Shri Rajesh Jaymukund Sheth, Bilimora V. The Income Tax Officer, Ward-3, Valsad

ITA 666/AHD/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2003 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 17-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Assessee Lawyers: RAJESH M UPADHAYAY
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Capital asset; Cost of acquisition
• Section: 2; 50C

Judgement Text

RAJESH JAYMUKUND SHETH V. ITO WD-3 VALSAD /I.T.A. NO. 666/AHD/2017/A.Y.121-3 PAGE 1 OF 7 , , INCOM TAX APPELLATE TRIBUNAL-SURAT-BENCH-SURAT . . , . . , BEFORE C .M. GARG, JUDICIAL MEMBER AND O. P. MEENA, ACCOUNTANT MEMBER . . /. I.T.A NO.666/AHD/2017/SRT /ASSESSMENT YEAR:2012-13 SHRI RAJESH JAYMUKUND SHETH, 5 PRIYNAKA ROW HOUSE, OPP. LOCO SHED ABRAMA VALSAD 396001 PAN:ACPPS0797K V. INCOME TAX OFFICER, WARD-2 VALSAD APPELLANT /RESPONDENT ASSESSEE BY SHRI RAJESH M. UPADHAYAY, A.R. REVENUE BY SHRI R. P. RASTOGI, SR. D.R. DATE OF HEARING 05.10.2018 DATE OF PRONOUNCEMENT 02.11.2018 /ORDER PER O. P. MEENA, AM 1. THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II; SURAT [IN SHORT CIT (A)] DATED 09.02.2017 FOR THE ASSESSMENT YEAR 2012-13. 2. GROUND NO. 1 STATES THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AS WELL AS LAW PREVAILING ON THE ISSUE OF ADDITION UNDER RAJESH JAYMUKUND SHETH V. ITO WD-3 VALSAD /I.T.A. NO. 666/AHD/2017/A.Y.121-3 PAGE 2 OF 7 SECTION 50C OF THE ACT, LD. CIT (A) VALSAD HAS ERRED IN LAW AND ON THE FACTS IN UPHOLDING ADDITION OF RS. 17,24,066 WITHOUT CONSIDERING ADVERSE FACTORS AND COMPARATIVE SALE INSTANCES IN DETERMINING FMA FOR LAND BEARING CS NO.1577, R S NO 482 LOCATED AT ABRAMA OF VALSAD ON THE DATE OF SALE. 3. SUCCINCT FACTS ARE THAT THE ASSESSEE HAS SOLD NA LAND FOR SALE CONSIDERATION OF RS. 40 LAKH, WHICH HAS BEEN VALUED BY STAMP DUTY AUTHORITIES AT RS. 65,49,484. WHEREAS THE REGISTERED VALUER OF THE ASSESSEE HAD VALUED THE SAID PROPERTY AT RS. 32,53,000. THE ASSESSEE HAS DISPUTED THE STAMP DUTY AUTHORITIES VALUATION; HENCE, PROPERTY WAS REFERRED TO DVO FOR VALUATION. THE DVO VALUED THE PROPERTY AT RS. 61.26 LAKH. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE AO MADE ADDITION OF RS. 21,26,000 BEING DIFFERENCE IN SALE CONSIDERATION AND VALUE CONSIDERED BY THE DVO AS PER PROVISION OF SECTION 50C OF THE ACT. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). IT WAS EXPLAINED THAT THE ASSESSEE WAS IN POSSESSION OF LAND AREA OF 4026.57 SQ. METER OUT OF WHICH 907.53 SQ. METER PLOT WAS SOLD RAJESH JAYMUKUND SHETH V. ITO WD-3 VALSAD /I.T.A. NO. 666/AHD/2017/A.Y.121-3 PAGE 3 OF 7 EARLIER LEAVING BALANCE AREA AT 3119.04 SQ. METER. THE ASSESSEE WAS BOUND BY THE VALSAD DISTRICT PANCHAYAT KUCHERI ORDER DTD. 11.01.2000 TO KEEP THE LAND AREA OF 1407.99 SQ. METER OUT OF THE SAID PLOT OF LAND AS VACANT AND OPEN TO SKIES AND NO CONSTRUCTION WAS TO BE DONE ON THIS AREA OF LAND. AFTER TAKING INTO ACCOUNT, THE REGISTERED VALUER HAS DETERMINED THE NET SALABLE AREA AT 1549.1 SQ. METER AND VALUED THE LAND @ 2100 PER SQ. METER AT RS. 32,53,000. WHEREAS THE DVO HAS TAKEN THE NET SALABLE AREA AT 3119.04 SQ., METER AND APPLIED THE RATE OF 1964 PER SQ. METER. CONSIDERING THESE FACTS, THE CIT (A) OBSERVED THAT THE CONTENTION OF THE APPELLANT THAT NET SALABLE AREA SHOULD BE EXCLUDING 907.53 SQ. METER SOLD EARLIER IS FOUND TO BE CORRECT HENCE, TOTAL SALABLE AREA 3119.04 SQ. METER. HOWEVER, CIT (A) AFTER TAKING INTO ACCOUNT OF REGISTERED VALUER REPORT CONSIDERED THE OPEN PLOT OF LAND AREA AT 1549.1 SQ. METER AND VALUED THE SAME AT RS. 30,42,432[ 1549.10X1964 PER SQ. METER AND ALSO CONSIDERED THE VALUATION EMBEDDED OF FSI AREA OF 1706.96 SQ. METER AND VALUED THE SAME @ 1571[ 1964- 20% LESS OF1964] AT RS. 26,81,634. THUS, CIT (A) HAS CONSIDERED THE VALUATION AT RS. 57,24,066 [ 30,42,432+26,81,634] AS AGAINST VALUATION OF DVO AT RS. 61,26,000. THUS, THE ADDITION WAS RAJESH JAYMUKUND SHETH V. ITO WD-3 VALSAD /I.T.A. NO. 666/AHD/2017/A.Y.121-3 PAGE 4 OF 7 REDUCED TO RS. 17,24,066 AS AGAINST ADDITION OF RS. 21,26,000 MADE BY THE AO. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LAND SOLD IN QUESTION WAS ADJACENT TO SLUM ZUPAPATI AND PLOT OF LAND WAS DOWN 5 TO 6 METERS FROM ROAD. THE DVO REPORT IS DTD. 29.02.2016 WHEREAS PLOT OF LAND SOLD ON 02.01.2012. SUBSEQUENTLY THERE WAS CONSTRUCTION OF MULTISTORIED BUILDING HENCE, THE BUYERS HAS BARGAINED A LOT ON SALE CONSIDERATION. THE TOTAL PERMITTED NA AREA BY THE AUTHORITIES IS AT 1407.99 SQ. METER OUT OF 4026.57 SQ. METER AREA MEANING THEREBY THAT 65% AREA WAS NON-USABLE. WHILE COMPUTING LONG-TERM CAPITAL GAIN THE TOTAL AREA WAS FOR COST OF ACQUISITION WAS CONSIDERED AT 3119.04 SQ. METER BECAUSE OF THE FACTS THAT COP AND APPROACH ROAD AREA MARGIN AREA ALSO TRANSFERRED IN FAVOUR OF PRIYANKA ROW HOUSE AND M/S. S. S. ASSOCIATES. AS PER THE DVO, COMPARABLE SALE INSTANCES ARE 1410, AND 2647 PER SQ. METER. ALL THE PLOT ARE VERY FAR FROM THE LOCATION OF THE ASSESSEE`S LAND. THE RATE WORKED OUT BY THE REGISTERED VALUER IS AT 1262 PER SQ. METER. LOWEST COMPARABLE SALE INSTANCES BY DVO IS 1410 PER SQ. METER. THUS, THERE IS ONLY DIFFERENCE OF 11.72 %, WHICH IS VERY MUCH NEGLIGIBLE RAJESH JAYMUKUND SHETH V. ITO WD-3 VALSAD /I.T.A. NO. 666/AHD/2017/A.Y.121-3 PAGE 5 OF 7 CONSIDERING ABOVE STATED ADVERSE FACTORS. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO CITED SALE INSTANCES OF ADJOINING AREA AT 995, 1411 AND 1281 PER SQ. METER ON SALE DATE OF 27.03.2012, 24.10.2011 AND 02.01.2012. THE DVO VALUED PLOT OF LAND BY TAKING RATE OF 1964 AS AGAINST STAMP DUTY VALUATION RATE OF 2100 PER SQ. METER ONLY ALLOWING DEDUCTION OF RS. 136, WHICH WORKED OUT TO 6.92%, WHICH IS NOT JUSTIFIABLE. THEREFORE, VALUATION ADOPTED BY DVO SHOULD BE REDUCED BY 30% CONSIDERING THE FACTS THAT BUYER IS BUILDER AND BARGAINED A LOT, AS THEY CANNOT MAKE USE COP LAND ALREADY OCCUPIED. IF CIT (A) APPEAL WORKING OF FSI IS TAKEN THEN NO CAPITAL GAINS IS TAXABLE AS FSI IS NOT A CAPITAL ASSET. THEREFORE, FSI AREA IN VACANT LAND IS NOT PROPER. 6. AU CONTRAIRE, THE LD. SR. DR RELIED ON CIT (A) AND THE AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE PERUSAL OF SALE DEED PLACED AT PAPER BOOK PAGE NO. 39 TO 53, IT IS SEEN THAT PLOT OF LAND AREA SOLD BY THE ASSESSEE IS AT 3119.04 SQ. METER; THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE VALUATION IS TO BE ADOPTED OF THE LAND AREA SOLD. THEREFORE, THE FSI CONSIDERED BY THE CIT (A) IS NOT FOUND TO BE CONVINCING IN CASE SALE OF PLOT OF LAND. WE FIND THAT THE STAMP DUTY VALUATION HAS RAJESH JAYMUKUND SHETH V. ITO WD-3 VALSAD /I.T.A. NO. 666/AHD/2017/A.Y.121-3 PAGE 6 OF 7 ADOPTED CIRCLE RATE AT 2100 PER SQ. METER WHEREAS DVO HAS CONSIDERED 1964 PER SQ. METER ON THE BASIS OF SOME SALE INSTANCES. THE REGISTERED VALUER OF THE ASSESSEE HAS CONSIDERED THE RATE OF 1262 PER SQ. METER.2647, 2076, 1981, AND 1410 PER SQ. METER (PB-23 DVO REPORT). THE LEARNED COUNSEL FOR THE ASSESSEE ALSO CITED SALE INSTANCES OF ADJOINING AREA AT 995, 1411 AND 1281 PER SQ. METER ON SALE DATE OF 27.03.2012, 24.10.2011 AND 02.01.2012 WHEREAS DVO HAS CITED SALE INSTANCES OF NEARBY AREA. THE DVO VALUED PLOT OF LAND BY TAKEN 1964 AS AGAINST STAMP DUTY VALUATION RATE OF 2100 PER SQ. METER ONLY ALLOWING DEDUCTION OF RS. 136 PER SQ. METER. CONSIDERING THE LOCATION OF PLOT OF LAND SOLD WHICH IS SITUATED IN POOR LOCALITY, THERE ARE VARIOUS ADVERSE FACTORS, AND BARGAINING POWER OF BUILDER AND SALABLE OR USABLE AREA IS ONLY AT 1549 SQ. METER, IT WOULD BE REASONABLE TO REDUCE THE RATE OF 1964 BY 30% MARGIN. ACCORDINGLY, THE RATE WOULD BE AT RS. 1375 PER SQ. METER [1964-589=1375]. SIMILARLY, IF SALE INSTANCES OF LOWEST OF DVO AT 1410 AND HIGHEST OF THE ASSESSEE REGISTERED VALUER AT 1411 IS CONSIDERED AND AVERAGE WERE TAKEN IT WOULD BE 1410 PER SQ. METER. THEREFORE, TAKING AVERAGE OF RS. 1392.50 [1375+1410= 2785/2=1392.5], THE RATE WOULD WORKED OUT TO RS. 1392.50. ACCORDINGLY, IF THE RATE OF RS.1392.50 IS APPLIED RAJESH JAYMUKUND SHETH V. ITO WD-3 VALSAD /I.T.A. NO. 666/AHD/2017/A.Y.121-3 PAGE 7 OF 7 TO 3119.04 SQ. METER AREA SOLD. THE VALUE OF PROPERTY WOULD BE AT RS.43,43,263 [1392.50X3119.04]. IN VIEW OF THESE FACTS, CIRCUMSTANCES, AND TAKING A HOLISTIC VIEW, WE CONSIDER VALUATION OF LAND SOLD AT RS. 43,43,263 AS JUST, PROPER AND REASONABLE AS AGAINST THE VALUE CONSIDERED AT RS. 57,24,066 BY LD. CIT (A). SINCE THE SALE, CONSIDERATION IS SHOWN AT RS. 40,00,000. THEREFORE, ADDITION IS REDUCED TO RS.3,43,263 [43,43263-40,00,000] AS AGAINST RS. 17,24,066 SUSTAINED BY THE CIT (A). THIS GROUNDS OF APPEAL IS THEREFORE, PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. PRONOUNCED IN THE OPEN COURT ON 02.11.2018 SD/- SD/- (C.M. GARG) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT: DATED: 2 ND NOVEMBER 2018/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT