ITO-WARD-7(1), Nagpur V. SHRI MUSHTAQUE AHMED ABDUL KHALIQUE, Nagpur

ITA 265/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1721 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: V V SARANJAME
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Valuation report
• Section: 143(3); 50C

Judgement Text

1 ITA NO. 265/NAG/2014 & C.O. NO. 06/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 265 /NAG/2014 ASSESSMENT YEAR : 2009 - 10. THE INCOME - TAX OFFICER, SHRI MUSHTAQUE AHMED ABDUL KHALIQUE, WARD - 7(1), NAGPUR. V/S. M/S LUCKY BHARAT BRICKS MANUFACTURING, YERKHEDA, KAMPTEE, DIST. NAGPUR. PAN ADGPK6830K APPELLANT. RESPONDENT. AND C.O. NO. 06/NAG/2014 (IN ITA NO. 265/NAG/2014) ASSESSMENT YEAR : 2009 - 10. SHRI MU SHTAQUE AHMED ABDUL KHALIQUE, THE INCOME - TAX OFFICER, YERKHEDA, KAMPTEE. V/S. WARD - 7(1), NAGPUR. CROSS OBJECTOR. RESPONDENT. DEPARTMENT BY : S HRI NARENDRA KANE. ASSESSEE BY : SHRI V.V. SARANJAME. DATE OF HEARING : 29 - 07 - 2015 DATE OF PRONOUNCEMENT : 21 ST AUGUST, 2015 O R D E R PER MUKUL K. SHRAWAT, J.M. . REVENUE IS IN APPEAL AND THE ASSESSEE HAS FILED A CROSS OBJECTION EMANATING FROM THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 28 - 02 - 2014. THE REVENUE HAS RAISED THE FOLLOWING GROUND : 2 ITA NO. 265/NAG/2014 & C.O. NO. 06/NAG/2014 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LE. CIT(A) WAS RIGHT IN ESTIMATING THE VALUE OF PROPERTY ON THE BASIS OF THE VALUATION DONE BY THE REGISTERED VALUER OF THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT AS PER SECTION 50C(2) OF THE I.T. ACT WHERE REFERENCE HAS BEEN MADE TO THE VALUATION OF FICER AT THE INSTANCE OF THE ASSESSEE, IN VIEW OF PROVISION U/S 50C(3) OF I.T. ACT, VALUE ADOPTED BY D.V.O. SHALL BE TAKEN AS FULL VALUE OF CONSIDERATION? 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 31 - 10 - 2011 WERE THAT THE ASSESSEE IN HIS INDIVIDUAL CAPACITY HAS FILED THE RETURN AND A NOTE WAS APPENDED DISCLOSING COMPUTATION PERTAINING TO SALE OF ALLEGED AGRICULTURAL LAND ON 23 - 07 - 2008 FOR A SUM OF ` .20 LAKHS. IT WAS INFORMED THAT THE LAND IN Q UESTION WAS ACQUIRED ON 28 TH OF MARCH, 1990 FOR A SUM OF ` .37,000/ - . IT WAS ALSO INFORMED THAT THE SAID ASSET WAS SOLD AS AGRICULTU8RAL LAND, THEREFORE, THERE WAS NO LEVY OF CAPITAL GAIN ON THE ASSESSEE. HOWEVER, IT WAS OBSERVED BY THE ASSESSING OFFICER T HAT THE LAND IN QUESTION WAS VALUED AT ` . 71,10,000/ - FOR THE PURPOSE OF STAMP VALUATION BY THE APPROPRIATE AUTHORITY. DUE TO THE SAID REASON THE PROVISIONS OF SECTION 50C WERE INVOKED. CONSIDERING THE SUBMISSION OF THE ASSESSEE THE ASSESSING OFFICER HAS R EFERRED THE ISSUE OF VALUATION TO THE VALUATION OFFICER. VIDE VALUATION REPORT DATED 23 - 09 - 2011 THE VALUATION OFFICER HAS DETERMINED THE VALUE OF THE PROPERTY AT ` .50,84,062/ - . THE ASSESSING OFFICER HAS FOLLOWED THE VALUATION AS GIVEN BY THE VALUATION OFF ICER. THE ASSESSING OFFICER HAS ALSO MENTIONED THAT THERE WAS NO EVIDENCE OF ANY AGRICULTURAL ACTIVITY. THEREFORE, THE LAND IN QUESTION WAS NOT TO BE TREATED AS AN AGRICULTURAL LAND. THE ASSESSING OFFICER HAS ALSO MENTIONED THAT THE VALUATION OFFICER WAS L IBERAL ENOUGH TO ALLOW A REDUCTION OF 10% FROM THE RATE ADOPTED FOR STAMP DUTY PURPOSES. ACCORDINGLY THE ASSESSING OFFICER HAS COMPUTED THE LONG TERM CAPITAL GAIN AND TAXED IN THE HANDS OF THE ASSESSEE. 3 ITA NO. 265/NAG/2014 & C.O. NO. 06/NAG/2014 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPEL LATE AUTHORITY IT WAS PLEADED THAT THE DVO HAS NOT CONSIDERED ANY COMPARABLE SALE INSTANCES BUT THE ENTIRE VALUE WAS BASED UPON READY RECKONER RATES. SUCH REPORT WAS NOT CORRECT IN THE EYES OF LAW. CASE LAW CITED WAS RAVI KANT V/S. ITO 110 TTJ 297 (DEL .). AFTER CONSIDERING THE EVIDENCES PLACED BEFORE THE LEARNED CIT(APPEALS) AND A VALUATION SUBMITTED BASED UPON COMPARABLE SALE INSTANCES, A PART RELIEF WAS GRANTED AS PER THE FOLLOWING PARAGRAPH: IN VIEW OF THE ABOVE FACTS THE VALUE DETERMINED BY THE V ALUATION OFFICER CANNOT BE RELIED UPON. AT THE SAME TIME THE VALUE AS DETERMINED BY THE REGISTERED VALUER ALSO SUFFERS FROM CERTAIN LIMITATIONS. THE COMPARABLE SALE INSTANCES USED BY THE REGISTERED VALUER ARE AGRICULTURAL LAND. IT IS STATED BY THE REGISTERED VALUER THAT THERE ARE NO SALE TRANSACTION IN RESPECT OF BULK NON AGRICULTURAL LAND IN THE LOCALITY OF DEOLAPAR AND THEREFORE THE BETTER WAY TO DETERMINE THE VALUE OF THE SAID PROPERTY WOULD BE AGRICULTURAL LAND AND THEN INCREASE THE SAME BY A CERTAIN FACTOR SO AS TO DETERMINE THE VALUE OF NON AGRICULTURAL LAND IN THE SAID AREA. IT IS NOTED BY THE REGISTERED VALUER THAT THERE ARE THREE SUCH INSTANCES IN 2008 AND AFTER CONSIDERING INSTANCES IN THE YEAR 2007 AND 2009 HE HAS ARRIVED AT THE AVER AGE RATE OF AGRICULTURAL LAND AT ` .204000/ - PER HECTARE. THE REGISTERED VALUER HAS DOUBLED THE VALUE OF THE LAND BY ADOPTING THE RATE OF ` . 408000/ - PER HECTARE TO COMPENSATE FOR THE FACT THAT THE LAND IN QUESTION IS PERMITTED FOR NON AGRICULTURAL USE HAS A BETTER LOCATION THAN THE COMPARABLE SALE INSTANCES. HOWEVER, IT IS SEEN THAT THE SAID VALUATION, AS DONE BY THE REGISTERED VALUER, IS ON THE CONSERVATIVE SIDE AS THE AVERAGE RATE HAS ONLY BEEN DOUBLED WHICH DOES NOT APPROPRIATELY COMPENSATE FOR THE INCREASED VALUE OF NA LAND. IN VIEW OF THE SAME, THE AVERAGE RATE AS DETERMINED BY THE REGISTERED VALUER IS INCREASED BY FOUR TIMES (AS AGAINST TWO TIMES DONE BY THE REGISTERED VALUER) AND THE VALUE OF THE SAID PROPERTY IS DETERMINED AS UNDER : - 2.99 HECTARE X ` .816000 ( ` . 204000 X 4) = ` .2439840/ - IN VIEW OF THE ABOVE, DEEMED FULL CONSIDERATION OF THE SAID PROPERTY IS COMPUTED AT ` .2439840/ - (AS AGAINST ` .5084062/ - TAKEN BY THE LD.AO ) AND THE LD.AO IS DIRECTED TO COMPUTE THE LONG TERM C APITAL GAIN ACCORDINGLY. THIS GROUND IS THEREFORE PARTLY ALLOWED. 4 ITA NO. 265/NAG/2014 & C.O. NO. 06/NAG/2014 4. FROM THE SIDE OF THE REVENUE LEARNED D.R. MR. NARENDRA KANE APPEARED AND SUPPORTED THE ACTION OF THE ASSESSING OFFICER. HE HAS PLEADED THAT LEARNED CIT(APPEALS) SHOULD NOT HAVE DISTURB ED THE REPORT OF THE DVO BECAUSE THE VALUATION WAS DONE BY A TECHNICAL PERSON AND THE FIRST APPELLATE AUTHORITY HAS NO SUCH EXPERTISE. LEARNED D.R. HAS ALSO PLEADED THAT ONCE A LAW HAS BEEN ENACTED TO ADOPT THE VALUATION AS FIXED FOR STAMP DUTY PURPOSES UN DER SECTION 50C OF I.T. ACT, THEREFORE, LEARNED CIT(APPEALS) HAS NO JURISDICTION TO ADOPT ANY OTHER VALUATION. 5. ON THE OTHER HAND, FROM THE SIDE OF THE RESPONDENT - ASSESSEE LEARNED A.R. MR. V.V. SARANJAME APPEARED AND PLACED RELIANCE ON FOLLOWING TWO DECI SIONS: I) RAVIKANT V/S. CIT 110 TTJ 297 (ITAT DELHI). II) RALLIS INDIA LTD. V/S. CIT 116 DTR 217 (BOMBAY HIGH COURT). 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES WE ARE OF THE CONSIDERED OPINION THAT ALTHOUGH THE PROVISIONS OF SECTION 50C HAVE BEEN INTRODUCED IN THE STATUTE TO ADOPT THE VALUE FIXED FOR THE PURPOSE OF PAYMENT OF STAMP DUTY AND SHOULD BE TREATED AS DEEMED VALUE OF CONSIDERATION BUT WITHOUT PREJUDICE TO THE MAIN PROVISION OF SECTION 50C(1) AN ANOTHER SITUATION HAS ALSO BEEN INTRODU CED IN THE SAID SECTION WHERE THE ASSESSEE CLAIMS THAT THE VALUE FOR STAMP VALUATION PURPOSE WAS NOT JUSTIFIED AND EXCEEDED THE FAIR MARKET VALUE THEN THE ASSESSING OFFICER MAY REFER THE VALUATION TO A VALUATION OFFICER. WHILE ANALYZING THESE PROVISIONS T HE RESPECTED COORDINATE BENCH HAS OPINED THAT IN A SITUATION WHEN THE MATTER IS REFERRED TO THE DVO THEN THE REPORT OF THE DVO SHOULD NOT BE BASED ONLY ON THE STAMP DUTY VALUATION BUT SHOULD BE BASED ON COMPARABLE TRANSACTIONS AS ALSO OTHER RELEVANT FACTOR S. IN OUR CONSIDERED OPINION WHEN CERTAIN COMPARABLE INSTANCES WERE QUOTED BEFORE THE LEARNED CIT(APPEALS) AND AN ANOTHER VALUATION REPORT WAS FURNISHED THEN CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES LEARNED CIT(APPEALS) HAS ARRIVED AT AN AVERAGE VALUA TION, AS IS EVIDENT FROM THE RELEVANT 5 ITA NO. 265/NAG/2014 & C.O. NO. 06/NAG/2014 PARAGRAPHS REPRODUCED ABOVE. WE ARE OF THE CONSIDERED OPINION THAT THERE WAS NO FALLACY IN THE SAID APPROACH OF THE SAID APPELLATE AUTHORITY. RESULTANTLY WE HEREBY AFFIRM THE SAME. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 7. IN THE CROSS OBJECTION NO INDEPENDENT LEGAL ISSUE HAS BEEN RAISED BY THE CROSS OBJECTOR BUT SIMPLY SUPPORTED THE ORDER OF LEARNED CI T(APPEALS). IN THE GROUNDS TAKEN IN THE CROSS OBJECTION IT IS PLEADED THAT THE LEARNED CIT(APPEALS) WAS FULLY JUSTIFIED IN ESTIMATING THE VALUE OF THE PROPERTY IN QUESTION, THEREFORE, THE SAME DESERVES TO BE CONFIRMED. SINCE THE VIEW HAS ALREADY BEEN TAKE N AFFIRMING THE ORDER OF LEARNED CIT(APPEALS), THEREFORE THE GROUNDS AS PER THE CROSS OBJECTION DO NOT SURVIVE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N THIS 21 ST DAY OF AUGUST, 2015. SD/ - SD/ - ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) (ACCOUNTANT MEMBER. JUDICIAL MEMBER NAGPUR, DATED: 21 ST AUGUST, 2015. 6 ITA NO. 265/NAG/2014 & C.O. NO. 06/NAG/2014 COPY OF ORD ER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR