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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI H.S. SIDHU & SHRI O. P. MEENA
Ashutosh Sharadbhai Kapadia v. ITO(International Taxation) Surat /I.T.A. No. 449/AHD/2017/A.Y.13-14 Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A. No. 449/AHD/2017: Assessment Year: 2013-14 Shri Ashutosh Sharadbhai Kapadia, Vs. Income Tax Officer (International 20 Sat Kewal Society, Near Sarjan Taxation), Surat. Society, OPp. Amidhara Apartment, Athwalines, Umara South, Surat - 395007. [PAN: ACAPK 2046 C ] Appellant Respondent
Assessee by Shri Hiren R. Vepari, CA Revenue by Ms. Anupama Singla, Sr. D.R. Date of hearing 30.04.2019 Date of pronouncement 02.05.2019
ORDER PER O. P. MEENA, AM 1. This appeal by the Assessee is directed against the order of learned Commissioner of Income tax (Appeals)-Surat (in short “the CIT (A)”) dated 05.12.2016 pertaining to Assessment Year 2013-14.
Ground No. (1) states that Ld. CIT (A) erred in retaining disallowance of Rs.11,46,870/- being difference between the valuation of fair market value as on 01.04.1981 between the report of District Valuation Officer(DVO) and Approved Valuer of the assessee, without considering the objection filed by the assessee and
Ashutosh Sharadbhai Kapadia v. ITO(International Taxation) Surat /I.T.A. No. 449/AHD/2017/A.Y.13-14 Page 2 of 6 ignoring the fact that DVO has valued building after it was demolished and that in the case of land difference being 15% between the valuation by the Approved Valuer and DVO.
Succinct facts are that the assessee has sold land and building on 28.03.2013 for Rs.1,96,00,000/- and after claiming deduction cost of acquisition as on 01.04.1981 of Rs.49,33,846/- on the basis of cost of land valuation at Rs.3,58,356/- and building valuation of Rs.2,40,600/- based on report of Approved Valuer, long- term capital gain of Rs. 1,46,66,154/- was shown before exemption. The AO made a reference under section 55A of the Act for estimating fair market value as on 01.04.1981 & 01.04.1982 to DVO. The DVO vide his report dated 03.03.2016 determined value of land at Rs.3,03,603/- and building at Rs.1,71,265/- as on 01.04.1981 totaling to Rs.4,75,870/- as against valuation of Approved Valuer at Rs.5,98,956/- as on 01.04.1981. Accordingly, the AO had recomputed the long-term capital gain by considering capital gains at Rs.1,57,46,870/- before exemption/ deduction claimed by the assessee, which resulted in addition of Rs.11,46,870/-.
Being aggrieved, the assessee filed an appeal before the ld. CIT (A). However, Ld. CIT (A) echoed the action of the AO by observing that capital gains has been computed based on expert opinion of DVO. The CIT (A) further observed that the
Ashutosh Sharadbhai Kapadia v. ITO(International Taxation) Surat /I.T.A. No. 449/AHD/2017/A.Y.13-14 Page 3 of 6 claim the DVO has valued property after it was demolished is unsubstantiated and without any evidence.
Being dissatisfied, the assessee has filed this appeal before Tribunal. The learned counsel for the assessee argued that in terms of section 55A read with Rules 111A, valuation of land did not exceed the prescribed limit of 15%. Hence, the AO could not have formed an opinion to refer the matter to the DVO. In support of this contention, the learned counsel for the assessee placed reliance of Hon`ble Supreme Court judgement in the case of C.B. Gautam v. Union of India [1992] 199 ITR 530 (SC) wherein it was held that provisions of Chapter XX-C can be resorted to only where there is a significant under valuation of property to the extent of 15 percent or more in the agreement of sale as evidenced by the apparent consideration being lower than the fair market value by 15 percent or more. It was further claimed that the building was already demolished at the time of referring matter to the DVO. Therefore, the AO could not have formed opinion that the FMV as on 01.04.1981 determined by the Approved Valuer was incorrect. Further the AO has not disposed-off the objection raised by the assessee vide letter dated 01.03.2016 during the course of assessment proceedings as mentioned in the body of assessment order. Learned Counsel contended that the AO / DVO had
Ashutosh Sharadbhai Kapadia v. ITO(International Taxation) Surat /I.T.A. No. 449/AHD/2017/A.Y.13-14 Page 4 of 6 considered 4 sale instances showing rate of 191.36, 628.59, 200 and 245.17 per sq. meter and considered the value of land @510 per sq. meter as against the rate of Approved Valuer of the assessee considered at Rs. 600 per sq. meter considering the location of the land which is situated near two cinema and diamond units and nearby railway station. Therefore, valuation done by the Approved Valuer should have been accepted by the AO. It was further claimed that the property was two storied residential bungalow constructed in year 1982 and construction was of superior type structure with teakwood furniture and all amenities. The DVO has done valuation after demolition of bungalow, hence, DVO valuation is not correct.
Per contra, the ld. Sr. D.R. submitted that difference of 15% is only in respect of land for entire property hence, the contention of the assessee that where difference is 15% or losses the same is to be ignored is not correct. The ld. Sr. D.R. further supported the order of Ld. CIT (A).
We have heard the rival submissions and perused the relevant material on record. We find that the AO has adopted the value of land at Rs.3,04,603/- on the basis of DVO Report whereas the assessee has considered the value of land at Rs.3,58,356/- on the basis of report of approved registered valuer. It is noticed from the valuation report of the DVO that sale instances in respect of four
Ashutosh Sharadbhai Kapadia v. ITO(International Taxation) Surat /I.T.A. No. 449/AHD/2017/A.Y.13-14 Page 5 of 6 properties considered by the DVO as per Annexure to his report (PB-10) also shows the sale rate of Rs.628.59 per square metres as on 15.01.1980 whereas the DVO has considered the land rate of Rs.510 per sq.metre of the land as against the assessees’s rate of Rs.600 per sq.metre. Since the sale instances considered by the DVO itself shows the rate of Rs.600 per sq.mtr, therefore we are of the considred opinion that the valuation done by the registered valuer of the assessee is to be considered as reasonable. Further the difference in valuation of DVO and assessee is only 15%. Therefore, the same has to ignored as per the decision of Hon’ble Supreme Court in the case of C.B.Gautam 199 ITR 530 (SC) (supra). Similarly, the valuation of building has been considered by the AO at Rs.1,71,265/- based on DVO’s report whereas the assessee has valued it at Rs.2,40,600/- on the basis of approved valuers report. We find that the assessee has alleged that the residential bungalow of the assessee which was sold by the assessee was already demolished at the time of referring the matter to the DVO. Therefore, the value considered by DVO cannot be considered as true and correct. We further find that the bungalow was constructed with superior quality RCC structure having floring of marble and fitted with teak wood windows. Further, the AO has considered 30% of the building value, but he has not considered the Geyser, cooking platform, fixed wood furniture, paved compound and godown. In view of these facts, we are of the considered opinion that valuation of approved valuer of the assessee is more
Ashutosh Sharadbhai Kapadia v. ITO(International Taxation) Surat /I.T.A. No. 449/AHD/2017/A.Y.13-14 Page 6 of 6
authentic which is based on the actual specification of the residential bungalow. Further, the AO has not disposed off the objection raised by the Assessee. Therefore, in the light of these facts, and circumstances of the case, we are of the considered opinion that the addition of Rs.11,46,870/- made on account of difference in valuation of DVO and APV report is not justified, accordingly same is directed to be deleted. Accordingly, grounds of appeal are allowed.
In view of the above facts, appeal of the assessee is allowed.
The order pronounced in the open Court on 02.05.2019.
Sd/- Sd/- (H. S. SIDHU) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat: Dated: 2nd May, 2019/opm Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat.