SUNIL KUMAR PALIWAL, HUF, Jaipur V. ITO, Ajmer

ITA 826/JPR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2019 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Fair market value; Valuation report
• Section: 50C; 244A; 147; 148; 54

Judgement Text

+VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 826/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 M/S SUNIL KUMAR PALIWAL HUF, G-146, MAKARWALI ROAD, VAISHALI NAGAR, AJMER. CUKE VS. INCOME TAX OFFICER, WARD-2(1), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAGHS 3758 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 827/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 TARA DEVI PALIWAL, G-146, MAKARWALI ROAD, VAISHALI NAGAR, AJMER. CUKE VS. INCOME TAX OFFICER, WARD-2(1), AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AJVPP 4222 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27/07/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 20/09/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. BOTH THE APPEALS HAVE BEEN FILED BY THE TWO DIFFERE NT ASSESSEES EMANATES FROM THE TWO SEPARATE ORDERS OF THE LD. CIT( A), AJMER DATED 14/07/2016 PERTAINING TO THE A.Y. 2007-08. ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 2 2. BOTH THE APPEALS WERE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE AND BREVITY, A COMMON ORDER IS BEING PA SSED. 3. FOR THE FACTS AND FINDINGS, I TAKE ITA NO. 826/J P/2017. IN BOTH THESE APPEALS, A COMMON ISSUE IS INVOLVED. FOR THE SELF OUT, A JOINTLY SOLD A PROPERTY BEING PLOT NO. 471, GALI NO. 5, ADRASH NAGAR VISTAR, RAJA PARK, JAIPUR ON 03/06/2006. THE D ECLARED CONSIDERATION AS PER THE REGISTERED DEED WAS RS. 23, 00,000/-. HOWEVER, THE SUB REGISTRAR VALUED THE PROPERTY AT RS. 48,60, 591/- U/S 54 OF THE STAMP DUTY ACT. BOTH THESE ASSESSEES WERE HAVING 50 % SHARES IN THE PROPERTY. ON THE ASSESSEES REQUEST, THE MATTER WAS REFERRED TO THE VALUATION SALE AS PER THE PROVISIONS OF SECTION 50C (II) OF THE ACT. THE ASSISTANT VALUATION OFFICER, JAIPUR PROPOSED THE VA LUE AT RS. 46,75,000/- AND ALSO INVITED OBJECTION FROM THE ASSESSEE FOR TH E PROPOSED VALUATION. THE ASSESSEE SUBMITTED THE OBJECTIONS BEFORE THE ASS ISTANT VALUATION OFFICER, JAIPUR. AFTER CONSIDERING THE OBJECTIONS A ND AFTER PHYSICAL INSPECTION, IT WAS ASSESSED AT RS. 44,41,500/- AND 5 0% OF THE SAME HAS BEEN ADOPTED THE VALUE BY THE ASSESSING OFFICER IN EACH OF THE CASE WHILE WORKING OUT THE LONG TERM CAPITAL GAIN. 4. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), W HO AFTER CONSIDERING ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 3 THE SUBMISSIONS, DISMISSED THE APPEAL OF THE ASSESS EE BY HOLDING AS UNDER:- I HAVE GONE THROUGH THE ASSESSMENT ORDER, STATEMENT OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSION CAREFULLY. IT IS SEEN THAT THE ASSESSEE HAD SOLD PLOT NO. 471, ADARSH NAGAR , JAIPUR, THE CONSIDERATION OF WHICH, AS PER THE REGISTERED SALE DEED WAS RS. 23 LACS. THE SUB REGIS TRAR VALUED THE PROPERTY AT RS. 48,60,591/- U/S 54 OF THE STAMP DUTY ACT. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE REQUESTED THE AO TO REFER THE VALUATION OF THE PROPERTY TO VALUATION OFFICER U/S 50C(2). THE VALUA TION OFFICER AFTER CONSIDERING THE OBJECTION RAISED BY THE AO TO THE PROPOSED VALU ATION, VALUED THE PROPERTY AT RS. 44,41,500/-. THE ASSESSEES SHARE IN THE PRO PERTY WAS 50%, HENCE, THE AO TOOK THE SALES CONSIDERATION OF THE PROPERTY IN THE HANDS OF THE APPELLANT AT RS. 22,20,750/-. AS THE SALES CONSIDERATION OF THE PROP ERTY HAS BEEN ADOPTED BY THE AO AT RS. 22,20,750/- ONLY AFTER REFERRING THE PROP ERTY FOR VALUATION TO THE VALUATION OFFICER AT THE REQUEST OF THE ASSESSEE AS PROVIDED U/S 50C(2), THEREFORE, I FIND NO INFIRMITY IN THE ACTION OF THE A.O. ADOPTING THE SALES CONSIDERATION OF THE PROPERTY AT RS. 22,20,750/- U/ S 50C. ACCORDINGLY, THE ADDITION OF RS. 10,70,750/- MADE BY THE A.O. UNDER THE HEAD CAPITAL GAIN IS HEREBY CONFIRMED. THE LD. CIT(A) HAS ALSO GIVEN SIMILAR FINDING IN THE CASE OF SMT. TARA DEVI PALIWAL AND DISMISSED THE APPEAL. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY T AKING FOLLOWING GROUNDS OF APPEAL: ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 4 GROUNDS OF ITA NO. 826/JP/2016 1.1 THE VERY ACTION TAKEN U/S 147 R/W 148 IS BAD IN LAW WITHOUT JURISDICTION AND BEING VOID AB-INITIO HENCE, THE SA ME KINDLY BE QUASHED. CONSEQUENTLY THE IMPUGNED ASSESSMENT FRAME D U/S 143(3)/147 DATED 24.06.2014 ALSO KINDLY BE QUASHED. 1.2 THE IMPUGNED ORDER U/S 143(3)/147 DATED 24.06. 2014 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICT ION AND VARIOUS OTHER REASONS AND HENCE THE SAME KINDLY BE QUASHED. 2. RS.10,70,750/-: ADDITION ON ACCOUNT OF LONG TER M CAPITAL GAIN (LTCG) 2.1 THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE F ACTS OF THE CASE IN CONFIRMING THE LTCG AT RS.10,70,750/-, AS AGAINST T HE DECLARED LTCG OF RS. 84,161/- ONLY. THE ADDITION SO MADE AND CONFIRMED BY THE ID. CIT(A) BEING TOTALLY CONTRARY TO THE PRO VISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. 2.2 THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE F ACTS OF THE CASE IN CONSIDERING THE FULL VALUE OF THE SALE CONSIDERATIO N U/S 50C OF THE ACT AT RS.22,20,750/- [BEING 50% OF RS.44,41,500/-] , BASED ON THE REPORT OF THE DVO, AS AGAINST THE DECLARED SALE CONSIDERATION OF RS.11,50,000/-. THE ENHANCEMENT IN THE SALE CONS IDERATION BY THE AO AND CONFIRMATION BY THE ID. CIT(A) BEING TOT ALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE HENC E, THE SALE CONSIDERATION AS DECLARED BY THE APPELLANT, KINDLY BE CONSIDERED. 2.3 THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE F ACTS OF THE CASE IN NOT AT ALL CONSIDERING THE VARIOUS OBJECTIONS RAISE D U/S 50C(2) OF THE ACT AND IN BLINDLY ADOPTING THE VALUATION DONE BY THE DVO AS A FINAL WORD EVEN THOUGH THE IMPUGNED VALUATION SO MADE SERIOUSLY SUFFERED FROM VARIOUS DEFICIENCIES APPARE NT FROM THE RECORD ITSELF, BUT WERE IGNORED & CONFIRMED WITHOUT ANY APPLICATION OF MIND AND THEREFORE, THE ID. CIT(A) E RRED IN WRONGLY ADOPTING THE FULL VALUE OF SALE CONSIDERATION AT RS .22,20,750/- FOR THE HALF SHARE. THEREFORE, THIS PART OF THE ORD ER OF THE ID. CIT(A) KINDLY BE QUASHED BEING HIGHLY PERVERSE AND THE DECLARED ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 5 SALE CONSIDERATION AT RS.11,50,000/- KINDLY BE ACCE PTED AND THE CONSEQUENT ADDITION, KINDLY BE DELETED IN FULL. 2.4 RS.84,161/-: THE ID. CIT(A) FURTHER ERRED IN LAW AS WELL AS ON T HE FACTS OF THE CASE IN NOT CORRECTLY & JUDICIOUSLY AP PRECIATING THE FACTS THAT AS AGAINST THE LTCG OF RS.10,70,750/- CO MPUTED BY THE AO AFRESH, THE APPELLANT HAD ALREADY DECLARED L TCG OF RS.84,161/- IN THE COMPUTATION OF TOTAL INCOME AND THEREFORE, TO THAT EXTENT THERE WAS A CLEAR CASE OF DOUBLE TAXATI ON OF THE SAME INCOME YET THE ADDITION SO MADE AND CONFIRMED BY THE ID. CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. 3. THE ID. AO FURTHER ERRED IN LAW AS WELL AS ON TH E FACTS OF THE CASE IN CHARGING INTEREST U/S 234A, 234B, 234C & 234D OF THE ACT AND AS ALSO IN WITHDRAWING INTEREST U/S 244A OF THE ACT . THE APPELLANT TOTALLY DENIES ITS LIABILITY OF CHARGING AND WITHDRAWAL OF ANY SUCH INTEREST. THE INTEREST SO CHARGED/WITHD RAWN, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, KINDLY BE DELETED IN FULL. 4. THE APPELLANT PRAYS YOUR HONOUR INDULGENCES TO A DD, AMEND OR ALTER OF OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. SIMILAR IDENTICAL GROUNDS HAVE ALSO BEEN TAKEN IN I TA NO. 827/JP/2016 6. GROUND NOS. 1.1 AND 1.2 OF THE APPEALS WERE NOT P RESSED AT THE TIME OF HEARING, THEREFORE THE SAME ARE DISMISSED A S NOT PRESSED. 7. GROUNDS NO. 2.1 TO 2.4 OF THE APPEAL ARE WITH REG ARD TO SUSTAIN THE ADDITION ON ACCOUNT LONG TERM CAPITAL GAIN. IN THIS CASE, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE SALE WAS A DISTRESS SALE WHERE NEITHER THE RENT CAPITALIZATION METHOD NOR LAND AND BUILDIN G METHOD COULD BE ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 6 APPLIED TO WORK OUT FAIR MARKET VALUE AND IT TRIED T O ESTABLISH THAT THERE WERE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WH ICH HAS DIRECT BEARING ON THE VALUATION OF THE SOLD ASSET. THE LD. AR HAS FILED A DETAILED WRITTEN SUBMISSIONS, THE CONTENTS OF THE WRITTEN SUBM ISSIONS HAS REPRODUCED HEREUNDER: 1.1 AT THE OUTSET, IT IS SUBMITTED THAT THE PRESEN T IS A CASE OF DISTRESS SALE WHERE NEITHER THE RENT CAPITALIZATION METHOD N OR LAND & BUILDING METHOD COULD BE APPLIED AND THE FAIR MARKET VALUE ( FMV) COULD AND SHOULD HAVE BEEN ASCERTAINED ONLY CONSIDERING THE P ECULIAR FACTS OF THE CASE. 1.2 THE UNDISPUTED FACTS HAVING DIRECT BEARING OVE R THE CONTROVERSY IN HAND ARE THAT THE SUBJECTED PROPERTY I.E. PLOTS NO. 471, GALI NO.-5, ADARSH NAGAR VISTAR, RAJA PARK, JAIPUR WAS EARLIER OWNED BY LATE SHRI RAMLAL BHATIA. ON HIS DEATH, THE SAME WAS SUCCEEDED BY HIS SUCCESSORS NAMELY SMT RAJ BHATIA W/O SHRI RAMLAL BHATIA, RAJ K UMAR, RAJENDRA, AND SANJAY S/O SHRI RAMLAL BHATIA, WHO SOLD ONE HAL F OF THE SAID PROPERTY TO SHRI SUNIL KUMAR PALIWAL AND SMT. TARA DEVI PALIWAL, JOINTLY WITH EQUAL SHARE. IN THE ONE HALF OF PORTION THE SE LLERS CONTINUED TO OCCUPY/RESIDE. THE SUBJECTED PROPERTY WAS SOLD ON 2 3.04.2006 FOR TOTAL CONSIDERATION OF RS.23,00,000/- I.E. RS. 11,50,000/ - EACH BUYERS. AT THE TIME OF SALE, THE GROUND FLOOR WAS UNDER LEASE TO S TATE BANK OF PATIALA ON MONTHLY LEASE RENTAL OF RS.12,400/- PER MONTH WH EREAS THE FIRST FLOOR WAS UNDER LEASE TO OTIS ELEVATORS CO. (INDIA) LTD. O N MONTHLY LEASE OF RS.17,000/- PER MONTH WHICH CONTINUED TILL THE END OF A.Y.2006-07. IT IS SUBMITTED THAT UNFORTUNATELY, RIGHT SINCE THE VERY PURCHASE OF THE SAID PROPERTY, A DISPUTE WAS RAISED BY THE BANK, WH O DENIED TO MAKE THE PAYMENT OF THE ENTIRE LEASE RENT TO THE BUYERS/ LESSEES (ASSESSEE), MAINLY ON THE REASONING THAT LATE SHRI RAMLAL BHATI A HAD AVAILED A LOAN WHICH WAS TO BE REPAID, PARTLY OUT OF THE LEASE REN T PAYABLE BY THE BANK TO SHRI BHATIA (AND NOW TO PALIWALS) AND HENCE THE BANK WAS NOT MAKING ANY PAYMENT OF LEASE TO THE PALIWALS. ACCORDINGLY, A SUIT WAS FILED BEFORE THE TRAIL COURT IN CASE NO. 167/2001 WHICH WAS DECI DED VIDE ORDER DATED 10.12.2002 AND AGAINST THE SAME , THE BANK APPROACH ED THE HON`BLE ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 7 HIGH COURT BY WAY OF REVISION REGISTERED AS CMA 407 /2003 DATED 30.01.2003. THE COURT GRANTED STAY OVER RENT PAYMEN T. OUT OF COURT SETTLEMENT WAS REACHED JUST A FEW DAYS BACK TO THE SALE. THOUGH, THE ASSESSEE CONTINUED GETTING RENT FROM OTIS ELEVATORS CO. (INDIA) LTD. 1.3 ON THE OTHER HAND BECAUSE OF THIS CONTINUOUS A ND VEXED LITIGATION, THE ASSESSEE WAS NOT FINDING SUITABLE B UYERS. THE FACT OF LITIGATION WAS IN THE KNOWLEDGE OF THE NEIGHBORS AN D ALSO WELL KNOWN TO THE NEARBY PROPERTY DEALERS, AS A RESULT OF WHICH, IT BECAME A CASE OF A DISPUTED PROPERTY. A COPY OF CERTIFICATE OF A PROPE RTY BROKER WAS SUBMITTED SUPPORT THE CONTENTION (PB 7) WHO EVEN CO NFIRMED THAT THE ASSESSEE SOLD THE PROPERTY BELOW PRICE WHICH REMAIN ED UNDISPUTED WHO EVEN CONFIRMED THAT ASSESSEE SOLD THE PROPERTY BELO W PRICE WHICH REMAINED UNDISPUTED. ON THE ONE HAND, THE ASSESSEE BEING IN THE FINANCIAL NEEDS WANTED TO SALE THE PROPERTY AT THE EARLIEST POSSIBLE HOWEVER, THE LITIGATION WAS DELAYING THE SALE, ON T HE OTHER. THIS HAS RESULTED IN A CONSIDERABLE DOWNFALL IN THE OFFERS B EING MADE BY THE PROSPECTIVE BUYERS OF THE PROPERTY TO THE ASSESSEE SELLERS. 1.4 IT IS FURTHER SUBMITTED THAT THE PRESENT OWNER M/S BIRANANI SAFE DEPOSIT VAULTS PVT. LTD., JAIPUR HAD ALREADY BEEN U NDER NEGOTIATION WITH THE ASSESSEE SELLER SINCE LONG AND THE PARTIES ALMO ST REACHED TO A COMMON CONSENSUS OF THE DEAL TO BE FINALIZED AT RS. 23,00,000/- OR AROUND. HOWEVER, IT WAS ONLY BECAUSE OF NON SETTLEM ENT IF THE LEGAL DISPUTE, THE REGISTRATION OF THE SAID TRANSACTION I N FAVOUR OF THE BUYER, WAS NOT POSSIBLE EARLIER. AS SOON AS THE LEGAL DISP UTE BETWEEN THE BANK AND THE ASSESSEE SELLER SETTLED IN THE MONTH OF MAR CH2006 (WHEN THE BANK PAID ARREARS OF RENT), THE BUYER GOT THE PROPE RTY REGISTERED IN HIS NAME THROUGH REGISTERED SALE DEED EXECUTED ON 03.04 .2006 (PB 20-31). THESE FACTS MIGHT NOT HAVE BEEN NARRATED IN THE PRE AMBLE OF THE REGISTERED SALE DEED YET HOWEVER, THE FACTS WHICH O THERWISE PREVAILS BEING THE EXISTENCE OF A SERIOUS LEGAL LITIGATION G OING ON AND THEREFORE, THE BUYER WAS IN A DICTATING TERM, CANNOT BE BRUSHE D ASIDE. 1.5 IT WAS SUBMITTED BEFORE THE AO & DVO THAT: (VI) THE PROPERTY WAS DISPUTED, COURT CASE WAS THE RE ON THE PROPERTY (PHOTOCOPY ENCLOSED) AND PLACED AT S.NO.1 TO 15. SM T. TARADEVI, AGE 70 YEARS HAVE TO TRAVEL JAIPUR BY BUS ON EVERY HEARING , VERY MUCH MENTAL ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 8 TENSION WAS THERE IN HER OLD AGE DUE TO COURT CASE AND NON-PAYMENT OF RENT BY BANK. HOWEVER, THE DVO IN PR-6 (PB 8-19) REJECTED THE SAM E STATING THAT: 6. THE ASSESSEE HAS PUT THE PAPER RELATED TO THE YEAR 2002-03. IN THE YEAR OR DATE OF SALE THE PROPERTY HAS FREE FROM ENCUMBRANCE OR ANY DISPUTE (COPY OF SALE DEED PAGE ENCLOSED IS PROOF) HENCE DOES NOT CALL ANY DISCOUNT. THE AO/DVO DID NOT APPRECIATE THAT BECAUSE OF PROLO NGED ADVERSE PUBLICITY DUE TO CONTINUED LITIGATION WHICH FACT IS NOT DENIED, IT WAS A CASE OF DISTRESS SALE. VARIOUS PROSPECTIVE BUYERS T HOUGH INITIALLY WILLING BUT HAVING THE KNOWLEDGE OF DISPUTE, DID NOT TURN U P. DISPUTE SETTLED ONLY IN MARCH, 2006. 1.6 UNFORTUNATELY HOWEVER, THE LD. SUB REGISTRAR W HILE ADAPTING THE VALUE U/S 54 OF THE REGISTRATION ACT AND ESTIMATING THE VALUE AT RS.48,60,591/- AND ALSO THE LD. DVO WHILE ESTIMATI NG THE VALUE U/S 50C AT RS.44,41,500/-, DID NOT TAKE INTO CONSIDERATION THESE FACTS AND THERE IMPLICATIONS, JUDICIOUSLY. 2. RENT CAPITALIZATION METHOD NOT APPLICABLE: 2.1 IT IS SUBMITTED THAT ADMITTEDLY THE BANK WAS N OT PAYING RENT TO THE ASSESSEE SINCE LONG AND THE DISPUTE BETWEEN THE ASSESSEE AND BANK WAS PENDING BEFORE COURT OF LAW FOR FIVE TO SIX YEA RS IMMEDIATELY BEFORE THE SALE. ADMITTEDLY THE RENT IS FOUNDATION INGREDI ENT OF RENT CAPITALIZATION METHOD, HOWEVER IN THE INSTANT CASE SINCE NO RENT FOR THE ENTIRE SUBJECTED PROPERTY EXISTED, HENCE THE ADOPTI ON OF RENT CAPITALIZATION METHOD FOR ESTIMATING FAIR MARKET VA LUE IS WITHOUT JURISDICTION AND IMPROPER. 2.2 IT IS SUBMITTED THAT BECAUSE OF THE DISPUTE GO ING ON AS STATED ABOVE, THE ASSESSEES WERE NOT GETTING ANY RENT AT LEAST TILL A.Y.2005-06 AND IT WAS ONLY IN A.Y. 2006-07 WHEN AN OUT OF COUR T SETTLEMENT WAS REACHED BETWEEN THE PARTIES, PURSUANT TO WHICH THE ASSESSEE WERE PAID THE FULL AND FINAL AMOUNT OF LEASE RENT. HOWEVER, I N A.Y. 2007-08 THE PROPERTY STOOD SOLD AND THEREFORE, THE LEASE AMOUNT , IF ANY, ACCRUED TO THE NEW BUYER AND NOT TO THE ASSESSEE HENCE, NO REN TAL INCOME SHOWN BY THE ASSESSEE IN THE ROI FILED FOR A.Y. 2007-08 ( PB 1-3). UNDER THESE ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 9 CIRCUMSTANCES WHEN, THERE WAS NO RENT RECEIVED/RECE IVABLE AT THE TIME OF SALE, THE RENT CAPITALIZATION METHOD WAS NOT PRO PER METHOD TO BE APPLIED. 3.1 MOREOVER, AS PER GUIDELINES FOR VALUATION OF I MMOVABLE PROPERTIES, 2009 PUBLISHED BY THE DIRECTORATE OF IN COME TAX, INCOME TAX DEPARTMENT, DELHI (FOR OFFICIAL USE ONLY), HAS PROVIDED THAT APPROACH AND METHOD OF VALUATION SHOULD BE RATIONAL . IT HAS BEEN GUIDED THAT NORMALLY THERE WOULD BE AN APPROPRIATE METHOD FOR A PARTICULAR SITUATION. FOR INSTANCE FOR OWNER OCCUPIED PROPERTY, AS VACANT POSSESSION CAN BE GIVEN TO THE BUYER, LAND AND BUILDING METHOD WOULD BE APPROPRIATE. SIMILARLY FOR RENTED PROPERTY RENT CAPITALIZATION METHOD WOULD BE APPROPRIATE. WHEN TH E BUILDING IS PARTLY OCCUPIED BY OWNER AND PARTLY RENTED THEN BOTH THE M ETHODS CAN BE APPLIED FOR RESPECTIVE PORTIONS. THE DVO REFERRED BUT (PB 18) BUT IGNORED. 3.2 LAND & BUILDING METHOD: IN ANY CASE, IF IT IS HELD THAT IT IS NOT A CASE OF DISTRESS SALE AND ALSO WHEN RENT CAPITALIZA TION METHOD IS NOT FOUND PROPER, THE ONLY METHOD LEFT IS THE LAND & BU ILDING METHOD. ON THIS ACCOUNT HOWEVER, VARIOUS OBJECTIONS WERE RAISE D BEFORE THE AUTHORITIES BELOW AND IN PARTICULAR BEFORE THE DVO, HOWEVER, WERE NOT CONSIDERED JUDICIOUSLY. THE ASSESSEE CLAIMED THAT T HE FAIR MARKET VALUE OF THE LAND WAS LESS THAN THE VALUATION ADOPTED FOR THE PURPOSE OF STAMP DUTY/VALUED ESTIMATED BY THE LD. DVO FOR DIFF ERENT REASONS, WHICH ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE T OGETHER WITH OUR SUBMISSIONS ON THE OBSERVATIONS MADE BY THE DVO THE REON: S. NO. ASSESSEE DVO OUR COMMENT (I) THAT THIS PROPERTY IS A RESIDENTIAL HOUSE PROPERTY AND BUILT UP BY, COVERING THE SET BACK PORTION OF THE HOUSE. EX OWNER IS STILL RESIDING IN BALANCE PORTION HOUSE. 1. THE AR OF ASSESSEE SUBMITTED IN PARA THAT THE PROPERTY IS RESIDENTIAL IS TOTALLY WRONG. THE SUBJECT PROPERTY IS FULLY THE FACT WA S NOT DENIED THAT THE PROPERTY WAS A RESIDENTIAL PROPERTY AND HALF PORTION I.E. 129.40 SQMTR OF GROUND FLOOR AND 106.25 SQMTR OF FIRST FLOOR WAS OCCUPIED BY THE ORIGINAL SELLER BHATIA FAMILY AND ADMITTEDLY, NO APPLICATION WAS FILED BY ANY ONE CONCERN FOR CHANGE USE / CONVERSION FROM ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 10 RESIDENTIAL TO COMMERCIAL. NOTABLY, DVO ITSELF IN PARA 6.4 PAGE 3 (PB 10) HAS STATED PARTICULARS OF TENANTS/ LEASES /LICENCES ETC AND PORTIONS OCCUPIED BY EACH FULLY SELF OCCUPIED. EVEN THE SUBJECTED REGISTERED SALE DEED ITSELF, IN THE PREAMBLE, STATES THE PROPERTY TO BE A RESIDENTIAL PROPERTY (PB 20-31). (II) NO SITE PLAN WAS SANCTIONED BY NAGAR NIGAM, JAIPUR. 2. ASSESSEE DID NOT SUBMITTED ANY SITE PLAN MAY NOT BE COMMENTED. THE USE IS COMMERCIAL THE DVO DID NOT COMMENT O N THIS ASPECT. NEEDLESS TO SAY THAT SUCH A FACT DISCOURAGES THE BUYER AND HE TAKES HELP IN BARGAINING TO REDUCE THE SALES CONSIDERATION. NO COMMERCIAL ACTIVITY. (III) NO LEASE DEED WAS EXECUTED BY THE BANK DUE TO DISPUTED PROPERTY. THE BANK WAS WITHOUT THE STRONG ROOM. 3. REGARDING LEASE DEED THE MATTER IS IN BETWEEN LESSEE AND LESSOR. THIS IS THEIR MATTER WILL MAY NOT BE COMMENTED. DVO DID NOT COMMENT BUT ALSO IGNORED THAT DUE TO THIS RCM WAS NOT APPLICABLE. (IV) NO STRONG ROOM WAS CONSTRUCTED BY THE BANK AS THE PORTION WAS CONSTRUCTED AFTER COVERING THE SET BACK PORTION OF THE HOUSE AND DUE TO DISPUTE WITH OWNER. THE STAIRS ARE COMMON FOR WHOLE BUILDING. 4. THE CONSTRUCTION OF STRONG ROOM IS REQUIREMENT OF BANK DOES NOT CHANGE THE NATURE OF COMMERCIAL. THE FOCUS WAS ON THE FACT THAT THE CONSTRUCTION OF STRONG ROOM WAS DONE IN THE SET BACK AREA WHICH IS AGAINST THE BUILDING BY LAWS AND SUCH CONSTRUCTION WAS ILLEGAL. THEREFORE, A PROSPECTIVE BUYER SHALL CERTAINLY MAKE A DISCOUNT IN THE SALE CONSIDERATION. DVO COMPLETELY IGNORED THIS ASPECT. (V) OVER HEAD WATER TANK WAS ALSO COMMON FOR THE WHOLE BUILDING. MANY TIMES, THERE 5. THE BUILDING IS VALUED BY RENT CAPITALIZATION METHOD. THE WATER THE FACT OF THERE BEING COMMON STAIRS & COMMON OVER HEAD WATER TANK WILL CERTAINLY MAKE DIFFERENCE IN THE LAND & ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 11 WERE HOT TALKS WITH LAND LORD IN THE MATTER OF WATER SUPPLY, TOILET WATER, ROOF LEAKAGE ETC. IN THESE PREMISES. TANK DOES NOT RELATED THE TENANCY. BUILDING METHOD. THE VERY FACT OF THE PRESENCE OF THE ORIGINAL SELLER TOGETHER WITH THE COMMON USES OF CIVIC AMENITIES, CERTAINLY DISCOURAGES A PROSPECTIVE BUYER AND THIS CONSIDERABLY REDUCE THE FMV SALE CONSIDERATION OF THE PROPERTY. (VI) THE PROPERTY WAS DISPUTED AND COURT CASE WAS THERE ON THE PROPERTY, PLACED AT S.NO.1 TO 15. SMT. TARADEVI, AGED 70 YEARS HAVE TO TRAVEL JAIPUR BY BUS ON EVERY HEARING, VERY MUCH MENTAL TENSION WAS THERE IN HER OLD AGE DUE TO COURT CASE AND NON-PAYMENT OF RENT BY BANK. 6. THE ASSESSEE HAS PUT THE PAPER RELATED TO THE YEAR 2002-03. IN THE YEAR OR DATE OF SALE THE PROPERTY HAS FREE FROM ENCUMBRANCE OR ANY DISPUTE (COPY OF SALE DEED PAGE ENCLOSED IS PROOF) HENCE DOES NOT CALL ANY DISCOUNT. DVO CLEARLY IGNORED THE FACTS RELEVANT FOR THE ISSUE IN HAND IN VIEW OF THE CASE LAWS, PAPERS AND IN ABSENCE OF CONTRARY EVIDENCE BROUGHT BY THE AO & DVO. IT CANNOT BE SAID THAT THE PROPERTY WAS FREE FROM ENCUMBRANCE / ANY DISPUTE AND FACTS OF PROLONGED NEGATIVE CANNOT BE IGNORED. (IX) THAT THE HOUSE WAS CONSTRUCTED IN THE YEAR 1972 AND BUILDING WAS RENTED OUT IN THE YEAR 2006 TO THE BANK. THE BUILDING IS 43 YEARS OLD, NO DEDUCTION OF DEPRECATION HAS BEEN GIVEN BY YOUR HONOUR. 9. HERE AR MENTIONED THE YEAR OF CONSTRUCTED DEPRECIATION. THERE IT IS MENTION THAT PROPERTY IS VALUED ON THE BASIS OF RENT CAPITALIZATION METHOD HENCE DOES NOT CALL ANY CHANGE. THE DEPRECIATION IS BEING ---- ON L & B METHOD ONLY. SINCE LAND & BUILDING METHOD IS APPROPRIATE HENCE DEPRECIATION HAS TO BE REDUCED AS ADMITTED BY THE DVO ALSO. 3.3 GUIDELINES FOR VALUATION OF IMMOVABLE PROPERTI ES 2009 PUBLISHED BY THE DIRECTORATE OF INCOME TAX, INCOME TAX DEPART MENT, DELHI (FOR OFFICIAL USE ONLY), HAS NOT KEPT IN MIND BY THE DVO . IT HAS BEEN PROVIDED THAT APPROACH AND METHOD SHOULD BE RATIONAL. IT IS PROVIDED THAT FOR ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 12 DETERMINATION OF FAIR MARKET VALUE OF COMMERCIAL PR OPERTIES IF COMPARED TO LAND AND BUILDING METHOD, THE PROFIT METHOD INDI CATES LESSER VALUE, THEN THE FORMER SHOULD BE APPLIED. IT SHOULD CORRECTLY REFLECT THE REAL LIFE SITUATION . ALL FACTORS AFFECTING VALUE SHOULD BE CONSIDERED, LIKE. SHAPE, SIZE, LOCATION, LOW LYING, ALLOWABLE FAR ETC ., FOR LAND VALUATION. TYPE OF FOUNDATION, SPECIFICATION, NO. OF STOREYS, STANDARD OF CONSTRUCTION AND FINISHING PLANNING EFFICIENCY ETC FOR BUILDING VALUATION. LEASE HOLD OR FREE HOLD. UNDER LITIGATION OR NOT. TITLE IS CLEAR OR NOT: OWNER SHIP & POSSESSION. TENANTED OR SELF-OCCUPIED. ENCROACHMENT / UNAUTHORIZED OCCUPANT EXIST OR NOT ET C. VALUATION SHOULD BE CORRECTLY DONE. THE FOLLOWING POINTS SHOULD BE CAREFULLY NOTED. PLINTH AREA RATES SHOULD BE CORRECTLY APPLIED. COST INDICES OF RELEVANT TIME & PLACE SHOULD BE CON SIDERED. GUIDELINES OF VALUATION OF IMMOVABLE PROPERTIES 96 EXTRA ITEMS SHOULD BE PROPERLY FRAMED BASED ON CORRE CT RATES OF MATERIALS AND LABOUR. FOR ASCERTAINING COMPARABLE LAND VALUES PUBLIC AUCT ION OR SALE CLEARED BY THE APPROPRIATE AUTHORITY SHOULD BE CONSIDERED M ORE AUTHENTIC. RELIANCE SHOULD BE PLACED ON SALE INSTANCES OF REGI STRATION OFFICES ONLY UNDER CIRCUMSTANCES WHERE APPROPRIATE AUTHORITY INS TANCES ARE NOT AVAILABLE. RELIANCE MAY ALSO BE MADE ON THE LOCAL G UIDELINES RATES ISSUED BY RELEVANT AUTHORITY. IT SHOULD BE BASED ON FACTS NOTED DURING INSPECTION OF PROPERTY AND FACTS INTIMATED BY ASSESSEE AND VERIFIED. IT SHOULD DEPICT THE PROPERTY IN SIMPLE TERMS BRING ING OUT THE POSITION ON THE DATE OF INSPECTION THROUGH A NOTE. THE DETAILED MEASUREMENTS AND SPECIFICATION SHOULD BE NOTED AND GOT ACCEPTED FROM THE ASSESSEE OR HIS AUTHORIZED REPRES ENTATIVE FOR AVOIDING CONTRADICTION. 4. APPROVED VALUERS REPORT SHOULD BE APPLIED: SIN CE THE LD. DVO DID NOT FOLLOW THE GUIDELINE PRESCRIBED BY THE DEPA RTMENT NOR HE CONSIDERED THE VARIOUS OBJECTIONS OBJECTIVELY AND T HE FACTS ARE NOT ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 13 DENIED THAT THE ASSESSEE ALSO SUBMITTED A REPORT OF AN EXPERT I.E. THE APPROVED VALUER (BY THE DEPARTMENT) M/S S.K. ASSOCI ATES, JAIPUR, WHO HAS ALSO SUBMITTED HIS VALUATION REPORT DATED 30.04 .2014, ESTIMATING THE FAIR MARKET VALUE (FMV) OF THE PROPERTY AT RS. 23,1 4,948/- FOLLOWING THE LAND & BUILDING METHOD. ONCE, IT IS HELD THAT RENT CAPITALIZATION METHOD IS NOT APPLICABLE AND THE DVO NOT HAVING APPLIED LA ND & BUILDING METHOD, THE REPORT OF THE OTHER EXPERT, HAS TO BE A PPLIED, BEING A REPORT BY A TECHNICAL EXPERT. THERE IS NO CONTRARY EVIDENC E OR REPORT WAS BROUGHT BY THE AO OF AN EXPERT, FOLLOWING THE SAME METHOD. THEREFORE, IT IS REQUESTED THAT THE VALUATION DONE BY THE REGI STERED VALUER AT RS.23,14,948/- MUST BE ACCEPTED. 5. SUPPORTING CASE LAWS: 5.1 IN KRISHNA KUMAR RAWAT & ORS. V/S UNION OF IND IA & ORS. (1995) 123 CTR 61/214 ITR 610 (RAJ) HELD THAT 12. ----------- THE RESPONDENTS HAVE TO MAKE THE V ALUATION OF THE PROPERTY BY TAKING INTO CONSIDERATION ALL RELEVANT FACTS AND TH EREAFTER A DECISION HAS TO BE TAKEN BY THE APPROPRIATE AUTHORITY. THE VISCOUNT SI MON, J. IN GOLD COAST SELECTION TRUST LTD. VS. HUMPHREY (INSPECTOR OF TAX ES) (1949) 17 ITR (SUPPL) 19 (HL) OBSERVED THAT, `VALUATION IS AN ART, NOT AN EXACT SCIENCE, MATHEMATICAL CERTAINTY IS NOT DEMANDED NOR IS POSSIBLE. CERTAIN ELEMENT OF GUESS HAS TO BE THERE BASED ON OBJECTIVE FACTORS HAVING REASONABLE NEXUS WITH THE EVIDENCE ON RECORD. THE VARIOUS FACTORS ARE THERE ON THE BASIS OF WHICH OUT OF THE VARIOUS METHODS BY WHICH THE VALUATION OF THE IMMOVABLE PRO PERTY CAN BE MADE, APPROPRIATE METHOD IS TO BE ADOPTED. IT DEPENDS ON THE LOCATION OF THE PROPERTY, THE PURPOSE FOR WHICH THE PROPERTY IS USE D, THE NATURE OF THE PROPERTY, THE TIME WHEN THE AGREEMENT IS ENTERED IN TO AND SIMILAR OTHER OBJECTIVE FACTORS. THE VALUATION, THEREFORE, HAS TO BE DONE BY A METHOD WHICH IS MORE OBJECTIVE AND COULD FURNISH THE RELIABLE DA TA TO ARRIVE AT A JUST CONCLUSION. 13. IN RESPECT OF THE LAND, THE COMPARABLE CASES P ROVIDE THE BETTER GUIDE. THE COMPARABLE CASES COULD BE WHICH ARE IN R ESPECT OF THE LAND HAVING SIMILAR CHARACTER AND IS IN THE PROXIMITY OF THE LAND UNDER AGREEMENT HAVING SIMILAR ADVANTAGES AND AMENITIES. THE PROXIMITY IN TIME IS ALSO THE IMPORTANT FACTOR IN SUCH A CASE. T HE LOCATION, FRONTAGE, TRANSPORT FACILITY AND OTHER AMENITIES BESIDE THE S IZE OF THE PLOT ARE THE RELEVANT CONSIDERATIONS. THE METHOD OF BELTING IS A LSO APPLIED IN RESPECT OF LAND HAVING LARGE AREA AS THE FRONT OF THE LAND ON THE MAIN SIDE ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 14 FETCHES HIGHER PRICE THAN OF THE NEXT BELT AND SO O N. IN THIS METHOD THE PLOT IS DIVIDED INTO BELTS ON THE BASIS OF DISTANCE FROM THE MAIN ROAD AND THE VALUE OF SUCH BELTS HAVE TO BE DETERMINED SEPAR ATELY. 14. IN RAGHUBANS NARAYAN SINGH VS. STATE OF U.P. A IR 1967 SC 465, IT WAS OBSERVED BY THE APEX COURT THAT THE VALUE TO BE ASCERTAINED IS THE PRICE TO BE PAID FOR THE LAND WITH ALL ITS POTE NTIALITIES AND WITH ALL THE USE THAT CAN BE MADE OF IT BY THE VENDOR. SIMILARLY IN U.P. GOVERNMENT VS. H.S. GUPTA AIR 1957 SC 202, THE MARKET PRICE WA S CONSIDERED THE HIGHEST VALUE THE PROPERTY COULD FETCH WHEN LAID OU T IN THE MOST ADVANTAGEOUS MANNER. THE POTENTIALITIES OR THE CAPA CITY TO USE THEREFORE IS ALSO AN ANOTHER RELEVANT FACTOR. THE I NSTANCES OF THE COMPARABLE CASES WHICH ARE TAKEN INTO CONSIDERATION MUST BE OF THE GENUINE CASES. 15. ---------------- (VIII) LAND AND BUILDING METHO D: UNDER THIS METHOD THE VALUATION OF THE LAND IS DONE SEPARATELY ON THE BASIS OF COMPARABLE INSTANCES OF SALE OF THE PLOTS AND THE COST OF CONSTRUCTION AS PREVAILING IS TAKEN FROM WHICH THE DEPRECIATION LOOKING TO THE YEAR OF CONSTRUCTION IS REDUCED. THIS METHOD IS NORMALLY APPLIED IN CASES OF COMPULSORY ACQUISITION.------------ ---------- 21. IN DEBI PROSAD VS. CWT (1977) 109 IT R 760 (CAL), THE FOLLOWING PRINCIPLES WERE LAID DOWN FOR THE VALUATI ON OF IMMOVABLE PROPERTY UNDER THE WT ACT : (I) ATTEMPT MUST BE MADE TO FIND OUT THE PRICE WHIC H THE IMMOVABLE PROPERTY WOULD FETCH ON THE VALUATION DATE IMAGININ G A WILLING BUYER TO PURCHASE THE PROPERTY FROM A WILLING SELLER IN RESP ECT OF THE PROPERTY; (II) IN RESPECT OF THE IMMOVABLE PROPERTY THERE IS NO FIXED MARKET SUCH AS MARKET FOR SHARES OR FOR OTHER COMMODITIES, LIKE SUGAR, CLOTH, ETC. IN ORDER TO ARRIVE AT A VALUATION IN RESPECT OF THE PR OPERTY, THERE MUST NECESSARILY BE CERTAIN ELEMENT OF GUESS. BUT THE GU ESS MUST BE BASED ON CERTAIN FACTS AND ACCORDING TO CERTAIN PRINCIPLE S WHICH WOULD BE, IN THE FACTS AND CIRCUMSTANCES OF EACH CASE, AS FAIR A S POSSIBLE TO THE REVENUE AS WELL AS TO THE ASSESSEE IN TRYING TO IMA GINE REASONABLY AND ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 15 INTELLIGENTLY THE PRICE WHICH WAS EXPECTED TO BE FE TCHED IF IT WAS POSSIBLE TO SELL THE PROPERTY IN QUESTION ON THE RELEVANT VA LUATION DATE. (III) SUCH A DETERMINATION, THEREFORE, INVOLVES ADO PTING CERTAIN METHODS IN DETERMINING THE VALUATION AND THERE ARE DIFFEREN T KINDS OF METHODS, AS MENTIONED IN THE CIRCULARS OF THE BOARD AND THE PRI NCIPLES ENUNCIATED IN THE SEVERAL DECISIONS OF THE COURT AS NOTICED BEFOR E. (IV) WHICH ONE OF THE VARIOUS METHODS WOULD BE SUIT ABLE FOR A PARTICULAR CASE MUST DEPEND UPON THE NATURE OF THE PROPERTY, T HE LOCATION OF THE PROPERTY, THE PURPOSE FOR WHICH THE PROPERTY IS USE D AND SEVERAL OTHER OBJECTIVE FACTORS, VIZ., THE TIME WHEN THE VALUATIO N IS MADE, THE PROSPECT OF BUYING AND SELLING IN RESPECT OF THE PROPERTY AT THE RELEVANT TIME AND ALSO SPECIAL FEATURES IN RESPECT OF THE PROPERTY, I F THERE BE ANY. TAKING ALL THESE FACTORS INTO CONSIDERATION IT IS, THEREFO RE, NECESSARY TO DETERMINE WHICH ONE OF THE VARIOUS METHODS WILL BE MOST SUITABLE TO REACH AS ACCURATE AS POSSIBLE GUESS AS TO THE VALUA TION ON THE VALUATION DATE. (V) ANOTHER FACTOR THAT HAS TO BE BORNE IN MIND IS THAT SUCH A METHOD SHOULD BE PREFERRED WHICH HAS MORE OBJECTIVE RELIAB LE DATA TO RELY UPON THAN MERE SUBJECTIVE OPINIONS. FOR INSTANCE, IF THE RE ARE MORE OBJECTIVE DATA TO WORK OUT IN RESPECT OF ONE METHOD MORE RELI ABLE THAN ANOTHER, THEN THAT METHOD FOR A PARTICULAR LAND SHOULD BE PR EFERRED. IF, HOWEVER, THERE IS ANY OBJECTIVE RELIABLE EVIDENCE OF ANY TRA NSACTION OF SALE OF THE LAND OR PROPERTY SIMILAR IN QUALITY OR OF THE SAME TYPE AND IN APPROXIMATELY SAME TIME THEN THAT WOULD, HOWEVER, P ROVIDE MORE RELIABLE METHOD TO FOLLOW.------- 5.2 CWT VS. P.N SIKAND (1977) 107 ITR 922 (SC)(DPB 1-8) WHEREIN IT WAS HELD THAT THE VALUATION OF THE PROPERTY SHOU LD ALWAYS BE MADE AFTER GIVING EFFECT TO THE DISADVANTAGES ATTACHED T O IT. THEREFORE, WHEN THE LEASEHOLD INTEREST IN THE LAND HAS TO BE VALUED , THIS BURDEN OR DISADVANTAGE ATTACHING TO THE LEASEHOLD INTEREST MU ST BE DULY DISCOUNTED IN ESTIMATING THE PRICE WHICH THE LEASEH OLD INTEREST WOULD FETCH. TO VALUE THE LEASEHOLD INTEREST ON THE BASIS THAT THIS BURDEN OR DISADVANTAGE WAS TO BE IGNORED WOULD BE TO VALVE AN ASSET DIFFERENT IN CONTENT AND QUALIFY FROM THAT ACTUALLY OWNED BY THE ASSESSEE. ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 16 5.3 KINDLY REFER CIT V/S R.P. KACHOLIA (2016) 137 D TR 61 (RAJ) (DPB 31- 34) 5.4 ALSO KINDLY REFER RAVIKANT V/S ITO (2007) 110 T TJ 297 (DEL TRIB) IN PARA 9 (DPB 26-30) THUS, WHATEVER BE THE NATURE OF THE PROPERTY, A DUE DEDUCTION OF THE DISADVANTAGES ATTACHED TO THE PROPERTY HAS ALWAYS T O BE REDUCED WHILE VALUING THE PROPERTY. IN THE INSTANT CASE, THE DRAWBACKS ATTACHED WITH TH E PLOT WERE ODD SIZE OF THE PLOT, ILLEGAL CONSTRUCTION IN THE SET BACK P ORTION, COMMON STAIRWAYS, OVERHEAD WATER TANK, THE FACT OF THE CON TINUED OCCUPANCY OF THE ORIGINAL SELLERS AND THE ON-GOING LITIGATION WH ICH WAS KNOWN TO NEIGHBORS AND PROPERTY DEALERS, WHICH FACTORS WERE COMPLETELY IGNORED BY THE AVO/DVO AND LD. CIT(A) WHILE VALUING THE PRO PERTY. 6. ALL THESE DETAILED SUBMISSIONS TOGETHER WITH TH E FACTS AND LEGAL POSITION WERE SUBMITTED BEFORE THE LD. CIT(A), WHIC H HE HAS EVEN REPRODUCED IN HIS ORDER FROM PAGES 3 TO 9 UNFORTUNA TELY HOWEVER, HE DID NOT UTTER A SINGLE WORD THEREON BUT DISMISSED THE A PPEAL BY MERELY AND BLINDLY RELYING UPON THE REPORT OF THE DVO, AS IF T HAT WAS THE FINAL WORD. HE DID NOT APPRECIATE THAT THE DVO ACTED ONLY IN TH E CAPACITY OF A COMMISSIONER WHO WAS APPOINTED BY THE TRIAL COURT J UDGE/ APPELLATE AUTHORITY AND SUCH REPORT GIVEN BY THE COMMISSIONER WAS TO BE CONSIDERED OBJECTIVELY BY THE APPELLATE AUTHORITY, WHO WAS NOT AT ALL BOUND BY THE REPORT OF THE DVO. HAS THIS BEING THE INTENTION OF THE LEGISLATURE, AFTER FILING THE OBJECTION U/S 50C(2) AND GETTING A REPORT FROM THE DEPARTMENT VALUATION OFFICER, THE LAW WOUL DNT HAVE PROVIDED ANY APPEAL EVEN U/S 246A AGAINST THE ADDITION RESUL TING AFTER GIVING EFFECT TO THE REPORT OF THE DVO. HOWEVER, NO SUCH A MENDMENTS IS FOUND IN PROVISIONS OF S. 246A. THE ASSESSEE FEELING AGGR IEVED FROM THE ADDITION MADE BY THE AO, ONLY AFTER CONSIDERING THE REPORT OF THE DVO, WAS AGGRIEVED AND ITS APPEAL WAS FULLY MAINTAINABLE AS WAS ALSO RIGHTLY ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 17 ADMITTED BY THE LD. CIT(A). THE LD. CIT(A) HAVING A DMITTED SUCH AN APPEAL, ALSO ADMITTED THAT THE APPELLANT WAS AGGRIE VED BY THE ADDITION WHICH WAS BASED/CONSEQUENT TO THE DVOS REPORT. THE REFORE ALSO, THE LD. CIT(A) COULD NOT HAVE RESTED HIS DECISION SOLELY ON THE REPORT OF THE DVO. HE WAS SUPPOSED TO MAKE HIS COMMENT AND GRANT RELIEF, IF THOUGHT FIT. BY NOT DOING SO AND BY NOT REJECTING THE SPECI FIC FACTUAL AND LEGAL SUBMISSION MADE DULY SUPPORTED BY THE BINDING JUDIC IAL PRONOUNCEMENTS, IT HAS TO BE PRESUMED THAT LD. CIT( A) HAD NOTHING TO REBUT/NEGATE THE SAME AND HENCE HIS CONFIRMATION WA S COMPLETELY CONTRARY TO THE PROVISIONS OF LAW AND FACTS. HENCE THE IMPUGNED ADDITION KINDLY BE DELETED IN FULL. 8. AFTER HEARING BOTH THE SIDES AND CONSIDERING THE FACTUAL POSITION OF THE PROPERTY, I HOLD THAT BASICALLY THE PROPERTY WAS A RESIDENTIAL PROPERTY. THE PROPERTY WAS LET OUT BUT IT WAS CONSTRUCTED IN THE BACK PORTION OF THE PLOT OF LAND. THE DISTRICT VALUATION OFFICER HAS TRE ATED THE PROPERTY AS FULLY COMMERCIAL, WHICH IS NOT JUSTIFIED. IT IS ALSO A FACT THAT NO SITE PLAN WAS SANCTIONED BY THE LOCAL BODIES, WHICH THE ASSESSE E COULD SUBMIT TO THE DISTRICT VALUATION OFFICER, THEREFORE, THE DIST RICT VALUATION OFFICERS OBSERVATION WAS THAT THE ASSESSEE DID NOT FILE SITE PLAN IS FACTUALLY INCORRECT. FURTHER IT IS ALSO IMPORTANT TO NOTE THA T TO INVOKE THE RENT CAPITALIZATION METHOD, THE PERIOD OF TENANCY HAS TO BE CONSIDERED. FURTHER THE TERMINATION DATE OF TENANCY IS ALSO REL EVANT FACTOR TO INVOKE THE RENT CAPITALIZATION METHOD. THE DISPUTE WITH TENA NT IS ALSO VERY RELEVANT ASPECT WHICH NEEDS CONSIDERATION WHILE VALUI NG THE PROPERTY. NO LEASE DEED WAS EXECUTED WITH THE BANK DUE TO DISPU TE IN THE ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 18 PROPERTY. THE STRONG ROOM FACILITY WAS NOT CONSTRUCTE D DUE TO DISPUTE WITH THE OWNER. IT WAS ONLY CONSTRUCTED IN SETBACK AR EA ILLEGALLY. FURTHER THE STAIRWAYS WERE COMMON AND OTHER FACILITIES LIKE O VERHEAD WATER TANK WERE ALSO COMMON WITH PART OWNER OF PLOT, WHICH REDUCES THE FAIR MARKET VALUE IN TERMS OF SALABLE PRICE AND ALSO IN TERMS O F THE RENT. IT IS ALSO IMPORTANT TO NOTE THAT THE PROPERTY WAS IN DISPUTE A ND THE COURT CASES WERE GOING ON. THE ASSESSEES WERE RESIDING OUTSIDE THE JAIPUR. IT WAS DIFFICULT FOR THEM TO TRAVEL TO JAIPUR EVERY TIME T O NEGOTIATE THE DEAL WHEN THEY WERE SENIOR CITIZENS. THE STRUCTURE WAS VERY OLD AS IT WAS CONSTRUCTED IN 1972. CONSIDERING ALL THESE ASPECTS, I HOLD THAT THE DISTRICT VALUATION OFFICER HAS NOT CONSIDERED ALL THESE VARI OUS ASPECTS WHICH HAS DIRECT BEARING ON THE FAIR MARKET VALUE OF THE LAND ON THE DATE OF TRANSFER. THE FACTS OF THE CASE ALSO SUGGEST THAT IT CAN BE TERMED AS DISTRESS SALE, THEREFORE, THE DISTRICT VALUATION OF FICER WAS NOT JUSTIFIED IN ESTIMATING THE FAIR MARKET VALUE BY ADOPTING RENT C APITALIZATION METHOD, THEREFORE, I DIRECT TO DELETE THE SAME. 9. NOW I TAKE ITA NO. 827/JP/2016. SINCE THE FACTS AND ISSUES ARE IDENTICAL TO THE FA CTS OF ITA NO. 826/JP/2016, THEREFORE, SIMILAR SUBMISSIONS OF THE A.R. OF THE ASSESSEE AND SIMILAR FINDINGS OF THE BENCH SHALL APPLY IN TH IS CASE ALSO. ACCORDINGLY THE ADDITION MADE AND CONFIRMED IN THIS CASE IS ALS O DELETED. ITA 826 & 827/JP/2016_ SUNIL KUMAR PALIWAL VS ITO 19 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/09/2017. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20 TH SEPTEMBER, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- 1. M/S SUNIL KUMAR PALIWAL HUF, AJMER. 2. SMT. TARA DEVI PALIWAL, AJMER. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-2(1), AJMER. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 826 & 827/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR