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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI RAMIT KOCHAR
सुनवाई क� तार�ख /Date of Hearing : 18-04-2016 घोषणा क� तार�ख /Date of Pronouncement : 12-07-2016 आदेश / O R D E R PER RAMIT KOCHAR, Accountant Member
This appeal, filed by the Revenue, being 15-07-2013 passed by learned Commissioner of Income Tax (Appeals)- 27, Mumbai (hereinafter called “the CIT(A)”), for the assessment year 2009-10, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 30-12-2011 passed by the learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) of the Income Tax Act,1961 (Hereinafter called “the Act”).
ITA 5987/Mum/2013 2
The grounds of appeal raised by the Revenue before Income Tax Appellate Tribunal, Mumbai (hereinafter called “the Tribunal”) in the memo of appeal filed with the Tribunal read as under:-
“1. On the facts and circumstances of the case and in law, Id. CIT(A) has erred in allowing relief to the assessee by adopting mean value of the properties based on valuation reports submitted by the DVO and assessee valuer for the purpose of cost of acquisition of land as on 01.04.1981 without giving credence to value adopted by District Valuation Officer u/s 55A.
2. On the facts and circumstances of the case and in law, Id. CIT(A) has erred in not appreciating the fact that the Income-tax does not permit mean value of Government Valuer and Register Value for the purpose of cost of acquisition as on 01.04.1981.
3. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. The Appellant pray that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.”
The brief facts of the case are that the assessee is an individual deriving income from house property, capital gains and also income from other sources. During assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the assessee submitted all the supporting documents for computation of capital gains , like agreements, rates as per the ready reckoner, maps of the plot sold. The assessee has shown the sale consideration as per section 50C of the Act. However, the A.O. observed that the assessee has computed the cost of acquisition as on 1st April, 1981 as per the ready reckoner’s rate for ‘developed land’. The A.O. referred the case to the DVO-I , Mumbai for determination of FMV/cost of acquisition and sale value u/s 50-C and 55A of the Act on 22.11.2011. The DVO issued notice dated 30th November, 2011 u/s 55A of the Act to the assessee. The DVO-I, Mumbai further referred the matter to the DVO–II,Mumbai vide letter dated 21st December, 2011 for some plots as the jurisdiction was lying with him.
ITA 5987/Mum/2013 3 The DVO-II, Mumbai informed the A.O. that the valuation of property will take some time and as such the A.O. was requested to pass a protective order as the case was getting time barred. The A.O. accordingly passed the assessment order dated 30-12-2011 u/s 143(3) of the Act based upon the information available on record and it is stated in the assessment order dated 30-12-2011 passed by the AO that the appropriate action will be taken once the DVO report is received.
During assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the assessee was asked by the AO to justify the adoption of rates as per the definition of the ‘developed land’ , and reliance by the assessee in context thereof on the reference in the agreements that the land is developed because there were structures standing thereon and in certain cases there were notification by Collector that the areas are notified to be slums.
The A.O. observed that as per reckoner of valuation of property as on 1-4- 1981 , the rate mentioned for developed land was applicable to those land which is defined as “Land has approved building and has facilities of road, electricity, drainage and water or has got non-agricultural permission” .
The A.O. did not accept the submissions of the assessee due to the reasons mentioned below against each property in the light of definition of ‘developed land’ as indicated above, vide assessment orders dated 30-12-2011 passed by the AO u/s. 143(3) of the Act:-
“(i) CTS No. 7/1 of village Hariyali, Area of plot is 10,249.48 SQ Fts and Cost of acquisition was taken as Rs.96 per SQ.Ft.(as developed land).
As per the deed of conveyance, dated 2nd April, 2008, it is found that the land bearing CTS No.7/1 admeasuring 952.20 sq mtrs situate, lying and ITA 5987/Mum/2013 4 being at Village hariyal Taluka Kurla has been declared as slum vide Gazette Notification No. SLM-OCK-II-WS-I-3025 dated 6th April, 1984. It is further mentioned that: "We hereby also agree and undertake to develop the said slum notified property as mentioned hereinabove under the Slum and the same herein under the prescribed guidelines of Development Control regulation for Greater Bombay, 1991, 33(10), 33(14- D) of Mumbai Municipal Corporation and conformity with SRA(Slum Rehabilitation Authority) or any other scheme permissible by law by demolishing the existing structures and construction new building in its place as per Slum Rehabilitation Scheme under the Maharashtra Slum Area(Improvement, clearance and Re-development) Act, 1971". It is clear from the above facts, the land has been purchased for develop the same which is also clear from the Indemnity Bond filed by M/S. Kanchi Koncept it and as per the stamp duty authority also the land has Zero value for the purpose of stamp duty. The said land had already declared as slum as on 6th April, 1984 indicated that land is not developed as on 0l.04.1981. Hence, Fair Market Value of land taken by the assessee as developed land is not justifiable. Accordingly, the F.M.V is taken as Rs.30 per SQFT as for undeveloped land which comes to Rs.3,07,484/-.
(ii) CTS No. 122(PT) of Village Hariyali. Area of plot is 8156.85 SQ FTS. Cost of acquisition taken by the assessee is Rs. 100/- per SQ FTS. (as developed land).
The aforesaid property has been notified as slum area vide the Notification No. SLM-DC-K-11,77, Published in the Maharashtra Government Gazettee dated 8th February, 1979 issued by the Deputy Collector (ENC) & Competent Authority, Sub Division, Kurla-II. It is further found that the purchaser agreed and undertook to develop the said slum notified property as mentioned hereinabove under the Slum and the same herein under the prescribed guidelines of Development Control regulation ITA 5987/Mum/2013 5 for Greater Bombay, 1991, 33(10), 33(14-D) of Mumbai Municipal Corporation and conformity with SRA(Slum Rehabilitation Authority) or any other scheme permissible by law by demolishing the existing structures and construction new building in its place as per Slum Rehabilitation Scheme under the Maharashtra Slum Area (Improvement, clearance and Re-development) Act, 1971. In view of the above, the plot of land is encroached by the slum rehabilitant and it is undeveloped properties as on 0 l.04.1981, hence the cost of acquisition is taken as Rs.26 per SQFT as for undeveloped land which comes to Rs.2,12,078/ - .
(iii) CTS No. 238, 239, 240, 241, 245, 214, 215, 216, 217, Area: 290,493.45 SQFTS, The assessee has only 2l.5% of shares in these property.
As per para No. "N" of deed of conveyance that some portion of the said property is encroached. In view of the above, the plot of land is treated as undeveloped and cost of acquisition is taken as Rs. 24 per SQFT which comes to Rs. 69,71,843/-. 2l.5% of 69,71,843/- is Rs.14,98,946/-.
(iv) CTS No.62/39(part) of Village Hariyali, Area-599.99SQFTS, cost of acquisition taken by the assessee is Rs.112/ - per SQFT (as developed land).
As per the deed of conveyance it is clear that this property is already encroached and was not having any approved buildings or meets the other criteria as per definition of developed land. Hence, the cost of acquisition is taken as Rs.32/ - per SQFT as for undeveloped land which comes to Rs.4,223 / -.
(v) CTS No.62/39(part) of Village Hariyali, Area: 599.99SQFT. Cost of acquisition taken by the assessee is Rs. 112/- per SQ.FT. (as developed land).
ITA 5987/Mum/2013 6
As per the deed of conveyance it is clear that this property is already encroached and was not having any approved buildings or meets the other criteria as per definition of developed land. Hence, cost of acquisition is taken as Rs.32/ - per SQFT as for undeveloped land which comes to Rs.19,200/ -.
(vi) CTS No.181(PT) of Village Hariyali, Area: 44,132.40SQFT, cost of acquisition taken by the assessee as Rs.52/ - per SQFT(as developed land)
The aforesaid property has been notified as slum area vide the Notification No. SLM-OC-K-l1, 77, Published in the Maharashtra Government Gazette, dated 8th February, 1979. It is also found from the deed of conveyance, the property has various reservations in force on various portion of the said property. Further, the property was sold to develop the slum area. In view of the above and also since it does not fulfill the conditions of developed land, the cost of acquisition is taken as Rs. 20/- per SQFT as for undeveloped land which comes to Rs.8,82,648/-.
(vii) CTS No. 215,221,231 of Village Hariyali, Area: 67045.73 SQFT, cost of acquisition taken by the assessee as Rs.25/- per SQFT.
The aforesaid property has been notified as slum area vide the Notification No. SLM-OC-K-11, 77, Published in the Maharashtra Government Gazette, dated 8th February, 1979. It is also found from the deed of conveyance that the said property is almost fully reserved by various reservations. In view of the above and also not fulfill the condition of developed property, the cost of acquisition is taken as Rs.20/- per SQFT which comes to Rs.13,40,915/-.”
ITA 5987/Mum/2013 7 Thus, it was observed by the A.O. that properties claimed to be present on the plots sold by the assessee are in the nature of slums/encroachments and are not “approved building” per-se. The A.O. observed that the assessee has also not proved the other conditions as per the aforementioned definition of developed land. It was also observed by the AO that some properties are under the force of reservations. Thus , the A.O. adopted the rate of undeveloped land for the purpose of valuation of cost of acquisition as on 01- 04-1981 as per the ready reckoner rates and recomputed the capital gains accordingly, vide assessment orders dated 30-12-2011 passed by the AO u/s 143(3) of the Act.
Aggrieved by the assessment orders dated 30-12-2011 passed by the A.O. u/s 143(3) of the Act, the assessee filed first appeal before the learned CIT(A).
Before the learned CIT(A), the assessee submitted that the only issue involved in this appeal is regarding computation of long term capital gain on sale of seven properties in which the assessee has 1/3rd share. The assessee has declared the long term capital loss on the sale of these seven properties at Rs. 8,96,153/- and the statement of computation of capital gain was duly enclosed. It was submitted that these properties were inherited by the assessee which were purchased by the previous owner prior to 1-4-1981, the assessee has adopted cost of the properties as on 1-4-1981 by taking ready reckoner rates of developed land as on 1-4-1981, the ready reckoner rate list as on 01-04-1981 were enclosed by the assessee. Since the A.O. was not satisfied of the above ready reckoner rate of developed land as on 01-04-1981, the AO referred the valuation of these properties as on 01-04-1981 to the DVO-I, Mumbai on 22-11-2011, however, the A.O. did not received the valuation report from the DVO , whereby the DVO informed the AO that since the valuation of the property will take some time, the A.O. may pass a protective order as the case was getting time barred. Thus, the A.O. has ITA 5987/Mum/2013 8 estimated the value on his own and held that appropriate action will be taken once the report from the DVO is received and in view of time barring date, the assessment order u/s 143(3) of the Act was passed based on the information available on record. In the absence of the DVO report, the A.O. finalised the assessment by estimating value and agreed to adopt the ready reckoner rate of 1-4-1981 but he had taken the rate of undeveloped land while the assessee has adopted the ready reckoner rate of developed land. The assessee explained that developed land means land that has approved building and has facilities of road, electricity, drainage and water or has got non- agricultural permission. The A.O. rejected the contentions of the assessee on the ground that these lands are declared as slum by the Maharashtra Government and the purchaser of the land has to develop the property. The assessee averred before the learned CIT(A) that the A.O. erred in not considering the facts that on these lands structures created by the inhabitants called slum dwellers are existing, there are facilities like road electricity, drainage and water on these lands and these lands are non- agricultural lands as per non-agriculture permission issued by the authorities. The purchaser of the land has to develop the property by removing the structure and develop the property thereby settle the hutments dwellers and sell the balance property, meaning redevelopment of property. It was submitted by the assessee before the learned CIT(A) that DVO has done valuation of only one property and valuation of the remaining six other properties has been done by the Valuation Officer and the reports were submitted by the assessee before the learned CIT(A) of DVO/VO. The comprehensive chart showing the valuation of 1/3rd share of the assessee as on 01-04-1981 was also furnished before the learned CIT(A) comprising the value declared by the assessee in the return of income filed with the Revenue, the value as estimated by the A.O. in the assessment order , the value as made by DVO/Valuation officer and the value as per the assessee’s valuer Shah & Shah which was submitted before the DVO/VO while raising the ITA 5987/Mum/2013 9 objection against the draft valuation reports , were all furnished before the ld. CIT(A) during appellate proceedings by the assessee. In the light of above, the assessee submitted before the learned CIT(A) that the value adopted by the A.O. as on 1-4-1981 by treating the land as undeveloped land was not justified and the assessee’s valuation as per ready reckoner rate of 1-4-1981 by treating the land as developed land is correct and accordingly the cost of acquisition as on 1-4-1981 of the 1/3rd share of the assessee adopted by the A.O. at Rs. 14,21,831/- instead of value adopted by the assessee at Rs. 43,86,339/- was not justified and the assessee prayed before the learned CIT(A) that the addition made by the A.O. may be deleted. It was also submitted by the assessee before learned CIT(A) that while valuing the said land, the DVO/VO has accepted this land as developed land, however, they have not accepted the ready reckoner rate but adopted the valuation as per sale instances in the vicinity. Thus, the action of the A.O. in valuing the land as undeveloped land though agreeing with the Ready Reckoner rate is not justified. It was submitted that the DVO after rejecting ready reckoner rates as on 01-04-1981, has valued the land as on 1-4-1981 as per the share of the assessee which comes to Rs. 29,36,679/- , whereas the valuer of the assessee M/s Shah & Shah in the report given to the DVO valued the said land at Rs. 49,57,208/- whereby the assessee valuer cited the sale instances of that year in the vicinity. It was objected that the A.O. cannot extend the time barring limit of the assessment if the DVO report is not received. In support the assessee relied on the decision of Hon’ble Calcutta High Court in the case of Reliance Jute & Industries Ltd. v. ITO, 150 ITR 643 (Cal.) and in the case of Shahdara (Delhi) Sarangpur Light Railway Co. Ltd. v. CIT, 208 ITR 882 (Cal.). It was further submitted that all the lands are developed lands having structure, road, electricity, drainage and water facilities and are non agricultural lands as per non-agricultural permission and merely because they are occupied by hutments, it cannot be said that they are not developed lands.
ITA 5987/Mum/2013 10 The ld. CIT(A) observed that the A.O. has made the addition by valuing the land as undeveloped land based on the ready reckoner rate as on 01-04-1981 as the DVO report was not received and the assessment was getting time barred. The A.O. has made the assessment by stating that appropriate action will be taken once the valuation report is received from DVO. Now the DVO/VO report was received and has been made part of the proceedings before the ld. CIT(A). The assessee submitted before the ld. CIT(A) that the DVO and V.O. have treated all the land as developed land though they have not accepted the ready reckoner rates but adopted the valuation as per sale instances. Thus, it was submitted that the A.O.’s action in valuing the land as undeveloped though agreeing with the ready reckoner rate is not justified. The ld. CIT(A) rejected the contention of the assessee observing that the A.O. has passed the order due to time barring of the assessment and there is no infirmity in the action of the AO keeping in view the factual matrix of the case.
The ld. CIT(A) observed that different authorities have valued the land differently which is evident from the following tabulation:-
