The ACIT, Vapi Circle, Vapi V. Shri Bhaskar Krishnaji Barve,HUF, U.T. OF DADRA & NAGAR HAVELI

ITA 821/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1455 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 15-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Fair market value; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER. ITA. NO. 821/AHD/2011 (ASSESSMENT YEAR: 2007-08) ASSISTANT COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI AP PELLANT VS. SHRI BHASKAR KRISHNAJI BARVE (HUF) BARVES HOUSE, AT & POST : RAKHOLI, VIA: SILVASSA, U.T. OF DADRA NAGRA HAVELI RESPONDENT & C.O. NO.103/AHD/2011 (IN ITA. NO. 821/AHD/2011) (ASSESSMENT YEAR: 2007-08) SHRI BHASKAR KRISHNAJI BARVE (HUF) BARVES HOUSE, AT & POST : RAKHOLI, VIA: SILVASSA, U.T. OF DADRA NAGRA HAVELI APPELLANT VS. ASSISTANT COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI RESPONDENT ITA NO. 821/AHD/11 & C.O. NO.103/A/11 A.Y. 07-08 [ACIT VS. SHRI BHASKAR KRISHNAJI BARVE (HUF)] PAGE 2 PAN: AABHB6416Q / BY REVENUE : SHRI RAJDEEP SINGH, SR. D.R. / BY ASSESSEE : SHRI VARTIK CHOKSHI, A.R. /DATE OF HEARING : 30.05.2016 /DATE OF PRONOUNCEMENT : 31 .05.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THESE TWO APPEALS OF WHICH ONE IS FILED BY REVENUE AND THE OTHER APPEAL I.E. CROSS OBJECTION BY ASSESSEE A RE AGAINST THE ORDER OF CIT(A), VALSAD, DATED 29.11.2011 FOR A .Y. 2007-08. 2. IN ITA NO.821/AHD/2011, THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) HAS DELETED ADDITION OF RS.1,10,90,848/- MADE BY THE A.O. AS THE A.O. HAD NOT ADOPTED THE CORRECT VALUE TO ARRIVE AT COST OF INDEXATION. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(APPEALS) HAS FAILED TO APPRECI ATE THAT THE VALUATION REPORTS DO NOT REFER TO SITUATIO N OF SURROUNDINGS PRESENT DURING THE YEAR 1981 OR EARLIE R AND HAS CONSIDERED THE SAME. 2.1 IN C.O. NO.20103/AHD/2011, THE ASSESSEE HAS TAK EN FOLLOWING GROUNDS OF APPEAL:- ITA NO. 821/AHD/11 & C.O. NO.103/A/11 A.Y. 07-08 [ACIT VS. SHRI BHASKAR KRISHNAJI BARVE (HUF)] PAGE 3 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN NOT UPHOLDING ASSESSEES GROUNDS NO .1, 2 & 3 TAKEN BEFORE HIM THAT THE IMPUGNED ASSESSMENT ORDER WAS BAD IN LAW MORE PARTICULARLY BECAUSE IT W AS PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JU STICE AND ALSO WITHOUT PROVIDING SUFFICIENT OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. 