SHRI RAMJIBHAI N.VITHANI,SURAT vs. THE DY.CIT.,CIRCLE-9,, SURAT

O R D E R

PER DR. A. L. SAINI, ACCOUNTANT MEMBER:

2. Grounds of appeal

raised by the assessee are as follows: “1. That on facts and in law, the learned CIT(A) has grievously erred in partly confirming the addition made u/s 50C of the Act by adopting the value of property sold at Rs.40,70,200/-, as against the value declared as per the sale deed of Rs.25,00,000/-

2. That on facts and in law, the learned CIT(A) ought to have held that the DVO has not considered the objections of assessee properly.

3. That on facts, and in law, it ought to have been held that the comparable sale instances taken by DVO are not at all comparable as they are of commercial plots and not of residential zone in which the assessee has sold the property.

4. The assessee craves leave to add, alter, amend any ground of appeal.”

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] 3. Brief facts of the issue in dispute are stated as under. The assessee before us is an individual. During the assessment year, the assessee sold a plot of land. The returned income comprises of Long term capital gain of Rs. 8,96,638/- on sale of plots of land, Survey No.35-l-A and 35-1-B, Paiki, T.P. Scheme No.8,F.P.No-18, Umarwada, Surat. Information was received from the office of Sub registrar of immovable properties that valuation adopted by the stamp duty authorities in respect of the plots sold by the assessee was much higher than reflected in the sale deeds. The stamp valuation authority had valued the land at Rs.3,09,90,000/-. The undisclosed Long Term Capital Gain (LTCG) as per this valuation under the provisions of section 50C of the Act for the said land comes to Rs.46,74,185/-_ (3,09,90,000 of 23.15% share Rs.71,74,185 - Rs.25,00,000 as per sale deed) in the case of assessee. In this context, the assessee was confronted and requested to explain as to why the differential amount of under valuation of the sale consideration should not be treated as his income in view of provisions of section 50C of the Act.

4. In response, the assessee replied, vide letter dated 07.02.2011 stating that the said land was having number of litigation since more than 12 years and civil suits were pending with various courts. The said land situated at slum area like Zupadpatti, auto garage and godowns. In support of his claims, the assessee filed supporting evidences like legal notices and copy of order of the High Court etc.

5. However, the assessing officer had rejected the contention of the assessee and held that valuation of the immovable property for the purpose of payment of stamp duty would be deemed to be the full value of the consideration (FVC) if the sale consideration is less than the value adapted by the stamp valuation authority. Consequently, the difference between the sale consideration shown in the registered deed and stamp value adopted by the prescribed authority would be the capital gain in the hand of seller. Therefore, assessing officer made addition of Rs.46,74,185/- (3,09,90,000 of 23.15%, share Rs.71,74,185 - Rs.25,00,000 as per sale deed), being the difference between stamp valuation of land, and value adopted by the assessee, and treated the same as undisclosed income in the hands of the assessee.

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani]

6. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld.CIT(A) who has partly allowed the appeal of the assessee. During the course of the appellate proceedings, a reference to the AVO was made by the Assessing Officer under section 50C(2) of the Act. The AVO submitted his Valuation Report u/s 50C dated 03.05.2012 wherein the fair market value of the property as on 22.03.2007 was taken as Rs. 40,70,200/- against the declared value of Rs. 25,00,000/-. Therefore, ld CIT(A) directed the assessing officer to adopt the value of Rs. 40,70,200/- for the purpose of computation of capital gain.

7. Aggrieved by the order of ld.CIT(A), the assessee is in further appeal before us.

8. Shri Mehul K. Patel, Learned Counsel for the assessee has submitted before us that assessee’s land is situated at Survey No.35-l-A and 35-1-B, Paiki, T.P. Scheme No.8,F.P.No-18, Umarwada, Surat. The said land is not free from encumbrances, such as, unauthorized structures, such as Zupad Patties, Garage etc., were constructed. To remove these unauthorized structures, the assessee has to incur cost. The ld.Counsel took us through paper book page no.43 and 46 where the town planning map is given. The ld.Counsel also took us through the paper book page 47, wherein the order under section 50C of the Act is placed. The ld.Counsel also took us through the comparable sale instances, which is placed at paper book page no.59.Therefore, based on these facts, the ld.Counsel prayed the Bench that addition made by the ld.Assessing Officer and sustained by the ld.CIT(A) may be deleted.

9. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

10. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessing officer has taken the Page | 3

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] stamp duty value at Rs.46,74,185/- to compute the capital gain. On appeal by the assessee, ld CIT(A) has provided partly relief to the assessee. During the course of appellate proceedings, a reference to the AVO was made by the Assessing Officer under section 50C(2) of the Act. The AVO submitted his Valuation Report under section 50C of the Act, dated 03.05.2012, wherein the fair market value of the property as on 22.03.2007 was taken as Rs. 40,70,200/- against the value adopted by the assessing officer at Rs.46,74,185/-. That is, AVO reduced the fair market value of land from Rs.46,74,185/- to Rs. 40,70,200/- and accordingly ld CIT(A) directed the assessing officer to adopt the fair market value of Rs. 40,70,200/- to compute the capital gain tax. However, the assessee has taken the value of property at Rs. 25,00,000/- to compute capital gain. Now the assessee is in appeal before us and prayed that difference Rs.15,70,200/- (fair market value of Rs. 40,70,200/- and Rs. 25,00,000/-, value adopted by the assessee) may also be deleted.

11.We note that a perusal of the report of the AVO shows that valuation report has been prepared after taking into consideration the objections raised by the assessee before the AVO, vide his letter dated 25.04.2012, where the objections pertaining to various encroachments, civil court matters etc. have been raised. For the sake of clarity, the relevant points of the valuation report prepared by the AVO,( which were considered by the ld CIT(A), are reproduced below :

"7.0 Method of Valuation: 7.1. Method adopted : Comparable Sale Instance Method. 7.2 Reasons of support of Method : As the PUC is self occupied on the date of Sale deed & sufficient no. of Comparable Sale Instances are available in nearby vicinity. The Comparable Sale Instance Method is most appropriate method of valuation after taking into account various factors which affect the land value. While deriving the land rates, the Jantry rate & Prevalent market rates also taken into consideration. 7.3 Any special observation or qualification : Since, the P.U.C. as on the date of Sale i.e. 22.03.2007 there was an encroachment of Auto-Garrage, slum area of Zupad patti in land & Court cases were also going on in Small Cause Court, Surat vide case no. 75/96 and 541/07 (Still there is no decision in Court), as per the documentary evidences submitted by the assessee. Hence, the market land rates naturally effects as on the date of valuation, these facts has been affected on land rate and considered while deriving the land rates of concerned years. Page | 4

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani]

10.0. Comments on Registered Valuer's Report: In this case the Assessee has submitted Regd. Valuers report of Shri Jashvant H Mehta. The land rate as adopted by the valuer are not acceptable and on lower side as compared to prevalent market rates. The Regd. Valuer has considered the rates which are very less and cannot be adopted to reach on a reasonable fair market value. The Regd. Valuer considered only two sale instances out of these two, one is for Residential constructed plot which is not acceptable and not fair to compare with the PUC and other is for open Non agricultural land which is on lower side having l/3rd area of the PUC and not acceptable, whereas this office considered Sale instances for Open Non agricultural land only. The Regd. Valuer has not considered the Comparable sale Instances available, whereas this office has considered the Comparable Sale Instances duly adjusted for all factors including time lag. Thus the rates as adopted by the Regd. Valuer are without any hi sis and on lower side and qualify for rejection. 11.0. Assessee's Objection and Replies : The proposed estimate inviting objections writing/in person by 11/05/2011 was sent to the assessee vide this office letter even no. 6(17)/AVOS/l 1-12/59 dated 17.04.2012. In response to this proposed estimate the assessee has submitted following objections vide his letter no. nil dated 25.04.2012 and received by this office on dated 30.04.2012. Replies to the objections made by this office as follows. Objections and Replies: Objection 1 : Total area of land, as per record, is 4132 square meter. However, actual area of land at site is only 3962 square meter as per following details. There was an encroachment of about 351 sq.mts. on north side by occupants of building n east side which has now become a public road. This can be personally verified by you at site even to-day. An area of about 145 Sq.mtrs was allotted to us on west side by Town Planning Dept. Actual area at site is 3926 Sq.mts. as per following details Original area of plot (as per record) - 4132 Sq. mts. Less area under enchroachment - 351 Sq.mtrs. 3,781 Sq.mts. Add area allotted by T.P. Dept. -145 Sq.mts. Net final area at site - 3926 Sq.mts.

Land area for my 57.40% share is 2,251.80 Sq.mts. and this area should be considered for valuation of my share. Reply: As per the sale deed the mentioned area is 4132 Sq.mts. which was transferred to the M/s. Ghelani Builder. And you didn't submitted any documentary proof regarding difference of area i.e. 4132-3926-206 sq.mts. and you may be A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] benefited by the Authority for increased F.S.I, i.e. 1.9 instead of 1.3. For checking of correctness you didn't submitted "F-Form" which showing the exact area of your plot. This office has taken 57.40% of total area i.e. 4132 sq.mtr.=2371.768 sq.mts., which is correct. Hencer your objection is qualifies for rejection. Replies: 7(A):- Regarding Sale instances taken by this office, your objection qualifies for rejection as this office has considered sale instances of residential area purchased by B.S, Agrawal Director of Swajan Housing Pvt. Ltd. The Surrounding area of PUC is highly developed and all amenities like school, market, bank, temples are situated within a short distance. Garden is situated right opposite of the plot under consideration. The plot under consideration is situated on 24.38 m wide road in front and 9.00 m wide road on two sides of the plot. Railway station, Cinema, medical college, Bombay Gujarat Art Silk Market is situated within 2 km. Hence, the sale instances considered by this office are correct. 7(B):- Regarding comparable sale instances taken by this office situated on F.P. Nos. 128, 129, & 130, the sale instances collected by this office are situated in residential area of same T.P. Scheme only. These plots are situated near Western railway line & not on Ring Road & hence, not situated in commercial area. According to your objection it seems like that all textile markets of Surat city comes to the same place. This office has already considered for the factor of situation and location in the derivation of land rates. Hence, your statement is wrong and qualifies for rejection. Replies to objection 8 &9 The area of first two sale instance is just half of the PUC and as a result of which the rates are differ. And regarding the last sale instance the area is bigger than the PUC due to which the rate is less. As you might be aware of the market trend that the small area plot having higher rates compared to the plots having larger area, as a result of which there is difference in the rate of the plots situated on F.P. Nos. 128, 129 & 130. This office already considered the factors which affect the land rates such as size, shape, situation, location, utility, future potentiality, time lag, and other factors such as disadvantage of HUF factor, litigation, encroachments of slum, zupad patti, auto-garrage, etc. of the sale instance properties with respect to PUC and make it comparable by adjusting all advantages and disadvantages of the sale instances with the PUC, the Land rate of Rs.4255/- per sq.m. as on date 22.03.2007 is considered quite fair and reasonable. Hence, your objection is qualifies for rejection".

11. Hence, from the above report of the AVO, it is abundantly clear that AVO has taken into consideration all the objections and issues raised by the assessee regarding the valuation of the property which includes the area of property, the A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] method of valuation, the objections raised by the AVO on the report of the Registered Valuer, the basis and justification of the comparable cases taken by the AVO, the issue of joint ownership of the property etc. The ld Counsel`s main contention was regarding the valuation of land being unreasonable as the land was not free of encumbrances has already been considered by the Valuation Officer in his Valuation Report where he has valued the land at a much lower cost of Rs.40,70,200/- than the assessed value as per the Stamp Registration Authority of Rs.71,74,185/- (l/3rd share) thereby, reducing the value of land by Rs.31,03,985/-, after taking into consideration all the encumbrances such as jhuggi jhopdi, garage, civil suits etc. Hence, no further relief can be given on this contention of the ld Counsel. However, we note that it is difficult to compute the cost involved in all the encumbrances such as jhuggi jhopdi, garage, civil suits etc, therefore, to meet the end of justice, a further relief of Rs. 3,00,000/- may be given to the assessee, thus, we direct the assessing officer to compute the capital gain by adopting fair market value at Rs.37,70,200/- ( Rs.40,70,200 – Rs.3,00,000).

12. In the result, appeal filed by the assessee is partly allowed.

Order is pronounced on 30/07/2021 by placing result on Notice Board.

Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat /�दनांक/ Date: 30/07/2021 /sgr Copy of the Order forwarded to 1. The Assessee 2. The Respondentd 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order / / TRUE COPY / / Assistant Registrar/Sr. PS/PS ITAT, Surat IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ (�नधा�रणवष� / Assessment Year: (2007-08) (Virtual Court Hearing) Smt. Varshaben Labubhai S. Kasodaria, V The Deputy Commissioner of L/H of Late Shri Nagjibhai M. Vithanik, Income Tax, s. 16-17, Sant Jalaram Society, Opp. Circle-9, Surat. Pandol Ind., Ved Road, Surat. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABYPK 6329 F (Assessee) (Respondent) Assessee by : Shri Mehul K. Patel - AR Respondent by : Ms. Anupama Singla – Sr.DR सुनवाईक�तार�ख/ Date of Hearing : 07/07/2021 घोषणाक�तार�ख/Date of Pronouncement : 30/07/2021 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee pertaining to the assessment year 2007-08, is directed against the order passed by the ld.Commissioner of Income Tax(Appeals)-V, Surat dated 15.01.2013, which in turn arises out of an assessment order passed by the assessing officer under section 147 r.w.s. 143(3) of the Income Tax Act, 1961 ( hereinafter referred to as “the Act”), dated 30.08.2011.

2. Grounds of appeal

raised by the assessee are as follows: “1. That on facts and in law, the learned CIT(A) has grievously erred in partly confirming the addition made u/s 50C of the Act by adopting the value of property sold at Rs.40,70,200/-, as against the value declared as per the sale deed of Rs.25,00,000/-

2. That on facts and in law, the learned CIT(A) ought to have held that the DVO has not considered the objections of assessee properly.

3. That on facts, and in law, it ought to have been held that the comparable sale instances taken by DVO are not at all comparable as they are of commercial plots and not of residential zone in which the assessee has sold the property.

4. The assessee craves leave to add, alter, amend any ground of appeal.”

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] 3. Brief facts of the issue in dispute are stated as under. The assessee before us is an individual. During the assessment year, the assessee sold a plot of land. The returned income comprises of Long term capital gain of Rs. 8,96,638/- on sale of plots of land, Survey No.35-l-A and 35-1-B, Paiki, T.P. Scheme No.8,F.P.No-18, Umarwada, Surat. Information was received from the office of Sub registrar of immovable properties that valuation adopted by the stamp duty authorities in respect of the plots sold by the assessee was much higher than reflected in the sale deeds. The stamp valuation authority had valued the land at Rs.3,09,90,000/-. The undisclosed Long Term Capital Gain (LTCG) as per this valuation under the provisions of section 50C of the Act for the said land comes to Rs.46,74,185/-_ (3,09,90,000 of 23.15% share Rs.71,74,185 - Rs.25,00,000 as per sale deed) in the case of assessee. In this context, the assessee was confronted and requested to explain as to why the differential amount of under valuation of the sale consideration should not be treated as his income in view of provisions of section 50C of the Act.

4. In response, the assessee replied, vide letter dated 07.02.2011 stating that the said land was having number of litigation since more than 12 years and civil suits were pending with various courts. The said land situated at slum area like Zupadpatti, auto garage and godowns. In support of his claims, the assessee filed supporting evidences like legal notices and copy of order of the High Court etc.

5. However, the assessing officer had rejected the contention of the assessee and held that valuation of the immovable property for the purpose of payment of stamp duty would be deemed to be the full value of the consideration (FVC) if the sale consideration is less than the value adapted by the stamp valuation authority. Consequently, the difference between the sale consideration shown in the registered deed and stamp value adopted by the prescribed authority would be the capital gain in the hand of seller. Therefore, assessing officer made addition of Rs.46,74,185/- (3,09,90,000 of 23.15%, share Rs.71,74,185 - Rs.25,00,000 as per sale deed), being the difference between stamp valuation of land, and value adopted by the assessee, and treated the same as undisclosed income in the hands of the assessee.

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani]

6. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld.CIT(A) who has partly allowed the appeal of the assessee. During the course of the appellate proceedings, a reference to the AVO was made by the Assessing Officer under section 50C(2) of the Act. The AVO submitted his Valuation Report u/s 50C dated 03.05.2012 wherein the fair market value of the property as on 22.03.2007 was taken as Rs. 40,70,200/- against the declared value of Rs. 25,00,000/-. Therefore, ld CIT(A) directed the assessing officer to adopt the value of Rs. 40,70,200/- for the purpose of computation of capital gain.

7. Aggrieved by the order of ld.CIT(A), the assessee is in further appeal before us.

8. Shri Mehul K. Patel, Learned Counsel for the assessee has submitted before us that assessee’s land is situated at Survey No.35-l-A and 35-1-B, Paiki, T.P. Scheme No.8,F.P.No-18, Umarwada, Surat. The said land is not free from encumbrances, such as, unauthorized structures, such as Zupad Patties, Garage etc., were constructed. To remove these unauthorized structures, the assessee has to incur cost. The ld.Counsel took us through paper book page no.43 and 46 where the town planning map is given. The ld.Counsel also took us through the paper book page 47, wherein the order under section 50C of the Act is placed. The ld.Counsel also took us through the comparable sale instances, which is placed at paper book page no.59.Therefore, based on these facts, the ld.Counsel prayed the Bench that addition made by the ld.Assessing Officer and sustained by the ld.CIT(A) may be deleted.

9. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

10. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessing officer has taken the Page | 3

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] stamp duty value at Rs.46,74,185/- to compute the capital gain. On appeal by the assessee, ld CIT(A) has provided partly relief to the assessee. During the course of appellate proceedings, a reference to the AVO was made by the Assessing Officer under section 50C(2) of the Act. The AVO submitted his Valuation Report under section 50C of the Act, dated 03.05.2012, wherein the fair market value of the property as on 22.03.2007 was taken as Rs. 40,70,200/- against the value adopted by the assessing officer at Rs.46,74,185/-. That is, AVO reduced the fair market value of land from Rs.46,74,185/- to Rs. 40,70,200/- and accordingly ld CIT(A) directed the assessing officer to adopt the fair market value of Rs. 40,70,200/- to compute the capital gain tax. However, the assessee has taken the value of property at Rs. 25,00,000/- to compute capital gain. Now the assessee is in appeal before us and prayed that difference Rs.15,70,200/- (fair market value of Rs. 40,70,200/- and Rs. 25,00,000/-, value adopted by the assessee) may also be deleted.

11.We note that a perusal of the report of the AVO shows that valuation report has been prepared after taking into consideration the objections raised by the assessee before the AVO, vide his letter dated 25.04.2012, where the objections pertaining to various encroachments, civil court matters etc. have been raised. For the sake of clarity, the relevant points of the valuation report prepared by the AVO,( which were considered by the ld CIT(A), are reproduced below :

"7.0 Method of Valuation: 7.1. Method adopted : Comparable Sale Instance Method. 7.2 Reasons of support of Method : As the PUC is self occupied on the date of Sale deed & sufficient no. of Comparable Sale Instances are available in nearby vicinity. The Comparable Sale Instance Method is most appropriate method of valuation after taking into account various factors which affect the land value. While deriving the land rates, the Jantry rate & Prevalent market rates also taken into consideration. 7.3 Any special observation or qualification : Since, the P.U.C. as on the date of Sale i.e. 22.03.2007 there was an encroachment of Auto-Garrage, slum area of Zupad patti in land & Court cases were also going on in Small Cause Court, Surat vide case no. 75/96 and 541/07 (Still there is no decision in Court), as per the documentary evidences submitted by the assessee. Hence, the market land rates naturally effects as on the date of valuation, these facts has been affected on land rate and considered while deriving the land rates of concerned years. Page | 4

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani]

10.0. Comments on Registered Valuer's Report: In this case the Assessee has submitted Regd. Valuers report of Shri Jashvant H Mehta. The land rate as adopted by the valuer are not acceptable and on lower side as compared to prevalent market rates. The Regd. Valuer has considered the rates which are very less and cannot be adopted to reach on a reasonable fair market value. The Regd. Valuer considered only two sale instances out of these two, one is for Residential constructed plot which is not acceptable and not fair to compare with the PUC and other is for open Non agricultural land which is on lower side having l/3rd area of the PUC and not acceptable, whereas this office considered Sale instances for Open Non agricultural land only. The Regd. Valuer has not considered the Comparable sale Instances available, whereas this office has considered the Comparable Sale Instances duly adjusted for all factors including time lag. Thus the rates as adopted by the Regd. Valuer are without any hi sis and on lower side and qualify for rejection. 11.0. Assessee's Objection and Replies : The proposed estimate inviting objections writing/in person by 11/05/2011 was sent to the assessee vide this office letter even no. 6(17)/AVOS/l 1-12/59 dated 17.04.2012. In response to this proposed estimate the assessee has submitted following objections vide his letter no. nil dated 25.04.2012 and received by this office on dated 30.04.2012. Replies to the objections made by this office as follows. Objections and Replies: Objection 1 : Total area of land, as per record, is 4132 square meter. However, actual area of land at site is only 3962 square meter as per following details. There was an encroachment of about 351 sq.mts. on north side by occupants of building n east side which has now become a public road. This can be personally verified by you at site even to-day. An area of about 145 Sq.mtrs was allotted to us on west side by Town Planning Dept. Actual area at site is 3926 Sq.mts. as per following details Original area of plot (as per record) - 4132 Sq. mts. Less area under enchroachment - 351 Sq.mtrs. 3,781 Sq.mts. Add area allotted by T.P. Dept. -145 Sq.mts. Net final area at site - 3926 Sq.mts.

Land area for my 57.40% share is 2,251.80 Sq.mts. and this area should be considered for valuation of my share. Reply: As per the sale deed the mentioned area is 4132 Sq.mts. which was transferred to the M/s. Ghelani Builder. And you didn't submitted any documentary proof regarding difference of area i.e. 4132-3926-206 sq.mts. and you may be A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] benefited by the Authority for increased F.S.I, i.e. 1.9 instead of 1.3. For checking of correctness you didn't submitted "F-Form" which showing the exact area of your plot. This office has taken 57.40% of total area i.e. 4132 sq.mtr.=2371.768 sq.mts., which is correct. Hencer your objection is qualifies for rejection. Replies: 7(A):- Regarding Sale instances taken by this office, your objection qualifies for rejection as this office has considered sale instances of residential area purchased by B.S, Agrawal Director of Swajan Housing Pvt. Ltd. The Surrounding area of PUC is highly developed and all amenities like school, market, bank, temples are situated within a short distance. Garden is situated right opposite of the plot under consideration. The plot under consideration is situated on 24.38 m wide road in front and 9.00 m wide road on two sides of the plot. Railway station, Cinema, medical college, Bombay Gujarat Art Silk Market is situated within 2 km. Hence, the sale instances considered by this office are correct. 7(B):- Regarding comparable sale instances taken by this office situated on F.P. Nos. 128, 129, & 130, the sale instances collected by this office are situated in residential area of same T.P. Scheme only. These plots are situated near Western railway line & not on Ring Road & hence, not situated in commercial area. According to your objection it seems like that all textile markets of Surat city comes to the same place. This office has already considered for the factor of situation and location in the derivation of land rates. Hence, your statement is wrong and qualifies for rejection. Replies to objection 8 &9 The area of first two sale instance is just half of the PUC and as a result of which the rates are differ. And regarding the last sale instance the area is bigger than the PUC due to which the rate is less. As you might be aware of the market trend that the small area plot having higher rates compared to the plots having larger area, as a result of which there is difference in the rate of the plots situated on F.P. Nos. 128, 129 & 130. This office already considered the factors which affect the land rates such as size, shape, situation, location, utility, future potentiality, time lag, and other factors such as disadvantage of HUF factor, litigation, encroachments of slum, zupad patti, auto-garrage, etc. of the sale instance properties with respect to PUC and make it comparable by adjusting all advantages and disadvantages of the sale instances with the PUC, the Land rate of Rs.4255/- per sq.m. as on date 22.03.2007 is considered quite fair and reasonable. Hence, your objection is qualifies for rejection".

11. Hence, from the above report of the AVO, it is abundantly clear that AVO has taken into consideration all the objections and issues raised by the assessee regarding the valuation of the property which includes the area of property, the A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] method of valuation, the objections raised by the AVO on the report of the Registered Valuer, the basis and justification of the comparable cases taken by the AVO, the issue of joint ownership of the property etc. The ld Counsel`s main contention was regarding the valuation of land being unreasonable as the land was not free of encumbrances has already been considered by the Valuation Officer in his Valuation Report where he has valued the land at a much lower cost of Rs.40,70,200/- than the assessed value as per the Stamp Registration Authority of Rs.71,74,185/- (l/3rd share) thereby, reducing the value of land by Rs.31,03,985/-, after taking into consideration all the encumbrances such as jhuggi jhopdi, garage, civil suits etc. Hence, no further relief can be given on this contention of the ld Counsel. However, we note that it is difficult to compute the cost involved in all the encumbrances such as jhuggi jhopdi, garage, civil suits etc, therefore, to meet the end of justice, a further relief of Rs. 3,00,000/- may be given to the assessee, thus, we direct the assessing officer to compute the capital gain by adopting fair market value at Rs.37,70,200/- ( Rs.40,70,200 – Rs.3,00,000).

12. In the result, appeal filed by the assessee is partly allowed.

Order is pronounced on 30/07/2021 by placing result on Notice Board.

Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat /�दनांक/ Date: 30/07/2021 /sgr Copy of the Order forwarded to 1. The Assessee 2. The Respondentd 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order / / TRUE COPY / / Assistant Registrar/Sr. PS/PS ITAT, Surat IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ (�नधा�रणवष� / Assessment Year: (2007-08) (Virtual Court Hearing) Smt. Varshaben Labubhai S. Kasodaria, V The Deputy Commissioner of L/H of Late Shri Nagjibhai M. Vithanik, Income Tax, s. 16-17, Sant Jalaram Society, Opp. Circle-9, Surat. Pandol Ind., Ved Road, Surat. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABYPK 6329 F (Assessee) (Respondent) Assessee by : Shri Mehul K. Patel - AR Respondent by : Ms. Anupama Singla – Sr.DR सुनवाईक�तार�ख/ Date of Hearing : 07/07/2021 घोषणाक�तार�ख/Date of Pronouncement : 30/07/2021 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee pertaining to the assessment year 2007-08, is directed against the order passed by the ld.Commissioner of Income Tax(Appeals)-V, Surat dated 15.01.2013, which in turn arises out of an assessment order passed by the assessing officer under section 147 r.w.s. 143(3) of the Income Tax Act, 1961 ( hereinafter referred to as “the Act”), dated 30.08.2011.

2. Grounds of appeal

raised by the assessee are as follows: “1. That on facts and in law, the learned CIT(A) has grievously erred in partly confirming the addition made u/s 50C of the Act by adopting the value of property sold at Rs.40,70,200/-, as against the value declared as per the sale deed of Rs.25,00,000/-

2. That on facts and in law, the learned CIT(A) ought to have held that the DVO has not considered the objections of assessee properly.

3. That on facts, and in law, it ought to have been held that the comparable sale instances taken by DVO are not at all comparable as they are of commercial plots and not of residential zone in which the assessee has sold the property.

4. The assessee craves leave to add, alter, amend any ground of appeal.”

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] 3. Brief facts of the issue in dispute are stated as under. The assessee before us is an individual. During the assessment year, the assessee sold a plot of land. The returned income comprises of Long term capital gain of Rs. 8,96,638/- on sale of plots of land, Survey No.35-l-A and 35-1-B, Paiki, T.P. Scheme No.8,F.P.No-18, Umarwada, Surat. Information was received from the office of Sub registrar of immovable properties that valuation adopted by the stamp duty authorities in respect of the plots sold by the assessee was much higher than reflected in the sale deeds. The stamp valuation authority had valued the land at Rs.3,09,90,000/-. The undisclosed Long Term Capital Gain (LTCG) as per this valuation under the provisions of section 50C of the Act for the said land comes to Rs.46,74,185/-_ (3,09,90,000 of 23.15% share Rs.71,74,185 - Rs.25,00,000 as per sale deed) in the case of assessee. In this context, the assessee was confronted and requested to explain as to why the differential amount of under valuation of the sale consideration should not be treated as his income in view of provisions of section 50C of the Act.

4. In response, the assessee replied, vide letter dated 07.02.2011 stating that the said land was having number of litigation since more than 12 years and civil suits were pending with various courts. The said land situated at slum area like Zupadpatti, auto garage and godowns. In support of his claims, the assessee filed supporting evidences like legal notices and copy of order of the High Court etc.

5. However, the assessing officer had rejected the contention of the assessee and held that valuation of the immovable property for the purpose of payment of stamp duty would be deemed to be the full value of the consideration (FVC) if the sale consideration is less than the value adapted by the stamp valuation authority. Consequently, the difference between the sale consideration shown in the registered deed and stamp value adopted by the prescribed authority would be the capital gain in the hand of seller. Therefore, assessing officer made addition of Rs.46,74,185/- (3,09,90,000 of 23.15%, share Rs.71,74,185 - Rs.25,00,000 as per sale deed), being the difference between stamp valuation of land, and value adopted by the assessee, and treated the same as undisclosed income in the hands of the assessee.

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani]

6. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld.CIT(A) who has partly allowed the appeal of the assessee. During the course of the appellate proceedings, a reference to the AVO was made by the Assessing Officer under section 50C(2) of the Act. The AVO submitted his Valuation Report u/s 50C dated 03.05.2012 wherein the fair market value of the property as on 22.03.2007 was taken as Rs. 40,70,200/- against the declared value of Rs. 25,00,000/-. Therefore, ld CIT(A) directed the assessing officer to adopt the value of Rs. 40,70,200/- for the purpose of computation of capital gain.

7. Aggrieved by the order of ld.CIT(A), the assessee is in further appeal before us.

8. Shri Mehul K. Patel, Learned Counsel for the assessee has submitted before us that assessee’s land is situated at Survey No.35-l-A and 35-1-B, Paiki, T.P. Scheme No.8,F.P.No-18, Umarwada, Surat. The said land is not free from encumbrances, such as, unauthorized structures, such as Zupad Patties, Garage etc., were constructed. To remove these unauthorized structures, the assessee has to incur cost. The ld.Counsel took us through paper book page no.43 and 46 where the town planning map is given. The ld.Counsel also took us through the paper book page 47, wherein the order under section 50C of the Act is placed. The ld.Counsel also took us through the comparable sale instances, which is placed at paper book page no.59.Therefore, based on these facts, the ld.Counsel prayed the Bench that addition made by the ld.Assessing Officer and sustained by the ld.CIT(A) may be deleted.

9. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

10. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessing officer has taken the Page | 3

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] stamp duty value at Rs.46,74,185/- to compute the capital gain. On appeal by the assessee, ld CIT(A) has provided partly relief to the assessee. During the course of appellate proceedings, a reference to the AVO was made by the Assessing Officer under section 50C(2) of the Act. The AVO submitted his Valuation Report under section 50C of the Act, dated 03.05.2012, wherein the fair market value of the property as on 22.03.2007 was taken as Rs. 40,70,200/- against the value adopted by the assessing officer at Rs.46,74,185/-. That is, AVO reduced the fair market value of land from Rs.46,74,185/- to Rs. 40,70,200/- and accordingly ld CIT(A) directed the assessing officer to adopt the fair market value of Rs. 40,70,200/- to compute the capital gain tax. However, the assessee has taken the value of property at Rs. 25,00,000/- to compute capital gain. Now the assessee is in appeal before us and prayed that difference Rs.15,70,200/- (fair market value of Rs. 40,70,200/- and Rs. 25,00,000/-, value adopted by the assessee) may also be deleted.

11.We note that a perusal of the report of the AVO shows that valuation report has been prepared after taking into consideration the objections raised by the assessee before the AVO, vide his letter dated 25.04.2012, where the objections pertaining to various encroachments, civil court matters etc. have been raised. For the sake of clarity, the relevant points of the valuation report prepared by the AVO,( which were considered by the ld CIT(A), are reproduced below :

"7.0 Method of Valuation: 7.1. Method adopted : Comparable Sale Instance Method. 7.2 Reasons of support of Method : As the PUC is self occupied on the date of Sale deed & sufficient no. of Comparable Sale Instances are available in nearby vicinity. The Comparable Sale Instance Method is most appropriate method of valuation after taking into account various factors which affect the land value. While deriving the land rates, the Jantry rate & Prevalent market rates also taken into consideration. 7.3 Any special observation or qualification : Since, the P.U.C. as on the date of Sale i.e. 22.03.2007 there was an encroachment of Auto-Garrage, slum area of Zupad patti in land & Court cases were also going on in Small Cause Court, Surat vide case no. 75/96 and 541/07 (Still there is no decision in Court), as per the documentary evidences submitted by the assessee. Hence, the market land rates naturally effects as on the date of valuation, these facts has been affected on land rate and considered while deriving the land rates of concerned years. Page | 4

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani]

10.0. Comments on Registered Valuer's Report: In this case the Assessee has submitted Regd. Valuers report of Shri Jashvant H Mehta. The land rate as adopted by the valuer are not acceptable and on lower side as compared to prevalent market rates. The Regd. Valuer has considered the rates which are very less and cannot be adopted to reach on a reasonable fair market value. The Regd. Valuer considered only two sale instances out of these two, one is for Residential constructed plot which is not acceptable and not fair to compare with the PUC and other is for open Non agricultural land which is on lower side having l/3rd area of the PUC and not acceptable, whereas this office considered Sale instances for Open Non agricultural land only. The Regd. Valuer has not considered the Comparable sale Instances available, whereas this office has considered the Comparable Sale Instances duly adjusted for all factors including time lag. Thus the rates as adopted by the Regd. Valuer are without any hi sis and on lower side and qualify for rejection. 11.0. Assessee's Objection and Replies : The proposed estimate inviting objections writing/in person by 11/05/2011 was sent to the assessee vide this office letter even no. 6(17)/AVOS/l 1-12/59 dated 17.04.2012. In response to this proposed estimate the assessee has submitted following objections vide his letter no. nil dated 25.04.2012 and received by this office on dated 30.04.2012. Replies to the objections made by this office as follows. Objections and Replies: Objection 1 : Total area of land, as per record, is 4132 square meter. However, actual area of land at site is only 3962 square meter as per following details. There was an encroachment of about 351 sq.mts. on north side by occupants of building n east side which has now become a public road. This can be personally verified by you at site even to-day. An area of about 145 Sq.mtrs was allotted to us on west side by Town Planning Dept. Actual area at site is 3926 Sq.mts. as per following details Original area of plot (as per record) - 4132 Sq. mts. Less area under enchroachment - 351 Sq.mtrs. 3,781 Sq.mts. Add area allotted by T.P. Dept. -145 Sq.mts. Net final area at site - 3926 Sq.mts.

Land area for my 57.40% share is 2,251.80 Sq.mts. and this area should be considered for valuation of my share. Reply: As per the sale deed the mentioned area is 4132 Sq.mts. which was transferred to the M/s. Ghelani Builder. And you didn't submitted any documentary proof regarding difference of area i.e. 4132-3926-206 sq.mts. and you may be A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] benefited by the Authority for increased F.S.I, i.e. 1.9 instead of 1.3. For checking of correctness you didn't submitted "F-Form" which showing the exact area of your plot. This office has taken 57.40% of total area i.e. 4132 sq.mtr.=2371.768 sq.mts., which is correct. Hencer your objection is qualifies for rejection. Replies: 7(A):- Regarding Sale instances taken by this office, your objection qualifies for rejection as this office has considered sale instances of residential area purchased by B.S, Agrawal Director of Swajan Housing Pvt. Ltd. The Surrounding area of PUC is highly developed and all amenities like school, market, bank, temples are situated within a short distance. Garden is situated right opposite of the plot under consideration. The plot under consideration is situated on 24.38 m wide road in front and 9.00 m wide road on two sides of the plot. Railway station, Cinema, medical college, Bombay Gujarat Art Silk Market is situated within 2 km. Hence, the sale instances considered by this office are correct. 7(B):- Regarding comparable sale instances taken by this office situated on F.P. Nos. 128, 129, & 130, the sale instances collected by this office are situated in residential area of same T.P. Scheme only. These plots are situated near Western railway line & not on Ring Road & hence, not situated in commercial area. According to your objection it seems like that all textile markets of Surat city comes to the same place. This office has already considered for the factor of situation and location in the derivation of land rates. Hence, your statement is wrong and qualifies for rejection. Replies to objection 8 &9 The area of first two sale instance is just half of the PUC and as a result of which the rates are differ. And regarding the last sale instance the area is bigger than the PUC due to which the rate is less. As you might be aware of the market trend that the small area plot having higher rates compared to the plots having larger area, as a result of which there is difference in the rate of the plots situated on F.P. Nos. 128, 129 & 130. This office already considered the factors which affect the land rates such as size, shape, situation, location, utility, future potentiality, time lag, and other factors such as disadvantage of HUF factor, litigation, encroachments of slum, zupad patti, auto-garrage, etc. of the sale instance properties with respect to PUC and make it comparable by adjusting all advantages and disadvantages of the sale instances with the PUC, the Land rate of Rs.4255/- per sq.m. as on date 22.03.2007 is considered quite fair and reasonable. Hence, your objection is qualifies for rejection".

11. Hence, from the above report of the AVO, it is abundantly clear that AVO has taken into consideration all the objections and issues raised by the assessee regarding the valuation of the property which includes the area of property, the A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] method of valuation, the objections raised by the AVO on the report of the Registered Valuer, the basis and justification of the comparable cases taken by the AVO, the issue of joint ownership of the property etc. The ld Counsel`s main contention was regarding the valuation of land being unreasonable as the land was not free of encumbrances has already been considered by the Valuation Officer in his Valuation Report where he has valued the land at a much lower cost of Rs.40,70,200/- than the assessed value as per the Stamp Registration Authority of Rs.71,74,185/- (l/3rd share) thereby, reducing the value of land by Rs.31,03,985/-, after taking into consideration all the encumbrances such as jhuggi jhopdi, garage, civil suits etc. Hence, no further relief can be given on this contention of the ld Counsel. However, we note that it is difficult to compute the cost involved in all the encumbrances such as jhuggi jhopdi, garage, civil suits etc, therefore, to meet the end of justice, a further relief of Rs. 3,00,000/- may be given to the assessee, thus, we direct the assessing officer to compute the capital gain by adopting fair market value at Rs.37,70,200/- ( Rs.40,70,200 – Rs.3,00,000).

12. In the result, appeal filed by the assessee is partly allowed.

Order is pronounced on 30/07/2021 by placing result on Notice Board.

Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat /�दनांक/ Date: 30/07/2021 /sgr Copy of the Order forwarded to 1. The Assessee 2. The Respondentd 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order / / TRUE COPY / / Assistant Registrar/Sr. PS/PS ITAT, Surat IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ (�नधा�रणवष� / Assessment Year: (2007-08) (Virtual Court Hearing) Smt. Varshaben Labubhai S. Kasodaria, V The Deputy Commissioner of L/H of Late Shri Nagjibhai M. Vithanik, Income Tax, s. 16-17, Sant Jalaram Society, Opp. Circle-9, Surat. Pandol Ind., Ved Road, Surat. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABYPK 6329 F (Assessee) (Respondent) Assessee by : Shri Mehul K. Patel - AR Respondent by : Ms. Anupama Singla – Sr.DR सुनवाईक�तार�ख/ Date of Hearing : 07/07/2021 घोषणाक�तार�ख/Date of Pronouncement : 30/07/2021 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee pertaining to the assessment year 2007-08, is directed against the order passed by the ld.Commissioner of Income Tax(Appeals)-V, Surat dated 15.01.2013, which in turn arises out of an assessment order passed by the assessing officer under section 147 r.w.s. 143(3) of the Income Tax Act, 1961 ( hereinafter referred to as “the Act”), dated 30.08.2011.

2. Grounds of appeal

raised by the assessee are as follows: “1. That on facts and in law, the learned CIT(A) has grievously erred in partly confirming the addition made u/s 50C of the Act by adopting the value of property sold at Rs.40,70,200/-, as against the value declared as per the sale deed of Rs.25,00,000/-

2. That on facts and in law, the learned CIT(A) ought to have held that the DVO has not considered the objections of assessee properly.

3. That on facts, and in law, it ought to have been held that the comparable sale instances taken by DVO are not at all comparable as they are of commercial plots and not of residential zone in which the assessee has sold the property.

4. The assessee craves leave to add, alter, amend any ground of appeal.”

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] 3. Brief facts of the issue in dispute are stated as under. The assessee before us is an individual. During the assessment year, the assessee sold a plot of land. The returned income comprises of Long term capital gain of Rs. 8,96,638/- on sale of plots of land, Survey No.35-l-A and 35-1-B, Paiki, T.P. Scheme No.8,F.P.No-18, Umarwada, Surat. Information was received from the office of Sub registrar of immovable properties that valuation adopted by the stamp duty authorities in respect of the plots sold by the assessee was much higher than reflected in the sale deeds. The stamp valuation authority had valued the land at Rs.3,09,90,000/-. The undisclosed Long Term Capital Gain (LTCG) as per this valuation under the provisions of section 50C of the Act for the said land comes to Rs.46,74,185/-_ (3,09,90,000 of 23.15% share Rs.71,74,185 - Rs.25,00,000 as per sale deed) in the case of assessee. In this context, the assessee was confronted and requested to explain as to why the differential amount of under valuation of the sale consideration should not be treated as his income in view of provisions of section 50C of the Act.

4. In response, the assessee replied, vide letter dated 07.02.2011 stating that the said land was having number of litigation since more than 12 years and civil suits were pending with various courts. The said land situated at slum area like Zupadpatti, auto garage and godowns. In support of his claims, the assessee filed supporting evidences like legal notices and copy of order of the High Court etc.

5. However, the assessing officer had rejected the contention of the assessee and held that valuation of the immovable property for the purpose of payment of stamp duty would be deemed to be the full value of the consideration (FVC) if the sale consideration is less than the value adapted by the stamp valuation authority. Consequently, the difference between the sale consideration shown in the registered deed and stamp value adopted by the prescribed authority would be the capital gain in the hand of seller. Therefore, assessing officer made addition of Rs.46,74,185/- (3,09,90,000 of 23.15%, share Rs.71,74,185 - Rs.25,00,000 as per sale deed), being the difference between stamp valuation of land, and value adopted by the assessee, and treated the same as undisclosed income in the hands of the assessee.

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani]

6. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld.CIT(A) who has partly allowed the appeal of the assessee. During the course of the appellate proceedings, a reference to the AVO was made by the Assessing Officer under section 50C(2) of the Act. The AVO submitted his Valuation Report u/s 50C dated 03.05.2012 wherein the fair market value of the property as on 22.03.2007 was taken as Rs. 40,70,200/- against the declared value of Rs. 25,00,000/-. Therefore, ld CIT(A) directed the assessing officer to adopt the value of Rs. 40,70,200/- for the purpose of computation of capital gain.

7. Aggrieved by the order of ld.CIT(A), the assessee is in further appeal before us.

8. Shri Mehul K. Patel, Learned Counsel for the assessee has submitted before us that assessee’s land is situated at Survey No.35-l-A and 35-1-B, Paiki, T.P. Scheme No.8,F.P.No-18, Umarwada, Surat. The said land is not free from encumbrances, such as, unauthorized structures, such as Zupad Patties, Garage etc., were constructed. To remove these unauthorized structures, the assessee has to incur cost. The ld.Counsel took us through paper book page no.43 and 46 where the town planning map is given. The ld.Counsel also took us through the paper book page 47, wherein the order under section 50C of the Act is placed. The ld.Counsel also took us through the comparable sale instances, which is placed at paper book page no.59.Therefore, based on these facts, the ld.Counsel prayed the Bench that addition made by the ld.Assessing Officer and sustained by the ld.CIT(A) may be deleted.

9. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

10. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessing officer has taken the Page | 3

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] stamp duty value at Rs.46,74,185/- to compute the capital gain. On appeal by the assessee, ld CIT(A) has provided partly relief to the assessee. During the course of appellate proceedings, a reference to the AVO was made by the Assessing Officer under section 50C(2) of the Act. The AVO submitted his Valuation Report under section 50C of the Act, dated 03.05.2012, wherein the fair market value of the property as on 22.03.2007 was taken as Rs. 40,70,200/- against the value adopted by the assessing officer at Rs.46,74,185/-. That is, AVO reduced the fair market value of land from Rs.46,74,185/- to Rs. 40,70,200/- and accordingly ld CIT(A) directed the assessing officer to adopt the fair market value of Rs. 40,70,200/- to compute the capital gain tax. However, the assessee has taken the value of property at Rs. 25,00,000/- to compute capital gain. Now the assessee is in appeal before us and prayed that difference Rs.15,70,200/- (fair market value of Rs. 40,70,200/- and Rs. 25,00,000/-, value adopted by the assessee) may also be deleted.

11.We note that a perusal of the report of the AVO shows that valuation report has been prepared after taking into consideration the objections raised by the assessee before the AVO, vide his letter dated 25.04.2012, where the objections pertaining to various encroachments, civil court matters etc. have been raised. For the sake of clarity, the relevant points of the valuation report prepared by the AVO,( which were considered by the ld CIT(A), are reproduced below :

"7.0 Method of Valuation: 7.1. Method adopted : Comparable Sale Instance Method. 7.2 Reasons of support of Method : As the PUC is self occupied on the date of Sale deed & sufficient no. of Comparable Sale Instances are available in nearby vicinity. The Comparable Sale Instance Method is most appropriate method of valuation after taking into account various factors which affect the land value. While deriving the land rates, the Jantry rate & Prevalent market rates also taken into consideration. 7.3 Any special observation or qualification : Since, the P.U.C. as on the date of Sale i.e. 22.03.2007 there was an encroachment of Auto-Garrage, slum area of Zupad patti in land & Court cases were also going on in Small Cause Court, Surat vide case no. 75/96 and 541/07 (Still there is no decision in Court), as per the documentary evidences submitted by the assessee. Hence, the market land rates naturally effects as on the date of valuation, these facts has been affected on land rate and considered while deriving the land rates of concerned years. Page | 4

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani]

10.0. Comments on Registered Valuer's Report: In this case the Assessee has submitted Regd. Valuers report of Shri Jashvant H Mehta. The land rate as adopted by the valuer are not acceptable and on lower side as compared to prevalent market rates. The Regd. Valuer has considered the rates which are very less and cannot be adopted to reach on a reasonable fair market value. The Regd. Valuer considered only two sale instances out of these two, one is for Residential constructed plot which is not acceptable and not fair to compare with the PUC and other is for open Non agricultural land which is on lower side having l/3rd area of the PUC and not acceptable, whereas this office considered Sale instances for Open Non agricultural land only. The Regd. Valuer has not considered the Comparable sale Instances available, whereas this office has considered the Comparable Sale Instances duly adjusted for all factors including time lag. Thus the rates as adopted by the Regd. Valuer are without any hi sis and on lower side and qualify for rejection. 11.0. Assessee's Objection and Replies : The proposed estimate inviting objections writing/in person by 11/05/2011 was sent to the assessee vide this office letter even no. 6(17)/AVOS/l 1-12/59 dated 17.04.2012. In response to this proposed estimate the assessee has submitted following objections vide his letter no. nil dated 25.04.2012 and received by this office on dated 30.04.2012. Replies to the objections made by this office as follows. Objections and Replies: Objection 1 : Total area of land, as per record, is 4132 square meter. However, actual area of land at site is only 3962 square meter as per following details. There was an encroachment of about 351 sq.mts. on north side by occupants of building n east side which has now become a public road. This can be personally verified by you at site even to-day. An area of about 145 Sq.mtrs was allotted to us on west side by Town Planning Dept. Actual area at site is 3926 Sq.mts. as per following details Original area of plot (as per record) - 4132 Sq. mts. Less area under enchroachment - 351 Sq.mtrs. 3,781 Sq.mts. Add area allotted by T.P. Dept. -145 Sq.mts. Net final area at site - 3926 Sq.mts.

Land area for my 57.40% share is 2,251.80 Sq.mts. and this area should be considered for valuation of my share. Reply: As per the sale deed the mentioned area is 4132 Sq.mts. which was transferred to the M/s. Ghelani Builder. And you didn't submitted any documentary proof regarding difference of area i.e. 4132-3926-206 sq.mts. and you may be A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] benefited by the Authority for increased F.S.I, i.e. 1.9 instead of 1.3. For checking of correctness you didn't submitted "F-Form" which showing the exact area of your plot. This office has taken 57.40% of total area i.e. 4132 sq.mtr.=2371.768 sq.mts., which is correct. Hencer your objection is qualifies for rejection. Replies: 7(A):- Regarding Sale instances taken by this office, your objection qualifies for rejection as this office has considered sale instances of residential area purchased by B.S, Agrawal Director of Swajan Housing Pvt. Ltd. The Surrounding area of PUC is highly developed and all amenities like school, market, bank, temples are situated within a short distance. Garden is situated right opposite of the plot under consideration. The plot under consideration is situated on 24.38 m wide road in front and 9.00 m wide road on two sides of the plot. Railway station, Cinema, medical college, Bombay Gujarat Art Silk Market is situated within 2 km. Hence, the sale instances considered by this office are correct. 7(B):- Regarding comparable sale instances taken by this office situated on F.P. Nos. 128, 129, & 130, the sale instances collected by this office are situated in residential area of same T.P. Scheme only. These plots are situated near Western railway line & not on Ring Road & hence, not situated in commercial area. According to your objection it seems like that all textile markets of Surat city comes to the same place. This office has already considered for the factor of situation and location in the derivation of land rates. Hence, your statement is wrong and qualifies for rejection. Replies to objection 8 &9 The area of first two sale instance is just half of the PUC and as a result of which the rates are differ. And regarding the last sale instance the area is bigger than the PUC due to which the rate is less. As you might be aware of the market trend that the small area plot having higher rates compared to the plots having larger area, as a result of which there is difference in the rate of the plots situated on F.P. Nos. 128, 129 & 130. This office already considered the factors which affect the land rates such as size, shape, situation, location, utility, future potentiality, time lag, and other factors such as disadvantage of HUF factor, litigation, encroachments of slum, zupad patti, auto-garrage, etc. of the sale instance properties with respect to PUC and make it comparable by adjusting all advantages and disadvantages of the sale instances with the PUC, the Land rate of Rs.4255/- per sq.m. as on date 22.03.2007 is considered quite fair and reasonable. Hence, your objection is qualifies for rejection".

11. Hence, from the above report of the AVO, it is abundantly clear that AVO has taken into consideration all the objections and issues raised by the assessee regarding the valuation of the property which includes the area of property, the A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] method of valuation, the objections raised by the AVO on the report of the Registered Valuer, the basis and justification of the comparable cases taken by the AVO, the issue of joint ownership of the property etc. The ld Counsel`s main contention was regarding the valuation of land being unreasonable as the land was not free of encumbrances has already been considered by the Valuation Officer in his Valuation Report where he has valued the land at a much lower cost of Rs.40,70,200/- than the assessed value as per the Stamp Registration Authority of Rs.71,74,185/- (l/3rd share) thereby, reducing the value of land by Rs.31,03,985/-, after taking into consideration all the encumbrances such as jhuggi jhopdi, garage, civil suits etc. Hence, no further relief can be given on this contention of the ld Counsel. However, we note that it is difficult to compute the cost involved in all the encumbrances such as jhuggi jhopdi, garage, civil suits etc, therefore, to meet the end of justice, a further relief of Rs. 3,00,000/- may be given to the assessee, thus, we direct the assessing officer to compute the capital gain by adopting fair market value at Rs.37,70,200/- ( Rs.40,70,200 – Rs.3,00,000).

12. In the result, appeal filed by the assessee is partly allowed.

Order is pronounced on 30/07/2021 by placing result on Notice Board.

Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat /�दनांक/ Date: 30/07/2021 /sgr Copy of the Order forwarded to 1. The Assessee 2. The Respondentd 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order / / TRUE COPY / / Assistant Registrar/Sr. PS/PS ITAT, Surat IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ (�नधा�रणवष� / Assessment Year: (2007-08) (Virtual Court Hearing) Smt. Varshaben Labubhai S. Kasodaria, V The Deputy Commissioner of L/H of Late Shri Nagjibhai M. Vithanik, Income Tax, s. 16-17, Sant Jalaram Society, Opp. Circle-9, Surat. Pandol Ind., Ved Road, Surat. �थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABYPK 6329 F (Assessee) (Respondent) Assessee by : Shri Mehul K. Patel - AR Respondent by : Ms. Anupama Singla – Sr.DR सुनवाईक�तार�ख/ Date of Hearing : 07/07/2021 घोषणाक�तार�ख/Date of Pronouncement : 30/07/2021 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the assessee pertaining to the assessment year 2007-08, is directed against the order passed by the ld.Commissioner of Income Tax(Appeals)-V, Surat dated 15.01.2013, which in turn arises out of an assessment order passed by the assessing officer under section 147 r.w.s. 143(3) of the Income Tax Act, 1961 ( hereinafter referred to as “the Act”), dated 30.08.2011.

raised by the assessee are as follows: “1. That on facts and in law, the learned CIT(A) has grievously erred in partly confirming the addition made u/s 50C of the Act by adopting the value of property sold at Rs.40,70,200/-, as against the value declared as per the sale deed of Rs.25,00,000/-

2. That on facts and in law, the learned CIT(A) ought to have held that the DVO has not considered the objections of assessee properly.

3. That on facts, and in law, it ought to have been held that the comparable sale instances taken by DVO are not at all comparable as they are of commercial plots and not of residential zone in which the assessee has sold the property.

4. The assessee craves leave to add, alter, amend any ground of appeal.”

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] 3. Brief facts of the issue in dispute are stated as under. The assessee before us is an individual. During the assessment year, the assessee sold a plot of land. The returned income comprises of Long term capital gain of Rs. 8,96,638/- on sale of plots of land, Survey No.35-l-A and 35-1-B, Paiki, T.P. Scheme No.8,F.P.No-18, Umarwada, Surat. Information was received from the office of Sub registrar of immovable properties that valuation adopted by the stamp duty authorities in respect of the plots sold by the assessee was much higher than reflected in the sale deeds. The stamp valuation authority had valued the land at Rs.3,09,90,000/-. The undisclosed Long Term Capital Gain (LTCG) as per this valuation under the provisions of section 50C of the Act for the said land comes to Rs.46,74,185/-_ (3,09,90,000 of 23.15% share Rs.71,74,185 - Rs.25,00,000 as per sale deed) in the case of assessee. In this context, the assessee was confronted and requested to explain as to why the differential amount of under valuation of the sale consideration should not be treated as his income in view of provisions of section 50C of the Act.

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani]

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] stamp duty value at Rs.46,74,185/- to compute the capital gain. On appeal by the assessee, ld CIT(A) has provided partly relief to the assessee. During the course of appellate proceedings, a reference to the AVO was made by the Assessing Officer under section 50C(2) of the Act. The AVO submitted his Valuation Report under section 50C of the Act, dated 03.05.2012, wherein the fair market value of the property as on 22.03.2007 was taken as Rs. 40,70,200/- against the value adopted by the assessing officer at Rs.46,74,185/-. That is, AVO reduced the fair market value of land from Rs.46,74,185/- to Rs. 40,70,200/- and accordingly ld CIT(A) directed the assessing officer to adopt the fair market value of Rs. 40,70,200/- to compute the capital gain tax. However, the assessee has taken the value of property at Rs. 25,00,000/- to compute capital gain. Now the assessee is in appeal before us and prayed that difference Rs.15,70,200/- (fair market value of Rs. 40,70,200/- and Rs. 25,00,000/-, value adopted by the assessee) may also be deleted.

11.We note that a perusal of the report of the AVO shows that valuation report has been prepared after taking into consideration the objections raised by the assessee before the AVO, vide his letter dated 25.04.2012, where the objections pertaining to various encroachments, civil court matters etc. have been raised. For the sake of clarity, the relevant points of the valuation report prepared by the AVO,( which were considered by the ld CIT(A), are reproduced below :

"7.0 Method of Valuation: 7.1. Method adopted : Comparable Sale Instance Method. 7.2 Reasons of support of Method : As the PUC is self occupied on the date of Sale deed & sufficient no. of Comparable Sale Instances are available in nearby vicinity. The Comparable Sale Instance Method is most appropriate method of valuation after taking into account various factors which affect the land value. While deriving the land rates, the Jantry rate & Prevalent market rates also taken into consideration. 7.3 Any special observation or qualification : Since, the P.U.C. as on the date of Sale i.e. 22.03.2007 there was an encroachment of Auto-Garrage, slum area of Zupad patti in land & Court cases were also going on in Small Cause Court, Surat vide case no. 75/96 and 541/07 (Still there is no decision in Court), as per the documentary evidences submitted by the assessee. Hence, the market land rates naturally effects as on the date of valuation, these facts has been affected on land rate and considered while deriving the land rates of concerned years. Page | 4

A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani]

10.0. Comments on Registered Valuer's Report: In this case the Assessee has submitted Regd. Valuers report of Shri Jashvant H Mehta. The land rate as adopted by the valuer are not acceptable and on lower side as compared to prevalent market rates. The Regd. Valuer has considered the rates which are very less and cannot be adopted to reach on a reasonable fair market value. The Regd. Valuer considered only two sale instances out of these two, one is for Residential constructed plot which is not acceptable and not fair to compare with the PUC and other is for open Non agricultural land which is on lower side having l/3rd area of the PUC and not acceptable, whereas this office considered Sale instances for Open Non agricultural land only. The Regd. Valuer has not considered the Comparable sale Instances available, whereas this office has considered the Comparable Sale Instances duly adjusted for all factors including time lag. Thus the rates as adopted by the Regd. Valuer are without any hi sis and on lower side and qualify for rejection. 11.0. Assessee's Objection and Replies : The proposed estimate inviting objections writing/in person by 11/05/2011 was sent to the assessee vide this office letter even no. 6(17)/AVOS/l 1-12/59 dated 17.04.2012. In response to this proposed estimate the assessee has submitted following objections vide his letter no. nil dated 25.04.2012 and received by this office on dated 30.04.2012. Replies to the objections made by this office as follows. Objections and Replies: Objection 1 : Total area of land, as per record, is 4132 square meter. However, actual area of land at site is only 3962 square meter as per following details. There was an encroachment of about 351 sq.mts. on north side by occupants of building n east side which has now become a public road. This can be personally verified by you at site even to-day. An area of about 145 Sq.mtrs was allotted to us on west side by Town Planning Dept. Actual area at site is 3926 Sq.mts. as per following details Original area of plot (as per record) - 4132 Sq. mts. Less area under enchroachment - 351 Sq.mtrs. 3,781 Sq.mts. Add area allotted by T.P. Dept. -145 Sq.mts. Net final area at site - 3926 Sq.mts.

Land area for my 57.40% share is 2,251.80 Sq.mts. and this area should be considered for valuation of my share. Reply: As per the sale deed the mentioned area is 4132 Sq.mts. which was transferred to the M/s. Ghelani Builder. And you didn't submitted any documentary proof regarding difference of area i.e. 4132-3926-206 sq.mts. and you may be A.Y. 2007-08 Smt. Varshaben Labhubhai Kasodaria, [L/h of Late Shri Nagjibhai M Vithani] benefited by the Authority for increased F.S.I, i.e. 1.9 instead of 1.3. For checking of correctness you didn't submitted "F-Form" which showing the exact area of your plot. This office has taken 57.40% of total area i.e. 4132 sq.mtr.=2371.768 sq.mts., which is correct. Hencer your objection is qualifies for rejection. Replies: 7(A):- Regarding Sale instances taken by this office, your objection qualifies for rejection as this office has considered sale instances of residential area purchased by B.S, Agrawal Director of Swajan Housing Pvt. Ltd. The Surrounding area of PUC is highly developed and all amenities like school, market, bank, temples are situated within a short distance. Garden is situated right opposite of the plot under consideration. The plot under consideration is situated on 24.38 m wide road in front and 9.00 m wide road on two sides of the plot. Railway station, Cinema, medical college, Bombay Gujarat Art Silk Market is situated within 2 km. Hence, the sale instances considered by this office are correct. 7(B):- Regarding comparable sale instances taken by this office situated on F.P. Nos. 128, 129, & 130, the sale instances collected by this office are situated in residential area of same T.P. Scheme only. These plots are situated near Western railway line & not on Ring Road & hence, not situated in commercial area. According to your objection it seems like that all textile markets of Surat city comes to the same place. This office has already considered for the factor of situation and location in the derivation of land rates. Hence, your statement is wrong and qualifies for rejection. Replies to objection 8 &9 The area of first two sale instance is just half of the PUC and as a result of which the rates are differ. And regarding the last sale instance the area is bigger than the PUC due to which the rate is less. As you might be aware of the market trend that the small area plot having higher rates compared to the plots having larger area, as a result of which there is difference in the rate of the plots situated on F.P. Nos. 128, 129 & 130. This office already considered the factors which affect the land rates such as size, shape, situation, location, utility, future potentiality, time lag, and other factors such as disadvantage of HUF factor, litigation, encroachments of slum, zupad patti, auto-garrage, etc. of the sale instance properties with respect to PUC and make it comparable by adjusting all advantages and disadvantages of the sale instances with the PUC, the Land rate of Rs.4255/- per sq.m. as on date 22.03.2007 is considered quite fair and reasonable. Hence, your objection is qualifies for rejection".

Order is pronounced on 30/07/2021 by placing result on Notice Board.