SHRI KAILASH CHAND AGARWAL, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR

ITA 846/JPR/2017

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9840 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 13-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA
• 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

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 846/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 SHRI KAILASH CHAND AGARWAL G-6-7, ROAD NO. 9, VIJAY BADI, SIKAR ROAD, JAIPUR. CUKE VS. THE ACIT, CIRCLE-4, JAIPUR. TOLFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABPPA 5346 D VIHYKFKHZ@ AP PELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VEDANT GUPTA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K.C. GUPTA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 04/12/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 30/12/2019 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)-II, JAIPUR DATED 15.09.2017 FOR THE ASSESSME NT YEAR 2013-14 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND S OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, LD. LOWER AUTHORITIES GROSSLY ERRED IN TAKING SALE VALU E AS PER SECTION 50C AT RS. 11,45,000/- INSTEAD OF RS. 6,75,000/- AS SALE VALUE IGNORING THE VALUE ASSESSED BY REGISTERED VALUER AT RS. 6,60,880/. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, LD. LOWER AUTHORITIES GROSSLY ERRED IN RELYING UPON THE REPOR T OF DVO MADE ITA NO. 846/JP/2017 SHRI KAILASH CHAND AGARWAL VS. DCIT 2 ON THE BASIS OF CPWD RATES AS IT IS A SETTLED LAW T HAT STATE PWD RATES SHOULD BE ADOPTED. MOREOVER LD LOWER AUTHORIT IES DID NOT CONSIDER THE OBJECTIONS FILED BY THE ASSESSEE IN RE GARDS TO REPOT OF DVO. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE ACT DATED 29.12.201 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER OBSERVED THAT THE ASSESSEE HAS SHOWN SALE CONSIDERATION OF THREE SHOPS AT RS. 6,75,000/- BEING HIS 1/3 SHARE OUT OF TOTAL SAL E CONSIDERATION OF RS. 20,25,000/- WHEREAS THE SUB-REGISTRAR HAS VALUE D THESE THREE SHOPS AT RS. 39,65,418/- AND THE ASSESSEES SHARE C OMES TO RS. 13,21,806/-. THE ASSESSEE WAS ISSUED A SHOW CAU SE AS TO WHY THE VALUE SHOULD NOT BE TAKEN AS PER SECTION 50C AT RS. 13,21,806/- TO WHICH THE ASSESSEE OBJECTED AND SUBMITTED THAT THE MATTER MAY BE REFERRED TO THE VALUATION OFFICER FOR DETERMINATION OF FAIR MARKET VALUE. THEREAFTER, THE AO REFERRED THE MATTER TO VALUATION OFFICER ON 05.08.2015 FOR DETERMINATION FAIR MARKET OF THE ASS ETS AS ON 01.02.2013. THE VALUATION OFFICER SUBMITTED HIS RE PORT DATED 05.10.2015 ESTIMATED THE VALUE OF SHOPS AT RS. 11,9 4,402/- AND BASED ON OBJECTION FILED BY THE ASSESSEE, SUBSEQUENTLY RE VISED AND FINALIZED THE VALUE OF THE SHOPS AT RS. 11,45,000/- VIDE HIS REPORT DATED 30.10.2015. AGAINST THE SAID VALUATION, THE ASSESS EE AGAIN FILED AN OBJECTION BEFORE THE VALUATION OFFICER AND THEREAFT ER BEFORE THE ASSESSING OFFICER. IN ITS OBJECTION BEFORE THE AO, THE ASSESSEE SUBMITTED COPY OF THE VALUATION REPORT BY A REGISTE RED VALUER. IT WAS FURTHER SUBMITTED THAT THE VALUE OF THE SHOPS ARE D ETERMINED BY THE VALUATION OFFICER BASED ON THE DLC RATE WHEREAS THE VALUE HAS TO BE ITA NO. 846/JP/2017 SHRI KAILASH CHAND AGARWAL VS. DCIT 3 DETERMINED AS PER FAIR MARKET VALUE I.E. AMOUNT WHI CH THE PROPERTY CAN FETCH IN THE OPEN MARKET BASED ON ITS LOCATION. IT WAS SUBMITTED THAT THE VALUATION OFFICER HAS NOT TAKEN INTO CONSIDERAT ION THE FACT THAT THE SHOPS OF THE ASSESSEE ARE SITUATED JUST IN FRONT OF THE RAILWAY BRIDGE AND DUE TO SUCH RAILWAY BRIDGE, COMMERCIAL VALUE OF SHOPS HAS COME DOWN DRASTICALLY. IN SUPPORT, THE COPY OF THE LETTE R NO. 11/8601 ISSUED FROM THE OFFICE OF THE COLLECTOR, SIKAR REGARDING A CQUISITION OF LAND FOR PROPOSED OVER BRIDGE UNDER THE CENTRAL LAND ACQUISI TION ACT WAS SUBMITTED. IT WAS FURTHER SUBMITTED THAT THE VALUAT ION OFFICER HAS TAKEN VALUE OF CONSTRUCTION OF THE THREE SHOPS AS PER CPW D RATE WHEREAS IT SHOULD BE VALUED AS PER PWD RATE A POSITION WHICH H AS BEEN ACCEPTED BY THE HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS. SHRI PREM KUMAR MARDHIYA 216 ITR 508. IT WAS FURTHER SUBMITTED THAT THE COMPARABLE CASE OF SALE OF SHOPS WAS ALSO NOT CONSIDERED BY TH E VALUATION OFFICER. THE OBJECTIONS SO FILED BY THE ASSESSEE WERE CONSID ERED BUT NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. AS PER THE AS SESSING OFFICER, HE IS NOT A TECHNICAL PERSON TO VALUE THE SHOPS AND THE D ETERMINATION OF THE VALUATION IS FINAL AS PER REPORT OF VALUATION OFFIC ER AND UNDERSIGNED HAS NO AUTHORITY TO INTERFERE IN THE VALUATION SO MADE BY THE VALUATION OFFICER . FURTHER THE VALUATION DONE BY THE REGISTE RED VALUER HAS NO SANCTITY ONCE THE VALUATION HAS BEEN DONE BY THE VA LUATION OFFICER. ACCORDINGLY, HE ADOPTED SALE CONSIDERATION OF SHOPS AT RS. 11,45,000/- AND LONG TERM CAPITAL GAIN ON SALE OF SHOPS WAS DET ERMINED AT RS. 10,85,000/- AFTER PROVIDING DEDUCTION FOR INDEX ED COST OF ACQUISITION. 3. AGAINST THE SAID FINDINGS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD CIT(A) REJECTED THE SUBMISSION O F THE ASSESSEE ITA NO. 846/JP/2017 SHRI KAILASH CHAND AGARWAL VS. DCIT 4 HOLDING THAT ADEQUATE OPPORTUNITY HAS BEEN GRANTED AT THE TIME OF VALUATION AND THE VALUATION HAS BEEN DONE BY THE VA LUATION OFFICER AS PER THE PRESCRIBED AND APPROVED METHOD. THEREFORE, THE ACTION OF THE AO WAS UPHELD. AGAINST THE SAID FINDINGS, THE ASSE SSEE IS IN BEFORE US. 4. DURING THE COURSE OF HEARING, THE LD. AR REITERA TED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. IT H AS SUBMITTED THAT THOUGH THE VALUATION REPORT IS BINDING ON THE AO, H OWEVER, THE LD. CIT(A) BEING THE APPELLATE AUTHORITY COULD HAVE BEE N CONSIDERED THE OBJECTIONS SO FILED BY THE ASSESSEE AND THE MATTER COULD HAVE BEEN REFERRED TO THE VALUATION OFFICER FOR CONSIDERATION OF THE OBJECTIONS SO RAISED BY THE ASSESSEE. IN SUPPORT, RELIANCE WAS PL ACED ON THE DECISION OF THE TRIBUNAL IN CASE OF SMT VIMLA DEVI SAMARIYA VS ITO (ITA NO. 348/JP/2018 DATED 11.07.2019) . IT WAS FURTHER SUBMITTED THAT FIRSTLY THE VALUATION HAS BEEN DONE BY THE VALUATION OFFICE R APPLYING THE DLC RATE AND NOT AS PER FAIR MARKET VALUE AND THE FACT THAT THE SHOPS WERE SITUATED NEAR THE LIMITS OF RAILWAY OVER BRIDGE WAS NOT CONSIDERED BECAUSE OF WHICH THE VALUE OF THE SHOPS HAD COME DO NE DRASTICALLY. IT WAS FURTHER SUBMITTED THAT IT IS NOW A SETTLED PROP OSITION THAT THE PWD RATES HAVE TO BE CONSIDERED BY THE VALUATION OFFICE R AS THERE IS NOT DISPUTE THAT THE PROPERTY LIES IN CASE OF STATE OF RAJASTHAN AND IN SUPPORT RELIANCE WAS PLACED ON THE DECISION OF HON BLE SUPREME COURT IN CASE OF CIT VS. SUNITA MANSINGHA (CIVIL APPEAL NO. 3064/2007 DATED 29.03.2017). 5. PER CONTRA, THE LD. DR SUBMITTED THAT ONCE THE V ALUATION OFFICER HAS SUBMITTED HIS REPORT TO THE ASSESSING OFFICER, THE LATTER IS GUIDED BY ITA NO. 846/JP/2017 SHRI KAILASH CHAND AGARWAL VS. DCIT 5 THE SAID REPORT AND CANNOT ENTERTAIN ANY FURTHER OB JECTIONS RAISED BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT VARIOU S OBJECTIONS RAISED BY THE ASSESSEE RELATING TO FALL IN VALUE OF THE SHOPS DUE TO RAILWAY OVERBRIDGE, ADOPTION OF CPWD RATES HAVE BEEN DULY C ONSIDERED BY THE VALUATION OFFICER AND OUR REFERENCE WAS DRAWN TO RE PORT OF THE VALUATION OFFICER DATED 30.10.2015 WHEREIN THE VALUATION REPO RT HAS COMMENTED ON EACH OF THE OBJECTIONS RAISED BY THE ASSESSEE AN D HAS FINALLY DETERMINED THE VALUE OF THE SHOPS AT RS 11,45,000. HE ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER O F THE LOWER AUTHORITIES AND THE SAME SHOULD BE CONFIRMED. 6. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IT IS A SETTLED LEGAL PROPOSIT ION THAT THE DVO REPORT IS BINDING ON THE ASSESSING OFFICER BUT ONCE THE MA TTER IS BEFORE THE APPELLATE AUTHORITY AND THE ASSESSEE IS AGGRIEVED W ITH THE REPORT OF THE DVO, THE APPELLATE AUTHORITY SHOULD HAVE CONSIDERED THE ASSESSEES OBJECTIONS AND SHOULD NOT HAVE BEEN GUIDED SOLELY B Y THE REPORT OF THE DVO. IN THE INSTANT CASE, THE LD AR HAS RAISED TWO SPECIFIC OBJECTIONS. FIRST OBJECTION RELATES TO DETERMINATION OF FAIR MA RKET VALUE AS AGAINST DLC VALUE AND THE FALL IN THE FAIR MARKET VALUE ESP ECIALLY DUE TO THE FACT THAT THE SHOPS OF THE ASSESSEE ARE SITUATED JUST IN FRONT OF THE RAILWAY BRIDGE AND DUE TO SUCH RAILWAY BRIDGE, COMMERCIAL V ALUE OF SHOPS HAS COME DOWN DRASTICALLY. WE FIND THAT THE SAID OBJECT ION HAS BEEN DULY CONSIDERED AND ADDRESSED BY THE DVO IN ITS REPORT D ATED 30.10.2015. IN HIS REPORT, THE DVO HAS STATED THAT THE SHOPS AR E SITUATED ON MAIN 100 FEET WIDE ROAD HAVING ALL COMMERCIAL AMENITIES AND REGARDING RAILWAY BRIDGE, THE ASSESSEE HAS NOT PROVIDED ANY A LIGNMENT MAP/ROUTE ITA NO. 846/JP/2017 SHRI KAILASH CHAND AGARWAL VS. DCIT 6 MAP OF BRIDGE AND AT PRESENT, THE WORK IS STOPPED A ND AS ON DATE OF SALE, THE BRIDGE IS NOT IN EXISTENCE. THE SAID FIND INGS OF THE DVO REMAIN UNCONTROVERTED BEFORE US AND WE THEREFORE DONT FIN D ANY JUSTIFIABLE REASON TO INTERFERE WITH THE SAID FINDINGS OF THE D VO AND THE FIRST OBJECTION IS HEREBY DISMISSED. REGARDING THE OTHER OBJECTION RAISED BY THE LD AR REGARDING ADOPTION OF CPWD RATES AS AGAIN ST PWD RATES, WE AGREE WITH LD AR THAT WHERE THE SHOPS ARE SITUATED IN THE JURISDICTION OF STATE PWD, STATE PWD RATES SHOULD BE APPLIED FOR ES TIMATION OF COST OF CONSTRUCTION OF SHOPS. THE SAME IS THE CONSISTENT POSITION OF THIS BENCH FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SUNITA MANSINGHA (SUPRA) INCLUDING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HOTEL JOSHI (242 ITR 478). IN ABSENCE OF ANY CONTRARY PRECEDENT BROUGHT TO OUR NOTICE, WE DIRECT THE ADOPTION OF STATE PWD RATES FOR DETERMINATION OF COST OF CON STRUCTION OF SHOPS AND TO THIS LIMITED EXTENT, THE MATTER IS REMANDED TO THE FILE OF AO/DVO TO DETERMINE THE VALUE OF THE SHOPS AFTER CONSIDERI NG STATE PWD RATES. THUS, FIRST GROUND OF APPEAL IS DISMISSED AND THE S ECOND GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/12/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30/12/2019. ITA NO. 846/JP/2017 SHRI KAILASH CHAND AGARWAL VS. DCIT 7 *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI KAILASH CHAND AGARWAL, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-4, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 846/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR