M/S ACCURATE BUILDCON PVT LTD., JAIPUR V. INCOME TAX OFFICER, WARD-5-1, JAIPUR

ITA 502/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6362 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 12-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI DCIT DHK
• Assessee Lawyers: S L PODDAR; ISHA KANOONGO S
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Fair market value; Valuation report
• Section: 50C

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH HKKXPUN ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 502/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2012-13. M/S. ACCURATE BUILDCON PVT. LTD., 8-A, TAKTESHAHI ROAD, KANOTA BAGH, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 5(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AACCA 9803 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR & MS. ISHA KANOONGO (ADVOCATES) JKTLO DH VKSJ LS@ REVENUE BY : SMT. POONAM RAI (DCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24.07.2018. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 25/07/2018. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 12 TH MARCH, 2018 OF LD. CIT (A)-2, JAIPUR FOR THE ASSESSMENT YE AR 2012-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 26, 97,750/- ON ACCOUNT OF LONG TERM CAPITAL GAIN BY INVOKING THE P ROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 26, 97,750/- ON ACCOUNT OF LONG TERM CAPITAL GAIN ON THE BASIS OF D VOS REPORT 2 ITA NO. 502/JP/2018 M/S. ACCURATE BUILDCON PVT. LTD., JAIPUR. WHO HAS NOT GIVEN OPPORTUNITY FOR MAKING OBJECTION TO THE ASSESSEE ON PROPOSED VALUATION. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 26, 97,750/- ON ACCOUNT OF LONG TERM CAPITAL GAIN ON THE BASIS OF D VOS REPORT WHICH IS NOT ON THE BASIS OF ACTUAL FACTS BUT ON TH E BASIS OF SURMISES AND CONJECTURES BECAUSE THE MARKET RATE IS MUCH LOWER THAN THE DLC RATES. 4. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD, AMEN D OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF H EARING. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF REAL ESTATE, BUILDERS AND DEVELOPERS. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE AO NOTED THAT THE ASSESSEE HAS SHOWN SALE OF OFFICE AT GANPATI PL AZA, JAIPUR FOR RS. 7,50,000/- AND AFTER DEDUCTING INDEX COST OF ACQUISITION, ASSESSEE HAS CLAIMED LONG TERM CAPITAL LOSS OF RS. 4,78,656/-. ON QUERY FROM THE AO, THE ASSES SEE EXPLAINED THAT THE SALE CONSIDERATION OF THE OFFICE IN QUESTION IS RS. 11,5 1,000/- AS PER THE SALE AGREEMENT AND ASSESSEE HAS WRONGLY TAKEN THE SALE CONSIDERATI ON AT RS. 7,50,000/-. THE AO PROPOSED TO ADOPT THE DLC RATE AS FULL VALUE CONSID ERATION UNDER SECTION 50C OF THE ACT. THE ASSESSEE OBJECTED TO THE ADOPTION OF DLC RATE AS FULL VALUE AND CONSEQUENTLY THE AO REFERRED THE VALUATION TO THE D VO. THE DVO FINALLY VIDE HIS VALUATION REPORT DATED 25 TH FEBRUARY, 2015 HAS DETERMINED THE VALUE OF THE PRO PERTY IN QUESTION AT RS. 39,26,406/- AS AGAINST THE DECLA RED VALUE OF RS. 11,51,000/-. THE AO ACCORDINGLY ASSESSED THE CAPITAL GAIN ARISING FR OM THE TRANSACTION AT RS. 26,97,750/-. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT (A) AND RAISED THE OBJECTION AGAINST THE VA LUATION DETERMINED BY THE DVO BY 3 ITA NO. 502/JP/2018 M/S. ACCURATE BUILDCON PVT. LTD., JAIPUR. TAKING THE DLC RATE AS BASIS OF THE VALUATION. THE LD. CIT (A) UPHELD THE ACTION OF THE AO AS WELL AS THE VALUATION DETERMINED BY THE D VO. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE DVO HAS ADOPTED THE DLC RATE AS FAIR MARKET VALUE OF THE PR OPERTY WHICH IS NOT PROPER WHEN THE VALUATION WAS REFERRED TO THE DVO FOR DETERMINA TION OF FAIR MARKET VALUE. THE LD. A/R HAS FURTHER CONTENDED THAT THE DVO HAS DONE NOTHING BUT ADOPTED THE DLC RATE WHICH WAS OBJECTED BY THE ASSESSEE AND CONSEQU ENTLY THE MATTER WAS REFERRED TO THE DVO FOR VALUATION OF THE PROPERTY IN QUESTIO N. HE HAS REFERRED TO THE GUIDELINES ISSUED BY THE CBDT FOR VALUATION OF IMMO VABLE PROPERTIES AND SUBMITTED THAT AS PER THE GUIDELINES ISSUED IN THE YEAR 2009 THE CBDT HAS SET OUT VARIOUS PARAMETERS AND CONSIDERATIONS TO BE TAKEN INTO CONS IDERATION FOR DETERMINATION OF FAIR MARKET VALUE OF THE PROPERTY BEING LAND AND BU ILDING. THE VALUATION DETERMINED BY THE DVO IS NOT IN CONFORMITY WITH THE GUIDELINES OF THE CBDT. THE LD. A/R HAS THUS CONTENDED THAT THE DVO WAS REQUIRED TO TAKE IN TO CONSIDERATION THE SALE INSTANCES FOR DETERMINATION OF THE FAIR MARKET VALU E. HOWEVER, THE DVO HAS ADOPTED THE DLC RATE WHICH IS NOT JUSTIFIED. HENCE, HE HAS PLEADED THAT THE MATTER MAY BE REMITTED TO THE RECORD OF THE AO/DVO FOR DETERMINAT ION OF THE FAIR MARKET VALUE OF THE PROPERTY AND CONSEQUENTIAL CAPITAL GAIN. 4. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THE DVO HAS DETERMINED THE FAIR MARKET VALUE AFTER CONSIDERING ALL THE REL EVANT FACTS AND EVEN THE OBJECTIONS OF THE ASSESSEE WERE INVITED BY THE DVO PRIOR TO TH E VALUATION REPORT. SHE HAS FURTHER SUBMITTED THAT BUT FOR THE SCRUTINY ASSESSM ENT, THE ASSESSEE WOULD NOT HAVE DISCLOSED THE CORRECT SALE CONSIDERATION OF THE PRO PERTY IN QUESTION AS POINTED OUT BY 4 ITA NO. 502/JP/2018 M/S. ACCURATE BUILDCON PVT. LTD., JAIPUR. THE AO THAT THE ASSESSEE HAS SHOWN THE SALE CONSIDE RATION IN THE RETURN OF INCOME AT RS. 7,50,000/- AS AGAINST THE SALE CONSIDERATION OF RS. 11,51,000/- SHOWN IN THE SALE DEED. THE DVO HAS CONDUCTED A PROPER ENQUIRY AND THEN DETERMINED THE FAIR MARKET VALUE OF THE PROPERTY IN QUESTION. SHE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. AS PER THE PROVISIONS OF SECTION 50C(2) I N CASE THE ASSESSEE HAS OBJECTED TO THE ADOPTION OF FULL VALUE CONSIDERATION PROPOSE D BY THE AO UNDER SECTION 50C OF THE ACT, THE MATTER OF VALUATION HAS TO BE REFERRED TO THE DVO FOR DETERMINATION OF FAIR MARKET VALUE. THUS ONCE THE ASSESSEE HAS RAIS ED THE OBJECTION AGAINST THE VALUE ADOPTED OR ASSESSED BY THE AUTHORITY OF STAMP VALUATION THEN THE OBJECTIONS SO RAISED BY THE ASSESSEE ARE TO BE TAKEN INTO CONS IDERATION AND THE VALUATION OFFICER SHALL DETERMINE THE FAIR MARKET VALUE OF THE PROPER TY BEING LAND AND BUILDING BY CONSIDERING THE SALE INSTANCES ON OR AROUND THE DAT E OF SALE OF SIMILARLY SITUATED IMMOVABLE PROPERTIES. WE NOTE THAT IN THE VALUATIO N REPORT THE DVO HAS CONDUCTED THE ENQUIRY ONLY TO MEASURE THE AREA OF THE PROPERT Y AND EVEN HAS NOT MADE ANY ATTEMPT TO FIND OUT ANY COMPARABLE SALE INSTANCES F OR DETERMINATION OF THE FAIR MARKET VALUE OF THE PROPERTY. THE VALUATION DETERM INED BY THE DVO IS BASED ON THE DLC RATES AS PER PARA 7.1 AND 8.1 OF THE REPORT IN QUESTION. THEREFORE, THE SOLE BASIS OF DETERMINATION OF FAIR MARKET VALUE IS THE DLC RATE WHICH IS NOT PROPER AND JUSTIFIED. ONCE THE ASSESSEE HAS OBJECTED TO THE A DOPTION OF DLC RATES AS FULL VALUE CONSIDERATION AND CONSEQUENTLY THE MATTER WAS REFER RED TO THE DVO FOR DETERMINATION OF FAIR MARKET VALUE, THEN THE DVO WA S REQUIRED TO DETERMINE THE FAIR 5 ITA NO. 502/JP/2018 M/S. ACCURATE BUILDCON PVT. LTD., JAIPUR. MARKET VALUE BY TAKING INTO CONSIDERATION VARIOUS S ALE INSTANCES AND AS PER THE GUIDELINES ISSUED BY THE CBDT AT LEAST THREE INSTAN CES OF SALE ON OR AROUND THE SALE DATES AND IN THE LOCALITY IN QUESTION. THE VARIOUS FACTORS WHICH ARE RELEVANT FOR THE PURPOSE OF DETERMINATION OF VALUATION ARE DISCUSSED IN THE GUIDELINES ISSUED BY THE CBDT BEING THE GUIDELINES FOR VALUATION OF IMMOVABL E PROPERTIES 2009. HENCE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND TH AT THE DETERMINATION OF FAIR MARKET VALUE OF THE PROPERTY REQUIRES A FRESH CONSI DERATION AND ADJUDICATION AT THE LEVEL OF AO/DVO. ACCORDINGLY, WE SET ASIDE THIS MA TTER TO THE RECORD OF THE AO WITH THE DIRECTION TO REFER THE MATTER TO THE DVO AGAIN FOR DETERMINATION OF FAIR MARKET VALUE OF THE PROPERTY IN ACCORDANCE WITH THE GUIDEL INES OF THE CBDT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25/07/201 8. SD/- SD/- HKKXPUN FOT; IKY JKWO (BHAGCHAND) ( VIJAY PAL RAO ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25/07/2018. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-M/S. ACCURATE BUILDCON PVT. LTD., JAI PUR. 2. IZR;FKHZ@ THE RESPONDENT-THE ITO WARD 5(1), 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. 502/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 6 ITA NO. 502/JP/2018 M/S. ACCURATE BUILDCON PVT. LTD., JAIPUR.