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Income Tax Appellate Tribunal, ‘SMC’ ‘B’ BENCH, CHENNAI
Before: Shri A. Mohan Alankamony
आदेश / O R D E R
This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-2, Chennai dated 29.09.2016 in IT No.249/CIT(A)-2/2013-14 for the assessment year 2008-09 passed U/s.250(6) r.w.s.143(3) of the Act.
The only issue which arises for our consideration in this appeal is that the Ld.CIT(A) has erred in confirming the order of the Ld.AO who had determined the Fair Market Value (FMV) of the land sold by the assessee at Rs.300/- per Sq.Yard as on 01.04.1981 for the purpose of computing Long Term Capital Gain.
The brief facts of the case are that the assessee is an individual filed his return of income for the assessment year 2008-09 on 30.07.2008 admitting total income of Rs.3,87,810/-. Thereafter the return of income was processed U/s.143(1) of the Act.
Subsequently survey U/s.133A of the Act was conducted in the case of M/s. Vijaya Talkies (partnership firm), Eluru Road, Vijayawada on 03.02.2010, wherein the assessee is one amongst the 17 partners.
In the survey proceedings, it was revealed that during the relevant previous year, all the partners of the firm had jointly sold 2327 Sq.Yards of undivided share of land situated at Eluru Road, Vijayawada for Rs.2,52,00,000/- vide document No.2299/2007 dated 18.05.2007. The above said land was purchased between the periods 1968 to 1971 by the ancestors of the partners. It was further revealed that for the purpose of computing capital gain they had adopted FMV as on 01.04.1981 according to their convenience at Rs.5,87,81,000/- taking advantage of the fact about the non- availability of the records with the Sub-Registrar Office (SRO) due to destruction of the same because of the riots which took place on the assassination of the local MLA. Therefore, the Ld.AO after examining the particulars of the land sold by the assessee and after obtaining certain evidence from the SRO’s office determined the FMV of the property as Rs.300/- per Sq.Yard as on 01.04.1981.
Thereafter the Ld.AO completed the assessment by adopting Rs.300/- per Sq.Yard as the fair market value as on 01.04.1981 and computed the long term capital gain at Rs.28,45,298/-.
On appeal, the Ld. CIT(A) upheld the order of the Ld.AO by observing as under:
“4. In the course of hearing conducted on 9.2.2016, the appellant has filed a copy of the order of CIT(A), Vijayawada dt. 23.4.2013 in the case of Shri Vallabhaneni Rajesh, for AY 2008-09. Shri Vallabhaneni Rajesh, is another partner of the firm M/s Vijaya Talkies. In the case of Shri Rajesh also, as in the case of the appellant, the Assessing Officer i.e. the ITO, Ward 2(4), Vijayawada has adopted the FMV of the property i.e. the land at Rs. 300/- per Sq. Yard, while completing the assessment.
The CIT(A), Vijayawada, vide the said order, has directed the Assessing Officer to adopt the FMV as on 1.4.1981 at Rs. 2000/- per Sq. yard. The concluding portion of the order is reproduced below (relevant portions are highlighted in bold font): "5. I have seen the submissions made by the appellant, gone through the assessment order besides perusing all other material available on record. The only issue is dispute in fixing fair market value as on 01.04.1981 for Computation of Long term capital gains. It is seen that the main thrust of representation is that fair market value cannot be sub registrar value as it is fixed for different purposes as well as it was made under different legislations made from time to time. Various judicial pronouncements also referred by appellant have underlined the importance of considering location significance and commercial value of the property in arriving at fair market value as on 01.04.1981. The arguments put forth like notification of up gradation of Vijayawada municipality into corporation status in 1981 and developments made to Vijayawada city during Krishna Pushkarams are facts in public domain and should have been considered by the Assessing officer in arriving at fair market value of the property. Location sketch provided by the appellant also highlights the commercial value of the subject property beyond doubt. At the same time, the value put forward by the appellant @ Rs. 4000 per square yard is not convincing and appear to be very high when the same obtained by the Assessing Officer at Rs.300 from the SRO is very low. In any case, it is seen that the subject property is located at prominent location on Eluru road known as Vijaya talkies centre and is a developed commercial area. Thus, there are many occasions, where the value as per office of the SRO is much more than actual market rate and vice versa also. Thus, looking at the developments that took in the location of the impugned property and also taking totality of facts and circumstances into account. I am of the considered opinion that ends of justice are met, if the FMV as on 01.04.1981 is taken at Rs.2,000 and the Assessing Officer is directed accordingly. All other grounds are not pressed and hence, treated as dismissed.
6. In the result, the appeal partly allowed.” Taking the contentions of the appellant Shri Rajesh into account, and keeping in view the factors such as notification of upgradation of Vijayawada Municipality into Corporation status in 1981, developments made to Vijayawada City during Krishna Pushkarams and the commercial value of the subject property, while at the same time, highlighting the fact that the value put forward by the appellant i.e. Rs. 4000/- per Sq. Yard is not convincing and appears to be very high, the CIT(A), Vijayawada was of the view that it would be fair to fix the FMV at Rs. 2000/- per Sq. Yard.
The learned CIT(A), Vijayawada states that the value obtained by the Assessing Officer at Rs.300/- from the SRO is 'very low'. However, it must be kept in mind that the appellant gets the benefit of Cost Inflation Index (Cll) vis- a-vis the basic cost/FMV of the property as on 1.4.1981, which would take care of the inflation factor. Besides, it is seen that the upgradation of Vijayawada Municipality into Corporation status has taken place during 1981. The property has devolved on the appellant as early as 1968 to 1971 and it is for this reason that the appellant is given the benefit of 'cost as on 1.4.1981'.
It has to be borne in mind that the information received from the Sub-Registrar's office is based on authentic records. Notwithstanding the appellant's submissions that the page containing the guideline value of the property bears strikings, the fact remains that the guideline value of the land located at Eluru Road, specifically Vijaya Talkies, is clearly mentioned therein as Rs. 300/- per Sq. Yard as on 1.4.1981. This information, contained in page No. 33 of the Register of Fair Market Value being maintained in the SRO Office, Vijayawada has officially come into the possession of the LT. Department and has been duly forwarded to the Assessing Officer assessing the case of the appellant as well as the Assessing Officers of the 16 other partners. On the other hand, as held by the CIT(A), Vijayawada, the basis of the valuation of Rs. 4000/- per Sq. Yard adopted by the appellant is not clear and hence the said value is not convincing and also appears to be very high. At the same time, the value determined by the learned CIT(A), Vijayawada also does not seem to be based on any specific document/ record such as Government records etc. Hence, it is held that, the guideline value as per information from the SRO, based as it is on authentic Government records, has been rightly adopted by the Assessing Officer.
Thus in my considered view, the Assessing Officer was justified in adopting Rs.300j- per Sq. Yard as the FMV of the land at Vijayawada, sold by the appellant during the relevant previous year. The addition made by adopting this value, is hence confirmed.”
At the outset, the Ld.AR submitted before us that in the case of Sri Vallabhaneni Rajesh, who is one amongst the 17 co-owners of the property, the Ld.CIT(A) in his order dated 23.04.2013, appeal No.433/CIT(A)/VJA/10-11 adopted the FMV of the land sold by the assessees as on 01.04.1981 at Rs.2000 per Sq.Yard. The Ld.AR further submitted that the Revenue did not prefer any appeal against the order of the Ld.CIT(A). He therefore requested that the same FMV may be adopted in the case of the assessee also, because the FMV determined by the Ld.CIT(A) on the very same property is accepted by the Revenue in the case of the joint owner of the property. The Ld.DR could not successfully controvert to the submissions made by the Ld.AR.
We have heard the rival submissions and carefully perused the materials available on record. As argued by the Ld.AR, it is evident that the Ld.CIT(A) vide order dated 23.04.2013 in the case of the joint owner of the property has determined the FMV of the property as on 01.04.1981 at Rs.2000/- per Sq.Yard. The relevant portion of the order is reproduced herein below for reference: “I have seen the submissions made by the appellant, gone through the assessment order besides perusing all other material available on record. The only issue is dispute in fixing fair market value as on 01.04.1981 for Computation of Long term capital gains. It is seen that the main thrust of representation is that fair market value cannot be sub registrar value as it is fixed for different purposes as well as it was made under different legislations made from time to time. Various judicial pronouncements also referred by appellant have underlined the importance of considering location, significance and commercial value of the property in arriving at fair market value as on 01.04.1981. The arguments put forth like notification of up gradation of Vijayawada municipality into Corporation status in 1981 and developments made to Vijayawada city during Krishna pushkarams are facts in public domain and should have been considered by the Assessing Officer in arriving at fair market value of the property. Location sketch provided by the appellant also highlights the commercial value of the subject property beyond doubt. At the same time, the value put forward by the appellant @ Rs.4000 per square yard is not convincing and appear to be very high when the same obtained by the Assessing Officer at Rs.300 from the SRO is very low. In any case, it is seen that the subject property is located at prominent location on Eluru road known as Vijaya talkies centre and is a developed commercial area. Thus, there are many occasions, where the value as per office of the SRO is much more than actual market value and vice versa also. Thus, looking at the developments that took in the location of the impugned property and also taking totality of facts and circumstances into account, I am of the considered opinion that ends of justice are met, if the FMV as on 01.04.1981 is taken at Rs.2,000/- and the Assessing Officer is directed accordingly. All other grounds are not pressed and hence, treated as dismissed.”
Since the Ld.CIT(A) on the earlier occasion had determined the value of the land sold which is accepted by the Revenue since they have not carried the matter on appeal as clarified by the Ld.D.R, I am of the considered view that the same value should be adopted in the case of the assessee also. Therefore, I hereby direct the Ld.AO to compute the capital gain in the case of the assessee by adopting the FMV of the property at Rs.2000/- per Sq.Yards as held in the case of the co-owner of the same property by the Ld.CIT(A) vide the order dated 23.04.2013 supra.
In the result, the appeal of the assessee is partly allowed.
Order pronounced on the 5th April, 2017.