M/S S.K. ENTERPRISES, AJMER V. INCOME TAX OFFICER, WARD-2-1, AJMER

ITA 714/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2072 (ITAT-JAIPUR)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA JCIT A
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Cost of acquisition; Fair market value; Valuation report
• Section: 143(3); 50C; 48; 22; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM ITA. NO. 714/JP/2019 ASSESSMENT YEARS : 2009-10 M/S S.K. ENTERPRISES NEAR VAISHALI PETROL PUMP, VAISHALI NAGAR, AJMER. JAIPUR. CUKE VS. THE ITO, WARD-2(1), AJMER. PAN/GIR NO.: AAQFS 2058 E APPELLANT RESPONDENT ASSESSEE BY : SHRI SUNIL PORWAL (C.A.) REVENUE BY : SHRI K.C. GUPTA (JCIT) A DATE OF HEARING : 21/01/2020 DATE OF PRONOUNCEMENT : 15/04/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), AJMER DATED 27.03.2019 FOR ASSESSMENT YEAR 2009-10 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APP EAL:- (1) NOT CONSIDERING THE OBJECTIONS RAISED ON VALUA TION OFFICERS REPORT AND ACCORDINGLY CONSIDERING THE FAIR MARKET VALUE OF LAND SOLD AT HIGHER RATE U/SEC 50C THE OBJECTION WERE FO R (A) RESTRICTION OF LAND USAGES (B) LOCATION (C) SIZE OF LAND (D) FA R OR FSI ETC. (2) APPLYING WRONG CII VALUE FOR INDICATION OF COST OF ACQUISITION. 2. AT THE OUTSET, THE LD. AR SUBMITTED THAT THIS IS A SECOND ROUND OF APPELLATE PROCEEDING AND AS PER DIRECTION OF THE TR IBUNAL VIDE ORDER ITA NO. 714/JP/2019 M/S S.K. ENTERPRISES VS. ITO 2 DATED 05.11.2018 THE ASSESSING OFFICER HAS REFERRED THE VALUATION OF THE PROPERTY TO DVO AND THE DVO VIDE ITS VALUATION REPORT DATED 25.10.2018 HAS DETERMINED THE VALUE OF THE LAND AT RS. 3,24,73,954/- HOWEVER, VARIOUS OBJECTIONS RAISED BY THE ASSESSEE WERE NOT CONSIDERED. IT WAS SUBMITTED THAT SIMILAR PLEA WAS RAISED BEFORE THE ASSESSING OFFICER AS WELL AS LD. CIT(A) HOWEVER, NO FINDING HAS BEEN RECORDED BY THE LOWER AUTHORITIES AND IN THIS REGAR D IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS RAISED MANY OBJECTI ONS (TECHNICAL) ON DVOS REPORT AS BELOW BASED ON EXPERT ADVICE AND G UIDELINES OF MINISTRY OF FINANCE GOVERNMENT OF INDIA, 2009 (GUID ELINES FOR VALUATION OF IMMOVABLE PROPERTIES VALUATION CELL INCOME TAX DEPARTMENT) COPY AS ENCLOSED. WHICH ARE FURTHER REQUIRED FOR AMENDME NTS IN VALUATION OF LAND CONSIDERED. IT WAS FURTHER SUBMITTED THAT THE AMENDMENTS NEEDED IN VOS REPORT (A) WHEREAS A PARTICULAR TRANSACTION IS CONSIDERED FOR MANY REASONS BEFORE DERIVING THE REAL VALUE (A) RESTRICTION ON L AND USAGE (B) POPULATION AS ON 01.04.2009 (C) LOCATION (D) SIZE ( E) USAGES (E) FAR OR FSI ETC. WHICH HELPS IN DETERMINING THE REAL VALUES . (B) WITH RESPECT TO VALUATION OF LAND PLOT (SIZE 22 60 SQ.MT.) NON DEPRECIABLE) BEING OVERSIZED (LARGE PLOT ABOVE 1000 SQ. MT.) IN GENERAL LARGE PLOTS FETCH LESS UNIT PRICE DUE TO LESS NUMBE R OF BUYERS; (AS PER CHAPTER 5 PARA 5.2.1.3(D) IN GUIDELINES FOR VALUATI ON OF IMMOVABLE PROPERTIES 2009 BY VALUATION CELL INCOME TAX DEPART MENT REBATE DUE TO LESS AVAILABILITY OF BUYERS FOR LARGE PLOTS-(-) 0.5 % PER 100 SQ.MT. CAN BE CONSIDERED AS REASONABLE THE REGISTERED VALUERS RE PORT FOR ELABORATE CALCULATION & DISCUSSION ON ISSUE DISCUSSED BY MINI STRY FINANNCE HAS ALSO MENTIONED THIS FACT (FACTOR) IN ITS GUIDELINE S FOR VALUATION CELL ITA NO. 714/JP/2019 M/S S.K. ENTERPRISES VS. ITO 3 INCOME TAX DEPARTMENT 2009. SINCE THE FAR (FLOOR) A REA RATIO) OR FSI(FLOOR SPACE INDEX) HAS ALSO UTILIZED (OPTIMUM) OF COMMERCIAL PROPERTY AT THE TIME OF SALE (AS PER NORMS PERMISSI BLE FAR AS ON DATE WAS 1.75 OF 2260 SQ. MT.= 3955 AQ.MT.; HENCE FURTHE R 20% DEDUCTION IN LAND RATE FOR NOT UTILIZING FAR IS AT MOST FULL CAPACITY. WHICH HAS NOW BEEN CONVERTED TO CINEMA TO COMMERCIAL (MULTIPLEX, HOTEL, GENERAL COMMERCIAL) AS PER ENCLOSED ORDER NO. A.V.P.NIYOJAN /P#/18 DATED 13.08.2018. (C) GROUND COVERAGE PERMISSIBLE IS LESS IN LARGE CO MMERCIAL PLOTS RESULTING DESIRED COMMERCIAL VALUE IS NOT OBTAINABL E; SHALL DEFINITELY FETCH LESSER MARKET VALUE AS COMPARE TO SMALLER COM MERCIAL PLOT. WHEREAS AS PER DLC GUIDELINES OF SUB-REGISTRAR SIMI LAR COMMERCIAL DLC RATE IS APPLICABLE IN BOTH CASE. THE V.O. ON REPRESENTATION MADE HAS NOT CONSIDERED ALL THESE OBJECTIONS AS PER THE GUIDELINES OF MINISTRY OF FIN ANCE E.G. (A) NOT GRANTING THE DEDUCTION IN PRICE BY 0.5% SQ. 100 MT. ( LARGE PLOT ABOVE 1000 SQ. MT.). (B) WITH RESPECT TO LESS FAR UNTILIZATION A REDUCTI ON OF 20% IN LAND RATES HAS BEEN SUGGESTED; BUT INSTEAD THAT THE DVO HAS GRANTED DISCOUNTED VALUE OF CONVERSION CHARGES PAIIRS. 3, 66,740/- (AMOUNT PAID RS. 11,39,040/- AS AUGUST, 18 FOR CONVERSION O F LAND TO ADA). THUS FOR CAUSE OF JUSTICE & LAW, IT IS REQUESTED TO CONSIDER THESE LEGAL ASPECTS FOR VALUATION U/SEC 50C(2). THE DVO HAS NO POWER TO CONVERT THE CONVERSION AMOUNT PAID TO CONVERT IN DISCOUNTED VALUE; NOR CAN BE AVOID THE GUIDELINES NOR CAN AVOID THE GUIDELINES. IT IS REQUESTED TO CONSIDER THE FACTS. LOOKING TO AFORESAID FACTS IT I S REQUESTED TO ITA NO. 714/JP/2019 M/S S.K. ENTERPRISES VS. ITO 4 RECONSIDER THE VALUE ADOPTED BY DVO & ACCEPTED BY C IT(A) SUBJECT TO AFORESAID FACTORS TO RECALCULATED THE CAPITAL GAIN. 3. PER CONTRA, THE LD. DR IS HEARD WHO HAS RELIED O N THE FINDING OF THE LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL OF THE ASSESSMENT O RDER, WE FIND THAT THE ASSESSEE HAS RAISED CERTAIN CONTENTIONS BEFORE THE ASSESSING OFFICER STATING THAT DVO REPORT SUFFERS FROM CERTAIN DISCRE PANCIES. IN THIS REGARD THE AO HAS STATED THAT NO ADDITION HAS BEEN MADE ON THE BASIS OF THE DVO REPORT SINCE THE VALUE AS PER DVO IS MO RE THAN THE VALUE ADOPTED BY THE SUB-REGISTRAR, THEREFORE, THE FULL V ALUE CONSIDERATION IS BEING TAKEN AS PER THE VALUATION OF THE SUB-REGISTR AR AND UNDER THE CIRCUMSTANCES, THE DISCREPANCIES IN DVOS REPORT EV EN IF THERE, DO NOT MAKE ANY EFFECT OR IMPACT SIMPLY BECAUSE THE FULL V ALUE OF CONSIDERATION IS NOT BEING TAKEN AS PER THE DVOS REPORT AND THER EFORE, CONSIDERING THE FACT THAT THE FULL VALUE OF CONSIDERATION DOES NOT UNDERGO ANY CHANGE AFTER THE VALUATION OF THE DVO, THEREFORE, L ONG TERM CAPITAL GAIN ALSO DOES NOT UNDERGO ANY CHANGE AND REMAINS THE S AME AS WAS DETERMINED VIDE THE ORDER U/S 147 R.W.S. 143(3) OF THE ACT DATED 28.12.2011. PER PERUSAL OF THE ASSESSMENT ORDER WE, THEREFORE, FIND THAT THERE IS AN ACKNOWLEDGEMENT BY THE ASSESSING O FFICER THAT THE ASSESSEE HAS RAISED CERTAIN OBJECTIONS REGARDING TH E DVOS REPORT HOWEVER, CONSIDERING THE FACT THAT THE VALUATION AS PER THE DVO WAS NOT CONSIDERED FOR WORK OUT THE CAPITAL GAIN THE CO NTENTION SO ADVANCE BY THE ASSESSEE WERE NOT ADDRESS. HOWEVER, IF WE L OOK AT THE ORDER OF ITA NO. 714/JP/2019 M/S S.K. ENTERPRISES VS. ITO 5 THE LD. CIT(A), WE FIND THAT HE HAS WORKED OUT THE VALUE OF THE LAND AS PER DVOS REPORT AS CAN BE SEEN FROM THE FOLLOWING FINDING WHICH READS AS UNDER:- IT CAN BE SEEN THAT THE VALUE OF LAND ASSESSED BY THE SUB-REGISTRAR-2, AJMER FOR THE PURPOSE OF LEVYING STAMP DUTY WAS RS. 4,01,44,731/- AND VALUE OF BUILDING WAS ASSESSED AT RS. 35,07,066/- ( RS. 17,67,066+ RS. 17,40,000). SINCE THE VALUE OF LAND ESTIMATED BY TH E DVO WAS RS. 3,24,73,954/- IS LESS THAN THE VALUE OF LAND ASSESS ED BY THE STAMP DUTY AUTHORITY (RS. 4,01,44,731/-), THEREFORE, AS PER TH E PROVISIONS OF SECTION 50C(2) AND 50C(3), THE VALUE ESTIMATED BY THE DVO H AS TO BE CONSIDERED AS FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER FOR THE PURPOSE OF SECTION 48. ACCORDIN GLY, THE CAPITAL GAIN ON SALE OF LAND HAS TO BE COMPUTED AS UNDER: COST OF LAND (AS DETERMINED BY THE DVO U/S 50C) RS . 3,24,73,954/- LESS INDEXED COST OF LAND RS. 79,21,999/- LONG TERM CAPITAL GAIN ON SALE OF LAND RS. 2,45, 51,955/- THE CAPITAL GAIN ON SALE OF LAND IN VIEW OF PROVISI ONS OF SECTION 50C R.W.S. 48 WOULD BE RS. 2,45,51,955/-. THE AS THE AO HAS DETERMINED THE CAPITAL GAIN ON SALE OF LAND RS. 3,09,29,574/-, THEREFORE, ADDITION OF RS. 63,77,619/- (RS. 3,09,29,574 - RS. 2,45,51,955) IS HEREBY DELETED AND REMAINING ADDITION OF RS. 2,45,51,955/- IS HERE BY CONFIRMED. WE, THEREFORE, FIND THAT THE VALUATION DONE BY THE DVO HAS BECOME RELEVANT IN LIGHT OF THE FINDING OF THE LD. CIT(A) FURTHER, WE FIND THAT THE ASSESSEE HAS RAISED SIMILAR CONTENTIONS REGARDING T HE DISCREPANCIES IN ITA NO. 714/JP/2019 M/S S.K. ENTERPRISES VS. ITO 6 THE VALUATION REPORT BEFORE THE LD. CIT(A) HOWEVER, THERE IS NO SPECIFIC FINDING RECORDED BY THE LD. CIT(A). IN THE ABSENCE OF FINDING RECORDED BY THE LOWER AUTHORITIES THE MATTER NEEDS TO BE REM ANDED BACK TO THE FILE OF THE LD. CIT(A) WHO SHALL CONSIDERED THE MAT TER RELATING TO OBJECTION ADVANCE BY THE ASSESSEE. REGARDING THE VA LUATION REPORT AND CALL FOR A REPORT IN THIS REGARD AND DETERMINE THE MATTER AS PER LAW. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 /04/2020. SD/- SD/- ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED:- 15/04/2020. *SANTOSH COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S S.K. ENTERPRISES, AJMER. 2. THE RESPONDENT- ITO, WARD-2(1), AJMER. 3. CIT 4. CIT(A) 5. DR, ITAT, JAIPUR. 6. GUARD FILE { ITA NO. 714/JP/2019} BY ORDER, ASST. REGISTRAR