MEENAKUMARI RANKA,MUMBAI vs. ASST CIT RG 24(2), MUMBAI

आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in A.Y.2004-05 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-34, Mumbai in appeal No.CIT(A)/34/IT/256/2006-07 dated 05/02/2013 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 30/11/2006 by the ld. Asst. Commissioner of Income Tax-24(2), Mumbai (hereinafter referred to as ld. AO).

3. We have heard rival submissions. We find that the assessee had sold her office premises at No.143, Mittal Court, Nariman Point admeasuring 1162 sq.ft vide agreement dated 08/09/2003 for Rs.81 lakhs. The stamp duty authority assessed the stamp duty value for the said property at Rs.1,28,59,000/- This is the value in terms of Section 50C of the Act. The purchaser of the property did not dispute the levy of stamp duty on the enhanced consideration and had duly paid the stamp duty without raising any dispute thereon, as stated by the ld. AR before us. Since the stamp duty value was higher than the sale consideration reiterated by the assessee, the assessee in terms of Section 50C (2) of the Act requested the ld. AO to refer the matter to District Valuation Officer (Ld. DVO) for determining the fair market value of the property sold. The ld. DVO valued the property at Rs.1,29,56,300/- which was higher than the value as per Section 50C at Rs.1,28,59,000/-. Accordingly, the ld. AO determined the full value of consideration as per Section 50C of the Act at Rs.1,28,59,000/- while computing the capital gains in the assessment. The assessee raised several objections in the valuation report submitted by the ld. DVO. The assessee also made specific plea before the ld. CIT(A) that the relevant sale instances were actually furnished by the assessee before the ld. DVO and the same were ignored by the ld. DVO while valuing at a higher figure at Rs.1,29,56,300/-. The ld. CIT(A) however, did not agree to these contentions of the assessee and held that the ld. AO had followed the provisions of the Act and had computed the capital gains accordingly which does not require any interference.

3.1. During the course of proceedings before us, the Bench on an earlier occasion had called for a report from the ld. DVO to be addressed through the ld. CIT DR giving the para wise reply of various objections filed by the assessee against the DVO’s report. We find that the ld. DVO had submitted his report in reference No.DVO-I/MUM/Misc/2019-20/151 dated 08/08/2019. The ld. AR argued that the ld. DVO had also annexed the comparable instances in his report wherein the highest rate was considered at Rs.8375 per sq. ft and lowest rate was considered at Rs.6937/- per sq.ft and the weighted average rate thereon worked out to Rs.7838/- per sq.ft during the relevant period i.e., first half yearly period of 2002. While this is so, we are unable to persuade ourselves to accept the valuation made by the ld. DVO for the very same property in his first half of 2003 at Rs.11,150/- per sq. ft for the property in the very same premises. We find from the perusal of the report of the ld. DVO and the para wise reply given by him, nowhere the ld. DVO had given specific reasons for valuing the subject mentioned property at 11150/- per sq.ft as on 08/09/2003 by quoting specific sale example near about to the date of sale i.e., 08/09/2003.

3.2. On the contrary, the assessee had furnished comparable sale instances before the ld. DVO on the dates which are posterior to the date of sale made by the assessee. We find that assessee had submitted sale instances in March and April 2004 at Tulsiyani Chambers in the very same locality of Nariman Point wherein the rate per sq.ft were Rs.6384/- and Rs.6530/- per sq.ft in March and April 2004 respectively. The assessee has also furnished the sale instances in the Mittal Court premises itself before the ld. DVO on the near about dates such as 30/06/2003 wherein the office premises at Mittal Court was sold out at Rs.5,592/- per sq. ft.

We find that assessee had given the following sale instances before the ld. DVO which could be summarised in this tabulated form:-

Sr. No. Office Date of Sale Consideration Built up Rate As per DVO/ area sq per ft Sq. Assessee Ft. 08.09.200 81,00,000 1162 6,971 Office Sale 3 number transaction 143/B in dispute 1. Office 30.06.2003 67,50,000 1207 5,592 Assessee No. 123-A

4 23.05.2002 1,00,00,000 8375 Office 1194 DVO no. 74A

3,49,04,810 5,007 Average 6,971 3.3. From the aforesaid table, it could be safely concluded that the average of the sale instances in the very same locality of the subject mentioned property in the near about dates was Rs 6971 per sq. ft and the sale price calculated by the assessee was also at Rs.6971/- per sq.ft.

This itself goes to prove that there were certain obvious flaws in the report of the ld. DVO. Moreover in the ld. DVO’s para wise reply dated 08/08/2019, we find that the ld. DVO had specifically stated that the fair market value was worked out after analyzing the comparative sale instances of properties vis-à-vis the subject mentioned property by considering the time factor, floor level, specification, status, sea view, similar environment etc. When the ld. DVO had also considered the comparable sale instances which are not in consonance with the comparable sale instances provided by the assessee before him, then it cannot be concluded that the report of the ld. DVO had to be brushed aside completely. We find in the instant case that the ld. DVO had considered the exorbitant price which is not at par with the comparable sale instances despite those details being filed by the assessee before him. The ld. AO had considered the report of the ld. DVO and since the value determined by the ld. DVO is more than the value u/s.50C of the Act, the ld. AO had adopted value u/s.50C of the Act. The crucial point is the report of the ld. DVO is not subjected to any appeal proceedings under the Income Tax Act, whereas the valuation report given in terms of 16A of the Wealth Tax Act, 1957 could be appealed before the ld. CIT(A) in terms of Section 23A of the Wealth Tax Act and also before the appellate Tribunal in terms of Section 24 of the Wealth Tax Act. In this peculiar situation, the assessee’s doors are eternally closed as the report of the ld. DVO is binding on the ld. AO so if there is a huge variation between the assessee’s consideration and the fair market value determined by the ld. DVO, then the objections raised by the assessee on the DVO’s report are to be adjudicated by the appellate authorities. From the above observations, we could safely conclude that the ld. DVO despite having comparable sale instances before him in the very same premises on the near about dates to the date of sale i.e. 08/09/2003 (i.e. date of sale executed by the assessee), the ld. DVO had adopted the exorbitant rate of Rs.11150 per sq.ft, which in our considered opinion, cannot be accepted. Hence, we deem it fit and appropriate that incremental value of 5% over and above the sale consideration reported by the assessee should be construed as fair market value in the facts of the instant case. We find by considering the totality of facts and circumstances of the case that the fair market value could be determined at Rs.85,05,000/- with an enhancement of 5% without the agreement value of the assessee (81,00,000 + (5% of 81 lacs)) = 85,05,000), which in our considered opinion, would meet the ends of justice. Accordingly, the Ground No.1 raised by the assessee is partly allowed.

Order pronounced in the open court on this 23/08/2019