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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI SANJAY ARORA & SHRI G. PAVAN KUMAR
आदेश /O R D E R
PER BENCH:
The appeal filed by the Revenue and Cross Objection by the assessee are against the order of the Commissioner of Income Tax (Appeals)- 15, in dated 05.01.2016 passed u/s. 143(3) and 250 of the Income Tax Act. At the time of hearing the Ld. AR submitted that :-2-: C.O. No. 90/Mds/2016 there is a delay of 26 days in filing the Cross Objection. The ld. AR filed condonation petition and explained the circumstances for delay which are not deliberate. Further, ld. DR of the assessee has no serious objections for condonation of delay. After hearing the submissions, we are satisfied with the Reasonable cause explained in affidavit for filing the Appeal Belatedly and the delay is condoned and appeal is admitted.
We take up the where the Revenue has raised the following grounds:
2.1 The Ld CIT(A) erred to direct the AO to adopt the value given by Government registered valuer as on 01.04.1981 at Rs. 60,000/- per cent for 29,287 cents and Rs. 45 per sq.ft. for 1.713 cents as on 01.04.1982.
2.2 The Ld. CIT(A) erred to direct the AO to adopt the value given by Government registered valuer, even though the District
Registrar/Sub Registrar (Stamp Valuation Authority) is the competent authority to give valuation of land 2.3 The Ld. CIT(A) erred to direct the AO to adopt the value given by Government registered valuer, even though the valuer has also not relied upon only contemporaneous and corroborative evidence to ascertain the value of the land as on 01.04.1981, but has only
:-3-: C.O. No. 90/Mds/2016 expressed his opinion, which cannot be the basis for acceptance of such proposed value.
2.4 The Ld. CIT(A) erred to direct the AO to adopt the value given by Government registered, even though the valuer has certified that the prevailing market value of the given property may be Rs.
60,000/- to Rs. 80,000/- per cent of land in 1981. Thus it may be assessee seen that the valuer has estimated the value of the land.
The Brief facts of the case are that the assessee is an individual and filed the Return of income electronically for the assessment year 2011-12 on 30.07.2011 with total income of Rs. 3,57,088/-. The Return of income was processed u/s. 143(1) on 26.11.2011. Subsequently, the case was selected for scrutiny and notice u/s. 143(2) and 142(1) of the Act was issued along with the questionnaire. In compliance to the notice, the Ld. AR appeared from time to time and filed the details. During the financial year 2010-11 the assessee has sold the property at Nagercoil for Rs. 4,27,80,000/- and the assessee has adopted cost of acquisition as on 01.04.1981 at Rs. 1,00,000/-
per cent of land and for the year 1992 at Rs. 2,00,000/- per cent of land and claimed exemption on investment of Rs. 2,54,06,200/- on purchase of property in Chennai. Whereas, the Ld. AO calculated the capital gains based on the information and considered the facts on claim of exemption u/s. 54 of the Act at Page 2 and 3 of the order and has not disputed the sale
:-4-: C.O. No. 90/Mds/2016 consideration but the cost of acquisition as the actual value as on 01.04.1981 was Rs. 5,000 per cent and on 01.04.1992 was only Rs. 85.80 per sq.ft. The assessee explained the reasons through letter dated 21.01.2014 objecting to adoption of the guideline of the property and produced supporting the evidence of value as on 01.04.1981 & 01.04.1992. But the Ld. AO overlooked the value of assessee and adopted the guideline value as discussed and worked out taxable capital gains of Rs. 1,36,17,486/- and added the Returned income and passed order u/s. 143(3) of the Act dated 22.03.2014.
Aggrieved by the order, the assessee filed an appeal with the CIT(A). In the appellate proceedings, the Ld. AR argued the grounds and reiterated the submissions made in the assessment proceedings. The Ld. CIT(A) considered the grounds and findings of the Assessing Officer and jurisdictional High Court decision Thulasimani Ammai vs Commissioner of Income Tax & Anr. ((2000) 158 CTR 5 (Mad) and co-ordinate bench decision of Smt Usha Ramesh in dated 23.09.2011 and held at Para 5.3.2 which read as under:
" The appellant had placed valuation report by K. Sivagurunathan, Chartered Engineer dated 17.02.2014 before the AO. He is a govt. registered valuer. He has valued the property between Rs. 60,000/- per cent to Rs. 80,000/- per cent for the aforesaid property in 1981 and Rs. 45 per sq.ft. in 1992. The guidelines value given by the sub- registrar are common to all the properties in a particular area. They
:-5-: C.O. No. 90/Mds/2016 have evidentiary value but not conclusive value. Whereas as govt. registered valuer is a technical person who has given the value as on 1981 on the basis of the other relevant factors also. The AO is directed to adopt the value as on 01.04.1981 at Rs. 60,000/- per cent for 29.287 cents and Rs. 45 per sq.ft. for 1.713 cents as on 01.04.1992. These grounds of appeal are partly allowed."
The Ld. CIT(A) directed the Assessing Officer to adopt value as on 01.04.1981 at Rs. 60,000 per cent of land and Rs. 45 per sq.ft. for 1.713 cent as on 01.04.1992 and partly allowed the appeal.
Aggrieved by the CIT(A) order, Revenue has filed an appeal with the Tribunal. Before us, the Ld. DR submitted that the Ld. CIT(A) has erred in directing the AO to adopt the value of Rs. 60,000/- as on 01.04.1981 and Rs. 45 per sq.ft. as on 01.04.1992 and also erred in directing the adoption of valuation report value even though Sub-Registrar/District Registrar are competent authorities to give valuation of land and the CIT(A) overlooked the observation of the Assessing Officer and expressed the opinion and allowed the appeal of the assessee and prayed for set aside the order of CIT(A).
Contra, the Ld. AR relied on the orders of the CIT(A) and judicial decisions.
We have heard the rival parties, and perused the material on record.
6.1 The dispute before us thus is the proper and correct estimation of the fair market value of the Long Term Capital Asset, being 29.287 cents of land
:-6-: C.O. No. 90/Mds/2016 at Nagerkoil transferred by the assessee during the year, as on 01.04.1981, i.e., for computing the Long Term Capital Gain (LTCG) on the said transfer.
This is as the same was acquired by the assessee through Will of his late mother, Smt. Sarojini Ammal, who passed by on 16.03.2006. The Revenue insists on the said value as per the guideline value determined by the Stamp Valuation Authority under the Stamp Act in-as-much as the same also purports to assesss the fair market value of the subject property, i.e., at Rs. 5,000/- per cent. The assessee, on the other hand, discarding his own returned rate of Rs. 1,00,000/- per cent, urges the adoption of the rate of Rs. 60,000/- per cent based on the valuation report dated 17/2/2014 by a Registered Valuer (copy on record), which states of the fair market value as ranging between Rs. 60,000/- to Rs. 80,000/- per cent. The Ld. CIT(A) has preferred the rate of Rs. 60,000/- per cent for the reason that the market value as per the stamp valuation authorities is for the entire land covered by the survey, common for all the properties in a particular ares, while the registered valuer is a technical person, who has placed due weightage on the locational advantage of the assessee’s plot.
6.2 In our view, the fair market value of land is governed and determined by a variety of factors, which get captured in the market value, signifying an equilibrium of the supply and demand forces, euphemistically called market forces, impacting the market rate obtaining for a particular property at a particular time. The nature of land; its’ intended use, viz., residential,
:-7-: C.O. No. 90/Mds/2016 industrial, commercial, agricultural etc.; the local advantage, with reference to the intended use, etc. are same such pertinent factors. These could get supplemented by the factors as where the sale is not under normal circumstances, as in case of a distress sale, or where the purchaser has an interest in the property, etc. These, however, would though influence the purchase cost (of the capital asset transferred), would not impact the fair market value, particularly years later; the previous owner in the present case having acquired the capital asset much earlier in 1964. What we wish to emphasize is that the fair market value is not amenable to any strict rules or technical formulae. The alluding to the registered valuer as a technical person by the Ld. CIT(A) is therefore of little consequence. The stamp valuation, on the other hand, as afore-stated, seeks to determine the fair market value of the land only, and is accordingly, i.e., in the absence of any controverting factors and basis, adopted by the Revenue. The same therefore is a valid basis, being ostensibly based on the purchase and sale transactions of the land in that particular area at the relevant time. The only manner therefore in our view by which the assessee can validly dispute the adoption of the said rate is by furnishing comparable cases, i.e., of purchase/sale transactions of land in vicinity of its land and for around same period. The matter accordingly, so as to allow the assessee an opportunity to present its case in the matter, is restored back to the file of the AO, who shall decide the same after allowing reasonable opportunity of hearing to the assessee, in accordance with law,
:-8-: C.O. No. 90/Mds/2016 issuing definite findings of fact. The balance 1.713 cents of the total 31.015 cents of land sold by the assessee stands also acquired by him from his mother, albeit by way of a gift in the year 1992. The Ld. CIT(A) has directed for adoption of the fair market value as on 01.04.1992, stated to be Rs. 45
per sq. ft., as its’ cost of acquisition. The validity of the rate apart, we find no basis for such direction. This is as gift as also one of the specified modes of acquisition stated in section 49 (s.49(1)(ii)). Therefore, where it is acquired by the previous owner, i.e., the donor (the assessee's mother), cost of acquisition in her hands would be taken into account. However, being prior to 01.04.1981 in the present case, its fair market value as on that date shall, at the assessee’s option, shall apply. We decide accordingly.
In the result, the Revenue appeal is allowed for statistical purposes and the assessee’s CO is dismissed.
Order pronounced on Friday, the 03rd day of March, 2017 at Chennai.