Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI R. C. SHARMA & SHRI AMARJIT SINGH
सुनवाई की तायीख / : 10.07.2017 Date of Hearing घोषणा की तायीख / : 21.09.2017 Date of Pronouncement आदेश / O R D E R Per R. C. Sharma, A. M.: This is an appeal filed by the assessee against the order by the ld. CIT(A)- II, Thane, for the assessment year (A.Y.) 2006-07 in the matter of order passed u/s.143(3) of the Income Tax Act, 1961.
Following grounds has been taken by the assessee:
(A.Y. 2006-07) Aspandiar R. Irani vs. Asst. CIT 1. The CIT(A) has erred in confirming the action of the A.O. of adopting the value of Rs.3,91,77,903/- on the date of sale as determined by the DVO for calculation of long term capital gains. The value of Rs.3,47,91,000/- as determined by the approved valuer may please be adopted for capital gain calculation.
2. The CIT(A) has erred in confirming the action of the A.O. of disregarding the valid objections raised by the Appellant in the process of valuation by DVO; which objections were overlooked by the DVO as well. Thus, the CIT(A) has failed to appreciate the fact that valuation done by DVO was erroneous.
Rival contentions have been heard and record perused. Facts in brief are that the assessee is an individual driving income from pension, capital gain and other sources. During the year, the assessee sold two plots of land for a total consideration of Rs.3,41,00,000/-. The stamp duty valuation for both the plots together was Rs.4,84,00,000/-. The assessee was of the opinion that the fair market value was much less than stamp duty valuation since the plots were situated at higher level compared to surrounding area requiring additional cost for filling and the land was encroached by hutments. Hence, the assessee approached the approved valuer and adopted the value of Rs.3,47,91,000/- as determined by the approved valuer for calculation of capital gains. Thereafter, since the A.O. was insisting on adoption of stamp duty valuation, the matter was referred to DVO as per sec. 50-C. The valuation officer valued the plots at Rs.3,91,77,903/-, i.e., the value higher than the value determined by approved valuer by overlooking the objections raised by the assessee. The A.O. adopted the value determined by DVO for tax purposes. The details of the values of the plots are as follows:
(A.Y. 2006-07) Aspandiar R. Irani vs. Asst. CIT Particulars Plot no. Plot no. Total Remark 347 338 Stamp duty valuation on 1,44,00,000 3,40,00,000 4,84,00,000 - the date of sale Consideration on sale 1,00,00,000 2,41,00,000 3,41,00,000 As per agreement Value as per approved 1,00,80,000 2,47,11,000 3,47,91,000 Adopted by valuer on the date of sale assessee in the return Value as per DVO on the 1,22,81,584 2,68,96,319 3,91,77,903 Adopted by AO date of sale in the assessment
The A.O. also referred the valuation of property as on 01.4.1981 to the DVO, even though the value as per report of valuation officer as on 01.04.1981 is not less than its FMV. The A.O. also declined exemption u/s. 54EC to the tune to Rs.50 lacs.
By the impugned order, the ld. CIT(A) confirmed all the additions against which the assessee is in further appeal before us.
We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the assessee during the year under consideration along with one Shri Gustad Irani sold plot no. 347 and 338 at Panchpakhadi, Thane for a total consideration of Rs.3,41,00,000/- and calculated his long term capital gains at Rs.1,53,42,890/-, being 50% of his share of the total gains out of the sale of the above property. The assessee further claimed a deduction of Rs.1,00,00,000/-
(A.Y. 2006-07) Aspandiar R. Irani vs. Asst. CIT under section 54EC of the I.T. Act, 1961 out of the above capital gains and offered balance Rs.53,42,890/-, for taxation as capital gains. According to the A.O. the sale consideration of the above plots shown was less than the market value as per stamp duty reckoner and therefore the assessee was asked to show cause as to why the market value as per the ready reckoner should not be adopted for working out the taxable long-term capital gains, to which the assessee objected. The AO referred the matter for valuation of the property to DVO, who vide his report dated 20/11/2008 determined the market value of the properties in question at Rs.3,91,77,903/-. On the basis of the market value determined by the DVO at Rs.3,91,77,903/-, the assessee's 50% share in the long-term capital gain on the sold properties was calculated at Rs.1,77,55,325/- as against Rs.1,53,42,890/- shown by the assessee in the return of income. Since the value admitted by the assessee at Rs.8,26,000/- as on 1st April, 1981 was substantially higher, the same was rejected by the AO and value of Rs.7,37,878/- as per DVO's report was adopted resulting in computation of higher long-term capital gain at Rs.1,77,55,325/- as against admitted gains of Rs.1,53,42,890/- by the assessee and the capital gains were taxed accordingly by the A.O.
Our attention was also invited by learned AR to the comparison of parallel sale instances as on 28.08.2006 in respect of following plots:
(A.Y. 2006-07) Aspandiar R. Irani vs. Asst. CIT Sr. Date of Location Rate per Sq. Mt. Transferor/Transferee No Agreement Applied (Rs.) 1 22/09/2005 Near Naupada 5,508 Chandrakant Thakkar Thane & Associates 2 04/05/2006 Pokhran Road 3,189 Hiralal Thane 3 28/02/06 Plot No 347 7,420 (Adopted by A.R.Irani & G R Irani you) 4 28/02/06 Plot No 338 6,106 (Adopted by A.R.lrani & G R Irani you)
It was contended that considering the distance from railway station, the value adopted for the plots under reference vis-a-vis value of sale instances sited above was on higher side.
As per ld. AR the sale instances sited above does not reflect whether the lands were under weaker section housing scheme u/s. 20 of ULC Act.
We found that during the year, the assessee sold the plots of land which were situated at higher level compared to surrounding area requiring additional cost for filling. The land was encroached by hutments. Against this background, the stamp duty valuation was very much on higher side as compared to the fair market value of the plots. Hence, the assessee approached the Approved valuer and adopted the value determined by the approved valuer for calculation of capital gain. Thereafter, since the AO was insisting on adoption of stamp duty valuation, the matter was referred to valuation officer as per sec. 50-C. The valuation officer valued the plots at a value higher than the value determined by approved valuer by overlooking the objections raised by the assessee. The AO (A.Y. 2006-07) Aspandiar R. Irani vs. Asst. CIT adopted the value determined by the valuation officer for tax purposes. We found that the objection raised by the assessee was not properly considered by the DVO insofaras the land is covered under ULC Act, the plots were named for. The Scheme of development of plots under the weaker section housing scheme u/s. 20 is permissible subject to fulfillment of certain conditions and restrictions, one of which is to sell the tenements @ Rs.702/- per sq.ft. Development is also permissible subject to rehabilitation of existing unauthorized occupants/encroachers. However, the DVO has also not discounted the value accordingly. We found that plot No 338 was fully encroached though the Thane Municipal Corporation has certified the list of only record.
In view of the above discussion, we restore the matter back to the file of the AO for deciding afresh, keeping in view our above observations.
In the result, appeal of the assessee is allowed for statistical purposes.