Kisanlal B Jain, HUF, Nashik V. Income-tax Officer, Malegaon

ITA 785/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9916 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-08-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 25-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: SANJEEV S MUTHA
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Fair market value; Valuation report
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 785/PN/2010 (ASSTT. YEAR : 20 04-05) KISANLAL B JAIN HUF, APPELLANT HOUSE NO. 93, TILAK ROAD, MALEGAON, DIST. NASHIK PAN : AAFHK8700A V. THE INCOME TAX OFFICER RESPONDENT WARD 3(3), MALEGAON APPELLANT BY : SHRI. SANJEEV S. MUTHA RESPONDENT BY : MS. ANN KAPTHUA MA DATE OF HEARING : 28/8/1 2 DATE OF PRONOUNCEMENT : 19-10-12 O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE I MPUGNED ORDER OF THE LD CIT(A) - II, NASHIK DATED 16.02.2010 FOR T HE A.Y. 2004-05. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS : (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND AS PER THE PROVISIONS OF LAW, THE COMMISSIONER OF INCOME TAX, (APPEALS)-II, NASHIK IS NOT JUSTIFIED IN ESTIMATING THE SALES CONSIDERA TION OF THE AGRICULTURAL LANDS BEING G.NOS. 65/A/7, 70/4 & 71/2, YEOLA AT RS . 6,00,000/-, RS.5,80,000/- & RS. 5,00,000/- RESPECTIVELY AS AGAI NST THE ACTUAL SALES CONSIDERATION RECEIVED OF RS. 4,91,000/-, RS. 4,41, 000/- & RS. 3,61,000/- RESPECTIVELY. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND AS PER THE PROVISIONS OF LAW, THE COMMISSIONER OF INCOME TAX, (APPEALS)-II, NASHIK IS NOT JUSTIFIED IN ESTIMATING THE SALES CONSIDERA TION OF THE AGRICULTURAL LANDS BEARING G.NOS. 65/A/7, 70/4 & 71/2, YEOLA AT RS. 6,00,000/-, RS. 5,80,000/- & RS. 5,00,000/- RESPECTIVELY AND IGNORI NG THE VALUATION OF THE LANDS CALCULATED AS PER HYPOTHETICAL LAYOUT SCHEME AS PRESCRIBED UNDER THE LAND ACQUISITION PROCEEDINGS. (3) ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER THE PROVISIONS OF LAW, THE COMMISSIONER OF INCO ME TAX, (APPEALS)-II, NASHIK IS NOT JUSTIFIED IN DIRECTING THE DVO FOR VA LUATION OF THE AGRICULTURAL LANDS SITUATED IN GREEN-BELT, WHEN IT WAS SPECIFICA LLY CONFIRMED BY THE DVO THAT THE SAID LANDS CANNOT BE VALUED BY HIM. 2 ITA NO. 785/PN/2010 KISANLAL B. JAIN HUF, A.Y.2004-05 2. THE MAIN DISPUTE IN THIS APPEAL IS RELATING TO T HE ADOPTION OF THE FAIR MARKET VALUE FOR THE PURPOSE OF COMPUTATION OF THE CAPITAL GAINS IN RESPECT OF THE 3 PLOTS OF LAND. THE ASSESSEE WAS J OINTLY HOLDING THE FOLLOWING PLOTS OF LAND : DESCRIPTION OF PLOT OF LAND ASSESSEES SHARE 1. GUT NO.65/A/7, PLOT IN THE YELLOW SHA RE ZONE (RESIDENTIAL ZONE) OF YEOLA MUNICIPAL AREA 2. GUT NO. 70/4 IN GREEN ZONE 1/3 RD SHARE (AGRICULTURAL LAND) SITUATED IN THE YEOLA MUNICIPAL AREA 3. GUT NO. 71/2 IN GREEN ZONE S HARE (AGRICULTURAL LAND) IN THE ABOVE AREA IT WAS NOTICED BY THE A.O THAT THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY WAS HIGHER THAN THE ACTUAL SALE DECLARED BY THE ASSESSEE AND HE PROPOSED TO EVOKE THE PROVISIONS OF SEC.50C OF THE ACT. THE ASSESSEE OBJECTED TO THE ACTION OF THE A.O AND THE A.O REFER RED THE MATTER OF VALUATION TO THE DEPARTMENTAL VALUATION OFFICER (DV O), THANE. AS PER THE DVOS REPORT, HE COULD MAKE THE VALUATION OF ONE PL OT OF LAND THAT IS BEING GUT NO. 65/A/7 WHICH WAS LOCATED IN THE RESID ENTIAL ZONE AND IN RESPECT OF THE OTHER TWO PLOTS OF LAND, HE EXPRESSE D HIS INABILITY TO DO THE VALUATION AS BOTH THE PLOTS WERE AGRICULTURAL PROP ERTIES LOCATED IN THE GREEN ZONE. THE A.O APPLIED THE VALUATION DONE BY THE DVO IN RESPECT OF THE PROPERTY BEING GUT NO. 65/A/7 TO THE OTHER PROP ERTIES FOR THE PURPOSE OF SEC. 50C OF THE ACT. THE ASSESSEE APPROACHED TH E JOINT CIT, RANGE-3, NASHIK U/S. 144A OF THE ACT, WHO GAVE THE DIRECTION S TO THE A.O FOR COMPLETING THE ASSESSEES ASSESSMENT AS PER PROVIS IONS OF SEC. 50C OF THE ACT. THE WORKING OF THE CAPITAL GAIN WAS MADE AS UNDER : GUT NO. AS SHARE DT. OF PURCHASE PURCHASE PRICE INDEX DATE OF SALE STAMP DUTY VALUE FOR REGISTRATION ACTUAL SALE PRICE WORKING OF CAPITAL GAIN U/S.50(C)(6- 4F) ASSESSEES SHARE (6- 4) 1 2 3 4 5 6 7 8 9 65/A/7 15/07/97 271000 271000X463 331 =379072 16/1/04 700000 491000 320928 240696 70/4 29/10/97 221000 221000X463 331 =309132 16/1/04 700000 441000 390868 195434 71/2/ 28/10/98 215000 215000X463 331 =300740 16/1/04 600000 361000 299260 149630 3 ITA NO. 785/PN/2010 KISANLAL B. JAIN HUF, A.Y.2004-05 TOTAL 707000 998944 2000000 1293000 1011056 585760 3. THE MAIN OBJECTION OF THE ASSESSEE WAS THAT THE PROVISIONS OF SEC. 50C OF THE ACT CANNOT BE MADE APPLICABLE TO THE PRO PERTIES SITUATED IN THE GREEN ZONE AS THE VALUATION OFFICER COULD NOT MAKE VALOUATION. THE A.O. COMPLETED THE ASSESSMENT OF THE ASSESSEE FOLLOWING THE DIRECTIONS ISSUED BY THE JT CIT, RANGE 3, NASHIK U/S. 144A OF THE AC T DETERMINING THE TOTAL CAPITAL GAIN AT RS.5,85,760/- AS AGAINST RS. 1,42,7 09/- DECLARED BY THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER BEFORE T HE LD CIT(A) SERIOUSLY OBJECTING THE ASSESSMENT ORDER ON THE ISSUE OF THE WORKING OF CAPITAL GAIN MADE BY THE A.O. IT APPEARS THAT DURING THE APPELL ATE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, SO FAR AS 2 P ROPERTIES ARE CONCERNED,I.E. GREEN ZONE PROPERTIES, THE VALUATION OF WHICH WAS INITIALLY NOT DONE BY THE DEPARTMENTAL VALUER, REFERENCE WAS MADE TO THE VALUATION OFFICER AND REPORT OBTAINED, AND THE SAID VALUATION REPORTS WERE ALSO PROVIDED TO THE ASSESSEE. AFTER CONSIDERING T HE OBJECTIONS OF THE ASSESSEE, THE LD CIT(A) GAVE RELIEF TO THE ASSESSEE AS UNDER : 1. IN RESPECT OF PROPERTY BEARING GUT NO. 65/7/A WHICH WAS IN THE RESIDENTIAL ZONE, REDUCED THE VALUE BY RS. 1,00,000 /- I.E. IN PLACE OF RS. 7,00,000/-, THE A.O HAS BEEN ASKED TO ADOPT RS.6,00,000/- AS A FAIR MARKET VALUE. IN RESPECT OF OTHER TWO PROPERTIES I.E. BEARING GUT NO. 70/4 AND 71/2, LD C IT(A) DIRECTED THE A.O TO GIVE THE FOLLOWING RELIEF : I. FOR CONVERSION OF AGRICULTURAL LAND INTO NON-AGRIC ULTURAL PURPOSE, 30% OF THE LAND SHOULD BE REDUCED FOR THE OPEN SPACE AND OTHER AMENITIES LIKE ROADS ETC. AS HAS BEEN DONE BY THE DVO. II. AFTER CONSIDERING THE ABOVE REDUCTION OF LAND FROM THE TOTAL AREA, A FURTHER REDUCTION OF 40% OF THE VALUE SHOULD BE CONSIDERED FOR THE PURPOSE OF TIME TAKEN ON CONVERSION, DEPRECIATION IN REAL VALUE DUE TO DROUG HT CONDITION AND OTHER INCIDENTAL EXPENDITURE INCURRED . 4. THE OPERATIVE PART OF THE REASONS AND DIRECTIONS OF THE LD CIT(A) IS AS UNDER : 8. THE NEXT ISSUE IS RELATING TO THE APPELLANTS PL EA THAT THE NECESSARY CONCESSIONS MUST HAVE BEEN GIVEN REGARDING THE REDU CTION IN THE FAIR 4 ITA NO. 785/PN/2010 KISANLAL B. JAIN HUF, A.Y.2004-05 MARKET VALUE DUE TO DROUGHT CONDITIONS AND OTHER ME THODS OF VALUATION AS PER THE MUMBAI STAMP ACT/HYPOTHETICAL LAYOUT SCHEME UNDER THE LAND ACQUISITION PROCEEDINGS. THE DVO REJECTED THE APPE LLANTS PLEA THAT NO REDUCTION NEED TO BE GIVEN EITHER DUE TO DROUGHT CO NDITIONS OR METHOD OF VALUATION AS HE FOLLOWED THE READY RECKNOR VALUES A S ADOPTED BY THE STAMP VALUING AUTHORITIES FOR THE PURPOSE OF REGIST RATION AS IT REPRESENTS THE FAIR MARKET VALUE. HOWEVER, THE DVO STATED THA T THE OTHER TWO PROPERTIES WHICH WERE LOCATED IN THE MUNICIPAL LIMI T AND HAD POTENTIAL OF HIGHER MARKET VALUE AND HE HAD ALREADY GIVEN 30% DI SCOUNT FOR THE PURPOSE OF CONVERSION INTO NON-AGRICULTURAL LAND. 9. THE SUBMISSIONS OF THE APPELLANT ARE EXAMINED WI TH REFERENCE TO THE VALUATION DONE BY THE DVO. IT IS UNDISPUTED FA CT THAT THE ACTUAL SALE CONSIDERATION RECEIVED IS LESSER THAN THE VALUE ADO PTED BY THE SVA/DVO. THE DETAILS OF VALUATION ARE GIVEN BELOW : SR.NO. DETAILS OF PROPERTY ACTUAL SALE PRICE RECEIVED VALUE DETERMINED BY THE SVA VALUE DETERMINED BY THE DVO 1 65/A/7 4,91,000 7,00,000 8,97,750 2 70/4 4,41,000 7,00,000 7,78,400 3 71/2 3,61,000 6,00,000 6,77,600 10. IT MAY BE SEEN FROM THE ABOVE THAT THE VALUATI ON DONE BY THE DVO IS HIGHER THAN THE VALUE ADOPTED BY THE SVA . FURTHER, THE DVO HAS NOT CONSIDERED SOME OF THE VALID OBJECTIONS RAI SED BY THE APPELLANT, WHICH HAVE SOME BEARING IN THE VALUATION. THE DVO HAS GIVEN 30% DISCOUNT FOR THE PURPOSE OF CONVERSION INTO NON-AGR ICULTURAL AND FOR OTHER AMENITIES. HOWEVER, HE HAS NOT DISCOUNTED THE TIME TAKEN FOR CONVERSION AND OTHER EXPENSES AND THE REAL MARKET CONDITIONS. IF THESE FACTORS ARE ALSO CONSIDERED, THE APPELLANT IS ENTITLED TO GET A FURTHER CONCESSION IN THIS REGARD. CONSIDERING THE OBJECTIONS RAISED BY THE APPELLANT AND ALSO THE OTHER COMPLEX FACTORS INVOLVED IN THE VALUATION , THE PROPERTIES LOCATED AT GUT NO. 70/4 AND 71/2 ARE TO BE DETERMINED AS UN DER : I) FOR CONVERSION OF AGRIL. LAND INTO NON-AGRIL.PUR POSE, 30% OF THE LAND SHOULD BE REDUCED FOR THE OPEN SPACE AND OTHER AMENITIES LIKE ROADS ETC. AS HAD BEEN DONE BY THE DVO. II) AFTER CONSIDERING THE ABOVE REDUCTION OF THE LA ND FROM THE TOTAL AREA, A FURTHER REDUCTION OF 40% OF THE VALUE SHOUL D BE CONSIDERED FOR THE PURPOSE OF TIME TAKEN FOR CONVERSION, DEPRE CIATION IN REAL VALUE DUE TO DROUGHT CONDITIONS AND OTHER INCIDENTA L EXPENDITURE INCURRED. IF THE ABOVE FACTORS ARE CONSIDERED, THE VALUATION OF THE ABOVE PROPERTIES IS ARRIVED AT AS UNDER : THE PROPERTY AT GUT NO. 65/A/7 WAS ALREADY IN RESID ENTIAL ZONE AND ALSO THE VALUATION WAS DONE AS PER THE READY RECKNO NER. THERE IS ALSO NO NEED TO GIVE ANY DISCOUNT ON ACCOUNT OF CON VERSION IN THIS CASE. HOWEVER, CONSIDERING THE REAL ESTATE DOWN TU RN AND OTHER 5 ITA NO. 785/PN/2010 KISANLAL B. JAIN HUF, A.Y.2004-05 FACTORS DISCUSSED ABOVE, A CONCESSION OF RS. 1,00,0 00/- CAN BE GIVEN TO THE VALUE ASSESSED BY THE AO. THEREFORE, THE AO IS DIRECTED TO ADOPT THE FAIR MARKET VALUE OF THIS PRO PERTY AT RS.6,00,000/- AS AGAINST RS. 7,00,000/- ADOPTED AT THE TIME OF ASSESSMENT. AS REGARDS THE OTHER TWO PROPERTIES, T HE VALUATION IS WORKED OUT AS UNDER : GUT NO. 70/4 GUT NO. 71/2 TOTAL AREA 13,900 SQ.MRS. 12,100 SQ.MTRS. LESS: 3 0% (AS GIVEN BY THE DVO) 4,170 S1.MTRS 3,630 SQ.M TRS. BALANCE AREA 9,730 SQ.MTRS. 8,470 SQ.MTRS. THE VALUE @ RS.100/- PER SQ.MTR.AS PER THE DVO RS.9,73,000/- RS.8,47,000/- LESS : DISCOUNT @ 40% OF THE VALUE ON ACCOUNT OF OTHER FACTORS DISCUSSED ABOVE. RS.3,89,200/- RS.3,38,800/- NET VALUE RS.5,83,800/- RS.5,08,200/- ROUNDED OFF RS.5,80,000/- RS. 5,00,000/- NOW THE ASSESSEE HAS RAISED THE GRIEVANCE FOR NOT F ULLY ACCEPTING THE VALUATION DECLARED BY THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. WE HAVE ALSO ANXIOUSLY PERUSED THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEES OB JECTIONS HAVE BEEN DEALT WITH BY THE LD CIT(A) IN RESPECT OF THE 3 PRO PERTIES. AT THE TIME OF THE ASSESSMENT, THE VALUATION OF THE TWO PROPERTIES WAS NOT MADE BY THE DVO, BUT ON REFERENCE, DURING THE APPELLATE PROCEED INGS BEFORE THE FIRST APPELLATE AUTHORITY, THE VALUATION REPORT WAS RECEI VED. WE FURTHER FIND THAT THE LD CIT(A) GAVE 40% REDUCTION IN PLACE OF THE 30% FROM THE VALUATION OF THE 2 PROPERTIES I.E. GUT NO. 70/4 AND 71/2 FOR THE PURPOSE OF CONVERSION OF THOSE AGRICULTURAL LANDS FOR THE N ON-AGRICULTURAL USE AND FOR OTHER AMENITIES. IN RESPECT OF THE PROPERTY BE ARING GUT NO. 65/A/7, THE LD CIT(A) HAS FURTHER REDUCED THE VALUE BY RS. 1,00,000/- CONSIDERING THE REAL ESTATE DOWN TURN. NO CONVINCI NG MATERIAL HAS BEEN PLACED BEFORE US TO SHOW THAT THE VALUATION MADE BY THE LD CIT(A) IS AT HIGHER SIDE. IN OUR OPINION, THE APPROACH OF THE L D CIT(A) IS REASONABLE FOR PUTTING END TO THE CONTROVERSY. WE FIND NO REA SON TO INTERFERE WITH THE ORDER OF THE LD CIT(A). ACCORDINGLY, THE SAME IS CONFIRMED. 6. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. 6 ITA NO. 785/PN/2010 KISANLAL B. JAIN HUF, A.Y.2004-05 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19TH OCTOBER 2012. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (R.S.PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 19 TH OCTOBER, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-II, NASHIK 4. THE CIT(A)- II, NASHIK 5. THE D.R. A BENCH, PUNE 6. GUARD FILE /- TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE