USHABEN DESAI,SURAT vs. THE INCOME TAX OFFICER, WARD-2(3)(7), SURAT

Per contra, the ld.Senior Departmental 7. Representative(Sr.DR) supported the order of the Lower Authorities.

Ushmaben Desai Vs. ITO, Ward-2(3)(7), Surat/ITA No.21/SRT/2019 : A.Y.2013-14 Page 5 of 9

We have heard the rival submissions and perused the 8. material available on record. We find that the dispute between the assessee and the AO is the rate at 290 per sq.mtr as FMV as on 01.04.1981 whereas DVO has estimated the same @ 162 per sq.mtr. Further, the ld.CIT(A) has estimated the same @178 per sq.mtr. We find same force in the submissions of the ld.Counsel as discernable from the Annexure-A placed at Paper Book, Page 18 of the DVO’s Report that sale instances considered by the DVO are not of the same survey no. Further, the DVO has himself stated in his report that impugned land was situated at more appropriate location as compared to sale instances considered by him. The CIT(A) has also pointed out that the value determined by the Registrar Valuer was based on unscientific, ad-hoc method and DVO has determined the rate of reduction 162 per sq.mtr cost incurred on stamp duty, additional stamp duty, registration charges, legal charges. Therefore, considering the entirety of the facts and taking a holistic view, we are inclined to accept the ld.Counsel’s argument that the average value as determined by Registrar Valuer of the assessee DVO and has considered by the CIT(A) would be more reasonable and appropriate for determination of the FMV of land as on 01.04.1981. Accordingly, the average rate for FMV is worked out to Rs.210 i.e. (162 + 290 + 178 = 630/3= 210). The AO, therefore, accordingly directed to reworked out the index cost of acquisition by taking FMV at Rs.210

Ushmaben Desai Vs. ITO, Ward-2(3)(7), Surat/ITA No.21/SRT/2019 : A.Y.2013-14 Page 6 of 9

per sq.mtr and re-compute the taxable long term gain, accordingly this ground of the assessee is therefore partly allowed. Ground No.2 relates to confirming action of the AO by 9. sustaining the addition of Rs.3,06,250/- on account of difference in Jantri Value by applying the provisions of section 50C of the Act. Facts apropos of this ground are that as against the sale 10. consideration of Rs.5.11 crore shown in registered sale deed, the stamp valuation authorities have determined the full value of consideration at Rs.5.60 crore and accordingly the AO has made addition of Rs.3,06,250/- representing the assessee’s share (1/6th share) in the difference of these two figures. In appeal, the assessee contended before the ld.CIT(A) that 11. since the difference between Jantri Value and actual sale value is nominal i.e. less than 10%, therefore in view of the various court decisions, actual value shown by the assessee should be adopted. To buttress his argument, the AR of the assessee placed reliance on the decision of Bimla Singh Vs. CIT 18 DTR 028 (Patna HC), Rahul Construction Vs. DCIT [38 DTR 0019 (Pune ITAT)]. However, the ld.CIT(A) relying in the case of K.R.Palanisamy Vs. UOI (2009) 306 ITR 61 (Mad) has upheld the constitutional validity of provision of section 50C of the Act, therefore invoking the provision of section 50C was held to be validity. With regard to case laws of Bimla Singh (supra) the ld.CIT(A) observed that the issue was relating to estimation of cost of construction of house which was spread over

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a period of seven years and issue of valuation determination stamp valuation authority u/s.50C was not at all involved. Here the value determined by the Stamp Valuation Authority is definite and based on some rates approved by the competent authority. In view of distinguishing factors the ratio of above mentioned decisions is not at all applicable. Similarly, in the case of Rahul Construction the ITAT Pune directed to delete the addition representing difference less than 10%. A simple reading of relevant provision would reveal that provision of section 50C does not provide for any “tolerance of band”, hence the decision of Hon'ble ITAT Pune was not based on correct interpretation of law, hence not accepted. Accordingly, the addition of Rs.3,06,250/- was came to be sustained. Being aggrieved, the assessee filed an appeal before this 12. Tribunal. The ld.Counsel submitted that the difference between the valuation as per stamp duty and the sale consideration issue by the assessee is less than 10% and in such circumstances no addition can be made. For this proposition, the ld.Counsel has placed reliance on the decision of Bombay ITAT in the case of John Flower (India) Pvt. Ltd., in ITA No.7545/Mum/2014 for assessment year 2010-11. We have heard the rival submissions and perused the 13. material and orders of the authorities below and the case law relied on. Considering the entire facts of the assessee’s case, the

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submissions of the assessee cannot be ignored. The sale consideration of the land considered is shown at 5.11 crore in registered sale deed, the stamp valuation authorities have determined the full value of consideration at Rs.5.60 crore. Even assuming for a movement that the sale consideration in respect of Plot in survey no.128/2 is less than the stamp valuation it is Rs.3,06,250/- which is less than 10% of the stamp duty valuation of the said plot. Therefore, in view of the ratio of the decisions relied on by the assessee, the assessee should succeed in its appeal. The Jaipur Bench in the case of Smt. Sita Bai Ketan (supra) held as under : 4.2 “We have heard rival contentions and perused the material available on record. We find that the Hon'ble coordinate Bench in ITA No.1543/PN/2007 in the case of Rahul Constructions Vs. DCIT (supra) has held as under :- “We find that the Pune Bench of the Tribunal in the case of Asstt. CIT vs. Harpreet Hotels (P) LTd. Vide ITA No. 1156-1160/Pn/2007 and relied on by the learned counsel for the assessee had dismissed the appeal filed by the Revenue where the CIT(A) had deleted the unexplained investment in house construction on the ground that the difference between the figure shown by the assessee and the figure of the DVO is hardly 10 per cent. Similarly, we find that the Pune Bench of the Tribunal in the case of ITO vs. Kaaddu jayghosh Appasahebh, the learned counsel for the assessee following the decision of the J&K High Court in the case of Honest Group of Hotels (P) Ltd. Vs. CIT (2002) 177 CTR (J&K) 232 had held that when the margin between the value as given by the assessee and the Departmental valuer was less than 10 per cent, the difference is liable to be ignored and the addition made by the AO cannot be sustained. Since in the instant case such difference is less than 10 per cent and considering the fact that valuation is always a matter of estimation where some degree of difference is bound to occur, we are of the considered opinion that the AO in the instant case is not justified in substituting the sale consideration at Rs.20,55,000/- as against the actual sale consideration of Rs.149,00,000 disclosed by the assessee. We, therefore, set aside the order of the CIT(A) and direct the AO to take Rs.19,00,000/- only as the sale consideration of the property. The grounds raised by the assessee are accordingly allowed.”

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In the instant case, the difference between the valuation adopted by the Stamp Valuation Authority and declared by the assessee is less than 10%. Therefore, respectfully following the decision of the Hon'ble Coordinate Bench, we hereby direct the AO to adopt the value as declared by the assessee. This ground of the assessee is allowed. Therefore, respectfully following the said decision we direct 14. the AO to adopt the valuation of sale consideration as declared by the assessee. The additions made by the Assessing Officer u/s.50C is deleted and as grounds raised by the assessee are allowed. In the result, appeal of the assessee is allowed. 15. The order pronounced in the open court on 03.05.2019. 16.

Sd/- Sd/- (H.S.SIDHU) (O.P.MEENA) (�याियकसद�यतथा/JUDICIAL MEMBER) (लेखासद�यकेसम� /ACCOUNTANT MEMBER) सुरत/ Surat, �दनांक Dated: 3rd May, 2019/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat