ITO, Ward-3(1), Ahmedabad V. Dharmishthaben J. Patell, Ahmedabad

ITA 2622/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5877 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 24-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S.GODARA, JUDICIAL MEMBER) ITA. NO: 2622/AHD/2014 (ASSESSMENT YEAR: 2010-11) INCOME TAX OFFICER, WARD- 3(1), AHMEDABAD V/S DHARMISHTHABEN J. PATEL, 88, KESHAVNAGAR SOCIETY, NR. SUBHASHBRIDGE, SABARMATI, AHMEDABAD- 38005 (APPELLANT) (RESPONDENT) PAN: AAUPP1802D APPELLANT BY : SHRI PRASOON KABRA, SR. D .R. RESPONDENT BY : SHRI S. N. DIVATIA, ADV. ( )/ ORDER DATE OF HEARING : 22 -03-201 8 DATE OF PRONOUNCEMENT : 23 -03-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE REVENUE HAS CHALLENGED THE VA LIDITY OF THE ORDER OF THE LD. CIT(A)-6, AHMEDABAD DATED 14.07.2014 PERTAINING TO A.Y. 2010-11. ITA NO. 2622 /AHD/2014 . A.Y. 2010-11 2 2. THE SUBSTANTIVE GRIEVANCE OF THE REVENUE READ AS UN DER:- 1. THE CIT(A) ERRED IN LAW AND ON THE FACTS BY DELETIN G THE ADDITION OF RS.90,30,430/- TOWARDS LONG TERM CAPITAL GAIN(LTCG). 2. THE CIT(A) HAS ERRED IN IGNORING THE FACTS OF THE C ASE AS THE PROPERTY IN QUESTION WAS FIRST HELD BY THE ASSESSEE ON 7.4.1993 ON THE D EATH OF HER FATHER SHRI JAYANTILAL KESHAVLAL PATEL AND AS PER EXPLANATION ( III) TO SECTION 48 OF THE ACT, THE ASSESSEE IS ELIGIBLE FOR INDEXATION FROM 1993-94 IN STEAD OF 1981-82 AS CLAIMED BY THE ASSESSEE. 3. THE CIT(A) HAS FURTHER ERRED IN DIRECTING TO CONSID ER THE REFERENCE TO DVO AS BAD IN LAW ON THE GROUND THAT AO HAS NOT RESORTED TO SU B-CLAUSE(II) OF THE CLAUSE (B) OF SECTION 55A WITHOUT APPRECIATING THE FACT THAT T HE AO HAS RESORTED THE PROVISION OF SECTION 55(B)(II) WHILE DEALING WITH T HE REFERENCE OF VALUATION TO THE DVO. 3. THE GRIEVANCE RELATING TO THE ELIGIBILITY OF INDEXA TION FROM 1981-82 IS NO MORE RES INTEGRA. SINCE THE PROPERTY SOLD WAS FIRST HELD BY THE FATHER OF THE ASSESSEE AND THE ASSESSEE RECEIVED THE SAID PROPERTY THROUGH BILL ON THE DEATH OF HIS FATHER, THE INDEXATION BENEFIT WOULD BE AVAILABLE F ROM A.Y. 1981-82. THIS ISSUE IS WELL SETTLED IN FAVOUR OF THE ASSESSEE AND AGAIN ST THE REVENUE BY THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF MANJULA J SHAH 355 ITR 474 AND BY HONBLE GUJARAT HIGH COURT IN THE CASE O F RAJESH V PATEL IN TAX APPEAL NO. 13 OF 2013 DATED 17.04.2013. SINCE THE F IRST APPELLATE AUTHORITY HAS FOLLOWED THE DECISION OF THE HONBLE HIGH COURT (SUPRA), WE DECLINE TO INTERFERE. 4. THE SECOND GRIEVANCE RELATES TO THE ADOPTION OF FMV AS ON 01.04.1981 BY DISCARDING THE VALUATION REPORT OF THE DVO. ITA NO. 2622 /AHD/2014 . A.Y. 2010-11 3 5. THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF GA RANGIBEN S. SHODHAN IN TAX APPEAL NO. 149 TO 151 OF 2013 HAS HELD THAT PRI OR TO THE AMENDMENT OF SECTION 55A, THE A.O. WAS NOT VESTED WITH ANY POWER TO REFER THE MATTER TO THE DVO FOR ASCERTAINING THE FMV AS ON 01.04.1981. 6. SINCE THE A.O. HAS FRAMED THE ASSESSMENT ON THE BAS IS OF THE VALUATION REPORT OF THE DVO, IN THE LIGHT OF THE DECISION OF HONBLE HIGH COURTS (SUPRA), THE REFERENCE TO THE DVO IS VOID AB INITIO AND THE DVO S REPORT IS TREATED AS NON EST. THE ONLY ISSUE WHICH HAVE TO BE DECIDED IS NOW WHETHER THE FMV AS ON 01.04.1981 AS STATED BY THE ASSESSEE BECOME SACROSA NCT AND CANNOT BE DISTURBED. CLAUSE (B) (II) OF SECTION 55A STATES T HAT HAVING REGARD TO THE NATURE OF THE ASSET AND OTHER RELEVANT CIRCUMSTANCES, IT I S NECESSARY TO DO. 7. THE ASSESSEE HAS FURNISHED A VALUATION REPORT FROM THE APPROVED VALUER WHO DETERMINED THE FMV AS ON 01.04.1981. THE BASIS OF A RRIVING AT THE LAND RATE AND THE INSTANCES OF COMPARABLE SALES OF IMMOVABLE PROPERTIES IN THE LOCALITY AS MENTIONED BY THE APPROVED VALUER READ AS UNDER:- A. BY CONSIDERING AND COMPARING DIRECTLY OR INDIRECTLY THE INSTANCES OF THE SALES OF SIMILAR PROPERTIES OF N.A. LAND EXECUTED/REGISTERED DURING THE PERIOD OF LAST THREE YEARS PRECEDING FROM THE DATE OF VALUATION IN TERMS OF SITUATION, AREA, LOCALITY, SURROUNDING DEVELOPMENT & DEVELOPMENTAL POTENTIALIT Y, ADDITIONAL FACILITIES IT ANY AVAILABLE B. BY MAKING LOCAL INQUIRIES AND INQUIRIES TO THE CONCERNED GOVT./SEMI GOVT. DEPTTS AND REAL ESTATE DEVELOPERS. C. DEVALUATION OF RUPEES AND LIQUIDITY IN CAPITAL MARKET. D. FACTOR FL OF PROPERTY TAX BILL OF THIS AREA, ITA NO. 2622 /AHD/2014 . A.Y. 2010-11 4 E. INCREASING TREND IN THE MARKET VALUES OF THE IMMOVA BLE PROPERTIES AT ACCELERATED/RAPID RATES IN REAL ESTATE MARK ET DUE TO GROWING ECONOMY AT PRESENT. F. RESTRICTION AND CONTROL OF ULC (C&R) ACT 1976 AS ON 01/04/1981. G. ULC (C&R) ACT 1976 REPEALED IN AUGUST 1999 AND NOT IN FORCE AT PRESENT IN GUJARAT. RS.1100.00 PER SQ.MT AS ON 01/04/1981 THE STATEMENT SHOWING THE INSTANCES OF T HE SALES OF EXECUTED/REGISTERED DURING THE PERIOD OF LAST TWO YEARS PRECEDING FROM THE DATED VALUATION AND AS ON 1981 IS ATTACHED HEREWITH. THE MINIMUM RATE IS RS. 385.80 PER SQ MT AND MAXIMUM RATE 823.83 PER SQ. MT. IT IS OBSERVED THAT INSTANCES OF THE SALES AVAILABL E ARE FOUND TO BE UNDERVALUED AND DO NOT REFLECT THE TRUE/FAIR MARKET VALUE IN COMPAR ISON WITH THE RATES ACTUALLY PREVAILING DUE TO THREE MAIN REASONS. I. INVOLVEMENT OF UNACCOUNTED MONEY UPTO MORE/MUC H HIGHER EXTENT AT THE TIME OF DEALING AND EXECUTION OF THE SALE/TRANSFER OF THE PROPERTIES II. TO SAVE THE STAMP DUTY TO BE PAID ON HIGHER SIDE/RATE AT THE TIME OF THE REGISTRATION OF THE DOCUMENTS OF SALE/TRANSFER OF T HE PROPERTIES. III. CONTROL AND RESTRICTION ON THE URBAN LANDS DUE TO ULC (C&R) ACT 1976 WAS IN FORCE. HENCE LAWFUL REGISTRATION OF THE DOCUMENTS SHOWING TRUE/FAIR CONSIDERATION (SALE/VALUE) OF THE IMMOVABLE PROPERTIES WERE ALMOS T ABSENT IN THIS AREA. HENCE IT IS NOT EASY TO QUOTE THE SPECIFIC INSTANCES OF THE SAL ES TO BE RELIED UPON TO AND DIRECT COMPARABLE TO THE LAND/PROPERTY U/R IN TERMS OF THE LOCALITY, SITUATION, SHAPE, SIZE, PLOT, AREA ETC. IN THESE CIRCUMSTANCES, THE INCREASED TREND IN THE GOLD PRICE CAN ALSO PROVIDE THE BASIS FOR ARRIVING AT THE LAND RATE/VALUE AS ON 19 81. THIS COMMODITY IS GENERALLY SOLD/PURCHASED BY ACCOUNTED MONEY. HENCE IT'S TREND IS USEFUL FOR COMPARISON. IN APRIL 1981, THE GOLD PRICE FIXED BY THE RESERVE BAN K OF INDIA WAS RS.162.50 PER ITA NO. 2622 /AHD/2014 . A.Y. 2010-11 5 ONE GRAMME. THE PERCENTAGE INCREASE WAS 100. WH ILE IN 2002 IT WAS RS. 506.00 PER ONE AND PERCENTAGE INCREASE WAS 31 1.38. IT WAS MORE AND MORE DURING THE YEARS 2003 TO 2010. AT PRESENT AT THE TIME OF SALE DEED EXECUTED/REGIST ERED ON 19-02-2010. IT WAS APPROX RS. 1625A PER ONE GRAMME. IT IS TEN TIMES MORE THAN THE VALUE AS ON APRIL 1981. AT PRESENT THE RATE FOR THE PLOT/LAND U/R IS PREVAI LING AT RS. 8000/- PER SQ MT ACCORDING TO ASR 2006 (ANNUAL STATEMENT OF RATES - 2006) FOR THE STAMP DUTY PURPOSE COME INTO FORCE WITH EFFECT FROM 01/04/2008 . THE PERIOD OF MORE THAN FOUR YEARS HAS BEEN LAPSED IN 2006 AND GOVT. HAS NOT YET REVISED THE RATES OF A.S.R.2006. THE RATE OF A.S.R.2006 IS NOT REFLECTING THE RATE P REVAILING AT PRESENT IN THIS AREA. IT HAS COME TO KNOW THAT THE RATE OF DEVELOPED LAND PR EVAILING AT PRESENT IS RS. 15,000/- PER SQ MT. THE GOLD PRICE MAY BE APPLICABL E FOR FIXING THE LAND VALUE 10 (TEN) TIMES LESS, IT WOULD BE RS. 15007- PER ONE GRAMME. KEEPING IN VIEW ALL THE CRITERIA OF VALUATION BENEF ITS OF FS1 ETC AT PRESENT IN COMPARISON WITH FSI PREVAILING IN 1981 AND ANALO GY OF INCREASED GOLD PRICE INDEX, THE AVERAGE RATE OF THE LAND U/R RATE IS AS SESSED AT RS. 1100/- PER SQ.MT. AS ON 01/04/1981 AS STATED IN ITEM NO.13 8. A PERUSAL OF THE ABOVE SHOWS THAT THE APPROVED VALU ER HIMSELF AS DETERMINED THE RANGE FROM RS. 385.80 PER SQ. MTR. TO 823.83 PE R SQ. MTR. HOWEVER, IT CAN BE SEEN THAT IN SPITE OF THE RANGE DETERMINED BY HI M, HE HAS ADOPTED RS. 1100 PER SQ.MTR. IN DOING SO, THE VALUER HAS CONSIDERED SOME EXTRANEOUS CONSIDERATION INASMUCH AS HE HAS GIVEN MUCH WEIGTAG E TO THE INVOLVEMENT OF UNACCOUNTED MONEY AT THE TIME OF DEALING AND EXECUT ION OF THE SALE/TRANSFER OF THE PROPERTIES. 9. WHEN THIS WAS POINTED OUT TO THE LD. COUNSEL, THE L D. COUNSEL HIMSELF AGREED THAT THE OBSERVATIONS OF THE APPROVED VALUER ARE UN WARRANTED AND UNCALLED FOR. ITA NO. 2622 /AHD/2014 . A.Y. 2010-11 6 THE LD. COUNSEL FAIRLY CONCEDED THAT THE AVERAGE OF THE RANGE RATES MAY BE TAKEN AS THE FMV AS ON 01.04.1981 WHICH COMES TO AROUND R S. 605 PER SQ. MTR. 10. ON SUCH CONCESSION AND ON FINDING THAT THE FMV OF RS. 1100 PER SQ. MTR. ADOPTED BY THE APPROVED VALUER IS NOT BASED UPON SO UND PRINCIPLES, WE DIRECT THE A.O. TO RE-COMPUTE THE CAPITAL GAINS TAX LIABIL ITY, IF ANY, BY ADOPTING THE FMV AS ON 01.04.1981 AT RS. 605 PER SQ. MTR. 11. SINCE OUR FINDINGS ARE BASED UPON THE PECULIAR FACT S OF THE CASE IN HAND, WE DO NOT FIND THIS TO BE A FIT CASE FOR CONSIDERATION AS PRECEDENCE IN ANY OTHER CASE. WE DIRECT ACCORDINGLY. THIS GROUND IS PARTLY ALLOWE D. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23 - 03- 20 18 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY A CCOUNTANT MEMBER AHMEDABAD: DATED 23 /03/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD