Loading judgment…
No AI summary yet for this case.
Before: Shri A. Mohan Alankamony & Shri Duvvuru RL Reddy
O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal preferred by the Revenue and the Cross Objection filed by the assessee are directed against the order of the ld. Commissioner of Income Tax (Appeals) 2, Tiruchirapalli dated 02.02.2017 for the assessment year 2009-10. The only effective ground raised in the appeal of the Revenue is that the ld. CIT(A) has erred in allowing excess rebate of 25% on the value fixed by the DVO.
2 & C.O. No. 103/M/17 2. The appeal of the Revenue is found to have been filed late by 17 days before the Tribunal. By referring to the petition for condonation of delay, the ld. DR has submitted that the appeal papers were not readily traceable since it got mixed up with other scrutiny files. As soon as the records pertaining to this case was traced, immediately it was send to Administrative PCIT for authorization of appeal. Thereafter, appeal papers were submitted with a delay of 17 days. It was also submitted that the delay is neither wilful no wanton but due to the circumstances beyond control. The ld. DR, citing the above reasons requested for condoning the delay and to admit the appeal for hearing. The ld. Counsel for the assessee did not object to the submissions of the ld. DR and since there was reasonable cause, we condone the delay of 17 days in filing the appeal and admit the appeal for hearing.
Brief facts of the case are that the assessee sold 1.14 acres of land to the company M/s. Trichy Distilleries and Chemicals Ltd. for a sale consideration of ₹.45,00,000/-. The market value of the said property was ₹.2.90 crores. In order to assess capital gains arising out of the transaction, the assessment was reopened under section 147 of the Income Tax Act, 1961 [“Act” in short] and a notice under section 148 of the Act was issued to the assessee’s legal heir and brother Shri K.V. Chinnaraj. Notice under section 143(2) of the Act was also issued on 08.10.2013.
3 & C.O. No. 103/M/17 2.1 It was the submission of the assessee before the Assessing Officer that the land sold by the assessee was a thin strip of land, located within the property of purchaser, there was no direct approach to the land in question otherwise than through the land of purchaser. It was also stated that the sale was a kind of distress sale and guideline value fixed was not accepted. In order to determine the value to be adopted, the case of the assessee was referred to the Valuation Officer. After inspection of the property, the Valuation Officer has estimated the market value of the property at ₹.1,44,50,000/- and while doing so, the DVO had given 20% rebate for distress sale aspect. Accordingly, the Assessing Officer adopted the value determined by the DVO in computing the income from long term capital gains.
The assessee carried the matter in appeal before the ld. CIT(A). After considering the submissions of the assessee, the ld. CIT(A) allowed further rebate of 25% on the value fixed by the DVO by considering the facts such as location, shape, size, distress sale aspect, etc.
Aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted that after taking into account the disadvantageous location of the property sold by the assessee viz., shape, location, situation, size, other factors, by giving 50% rebate on the guideline value fixed by the Sub- Registrar, the DVO has determined the fair market value at ₹.1,44,50,000/-
4 & C.O. No. 103/M/17 and thus, the ld. CIT(A) was not justified in giving further rebate of 25% on the value fixed by the DVO and pleaded that the order of the ld. CIT(A) should be reversed and restored that of the Assessing Officer. On the other hand, by way of Cross Objection, the ld. Counsel for the assessee has contended that considering the intrinsic fetters in the shape of the property, the value shown by the assessee is factually correct and also challenged reopening of assessment. In turn, the ld. DR has submitted that the assessee has not challenged reopening of assessment before the ld. CIT(A) and thus, the ground raised in the Cross Objection should not be entertained.
We have heard both sides, perused the materials available on record and gone through the orders of authorities below. We have also perused the paper book filed by the assessee. It is an admitted fact that the property sold by the assessee was a thin strip of land, located within the property of purchaser and moreover, there was no direct approach to the land in question otherwise than through the land of purchaser. Since there was no comparable sale instance for the properties in the same street and during the same period, the guideline rate of land as certified by the SRO was taken as base rate and FMV was arrived by the DVO.
5.1 The guideline rate adopted by the SRO amounted to ₹.582/- sq.ft. The DVO allowed rebate on four grounds as detailed below.
5 & C.O. No. 103/M/17 1. On account of shape @ 5% ₹. 29.10/-sq.ft.
2. On account of location and ₹. 58.20/sq.ft. situation at 10% 3. On account of size @ 15% ₹. 87.30% 4. On account of other factors ₹. 116.40/sq.ft. @ 20% After allowing the above rebate the DVO adopted the FMV at ₹.291/- sq.ft. After examining the valuation report and site plan, the ld. CIT(A) has noted that the landed property carried many disadvantages namely; 1) Shape: The property consisted of 3 different survey and was irregular shape. 2) Location & Situation: The property could be reached only through the purchaser’s property. 3) Size: The property is not ideal for any development because of its locations in industrial area and since the hypothetical layout area available after leaving for mandatory requirements is very less. 4) Other factors: The property sold is surrounded by other industries and can be sold only to the neighbour. 5) The property is land locked and was in possession and enjoyment of M/s. Trichy Distilleries & Chemicals Ltd. for 40 years. The above features of the land of the assessee were not disputed by the Assessing Officer or the DVO. Considering the highly disadvantageous position of the property, with regard to determination of FMV, the ld. CIT(A) has observed that the assessee was forced to sell the property to the said purchased for the price fixed by the purchaser, which was under its enjoyment for the past 40 years. The fair market value cannot be the same for all the properties in a particular locality during a particular period. The fair
6 & C.O. No. 103/M/17 market value depends upon the merits and advantages carried by it. In view of the above, by giving further rebate at 25% to guideline value of ₹.582/-, the ld. CIT(A) directed the Assessing Officer to adopt the FMV at ₹.145.50/- per sq.ft. Under the above facts and circumstances, we are of the considered opinion that the ld. CIT(A) was fully justified in allowing further rebate of 25% of guideline value and we find no infirmity in the order passed by the ld. CIT(A). Thus, the ground raised by the Revenue is dismissed.
In the Cross Objection, the assessee has challenged reopening of assessment. Even though this ground issue was not raised before the ld. CIT(A), being a legal issue we proceeded to adjudicate the same.
6.1 The above landed property sold by the assessee comprises of 1.14 acres of land for a sale consideration of ₹.45,00,000/-. Since the market value of the said property was ₹.2.90 crores, in order to assess capital gains arising out of the transaction, the Assessing Officer reopened the assessment by issuing notice under section 148 of the Act within the time limit provided under the provisions of the Act. Even though the land sold by the assessee was highly disadvantageous position, the value shown by the assessee was very much lower than the guideline value, the Assessing Officer believed that income had escaped assessment and thereby, by issuing notice under section 148 of the Act, the assessment was reopened and the case of the assessee was referred to DVO for determination of FMV.
7 & C.O. No. 103/M/17 Under the above facts and circumstances, we do not find any flaw in reopening of assessment under section 147 of the Act. Accordingly, the objection raised by the assessee stands dismissed.
6.2 By considering, judiciously, the highly disadvantageous position of the land sold by the assessee, even though the landed property comprises of 1.14 acres, the ld. CIT(A) has justifiably allowed further rebate of 25% to the guideline value to adopt the FMV, which was sustained by us against the appeal filed by the Revenue in the preceding para. Thus, the objection raised by the assessee stands dismissed.
In the result, the appeal filed by the Revenue and the Cross Objection filed by the assessee are dismissed. Order pronounced on the 27th December, 2017 at Chennai.