Asses AO Valuati Valu see’s val on as ation valua uat per as tion ion assess per ee VO/ valuer DVO Sr Description of address Area in Per Total Per Total Per.sq. Total Per Total No property Sq,feets sq.fee value sq. value feet value sq.fe value t feet et 1 CTS No. 7/1 Village 10,249. 96.00 983,950. 30. 307,48 99.00 1,014,6 52.2 535,022. Hariyali 48 08 0 4.40 98.52 0 86 2 CTS Village 8,156.8 100.0 815,685. 26. 212,07 99.00 807,52 47.0 383,371. No.122(PT) hariyali 5 0 00 00 8.10 8.15 0 95 3 CTS 290,49 88.00 25,563,4 24. 6,971, 92.00 26,725, 57.6 16,732,4 No.238,239,24 3.45 23.60 00 842.80 397.40 0 22.72 0,241,245,214, 215,216,217 4 CTS 62/39 Village 132.00 112.0 14,784.0 32. 4223.0 105.00 13,860. 43.5 5,742.00 part Hariyali 0 0 00 0 00 0 5 CTS 62/39 Viilage 599.99 112.0 67,198.8 32. 19,199 105.00 62,998. 43.5 26,099.5 part Hariyali 0 8 00 ,68 95 0 7 6 CTS 1801 (PT) Village 44,132. 52.00 2,294,88 20. 882,64 65.00 2868,6 35.6 1,571,11 Hariyali 40 4.80 00 8.00 06.00 0 3.44 ITA 5987/Mum/2013 11 7 CTS Village 67,045. 52.00 3,486,33 20. 1,340, 65.00 4,357,9 40.1 2,691,21 215,221,231 Harriyal 73 7.96 00 914.60 72.45 4 5.60 i Total 7,662,88 2,766, 9,125,6 5,212,56 of(1+2+4=5+6+ 0.72 547.78 64.07 5.41 7 21.5% of item 5,496,13 1,498, 5,745,9 3,597,47 No. 3 6.07 946.20 60.44 0.88 Gross total 13,159,0 4,265, 14,871, 8,810,03 16.79 493.98 624.51 6.30 1/3 share of 4,386,33 1,421, 4,957,2 2,936,67 assessee 8.93 831.33 08.17 8.77 The ld. CIT(A) held that after the receipt of the report of the DVO/VO there was no dispute that the capital assets in question were developed land and hence the value adopted by the A.O. was not correct method of estimating the fair market value as on 1-4-1981 as it suffered from a major fallacy. The major reasons for the difference in value adopted by the DVO/VO and the assessee’s registered valuer as submitted by the assessee before the learned CIT(A) are as under:-
“(i) Out of 7 properties, 6 properties are situated in Village Hariyali, Vikhroli (East) and (West) and only one property is situated in village Kanjur (West).
(ii) The sale instances relied on by the DVO/VO are of Mulund (West), Ghatkopar (East) and Bhandup (West) whereas the sale instances relied on by the appellant's registered valuer are of Hariyali Village.
Here, we submit that Hariyali Village comes in Vikhroli area while Ghatkopar area comes prior to Vikhroli from CST (VT) side on the Central Railway route while Bhandup and Mulund come after Vikroli and Kanjurmarg on the Central Railway route.
Further, sale instances cited by the appellant's registered valuer are much closer to the appellant's properties i. e. less than 1 km while the sale instances cited by the DVO/VO are way beyond i.e. two railway stations beyond the area where the appellant's properties are situated.
ITA 5987/Mum/2013 12
Accordingly, when the sale instances of Hariyali village are available, where the appellant's properties are situated, why sale instances of areas coming in places beyond should be adopted.
(iii) The DVO/VO have taken the sale instances of the year 1983 and 1985 while the appellant's registered valuer has taken the sale instances as of the year 1982, which is much closer to the year 1981.
(iv) The method of computation to derive at the rate for each property is specifically described and justified by the registered valuer of the appellant while the DVO/VO have not given any method of computation to denote how he has arrived at a particular rate.
(v) Though the DVO/VO had admitted to the fact that structures were existing in the properties in question, however, they have not assigned any value to these structures which form part and parcel of the properties while the appellant’s registered valuer has taken into account the value of these structures which are existing on these properties.
Further, in respect of the one property valued by the DVO, he has included the value of the structure existing on the property while calculating the value of the property, while in respect of the six properties valued by the VO, he has not taken into consideration the structures the properties existing thereon."
It was observed by the ld. CIT(A) that the DVO/VO had taken the sale instances of Mulund (West), Ghatkopar (East) and Bhandup (West) whereas the sale instances in question valued by the assessee’s valuer were of Hariyali village situated in Vikhroli . The sale instances cited by the assessee’s valuer were much closer to assessee’s properties. It was also observed that the DVO/VO had taken the sale instances of the year 1983 and 1985 whereas the assessee’s valuer had taken the sale instances of the year 1982 which is much closer to 1-4-1981. However, neither the DVO/VO nor the assessee’s valuer had given the exact sale instances of the areas in question or the date ITA 5987/Mum/2013 13 under consideration i.e.1.4.1981, thus, none of the two can be said to be the perfect method for valuing the property. The ld. CIT(A) observed that the opinions expressed by the experts were relevant but in case the two experts differ, the only method available would to adopt the mean of the value adopted by the two experts i.e. DVO/VO and the assessee’s valuer. Thus, keeping in view the ends of justice, the ld. CIT(A) adopted the mean rate given by the DVO/VO and the assessee’s valuer which are tabulated as under, vide appellate orders of the learned CIT(A) dated 15-07-2013:-
Sr Description of Address Area in Area in Valuation as per Valuation as per No the property sq. mtr. sq. feets. Assesse valuer VO & DVO Per Sq Total Per sq. Total Ave. Total Avg. Feet value Value Rate value 1 CTS No. 7/1 Village 952.20 10,249.4 99.00 1,014,698. 52.20 535,022.86 76 778960.48 Hariyali 8 52 2 CTS No. Village 757.79 8,156.85 99.00 807,528.15 47.00 383,371.95 73 595450.05 122(PT) Hariyali 3 CTS No. 238,239,240,2 41,245, 214,215,216,2 26,987.5 290,493. 92.00 26,725,397 57.60 16,732,422. 17 0 45 .40 72 4 CTS No. 62/39 Village 12.26 132.00 105.0 13,860.00 43.50 5,742.00 74 9768.00 Hariyali 0 5 CTS No. 62/39 Village 55.74 599.99 105.0 62,998.95 43.50 26,099.57 74 44399.26 Hariyali 0 6 CTS No. 1801 Village 4,100.00 44,132.4 65.00 2,868,606. 35.60 1,571,113.4 50 2206620.0 (PT) Haiyali 0 00 4 0 7 CTS No. Village 6,228.70 67,045.7 65.00 4,357,972. 40.14 2,691,215.6 53 3553423.6 215,221,231 Hariyali 3 45 0 9 Total of 9,125,664. 5,212,565.4 -- 7188621.4 (1+2+4+5+6+7 07 1 8 21.5% of item 5,745,960. 3,597,470.8 -- 4684206.8 No. 3 44 8 8 Gross total 14,871,624 8,810,036.3 -- 11872828. .51 0 36 1/3 share of 4,957,208. 2,936,678.7 -- 3957609.4 assessee 17 7 5
Aggrieved by the appellate orders dated 15-07-2013 of the ld. CIT(A), the Revenue is in appeal before the Tribunal whereby Revenue has challenged adopting of mean value of the properties based on valuation reports submitted by the DVO/VO and the assessee’s valuer for the purpose of cost of acquisition of land as on 1-4-1981 without credence to the value adopted by the DVO/VO u/s 55A of the Act.
ITA 5987/Mum/2013 14
The ld. D.R. submitted that the only issue involved in this appeal is with respect to the computation of long term capital gain on sale of seven properties in which the assessee has 1/3 share. He submitted that the land is situated in Central Suburbs in Vikhroli and the cost of acquisition is to be determined w.e.f. 1-4-1981. The assessee has adopted the ready reckoner rate for developed land as on 01-04-1981, while the AO adopted ready reckoner rates as on 01-04-1981 of undeveloped land based on the premise that the land is notified slum by State of Maharashtra and which does not have approved building. The ld. D.R. referred to the order of the A.O. and submitted that the A.O. referred the matter to the DVO Mumbai for determination of cost of acquisition and sale value u/s 50C & 55A of the Act on 22nd November, 2011. He submitted that since the matter was getting time barred, the DVO wrote to the A.O. that the valuation of the property will takes some time and so requested the AO to pass a protective order. He submitted that seven pieces of land were encroached by the slum dwellers and it is not developed land and the rates mentioned for developed land is defined as “land that has approved building and has facilities of road, electricity, drainage and water or has got non-agricultural permission.” It is submitted that the assessee has adopted the rates as on 01-04-1981 based upon the ready reckoner rates for developed land , whereas the A.O. has adopted the ready reckoner rates for undeveloped land as on 01-04-1981. It is submitted that as per the assessee’s valuation, total valuation comes to Rs. 4,386,338/-, while as per the A.O.’s valuation comes to Rs. 1,421,831/-. The valuation as per the assessee’s valuer was at Rs. 4,957,208.17 while the valuation as per the DVO/VO’s comes to Rs. 2,936,678.77. It was submitted that no valuation report was furnished by the assessee before the DVO/VO and the AO , but in the objections filed before DVO sale instances were submitted by the government approved registered valuer of the assessee which were although of Vikhroli (West) land but were developed industrial ITA 5987/Mum/2013 15 built-up land on LBS Marg .It was submitted that the learned CIT(A) has adopted mean of the valuation as adopted by DVO/VO report and the valuation as adopted by the assessee’s valuer, which is not allowed as per the provisions of the Act.
8 The ld. Counsel for the assessee submitted that the mean of the value adopted by the different experts i.e. DVO/VO on behalf of the revenue and the registered valuer of the assessee was the method adopted by the ld. CIT(A) which under the circumstances was rightly done by learned CIT(A) to arrive at fair market value of the land as on 01-04-1981 u/s 55 and 55A of the Act. He submitted that it is a developed land which is accepted by the DVO/VO. 1/3 share is owned by the assessee and 2/3 share is owned by the co- owners. It is an ancestral property. It is also submitted that in case of co- owners no additions have been made by the Revenue. The ld. Counsel submitted that there were some structure constructed on the land by slum dwellers who encroached the land, hence, it is developed land as it also has water, electricity, road and drainage as well non agricultural permission. It was submitted that assessee's valuer report was duly given to the DVO/VO at the time of filing objections.
We have considered the rival contentions and also perused the material on record. We have observed that the Revenue is aggrieved by the decision of the ld. CIT(A) with respect to the adoption of mean of the value taken by the DVO/VO on behalf of the Revenue and the government approved registered valuer M/s Shah & Shah on behalf of the assessee. We have observed that the assessee is the co-owner of the land situated at Vikhroli at Hariyali Village. The said land was encroached and occupied by the slum dwellers and the said land is notified slum by State of Maharashtra. As per the definition of the developed land, the land must have approved building and should have facilities of road, electricity, drainage and water supply and has ITA 5987/Mum/2013 16 got non-agricultural permission. It is observed that the AO completed the assessment without DVO/VO report as the matter was getting time barred by adopting ready reckoner rate for undeveloped land as on 01-04-1981 on the premise that the land is encroached by slum dwellers and does not have approved building as per definition of developed land, while the assessee contended the same to be developed land as it was notified slum by State of Maharashtra having structures built by slum dwellers . The AO did not had the benefit of valuation determined by DVO/VO report , nor the valuations as per sale instances submitted by the assessee vide objections filed before DVO/VO of the assessee’s government approved registered valuer. The assessee has submitted comparative sale instances prepared by assessee’s government approved registered valuer while filing objections to the DVO proposed value, the assessee has submitted and claimed that the sale instances relied upon by his valuers are to be in vicinity of the land under consideration while filing objections to the proposed value by DVO/VO and the assessee’s relied upon valuations were duly considered by DVO/VO. The DVO/VO as well as valuer appointed by the assessee has relied upon the sale instances stated to be in the vicinity of the said land , but the assessee is contending that the DVO/VO has relied upon the sale instances which are far-away from the property under consideration and are of period 1981,1983 and 1985 while the assessee submitted that valuation of its relied upon properties are from Hariyali village itself in Vikhroli West on LBS Marg of the period December 1982 and December 1985 and are closer to 01-04-1981 . It was also submitted before DVO/VO that structures existing on the property has not been considered by DVO/VO in their proposed valuation. The said objections of the assessee’s valuer was filed before the DVO while filing objections to the DVO’s proposed valuation . The DVO has contended that sales instances relied upon by it are more reliable and closer to the property under consideration keeping in view the status of the land under consideration in 1981 and the property sale instances relied upon by the ITA 5987/Mum/2013 17 DVO/VO were more developed than the assessee’s land in 1981 and hence the assessee is not prejudiced . The learned CIT(A) went ahead to determine the value of the property as on 01-04-1981 being fair market value based on mean of the valuation adopted by the DVO/VO and the assessee’s valuer which in our considered view was appropriate keeping in view the factual matrix and prevailing circumstances of the case as no exact sales instances in the area were available . Thus, the learned CIT(A) was required to find out the fair market value of the property as on 01-04-1981 as per provisions of Section 55 and 55A of the Act and in-fact while computing the fair market value , an element of estimation is always involved as the value cannot be determined with the exact precision. The sale instances relied upon by DVO/VO as well as of the assessee’s valuer has some inherent weaknesses and under the factual circumstances of the case , keeping in view of the availability of the data with the DVO/VO and also with the assesee’s government approved registered valuer , the best recourse was to find out mean so that a fair market value of the property is arrived at which in-fact the learned CIT(A) did to determine fair market value of the property as on 01-04- 1981 under the provisions of Section 55 and 55A of the Act. We donot find any infirmity in the order of the learned CIT(A) as the fair market value of the property is dependent on several factors which influence valuation and there is no scientific or straight jacket method to value the property at a particular point of time and somewhere estimation element will definitely creep in while determining the fair market value of the property as on date keeping in view the mandate of Section 55 and 55A of the Act, the learned CIT(A) rightly observed as under :
“ 2.4.10 On perusal of the submissions made by the ld AR , I find that the District Valuation Officer /Valuation Officer has mostly taken the sales instances of Mulund(West) , Ghatkopar(East) and Bhandup(West) whereas the sale instances relied on by the appellant’s registered valuer ITA 5987/Mum/2013 18 are of Hariyali Village , where the capital assets in question are situated. It is also seen instances cited by the appellant’s registered valuer are much closer to the appellant’s properties while the sale instances cited by District Valuation Officer/Valuation Officer are little far away. Similarly, the District Valuation Officer/Valuation Officer have taken the sale instances of the year 1983 and 1985 while the appellant’s registered valuer has taken the sale instances of the year 1982 which is much closer to 01-04-1981.Nevertheless, there is no gain saying the fact that neither District Valuation Officer/Valuation office nor the appellant’s registered valuer has given the exact sale instances of the area in question or the date under consideration i.e. 01-4-1981. Thus, none of the two can be said to be perfect method for valuing the properties in question. While making the estimate, the opinions expressed by the experts are relevant but in case the two experts differ, perhaps the only method available at this stage would be to adopt the mean of the value adopted by the two experts i.e. District Valuation Officer/Valuation Officer on behalf of the Revenue and registered valuer, M/s Shah & Shah on behalf of the appellant. Accordingly, in the peculiar facts of the case and to meet the end of justice, the fair market value of the capital assets in question is adopted as average rate given by the District Valuation officer/Valuation Officer and the appellant’s registered valuer ….”
Our above view is fortified by the decision of the Chennai Tribunal in the case of ACIT v. MIL Industries Limited reported in (2013) 142 ITD 428(Chennai Trib) as under:
“18. Except the above, on all other aspects we agree with the Commissioner of Income-tax(Appeals) and the approach adopted by him. Earlier there was a valuation. The value was Rs. 1.21 crores. The valuation was made by the assessee's bankers. The guideline value is ITA 5987/Mum/2013 19 Rs. 3,95,91,000/-. But the valuation made by the DVO is less than the guideline value. The DVO's estimation was at Rs. 3,54,73,536/-. When all these variables are changing from time to time, from authority to authority, it is not possible to reject the contentions of the assessee as a whole. The truth lies somewhere in between. We cannot accept the valuation reported by the DVO as sacrosanct. We have to give equal importance to the other findings arrived at by the Commissioner of Income-tax(Appeals).
Now, taking into all aspects of the case, we refix the consideration accountable in the hands of the assessee-company for the purpose of section 50C at Rs. 2.5 crores.”
Thus, based on our above reasoning and detailed discussions keeping in view peculiar facts and circumstances of case, we are inclined to accept the valuation as adopted by the learned CIT(A) by following mean of the valuation adopted by DVO/VO and the assessee’s government approved valuer who is a and we donot find any infirmity in the order of the learned CIT(A) which we affirm/sustain, keeping in view factual matrix of the case. We order accordingly.
In the result, the appeal filed by the Revenue in ITA N0. 5987/Mum/2013 for the assessment year 2009-10 is dismissed.
Order pronounced in the open court on 12th July , 2016. आदेश क� घोषणा खुले �यायालय म� �दनांकः 12-06-2016 को क� गई ।