2. WITHOUT PREJUDICE, ON THE FACTS AND IN CIRCUMSTA NCES OF THE CASE, THE CIT(A) ERRED IN ADOPTING THE FAIR MARKET VALUE OF THE LAND SOLD BY THE ASSESSEE AS ON 1.4.1981 AT RS.25 PER SQ. MTR. AGAINST RS.40 PER SQ . MTR. CLAIMED BY THE ASSESSEE ON THE BASIS OF REPORT FROM A REGISTERED VALUER FURNISHED BEFORE THE ASSESSING OFFICER. 3. ASSESSEE HAD, DURING THE YEAR UNDER CONSIDERATIO N, SOLD AGRICULTURAL LAND BEARING SURVEY NO. 46/1/3/1 ADMEA SURING ABOUT 3 HECTORS AND LAND BEARING SURVEY NO. 37 ADME ASURING ABOUT 6 HECTORS AT VILLAGE NEAR RAKHOLI ON 19TH MAY , 2006. THE SALES CONSIDERATION RECEIVED ON ACCOUNT OF SUCH SALES WAS RS.3,28,47,500/-. THE SAID LAND WAS PURCHASED BY TH E ASSESSEE BEFORE 01.04.1981 AND HENCE APPLYING THE P ROVISIONS OF SECTION 55(2) OF THE ACT FOR COST OF ACQUISITION OF THE IMPUGNED ASSET WAS TO BE TAKEN AT ACTUAL COST OR FA IR MARKET VALUE WHICHEVER WAS MORE BENEFICIAL TO ASSESSEE. A SSESSEE ADOPTED THE FAIR MARKET VALUE AS ON 01.04.1981 AT R S.40 PER SQ. MTR. AS PER ITS VALUERS REPORT AS CLAIMED BY A SSESSEE. HOWEVER, ASSESSING OFFICER DID NOT ACCEPT THE COST (FAIR MARKET VALUE) ADOPTED BY ASSESSEE AND RECOMPUTED THE CAPIT AL GAINS CHARGEABLE TO TAX. THE CAPITAL GAINS COMPUTED BY A SSESSING OFFICER STOOD RS.3.17 CRORES BREAK-UP OF WHICH IS A S UNDER: ITA NO. 821/AHD/11 & C.O. NO.103/A/11 A.Y. 07-08 [ACIT VS. SHRI BHASKAR KRISHNAJI BARVE (HUF)] PAGE 4 PARTICULARS AS PER ASSTT. ORDER SALE CONSIDERATION 3,28,47,500 LESS: INDEXED COST OF ACQUISITION 10,86,189 2,09,286 X 519 100 (RS .2.23 PER SQ. MTR. X 93850 SQ. MTR. = 2,09,286 CAPITAL GAIN CHARGEABLE TO TAX 3,17,61,311 3.1 THE ASSESSING OFFICER MADE IMPUGNED ADDITION ON FOLLOWING GROUNDS: (I) THAT, THE BASIS OF ESTIMATING THE FAIR MARKET VALUE AT RS.4O PER SQ. MTR. ON 1.4.1981 WAS MERELY ON PRESUMPTIONS, SURMISES AND CONJECTURES. (II) THAT, THE APPELLANT HAD INSPITE OF SEVERAL REM INDERS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NEITHE R OBTAINED NOR SUBMITTED VALUATION REPORT FROM A REGISTERED VALUER TO SUPPORT THE FAIR MARKET VALUE SHOWN BY THE APPELLANT AS ON 1.4.1981. (III) THAT, VIDE LETTER DATED 24.12.2009 THE SUB-RE GISTRAR, ADMINISTRATION, DADRA AND NAGAR HAVELI, SILVASSA, H AD INTIMATED THAT THE PREVAILING RATE AT RAKHOLI VILLA GE AS ON 1.4.1981 WAS RS. 2.23 PER SQ. MTR. (IV) THAT THE APPELLANT'S BROTHER HAD ADOPTED RS.1 8 PER SQ. MTR. BEING FAIR MARKET VALUE AS ON 1.4.1981 FOR COMPUTING CAPITAL GAIN IN RESPECT OF SALE OF AGRICULTURAL LAND. (V) THAT, SINCE NO VALUATION REPORT OF A REGISTERE D VALUER HAD BEEN FILED THE RATE AS INDICATED BY THE SUB- REGISTRAR, ADMINISTRATION, DADRA AND NAGAR HAVELI, SILVASSA OF RS. 2.23 PER SQ. MTR. BE CONSIDERED AS ITA NO. 821/AHD/11 & C.O. NO.103/A/11 A.Y. 07-08 [ACIT VS. SHRI BHASKAR KRISHNAJI BARVE (HUF)] PAGE 5 AUTHENTIC AND ACCORDINGLY LONG TERM CAPITAL GAIN BE RE-COMPUTED. 3.2 THUS, ASSESSING OFFICER ADOPTED FAIR MARKET VAL UE OF LAND IN QUESTION AT RS. 2.23 PER SQ. MTR. FOR COMPUTATIO N OF CAPITAL GAIN. THE BASIS OF SAME WAS LETTER BY VALUATION RE PORT GIVEN BY THE GOVERNMENT REGISTERED VALUER. 4. IN APPEAL, THE GRIEVANCE OF ASSESSEE HAS BEEN TH AT THE BASIS OF THE VALUATION WAS NOT CONFRONTED TO ASSESS EE. BEFORE THE CIT(A), ASSESSEE MADE VARIOUS CONTENTIONS. HAV ING CONSIDERED THE SAME, CIT(A) HAS RESTRICTED THE VALU E OF LAND AT RS.25 PER SQ. MTR. AND DIRECTED THE ASSESSING OFFIC ER TO COMPUTE THE LONG TERM CAPITAL GAIN ACCORDINGLY. 5. SAME HAS BEEN OPPOSED BEFORE US BY BOTH PARTIES; REVENUE BY WAY OF ITS APPEAL AND ASSESSEE BY WAY OF ITS CROSS OBJECTION. LD. D.R. SUPPORTED THE ORDER OF ASSESSI NG OFFICER AND SUBMITTED THAT THERE IS NO BASIS FOR CIT(A) TO TAKE VALUE OF LAND AT RS.25 PER SQ. MTR. ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE BASIS ADOPTED BY ASSESSING OFFICER IS NOT BASED ON ANY EVIDENCE, SO CLAIM OF A SSESSEE SHOULD BE ALLOWED. ACCORDINGLY, HE REQUESTED TO AL LOW THE CLAIM OF ASSESSEE. 6. AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERI AL ON RECORD, WE FIND THAT THE ONLY DISPUTE THAT EXISTS I S THE QUANTUM OF DEDUCTION ALLOWABLE WHILE COMPUTING THE CAPITAL GAINS. THE ASSESSING OFFICER HEAVILY RELIED ON THE LETTER ISSUED BY THE SUB-REGISTRAR, ADMINISTRATION, DADRA & NAGAR HAVELI, ITA NO. 821/AHD/11 & C.O. NO.103/A/11 A.Y. 07-08 [ACIT VS. SHRI BHASKAR KRISHNAJI BARVE (HUF)] PAGE 6 SILVASSA WHILE ADOPTING THE RATE OF LAND @ 2.23 PER SQ. MTR. THIS LETTER WAS NOT CONFRONTED TO THE ASSESSEE. TH E CLAIM OF REVENUE IS THAT THE RATE OF SUCH LAND HAS BEEN ARRI VED AT AFTER TAKING INTO CONSIDERATION THE PREVAILING RATE IN TH E ENTIRE VILLAGE OF RAKHOLI. LD. COUNSEL FOR THE ASSESSEE D ISPUTED THE CONTENT OF THE LETTER FROM THE REVENUE DEPARTMENT, D & NH RELIED ON BY THE ASSESSING OFFICER WAS NOT CONFRONT ED TO ASSESSEE. HE SUBMITTED THAT A COPY OF THE LETTER F ROM THE SAID REVENUE DEPARTMENT DATED 11.02.2010 WHICH CLARIFIED THAT, 'THE RATE OF SUCH LAND HAD BEEN ARRIVED AT AFTER TA KING INTO CONSIDERATION THE PREVAILING RATE IN THE ENTIRE VIL LAGE OF RAKHOLI. OFFICER OF THE REVENUE DEPARTMENT HAD NOT VISITED THE SAID SITE BEFORE REPLYING THE LETTER OF ASSESSING O FFICER'. IN THE INTEREST OF JUSTICE, A REMAND REPORT WAS CALLED FRO M THE ASSESSING OFFICER ON THE PLEA TAKEN BY THE LD. COUN SEL VIDE LETTER DATED 17.05.2010. THE SUBSTANCE OF THE SAME IS AS UNDER: (I) THE AO HAD MADE ADDITION ON ACCOUNT OF CAPITAL GAINS ON THE BASIS OF INFORMATION RECEIVED FROM THE OFFICE OF SUB-REGISTRAR, DADRA AND NAGAR HAVELI, SILVASSA AND ACCORDINGLY HAD TAKEN COST OF LAND @ RS. 2,23 PER SQ.MT. THE LEGALITY OF THIS PROCESS I S NOT CHALLENGED BY THE APPELLANT AND ONLY THE RATE O F VALUATION IS SUBJECT MATTERS OF APPEAL. THOUGH THE ASSESSING OFFICER THEN COULD HAVE CONFRONTED THIS INFORMATION WITH THE APPELLANT BUT IT APPEARS DUE T O LACK OF TIME IT WAS NOT DONE. THIS DOES NOT TERMS T HE ADDITION MADE BY ASSESSING OFFICER AS INVALID OR BA D IN LAW. FURTHER, AS PER THE ANNEXURE-'C' OF THE PAP ER BOOK SUBMITTED IN YOUR OFFICE, THE APPELLANT HAS HIMSELF SUBMITTED THE COPY OF LETTER WRITTEN BY SUB - ITA NO. 821/AHD/11 & C.O. NO.103/A/11 A.Y. 07-08 [ACIT VS. SHRI BHASKAR KRISHNAJI BARVE (HUF)] PAGE 7 REGISTRAR, DADRA NAGAR & HAVELI, U.T. SILVASSA DATE D 11.02.2010 AS EVIDENCE IN SUPPORT OF HIS APPEAL. (II) THE APPELLANT HAS ALSO SUBMITTED THE VALUATION REPORT BY THE REGISTERED VALUER WHO WORKED OUT THE RATE @ RS. 40/- PER , SQ. MT. THE RATE OF RS. 40/- PER SQ. MT. INCLUDES COST OF LAND LEVELING WORK ETC. TH E VALUATION REPORT WAS PREPARED AFTER THE INSPECTION OF THE SITE HAS BEEN DONE BY SHRI JAYESH K. DALAL O N 11.12.2009 AND BY SHRI TALSI LAKHANI, THE OTHER VALUER ON 23.01.2010. THE AO ALSO CONTENDED IN THE RR THAT THE REPORTS DO NOT REFER TO THE SITUATION O F SURROUNDINGS PRESENT DURING THE YEAR 1981 OR EARLIER. SO THE REPORTS CANNOT BE ACCEPTED AT ALL. (III) THE APPELLANT HAS ALSO TAKEN THE CASE OF SHRI KANT K. BARVE, FOR A.Y. 2006-07 AS A COMPARABLE CASE WHEREIN THE DEPARTMENT HAS ACCEPTED THE VALUE OF LAND AT RS. 18/- PER SQ. MTS. THE AO CONTENDED THAT THE LAND OF SHRIKANT K. BARVE, HUF WAS DISTINGUISHABLE. (IV) THE APPELLANT DURING THE ASSESSMENT PROCE EDINGS VIDE HIS SUBMISSIONS DATED 10.12.2009 HAD SUBMITTED THAT THE OFFICE OF CONCERNED REVENUE OFFICER HAD INFORMED THAT NO RECORDS WERE AVAILABLE WITH THEM AND ACCORDINGLY THE LAND UNDER CONSIDERATION WAS CONSIDERED FOR VALUATION @ RS. 40/- PER SQ. MT. IT IS APPARENT THAT THE APPELL ANT IS TRYING TO JUSTIFY HIS VALUATION @ RS. 40/-PER SQ . MT. HOWEVER, IT IS ALSO CLEAR THAT THE ASSESSING OFFICER HAS DULY VALUED THE LAND @ RS. 2.23 PER SQ. MT. AND THIS ALSO DESERVES MERIT'. 6.1 THE MATTER BEFORE US IS WITH REGARD TO RATE O F LAND ADOPTED BY THE ASSESSING OFFICER FOR THE PERIOD PRI OR TO 1981 FOR COMPUTATION OF LONG TERM CAPITAL GAIN. THE ASSE SSING OFFICER RELIED ON THE LETTER FROM THE REVENUE DEPAR TMENT ITA NO. 821/AHD/11 & C.O. NO.103/A/11 A.Y. 07-08 [ACIT VS. SHRI BHASKAR KRISHNAJI BARVE (HUF)] PAGE 8 D&NH FOR ARRIVING AT THE RATE. ASSESSEE ALSO RELIE D ON THE LETTER FROM THE SAME REVENUE DEPARTMENT D&NH AND TH E VALUATION REPORT BY THE REGISTERED VALUER AND CONTE NDED THAT IN THE CASE OF SHRIKANT K. BARVE, HUF, THE REVENUE DEPARTMENT HAS ACCEPTED THE RATE OF THE LAND SITUAT ED IN THE SAME VICINITY AT RS. 18/- PER SQ. MTS. BUT IN THE A SSESSEE'S CASE THE VALUE OF LAND ADOPTED @ RS.2.23 PER SQ. MT R. WAS NOT FOUND JUSTIFIED. CIT(A) ON PERUSAL OF THE REPORT O F SURVEY MAP SUBMITTED BEFORE HIM OBSERVED THAT ASSESSEES LAND HAS LOCATIONAL ADVANTAGE WITH REGARDS TO THE ROADS, CIV IC AMENITIES LIKE SCHOOLS, HOSPITALS, OFFICES, MARKETS ETC. TRAN SPORTATION IN THE FORM OF AUTO-RICKSHAWS AND BUSES IS AVAILABLE. FURTHER, THE LAND WAS ON THE MAIN ROAD AND HAS ITS OWN POTEN TIAL. THE LAND WAS IN THE VICINITY OF DEVELOPED INDUSTRIAL AR EA AND SINCE IT IS SITUATED ON THE MAIN ROAD, IT WOULD ALWAYS FE TCH HIGHER VALUATION. IN THESE CIRCUMSTANCES, DETERMINING THE LAND VALUE AT RS.2.23 PER SQ. MTR. WAS FOUND TO BE ON LOWER SI DE AS ASSESSEES LAND AS HAVING MORE POTENTIAL BECAUSE OF THE ADVANTAGES ATTACHED TO IT AS DISCUSSED ABOVE. THER EFORE, TAKING INTO CONSIDERATION THAT THE DEPARTMENT HAD A LREADY ACCEPTED THE VALUE OF THE LAND OF LESSER ADVANTAGES AT RS.18/- SQ. MTR. IN VICINITY AND ALSO CONSIDERING THE FACTS AND CIRCUMSTANCES, CIT(A) RIGHTLY ESTIMATED THE VALUE O F THE LAND AT RS.25/- PER SQ. MTR. AS AGAINST THE VALUE ADOPTE D BY THE ASSESSING OFFICER AT RS.2.23/- PER SQ. MTR. ACCORD INGLY, THE ASSESSING OFFICER WAS DIRECTED TO ADOPT THE VALUE OF THE LAND AT RS.25/- PER SQ. MTR. AND COMPUTE THE LONG TERM C APITAL ITA NO. 821/AHD/11 & C.O. NO.103/A/11 A.Y. 07-08 [ACIT VS. SHRI BHASKAR KRISHNAJI BARVE (HUF)] PAGE 9 GAIN. THUS, THIS REASONED FINDING OF CIT(A) NEED NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. I N VIEW OF ABOVE, REVENUES APPEAL AND ASSESSEES C.O. BOTH AR E DISMISSED. 7. IN THE RESULT, THE REVENUES APPEAL AND ASSESSEE S C.O. BOTH ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 31 ST DAY OF MAY, 2016. SD/- SD/- (N. K. BILLAIYA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMB ER AHMEDABAD: DATED 31/05/2016 TRUE COPY / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ()*+ ,--. ./0 / DR, ITAT, AHMEDABAD 1+2345 / GUARD FILE. BY ORDER / . // ./0