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Facts
The assessee sold agricultural land, acquired prior to 1981, and computed capital gains using a Fair Market Value (FMV) of Rs.110/- per sq. mt. as on 01.04.1981, based on a Registered Valuer's report. The Assessing Officer (AO), due to a time bar and without the DVO report, initially adopted Rs.2.25/- per sq. mt. and made an addition under section 50C, with the DVO later estimating FMV at Rs.26/- per sq. mt. The assessee also claimed a deduction under section 54, which was disallowed by lower authorities, and an additional ground regarding the land's agricultural nature (under section 2(14)) was raised but not pressed.
Held
The Tribunal found the DVO's estimated FMV of Rs.26/- per sq. mt. as on 01.04.1981 to be on the lower side, considering that the average of comparable instances in DVO's own report was above Rs.33/- per sq. mt. Therefore, the AO is directed to adopt Rs.60.00/- per square meter as the FMV for capital gains computation. Additionally, the AO is instructed to allow the deduction under section 54 after verifying facts and requisite conditions, providing an opportunity of hearing to the assessee.
Key Issues
1. Determination of the correct Fair Market Value (FMV) of the land as on 01.04.1981 for capital gains purposes. 2. Admissibility of deduction claimed under section 54 of the Income Tax Act.
Sections Cited
254(1), 143(3), 147, 54, 2(14), 50C
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िनधा�रती की ओर से /Assessee by Shri Rajesh Upadhyay, AR राज� की ओर से /Revenue by Shri Mukesh Jain– Sr-DR सुनवाई की तारीख/Date of hearing 26.12.2024 उद्घोषणा की तारीख/Date of 20.02.2025 pronouncement Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi/Commissioner of Income tax (Appeals) [for short to as “NFAC/Ld.CIT(A)] dated 27.08.2024 for assessment year (AY) 2013-14, which in turn arises out of assessment order passed by Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) 28.12.2018. The assessee has raised the following grounds of appeal:-
1. Ld. CIT(A), NFAC, Delhi has erred in law and on fact to uphold AO’s disallowance u/s 54 of the Act claimed by the appellant at Rs.2,14,454/-.
2. Ld. CIT(A), NFAC, Delhi has erred in law and on fact to direct the AO to allow a cost of acquisition as on 01/04/1981 at Rs.25/- per sq. mt. worked out at Rs.3,78,000/- is against appellant’s cost at Rs.110/- per sq. mt. on the basis of Registered – Government approved valuer, without pointing out any detect in the report of RVO.
(A.Y.13-14) Vasuben N Patel 3. Additional Ground: Ld. CIT(A), NFAC, Delhi has erred in law and on fact to overlook the fact that appellant’s land being Block No.248 located at village Ambheta, Sub District Olpad, District Surat is an agricultural land, does not amount to capital asset within the meaning of section 2(14) of the Income Tax Act, consequently, no income tax can be levied.” 2. Vide application dated 23.09.2024 assessee has raised following additional grounds of appeal: “
Ld. CIT(A), NFAC, Delhi has erred in law and on fact to overlook the fact that appellant’s land being Block No.248 located at village Ambheta, Sub District Olpad, District Surat is an agricultural land, does not amount to capital asset within the meaning of section 2(14) of the Income Tax Act, consequently, no income tax can be levied.”
3. Rival submission of both the parties have been heard and record perused. we find that the assessee has raised additional ground of appeal but no submission was made at the time of submissions, thus such additional ground of appeal is treated as not pressed. On other grounds of appeal, the Ld. Authorized Representative (Ld.AR) of the assessee submits that during relevant financial year 2014-15, assessee sold agricultural land admeasuring 14569 square meter of Moje Ambheta, Khata No.453, Block No.248, R.S No.197 & 198, Old Tenure, Dandi Road, Ambheta Taluka Olpad, Dist. Surat. The assessee was having 1/4th share in the said property. The land was acquired prior to 1981, therefore, for the purpose of computation of capital gains, assesse computed capital gains by adopting value of land at Rs.110/- per square meter as on 01.04.1981. The assessee adopted such value on the basis of report of Registered valuer. The Assessing Officer made a reference to District Valuation Officer (‘DVO’ in short) for estimation of Fair Market Value (‘FMV’ for short) as on 01.04.1981. Since, the report of DVO was not received by Assessing Officer and the assessment (A.Y.13-14) Vasuben N Patel was getting time barred. The Assessing Officer adopted value of land as on 01.04.1981 at Rs. 2.25/- per square meter and made addition of Rs.2.25/- lakh under section 50C of the Act and treated the same as income from undisclosed source. The DVO furnished his report vide report dated 29.10.2018, which was received after passing assessment order. The DVO estimated fair market value of land @Rs. 26/- per square meter as on 01.04.1981. Before Ld. CIT(A), assessee agitated that no specific defect was pointed out by DVO in the report of Government registered valuer, while estimating the FMV of land at Rs.26/- per square meter. The DVO in his report has mentioned various comparable ranging from Rs. 9.62 to Rs.65/- per square meter, still he suggested rate @ Rs. 26/-per square meter. The location of various comparable instances is not mentioned in the report of DVO. However, the Government Registered Valuer has given all factors effecting potential value of land even on 01.04.1981. The land of assessee was situated in Dandi Road and having good potential value. The ld AR of the assessee submits that either value suggested by registered valuer may be accepted or average of the DVO value and registered valuer may be accepted. On other ground of appeal
, which relates to deduction under section 54F, the ld AR for the assessee submits that despite filing details for claiming such deduction, the lower authority disallowed such deduction on unreasonable basis. The ld AR of the assessee prayed for allowing his appeal.
4. On the other hand, ld. Sr. DR for the revenue, submits that value of land as on 01.04.1981 estimated by Government Registered Valuer is on higher side, no comparable instances are mentioned in his report. The DVO has given comparable of the local area and estimated reasonable value as on 01.04.1981 (A.Y.13-14) Vasuben N Patel on scientific basis. The ld SR DR for the revenue submit that on both the issues the ld CIT(A) has given his categorical findings.
We have considered the rival submission of both the parties and have gone through the order of lower authorities carefully. We find that though assessee has raised additional ground of appeal, but at the time of submission no specific submission either for admission of additional ground of appeal or in respect of Ground No.3 of original appeal is made by Ld. AR of the assessee. Therefore, additional ground of appeal and original ground of appeal as treated as not pressed. However, on considering the submissions on Ground No.2, we find that assessee while computing capital gain has adopted rate of Rs. 110/- per square meter as on 01.04.1981 on the basis of report of Government Registered Valuer. The Assessing Officer made reference of DVO to ascertain fair market value of land as on 01.04.1981. The report of DVO was not received and assessment was getting time barred, thus, Assessing Officer on his own has adopted rate Rs. 2.26/- per square meter and computed capital gain. At the time of hearing, appeal before ld CIT(A), the report of DVO was available. The DVO estimated value of land @ Rs.26/- per square meter. On perusal of report of DVO, we find that there are three comparable instances, the DVO has referred three instances ranging rate from Rs.9.62/-, Rs.26.36 and Rs. 64.82 per square meter, still, he has suggested the rate of Rs.26.00/- per square meter. We find that even the average value of three comparable instances is more than Rs.33.00/-, still DVO suggested rate as on 01.04.1981 at Rs. 26.00/- per square meter. In our view the rate suggested/ estimated by DVO as on 01.04.1981 is on lower side, therefore, considering overall facts and circumstances, we direct the AO to (A.Y.13-14) Vasuben N Patel adopt Rs.60.00/-per square meter as fair market value of land as on 01.04.1981 and compute capital gain. The Assessing Officer is further directed to allow deduction under section 54, on verification of facts, if the assessee fulfilled requisite conditions. Needless to direct that before passing order afresh the Assessing Officer shall allow opportunity of hearing to the assessee. The assessee is also directed to provide all the details to the Assessing Officer without any further delay. In the result, Ground No. 1 is allowed for statistical purpose and ground No. 2 is partly allowed.
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 20/02/2025.
Sd/- Sd/ (BIJAYANANDA PRUSETH) (PAWAN SINGH) लेखा सद�/Accountant Member �ाियक सद�/Judicial Member सूरत / Surat Dated: 20/02/2025 Dkp Outsourcing Sr.P.S* आदेश की �ितिलिप अ�ेिषत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant ��थ�/ The Respondent आयकर आयु�/ CIT िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, सूरत/ DR, ITAT, SURAT गाड� फाईल/ Guard File // True Copy // By order/आदेश से,
सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत