THE DCIT, 1(2), V. M/S SANGHI BEVERAGE PVT.LTD.,

ITA 797/IND/2005

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1492 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-11-2009
• Assessment Year: misc
• Appeal Filed On: 28-10-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K KARAN
• Assessee Lawyers: M C MEHTA; H CHIMNANI CAS
• Keywords: Cost of acquisition; Fair market value; Valuation report; Capital Gains
• Section: 143(1); 143(2); 6; 154

Judgement Text

- 1 - IN THE INCOEMTAX APPELATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH AND SHRI V.K. GUPTA, AM ITA NO. 797/IND/05 A.Y. 2002-03 DY. COMMISSIONER OF INCOME TAX 1(2) INDORE APPELLANT VS M/S SANGHI BEVERAGE PVT. LTD INDORE RESPONDENT PAN AACCS 4143F APPELLANT BY SHRI V.K. KARAN, SR. DR RESPONDENT BY SHRI M.C. MEHTA & H. CHIMNANI, CAS O R D E R PER JOGINDER SINGH, JM THIS APPEAL IS BY THE REVENUE CHALLENGING THE ORDER OF THE CIT(A) DATED 31.8.2005 ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED FIRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS.26,57,316/- MADE UNDER THE HEAD LO NG TERM CAPITAL GAIN WITHOUT APPRECIATING THE FACTS DISCUSSED IN THE ASS ESSMENT ORDER AND - 2 - FURTHER FAILED TO APPRECIATE THAT THE COST OF LAND IN QUESTION LOCATED IN A REMOTE AREA COULD NOT BE MORE THAN THE PRICE OF LAN D IN HEART OF THE CITY. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SHR I V.K. KARAN, LEARNED SENIOR DR AND SHRI M.C.MEHTA, LEARNED COUNS EL FOR THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE RE VENUE IS THAT DURING THE RELEVANT PERIOD, THE ASSESSEE SHOWED SALE OF 8 PLOTS FOR THE CONSIDERATION OF RS.54,29,800/- REFLECTING THE BASI S OF INDEXED COST OF ACQUISITION BY FURTHER SHOWING THE LONG TERM CAPITA L LOSS OF RS.28,99,191/-. AS PER THE REVENUE, THE ASSESSEE W AS INCORPORATED ON 3.6.1996 AND THEREAFTER AGRICULTURAL LAND ADMEASURI NG 11.03 ACRES WAS PURCHASED BY IT ON 14.10.1996 FOR ESTABLISHING COCO COLA BOTTLING PLANT AND ICE FACTORY. IT WAS POINTED OUT THAT IN 1976 T HE LAND ADMEASURING 6.32 ACRES WAS SOLD TO M/S. SANGHI STAFF HOUSING CO OPERATIVE PRIVATE LIMITED AND THE BOTTLING PLANT WAS CLOSED IN THE FI NANCIAL YEAR 1986-87. THE ICE FACTORY WAS SOLD IN JANUARY, 1995 AND THE B UILDING PREMISES WAS LET OUT TO M/S BHOPAL MOTORS LIMITED, A GROUP CONCE RN, ON RENT OF RS.2,10,000/- PER ANNUM. THE REMAINING 8 PLOTS WERE SOLD DURING THE PERIOD RELEVANT TO THE IMPUGNED ASSESSMENT YEAR FOR A TOTAL CONSIDERATION OF RS. 54,29,800/-. A STRONG PLEA WAS RAISED THAT THERE WAS NO BASIS FOR ADOPTING SUCH A HIGH FIGURE AS IN THE POSH LOCALITY LIKE PALASIA, THE RATE - 3 - WAS RS. 16/- TO RS.18/- PER SQ. FT. IT WAS ALSO CON TENDED THAT THE COST OF DEVELOPMENT HAS BEEN BROUGHT DOWN BY INDEXATION MET HOD. IT WAS PLEADED THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS ADOPTED A MID-WAY WITHOUT ANY BASIS WHEREAS THE AO HAS BASIS BY MENTI ONING THE SALE INSTANCES OF POSH LOCALITIES AND ALSO OF THE NEARBY AREA. THE ASSESSMENT ORDER WAS STRONGLY DEFENDED. 3. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE CONTENDED THAT THE LAND USE FROM AGRICULTURE TO NON-AGRICULTU RE WAS DONE IN 1969. THEREFORE, THE LAND WAS CLAIMED TO BE NON-AGRICULTU RAL LAND. A PART OF THE LAND WAS RESIDENTIAL IN 1976 AND ONLY SURPLUS L AND LYING NEARBY STAFF COLONY WAS DEVELOPED. THE IMPUGNED PORTION WAS CLA IMED TO BE DEVELOPED IN THE YEAR 2001-02 AND THE ADOPTION OF A PARTICULAR RATE BY THE LEARNED FIRST APPELLATE AUTHORITY WAS DEFENDED. IT WAS CLAIMED THAT THE SECOND VALUATION REPORT WAS DULY FILED BEFORE T HE FIRST APPELLATE AUTHORITY. IT WAS PLEADED THAT THE ASSESSEE SOLD T HE LAND AT RS. 147/- PER SQ. FT. AND THE AO HAS GONE BY THE COST OF IMPROVEM ENT. IT WAS FURTHER PLEADED THAT THE LAND RATES DEPENDS UPON THE LOCATI ON OF THE PLOT AND OTHER FACTORS FOR WHICH RELIANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF TRILOK KUMAR JHALANI; ITA N O. 98/IND/03. - 4 - IN REPLY, THE LEARNED DR CONTENDED THAT THE CALCULA TION MADE BY THE FIRST APPELLATE AUTHORITY IS VERY MUCH DEFECTIVE WHEREAS THE CALCULATION DONE BY THE AO IS CORRECT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PUT FOR TH BY THE LEARNED RESPECTIVE COUNSELS AND PERUSED THE MATERIAL AVAILA BLE ON RECORD. BRIEF FACTS ARE THAT THE ASSESSEE COMPANY CONVERTED AND D EVELOPED ITS SURPLUS LAND MEASURING 67005 SQ.FT INTO SALEABLE PLOTS IN SATISH VIHAR CONSISTING OF 14 PLOTS OUT OF WHICH 6 PLOTS WERE SO LD DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2001-02 AT A CONSID ERATION OF RS.38,79,840/- AND THE REMAINING 8 PLOTS WERE SOLD DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2002-03 AT A CONSID ERATION OF RS.54,29,800/-. THE LAND IS SITUATED AT AGRA BOMBA Y ROAD. THE ASSESSEE DECLARED NIL INCOME IN ITS RETURN OF INCOM E FILED ON 31.10.2002 WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 13.3.2003 AND THEREAFTER THE INTIMATION WAS RECTIFIED ON 31.3.200 4 UNDER SECTION 154 WHEREBY THE TAX LIABILITY WAS DETERMINED ON THE BAS IS OF BOOK PROFIT SHOWN BY THE ASSESSEE. NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE TO WHICH THE ASSESSMENT PROC EEDINGS WERE ATTENDED FROM TIME TO TIME AND THE REQUIRED INFORMA TION/DETAILS ON - 5 - VARIOUS POINTS WERE FURNISHED BY THE ASSESSEE AND T HE SAME WERE EXAMINED BY THE AO. 5. AS PER THE INFORMATION FURNISHED BY THE ASSESSEE , THE COMPANY I.E. M/S SANGHI BEVERAGES PRIVATE LIMITED, WAS INCORPORA TED ON 3.6.1966 AND THEREAFTER AGRICULTURAL LAND ADMEASURING 11.03 ACRES WAS PURCHASED ON 14.10.1996 FOR ESTABLISHING A COCA COLA BOTTLING PLANT AND ICE FACTORY. THE COMPANY STARTED ITS BUSINESS OF VENTU RING INTO PRODUCTION OF SOFT-DRINK AND MANUFACTURING OF ICE ALONG WITH B OTTLING OF COCA COLA ON 12.3.1976. THE LAND MEASURING 6.32 ACRES WAS SO LD TO M/S SANGHI STAFF HOUSING COOPERATIVE PRIVATE LIMITED, THEREAFT ER, THE LAND REMAINED WITH THE ASSESSEE WAS ONLY TO THE EXTENT OF 4.7 ACR ES. THE BOTTLING PLANT WAS CLOSED DOWN IN FINANCIAL YEAR 1986-87 AND THE I CE PLANT WAS SOLD ON 30.1.1995. AFTER CLOSURE OF THE ICE PLANT, THE BUI LDING PREMISES WAS LET OUT TO M/S BHOPAL MOTORS PRIVATE LIMITED (A GROUP C ONCERN) ON AN ANNUAL RENT OF RS.2,10,000/-. THE ASSESSEE ALSO RE CEIVED RS.1,35,000/- PER ANNUM AS GUARANTEE COMMISSION FOR FURNISHING BA NK GUARANTEE IN FAVOUR OF M/S BHOPAL MOTORS LIMITED TO BANK OF BARO DA. AS PER THE AUDITORS REPORT DATED 3.9.2001 THE REMAINING LAND I.E. 4.7 ACRES WAS CONVERTED AND THE FACTORY LAND ADMEASURING 1.54 ACR ES I.E. 67005 SQ. FT WAS CONVERTED INTO SALEABLE PLOTS IN THE NAME OF SA TISH VIHAR. OUT OF 14 - 6 - PLOTS SIX PLOTS WERE SOLD DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2001-02 FOR WHICH THE TOTAL SALE CONSIDERATION OF T HESE PLOTS WAS REFLECTED AT RS. 38,79,840/-. IN THE PERIOD RELEVA NT TO THE ASSESSMENT YEAR 2002-03 THE REMAINING 8 PLOTS WERE SOLD AT A T OTAL CONSIDERATION OF RS.54,29,800/- AND THE CAPITAL GAIN LOSS WAS WORKED OUT AT (-) RS.31,13,682/- FOR THE ASSESSMENT YEAR 2001-02 AND FOR THE RELEVANT ASSESSMENT YEAR I.E. 2002-03 THE LOSS WAS SHOWN AT RS.28,99,191/- BY CLAIMING TO HAVE INCURRED THE AMOUNT OF RS.88,89,77 0/- TOWARDS IMPROVEMENT/DEVELOPMENT EXPENSES OF LAND WHICH IS A BOUT RS. 43/- PER SQ.FT. THE NECESSARY DETAILS ARE AS UNDER :- S.NO PARTICULARS OF EXPENSES AMOUNT (RS.) (I) PAYMENT TO MUNICIPAL CORPORATION,INDORE 217,817 (II) PAYMENT TO DISTINCT REALTY LIMITED, INDORE, FOR DEVELOPMENT OF LAND 18,09,135 (III) VARIOUS LABOUR CHARGES PAID THROUGH MR. SUNIL ATHAWALA 10,818 (IV) PAYMENT TO C.S. ELECTRICALS (FOR ELECTRICAL POLLS, ETC.) 39,130 (V) M/S SHREYAS HOUSING COOPERATIVE SOCIETY (ADITYA NAGAR FOR PROVIDING WAY TO ENTRY FROM THEIR COLONY) 700,000 (VI) MPEB TRANSFORMER SHIFTING 112,870 TOTAL 28,89,770 - 7 - THE COST OF IMPROVEMENT PROPORTIONATE TO THE PLOTS SOLD IN 2001-02 WAS WORKED OUT AS UNDER :- (I)TOTAL AREA OF LAND DEVELOPED 67,005 SQ. FT. (II) THE AREA OF LAND RELATABLE TO EIGHT PLOTS SOLD DURING THE PREVIOUS YEAR (AS SHOWN BY THE ASSESSEE) 36,833 SQ.FT. (III)PROPORTIONATE DEVELOPMENT EXPENSES INCURRED IN A.Y. 2001-02 RS.1,588,522 (28,89,770X36,833/67,005) (ALTERNATIVELY 28,89,770 13,01,248 =15,88,522) (IV) DEVELOPMENT EXPENSES INCURRED IN A.Y. 2002-03 RS.7,350 (V) INDEXED COST OF IMPROVEMENT RS.1,674,12 4 (15,88,522X426/406) + 7350) NOTE : ASSESSEE HAS TAKEN THIS FIGURE AT RS.16,75,088 FOR THE COST OF ACQUISITION/VALUATION, THE ASSESSEE FURNISHED A REPORT/CERTIFICATE FROM THE APPROVED VALUER AS PER WHICH THE APPROVED VALUER WORKED OUT THE VALUE @ RS. 500/- PER SQ. MET RE AT RS. 31,13,610/- . AS PER THE REVENUE, NO BASIS/SUPPORTIVE DOCUMENT WAS FURNISHED BY THE ASSESSEE EXCEPT CLAIMING THAT THE LAND IS SITUATED AT PRIME LOCATION. THE ADOPTION OF RATE @ RS. 500/- PER SQ. METER, AS PER THE REVENUE, IS VERY EXCESSIVE IN COMPARISON TO PREVAILING RATE IN ADJOI NING AREA IN THE YEAR - 8 - 1981-82. AS PER THE LEARNED SENIOR DR, THE DEVELOP MENT ACTIVITIES DURING THE RELEVANT TIME IN THE AREA WERE VERY NOMI NAL AND THE LAND UNDER REFERENCE WAS CONVERTED INTO PLOTS DURING THE ASSESSMENT YEAR 2000-01 AS IT WAS AN UNDEVELOPED PIECE OF LAND ADJA CENT TO ITS FACTORY. THE ASSESSEE COMPANY WAS ASKED TO FURNISH REGISTERE D DEED FOR THE LAND ADMEASURING 6.32 ACRES SOLD TO SANGHI STAFF COOPERA TIVE HOUSING SOCIETY TO ASCERTAIN THE PREVAILING RATE IN THE YEA R 1976. HOWEVER, AS PER THE REPLY OF THE ASSESSEE DATED 16.3.2005, THE SAID AGREEMENT WAS NOT TRACEABLE. IT WAS CLAIMED THAT THE LAND SOLD I N 1976 WAS TO ACCOMMODATE ITS STAFF AT A NOMINAL PRICE AND WAS SO LD BELOW THE MARKET RATE, THEREFORE, THE SAME CANNOT BE THE BASIS FOR C OMPUTING THE CAPITAL GAINS. THE ADOPTION OF RATE OF RS.500/- PER SQ. M. WAS CLAIMED TO BE PROPER AND CORRECT. THE AO ALSO COLLECTED A CHART CONTAINING INFORMATION OF CERTAIN SALE INSTANCES FROM THE OFFI CE OF VALUATION OFFICER, INDORE, OF VISHNUPURI AND INDRAPURI COLONI ES WHICH WERE ADJACENT TO GRAM PIPLIA RAO. THE PARTICULARS IN THE CHART WERE FOR THE PERIOD FROM 1976 TO 1983. AS PER THE REVENUE, PROPE R OPPORTUNITY WAS PROVIDED TO THE ASSESSEE TO JUSTIFY ADOPTION OF RAT E AT RS.500/- PER SQ.M. ULTIMATELY AN AMOUNT OF RS. 26,57,316/- WAS CALCULA TED AS LONG TERM CAPITAL GAIN FOR THE IMPUGNED ASSESSMENT YEAR AS AG AINST THE CAPITAL LOSS - 9 - SHOWN AT RS.28,99,191/- BY THE ASSESSEE. THE RELEVA NT PORTION OF THE ASSESSMENT ORDER IS REPRODUCED HEREUNDER :- 2.4 AS REGARDS THE COST OF ACQUISITION, A COPY OF VALUATION REPORT OBTAINED FROM SHRI ACHAL K. CHOUDHARY, A CHARTERED ARCHITECT & APPROVED VALUER HAS BEEN FURNISHED. THE CERTIFICATE AND VALUATION REPORT IS UNDATED. THE FAIR MARKET VALUE OF THE LAN D UNDER REFERENCE (I.E. SURPLUS LAND OF 1.54 ACRE WHI CH IS EQUIVALENT TO 6277.22 SQ. MTRS. OR 67,005 SQ. FT IN THE YEAR OF 1981-82 HAS BEEN WORKED OUT BY THE SAID CHARTERED ARCHITECT AND APPROVED VALUER @ RS. 500/- PER SQ. MTRS. AT RS. 31,13,610/-. NO BASIS/SUPPORT ING DOCUMENT HAS BEEN GIVEN THEREIN EXCEPT HIS OBSERVATION THAT THE SAID LAND IS SITUATED IN VERY PRIMA LOCATION. THE RATE OF LAND ADOPTED @ RS. 500/- PER SQ. M. IS EQUIVALENT TO RS. 46.47 PER SQ. FT. AND IS FO UND TO BE VERY EXCESSIVE WITH REGARDS TO THE PREVAILING RA TE IN THE SAID VILLAGE PIPLIA RAO IN THE YEAR 1981-82, AS IT WAS LOCATED IN THE OUT SKIRT AREA OF CITY OF INDORE WHERE DEVELOPMENTAL ACTIVITIES AT THAT TIME WERE VE RY NOMINAL. THE LAND UNDER REFERENCE HAS BEEN DEVELOPED AND CONVERTED INTO THE PLOTS DURING AY 2001-02 ONLY AND AS SUCH IT WAS ONLY AN UNDEVELOPED PIECE OF LAND ADJACENT TO ITS FACTORY. THE LAND UN DER REFERENCE I.E. KHASRA NO. 51/1, 52/1, 56/1, 59/2, 6 0/2, 61/1 AND 89/3 IN THE GRAM PIPLIA RAO WAS AGRICULTUR AL LAND AND THE PREVAILING UNIT RATES IN THE YEAR 1981 -82 USED TO BE PER ACRE AND NOT PER SQ. M. OR PER SQ. F T. AND WERE QUITE NOMINAL. SINCE ASSESSEE COMPANY HAD SOL D ITS 6.32 ACRES IN THE SAME PREMISES TO SANGHI STAFF HOUSING COOPERATIVE PVT. LTD. IN THE YEAR 1976, IT WAS REQUIRED TO FURNISH THE COPY OF REGISTERED DEED SO AS TO HAVE AN IDEA OF PREVAILING RATE IN THE YEAR 1976. THE DOCUMENT AS WELL CAN BE TAKEN AS BASIS TO ARRIVE AT THE APPROXIMATE COST IN THE YEAR 1981. HOWEVER, VIDE REPLY DATED 16.03.2005, IT WAS SUBMITTED THAT THE S ALE AGREEMENT WAS NOT TRACEABLE AS THE SAME WAS EXECUTE D IN 1976. THEREFORE, THE ASSESSEE WAS ASKED TO OBTA IN - 10 - THE SAME FROM SANGHI STAFF HOUSING COOPERATIVE PVT. LTD. TO WHOM THE LAND WAS SOLD. TO THIS VIDE REPLY DATED 21.03.2005, IT WAS SUBMITTED THAT THEY WERE TRYING THEIR BEST TO OBTAIN THE COPY OF REGISTRY FR OM THE REGISTRAR OFFICE. IT WAS ALSO SUBMITTED THAT ASSES SEE HAD SOLD THE SAID LAND IN THE YEAR 1976 TO ACCOMMODATE ITS STAFF AT A VERY NOMINAL PRICE; AND THAT THE SAID LAND WAS SOLD BELOW THE MARKET RATE A ND HENCE THE SAME CANNOT EVEN OTHERWISE BE THE BASIS F OR COMPUTING CAPITAL GAIN. IT WAS ALSO SUBMITTED THAT THEY HAD OBTAINED A COPY OF REGISTERED DOCUMENT OF LAND AT 545, VISHUPURI ANNEX, PIPLIA RAO, INDORE EXECUTED O N 18.08.1983 FOR 1935 SQ. FT. FOR A CONSIDERATION OF RS. 46,000/- PLUS REGISTRATION EXPENSES INCURRED WHICH WERE OF RS. 7,130/-. ACCORDINGLY, TOTAL COST OF T HE SAID PLOT WAS OF RS. 53,130/- AND PER SQ FT RATE COMES T O RS. 27.46. IT WAS ALSO SUBMITTED VIDE AFORESAID LETTER DATED 21.03.2005 THAT THE LOCATION OF VISHNUPURI ANNEX IS VERY INFERIOR AS COMPARED TO THE LOCATION OF THE ASSESSEES LAND WHICH IS SITUATED ON MAIN AB ROAD. HENCE, MARKET VALUE OF THE LAND OF THE ASSESSEE AT RS. 50/- PER SQ FT AS ESTIMATED BY THE GOVT. APPROVED REGISTERED VALUER IS PROPER AND CORRECT. FURTHER OPPORTUNITIES WERE GIVEN TO THE ASSESSEE TO PRODUCE THE COPY OF REGISTRY IN RESPECT OF SALE TO SANGHI STAFF HOUSING COOPERATIVE PVT. LTD. ON 22 ND , 23 RD AND 28 TH MARCH, 2005. BUT, INSPITE OF THE COMMITMENT GIVEN B Y THE COUNSEL, THE SAME COULD NOT BE FURNISHED. IT WA S STATED THAT THE PHOTO COPY OF THE SAID DEED HAD BEE N TAKEN BY THE OFFICIALS OF THE REGISTRAR OFFICE AND THE SAME COULD BE ISSUED TO ASSESSEE AFTER CERTIFYING T HE SAME. IN FACT, DURING THE COURSE OF HEARING ON 21.03.2005, IT WAS POINTED OUT TO THE ASSESSEES COUNSEL THAT AS PER CERTAIN SALE DEEDS WHICH WERE OBTAINED FROM THE OFFICE OF REGISTRAR IN CONNECTION WITH SOME OTHER CASE, THE RATES IN THE YEAR 1981 IN PALASIA (WHICH WAS ONE OF THE POSH LOCALITY OF INDO RE DURING THAT PERIOD ALSO) WERE RS. 16 TO 18 PER SQ. FT; AND THUS RATES ADOPTED BY THE ASSESSEE VALUED FOR PIECE OF LAND, WHICH WAS IN THE OUT SKIRT OF THE CI TY AT - 11 - RS. 46.47 PER SQ. FT. WAS TOO HIGH. HOWEVER, NO REP LY TO THIS POINT WAS GIVEN TILL 28.03.2005. MEANWHILE, I HAD ALSO COLLECTED A CHART CONTAINING THE INFORMATION O N CERTAIN SALE INSTANCES IN THE VISHNUPURI AND INDRAP URI COLONIES, WHICH ARE ADJACENT TO THE GRAM PIPLIA RAO , FROM THE OFFICE OF VALUATION OFFICER, INDORE. THE INFORMATION HAD BEEN COMPLIED BY HIS OFFICE FOR THE VARIOUS PARTS/COLONIES OF INDORE FOR READY REFERENC E. THE PARTICULARS ARE FOR THE PERIOD 1978 TO 1983. ACCORDINGLY, ON 28.03.2005, DURING THE COURSE OF HEARING, THESE INSTANCE OF SALES IN RESPECT OF PALA SIA AND VISHNUPURI & INDRAPURI AREAS AS COMPILED IN CHART ANNEXURE-I & ANNEXURE-II RESPECTIVELY WERE GIVEN TO THE ASSESSEES COUNSEL FOR READY REFERENCE . THESE CHARTS ARE ALSO ENCLOSED AS ANNEXURE-I & ANNEXURE-II TO THIS ORDER. ON THAT DAY, DURING THE HEARING, IT WAS POINTED OUT TO HIM THAT AS PER THE DETAILS CONTAINED IN ANNEXURE-II, THE SALES RATE DU RING THE YEAR 1983 FOR THE PLOT SITUATED IN INDRAPURI CO LONY WAS RS. 28/- PER SQ. FT WHICH IS MORE OR LESS SAME AS FURNISHED BY THE ASSESSEE IN RELATION TO A PLOT IN THE AREA OF VISHNUPURI. FURTHER THE SAME CHART (ANNEXURE-II) REFLECTS THE SELLING RATE IN THE YEAR 1982 AT RS. 25/- PER SQ. FT, IN 1981 AT RS. 15/- PER SQ. FT. IN 1980 AT RS. 13/- PER SQ FT FOR THE PLOTS IN VISHNUP URI. THESE PLOTS WERE DEVELOPED PLOTS WHEREAS THE ASSESSEES LAND UNDER REFERENCE WAS UNDEVELOPED LAN D ADJACENT TO ITS FACTORY IN 1981. AS ALREADY MENTIO NED, SAID PIECE OF LAND WAS DEVELOPED BY THE ASSESSEE I N THE YEAR 2000. THE DEVELOPMENT COST WORKS OUT TO R S. 43/- PER SQ FT ITSELF. IN VIEW THEREOF THE ASSESSEE WAS AGAIN GIVEN ONE MORE OPPORTUNITY TO JUSTIFY THE RAT E ADOPTED BY IT AT RS. 500/- PER SQ FT. ON 29.03.200 5, THE ASSESSEE FURNISHED ITS REPLY AS WELL AS THE COPY OF SALE DEED IN RESPECT OF ITS 6.32 ACRES OF LAND SOLD TO S ANGHI STAFF HOUSING COOPERATIVE PVT. LTD. IN THE YEAR 197 6. THE TOTAL CONSIDERATION SHOWN THEREON IS ONLY RS.2,80,000/-. - 12 - 6. THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY WHEREIN THE LEARNED CIT(A) ADOPTED THE RA TE OF THE LAND AT RS.30/- PER SQ.FT., THEREFORE, THE AO WAS DIRECTED TO CALCULATE THE REVISED CAPITAL GAINS ON THE SALE OF LAND. THE RELEVANT POR TION OF THE IMPUGNED ORDER IS REPRODUCED HEREUNDER :- 2.3 I HAVE CONSIDERED THE OBSERVATION OF THE AO MADE IN THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. THE LAND AS SOLD BY THE APPELLANT WAS SITUATED AT THE MAIN A.B. ROAD, INDORE. THE ASSESSE E HAS ALSO FILED COPY OF THE REGISTERED DOCUMENTS EXECUTED IN RESPECT OF LAND AT VISHNU PURI ANNEX, INDORE, AT THE RATE OF RS. 27.46 PER SQ. FT. THE LOCATION OF THE APPELLANTS LAND IS FAR BETTER THAN THAT OF LAND AT VISHNU PURI. THE AO ALSO PLACED RELIANCE ON VARIOUS REGISTERED DOCUMENTS OF DIFFERENT PLACES OF THE CITY AS MENTIONED IN ANNEXURE-I OF THE ASSESSMENT ORDER. ALL THESE INSTANCES ARE NOT COMPARABLE TO THE CASE OF THE ASSESSEE. THE VALUE OF THE LAND/PLOTS SOLD AT INDRAPURI AND VISHNUPURI ANNEX AS PER THE REGISTERED DOCUMENTS AS MENTIONED IN ANNEXURE-II OF THE ORER I.E. THE LAND AT NEARBY LOCATIONS VARIES BETWEEN RS. 15/- TO RS. 28/- PER S Q. FT. IN THE YEAR 1981 AND ONWARDS. EVEN BY REVERSE INDEXING, FAIR MARKET VALUE OF THE LAND COMES TO RS.36.25 PER SQ. FT IN ADDITION TO THIS, THE APPELL ANT HAS THE SUPPORT OF THE VALUATION REPORT PREPARED BY TWO TECHNICAL PERSONS I.E. QUALIFIED ENGINEERS DULY REGISTERED WITH THE INCOMETAX DEPARTMENT. IN BOTH THESE REPORTS, THE FAIR MARKET VALUE OF THE LAND HA S BEEN ESTIMATED BETWEEN RS. 40/- TO RS. 50/-. THESE REPORTS CANNOT BE IGNORED ALTOGETHER ON THE BASIS O F WHIMS AND FANCIES. IT IS A KNOWN FACT THAT THE PRESTIGIOUS PROJECTS OF DEVELOPMENT OF CHOITHRAM MANDI AND THE CONSTRUCTION OF THE RING ROAD WERE IN THE OFFING AT THAT TIME. THE WORK, TAKEN UP BY THE - 13 - INDORE DEVELOPMENT AUTHORITY (IDA), WAS ALREADY IN PROGRESS. THEREFORE, THE RATE IN THE SAID AREA WAS FAR BETTER THAN OTHER AREAS OF THE CITY. AFTER CONSIDERING THE ABOVE FACTS, I AM OF TH VIEW THAT T HE CERTIFICATE REGARDING FAIR MARKET VALUE OF THE LAND SO SOLD ISSUED BY TWO QUALIFIED EXPERTS SHOULD NOT HAV E BEEN SUMMARILY REJECTED BY THE AO . THE AO HAS GIVEN NO COGENT REASON FOR DISREGARDING THE EXPERT ADVICE. INSTEAD, HE PROCEEDED ON THE BASIS OF SURMISES GENERATED BY DISCRETELY COLLECTED INFORMATION.THAT INFORMATION ALSO DID NOT FULLY CORROBORATE THE VALUE ADOPTED BY THE AO . THERE MAY BE A FEW DISCREPANCIES IN THE VALUATION REPORTS PREPARED BY THE APPROVED VALUERS AS THE INFORMATION IN THEIR POSSESSION COULD HAVE BEEN GIVEN AS SELECT ED BY THE APPELLANT EQUALLY DISCRETELY. THE SAID CERTIFICATES PREPARED BY THEM AFTER A LONG GAP OF PERIOD, COULD HAVE BEEN BASED ON FACTS WHICH DID NO T ACCURATELY REFLECTED THE TREND REGARDING THE VALUE AT THAT TIME. HENCE, THERE IS ALWAYS PROBABILITY OF VARIATION OF THE 10 TO 20% IN THE PRICE ESTIMATED. THE AO HAS TAKEN THE VALUE OF LAND AT TOO LOW A RAT E WHICH CANNOT BE ACCEPTED BY ANY STRETCH OF IMAGINATION. BUT AT THE SAME TIME, THE RATE OF RS. 46.47 PER SQ. FT. APPLIED BY THE APPELLANT IS TOO H IGH TO BE BELIEVED AS CORRECT. THE FAIR MARKET VALUE A S WORKED OUT BY THE APPLICANT BY REVERSE INDEXING METHOD AT RS. 36.25 PER SQ. FT THOUGH NOT ACCURATE APPEARS TO BE MORE NEAR THE ACCEPTABLE. IF WE TAK E INTO CONSIDERATION THE TWO VALUES I.E. ONE ADOPTED BY THE APPELLANT AND THE OTHER BY THE AO, THE AVERAGE VALUE COMES TO AROUND RS.28 PER SQ.FT. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ABOVE DISCUSSION, I BELIEVE THAT IT WILL BE LOGICAL, FAIR AND REASONABLE AND ALSO IT WILL MEET THE ENDS OF JUSTIC E IF THE FAIR MARKET VALUE OF THE LAND IN QUESTION AS ON 1.04.1981 IS TAKEN AT RS.30/- PER SQ. FT. THE AO IS , THEREFORE, DIRECTED TO ADOPT THE FAIR MARKET VALUE OF THE LAND AT RS.30/- PER SQ. FT. AS ON 1.04.1981 IN - 14 - PLACE OF RS.7/- PER SQ. FT. AND CALCULATE THE REVIS ED CAPITAL GAIN ON SALE OF LAND. 7. IF THE ASSESSMENT ORDER, IMPUGNED ORDER AND THE ARGUMENTS ADVANCED BY THE LEARNED RESPECTIVE COUNSELS ARE KEP T IN JUXTRA-POSITION AND ANALYSED, WE HAVE FOUND THAT NO BASIS/SUPPORTIN G DOCUMENT HAS BEEN FURNISHED BY THE ASSESSEE IN ADOPTING FAIR MARKET V ALUE BY THE REGISTERED VALUER OF THE ASSESSEE IN VALUING THE LAND @ RS. 50 0/- PER SQ. MTR. AS PER THE REVENUE, THE ADOPTED RATE WAS EXCESSIVE WIT H REGARD TO THE PREVAILING RATE IN THE SAID VILLAGE I.E. PIPLIA RAO IN THE YEAR 1981-82 AS IT WAS LOCATED IN THE OUTSKIRT OF INDORE CITY WHEREAS AT THE RELEVANT TIME THE DEVELOPMENT ACTIVITIES WERE VERY NOMINAL. THERE IS NO DISPUTE TO THE FACT THAT THE IMPUGNED LAND WAS DEVELOPED AND CONVE RTED INTO PLOTS DURING THE ASSESSMENT YEAR 2001-02 ONLY. IN 1976 T HE ASSESSEE SOLD ITS 6.32 ACRES OF LAND AT THE SAME PREMISES TO M/S. SAN GHI STAFF HOUSING COOPERATIVE PRIVATE LIMITED. INSPITE OF SUFFICIENT OPPORTUNITY PROVIDED TO THE ASSESSEE, THE ASSESSEE COULD NOT FURNISH COP Y OF REGISTERED DEED SO THAT CORRECT RATES CAN BE ASCERTAINED WITH PREVAILI NG RATES IN THE YEAR 1976. EVEN ON ASKING BY THE ASSESSING OFFICER, THE ASSESSEE COULD NOT OBTAIN/SUPPLY THE COPY FROM THE HOUSING COOPERATIVE SOCIETY AND TOOK A STAND THAT THE LAND WAS ALLOTTED AT A VERY NOMINAL PRICE THAT TOO BELOW THE MARKET RATE. CONSEQUENTLY, IT CANNOT BE MADE THE B ASIS FOR COMPUTING - 15 - THE CAPITAL GAINS. IT IS ALSO SEEN THAT THE ASSESS ING OFFICER COLLECTED VARIOUS INFORMATIONS/CERTAIN SALE INSTANCES FROM TH E OFFICE OF VALUATION OFFICER, INDORE, FOR THE PERIOD FROM 1978 TO 1983 I N VISHNUPURI AND INDRAPURI COLONIES WHICH WERE ADJACENT TO GRAM PIPL IA RAO WHERE IMPUGNED LAND WAS SITUATED. THESE SALE INSTANCES WE RE BROUGHT TO THE NOTICE OF THE ASSESSEE WHICH HAS BEEN MADE PART AS ANNEXURES 1 AND 2 OF THE ASSESSMENT ORDER. DURING THE YEAR 1983 THE RAT E IN INDRAPURI WAS BETWEEN RS. 25/- TO RS. 28/- PER SQ. FT. THESE RAT ES WERE OF DEVELOPED PLOTS. ON THE OTHER HAND, IN THE IMPUGNED ORDER THE LEARNED FIRST APPELLATE AUTHORITY HAS NOT QUOTED ANY SALE INSTANC E RATHER ESTIMATED THE LAND @ RS. 30/- PER SQ. FT. UNDER THE AFORESAID FA CTS AND TO PUT AN END TO THE LITIGATION, WE DIRECT THE LEARNED ASSESSING OFF ICER TO ADOPT THE RATE AT RS. 25/- PER SQ.FT. IN PLACE OF RS. 30/- ADOPTED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AND RS. 7/- PER SQ. FT. CALCULATED BY THE ASSESSING OFFICER IN CALCULATING THE CAPITAL GAINS ON THE SALE OF LAND. CONSEQUENTLY, THIS APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 19 TH NOVEMBER, 2009 SD/- SD/- (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER NOVEMBER 19, 2009 COPY TO APPELLANT/RESPONDENT/CIT/CIT(A)/DR - 16 - *D/-