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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -13, Chennai, dated 19.05.2016 and pertains to assessment year 2011-12.
Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the assessee sold a property to M/s Surana Corporation on 25.03.2011 for a total consideration of `2,20,0,000/-. The area of the land was 2.02 acres. Similarly, the assessee sold another property to the extent of 4.09 acres at Sholinganallur, to M/s Chennai Cybercity (P) Ltd. for a sum of `5,74,12,000/-. In respect of Sholinganallur property, the assessee claimed before the Assessing Officer that this is an agricultural land subjected to cultivation, therefore, cannot be considered as capital gain. The Assessing Officer found that the distance between the Sholinganallur property and Perumbakkam municipality was approximately 13.5 KMs. However, the assessing authority found that the population of the municipality was 15,519 as per Census of 2001. The Ld.counsel further submitted that the assessee has returned agricultural income regularly. In fact, for assessment year 2010-11, the assessee has returned a sum of `53,200/-. Similarly for the assessment years 2011-12 and 2012-13, the assessee has returned an agricultural income of `53,200/- each. This claim of the assessee was disallowed on the ground that agricultural income disclosed by the assessee was very less for a total area of 6.11 acres. According to the Ld. counsel, the assessee has disclosed agricultural income earned from cultivation. Therefore, merely because the agricultural income was very less, the claim of the assessee that the property was agriculture in nature cannot be rejected. When the agricultural income disclosed for earlier assessment years was admitted, merely because the assessee was claiming exemption from capital gain on transfer of land, the Assessing Officer cannot turn around and say that the property is not agriculture in nature.
Referring to the copy of patta and adangal, the Ld.counsel for the assessee submitted that the State Revenue Department classified the land as dry land and the assessee was cultivating the same. Therefore, according to the Ld. counsel, the CIT(Appeals) is not justified in confirming the order of the Assessing Officer.
The Ld.counsel for the assessee further submitted that the assessee has sold the land as a single piece in Sholinganallur Village. The assessee also sold another land at Perumbakkam Village. The guideline value adopted by the Sub-Registrar in Sholinganallur land was at `5,74,12,000/-. In respect of Perumbakkam land, the guideline value adopted by the Sub- Registrar was `2,20,18,000/-. Both Sholinganallur land and Perumbakkam land are one piece of property. According to the Ld. counsel, the Assessing Officer without any justification divided the same into two properties. Even though the assessee executed two different sale deeds and the property found in two different villages, it is one piece of land, therefore, there cannot be any two different guideline value for the purpose of valuation. According to the Ld. counsel, there cannot be a higher value for one part of land and lesser value for other part of the land. Referring to Departmental Valuation Officer’s report, the Ld.counsel submitted that this valuation was in respect of 2400 sq.ft. of land, which is otherwise considered to be one ground. What was sold by the assessee is 6.11 acres of land. The entire 6.11 acres of land is a single piece of land. In other words, what was sold by the assessee is 2,66,151 sq.ft. of land. Therefore, comparing a small piece of 2400 sq.ft. of land with large jungle of 2,66,151 sq.ft. of land is not justified.
The Ld.counsel for the assessee further submitted that the assessee claimed before the Assessing Officer and also before Departmental Valuation Officer that the land at Perumbakkam was taken at `250 per sq.ft. The Sholinganallur Village is next to Perumbakkam Village and the land at Perumbakkam Village is adjacent to Sholinganallur land. Therefore, there is no justification in valuing the land at Perumbakkam at `250/- per sq.ft. and valuing the land which falls in Sholinganallur Village at `750 per sq.ft.
Referring to comparable sale instances, the Ld.counsel submitted that a land of 2.14 acres adjacent to assessee’s land, was sold for `2,14,00,000/- at `100 lakhs per acre. The assessee, in fact, gave a copy of registered sale deed to the Departmental Valuation Officer. The Departmental Valuation Officer however, rejected the comparable sale instance suggested by the assessee on the ground that the value adopted under Section 47A of the Stamp Act cannot be made applicable to the assessee. According to the Ld. counsel, when the document was referred to Collector for determination of market value and the market rate was adopted under Section 47A of the Stamp Act, the Departmental Valuation Officer cannot say that the value determined under Stamp Act cannot be applied to the assessee. According to the Ld. counsel, the value determined by the Collector under Section 47A of Stamp Act is equally applicable while determining the fair market value of the assessee’s land.
Therefore, according to the Ld. counsel, the valuation adopted by the Departmental Valuation officer at the rate of `750/- per sq.ft. at Sholinganallur Village is not justified.
On the contrary, Shri A.V. Sreekanth, the Ld. Departmental Representative, submitted that the assessee sold 2.02 acres of land on 25.03.2011 for a sum of `2,20,00,000/- to Surana Corporation.
The fair market value was determined by adopting value declared by the assessee at `2,20,00,000/-. The property was situated at Perumbakkam Village. On the same day, the assessee also executed another document in respect of property at Sholinganallur Village for a sale consideration of `5,74,12,000/-. However, the registration authorities determined the fair market value of the land at Sholinganallur at `13,37,43,000/-. According to the Ld. D.R., the assessee claimed before the Assessing Officer that what was sold by the assessee is agricultural land, therefore, it cannot be a capital asset. The Assessing Officer found that the distance between Sholinganallur property and Perumbakkam municipality was approximately 13.5 KMs. However, Sholinganallur had a population of 15,519 as on 2001 Census. Therefore, according to the Ld. D.R., the Assessing Officer rejected the claim of the assessee and levied capital gain tax.
Referring to the claim of the assessee that the agricultural income was disclosed in the earlier assessment years, the Ld. D.R. submitted that the assessee has disclosed only a meagre income from agriculture. Therefore, the Assessing Officer treated the income disclosed as agricultural income as non-agricultural income and brought the same for taxation under the head “other sources”.
Referring to the order of the CIT(Appeals), the Ld. D.R. submitted that the Revenue authorities classified the land as dry land, and there is no evidence of cultivation of land by the assessee.
Moreover, the comparable instance reported by the assessee was rejected on the ground that the value was determined under Section 47A of the Stamp Act. According to the Ld. D.R., the fair market value determined under Section 47A of the Stamp Act cannot be a basis for computing the fair market value under Section 50C of the Act. Therefore, according to the Ld. D.R., the CIT(Appeals) has rightly confirmed the order of the Assessing Officer.
We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee has sold a property at Perumbakkam Village and Sholinganallur Village. The Sholinganallur property was to the extent of 4.09 acres and Perumbakkam Village property was of 2.02 acres. The assessee claims that both the lands are adjacent to each other and they form part of single piece of land. The assessee claims that the sale consideration of Sholinganallur property was `5,73,67,520/- which comes to nearly `215/- per sq.ft. The Perumbakkam Village land was sold for `2,20,00,000/- which comes to `250 per sq.ft. There is no dispute with regard to valuation adopted by the authorities below in respect of Perumbakkam Village. The valuation adopted by the Revenue authorities in respect of Sholinganallur property was disputed by the assessee.
The first contention of the assessee is that the land in question is agricultural land, therefore, it cannot be considered to be capital asset. Admittedly, the land in question was classified as dry land. No doubt, the dry land can also be subjected to cultivation.
The adangal extract produced by the assessee does not disclose / indicate any cultivation. Therefore, this Tribunal is of the considered opinion that when the land was classified as dry land in the revenue records, and adangal extract does not indicate any cultivation of crop, it cannot be considered to be agricultural land at all for the purpose of Income-tax Act. The matter would stand in a different footing if the land was classified as wet land by the State Revenue authorities. When it was specifically classified as dry land, it is for the assessee to produce necessary material that the land was under cultivation. One of the basic document to prove cultivation is adangal extract. Since the adangal extract does not disclose any cultivation, this Tribunal is of the considered opinion that the land in question cannot be considered to be as agricultural land.
Therefore, it has to be treated as capital asset.
Now coming to valuation, as observed earlier, in respect of Perumbakkam Village, there is no dispute about the value adopted by the Valuation Officer and the Assessing Officer. The dispute is with regard to property at Sholinganallur. The assessee has produced a copy of the sale deed to indicate that the sale consideration disclosed by the assessee is the fair market value.
This comparable document produced by the assessee was rejected by the authorities below and the Valuation Officer on the ground that the fair market value was determined by the appellate authority under Section 47A of the Stamp Act. This Tribunal is of the considered opinion that the guideline value prescribed by the authorities is only to guide the registration authorities to determine the fair market value. The Sub-Registrar or registration authority has to determine fair market value by taking the guideline value as one of the factors. The fair market value would depend upon various factors such as the location of property, area of the property, potentiality for future development, the infrastructure facility available around the area and the infrastructure facilities such as airport, railway station, bus stand, etc. Therefore, the guideline value as such cannot be considered to be the fair market value.
We have carefully gone through the provisions of Section 50C of the Act. Section 50C clearly says that when the consideration received by the assessee for transfer of capital asset is less than the value adopted or assessed by the authorities under the Stamp Act, the matter can be referred to the Valuation Officer.
Therefore, the guideline value can be one of the factor for determining the fair market value under Section 50C of the Act.
Even Section 50C of the Act clearly says that the value adopted by the stamp authorities has to be taken as market value or full value of consideration for transfer of property. In the case before us, the authorities below has taken the guideline value of Sub-Registrar and not the fair market value. Of course, the guideline value was higher than the sale consideration said to be received by the assessee.
The question arises for consideration is can the authorities below, including the Valuation Officer, ignore the sale instance on the ground that the value was adopted by the appellate authority under Section 47A of the Stamp Act? This Tribunal is of the considered opinion that the fair market value determined by the appellate authority under Section 47A of Stamp Act is also one of the valuations which cannot be rejected merely because the same was determined under Section 47A of the Stamp Act.
Moreover, the sale instance referred by the Departmental Valuation Officer was in respect of sale of property to the extent of `2400/-
per sq.ft. of land. In the case before us, what was sold by the assessee is to the extent of 2,66,151 sq.ft. Therefore, the comparison made by the Departmental Valuation Officer between 2400 sq.ft. and 2,66,151 sq.ft. is not justified. The comparison has to be made in respect of similarly placed property. By taking into consideration of the location of property and the comparable sale instance, this Tribunal is of the considered opinion that the value adopted for Perumbakkam property has to be adopted for Sholinganallur property also. This Tribunal is of the considered opinion that the report of the Valuation Officer and report of the Registered Valuer and sale comparable instance mentioned by the assessee and the District Valuation Officer clearly establish that the Sholinganallur property cannot fetch more than `250 per sq.ft. Therefore, the value adopted by the Assessing Officer at ` 750 per sq.ft. is highly exorbitant. Accordingly, while confirming the finding of the authorities below that the land in question is a capital asset and the valuation of Perumbakkam property at `250 per sq.ft., the orders of the authorities below fixing the value of Sholinganallur property at `750/- per sq.ft. is set aside the Assessing Officer is directed to adopted the value of Sholinganallur property also at `250 per sq.ft.