ACIT, Noida V. Shri Surinder Mohan Chhabra, Noida

ITA 2265/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5540 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 08-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 26-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Assessee Lawyers: DEEPAK GULATI
• Keywords: Capital asset; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER ITA NO.2265/DEL/2009 ASSESSMENT YEAR : 2005-06 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE, NOIDA, G BLOCK, COMMERCIAL COMPLEX, SECTOR 20, NOIDA. VS. SURINDER MOHAN CHHABRA, M-1008, ROYAL GARDEN ESTATE, E-12, SECTOR 61, NOIDA. PAN : ACVPC8192L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEEPAK GULATI, CA REVENUE BY : SHRI KISHORE B., SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THE IS APPEAL FILED BY THE REVENUE. IT IS DIRECTE D AGAINST THE ORDER CIT (A) DATED 23 RD MARCH, 2009 FOR ASSESSMENT YEAR 2005-06. GROUNDS O F APPEAL READ AS UNDER:- 1. THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FA CTS IN HOLDING THAT THE FAIR MARKET VALUE OF THE IMPUGNED LAND BE TAKEN AT RS.8489/- PER SQ. YARD AS AGAINST RS.3410/- ADOPTED BY THE AO ON THE BASIS OF VALUERS (SHRI SAXENA) REPORT. 2. HENCE ORDER OF THE LD. CIT (A) MAY BE SET ASIDE AND THE ORDER FO THE AO BE RESTORED. 2. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E HAS SOLD THE PROPERTY BEARING NO.S-384, PANCHSHEEL PARK, NEW DELHI (542 S Q. YARD) FOR A CONSIDERATION OF RS.3,40,00,000/- ON 5 TH JANUARY, 2005. THE ASSESSEE CLAIMED INDEXED VALUE OF THE SAID PROPERTY AT RS.2,41,72,80 0/-. THE SAID VALUE WAS ITA NO.2265/DEL/2009 2 ARRIVED AT AS PER THE VALUATION REPORT PREPARED BY VALUER M/S KHEM RAJ AGGARWAL OF DELHI WHO APPLIED THE RATE OF RS.8,489/- PER SQ . YRD. THE SAID LAND RATE WAS ARRIVED AT BY THE VALUER BY TAKING INTO ACCOUNT THE SALE OF PLOT NO. S-382 IN THE SAME LOCALITY I.E., PANCHSHEEL PARK MADE BY INCOME- TAX DEPARTMENT ON 10 TH JANUARY, 1989 AT RS.57,75,000/- WITH THE AREA OF 51 1.60 SQ. YARD AND FURTHER PAYMENT MADE BY THE VENDOR AT RS.12,17,901/- TAKING THE TOTAL PRICE OF THE SAID PLOT AT RS.69,92,901/- AND THE LAND RATE WAS WORKED OUT AT RS.13,668/- PER SQ. YARD. THE VALUE FOR THE PRESENT PLOT WAS WORKED OU T AT RS.8489/- AS ON 01.04.81 BY REDUCING THE VALUE OF COST INDEX FROM 161 IN 19 88-89 TO 100 IN 1980-81. THE COST OF CONSTRUCTION ON THE SAID PLOT WAS ADOPTED A T RS.2,11,179 AS ON 01.04.1981 AND, THUS, TOTAL COST WAS TAKEN AT RS.48 ,18,159/- AND BY APPLYING THE INDEX RATE AND ADDING THERETO EXPENSES INCURRED IN 1981-82 AT RS.50,000/- AND 1995-96 ON RENOVATION RS.2,50,000/- AS WORKED OUT A T RS.2,41,72,891/- WHICH ALSO INCLUDED THE PAYMENTS MADE TOWARDS DDA AMOUNTI NG TO RS.3,37,064/- ON VARIOUS DATES. THE AO DID NOT CONSIDER THE VALUATI ON DONE BY THE ASSESSEE PROPER AS ACCORDING TO AO THE RATE ADOPTED BY VALUE R IN 1989 COULD NOT BE THE BASIS FOR VALUING THE SAID PLOT IN 1981 AS THE SAME SHOULD HAVE BEEN CALCULATED ON THE BASIS OF PREVAILING RATES IN 1981. ANOTHER REPORT OF VALUER WAS FURNISHED BY THE ASSESEE BY SHRI A.P. SAXENA, SAFDURJUNG DEVE LOPMENT AREA, HAUZ KHAS, NEW DELHI WHO ADOPTED THE LAND RATE AT RS.6200/- PE R SQ. YARDS. THE VALUER ALSO MENTIONED IN HIS REPORT THAT HE HAS MADE INQUIRY FR OM LOCAL PROPERTY DEALERS AND AGREED THAT PLOT MEASURING 300 SQ. YARDS FACING TO SAFDURJUNG ENCLAVE WAS AUCTIONED IN 1981 @ RS.3100/- AND THE PLOT IN WEA, KAROL BAGH WAS SOLD @ RS.3150/- FOR WHICH THE NECESSARY EVIDENCE WAS ALSO COLLECTED AND MADE FORM PART OF THE REPORT AND ON THE GROUND THAT PANCHSHEE L PARK WAS A BETTER COLONY AS COMPARED TO THE ABOVE SITES AND WAS A CORNER PLOT, THEREFORE, 50% WAS ADDED TO THE ABOVE RATE FOR WORKING OUT THE FAIR MARKET RATE AND ALSO TAKING INTO CONSIDERATION THAT IT WAS ON A 80 FEET WIDE ROAD WH ERE ONE EXTRA FLOOR IS ALLOWED, 1/3 RD TO THE 100% + 50% EQUAL TO 150% (RS.3100/- + 1550/ - = RS.4650/- WAS ADDED) AND APPLIED THE RATE OF RS.6200/- FOR WORKIN G OUT THE COST OF THE LAND. AGAIN, THE ASSESSEE WAS REQUIRED TO JUSTIFY FOR ADO PTING THE METHOD IN ITA NO.2265/DEL/2009 3 DETERMINING THE COST OF LAND AND SPECIFICALLY CONFR ONTED THAT WHY THE VALUATION DONE BY THE SECOND VALUER AT RS.6200/- SHOULD NOT B E REDUCED BY ADOPTING ONLY 10% IN RESPECT OF WIDE ROAD TO THE BASIC VALUE OF R S.3100/- AND, IN THE CIRCUMSTANCES, THE AO ADOPTED THE VALUE AT RS.3410/ - BY TAKING BASE PRICE AT RS.3100/- + 10% INSTEAD OF THE RATE TAKEN BY THE S ECOND VALUER OF THE ASSESSEE AT RS.6200/- AND THE COST OF PLOT WAS WORKED OUT AT RS.18,50,607/-. TOTAL COST OF BUILDING + PLOT AS ON 01.04.81 WAS ADOPTED AT RS.20 ,91,786/- (RS.18,50,607 + RS.2,41,179/-) AND COST INDEX VALUE OF THE SAME WAS WORKED OUT AT RS.1,00,40,572/-. ON THESE FACTS, THE CIT (A) HAS GIVEN THE FOLLOWING FINDINGS:- 6. I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS MA DE BY THE AO IN THE ASSESSMENT ORDER AND ALSO ELABORATE SUBMI SSIONS MADE BY AR IN HIS WRITTEN SUBMISSIONS WITH REFERENCE TO THE FACTS AND EVIDENCE ON RECORD. MY FINDINGS ARE AS UNDER:- 6.1 THE REQUIREMENTS OF PRINCIPLES OF NATURAL JUSTI CE WERE NOT FOLLOWED BY AO, IN SO FAR AS HE FAILED TO PROVIDE A NY WORTHWHILE REASON AS TO WHY HE HAS BRUSHED ASIDE THE REPORT OF REGISTERED VALUER AND ON WHAT BASIS HE HAS DETERMINED THE FAIR MARKET VALUE OF THE LAND OF THE APPELLANT. THERE IS SUBSTANCE I N THE CONTENTION RAISED BY AR THAT IF THE AO HAS ANY DOUBTS OR WANTE D CLARIFICATIONS IN THE REPORT OF THE VALUER, HE SHOULD HAVE EXAMINE D HIM INSTEAD OF ASKING ASSESSEE TO JUSTIFY THE SAME OR ELSE, THE AO COULD HAVE GOT THE SAME VALUED THROUGH DVO. IN CASE THE AO DECIDED NOT TO CONSIDER THE VALUER R EPORT HE SHOULD HAVE ASSIGNED/DISCUSSED SPECIFIC REASONS FOR SAME. 6.2 THE AO HAS NOT FOUND ANY DEFECTS OR INGENUITY I N THE REPORT OF THE REGISTERED VALUER SH. K.R. AGGARWAL. THE RE PORT OF THE REGISTERED VALUER DETERMINING THE FAIR MARKET VALUE OF A CAPITAL ASSET IS AN EXPRESSION OF OPINION OF AN EXPERT OF G OOD REPUTE, AND CAN ONLY BE IGNORED COMPLETELY ONLY AFTER ASSIGNING THE REASONS. THIS REPUTED VALUER HAD BASED HIS REPORT ON SALE IN STANCE OF AN ADJOINING PROPERTY; SO THE SALE RATE ADOPTED WAS VE RY COMPARABLE PROPERTY; THE PURCHASE OF THIS ADJOINING PROPERTY W AS MADE BY THE INCOME-TAX DEPARTMENT ITSELF. THUS, THIS SALE INST ANCE WAS APPARENTLY THE BEST POSSIBLE BASIS FOR VALUING THE IMPUGNED PROPERTY. 6.3 AS AGAINST, THE VALUATION REPORT OF THE APPROVE D VALUER SH. K.R. AGGARWAL, SH. A.P. SAXENAS VALUATION REPORT I S BASED ON SALE ITA NO.2265/DEL/2009 4 INSTANCES OF PROPERTIES, SITUATED VERY-VERY FAR, IN A COMPLETELY DIFFERENT LOCALITY, AND, HENCE, SUFFERED FROM THE D EFECT OF COMPARABILITY. IN FACT, THOSE SALE INSTANCES ARE A LSO MUCH HERE SAY; NOT BACKED BY REQUISITE DOCUMENTARY EVIDENCE. THUS, VALUATION REPORT OF SHRI A.P. SAXENA LACKED CREDIBI LITY, APART FROM THE FACT THAT THERE WAS NO JUSTIFICATION FOR CALLIN G FOR SUCH REPORT. 6.4 THUS, I HAVE NO HESITATION IN REJECTING THE AO S MOVE TO DISREGARD THE VALUATION DONE BY SH. K.R. AGGARWAL. FURTHERMORE, I FIND THAT AOS CONCLUSION OF ADOPTING THE RATE OF RS.3,410/- IS PURELY ARBITRARY, TOTALLY BASELESS AND WITHOUT ANY SATISFACTORY REASONINGS. 6.5 I FIND THAT ALL OTHER TECHNICAL ARGUMENTS RAISE D BY THE APPELLANT ARE ALSO FORCEFUL. THUS, THE VALUE ADOPT ED BY THE ASSESSEE AS ON 01.04.1981, WAS ON SOUND TECHNICAL R EASONINGS. 6.6 FURTHER, THE CASE LAW MRS. SOSAMMA PAULOSE 79 T TJ 573 (COCHIN) ALSO ESTABLISHES THAT THE RESIDENTIAL HOUS E AT GULMOHAR PARK, A NEARBY COLONY OF PANCHSHEEL PARK, WAS VALUE D AT RS.10,500/- PER SQ. YARDS. THIS WAS HIGHER THAN TH E VALUE OF 8489 PER SQ. YARD, ADOPTED BY THE ASSESSEE WHILE THE RES IDENTIAL HOUSE OF THE ASSESSEE WAS BETTER LOCATED AND THAT OF BETT ER SIZE. 6.7 THEREFORE, IN VIEW OF ALL THE ABOVE, I DIRECT T HE AO THAT THE FAIR VALUE OF IMPUGNED LAND IS TO BE TAKEN AT RS.8, 489/- PER SQ. YRDS AS DETERMINED BY APPROVED VALUER, SH. K.R. AGGARWAL , AND, THUS, THE ADDITION MADE IS TO BE DELETED. 7. IN RESPECT OF VALUATION OF BUILDING, THE AO HAS OBSERVED IN HIS ASSESSMENT ORDER THAT TWO PAYMENTS AMOUNTING TO RS.9,504/- ARE MADE BY ASSESSEE FOR GROUND RENT AND FURTHER, N O EVIDENCE HAS BEEN GIVEN BY ASSESSEE IN RESPECT OF RENOVATION EXP ENSES AMOUNTING TO RS.2,50,000/- DURING 1995-96. THE LD. AR HAS NOT GIVEN ANYTHING TO SUBSTANTIATE THIS BEFORE ME ALSO . THE AO IS DIRECTED TO RE-COMPUTE THE VALUE OF BUILDING BY RED UCING THE ABOVE TWO AMOUNTS FROM THE VALUE TAKEN BY THE APPELLANT. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 3. THE REVENUE IS AGGRIEVED, HENCE, IN APPEAL. 4. IT WAS VEHEMENTLY PLEADED BY LD. DR THAT THE CIT (A) IS WRONG IN CONCLUDING THAT THE VALUATION ON THE BASIS OF FIRST VALUERS REPORT SHOULD BE ITA NO.2265/DEL/2009 5 ADOPTED. HE CONTENDED THAT LD. CIT (A) HAS ALSO WR ONGLY RELIED UPON THE DECISION OF COCHIN BENCH WHERE HE COMPARED THE CASE OF THE ASSESSEE WITH THE RESIDENTIAL HOUSE SOLD AT GULMOHAR PARK WHERE VALUE OF RS.10,500/- AS ADOPTED. HE CONTENDED THAT THE SECOND VALUATION SUBMITTED BY THE ASSESSEE WAS NEARER TO THE POINT OF TIME WHEN THE ASSESSEE SOLD THE REL EVANT PROPERTY AND IN THAT VALUATION REPORT TOO THE VALUER WAS NOT RIGHT IN EN HANCING THE VALUE BY ANOTHER 50% AND 10% AND, THUS, HE PLEADED THAT THE ORDER OF THE CIT (A) ON THIS ISSUE SHOULD BE SET ASIDE AND THAT OF AO BE RESTORED. 5. ON THE OTHER HAND, LD. AR RELYING ON THE FINDING S OF CIT (A) PLEADED THAT THE FIRST VALUATION REPORT SUBMITTED BY THE ASSESSE E WAS IN ACCORDANCE WITH THE LAW. THE BASIS TAKEN IN THE SAID VALUATION WAS THE ADJACENT PROPERTY AND THE METHOD ADOPTED BY VALUER WAS REVERSE INDEXATION WHI CH SHOULD HAVE BEEN ACCEPTED BY THE AO. SECONDLY, HE ARGUED THAT ACCOR DING TO THE AFOREMENTIONED DECISION OF KOCHIN BENCH WHEREIN IN THE NEARBY COLO NY OF GULMOHAR PARK THE RATE AS ON 01.04.1981 WAS ADOPTED AT RS.10,500/- PE R SQ. YARD. THUS, HE SUBMITTED THAT THE RATE SHOWN BY THE ASSESSEE IN TH E FIRST VALUATION REPORT WAS PROPER ONE AND SHOULD HAVE BEEN ADOPTED BY THE AO A ND, THUS, THE CIT (A) IS RIGHT IN DIRECTING THE AO TO ACCEPT THE VALUATION O F THE PROPERTY ON THE BASIS OF FIRST VALUATION REPORT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. WHEN A PROPERTY IS SIT UATED IN A PARTICULAR PLACE, IT CANNOT BE COMPARED WITH THE PROPERTY SITUATED IN OT HER COLONY. IN THE CASES OF PROPERTY DEALS THE TIME IS OF ESSENCE AND, THEREFOR E, BY APPLYING THE REVERSE INDEXATION ONE CANNOT GET THE RIGHT PICTURE AS THE GENERAL INDEX DOES NOT REPRESENT THE APPRECIATION ACTUALLY HAPPENED IN ONE PARTICULAR AREA. THUS, COMPARING THE PRESENT PROPERTY WITH THE SALE INSTAN CE OF 1989 WAS NOT PROPER AND, THUS, THE AO WAS RIGHT IN REJECTING THE CLAIM OF THE ASSESSEE ON THE BASIS THAT TAKING THE BASE VALUE OF 1989, THE VALUE OF PR ESENT PROPERTY COULD NOT BE ASSESSED FOR 01.04.81. THEREFORE, WE ARE OF THE O PINION THAT THE CIT (A) HAS NOT ITA NO.2265/DEL/2009 6 CORRECTLY DECIDED THE ISSUE. THE ISSUE IN THE PRE SENT CASE IS TO ASSESS THE FAIR MARKET VALUE AS ON 01.04.81 IN THE AREA WHERE PROPE RTY OF THE ASSESSEE IS SITUATED. THE SALE INSTANCE OF THAT VERY LOCALITY WILL GIVE MORE APPROPRIATE RATE BY WHICH THE VALUE AS ON 01.04.81 CAN BE FOUND OUT. I N THE INTEREST OF JUSTICE WE CONSIDER IT JUST AND PROPER TO RESTORE THIS ISSUE T O THE FILE OF AO TO BRING ON RECORD THE SALE INSTANCE OF PROPERTY IN THE IMMEDIATE VICI NITY OF THE RELEVANT PROPERTY AND, THEREAFTER, GIVING THE ASSESSEE A REASONABLE O PPORTUNITY OF HEARING TO DETERMINE THE FAIR MARKET VALUE AS ON 01.04.81 FOR THE PURPOSE OF INDEXATION. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF AO WITH THESE DIRECTIONS. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.20 10. SD/- SD/- [G.E. VEERABHADRAPPA] [I.P. BANSAL] VICE PRESIDENT JUDICIAL MEMBER DATED,12.02.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES