SANTOSH KUMAR SHARMA, Jaipur V. ITO, Jaipur

ITA 411/JPR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7547 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Valuation report
• Section: 50C; 133(6)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.411/ JP/2011 ASSESSMENT YEAR 2006-07 PAN: ACSPS 7247 N SHRI SANTOSH KUMAR SHARMA VS. THE ITO B-401 TRIMURTHY DAVE APARTMENT WARD- 6 (3) JAI SING HIGHWAY, BANIPARK, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI MUKESH KHANDELWAL DEPARTMENT BY : SHRI D.K. MEENA DATE OF HEARING: 10-01-2012 DATE OF PRONOUNCEMENT: 25-01-2012 ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-II, JAIPUR DATED 24-02-2011 FOR THE ASSESSMENT YEAR 2006-07. 2.1 THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE VALUE ASSESSED BY THE DVO AT RS. 69,11,000/- AS SALE CONSIDERATION FOR WORKING OUT CAPITAL GAIN. 2.2 DURING THE YEAR UNDER REFERENCE, THE ASSESSEE H AS SOLD THE PROPERTY NAMELY D-85, SHANTI PATH, TILAK NAGAR, JAIPUR. IN THE REGISTERED SALE DEED, THE ASSESSEE HAS SHOWN THE RECEIPT OF RS. 56.00 LACS AND ADOPTED THE SAME FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. THE AO OBTAINED THE INFORMATION FROM SUB-REGI STRAR U/S 133(6) OF THE ACT AND FOUND THAT THE SUB-REGISTRAR HAS ADOPTED THE VALUE OF THE PROPERTY FOR THE PURPOSE OF STAMP DUTY AT RS. 84,64,628/-. BEFORE THE AO, IT WA S SUBMITTED THAT THE SUB-REGISTRAR HAS 2 ADOPTED THE VALUE AT RS. 35,000/- PER SQ. MTR IN RE SPECT OF THE LAND ON WHICH SHOPS WERE CONSTRUCTED AND SUCH VALUATION BY THE SUB-REGISTRAR IS NOT CORRECT BECAUSE SHOPS HAVE BEEN ILLEGALLY CONSTRUCTED. THE ASSESSEE THEREFORE, ASKED THE AO TO REFER THE VALUATION TO THE DVO U/S 50C (2) OF THE ACT . THE REPORT WAS NOT RECEIVED WHEN THE AO MADE THE ASSESSMENT AND HE ADOPTED A SUM OF RS. 84,64,628/- AS SALE CONSIDERATION . THE ASSESSEE FILED AN APPEAL BEFORE THE LD CIT(A). THE REPORT OF THE DVO WAS RECEIVED VIDE LETTER NO.98 DATED 20-08-2009. THE DVO HAS DETERMINED THE VALUE OF THE PROPERTY AT THE TIME OF SALE AT RS. 69.11 LACS. THE LD CIT(A) HAS CONSI DERED THE REPORT OF THE DVO IN RESPECT OF THE VALUATION MADE AT RS. 69.11 LACS. THE ASSESS EE RAISED FOLLOWING OBJECTIONS WHEN THE DRAFT REPORT FROM THE VALUATION CELL WAS PROVI DED TO THE ASSESSEE BY THE DVO . THE OBJECTIONS ARE AS UNDER:- 5. REGARDING THE MARKET VALUE OF THE PROPERTY ASS ESSED BY YOUR GOOD SELF AS ON DATE OF SALE, WHICH HAS BEEN E STIMATED BY YOU AT RS. 69,11,000 IT IS SUBMITTED THAT THE SHOPS CONSTRUCTE D ON SOME PORTION OF THE RESIDENTIAL LAND OF THE ASSESSEE ARE ILLEGAL EVEN T ILL TODAY AS NEITHER ANY PERMISSION WAS OBTAINED FROM JDA/ JMC NOR THE SAME IS PRACTICALLY EXTENDED BY THE SAID AUTHORITIES FOR CONSTRUCTION O F SHOPS IN THE RESIDENTIAL LAND SITUATED IN THE AREA OF SHANTI PATH, TILAK NAG AR, JAIPUR. THEREFORE THE ADOPTION OF DLC RATE OF THE LAND OCCUPIED BY THE SH OPS TREATING THE SAME AS COMMERCIAL AND DEDUCTING 1/3 RD OF THE SAME ONLY IS WITHOUT ANY BASIS. IT IS ADMITTED FACT THAT THE PROPERTY OF THE ASSESS EE IS SITUATED IN RESIDENTIAL AREA ONLY AND NEITHER JDA NOR JMC CONVERT ANY LAND IN THE SAID AREA AS COMMERCIAL THEN HOW CAN THE RATE OF THE LAND BE TAK EN ON COMMERCIAL BASIS WITHOUT CONSIDERING THE FACT THAT SUCH ILLEGA L SHOPS CAN BE DEMOLISHED BY JDA/ JMC AT ANY POINT OF TIME. SUCH A DOPTION OF COMMERCIAL RATES FOR THE LAND OCCUPIED BY SHOPS IS ILLEGAL AND WITHOUT ANY BASIS AND DESERVES TO BE IGNORED. IT IS THEREFORE K INDLY REQUESTED THAT THE DLC RATE OF SUCH LAND BE ALSO TAKEN AS THAT OF RESI DENTIAL PROPERTY ONLY. 6. THE DEDUCTIONS ALLOWED BY YOUR GOOD SELF ON ACCO UNT OF CERTAIN OBJECTIONS RAISED BY THE ASSESSEE DURING THE VALUATION PROCEEDINGS RELATING TO SEWERAGE NALLAH JUST AT THE BACK OF THE PROPERTY AND LACK OF WATER IN THE BORING HAVE NOT PROPERLY DEALT WITH BY YOUR GOOD SELF. IT IS 3 OBSERVED FROM THE DRAFT REPORT THAT A DEDUCTION OF ONLY 5% HAS BEEN ALLOWED ON ACCOUNT OF SEWERAGE NALLAH BY YOUR HONOU R, WHICH NEEDS TO BE ENHANCED AS EXISTENCE OF NALLAH WAS THE BIGGEST DAM AGING FACTOR FOR THE LAND OF THE ASSESSEE AS NO PERSON WOULD LIKE TO PUR CHASE SUCH PROPERTY WHEREIN HE CAN NOT SMELL PROPERLY. THE OTHER FACTOR OF THE LACK OF WATER HAS NOT BEEN AT ALL CONSIDERED BY YOUR GOOD SELF. YOUR GOOD SELF IS KINDLY REQUESTED TO CONSIDER THE ABOVE OBJECTIONS OF THE ASSESSEE FAVORABLY AND MAKE NECESSARY CORRE CTIONS IN THE REPORT. IT IS ALSO FURTHER SUBMITTED THAT SINCE THE ASSESSEE I S NOT A TECHNICAL MAN AND HE THINKS THAT ALL OTHER CALCULATIONS DONE BY YOUR HONOUR DO NOT SUFFER FROM ANY INFIRMITY. IT IS THEREFORE SINCERELY REQUE STED THAT ALL THE CONTENTS OF THE REPORT MAY KINDLY BE REVIEWED ONCE AGAIN SO THAT NO INJUSTICE IS CAUSED TO THE ASSESSEE. 2.3 ALONGWITH OBJECTIONS, THE ASSESSEE ALSO SUBMITT ED HIS COMMENTS ON THE DRAFT REPORT OF THE DVO. IN RESPECT OF ILLEGAL CONSTRUCTI ON OF SHOPS, THE DVO HAS MENTIONED THAT HE HAS DEDUCTED 1/3 RD FROM THE RATE OF LAND TO BE APPLIED FOR COMMERCIAL PURPOSES. THE DVO FURTHER SUBMITTED THAT VALUATION IN RESPECT OF THE CONSTRUCTED PORTION HAS BEEN DONE ON THE BASIS OF CBDT CIRCULAR NORMS AND CPWD R ATES. THE DVO HAS GIVEN THE DEDUCTION ON ACCOUNT OF CO-OWNERSHIP AND NALA. THE DVO FURTHER SUBMITTED THAT CPWD RATES ARE APPROVED BY THE CBDT CIRCULAR AND THEREFO RE, STANDING ORDERS X-3 CANNOT BE APPLIED. THE LD CIT(A) AFTER CONSIDERING THE OBJECT IONS OF THE ASSESSEE AGAINST VALUATION REPORT AND CONSIDERING THE VALUATION REPORT GIVEN B Y THE DVO, IT WAS HELD THAT THE VALUE DETERMINED BY THE DVO IS TO BE TAKEN AS SALE CONSID ERATION FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN U/S 48 OF THE ACT 3. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO PERUSED THE ASSESSMENT ORDER AND FINDINGS OF THE AO THEREIN. THE FACT OF THE CASE AR E THAT THE ASSESSEE HAD SOLD A PROPERTY AT D-85, SHANTI PATH, TILAK NAGAR, JAIPUR, FOR A CONSIDERATION OF RS. 56,00,000/-. HOW EVER THE 4 STAMP DUTY AUTHORITIES IE. THE SUB REGISTRAR, JAIPU R-I VALUED THE PROPERTY AT RS 84,64,628/-. THE AO DIRECTED THE ASSESSEE TO SHOW CAUSE AS TO WHY IN VIEW OF PROVISIONS OF SECTI ON 50C, THE LONG TERM CAPITAL GAIN ON SALE OF PROPERTY SHOULD N OT BE REWORKED BY ADOPTING SALE CONSIDERATION AT RS 84,64 ,628/-. THE ASSESSEE HOWEVER RAISED OBJECTIONS AGAINST THE APPLICATION OF PROVISION OF SECTION 50C OF I.T. ACT. IN VIEW OF OBJECTIONS RAISED BY THE ASSESSEE U/S 50C(2) OF THE I T ACT, THE AO REFERRED THE MATTER TO DVO FOR VALUATION OF SAID PL OT. SINCE THE ASSESSMENT PROCEEDINGS WERE GETTING BARRED BY LIMIT ATION OF TIME ON 31.12.2008 AND REPORT OF THE DVO WAS NOT RE CEIVED, THEREFORE, THE AO COMPLETED THE ASSESSMENT ON 29.12 .08 ON THE BASIS OF THE VALUE ADOPTED BY THE SUB-REGISTRAR-I, JAIPUR. THE AO MADE AN ADDITION OF RS27,09,590/- IN RESPECT OF CAPITAL GAIN BY ADOPTING THE VALUE OF SALE OF PROPERTY IN Q UESTION AT RS 84,64,628/- AS TAKEN BY THE SUB-REGISTRAR I, JAIPU R. SUBSEQUENTLY THE DVO VIDE HIS REPORT DATED 20.8.200 9 FURNISHED THE VALUATION REPORT OF THE SAID PROPERTY ADOPTING VALUE OF PROPERTY AT RS 69,11,000/-. THE REPORT WAS PREPARED AFTER CONSIDERING ALL THE EVIDENCES PRODUCED AND VA RIOUS OBJECTIONS RAISED BY THE ASSESSEE. NO FURTHER OBJEC TIONS WERE RAISED BY THE ASSESSEE AFTER RECEIVING THE REPORT O F THE DVO. THE ASSESSEE WAS HOWEVER STILL NOT SATISFIED WITH T HE VALUE ADOPTED BY THE DVO AND HAS REQUESTED TO TAKE SALE CONSIDERATION OF RS 56,00,000/- SHOWN BY HIM AS COR RECT ONE. IN THE FIRST AND SECOND GROUND OF APPEAL, THE APPEL LANT HAS CHALLENGED THE APPLICATION OF SECTION 50C IN HIS CA SE AND SUBSTITUTION OF SALE CONSIDERATION BY THE VALUE DET ERMINED BY SUB- REGISTRAR. ON DUE CONSIDERATION OF THE FACTS I N ENTIRETY, I FIND THAT THE APPELLANT HAS BEEN TAKING CONTRADICTO RY STAND WITHOUT ANY SUCCESS. APPARENTLY THE ASSESSEE HAS TO BLAME HIMSELF FOR BEING TRAPPED IN THE LEGAL JARGON. ONCE THE ASSESSEE HAD RAISED OBJECTIONS AGAINST THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES AND AO HAD REFERRED THE MATTER TO DVO AT HIS INSTANCE, THEN HE SHOULD NOT HAVE TURNED HIS BACK. THE ASSESSING OFFICER WAS BOUND TO FOLLOW THE SUB-SECTI ON (1) OF SECTION 50C OR TO ADOPT THE LOWER OF THE VALUE FIXE D BY THE DVO OR THE VALUE AS DETERMINED BY THE STAMP VALUATI ON AUTHORITY AS PER SUBSECTION (3) OF SECTION 50C. FOR THIS PROPOSITION, THE RELIANCE IS PLACED ON THE DECISION OF THE 5 HONOURABLE LUCKNOW BENCH IN THE CASE OF JITENDRA MO HAN SAXENA V. ITO (305 ITR (AT) 62). THE REFRENCE TO TH E DVO UNDER SECTION 50C(2) IS NOT DISCRETIONARY, BUT MAND ATORY FOR WHICH RELIANCE IS PLACED ON THE DECISION OF THE HON OURABLE JODHPUR BENCH IN THE CASE OF MEGHRAJ BAID VS ITO (1 14 TTJ 841). THUS, AS PER SECTION 50C(1). THE VALUATION AS FIXED BY THE STAMP VALUATION AUTHORITY IS TAKEN AS A BENCH M ARK, AS SUB- SECTION (2) OF SECTION 50C THE BENCH MARK CAN BE RE VIEWED BY THE REFERENCE TO THE VALUATION OFFICER IF THE ASSES SEE CLAIMS THAT SUCH VALUE EXCEEDS THE FAIR MARKET VALUE. AS PER SU B-SECTION (3), IF THE VALUATION AS ARRIVED AT BY THE DVO AS A CONSEQUENCE OF THE REFERENCE MADE TO HIM BY THE ASSESSING OFFIC ER ON ACCOUNT OF THE ASSESSEE`S CLAIM AND SUCH VALUATION IS FOUND TO BE HIGHER THEN THE VALUE AS FIXED BY THE STAMP VALU ATION AUTHORITY THEN THE VALUE AS FIXED BY THE STAMP VALU ATION AUTHORITY BEING THE LOWER OF THE TWO IS TO BE APPLI ED. IT WAS ARGUED BY THE COUNSEL OF THE APPELLANT THAT THE REG ISTRAR ADOPTED THE VALUE OF SUCH LAND ON COMMERCIAL BASIS AND THE VALUATION OFFICER ALSO ADOPTED THE SAME VALUE AFTER ALLOWING CERTAIN DEDUCTIONS THERE FROM. IT WAS SUBMITTED BY THE COUNSEL OF APPELLANT THAT IT WAS AN UNDISPUTED FACT THAT TH E SHOPS SO CONSTRUCTED BY THE ASSESSEE WERE ILLEGAL AS THE ARE A OF TILAK NAGAR WAS RESIDENTIAL ONLY AND NO COMMERCIAL ACTIVI TY WAS PERMITTED THEREIN. FURTHER AS ON DATE NEITHER THE J DA NOR JAIPUR MUNICIPAL CORPORATION HAD GRANTED ANY PERMIS SION FOR CONVERSION OF LAND USE FROM RESIDENTIAL TO COMMERCI AL. IN SUCH CIRCUMSTANCES MERELY BY CONSTRUCTING SOME ILLEGAL S HOPS, THE LAND COULD NOT BE ASSESSED AS COMMERCIAL. IT WAS AR GUED THAT JDA/JMC COULD DEMOLISH THE SHOPS ILLEGALLY CONSTRUC TED AT ANY POINT OF TIME. IF THE ANALOGY ADOPTED BY THE RE GISTRAR AND THE DEPARTMENT VALUER WAS ADOPTED THEN THE MOMENT T HE SHOPS WERE DEMOLISHED, THE LAND VALUE WOULD BE RESIDENTIA L. THEREFORE IT WAS ARGUED THAT THE VALUES SO ADOPTED BY THE REGISTRAR AND THE VALUATION OFFICER WERE NOT RELIAB LE. I HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE CONTENTIONS O F THE APPELLANT. NO DOUBT THAT THE LAND WAS INITIALLY ALL OTTED FOR RESIDENTIAL PURPOSE. HOWEVER AS THE COMMERCIAL ACTI VITIES STARTED IN THAT AREA, LAND PLANNING COMMITTEE OF JD A ALSO STARTED CONVERTING THE LAND RESIDENTIAL USE TO COMM ERCIAL USE AS PER GUIDELINES AND FAR. THAT IS WHY COLLECTOR (S TAMPS) HAS 6 TO VALUE AND LEVY STAMP DUTY AS PER PROVISIONS OF S TAMPS ACT, WHEREBY THE MARKET VALUE OF THE PROPERTY IS BEING D ETERMINED TAKING INTO ACCOUNT NEW DEVELOPMENTS. ONLY 30% OF RESIDENTIAL PLOT CAN BE CONVERTED INTO COMMERCIAL P LOT. IT IS A FACT THAT PLOTS ALLOTTED WITH RESIDENTIAL LEASE DEE DS HAVE BEEN USED IN PAST FOR THE NON-RESIDENTIAL PURPOSES AS PO INTED BY DVO. THE DVO COULD UNDERSTAND THE SIGNIFICANCE OF L OGIC AND HAS ALLOWED A PROPORTIONATE RELIEF TO THE ASSESSEE. THUS CONTENTION OF THE APPELLANT THAT BOTH THE VALUE ADO PTED BY STAMP DUTY AUTHORITIES AND DVO ARE NOT RELIABLE, IS LIABLE TO BE REJECTED. THE CONTENTION OF THE APPELLANT THAT THE SHOPS CONSTRUCTED BY HIM WERE ILLEGAL AND MAY BE DEMOLISH ED AT ANY TIME , IS DEVOID OF ANY MERIT AND TOTALLY PREPOSTE ROUS. AT THE OUTSET, THE CONSTRUCTION OF THE SHOPS IN 69.11 SQ M ETERS OF AREA ITSELF REPUDIATES THE CONTENTION OF THE ASSESSEE TH AT THE LAND IN QUESTION WAS RESIDENTIAL. THE STRUCTURES ARE STATED TO BE PERMANENT IN THE VALUATION REPORT OF THE DVO. THE D VO HAS ALSO ALLOWED PROPORTIONATE DEDUCTION OF RS 11667/- TO THE ASSESSEE FROM THE COMMERCIAL RATE PREVAILING IN THE AREA. THE ASSESSEE HAD AN OPTION TO APPLY FOR CONVERSION OF 3 0% OF AREA FROM RESIDENTIAL TO COMMERCIAL AND PAY CONVERSION C HARGES. IT WOULD HAVE SAVED HIM FROM THE THREAT OF DEMOLITION. ACCORDINGLY NO INFIRMITY IS NOTICED IN THE VALUATIO N ADOPTED BY THE DVO. MOREOVER REFERENCE TO THE DVO IN THE PRESE NT CASE WAS DONE AT THE INSTANCE OF THE ASSESSEE SO HE CAN NOT REQUEST THE AO TO REJECT THE VALUATION ADOPTED BY THE DVO A ND HE IS BOUND TO FOLLOW THE SAME SINCE IT IS LESS THEN THE VALUE ADOPTED BY STAMP DUTY AUTHORITIES. THE ASSESSEE HAS ARGUED THAT SINCE THE STAMP DUTY WAS PAID BY THE BUYER, HE HAD NO CO NTROL OVER HIM AND HE AS SELLER COULD NOT BIND HIM. IN THIS RE GARD, THE DECISION OF HONOURABLE MADRAS HIGH COURT IN THE CAS E OF M/S AMBATTUR CLOTHING CO LTD (326 ITR 245) IS RELEVANT FOR THE ISSUE UNDER CONSIDERATION. IN THE CITED CASE, THE A SSESSEE HAD ARGUED THAT SINCE THE BUYERS WANTED THE TITLE DOCUM ENT TO BE RELEASED AT THE EARLIEST THEY HAD PAID THE STAMP DU TY AND THE ASSESSEE AS A SELLER DID NOT HAVE THE LOCUS STANDI TO QUESTION THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY. THE ASSESSING OFFICER REJECTED THE EXPLANATION OFFERED BY THE ASSESSEE ON THE TREAT THE VALUE ADOPTED BY THE STAM P VALUATION AUTHORITY AS THE DEEMED SALE CONSIDERATION RECEIVED ON 7 TRANSFER. THE COMMISSIONER (APPEALS) AND THE TRIBUN AL CONFIRMED THE ORDER OF THE ASSESSING OFFICER. ON AP PEAL, IT WAS HELD BY HONOURABLE HIGH COURT THAT ASSESSEE HAD NOT AVAILED OF THE OPPORTUNITY AVAILABLE UNDER SUB-SECTIONS (2) AND (3) OF SECTION 50C OF THE ACT IN ADDITION TO THE OPPORTUNI TY GIVEN UNDER THE STAMP ACT. THE REASONING PROVIDED BY THE ASSESSEE THAT IT DID NOT HAVE LOCUS STANDI TO QUESTION THE V ALUE DETERMINED BY THE STAMP AUTHORITY WAS IN ACCORDANCE WITH LAW. THE DIVISION BENCH OF HONOURABLE MADRAS HIGH COURT IN K. R. PALANISAMI V. UNION OF INDIA (306 ITR 61) HAS H ELD THAT THE PURPOSE OF SECTION 50C OF THE ACT IS TO PREVENT UND ERVALUATION OF THE REAL VALUE OF THE PROPERTY IN THE SALE DEEDS . SUB-SECTIONS (2) AND (3) OF SECTION 50C PROVIDE FURTHER SAFEGUAR D TO THE ASSESSEE, IN THE SENSE THAT IF THE ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT THE VALUE ADOPTED BY THE STA MP DUTY AUTHORITIES EXCEEDS THE FAIR MARKET VALUE AND THE V ALUE SO ADOPTED OR ASSESSED FOR THE PURPOSE OF STAMP DUTY H AS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION BEFORE ANY AUTH ORITY, THE ASSESSING OFFICER COULD REFER THE VALUATION OF THE CAPITAL ASSET TO THE DEPARTMENTAL VALUATION OFFICER. ON SUCH REFE RENCE, IF THE VALUE DETERMINED BY THE VALUATION OFFICER IS MO RE THAN THE VALUE ADOPTED OR ASSESSED BY THE STAMP DUTY AUTHORI TY, THE ASSESSING OFFICER SHALL ADOPT THE MARKET VALUE AS D ETERMINED BY THE STAMP DUTY AUTHORITY. THUS, A COMPLETE FOOLP ROOF SAFEGUARD HAS BEEN GIVEN TO THE ASSESSEE TO ESTABLI SH THE REAL VALUE BEFORE THE CONCERNED AUTHORITIES. THUS, WHAT IS STATED IN SECTION 50C AS A REAL VALUE CANNOT BE REGARDED AS A NOTIONAL OR ARTIFICIAL VALUE AND SUCH REAL VALUE IS DETERMINABL E ONLE AFTER HEARING THE ASSESSEE AS PER THE STATUTORY PROVISION S STATED SUPRA. THERE IS NO INDICATION EITHER IN THE PROVISI ONS OF SECTION 50C OF THE INCOME-TAX ACT OR SECTION 47A OF THE STA MP ACT OR RULES MADE THEREUNDER ABOUT THE ADOPTION OF THE GUI DELINE VALUE. THEREFORE, THE RIGHT OF AN ASSESSEE CONFERRE D UNDER SECTION 50C OF THE ACT IS A VALUABLE STATUTORY RIGH T AVAILABLE TO PROTECT HIS INTEREST AGAINST ANY ARBITRARINESS WHIC H MAY CREEP IN WHILW FIXING THE VALUE OF THE CAPITAL GAIN AND T HAT SAFEGUARD GIVEN TO THE ASSESSEE. THE SAID RIGHT IS MORE EFFEC TIVE IN CASES WHERE THE PARTIES TO THE DOCUMENT HAVE NOT TAKEN AN Y STEPS TO DEFEND OR TO INITIATE PROCEEDINGS UNDER SECTION 47A OF THE INDIAN STAMP ACT. IN THE PRESENT CASE, IT IS OBVIOU S THAT AO 8 HAD REFERRED THE VALUATION TO THE DVO ONLY AT REQUE ST OF THE ASSESSEE. IN THESE CIRCUMSTANCES, BOTH FROM THE POI NT OF VIEW OF LAW AND APPELLANT`S CONDUCT IN MAKING THE REQUES T FOR THE REFERENCE, THE AO`S ACTION IS PERFECTLY IN ORDER. T HAT APART, THE VALUATION DONE BY THE DVO IS BASED ON SCIENTIFIC ME THOD. THE DECISION OF HONOURABLE MADRAS HIGH COURT IN THE CAS E OF N MEENAKSHI VS ACIT (326 ITR229) IS OF ON HELP TO THE ASSESSEE. IN THE CITED CASE, THE MATTER WAS REMANDE D TO THE AO TO WORK OUT CAPITAL GAIN ON THE BASIS OF VALUATION REPORT OF THE DVO INSTEAD OF VALUE ADOPTED BY THE STAMP DUTY AUTH ORITIES. ACCORDINGLY I DIRECT THE AO TO ADOPT THE SALE CONSI DERATION AT RS 69,11,000/- FOR WORKING OUT CAPITAL GAIN U/S 50C OF THE I T ACT. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 2.4 WE HAVE HEARD BOTH THE PARTIES. WE HAVE ALSO OB SERVED THE VALUATION REPORT AS ON 28-09-2005 AS MADE BY THE DVO. THE DVO ADOPTED THE LAND RATE AT RS. 10,000/- PER SQ. MTR WHICH WAS BEING USED FOR THE RESIDENTIAL PROPER TY. THE VALUE OF SUCH LAND WAS TAKEN AT RS. 48,77,700/-. THE VALUE OF THE COMMERCIAL LA ND AS ON 28-09-2005 WAS RS. 35,000/- PER SQ. YARD. THERE WAS SMALL SHOP ON THE RESIDENTI AL PLOT OF THE LAND. THE AREA COVERED IN THIS SHOP WAS TO THE EXTENT OF 69.11 SQ. MTR. THE DVO GAVE DEDUCTION ON ACCOUNT OF THE SHOP ON THE RESIDENTIAL PLOT AS 1/3 RD OF THE RATE OF COMMERCIAL LAND AND ACCORDINGLY ADOPTED THE RATE OF RS. 23,333/- FOR THE AREA OF LA ND COVERED UNDER THE SHOP. THUS THE VALUE OF THE LAND UNDER SHOP CAME TO RS. 16,12,544/ - AND HENCE THE TOTAL VALUE OF LAND CAME TO RS. 64,90,244/-. THE DVO MADE THE FOLLOWING ADJUSTMENTS. 1. 10% WAS DEDUCTED ON ACCOUNT OF CO-OWNERSHIP RIG HT WHICH WAS TO THE EXTENT OF RS. 6,49,024/-. 2. THE PROPERTY SOLD IS SITUATED ON THE CORNER PLOT AND HENCE THE DVO MADE THE ADJUSTMENT OF 10% TO THE VALUE OF THE LAND AT RS. 6,49,024/- 3. THERE IS A BIG SEWERAGE NALA ON THE BACK OF THIS PLOT AND THE DVO HAS GIVEN A DEDUCTION AT 5% I.E. RS. 3,24,512/-. 9 2.5 THUS THE VALUE OF THE LAND AFTER ADJUSTMENT CAM E TO RS. 61,65,732/-. THE DVO HAS DETERMINED THE VALUE OF THE CONSTRUCTED PORTIONS ON THE BASIS OF THE CPWD RATES AND THE SAME WAS DETERMINED AT RS. 7,45,300/-. THUS THE TO TAL COMES TO RS. 69,11,000/- (RS.61,65,700 + 7,45,300). 2.6 BEFORE US, THE LD.AR DREW OUR ATTENTION TO THE VALUATION REPORT PREPARED BY THE VALUATION OFFICER OF THE DEPARTMENT U/S 55A OF THE ACT IN THE CASE OF ONE SHRI LAL SINGH NADARIYA. IN THIS CASE, THE LAND RATE FOR COMMERCIA L AREA WAS TAKEN AT RS. 65,300/- PER SQ. MTR. THE RATE FOR RESIDENTIAL WITH COMMERCIAL POTEN TIAL WAS TAKEN AT RS. 24,675/-.THUS THE RATIO TAKEN FOR RESIDENTIAL WITH COMMERCIAL POTENT IAL WAS AT 44% OF THE RATE OF COMMERCIAL LAND. HOWEVER, IN THE INSTANT CASE, THE RATE IS BEING ADOPTED AT 67% OF THE COMMERCIAL RATE OF LAND. LOOKING TO THE VALUATION R EPORT AS MADE BY THE DVO IN WHICH THE RATE WAS TAKEN AT 44% OF THE COMMERCIAL LAND FO R THE PURPOSE OF RESIDENTIAL WITH COMMERCIAL, THEREFORE, WE FEEL THAT IT WILL BE FAIR AND REASONABLE TO ADOPT 50% OF THE VALUE OF COMMERCIAL LAND FOR THE LAND INCLUDED IN T HE SHOP WHICH IS RESIDENTIAL-CUM- COMMERCIAL. THE LAND UNDER THE SHOP IS 69.11 SQ. MT R. THUS THE LAND IS TO BE VALUED AT RS. 17,500/- PER SQ. MTR AND THEREFORE, THE VALUE O F THE LAND UNDER THE SHOP WILL COME TO RS. 12,09,425/-. WITHOUT CONSIDERING FURTHER ADJUST MENT, THE VALUE OF LAND WILL BE RS. 48,77,700 + RS. 12,09,400 = RS. 60,87,100/-. THE PR OPERTY IS SITUATED ON THE CORNER PLOT AND THEREFORE, ADJUSTMENT OF 10% IS TO BE MADE. THE ADJUSTMENT WILL COME TO RS. 6,08,710/-. HENCE, AFTER ADJUSTMENT, THE VALUE OF L AND WILL BE RS. 66,95,800/-. THE ASSESSEE HAS SOLD THE UNDIVIDED SHARE AND ADJUSTMEN T OF 10% IS NEEDED. SUCH 10% HAS BEEN UPHELD BY HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CWT VS. K.N. NAGABHUSHANA SETTY (HUF) 156 ITR 484. FOR THIS PURP OSE, THE HON'BLE KARNATAKA HIGH 10 COURT HAS REFERRED TO THE BOOK AUTHORED BY DAVID M LAWRENCE AND OTHERS AND TITLE OF THE BOOK IS MODERN METHODS OF VALUATION OF LAND, HOUS ES AND BUILDINGS. THE DVO HAS ALSO GIVEN 10% REBATE FOR THE UNDIVIDED SHARE. VALUE OF LAND AS MENTIONED ABOVE RS. 66,95,800/- LESS: REBATE OF 10% ABOVE BUILDING RS. 6,69,580 / RS. 60,26,220/- THE DVO HAS GIVEN THE REBATE OF 5% ON ACCOUNT OF L AND SITUATED NEAR SEWERAGE NALA. HENCE THE REBATE IS GIVEN AT THE SAME PERCENTAGE I. E. RS. 3,01,311/-. THUS THE NET VALUE COMES TO RS. 57,24,909.00/- . WE HAVE GONE THROUGH THE SALE DEED. THE SHOPS HAVE BEEN GIVEN ON RENT AND THE PERSON WHO HAS PURCHASED THIS PROPERTY HAS GIVEN THE RIGHT TO GET THE SHOP VACATED. THE TENANT SHAVE BEEN INTIMATED T HAT PROPERTY HAS BEEN SOLD. MOREOVER, THE VALUATION OFFICER HAS DETERMINED THE VALUE OF T HE CONSTRUCTED PORTION AT RS. 7,45,300/- ON THE BASIS OF THE CPWD RATES. THE HON' BLE JURISDICTIONAL HIGH COURT HELD THAT AFTER DETERMINING THE COST OF CONSTRUCTION, ON E HAS TO TAKE THE PWD RATES. THERE IS DIFFERENCE OF AROUND 20% BETWEEN CPWD RATES AND PWD RATES. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. PREM KUMARI MUDRIA V S. ACIT, 303 ITR 128 UPHELD THE ACTION OF THE LD. CIT(A) IN WHICH THE LD. CIT(A) GR ANTED 20% DEDUCTION BY HOLDING THAT PWD RATES SHOULD BE ADOPTED AS AGAINST CPWD RATES. THE DVO HAS TAKEN THE FAIR MARKET VALUE OF CONSTRUCTED PORTION OF HOUSE AS WELL AS SH OPS AT RS. 7,45,300/-,. THE VALUATION HAS BEEN DONE AT CPWD RATES. THE HON'BLE JURISDICTI ONAL HIGH COURT IN THE CASE OF SMT. PREM KUMARI MUDRIA VS. ACIT (SUPRA) HAS UPHELD THE FINDINGS OF THE LD. CIT(A) IN WHICH THE LD. CIT(A) HAS ALLOWED DEDUCTION OF 20% O N ACCOUNT OF RATES DIFFERENT BETWEEN PWD AND CPWD RATES. HENCE, TO THIS EXTENT, THE AMOUNT IS TO BE REDUCED FROM THE VALUE ADOPTED BY THE DVO. MOREOVER, THE SHOPS W ERE UNDER POSSESSION OF THE TENANTS 11 AND THE PERSON WHO HAS PURCHASED THE PROPERTY HAS B EEN GIVEN RIGHT TO GET SUCH SHOPS VACATED. THE TENANTS WERE ALSO INFORMED REGARDING T HE SALE OF THE PROPERTY . THUS THE DISCOUNT IS TO BE GIVEN ON ACCOUNT OF POSSESSION O F SUCH LAND WITH THE TENANTS. WE THEREFORE, FEEL THAT IT WILL BE FAIR AND REASONABLE TO ADOPT THE VALUE OF THE CONSTRUCTED PORTION OF HOUSE AND SHOPS AT RS. 5.00 LACS AS AGAI NST RS. 7,45,700/- ADOPTED BY THE DVO. THE VALUE OF THE PROPERTY AS ON 28 TH SEPT. 2005 WILL BE RS. 57,24,900 PLUS CONSTRUCTION PORTION RS. 5,00,000 = RS. 62,24,900/-. THUS THE AO IS DIRECTED TO ADOPT THE VALUE OF . RS. 62,24,900 AS SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN U/S 48 OF THE ACT. 3.1 THE SECOND GRIEVANCE OF THE ASSESSEE IS THAT TH E LD. CIT(A) HAS ERRED IN HOLDING THAT THE AO WAS LEGALLY JUSTIFIED IN ISSUING THE CO MMISSION TO THE DVO FOR ASSESSING FAIR MARKET VALUE OF THE ASSET SOLD AS ON 01-04-1981. 3.2 BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT TH E AO HAS REFERRED THE VALUATION TO THE DVO AFTER COMPLETION OF ASSESSMENT. THE LD. CIT (A) AT PAGE 9 OF HIS ORDER HAS MENTIONED THAT THE DVO VIDE LETTER DATED 19-06-2009 ASKED THE AO TO SEND REFERENCE FOR ASCERTAINING FAIR MARKET VALUE AS ON 01-04-1981. BE FORE THE LD. CIT(A), IT WAS SUBMITTED BY THE AO THAT IF THE DVO WANTED TO ENLARGE THE TER MS OF REFERENCE THEN THE AO HAS NO ALTERNATIVE BUT TO COMPLY TO HIS REQUIREMENTS. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE LD. CIT(A) AS ACCORDING TO HIM, THE AO HAS MADE REFERENCE FOR ASCERTAINMENT OF FAIR MARKET VALUE AS ON DATE OF SA LE AND THEREFORE, SUBSEQUENT REFERENCE WAS HELD AS VALID BY THE LD. CIT(A). 3.3 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSMENT WAS MADE ON 29-12-2008. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS REFE RRED THE VALUATION U/S 50C(2) OF THE 12 ACT. INITIAL REFERENCE HAS NOT BEEN MADE U/S 55A OF THE ACT. SECTION 50C(2) PROVIDES THE DETERMINATION OF FAIR MARKET VALUE AS ON THE DATE O F TRANSFER OF PROPERTY AND IT IS NOT APPLICABLE TO ASCERTAIN FAIR MARKET VALUE AS ON 01- 04-1981. SECTION 55A OF THE ACT AUTHORIZES THE AO TO ASCERTAIN THE FAIR MARKET VALU E OF CAPITAL ASSET FOR THE PURPOSE OF CHAPTER IV WHICH RELATES TO COMPUTATION OF INCOME F ROM CAPITAL GAIN. THE AO HAS ALREADY MADE ASSESSMENT AND THEREFORE, THE AO COULD NOT HAVE MADE THE REFERENCE U/S 55A OF THE ACT BECAUSE AFTER ASSESSMENT THERE IS NO ISSUE PENDING BEFORE HIM FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN.THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRIG . B. LAL VS WTO 127 ITR 308 HELD IN REFERENCE TO SECT ION 16A OF THE WEALTH TAX ACT CANNOT BE MADE AFTER THE ASSESSMENT IS COMPLET ED. THE VALUATION REPORT SO OBTAINED AFTER COMPLETION OF ASSESSMENT CANNOT BE MADE A GRO UND FOR REOPENING THE ASSESSMENT. THE ABOVE REFERRED DECISION HAS BEEN FOLLOWED BY TH E HON'BLE JURISDICTIONAL HIGH COURT AGAIN IN THE CASE OF CWT VS. MASTER KAIRAS TARAPORE 163 ITR 310. THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT HAS BEEN FOLLOWED BY THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS. RAVI CHELOOR, 178 ITR 640. CONSIDERING THE LEGAL POSITION AS REFERRED ABOVE, WE HOLD THAT REFERENCE TO THE VALUA TION CELL FOR DETERMINING THE FAIR MARKET VALUE AS ON 01-04-1981 IS NOT VALID IN THE E YE OF LAW. SECTION 55A OF THE ACT GIVES POWER TO THE AO AND THE LD CIT(A) WAS NOT HAV ING POWER U/S 55A OF THE ACT TO MAKE REFERENCE TO THE VALUATION CELL. THE ASSESSEE HAS FILED THE VALUATION REPORT OF THE REGISTERED VALUER IN RESPECT OF THE VALUE AS ON 01- 04-1981. HENCE, THE AO IS REQUIRED TO ADOPT THE VALUE AS SHOWN BY THE ASSESSEE ON THE BAS IS OF REGISTERED VALUER REPORT AS ON 01-04-1981 FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. 13 4.1 DURING THE COURSE OF HEARING, THE LD.AR HAS NOT PRESSED THE GROUND NO. 3.HENCE, THE SAME IS DISMISSED BEING NOT PRESSED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 25-01 -2012. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 25/01/2012 *MISHRA COPY FORWARDED TO :- 1. SHRI SANTOSH KUMAR SHARMA,JAIPUR 2. THE ITO, WARD- 6(3), JAIPUR 3 THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5 THE LD.DR 6 THE GUARD FILE (ITA NO.411/JP /11) A.R, ITAT, JAIPUR