SMT. VIMLA DEVI SAMARIYA, JAIPUR V. INCOME TAX OFFICER, JAIPUR

ITA 348/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8175 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 14-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDAR MEHTA
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Fair market value; Valuation report
• Section: 54B; 50C; 54F; 37; 6

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HE A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 348/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 SMT. VIMLA DEVI SAMARIYA, PLOT NO. 8, JAMUNAPURI, MURLIPURA SCHEME, SIKAR ROAD, JAIPUR CUKE VS. INCOME-TAX OFFICER, WARD-4(3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACHPS5333D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI SIDHARTH RANKA (ADV.) & SHRI A SHISH KHANDELWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDAR MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 15/04/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 11/07/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-2, UDAIPUR DATED 12.02.2018 WHEREIN THE ASSESSEE HAS T AKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. LOWER AUTHORITIES GROSSLY ERRED IN INVOKING THE PRO VISION OF 50C OF THE INCOME-TAX ACT, 1961 AND IN ADOPTING THE TOTAL PRIC E OF THE PROPERTY AT RS. 3,58,96,520/- AS AGAINST ACTUAL SALES CONSIDERA TION OF RS. 1,27,72,600/- SHOWN BY THE ASSESSEE APPELLANT A ND IN MAKING ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN ON TH E DIFFERENTIAL VALUE. ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 2 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. LOWER AUTHORITIES GROSSLY ERRED IN RELYING UPON THE VALUE ADOPTED BY THE DVO WHICH WAS ARBITRARY, EXCESSIVE AND DO NOT PRESE NT FAIR MARKET VALUE OF THE PROPERTY AND OVERLOOKED THE VALUATION REPORT OF REGISTERED VALUER, COMPARATIVE SALES INSTANCES AND ALSO OVERLO OKED THE ADVERSE FACTORS WHICH WERE ATTACHED TO THE SAID PROPERTY. 1.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. LOWER AUTHORITIES GROSSLY ERRED IN BLINDLY RELYING UPON THE DVO REPORT WHEN THE DVO REPORT ITSELF WAS BASED UPON DLC RATES ITSELF THEREBY DEFEATING THE PURPOSE AND INTENT OF SECTION 50C(2) OF THE ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED LOWER AUTHORITIES GROSSLY ERRED IN DISALLOW ING THE DEDUCTION AMOUNTING OF RS. 28,04,925/- CLAIMED U/S 54F BY THE ASSESSEE APPELLANT IN HIS REVISED COMPUTATION OF INCOME. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED LOWER AUTHORITIES GROSSLY ERRED IN DISALLOW ING THE DEDUCTION OF RS. 40,50,510/- CLAIMED U/S 54B BY THE ASSESSEE APP ELLANT IN HIS REVISED COMPUTATION OF INCOME. 2. FIRSTLY, REGARDING GROUND NO. 1, BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAS SOLD IMMOVABLE PROPERTIES AT VILLAGE CHAKSU, JAIPUR VIDE TWO SALE DEEDS DATED 24.12.2012 FOR A CONSIDERATION OF RS. 1,27,00,000/- AND RS. 72,600 /- RESPECTIVELY. THE SUB REGISTRAR, CHAKSU, JAIPUR HAS VALUED FIRST PROPERTY AT RS. 3,58,35,150/- AND THE 2 ND PROPERTY AT RS. 74,720/-. AS PER THE ASSESSING OFF ICER, THE SALE CONSIDERATION AS DETERMINED BY THE STAMP DUTY AUTHO RITY SHOULD BE TAKEN BY ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 3 THE ASSESSEE. HOWEVER, THE ASSESSEE HAS NOT DISCLOS ED THE CAPITAL GAINS IN HER RETURN OF INCOME FILED ON 18.10.2013. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS CHALLENGED THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES AND REQUESTED TO REFER THE CASE TO THE VALUATION OFFICER FOR ASCERTAINING FAIR MARKET VALUE OF THE PROPERTIES U/ S 50C(2) OF THE ACT. THEREFORE, THE CASE WAS REFERRED TO THE VALUATION O FFICER U/S 55A OF THE ACT. THE DVO HAS DETERMINED THE FAIR MARKET VALUE OF THE PROPERTIES AT RS. 3,58,21,800/- AND RS. 2,03,200/- RESPECTIVELY AS ON THE DATE OF SALE. 3. BASIS THE DVO REPORT, A SHOW-CAUSE NOTICE WAS IS SUED TO THE ASSESSEE AS TO WHY AS PER THE PROVISION OF SECTION 50C OF TH E ACT, AN AMOUNT OF RS. 3,58,21,800/- AS DETERMINED BY THE DVO AND RS. 74,720/- FOR 2 ND PROPERTY AS DETERMINED BY STAMP DUTY AUTHORITY I.E. SUB REGI STRAR-CHAKSU SHOULD NOT BE TAKEN FOR THE PURPOSES OF DETERMINATION OF THE C APITAL GAINS. IN RESPONSE, THE ASSESSEE FILED HER SUBMISSIONS STATING THAT VAL UATION MADE BY THE DVO IS ARBITRARY, EXCESSIVE AND DO NOT REPRESENT THE FAIR MARKET VALUE AND ALSO LISTED DOWN SPECIFIC INSTANCES WHERE THE ASSESSEE DISAGREE S WITH THE FINDING OF THE VALUATION OFFICER. THE ASSESSING OFFICER HOWEVER RE JECTED THE OBJECTIONS TAKEN BY THE ASSESSEE AND STATING THAT THE ASSESSEE HERSE LF REQUESTED TO REFER TO THE CASE TO THE VALUATION OFFICER AND THE DVO HAS I NTIMATED THE FAIR MARKET VALUE OF THE PROPERTIES AFTER VISITING THE PROPERTI ES AND AS PER NORMS AND AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE. THEREFO RE, THE CONTENTIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE BY THE AO. AGAIN ST THE SAID FINDINGS, THE ASSESSEE MOVED IN APPEAL BEFORE THE LD. CIT(A). 4. AS PER LD. CIT(A), THE REFERENCE TO THE VALUATIO N OFFICER WAS MADE BY THE AO ON THE REQUEST OF THE ASSESSEE AND NOW THE A SSESSEE IS CHALLENGING THE REPORT OF THE DVO. AS PER LD CIT(A), THE WHOLE STAND TAKEN BY THE ASSESSEE IS OUT OF CONTEXT AS PER LAW IT WAS MANDAT ORY FOR THE AO TO ACCEPT ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 4 THE DVOS REPORT AND THEREFORE, THE AO HAS BEEN FAI R IN COMPUTING THE LONG TERM CAPITAL GAIN TAKING THE LOWER OF THE VALUATION DETERMINED BY DVO AND THE STAMP DUTY AUTHORITY AND ACCORDINGLY HE CONFIRM ED THE FINDING OF THE ASSESSING OFFICER. AGAINST THE SAID FINDING, THE AS SESSEE IS NOW IN APPEAL BEFORE US. 5. WE NOW REFER TO THE CONTENTIONS ADVANCED BY THE LD. AR. THE LD. AR SUBMITTED THAT THE ASSESSEE SOLD IMMOVABLE PROPERTY BEING LAND CONVERTED FOR NON-AGRICULTURAL USE, HOWEVER, WITHOUT GETTING ANY REGULARIZATION, MAP APPROVAL AND ANY DEVELOPMENT, MEASURING 3.525 HECTA RES AND AGRICULTURAL LAND MEASURING 0.045 HECTARES FOR CONSIDERATION OF RS. 1,27,00,000/- AND RS. 72,600/- RESPECTIVELY. DURING THE ASSESSMENT P ROCEEDINGS, THE ASSESSEE RAISED OBJECTIONS U/S 50C(2) OF THE I. T. ACT REGAR DING EXCESSIVE VALUATION BY STAMP DUTY AUTHORITY. FOR DETERMINATION OF FAIR MA RKET VALUE OF THE IMPUGNED IMMOVABLE PROPERTIES, THE AO ACCORDINGLY REFERRED T HE MATTER TO THE DVO AND THE DVO CONSIDERING DLC RATE AS SACROSANCT OF FAIR MARKET VALUE MADE VALUATION AT RS. 3,58,96,520/- AND RS. 2,03,200/- S OLELY RELYING ON THE DLC RATE. SUBSEQUENTLY, THE AO BY VIRTUE OF PROVISION O F SECTION 50C CONSIDERED THE FULL VALUE OF CONSIDERATION AT RS. 3,58,21,800/ - AND RS. 72,600/- RESPECTIVELY. 6. THE FIRST CONTENTION RAISED BY THE LD. AR IS TH AT DVO HAS SOLELY RELIED ON THE DLC RATE FOR EVALUATING FAIR MARKET VALUE. I N THIS REGARD, IT WAS SUBMITTED THAT THE LOWER AUTHORITIES HAVE NOT APPRE CIATED THE ASSESSEES CONTENTIONS THAT THE ACTUAL CONSIDERATION OF RS. 1, 27,72,600/- RECEIVED BY THE ASSESSEE DEPICTS TRUE FMV OF THE PROPERTY. THE BLIN D RELIANCE OVER CIRCLE RATES BY DVO BY CONSIDERING THEM AS SACROSANCT & GOSPEL T RUTH AND WITHOUT PUTTING ANY COMPARABLES ON RECORD HAS DEFEATED VERY PURPOSE OF BRINGING SECTION 50C(2) INTO STATUTE BOOKS. IT WAS SUBMITTED THAT TH E PROFESSIONAL EXPERTISE & ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 5 SKILL EXPECTED BY LAW FROM DVO BEING TECHNICAL PERS ON, HAD NOT BEEN EXERCISED AND SO CALLED DVO TECHNICAL REPORT IS MER ELY STATEMENT OF DUPLICITY OF DLC RATES WITHOUT ANY REASONED & COGENT BASIS. I T WAS SUBMITTED THAT THE DVO REPORT BUILT ON ERRONEOUS FOUNDATION THAT DLC R ATES ARE SOLE BASIS OF FMV WITHOUT ACKNOWLEDGING THAT DLC RATES ARE FIXED FOR THE ENTIRE LOCALITY WITHOUT CONSIDERING SPECIFIC ATTRIBUTES OF THE PROPERTY. TH E DVO OVERLOOKED SOLE PURPOSE OF REFERENCE WAS EXCESSIVE OF DLC RATE OVER FMV THEN TAKING DLC AS BASIS FOR FMV WITHOUT ASSIGNING REASON FOR SAME IS ARBITRARY & UNWARRANTED. IT WAS SUBMITTED THAT THE ASSESSEE HAS TAKEN THESE CON TENTIONS BEFORE THE ASSESSING OFFICER AND HE HAS NOT APPRECIATED THE SA ME IN RIGHT PERSPECTIVE. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) HAS ALSO NOT APPRECIATED THE AFORESAID CONTENTIONS AND STATED THAT SINCE REFEREN CE TO DVO WAS MADE ON REQUEST OF THE ASSESSEE. THEREFORE, NO QUESTION/OBJ ECTION ON REPORT OF DVO CAN BE MADE BY THE ASSESSEE. IN THIS REGARD, IT WAS SUBMITTED THAT THE LD. CIT(A) OVERLOOKED THE SETTLED LAW THAT THE DVO REPO RT IS NOT BINDING UPON APPELLATE AUTHORITIES. THE LD. CIT(A) WAS DUTY BOUN D TO CONSIDER THE OBJECTIONS OF ASSESSEE ON DVO REPORT POINT BY POINT . IN THIS REGARD, OUR REFERENCE WAS DRAWN TO THE CO-ORDINATE BENCH DECISI ON IN CASE OF SURESH C. MEHTA VS. ITO (2013) 35 TAXMANN.COM 230 (MUMBAI) FO R THE PROPOSITION THAT VALUATION REPORT IS NOT BINDING UPON APPELLATE AUTH ORITIES. FURTHER, RELIANCE WAS PLACED ON THE HONBLE MADRAS HIGH COURT IN CASE OF M/S JAGANNATHAN SAILAJA CHITTA VS. ITO [2019] 49 ITCD 121 (MAD) FOR THE PROPOSITION THAT LD. CIT(A) WAS DUTY BOUND TO CONSIDER POINT TO POINT OB JECTION OF ASSESSEE OVER DVO REPORT. FURTHER, REFERENCE WAS DRAWN TO THE CO- ORDINATE BENCH DECISION IN CASE OF RAVI KANT VS. ITO (2007) 110 TTJ 297 FOR THE PROPOSITION THAT SOLE RELIANCE ON DLC VALUE BY DVO WILL DEFEAT THE VERY P URPOSE OF BRINGING SECTION 50C(2) INTO THE STATUTE BOOKS. ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 6 7. THE SECOND CONTENTION WHICH HAS BEEN RAISED BY T HE LD. AR IS THAT THE DVO HAS WRONGLY CONSIDERED THE LAND & BUILDING METH OD AS ONLY METHOD FOR EVALUATING FAIR MARKET VALUE. IT WAS SUBMITTED THAT DVO OVERLOOKED THAT THERE WERE OTHER ALLOWABLE METHODS FOR EVALUATING FMV & I N FACT, THE DEVELOPMENT METHOD OF VALUATION WAS MORE REALISTIC & PRAGMATIC CONSIDERING THE UNDEVELOPED STATUS & LARGE CHUNK SIZE OF THE LAND A ND AVAILABILITY OF SALE INSTANCES OF SMALL PLOTS ON RECORD IN IMMEDIATE VIC INITY OF LAND IN & AROUND THE DATE OF TRANSFER. IT WAS FURTHER SUBMITTED THAT THE OBSERVATIONS OF DVO ITSELF SUPPORTS THAT METHOD OF VALUATION SHOULD HAV E BEEN DEVELOPMENT COST METHOD RATHER THAN LAND & BUILDING METHOD. IN THIS REGARD, OUR REFERENCE WAS DRAWN TO THE GUIDELINES FOR VALUATION OF IMMOVABLE PROPERTIES ISSUED BY THE INCOME TAX DEPARTMENT WHEREIN OUR REFERENCE WAS DRA WN TO PARA 5.2.3 WHICH READS AS UNDER:- THIS METHOD OF VALUATION OF LARGE EXTENT OF LAND I S ADOPTED IN THE FOLLOWING SITUATIONS. (A) WHEN THE COMPARABLE SALES OF LARGE TRACTS ARE NOT A VAILABLE BUT SALES OF SMALL PLOT ARE AVAILABLE. (B) WHEN THE LAND IS RIPE FOR USE FOR BUILDING IT POSSE SS NECESSARY POTENTIALITIES FOR URBAN USE. 8. IN SUPPORT, RELIANCE WAS PLACED ON THE HONBLE B OMBAY HIGH COURT IN CASE OF STATE OF MAHARASHTRA & OTHERS V/S NANABHAI RATHOD & OTHERS (AIR 1989 BOMBAY 9) WHEREIN UNDER SIMILAR CIRCUMSTANCES & FACTUAL MATRIX, THE DEVELOPMENT METHOD WAS HELD AS MORE JUSTIFIABLE FOR DETERMINING VALUATION OF LARGE TRACT OF LAND IN UNDEVELOPED STATUS. 9. THE THIRD CONTENTION RAISED BY THE LD. AR IS THA T THE DLC RATES APPLIED BY STAMP VALUATION AUTHORITIES WERE FOR PLOTS IN NE WLY DEVELOPED RESIDENTIAL COLONY AS THEY DO NOT HAVE INDEPENDENT RATES FOR LA RGE CHUNK OF UNDEVELOPED ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 7 CONVERTED LAND. IN THIS REGARD, IT WAS SUBMITTED TH AT THE ACTION OF DVO IN SOLELY RELYING ON THEM FOR EVALUATING FMV IS WITHOU T UNDERSTANDING OF THE TERM COLONY. THE TERM COLONY MEANS A PLACE SUIT ABLE FOR LIVING OF HUMAN BEING I.E. WHICH IS SERVED BY SANITATION, SCHOOL, C OLLEGE, MARKET, ELECTRICITY, WATER & ROADS AND NONE OF THE ABOVE FACTORS EXISTED AT THE TIME OF TRANSFER OF LAND. IT WAS SUBMITTED THAT THE IMPUGNED LAND WAS L ARGE CHUNK OF LAND IN UNDEVELOPED STATUS AND THEREFORE IN ANY STRETCH OF IMAGINATION, IT CANT BE CLASSIFIED AS PLOT IN COLONY, ON THE CONTRARY HOUSI NG SCHEME COLONY ITSELF. IN THIS REGARD, OUR REFERENCE WAS DRAWN TO ASSESSEES PAPER BOOK PAGE NO. 48 AND IT WAS SUBMITTED THAT THE CONSIDERATION OF DLC RATE FOR THE UNDEVELOPED/SEMI DEVELOPED LAND I.E. RS. 670/SQ YDS WAS MORE REALISTIC INSTEAD OF NEW COLONY DLC RATES CONSIDERING THE FAC T THAT THERE WERE NO ELECTRICITY, SANITATION, MARKET, WATER SUPPLY, COMM UNITY CENTRE & NO DEVELOPMENT. 10. THE NEXT CONTENTION WHICH HAS BEEN RAISED BY T HE LD. AR IS THAT THE EVALUATION OF FMV BY DVO BY RELYING ON DLC RATES OF PLOTS IS LIKE COMPARING RAW MATERIALS VALUE WITH FINISHED GOODS WITHOUT ALL OWANCE FOR PROCESSING COST (DEVELOPMENT COST), WASTAGE (EARMARKED FACILITY LAN D AS PER STATUTORY PROVISION & PROCESSING TIME ( INTEREST FACTOR FOR D ELAY). IT WAS SUBMITTED THAT THE DVO OVERLOOKED THAT ANY COLONIZER WILL BE BOUND TO INCUR MASSIVE DEVELOPMENT COST IN THE FORM OF ROAD CONSTRUCTION, LAYING WATER & SEWER LINES, ELECTRIC POLES, ENTRY GATE, LANDSCAPING, PLOT DEMAR CATION, FOOTPATH PARKS & ETC. WHICH PROBABLY AMOUNT 20-25% OF PROJECT COST. IT WAS FURTHER SUBMITTED THAT THE DVO OVERLOOKED THAT FOR CONVERTING LAND IN TO RESIDENTIAL PLOTS, 40% OF ENTIRE LAND WOULD HAVE TO BE EARMARKED FOR FACIL ITY PURPOSES I.E. FOR ROADS & PARKS & COMMUNITY SERVICE. ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 8 11. IN THIS REGARD, OUR REFERENCE WAS DRAWN TO THE HONBLE SUPREME COURT DECISION IN CASE OF MAJOR GENERAL KAPIL MEHRA AND O RS. V. UNION OF INDIA AND ANR. (2015) 2 SCC 262 WHEREIN IT WAS HELD AS UNDER: - P. 41. IN OUR VIEW, IT IS APPROPRIATE TO MAKE 35 % DEDUCTION TOWARDS UTILIZATION OF THE LAND AREA IN THE LAYOUT FOR ROADS, DRAINS, PARKS, PLAYGROUNDS AND CIVIC AMENITIES. SO FAR AS T HE EXPENDITURE FOR DEVELOPMENT OF THE LARGE EXTENT OF LAND INTO A DEVE LOPED AREA BY CONSTRUCTION OF PROPER ROADS, UNDERGROUND DRAINAGE, SEWERAGE AND ERECTION OF ELECTRICITY LINES, IT IS APPROPRIATE TO MAKE FURTHER DEDUCTION OF 25%, THROUGH 35% OF THE VALUE WAS DEDUCTED IN LA L CHAND CASE (SUPRA) TOWARDS DEVELOPMENT CHARGES. TWO COMPONENTS TAKEN TOGETHER, THE TOTAL DEDUCTION TO BE MADE WOULD BE 6 0%. RS. 14,974/- PER SQ. YARD IS MAINTAINED. 12. RELIANCE WAS PLACED ON THE HONBLE SUPREME COUR T DECISION IN CHANDRASHEKAR (D) BY LRS. & ORS VS. LAND ACQUISITIO N OFFICER & ANR (CIVIL APPEAL NO. 1743 OF 2006 DATED 22 NOVEMBER, 2011) WH EREIN IT WAS HELD AS UNDER:- HAVING GIVEN OUR THOUGHTFUL CONSIDERATION TO THE A NALYSIS OF THE LEGAL POSITION REFERRED TO IN THE FOREGOING TWO PARAGRAPH S, WE ARE OF THE VIEW THAT THERE IS NO DISCREPANCY ON THE ISSUE, IN THE R ECENT JUDGMENTS OF THIS COURT. IN OUR VIEW, FOR THE FIRST COMPONENT UNDER THE HEAD OF DEVELOPMENT, DEDUCTION OF 33-1/3 PERCENT CAN BE M ADE. LIKEWISE, FOR THE SECOND COMPONENT UNDER THE HEAD OF DEVELOPME NT A FURTHER DEDUCTION OF 33-1/3 PERCENT CAN ADDITIONALLY BE MAD E. THE FACTS AND CIRCUMSTANCES OF EACH CASE WOULD DETERMINE THE ACTU AL COMPONENT OF DEDUCTION, FOR EACH OF THE TWO COMPONENTS. YET UNDE R THE HEAD OF DEVELOPMENT THE APPLIED DEDUCTION SHOULD NOT EXCE ED 67 PERCENT. THAT SHOULD BE TREATED AS THE UPPER BENCHMARK. THIS WOULD MEAN, THAT ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 9 EVEN IF DEDUCTION UNDER ONE OR THE OTHER OF THE TWO COMPONENTS EXCEEDS 33-1/3 PERCENT, THE TWO COMPONENTS UNDER TH E HEAD OF DEVELOPMENT PUT TOGETHER, SHOULD NOT EXCEED THE U PPER BENCHMARK. 13. FURTHER, RELIANCE WAS PLACED IN THE CASE OF SUB H RAM VS. STATE OF HARYANA, (2010) 1 SCC 444 WHEREIN IT WAS HELD AS UN DER:- IN THE HYPOTHETICAL LAYOUT METHOD OF DETERMINATION OF MARKET VALUE, AS A FIRST STEP, THE AREAS THAT WILL BE USED UP FOR RO ADS, DRAINS, PARKS/PLAYGROUNDS AND COMMUNITY AREAS, PARKS/PLAYGR OUNDS AND COMMUNITY AREAS, WILL HAVE TO BE EXCLUDED FROM THE TOTAL EXTENT OF THE ACQUIRED LAND. THE STANDARD DEDUCTION IN THIS BEHAL F IS ONE-THIRD (33%). BUT MERELY DEDUCTING THE AREAS REQUIRED FOR ROADS, DRAINS, PARKS AND COMMUNITY AREAS, WILL NOT CONVERT A LARGE TRACT OF AGRICULTURAL OR UNDEVELOPED LAND INTO A DEVELOPED RESIDENTIAL LAYOU T. FOR THAT, CONSIDERABLE FINANCIAL OUTLAY HAS TO BE MADE. ALL T HESE EXPENDITURE AND FACTORS ARE STANDARDIZED INTO ANOTHER ONE-THIRD (33 %) DEDUCTION TOWARDS EXPENSES OF DEVELOPMENT. THUS, IF THE VALUA TION OF A LARGE EXTENT OF AGRICULTURAL OR UNDEVELOPED LAND IS TO BE BASED ON THE SALE PRICE OF A SMALL DEVELOPED PLOT IN A PRIVATE LAYOUT , THEN THE STANDARD DEDUCTIONS SHOULD BE ONE-THIRD (FOR ROADS ETC.) PLU S ONE-THIRD (FOR EXPENDITURE OF DEVELOPMENT) IN ALL TWO THIRDS (OR 6 7%), AS DEVELOPMENT COST FROM THE VALUE OF SMALL PLOT. 14. ANOTHER CONTENTION RAISED BY THE LD. AR IS THAT THE DVO HAS NOT GIVEN ANY CONCESSION FOR IOCL PIPE LINE PASSING FROM CENT RE OF LAND FOR WHICH AREA OF AROUND 393 X 41.81/2 MTR I.E. 8214 SQ MTR WAS UN USABLE FOR PLOTTING BEING GREEN BELT & NO CONSTRUCTION ZONE. IN THIS REGARD, IT WAS SUBMITTED THAT THE DVO OBSERVED THAT IOCL PIPE LINE WAS PASSING FROM C ENTRE OF THE LAND BUT REJECTED APPARENT FACT JUST BECAUSE EVIDENCE OF TIM ING OF LAYING THE SAME WAS ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 10 NOT IN POSSESSION OF ASSESSEE IGNORING THE NEWS PAP ER CUTTINGS EVIDENCING THE EXISTENCE OF PIPE LINE IN CHAKSU PRIOR TO TRANSFER OF LAND. IT WAS FURTHER SUBMITTED THAT IN CASE, THE DVO WOULD HAVE BEEN DES IROUS OF UNVEILING TRUTH, HE WOULD HAVE CONTACTED TEHSIL OFFICE, IOCL PUMP HO USE CHAKSU & EVEN ENQUIRED FROM OTHER NEARBY LAND HOLDERS. IT WAS SUB MITTED THAT THE DVO FAILED TO EXERCISE POWER OF CIVIL COURT CONFERRED U NDER SECTION 37 OF WEALTH TAX ACT FOR ENFORCING ATTENDANCE OF PERSON TO COLLE CT EVIDENCED THEREFORE THE ASSESSEE CANNOT BE PENALIZED FOR LACK OF ENQUIRY/IN ADEQUATE ENQUIRY AND NON EXERCISE OF CONFERRED STATUTORY POWERS BY THE DVO. IT WAS SUBMITTED THAT THE ASSESSEE CANNOT BE ASKED TO PROVE THE CONTRARY WHEN THE EXISTENCE OF PIPE LINE ON DATE OF INSPECTION WAS EVIDENT & OBSERVED B Y THE DVO. IN THIS REGARD, REFERENCE WAS DRAWN TO THE HONBLE SUPREME COURT DE CISION IN CASE OF DAULAT RAM RAWAT MUL (1973) 87 ITR 349 WHEREIN IT WAS HELD THAT THE APPARENT IS REAL & ASSESSEE CANNOT BE ASKED TO PROVE THE CONTRA RY. IT WAS ACCORDINGLY SUBMITTED THAT THE AREA OCCUPIED BY IOCL PIPE LINES IS STATUTORILY REQUIRED TO BE LEFT VACANT FOR GREEN BELT & IS NO CONSTRUCTION ZONE, THUS NON SALEABLE AS PLOT AND A SUITABLE ADJUSTMENT SHOULD HAVE BEEN MAD E BY THE DVO. 15. IT WAS FURTHER SUBMITTED THAT THE APPROVED VALU ER BEING A TECHNICAL EXPERT, HIS REPORT CANNOT BE DISCARDED WITHOUT ASSI GNING ANY REASON. IT WAS SUBMITTED THAT REPORT OF APPROVED VALUER IS MORE RE ALISTIC & REASONED AND DEALT WITH THE STATUS OF LAND AS ON DATE OF TRANSFE R AND AS PER THE REPORT OF APPROVED VALUER, THE DEVELOPMENT COST METHOD OF VAL UATION WHICH IS MOST SUITABLE METHOD IN PRESENT FACTUAL MATRIX OF THE CA SE. IT WAS FURTHER SUBMITTED THAT THE DEVELOPMENT COST METHOD OF VALUATION ADOPT ED BY REGISTERED VALUER IS APPROVED BY VALUATION GUIDELINES. IN SUPPORT, R ELIANCE WAS PLACED ON THE HONBLE RAJASTHAN HIGH COURT DECISION IN CASE OF CI T V HOTEL JOSHI (2000) 242 ITR 478 (RAJ.) AND THE DECISION OF HONBLE SUPREME COURT IN CASE OF SUBH RAM V. STATE OF HARYANA, (2010) 1 SCC 444. ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 11 16. LASTLY, IT WAS SUBMITTED THAT DVO HAS EVEN EVAL UATED FMV UNCONVERTED PORTION OF THE AGRICULTURE LAND (0.04 HECTARE) WHIC H IS NOT/CANNOT BE CONVERTED I.E. LAND OCCUPIED BY WELL PORTION AT DLC RATE FOR CONVERTED LAND. THE SAME SHOWS SOLE ARBITRARINESS IN THE REPORT OF DVO WHILE DETERMINING THE FMV. 17. THE LD. DR IS HEARD WHO HAS VEHEMENTLY ARGUED T HE MATTER AND SUBMITTED THAT ONCE THE ASSESSEE HAS RAISED HER OBJ ECTION IN TERMS OF ADOPTION OF THE STAMP DUTY AUTHORITY AND THEREAFTER THE MATTER HAS BEEN REFERRED BY THE ASSESSING OFFICER TO THE DVO U/S 50 C(2) OF THE ACT, THE AO IS BOUND TO FOLLOW THE REPORT SO SUBMITTED BY THE DVO. FURTHER OUR REFERENCE WAS DRAWN TO THE ASSESSMENT ORDER WHEREIN AO HAS GI VEN THE FINDING THAT THE VARIOUS OBJECTIONS RAISED BY THE ASSESSEE HAVE BEEN DULY ADDRESSED BY THE DVO AND THERE IS NOTHING FURTHER WHICH IS LEFT TO T HE DISCRETION OF THE ASSESSING OFFICER IN TERMS OF EXAMINING THE CONTENT IONS SO RAISED BY THE ASSESSEE. HE ACCORDINGLY SUPPORTED THE FINDINGS OF THE ASSESSING OFFICER AND REQUESTED FOR AFFIRMING THE ORDER OF THE LD CIT(A). 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE VALUATION REPORT DATED 16.0 3.2016 ISSUED BY THE DVO U/S 50C(2) OF THE ACT AND THE VALUATION REPORT OF T HE REGISTERED VALUER DATED 18.01.2016 AS SUBMITTED BY THE ASSESSEE. 19. WE FIND THAT THE DVO HAS DETERMINED THE FAIR MA RKET VALUE OF THE LAND AS ON THE DATE OF TRANSFER @ 850 PER SQ.YDS WHICH I S THE SAME RATE AS WHICH THE LAND HAS BEEN VALUED BY THE STAMP DUTY AUTHORTI ES. AS PER THE DVO, HE HAS WRITTEN TO SUB REGISTRAR, CHAKSU AND THE DLC RA TE OF AREA WAS RECEIVED. FURTHER, THE ASSESSEE DID NOT PROVIDE THE RELIABLE CONTEMPORARY SALE INSTANCES AND EARLIER SUBMITTED SALE INSTANCES ARE NOT COMPAR ABLY RELEVANT AND THE ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 12 SUBJECT PROPERTY IS SITUATED JUST ADJACENT TO MAIN ROAD OF WARD NO. 23 OF CHAKSU, I.E. BEST LOCALITY OF THIS WARD. THE PROPER TY IS ALREADY RESIDENTIAL CONVERTED LAND AND IN THE ABSENCE OF RELIABLE, COMP ARABLE, CONTEMPORARY SALE INSTANCES, THE RATE ADOPTED IS FAIR MARKET LAND RAT E OF THE PROPERTY. WE THEREFORE FIND THAT THE DVO HAS TAKEN THE DLC RATE AS DETERMINED BY THE STAMP DUTY AUTHORITY AND IN TERMS OF DETERMINING TH E COMPARABLE SALE INSTANCES, HAS PUT THE ONUS ENTIRELY ON THE ASSESSE E. ON HER PART, THE ASSESSEE HAS SUBMITTED TWO COMPARABLE SALE INSTANCE S. WHERE SUCH COMPARABLE SALE INSTANCES ARE NOT ACCEPTED BY THE D VO, IN OUR VIEW, THE DVO SHOULD SPECIFY THE REASONS AS TO WHY SUCH COMPARABL E SALE INSTANCES ARE NOT FOUND ACCEPTABLE AND FURTHER, THE DVO SHOULD INDEPE NDENTLY CARRY OUT THE NECESSARY INVESTIGATION AND FIND COMPARABLE SALE IN STANCES. ALTERNATIVELY, WHERE COMPARABLE SALE INSTANCES ARE NOT AVAILABLE I NSPITE OF BEST EFFORTS PUT IN BY THE DVO, IN OUR VIEW, HE SHOULD CONSIDER SPECIFI C ADJUSTMENTS TO THE DLC RATE AS THE DLC RATE IS MORE LIKE A GUIDELINE RATE LAID DOWN BY THE STAMP DUTY AUTHORITY AND MAY NOT IN ALL SITUATIONS CONSIDER TH E SPECIFIC OF A PARTICULAR PROPERTY IN TERMS OF LOCATION, SIZE, SHAPE, FRONTAG E, CONNECTIVITY ETC. OR CONSIDER EXPLORING OTHER VALUATION METHODOLOGY SO S PECIFIED AS MAY BE APPLICABLE IN THE FACTS OF THE PRESENT CASE. WE TH EREFORE FIND THAT WHERE THE DVO HAS FINALLY ADOPTED THE DLC VALUE WHICH AT FIRS T INSTANCE HAS BEEN DISPUTED BY THE ASSESSEE, THE WHOLE PURPOSE OF REFE RENCE OF MATTER U/S 50C(2) HAS NOT BEEN CORRECTLY APPRECIATED BY THE DV O. 20. FURTHER, WE FIND THAT THE DVO IN HIS REPORT HA S OBSERVED THAT THE PROPERTY IS VERY BIG RESIDENTIAL CONVERTED LAND SUI TABLE FOR GROUP HOUSING SCHEME, RESIDENTIAL PLOTS COULD BE LAID OUT AND HAS GOOD POTENTIAL FOR GROUP HOUSING AND CAN FETCH THE BEST VALUE OF THE PROPERT Y. SUCH A FINDING HAS NOT BEEN DISPUTED BY EITHER OF THE PARTIES BEFORE US. IN SUCH A SITUATION, WE ARE OF THE CONSIDERED VIEW THAT THE RELIANCE SOLELY ON THE DLC VALUE OF THE LAND BY ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 13 THE DVO IS NOT APPROPRIATE AND THE DVO SHOULD HAVE CONSIDERED AND ADOPTED OTHER VALUATION METHODS WHICH ARE MORE APPROPRIATE AND ELABORATELY DISCUSSED IN THE GUIDELINES LAID DOWN BY THE INCOME TAX DEPARTMENT FOR VALUATION OF IMMOVABLE PROPERTIES. IN THIS REGARD, OUR REFERENCE WAS DRAWN TO DEVELOPMENT METHOD WHICH CAN BE ADOPTED (AS STATED IN THE DEPARTMENTS VALUATION GUIDELINES) IN SITUATIONS WHERE THE COMPA RABLE SALES OF LARGE TRACTS OF LAND ARE NOT AVAILABLE BUT SALES OF SMALL PLOTS ARE AVAILABLE AND SECONDLY, WHERE THE LAND IS RIPE FOR USE FOR BUILDING PURPOSE S AND IT POSSESSES NECESSARY POTENTIAL FOR URBAN USE. IN OUR VIEW, THE FACT PAT TERN OF THE PRESENT CASE AND EVEN AS PER THE FINDINGS OF THE DVO THAT COMPARABLE SALE INSTANCES ARE NOT AVAILABLE AND THAT THE PROPERTY IS VERY BIG RESIDEN TIAL CONVERTED LAND AND HAS GOOD POTENTIAL FOR GROUP HOUSING WHICH CAN FETCH TH E BEST VALUE OF THE PROPERTY, THE DEVELOPMENT METHOD SEEMS TO BE MORE A PPROPRIATE RATHER THAN LAND AND BUILDING METHOD AS PRESENTLY ADOPTED, HOWE VER, WE FIND THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE DVO HAS EVEN EXAMINED THE FEASIBILITY OF CARRYING OUT THE NECESSARY EXERCISE FOR APPLYING SUCH VALUATION METHODOLOGY AS SO SPECIFIED IN THE GUIDELINES LAID DOWN BY THE DEPARTMENT ITSELF. 21. FURTHER, WE FIND THAT ONCE THE ASSESSEE HAS RAI SED THE OBJECTIONS AGAINST THE VALUATION SO DETERMINED BY THE DVO, THE LD. CIT(A) SHOULD HAVE CONSIDERED THOSE OBJECTIONS AND SHOULD HAVE GIVEN H IS FINDINGS ON MERITS. THE DVO REPORT IS NO DOUBT BINDING ON THE ASSESSING OFF ICER BUT ONCE THE MATTER IS BEFORE THE LD. CIT(A) AND THE ASSESSEE IS AGGRIEVED WITH THE REPORT OF THE DVO SO ADOPTED BY THE ASSESSING OFFICER, THE LD. CIT(A) BEING THE FIRST APPELLATE AUTHORITY SHOULD HAVE CONSIDERED THE ASSESSEES OBJ ECTIONS AND SHOULD NOT HAVE BEEN GUIDED SOLELY BY THE REPORT OF THE DVO. IN OTHER WORDS, THE REPORT OF THE DVO IS BINDING ON THE ASSESSING OFFICER, HOW EVER, THE SAME IS NOT BINDING AND CAN BE CHALLENGED BEFORE THE APPELLATE AUTHORITIES. THE LAW IS ITA NO. 348/JP/2018 SMT. VIMLA DEVI SAMARIY A, JAIPUR VS. ITO, JAIPUR 14 VERY CLEAR ON THIS ASPECT AS CAN BE SEEN FROM THE P ROVISIONS OF SECTION 23A OF THE WEALTH TAX ACT WHICH HAVE BEEN INCORPORATED WIT H NECESSARY MODIFICATION IN SECTION 50C OF THE ACT. 22. WE ALSO FOUND FORCE IN THE OTHER CONTENTIONS O F THE LD. AR REGARDING THE FACT THAT NO CONCESSION HAS BEEN GIVEN FOR THE IOC PIPE LINE WHICH IS PASSING FROM CENTRE OF THE LAND ON WHICH NO CONSTRUCTION AC TIVITY IS POSSIBLE. THE DVO HAVING ACKNOWLEDGED THE FACT THAT THE IOC PIPE LINE IS PASSING THROUGH THE LAND, IN OUR VIEW, HE SHOULD HAVE PROVIDED ADEQUATE ADJUSTMENT WHILE DETERMINING THE VALUE OF THE LAND. 23. WE HAVE NOT DEALT WITH OTHER CONTENTIONS SO RA ISED BY THE LD AR AS WE ARE OF THE CONSIDERED VIEW THAT THE MATTER REQUIRES A FRESH EXAMINATION BY THE DVO IN LIGHT OF WHAT WE HAVE DISCUSSED ABOVE. THE ASSESSEE SHALL BE AT LIBERTY TO RAISE THESE CONTENTIONS BEFORE THE DVO. 24. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF T HE CASE, WE ARE SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFIC ER WHO SHALL CALL FOR A FRESH REPORT FROM THE DVO TAKING INTO CONSIDERATION THE A FORESAID DISCUSSION AND AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSES SEE. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE IN THE PROCEEDINGS AND FURNI SH NECESSARY INFORMATION/DOCUMENTATION AS CALLED FOR BY THE AO/D VO SO THAT THE PROCEEDINGS CAN BE COMPLETED IN A TIMELY MANNER. IN THE RESULT, THE GROUND NO. 1 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 25. SINCE WE HAVE SET-ASIDE THE MATTER RELATING TO VALUATION OF THE PROPERTY U/S 50C TO THE FILE OF THE AO, THE OTHER TWO ISSUES RELATING TO DEDUCTION U/S 54F AND SECTION 54B ARE ALSO SET-ASIDE TO THE FILE OF THE AO. IN THE RESULT, THE GROUND NO. 2 AND 3 ARE ALLOWED FOR STATISTICAL PURP OSES. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11/07/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/07/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. VIMLA DEVI SAMARIYA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD-4 (3), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 348/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR