IN THE RETURN OF INCOME. THE ASSESSEE STATED THAT IT IS AN INADVERTENTLY TAKEN A COST OF LAND AT RS.10,00,000/- AND ACCORDINGLY PAID TAX OF RS.1,1 8,718/- AFTER STATING THE LTCG AT RS.1,92,31,888/-. A COPY OF REVISED COMPUTATION OF TAXABLE INCOME IS ALSO PLACED AT PAGE 1 OF THE PAPER BOOK. 4. ASSESSING OFFICER HAS STATED THAT ON PERUSAL OF SALE AGREEMENT AND DETAILS FILED BY THE ASSESSEE IN RESPECT OF CAPITAL GAINS DECLAR ED, IT IS SEEN THAT THE ASSESSEE HAS TAKEN THE SALE CONSIDERATION AT RS.2,24,00,000/-. HOWEVER, AS PER THE STAMP DUTY AUTHORITIES, THE MARKET VALUE OF THE SAID PROPERTY IS RS.4,65,42,500/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY MARKET VALUE OF RS.4,65,42,500/- IN RESPECT OF SA LE OF THE SAID PROPERTY SHOULD NOT BE ADOPTED FOR THE PURPOSE OF COMPUTATION OF CAPITAL G AINS, IN VIEW OF PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961(THE ACT). THE AS SESSEE VIDE LETTER DATED 11.10.2010 SUBMITTED AS UNDER : THE LAND SOLD BY US TO M/S APTECH LTD VIDE AGREEM ENT DATED 26.12.2007 FOR A CONSIDERATION OF RS.2,24,00,000/- FOR WHICH STAMP D UTY WAS PAID ON THE VALUE OF RS.4,75,08,000/- WAS LEASED OUT BY OUR CLIENT TO AS IAN EDUCATION OF COMMUNICATION AND RESEARCH (AICAR) VIDE LEASE DEED DATED 25.9.2001 LAND BEFORE SELLING THE LAND OUR CLIENT HAD OBTAINED VAL UATION REPORT FROM M/S DALAL JOSHI AND ASSOCIATES, GOVERNMENT APPROVED VALUERS , WHO VALUED THE RIGHTS OF THE OWNER IN THE LEASED LAND AT RS.1,92,60,000/-. SINCE THE SALE OF LAND WAS SUBJECT TO THE RIGHT O F THE LESSEE THE CONSIDERATION RECEIVED BY THEM IS PROPER CONSIDERATION. SINCE THE CONSIDERATION PAID BY OUR CLIENT IS APPRO PRIATE, OUR CLIENT REQUEST YOUR HONOUR TO REFER THE MATTER TO THE VALUATION OFFICER AS PROVIDED BY CLAUSE 2 OF SECTION 50C OF THE INCOME TAX ACT, 1961 AO HAS STATED THAT A REFERENCE WAS MADE TO A DISTR ICT VALUATION OFFICER (DVO) FOR DETERMINATION OF FAIR MARKET VALUE (FMV) OF THE AB OVE LAND UNDER SECTION 50C OF THE ACT. THE VALUATION OFFICER ESTIMATED FMV AT RS.2 ,54,10,000/- FOR LAND AREA OF 125790 SQ.MTRS. AT THE RATE OF 202/- PER SQ.MTR. SINCE TH E TOTAL AREA OF THE DEMISED PROPERTY IS 1,28,400 SQ.MTRS., THE AO CONSIDERED THE ADDITIONA L VALUE OF THE PROPERTY AT THE RATE VALUED BY THE VALUATION OFFICER OF 2610 SQ.MTRS (1 28400 125790 SQ.MTRS) WHICH COMES TO RS.5,27,220/-. THEREFORE, AO HAS TAKEN T OTAL VALUE OF THE PROPERTY AS PER RATE TAKEN BY THE VALUATION OFFICER AT RS.2,59,37, 220/-. IN VIEW OF ABOVE, THE AO HAS COMPUTED TOTAL CAPITAL GAIN AS PER SECTION 50C OF T HE ACT AT RS.2,27,69,108/- AS UNDER: I.T.A. NO.2184/MUM/2012 3 FAIR MARKET VALUE AS WORKED OUT ABOVE RS.2,59,37,220/ - COST OF ACQUISITION AS PER REVISED COMPUTATION FILED BY HE ASSESSEE RS.8,96,3 000 INDEXED COST OF ACQUISITION RS.31,68,112/ - TAXABLE LONG TERM CAPITAL GAINS RS.2,27,69,108/ - BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. IT IS RELEVANT TO STATE THAT THE ASSESSEE MADE H IS SUBMISSIONS STATING THE ABOVE FACTS BEFORE LD. CIT(A) AND THE LD. CIT(A) HAS STAT ED THESE FACTS AT PAGES 5 TO 9 OF THE IMPUGNED ORDER. ADDITIONAL FACTS WHICH HAVE BEEN ST ATED BY THE ASSESSEE BEFORE LD. CIT(A) AND HAVE NOT COME OUT IN THE ASSESSMENT ORDE R, AS MENTIONED HEREINABOVE, ARE THAT THE ASSESSEE CONTENDED THAT THE SAID DEMISED L AND WAS LEASED TO ASIAN EDUCATION OF COMMUNICATION AND RESEARCH (AICAR) FOR A PERIOD OF 99 YEARS FROM 25.9.2001 AT LEASE RENT OF RS.10/- PER MONTH WITH OPTION TO EX TEND THE LEASE FOR A FURTHER PERIOD OF 99 YEARS AT LEASE RENT OF RS.11/- PER MONTH. ASSESS EE STATED THAT IT POSSESSES A BUNDLE OF RIGHTS IN A PROPERTY VIZ.( (I) RIGHT OF OWNERSH IP; (II) RIGHT TO GIVE PROPERTY ON RENT; (III) RIGHT TO RECEIVE RENT; (IV) RIGHT TO MORTGAGE ; (V) RIGHT TO GIVE PROPERTY ON LEASE ; (VI) RIGHT TO REVERSION OF PROPERTY ON EXTINCTION OF LEASE ETC. IN THE PRESENT CASE, AFTER GIVING THE LAND ON 99 YEARS LEASE THE RIGHT OF REVE RSION OF PROPERTY ON THE EXTINCTION OF THE LEASE ONLY REMAINED WITH THE ASSESSEE. ON BEH ALF OF THE ASSESSEE, IT WAS ALSO CONTENDED THAT THE ASSESSEE DECIDED TO SELL ITS R ESIDUARY RIGHT IN THE SAID PROPERTY TO M/S APTECH LTD. IT WAS ALSO CONTENDED THAT THE A SSESSEE HAS OBTAINED VALUATION REPORT FROM M/S DALAL JOSHI AND ASSOCIATES WHO ARE TECHNIC AL AND GOVERNMENT APPROVED VALUERS TO ASCERTAIN FMV OF ITS RESIDUARY RIGHTS I N THE SAID LAND, ON THE TERMINATION OF LEASE. THAT SAID VALUER ESTIMATED THE FMV OF LESS ORS REMAINING INTEREST IN THE SAID LANDS AT RS. 1,92,60,000/- IT WAS CONTENDED THAT AO , HAD MIS-DIRECTED HIMSELF IN ASKING THE VALUATION OFFICER TO ESTIMATE THE VALUE OF THE LAND AS ON 26.12.2007 THOUGH HE WAS SUPPOSED TO COMPUTE THE VALUE OF RESIDUARY RIGHT OF REVERSION OF LAND TO THE OWNER AT THE END OF THE LEASE, IN VIEW OF THE LEASE OF LAND IN FAVOUR OF AICAR FOR A PERIOD OF 99 YEARS WITH OPTION TO RENEW THE LEAS E FOR ANOTHER PERIOD OF 99 YEARS. THUS, PROVISIONS OF SECTION 50C OF THE ACT ARE NOT APPLICABLE AS SECTION 50C ARE APPLICABLE TO FIND OUT THE FULL VALUE OF CONSIDERAT ION ON TRANSFER OF AN ASSET BEING LAND OR BUILDING OR BOTH AND NOT IN ANY OTHER CASE. ON BEH ALF OF THE ASSESSEE, IT WAS CONTENDED THAT THE SAID VALUER M/S DALAL JOSHI AND ASSOCIATE S ALSO STATED IN THEIR VALUATION REPORT I.T.A. NO.2184/MUM/2012 4 CATEGORICALLY THAT THEY DETERMINED THE FAIR VALUE OF LESSORS INTEREST FOR THE SAID LAND AS ON 26.12.2007 AND VALUED THE LESSORS INTEREST B Y CAPITALIZING ANNUAL LEASE RENT IN PERPETUITY AT RS.1,92,60,000/- IT WAS ALSO CONTEND ED THAT THE DVO CONSIDERED THE SALE INSTANCES IN VILLAGE DAMAT AS ON 20.2.2008, THE PREVAILING RATE AT RS.238 PER SQ. MTR AS ON 11.4.2008 AND ALSO PREVAILING RATE AS ON 11. 4.2008 AT RS.375/-. THUS, IN A SPAN OF ALMOST TWO MONTHS THE RATES OF LAND INCREASED BY RS.137 PER SQ.MTR. AND ACCORDINGLY THE RATE AS ON 26.12.2007, THE DATE ON WHICH THE AS SESSEE ENTERED INTO DEED OF CONVEYANCE WITH M/S APTECH LTD. OUGHT TO HAVE BEEN 101 PER SQ.MTR. ON BEHALF OF THE ASSESSEE, IT WAS CONTENDED THAT AO SHOULD HAVE ACCE PTED VALUATION OF THE REMAINING RIGHTS IN THE SAID PROPERTY AT RS.2,24,00,000/-. LD.CIT(A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND VIDE PARAGRAPH 2 OF THE IMPUGNE D ORDER CONFIRMED THE ACTION OF THE AO IN ADOPTING THE VALUATION OF THE LAND AT RS.25 9,37,220/- AND TO DETERMINE LTCG AT RS.2,27,69,108/-. PARA 2 OF LD. CIT(A) READS AS UN DER : 2. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER, THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT AND THE VALUATION REPORT OF THE DISTRICT VALUATION OFFICER, THANE. IN THIS CASE, THE APPELLANT HAD TAKEN OBJECTION AGAINST THE PROPOSED ACTION OF THE A.O. OF ADOPTING THE VALUE OF THE PROPERTY AS PER S TAMP DUTY AUTHORITIES, AT RS.4,65,42,500/-. THIS BEING SO, TH E A.O. REFERRED THE MATTER TO THE DISTRICT VALUATION OFFICER, THANE FOR DETERMINI NG THE FAIR MARKET VALUE OF THE PROPERTY U/S. 50C OF THE LT. ACT, 1961. THE DISTRIC T VALUATION OFFICER, THANE DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY AT RS. 2,54,10,000/- ON WHICH A FURTHER SUM RS.5,27,220/- WAS ADDED BY THE A.O. TO ARRIVE AT TOTAL VALUE OF THE PROPERTY AT RS.2,59,37,220/-.THE CONTENTION OF THE APPELLANT IS THAT THE FAIR MARKET VALUE OF THE PROPERTY SHOULD BE TAKEN AT RS. 2,24,00,000/- AS PER THE SALE AGREEMENT. IT IS SUBMITTED THAT THE VALUATION DONE BY THE VALUER OF THE APPELLANT IS THE VALUATION OF REMAINING INTEREST OF THE LESSE R IN THE SAID LAND. THEREFORE, IT IS PLEADED THAT THE CAPITAL GAINS OF THE APPELLANT SHOULD BE WORKED OUT BY TAKING THE FIGURE OF VALUATION OF THE LAND AT RS .2,24,00,000/- WHICH IS THE SALE VALUE OF THE LANDS. IN MY OPINION, ONCE, THE MATTER HAS BEEN REFERRED TO THE DISTRICT VALUATION OFFICER FOR ASCERTAINING THE FAI R MARKET VALUE OF THE PROPERTY FOR THE PURPOSES OF SECTION 50C OF THE IT. ACT THEN THE A.O. HAS NO OPTION BUT TO ACCEPT THE VALUE OF THE PROPERTY AS DETERMINED BY T HE DISTRICT VALUATION OFFICER. THIS VIEW IS SUPPORTED BY THE DECISION OF THE ITAT , AMRITSAR BENCH IN THE CASE OF JARNAIL SINGH VS. ITO REPORTED IN [2009] 31 SOT 8 (ASR). IN THIS CASE, THE A.O. HAS DONE THE SAME BY ACCEPTING THE VALUE AS DE TERMINED BY THE DISTRICT VALUATION OFFICER, THANE. THUS, THE VALUATION REPOR T OF THE DISTRICT VALUATION OFFICER IS BINDING ON THE A.O. THE APPELLANT HAS TA KEN OBJECTION AGAINST THE VALUATION DONE BY THE DISTRICT VALUATION OFFICER, T HANE. HOWEVER, THE DISTRICT VALUATION OFFICER WHILE PREPARING HIS REPORT HAS ME T ALL THE OBJECTIONS OF THE APPELLANT AND THEREFORE, NO FAULT CAN BE FOUND IN THE REPORT OF THE DISTRICT VALUATION OFFICER. THIS BEING SO, I FIND THAT THE A .O. IS QUITE JUSTIFIED IN ADOPTING FAIR MARKET VALUE OF THE PROPERTY AT RS. 2,59,37,22 0/- AS DETERMINED BY THE DISTRICT VALUATION OFFICER, THANE. THERE IS NO DISPUTE REGARDING THE COST OF ACQUISITION OF THE LANDS AND THE INDEXATION GIVEN O N SUCH LANDS. THERE IS NO MERIT IN THE ARGUMENT OF THE APPELLANT THAT THE SAL E CONSIDERATION OF I.T.A. NO.2184/MUM/2012 5 RS.2,24,00,000/- SHOULD BE ADOPTED FOR THE PURPOSE OF WORKING OUT THE CAPITAL GAINS OF THE APPELLANT. THEREFORE, THE ACTION OF TH E A.O. IN ADOPTING THE VALUATION OF THE LANDS AT RS.2,59,37,220/- AS PER THE DISTRIC T VALUATION OFFICER, THANE IS CONFIRMED ALONG WITH THE CAPITAL GAINS DETERMINED A T RS.2,27,69,108/-. THE GROUNDS OF APPEAL ARE DISMISSED. HENCE THIS APPEAL BEFORE THE TRIBUNAL. 6. DURING THE COURSE OF HEARING, LD.AR MADE HIS DET AILED SUBMISSIONS STATING THE ABOVE FACTS AS STATED BEFORE THE AUTHORITIES BELOW AND ALSO REITERATED THAT THE LAND WAS GIVEN ON LEASE TO AICAR VIDE LEASE DEED DATED 25.9. 