The ITO, Ward-5(2), RAJKOT-GUJARAT V. Shri Vithalbhai K Sakaria, RAJKOT-GUJARAT

ITA 40/RJT/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67308 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-07-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: DM RINDANI
• Keywords: Value adopted by valuation officer; Fair market value; Valuation report
• Section: 143(3); 148

Judgement Text

2 I , IN THE INCOME TAX APPELLATE TRIBU N AL; RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. SRIVASTAVA, AM IT A NO . 40 / RJT/20 12 / ASSESSMENT YEAR 20 0 3 - 0 4 ITO, WARD 5 ( 2 ), RAJKOT ( , / APPELLANT) VS. SHRI VITHALBHAI K SAKARIA, PROP. OF OASIS ROAK DRILL PARTS OPP. BAVISHI WEIGH BRIDGE, GONDAL ROAD, RAJKOT PAN : AEXPS 3338 C R, / RESPONDENT 6 / REVENUE BY DR M L MEENA, DR / ASSESSEE BY SHRI D M RINDANI, CA 2 /DATE OF HEARING 09 . 0 7 .2013 2 / DATE OF PRONOUNCEMENT 12 . 07 . 2013 / ORDER . . [ , / T. K. SHARMA, J. M . : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER DATED 04.11.2011 OF LD CIT (A) - IV, RAJKOT FOR THE ASSESSMENT YEAR 200 3 - 0 4 . 2 . THE BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A N INDIVIDUAL . HE FILED HIS RETURN OF INCOME ORIGINALLY ON 16.02.2004 RETURNING TOTAL INCOME OF RS.65,360/ - . THE ASSESSING OFFICER FRAMED THE ASSES SMENT U/S 143(3) ON THE INCOME - TAX ACT ON 28.03.2006 DETERMINING TOTAL INCOME AT RS.98,55,300/ - . THE LD CIT(A) VIDE ORDER DATED 30.11.2006 DELETED THE ADDITION OF RS.97,28,648/ - . AGAINST THIS ORDER OF LD CIT(A), THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE ITAT, RAJKOT. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION AGAINST THE ABOVE ORDER OF LD CIT(A) BEFORE THE ITAT, RAJKOT . THE TRIBUNAL VIDE ORDER DATED 31.07.2008 IN APPEAL NO.93/RJT/2007 RESTORED THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO DECID E THE VALUATION OF THE PROPERTY. AS PER THE DIRECTIONS OF THE TRIBUNAL, THE ASSESSING OFFICER FRAMED THE ASSESSMENT U/S 143(3) R.W.S. 254 OF THE INCOME - TAX ACT ON 31 .12.20 09 DETERMINING TOTAL INCOME AT RS.1,72, 220 / - AND AGRICULTURAL INCOME OF RS.2,23,548/ - . WHEN THE ORDER WAS PASSED, IT WAS TIME BARRING ON 31.12.2009; THEREFORE IT WAS PASSED IN THE ABSENCE OF VALUATION REPORT FROM THE 40 - RJT - 2012 SHRI VITHALBHAI K SAKARIA 2 DISTRICT VALUATION OFFICER (DVO) , AHMEDABAD FOR WHICH REFERENCE WAS MAD E ON 16.12.2009. SUBSEQUENTLY, VALUATION REPORT DATE D 31.12.2009 BEARING NO.2(3)/VOR/05 - 06/744 FROM T HE DISTRICT VALUATION OFFICER (DVO), AHMEDABAD WAS RECEIVE D; WHEREIN THE MARKET VALUE OF THE PROPERTY WAS INTIMATED THAT AT RS.93.40 LAKHS. S UBSEQUENTLY ASSESSMENT WAS REOPENED U/S 148 AND THE ASSESSING OFF ICER FRAMED A FRESH ASSESSMENT U/S 143(3) R.W.S. 147 OF THE INCOME - TAX ACT ON 27.12.2010, WHEREIN HE MADE ADDITION ON ACCOUNT OF DIFFERENCE IN VALUATION OF PROPERTY AT RS.77,69,000/ - . ON APPEAL, IN THE IMPUGNED ORDER, THE LD CIT(A) DELETED THE ADDITION O F RS.77,69,000/ - FOR THE DETAILED REASON GIVEN IN PARAGRAPH 4.1 TO 4.3 WHICH READ AS UNDER: - 4.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF APPELLANT. I FIND THAT THE DVO HAS TAKEN THE AVERAGE OF VALUATION OF THE PROPERTY MADE BY STAMP VALUATION DEPT. INITIALLY AT RS.1,12,33,646/ - AND FINALLY THE VALUE CORRECTED BY DY. COLLECTOR, STAMP VALUATION DEPT ON 13.03.2008 AT RS.15,05,000/ - . THE A VERAGE OF THESE TWO VALUE WAS FOUND OUT BY THE DVO AT RS.1,12,34 LAKH + RS.15.05 LAKH)/2 = RS.63.69 L AKH. THIS KIND OF AVERAGING IS BEYOND ANY UNDERSTANDING. IT IS NOT POSSIBLE TO SAY THAT THE VALUE OF THE BUILDING WOULD BE THE AVERAGE OF THE INCORRECT VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY INITIALLY AND THE CORRECT VALUE DETERMINED BY DY. COLL ECTOR, STAMP VALUATION DEPT SUBSEQUENTLY. THE VALUE OF EACH SHOP ON THE BASIS OF RENT CAPITALIZATION METHOD IS REQUIRED TO DETERMINED WHERE THE SHOP IS LET OUT AND THE VALUE OF SHOPS OCCUPIED BY OWNER IS REQUIRED TO BE DETERMINED ON THE BASIS OF LAND & BUI LDING METHOD AND ALL VALUES SO ARRIVED AT ARE REQUIRED TO BE ADDED UP. IN PRESENT CASE, 22 TENANTS OCCUPIED 25 SHOPS OUT OF 26 SHOPS SINCE LONG AND THAT TOO AT NOMINAL RENT AS PER THE DEED OF PURCHASE. MOREOVER THE VALUE OF RS.15.71 LAKH WAS ARRIVED AT BY THE REGISTERED VALUER BY ADOPTING THE RENT CAPITALIZATION METHOD OF VALUATION IN RESPECT OF LET OUT PORTION AT RS.2,81,000/ - AND RS.12,90,000/ - IN RESPECT OF THE SHOP OCCUPIED BY THE OWNER BY LAND BUILDING METHOD. THEREFORE, THE VALUATION OF ABOUT RS.15 - 16 LAKH ARRIVED AT BY THE REGISTERED VALUER AND DY. COLLECTOR, STAMP VALUATION DEPT ALREADY INCORPORATES THE ACTUAL POSITION IN RESPECT OF LET OUT PORTION OF THE BUILDING AND OWNERSHIP PORTION OF THE BUILDING. THE QUESTION OF ANY FURTHER AVERAGING ON THE VAL UATION OF ABOUT RS.15 - 16 LAKH DOES NOT ARISE. THEREFORE, THE DVO HAS INCORRECTLY TAKEN THE FAIR MARKET VALUE OF PROPERTY AT RS.63.69 LAKH INSTEAD OF RS.15.71 LAKH DETERMINED BY THE REGISTERED VALUER. 4.2 DVO HAS STATED THAT THE BUILDING WAS CONSTRUCTED I N 1973 AND IT IS A SINGLE STOREY RCC FRAMED STRUCTURE. DVO HAS STATED THAT AS PER PERMISSIBLE FSI, ONE MORE STOREY CAN BE ADDED UP. DVO TOOK THE APPURTENANT AREA OF FIRST FLOOR AT 961.515 SQ MT AND MULTIPLIED IT WITH RS.5000 PER SQ MT AND ARRIVED AT A VALU E OF RS.48 LAKH IN RESPECT OF FUTURE DEVELOPMENT POTENTIAL OF THIS BUILDING. ON THE OTHER HAND, THE APPELLANT HAS CLAIMED THAT THE PROPERTY OF APPELLANT IS FULLY CONSTRUCTED WITH SHOPS UP TO ROAD LEVEL. NO FURTHER CONSTRUCTION WOULD BE POSSIBLE ON THE EXIS TING STRUCTURE UNLESS NEW ROAD MARGINS ARE KEPT AND RULES REGARDING OPEN AREA ETC ARE OBSERVED. APPELLANT SUBMITTED THAT NOTHING OF THE SORT HAS BEEN EVEN PLANNED BY THE APPELLANT TILL DATE. I FIND THAT THIS 40 - RJT - 2012 SHRI VITHALBHAI K SAKARIA 3 BUILDING WAS PURCHASED AS SINGLE STOREY BUILDING ON 02.08.2004 AND WHEN THE DVO VERIFIED THIS BUILDING IN DECEMBER 2009, IT WAS STILL THE SAME SINGLE STOREY BUILDING AND AS PER THE CLAIM OF APPELLANT IT STILL CONTINUES TO BE SAME. THEREFORE, WHEN NO DEVELOPMENT HAS BEEN CARRIED OUT BY APPELLANT EVEN AFT ER ABOUT SIX SEVEN YEARS OF THE PURCHASE OF THIS BUILDING, THE VALUATION OF FUTURE DEVELOPMENT POTENTIAL OF THIS BUILDING FOR THE PURPOSE OF PURCHASE CONSIDERATION FROM THE POINT OF VIEW OF APPELLANT APPEARS TO BE A HYPOTHETICAL CONSIDERATION BY THE DVO. M OREOVER, THE VALUATION OF THE BUILDING AT RS.15.71 LAKH HAS BEEN ARRIVED AT BY TAKING THE VALUATION OF 25 SHOPS OUT OF 26 SHOPS ON RENT CAPITALIZATION METHOD. WHEN PRACTICALLY THE ENTIRE BUILDING IS GIVEN ON RENT, THE VALUE OF LAND AND BUILDING INCLUDING T ERRACE IS DETERMINED ON THE BASIS OF RENT REALIZED. IT IS NOT POSSIBLE TO FIRST VALUE THE TERRACE ON RENT CAPITALIZATION METHOD ALONG WITH BUILDING AND LAND AND THEN SEPARATE IT OUT FROM LAND AND BUILDING AND VALUE IT AGAIN ON LAND BUILDING METHOD. THIS WO ULD AMOUNT TO VALUING THE TERRACE TWICE UNDER TWO DIFFERENT METHODS. I FIND THAT THE APPELLANT CORRECTLY RELIED UPON THE JUDGMENT OF HBLE GUJARAT HIGH COURT IN CASE OF CWT VS. CHINUBHAI HARIDAS (HUF) 179 CTR 162 TO BRING OUT THE FACT THAT THE DVO HAS INCO RRECTLY CARRIED OUT THE DOUBLE VALUATION OF THE TERRACE IN THE GARB OF FUTURE DEVELOPMENT POTENTIAL. 4.3 IN VIEW OF THE ABOVE DISCUSSION I FIND THAT THE VALUE OF PROPERTY DETERMINED BY THE REGISTERED VALUER AT RS.15,71,000/ - IS THE CORRECT VALUE BECAUSE IT HAS CONSIDERED THE RENT CAPITALIZATION METHOD FOR RENTED SHOPS AND LAND BUILDING METHOD FOR THE SHOP OWNED BY THE APPELLANT. THIS VALUE IS FURTHER SUPPORTED BY THE VALUE OF RS.15,05,000/ - ADOPTED BY DY. COLLECTOR, STAMP VALUATION DEPT IN HIS ORDER DATED 13.03.2008 AFTER TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS IN RESPECT OF THE PROPERTY OF APPELLANT. I THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.77,69,000/ - MADE BY HIM TO THE TOTAL INCOME OF THE APPELLANT. 3. AGGRIEVED B Y THE ORDER PASSED BY LD CIT(A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUNDS: - 1. THE LD. CIT(A) - IV RAJKOT ERRED IN LAW AS WELL AS IN FACTS IN DIRECTING THE A.O. TO DELETE THE ADDITION OF RS.77,69,000/ - MADE U/S. 69B OF THE ACT ON ACCOUNT OF DIFFERENCE OF VALUATION OF PROPERTY WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORDS BY THE A.O. 2. ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. ANY OTHER GROUND THAT THE REVENUE MAY RAI SE BEFORE OR DURING HEARING PROCEEDINGS BEFORE THE HONBLE ITAT. 4. IT IS, THEREFORE PRAYED THAT THE ORDER OF THE LD. CIT(A) - IV RAJKOT MAY KINDLY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF REVENUE DR M L MEENA, DR APPEARED AND POINTED OUT THAT IN THE ASSESSMENT FRAMED U/S. 143(3) R.W.S. 147 OF T HE INCOME - TAX ACT ON 27.12.2010, THE ASSESSING OFFICER FOLLOWED THE DIRECTIONS U/S. 144A OF THE INCOME - TAX ACT. THESE DIRECTIONS WERE GIVEN AS TH E 40 - RJT - 2012 SHRI VITHALBHAI K SAKARIA 4 ASSESSEE MADE REFERENCE U/S 144A OF THE INCOME - TAX ACT, 1961. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NO OPTION BUT TO MADE THE ADDITION ON THE BASIS OF DVO REPORT AND THE LD CIT(A) IN THE IMPUGNED ORDER HAS NOT JUSTIFIED IN DELETING THE ENTI RE ADDITION. HE FURTHER SUBMITTED THAT THE RENT CAPITALIZATION METHOD CAN BE A GOOD METHOD FOR THE PURPOSE OF VALUING THE PROPERTY UNDER WEALTH TAX ACT AND NOT UNDER T HE INCOME - TAX ACT; THEREFORE EVEN I F THE PROPER TY IS TENANTED, FOR THE PURPOSE OF COMPUTI NG UNDERSTATEMENT OF INVESTMENT , ADDITIONS CAN BE MADE ON THE BASIS OF VALUATION REPORT OF DISTRICT VALUATION OFFICER (DVO). HE ACCORDINGLY POINTED OUT THAT THE ADDITION OF RS.77,69,000/ - MADE BY THE ASSESSING OFFICER BE RESTORED. 5. ON THE OTHER HAND, S HRI D M RINDANI, CA APPEARED ON BEHALF OF THE ASSESSEE FILED A CHART SHOWING CHRONOLOGICAL DATE OF PROCEEDINGS. HE POINTED OUT THAT GOVT APPROVED REGISTERED VALUER VALUED THE PROPERTY AT RS.15, 71 ,000/ - . HE ALSO SUBMITTED THAT INITIALLY THE DISTRICT VALUAT ION OFFICER (DVO) VALUED THE PROPERTY AT RS.1,12,33,648/ - AND FINALLY HE VALUED THE SAME AT RS.93,40,000/ - . THE FINAL ADJUDICATION BY DEPUTY COLLECTOR , STAMP DUTY VALUATION AT RS.15,05,0 00/ - IS ALMOST THE SAME TO THE INV ESTMENT MADE BY THE ASSESSEE AT RS.1 5,71,000/ - ; THEREFORE THE VIEW TAKEN BY THE LD CIT(A) DELETING THE LD CIT(A) DELETING THE ADDITION OF RS.77,69,000/ - BE UPHELD. 6. RIVAL SUBMISSIONS WERE CONSIDERED. WE HAVE CAREFULLY GONE THROUGH THE CHRONOLOG ICAL DATE S OF PROCEEDINGS FILED BY THE ASSES SEE. IT IS PERTINENT TO NOTE THAT THE ASSESSEE - VALUER VALUED THE PROPERTY AT RS.15,71,000/ - . THE DEPUTY COLLECTOR, STAMP DUTY VALUATION VALUED THE PROPERTY AT RS.15,05,000/ - . THE ASSESSEE - VALUER HAS CONSIDERED THE RENT CAPITALIZATION METHOD FOR RENTED SH OPS AND LAND BUILDING METHOD FOR THE SHOP OWNED BY THE ASSESSEE. TH IS VALUATION IS SUPPORTED BY THE VALUE ADOPTED BY DEPUTY COLLECTOR, STAMP VALUATION DEPT IN HIS ORDER DATED 13.03.2008 AFTER TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS. LOOKING TO THE SE CONSPICUOUS FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE VIEW TAKEN BY THE LD CIT(A) IN DELETING THE ADDITION OF 40 - RJT - 2012 SHRI VITHALBHAI K SAKARIA 5 RS.77,69,000/ - , WHICH WAS MADE BY THE ASSESSING OFFICER , IS FAIR AND REASONABLE. WE, THEREFORE, DECLINE TO INTERFERE. 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/ - SD/ - ( D. K. SRIVASTAVA ) (T. K. SHARMA) ,,, / ACCOUNTANT MEMBER 6 / JUDICIAL MEMBER / ORDER DATE 12 . 0 7 .2013 . /RAJKOT *B T B JO O / COPY OF ORDER FORWARDED TO: - 1 . , / APPELLANT - ITO, WARD 5 (2), RAJKOT 2 . R, / RESPONDENT - SHRI VITHALBHAI K SAKARIA,PROP. OF OASIS ROAK DRILL PARTS OPP. BAVISHI WEIGH BRIDGE, GONDAL ROAD, RAJKOT 3 . I O / CONCERNED CIT - III, RAJKOT 4 . O - / CIT (A) - IV, RAJKOT 5 . I , 2 I , / DR, ITAT, RAJKOT 6 . / GUARD FILE. / BY ORDER , TRUE COPY PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, RAJKOT