2001 AT THE RATE OF RS.10 PER MONTH FOR A PERIOD OF 99 YEARS. THUS, THE PROPERT Y IS ENCUMBERED AND THE ASSESSEE HAD ONLY RESIDUARY RIGHT IN THE SAID LAND. HE SUBM ITTED THAT THE ASSESSEE ALSO OBTAINED VALUATION REPORT FROM THE DVO AND HE VALUED THE AS SESSEES REMAINING INTEREST IN THE SAID LAND AT RS.1,92,60,000/- AND REFERRED A COPY O F THE VALUATION REPORT WHICH IS PLACED AT PAGES 21 TO 27 OF THE PAPER BOOK. LD. AR REFERR ED TO PAGES 12 TO 20 OF THE PAPER BOOK, COPY OF LEASE DATED 25.9.2001 BETWEEN ASSESS EE AND AICAR. LD. AR SUBMITTED THAT IF THE PROPERTY IS ENCUMBERED, IT IS TO BE VA LUED BY APPLYING RENT CAPITALIZATION METHOD AND TO SUBSTANTIATE HIS SUBMISSIONS HE RELIE D UPON THE FOLLOWING CASES : I) MALABAR HILL CO-OPERATIVE HOUSING SOCIETY LTD V/ S UNION OF INDIA (1990) 184 ITR 216 (BOM); II) CIT V/S DR.K.JAGANDEESAN (1987) 163 ITR 289 (MA D); III) CIT V/S RASIKLAL KANTILAL SHAH (1994) 206 ITR 425 (GUJ); THE LD. AR FURTHER SUBMITTED THAT IF THE RESIDUARY RIGHT IS VALUED BY RENT CAPITALIZATION METHOD, THE REVERSIONARY VALUE OF LAND COULD NOT BE INCLUDIBLE AND REFERRED THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CWT V/S SMT. URMILLA L.PITTIE (1995) 215 ITR 356 (BOM), THE DECISION OF HONBLE C ALCUTTA HIGH COURT IN THE CASE OF CIT V/S SMT.ASHIMA SINHA (1976) 116 ITR 26 (CAL) AN D ALSO REFERRED THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF NARINDER PAUL SYAL & ORS V/S CWT (1997) 226 ITR 850 (P&H). LD.AR SUBMITTED THAT THE DVO HAS COMMITTED THE MISTAKE TO VALUE THE LAND UNDER LAND AND BUILDING METHOD. HE FURTHER SUBMITTED THAT THE DVO OR THIS TRIBUNAL IS NOT EMPOWERED T O GO INTO THE ASPECT AS TO WHETHER LEASE RENT FIXED IS FAIR OR NOT PARTICULARLY WHEN T HE LEASE DEED IS REGISTERED. A QUERY WAS ALSO RAISED BY THE BENCH THAT THE DEMISED LAND WAS PURCHASED BY THE ASSESSEE BY DEED OF CONVEYANCE FROM 1987 TO 1990 ON DIFFERENT DATES. THE DETAILS OF WHICH ARE AT PAGE 2 OF THE PAPER BOOK AT AN AGGREGATE AMOUNT OF RS.8,96,300/- AND THE INDEXED COST ON THE DATE OF SALE COMES TO RS.31,68,112/-, COULD IT BE SAID THAT THE LEASE DATED I.T.A. NO.2184/MUM/2012 6 ENTERED INTO BY THE ASSESSEE FOR THE ENTIRE LAND AD MEASURING 128400 SQ.MT. AT THE RATE OF RS.10 PER MONTH FOR A PERIOD OF 99 YEARS IS JUS TIFIED, THE LD. AR REITERATED THAT THIS ASPECT CANNOT BE EXAMINED AT THIS STAGE EVEN BY THE TRIBUNAL. LD. AR ALSO REFERRED THE CASE OF HONBLE APEX COURT OF K.P.VARGHESE V/S ITO (1981) 131 ITR 597(SC) AND SUBMITTED THAT BURDEN IS ON THE DEPARTMENT TO PROV E THAT THE LEASE RENT FIXED BY THE ASSESSEE IS NOT BONAFIDE OR LEASE RENT CONSIDERATI ON RECEIVED BY THE ASSESSEE IS NOT CORRECTLY DISCLOSED. AT THE TIME OF HEARING A Q UERY WAS RAISED TO THE AR AS TO HOW THIS CASE IS RELEVANT WHICH WAS DECIDED BY THE HONBLE APEX COURT ON 4.9.1981 IN THE CONTEXT OF SECTION 52 OF THE ACT WHICH HAS SINCE B EEN DELETED AND A NEW SECTION I.E. SECTION 50C HAS BEEN INSERTED TO ASCERTAIN FULL VAL UE OF CONSIDERATION OF THE PROPERTY ON THE DATE TRANSFER TAKES PLACE. THE LD. AR COULD NO T EXPLAIN THE RELEVANCY OF THE SAID CASE (SUPRA) SAVE AND EXCEPT REITERATING THE FACT T HAT AS PER SUB-SECTION (2) OF SECTION 52 OF THE ACT THAT THE REVENUE IS TO SHOW NOT ONLY THE FMV OF THE ASSET ON THE DATE OF TRANSFER IS EXCEEDING OF FULL VALUE OF CONSIDERAT ION DECLARED BY THE ASSESSEE BY NOT LESS THAN 15% OF THE VALUE SO DECLARED BUT ALSO TO ESTA BLISH THAT THE CONSIDERATION DECLARED BY THE ASSESSEE HAS BEEN UNDERSTATED. WE MAY AGAI N STATE AT THE COST OF REPETITION THAT SECTION 52 WAS DELETED BY THE FINANCE ACT, 1 987 WITH EFFECT FROM 1.4.1988 AND SECTION 50C HAS BEEN INSERTED BY FINANCE ACT, 2002 WITH EFFECT FROM 1.4.2003. WE MAY STATE AT THIS STAGE ITSELF, WHICH WE ALSO INDICAT ED AT THE TIME OF HEARING, THAT THE RELIANCE PLACED ON THE ABOVE CASE I.E. K.P.VARGHES E (SUPRA) HAS NO RELEVANCE AND THEREFORE IS OF NO HELP TO THE ASSESSEE IN RESPECT OF THE ISSUE UNDER CONSIDERATION. LD. AR ALSO REFERRED THE CASES OF HONBLE DELHI HIGH C OURT IN CIT V/S KHOOBSURAT RESORTS PVT.LTD (2013) 82 DTR (DEL) 290 AND THE DECISION OF HONBLE PUNJAB AND HARIYANA HIGH COURT IN CIT V/S CHANDNI BHUCHAR (2010) 323 ITR 510. LD.AR SUBMITTED THAT THE CAPITAL GAIN AS DECLARED BY THE ASSESSEE SHOULD BE ACCEPTED ON THE SALE CONSIDERATION DECLARED BY THE ASSESSEE AS IT IS MORE THAN THE VAL UE OF THE LAND CONSIDERED BY THE REGISTERED VALUER M/S DALAL JOSHI AND ASSOCIATES. 7. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. HE FURTHER SUBMITTED THAT MOST OF THE CASES REFERRED B Y LD. AR ARE NOT RELEVANT IN VIEW OF THE INSERTION OF SECTION 50C IN THE ACT BY THE FIN ANCE ACT, 2002 W.E.F.1.4.2003. HE SUBMITTED THAT BY INSERTING THE PROVISION OF SECTIO N 50C IN THE ACT, THE LEGISLATURE HAVE PROVIDED THAT THE VALUE OF ASSET AS ASCERTAINED BY THE STAMP VALUATION AUTHORITY SHOULD BE CONSIDERED, THE CONSIDERATION RECEIVED BY THE AS SESSEE ON TRANSFER OF CAPITAL ASSET AND IN CASE THE ASSESSEE CLAIMS DURING THE ASSESSME NT PROCEEDINGS THAT THE VALUE ADOPTED BY THE STAMP VALUATION OFFICER EXCEEDS THE FMV OF THE PROPERTY ON THE DATE I.T.A. NO.2184/MUM/2012 7 OF TRANSFER, THE AO CAN MAKE A REFERENCE TO DVO F OR VALUATION OF THE SAID CAPITAL ASSETS. HE SUBMITTED THAT THE DVO ASSESSED THE VAL UE OF THE SAID LAND OF AN AREA OF 125790 SQ.MTRS OUT OF THE TOTAL AREA OF LAND 12840 0 AT RS.2,54,10,000/- BY TAKING @ RS.202 PER SQ.MTR. HE SUBMITTED THAT THE AO VALUED THE REMAINING AREA OF THE LAND AT THE SAME RATE ON WHICH THE DVO VALUED THE SAID PROP ERTY AND THUS, ARRIVED AT THE ADDITIONAL VALUE OF THE ADDITIONAL AREA OF RS.5,2 7,220. THUS THE TOTAL VALUE OF THE PROPERTY WHICH THE ASSESSEE HAS SOLD TO M/S APTECH LTD WORKS OUT TO RS.2,59,37,220/- AFTER CONSIDERING THE INDEXED COST OF ACQUISITION A ND COMPUTED THE LTCG AT RS.2,27,69,108/-. THE LD. AR REFERRED THE VALUATIO N REPORT OF THE DVO, A COPY OF WHICH IS PLACED AT PAGES 90 TO 103 OF THE PAPER BOOK AND SUBMITTED THAT THE DVO HAS CONSIDERED THE REGISTERED VALUERS REPORT, THE RATE S OF THE PROPERTY IN THE NEARBY LOCALITY FROM THE OFFICE OF THE SUB-REGISTRAR OF K ARJAT AND ALSO OBJECTION AND REPLY OF THE ASSESSEE AND THEREAFTER HAS DETERMINED THE FMV OF THE PROPERTY. HE SUBMITTED THAT THE DVO IN HIS REPORT HAS ALSO STATED THAT FMV OF T HE PROPERTY HAS BEEN ARRIVED AT AFTER GIVING REASONABLE DISCOUNT FOR THE LEASE HOLD NATUR E OF THE PROPERTY. HE SUBMITTED THAT THE LTCG AS COMPUTED BY THE AO AND CONFIRMED BY LD. CIT(A) IS JUSTIFIED AND THE SAME MAY BE CONFIRMED. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE CASES RELIED UPON BY LD.AR (SUPRA). WE HAVE CONSIDERED THE RELEVANT PAGES OF THE PAPER BOOK, COPY OF LEASE DEED DATED 25.9.2001 ENTERED I NTO BETWEEN THE ASSESSEE AND AICAR PLACED AT PAGES 12 TO 20 OF THE PAPER BOOK, A COPY OF VALUATION REPORT OF M/S DALAL JOSHI ASSOCIATES DATED 21.12.2007 PLACED AT P AGES 21 TO 27 OF THE PAPER BOOK AND ALSO CONSIDERED THE COPIES OF BOTH THE DEEDS OF CONVEYANCE PLACED AT PAGES 28 TO 89 OF THE PAPER BOOK AND ALSO COPY OF REPORT OF DE PARTMENTAL VALUATION OFFICER PLACED AT PAGES 90 TO 103 OF THE PAPER BOOK AS WELL AS S TATEMENTS AND WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE LD. CIT(A), COPIES OF WHICH ARE PLACED RESPECTIVELY AT PAGES 104 TO 106 AND 107 AND 111 OF THE PAPER BOOK. 8.1 AT THE OUTSET, WE MAY STATE THAT THE CASES RELI ED UPON BY LD. AR (SUPRA) PARTICULARLY 1 TO 6 CASES ARE NOT RELEVANT TO THE I SSUE BEFORE US AS THOSE CASES WERE DECIDED PRIOR TO INSERTION OF PROVISION OF SECTION 50C OF THE ACT WHICH HAS SPECIFICALLY BEEN INSERTED TO COMPUTE FMV OF THE TRANSFER OF CA PITAL ASSETS FOR THE PURPOSES OF COMPUTING CAPITAL GAINS. FURTHER WE MAY ALSO STATE THAT THE CASE OF THE HONBLE DELHI HIGH COURT IN KHOOBSURAT RESORTS PVT.LTD (SYUPRA) RELATES TO AN ISSUE INTERALIA WHERE THE AO MADE THE ADDITIONS U/S 68 OF THE ACT, THE DI FFERENCE IN CONSIDERATION DUE TO I.T.A. NO.2184/MUM/2012 8 HIGHER VALUATION FOR THE PURPOSE OF STAMP DUTY VIS -A-VIZ THE VALUE DECLARED BY THE ASSESSEE IN THE SALE DEED. IN THAT CONTEXT, THE HO NBLE DELHI HIGH COURT HELD THAT THE VALUE DECLARED BY AN ASSESSEE FOR PAYMENT OF STAMP DUTY IPSO FACTO CANNOT BE LEGITIMATE GROUND FOR CONCLUDING THAT THERE WAS UN DERVALUATION IN THE ACQUISITION OF IMMOVABLE PROPERTY AND THE REVENUE HAD TO MAKE INQU IRY BY CONSIDERING THE SALE OR TRANSFER DEEDS EXECUTED IN RESPECT OF SIMILAR OR N EIGHBORING PROPERTIES, CONTEMPORANEOUSLY AT THE TIME OF TRANSACTION. WE OBSERVE THAT THIS IS NOT THE ISSUE BEFORE US AS THE DVO, ON A REFERENCE MADE TO HIM UNDER SUB-SECTION (2) TO SECTION 50C OF THE ACT HAS VALUED THE PROPERTY AND THE AUTH ORITIES BELOW HAVE CONFIRMED THE SAID VALUATION AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE TO COMPUTE THE LTCG. FURTHER IN THE CASE OF CHANDNI BHUCHAR (SUPRA), IT WAS HELD THAT VALUATION DONE BY STAMP DUTY AUTHORITIES COULD NOT BE TAKEN AS AC TUAL SALE CONSIDERATION IN THE ABSENCE OF ANY ADMISSIBLE EVIDENCE AND ACCORDINGLY THE VALU E AS SHOWN IN THE SALE DEED HAS TO BE ACCEPTED. IN THE CASE BEFORE US, IT IS NOT THE CASE THAT THE AO HAS COMPUTED THE LTCG IN RESPECT OF THE PROPERTY UNDER CONSIDERATIO N ON THE BASIS OF VALUATION MADE BY THE STAMP VALUATION AUTHORITY BUT THE AO MADE A REFERENCE TO DVO. THAT DVO VALUED THE LAND UNDER CONSIDERATION AFTER GIVING D UE CREDIT TO THE OBJECTIONS OF THE ASSESSEE AND ACCORDINGLY AO COMPUTED THE LTCG. 8.2 NOW, COMING TO THE ISSUE AS TO WHETHER THE AUTH ORITIES BELOW HAVE RIGHTLY ACCEPTED THE DVOS REPORT FOR COMPUTING THE LTCG. 8.3 WE OBSERVE THAT THE ASSESSEE HAS INSISTED THAT THE PROPERTY SHOULD BE VALUED BY APPLYING RENT CAPITALIZATION METHOD AS THE ASSESSEE HAD ENTERED INTO LEASE AGREEMENT FOR A PERIOD OF 99 YEARS AT MONTHLY LEASE RENT OF RS.10 WITH OPTION TO EXTEND LEASE FOR A FURTHER PERIOD OF 99 YEARS AT MONTHLY LEASE RENT OF RS.11. DURING THE COURSE OF HEARING, LD.AR STATED THAT THE GENUINENESS OF THE S AID LEASE ARRANGEMENT ENTERED INTO BY THE ASSESSEE WITH AICAR CANNOT BE EXAMINED AT T HIS STAGE AS THE SAID LEASE AGREEMENT WAS ENTERED INTO WITH EFFECT FROM 25.9.20 01 AND THEREFORE WHETHER THE SAID LEASE RENT IS FAIR OR NOT SHOULD NOT BE THE BASIS T O CONSIDER THE VALUE OF THE PROPERTY. WE OBSERVE ON PERUSAL OF THE VALUATION REPORT OF REGISTERED VALUER M/S DALAL JOSHI ASSOCIATES THAT HE HIMSELF HAS MENTIONED AT PAGE 5 OF THE REPORT (PAGE 25 OF THE PAPER BOOK) THAT AGREED LEASE RENT OF RS.10/- PER MONTH FOR LAND ADMEASURING 1,28,400 SQ. MTS IS FAR TOO LESS IN HIS OPINION AND THE LEASE RENT SHOULD HAVE BEEN RE.1/- PER SQ.MTR. PER MONTH AS ON DATE OF EXECUTIO N OF DEED OF LEASE IE. 25.9.2001. THEREFORE, LEASE RENT SHOULD HAVE BEEN RS.1,28,40 0/- PER MONTH. THE ABOVE I.T.A. NO.2184/MUM/2012 9 OBSERVATIONS OF THE REGISTERED VALUER AND CONSIDER ING IN THE LIGHT OF THE FACT THAT THE ASSESSEE ITSELF PURCHASED THE SAID LAND IN THE YEAR S BETWEEN 1987 TO 1990 AT A TOTAL AMOUNT OF RS.8,96,300/-, THE SAID LEASE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH AICAR AT THE RATE OF RS.10 PER MONTH FOR A PERIOD OF 99 YEARS CANNOT BE ACCEPTED ON THE FACE OF IT TO BE JUST AND FAIR TO VALUE THE LAND ON THE DATE OF SALE, AND TO HOLD THAT THE SAID PROPERTY IS AN ENCUMBERED PROPERTY AND TH EREFORE ONLY RENT CAPITALIZATION METHOD SHOULD BE ADOPTED FOR THE VALUATION OF THE P ROPERTY BY THE DVO CONTENDED BY LD.AR. WE OBSERVE THAT THE REGISTERED VALUER HIM SELF HAS NOT ADOPTED THE SAID LEASE RENT AS PER LEASE DEED, THE BASIS TO VALUE THE DEM ISED LAND. FURTHER IT IS ALSO RELEVANT TO OBSERVE FROM THE DVOS REPORT (PARA 3.1) THAT WHEN THE ASSESSEE HAS ALREADY LEASED OUT THE SAID LAND FOR 99 YEARS WITH AN OPTI ON TO LESSEE TO RENEW FOR ANOTHER 99 YEARS WITH NOT EVEN A SQFT. OF SPACE LEFT TO THE PU RCHASER VIS M/S APTECH LTD, HOW THE PURCHASERS PROPOSAL TO ESTABLISH A TRAINING ACADEM Y, PURPOSE FOR WHICH THE SAID LAND WAS PROPOSED TO BE PURCHASED, COULD BE MATERIALIS E. THE ABOVE ASPECTS ALSO ESTABLISHES THAT THE SAID LEASE AGREEMENT ENTERED I NTO BY THE ASSESSEE VIDE LEASE DEED DATED 25.9.2001 CANNOT BE ACCEPTED ON THE FACE OF I T. HENCE CONTENTION OF THE LD.AR THAT DEMISED LAND IN AN ENCUMBERED LAND AND THE SAM E BE VALUED BY APPLYING RENT CAPITALISATION METHOD CAN NOT BE ACCEPTED ON THE FA CTS OF THE CASE. 8.4 NOW, THE QUESTION ARISES AS TO WHETHER THE VALU ATION MADE BY DVO BY CONSIDERING THE RATE AT THE RATE OF RS.202 PER SQ.M TR IS JUSTIFIED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. WE OBSERVE THAT DVO HA S STATED THAT HE MADE INQUIRY AT THE OFFICE OF THE SUB-REGISTRAR OFFICE TO ARRIVE AT THE FMV AS ON 26.12.2007. WE OBSERVE THAT THE DVO HAS STATED THAT HE HAS CONSID ERED THE SALE INSTANCES OF PROPERTY IN THE NEAR BY LOCALITY, DETAILS OF WHICH WERE OBT AINED FROM THE SUB-REGISTRARS OFFICE AND IN THIS RESPECT HE HAS GIVEN TWO INSTANCES OF S ALES AS ANNEXURE-II OF HIS REPORT, COPY PLACED AT PAGE 103 OF THE PAPER BOOK. WE OBSE RVE THAT ONE OF THE PROPERTY COMPRISES OF AREA OF 1,21,200 SQM FOR WHICH THE AG REEMENT WAS ENTERED INTO ON 20.2.2008 AT THE RATE OF 238 PER SQM. AND THE OTHE R INSTANCE OF THE SALE TRANSACTION IS FOR AN AREA OF 8570 SQM FOR WHICH AGREEMENT WAS E NTERED ON 11.04.2008 AT THE RATE OF RS.375/- PER SQM. WE ARE OF THE CONSIDERED VIEW THAT THE SECOND INSTANCE OF SALE CANNOT BE COMPARABLE WITH THE ASSESSEE BEFORE US AS THE AREA OF A SMALLER PLOT, ADMITTEDLY GET HIGHER PRICE VIS--VIS AREA OF A LAR GER PLOT. CONSIDERING THAT TOTAL AREA OF THE LAND OF THE ASSESSEE IS 128400 SQ.MTR. AND THE INSTANCE OF SALE TRANSACTION GIVEN BY THE DVO OF 121200 SQ.MTS. WE ARE OF THE CONSIDER ED VIEW THAT THE SAME CAN BE COMPARED WITH THE ASSESSEE. WE OBSERVE THAT THE SAI D TRANSACTION TOOK PLACE ON I.T.A. NO.2184/MUM/2012 10 28.2.2008 AT THE RATE OF RS.238 SQ.MTS. AFTER ABO UT TWO MONTHS, THE ASSESSEE ENTERED INTO THE TRANSACTION OF SALE. WE OBSERVE THAT TH E DVO HAS HIMSELF STATED THAT THERE IS A DISPUTE OF ACCESS WITH THE NEIGHBOUR DUE TO WHICH ENTRANCE GATE TO THE PROPERTY COULD NOT BE PROVIDED AT THE ENTRY TO THE PLOT AND SAME IS PROVIDED INSIDE THE PLOT, LEAVING ACCESS TO THE NEIGHBOUR. THEREFORE SOME PO RTION OF THE LAND AT THE FRONT CANNOT BE UTILIZED FULLY DUE TO THIS ISSUE. WE ALSO OBSERVE THAT THE SAID LAND WAS ORIGINALLY AGRICULTURAL LAND AND WAS CONVERTED INTO NON-AGRICULTURAL LAND VIDE ORDER DATED 5.5.2000 AND 23.1.2002 BY THE DISTRICT COLLECTOR, R AIGAD FOR THE USE OF EDUCATIONAL PURPOSES ONLY. THEREFORE, WE AGREE WITH THE LD.AR THAT THE SAID LAND IS NOT AVAILABLE FOR USE IN ANY MANNER AND CAN ONLY BE USED FOR EDUCATIO NAL PURPOSE. HENCE, THIS ASPECT, WE AGREE WITH LD.AR AFFECT THE VALUE OF THE LAND. WE OBSERVE THAT THE DVO HAS MENTIONED IN PARA 6 OF THE REPORT THAT HE HAS CONSI DERED THE RATE OF RS.202 PER SQ. MTR. AFTER GIVING DUE CONSIDERATION FOR VARIOUS FAC TORS INFLUENCING THE VALUE OF THE PROPERTY WITH RESPECT TO PHYSICAL, LEGAL SOCIAL AND ECONOMICAL ASPECTS. HOWEVER, WE OBSERVE THAT NO BASIS HAS BEEN GIVEN BY THE DVO TO CONSIDER THE RATE AT THE RATE OF RS.202 PER SQ.MTR AS ON 26.12.2007 SAVE AND EXCEPT STATING THERE IS A SALE INSTANCE OF PROPERTIES IN NEARBY LOCALITY AND CONSIDERED POSIT IVE AND NEGATIVE POINTS OF THE PROPERTY INTO CONSIDERATION. WE ARE CONSCIOUS OF T HE FACT THAT THE VALUATION IS AN EXPRESSION OF AN OPINION OF THE VALUER AND THE F ACT THAT THE VALUATION EXERCISE OF THE SAME ASSETS ADOPTED BY TWO VALUERS COULD BE DIFFER ENT. THAT THERE COULD NOT BE FIXED SET OF RULES FOR CARRYING OUT VALUATION. IN GOLD COAST SELECTION TRUST LTD. V. HUMPHREY (1949) 17 ITR (SUPPL) 19 (HL), THE COURT HELD THAT , 'VALUATION IS AN ART, NOT AN EXACT SCIENCE. MATHEMATICAL CERTAINTY IS NOT DEMANDED, NO R IS IT POSSIBLE'. THEREFORE, THE VALUATION IS A VERY SUBJECTIVE EXERCISE BASED ON HI GHLY OBJECTIVE DATA. CONSIDERING THE FACT THAT THE VALUATION IS A SUBJECTIVE JUDGMENT OF THE VALUAR, WE ARE OF THE CONSIDERED VIEW THAT IN RESPECT OF THE LAND UNDER CONSIDERATIO N, IT WILL BE FAIR AND REASONABLE TO REDUCE 20 % OF THE RATE OF RS.238 PER SQ.MTR. F ROM THE SALE INSTANCE CONSIDERED BY THE DEPARTMENTAL VALUATION OFFICER FOR VALUING TH E DEMISED LAND AS ON 26.12.2007 AND AS SUCH IT COMES TO RS.190.40 PER SQ.MTR. ACCORD INGLY, THE VALUE OF THE SAID PROPERTY WILL COME TO RS.2,44,47,360/- (RS.190.40 X 128400) AS AGAINST RS.2,59,37,220/- CONSIDERED BY THE AUTHORITIES BELOW AND AS AGAIN ST RS.2,24,00,000/- DISCLOSED BY THE ASSESSEE. HENCE, AFTER DEDUCTING THE INDEXED CO ST OF ACQUISITION OF RS.31,68,112/- WE HOLD THAT THE TAXABLE LTCG COMES TO RS.2,12,79, 248/- AS AGAINST RS.1,92,31,888/- STATED BY THE ASSESSEE AND RS.2,27,69,108/- CONFIRM ED BY THE LD. CIT(A). I.T.A. NO.2184/MUM/2012 11 8.5 HENCE, WE MODIFY THE ORDERS OF AUTHORITIES BEL OW AS ABOVE BY TAKING LTCG AT RS.2,12,79,248/- BY ALLOWING THE GROUND OF APPEAL T AKEN BY THE ASSESSEE IN PART. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE I S ALLOWED IN PART. ORDER PRONOUNCED AFTER HEARING LD. REPRESENTATIVE OF THE PARTIES IN THE OPEN COURT ON 31 ST JULY, 2013 % / 0 31ST JULY, 2013 % SD/- SD/- (RAJENDRA) (B.R. M ITTAL) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; 0 DATED 31/07/2013 . . ./ SRL , SR. PS ! '! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. # ' / THE RESPONDENT. 3. 4 ( ) / THE CIT(A)- 4. 4 / CIT 5. 5 #7 , ) 7 , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI