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Income Tax Appellate Tribunal, DELHI BENCHES, NEW DELHI
Before: SHRI.I.C. SUDHIR & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is preferred by the assessee against the order of the learned Commissioner of Income-tax (Appeals) - Meerut dated 06.08.2014 for the Assessment Year 2003-04. The assessee has raised the following grounds of appeal:-
1. That the learned Assessing Officer has been very much unfair and unreasonable a) To assess the appellant-H.U.F. to tax of Rs.4,06,060/- including the amount of interest of Rs.1,03,092/- u/s 234-B of the Income Tax Act, 1961 ; b) To compute income of the appellant-H.U.F. at Rs.15,55,330 by working out the Long Term Capital Gains to Rs.13,70,575/-; Page 2 of 7 2) That the learned Assessing Officer has been wrong to work out the Long Term Capital Gains on the sale of land at Maliyana measuring 4138.12 sq. mtrs, which is arbitrary, unjust and illegal on various factual and legal grounds including the following: (a) The value of the land measuring 4138.12 sq. mtrs. at Maliyana Village, Meerut at Rs.55,82,194/- as estimated by the D.V.O, was unjust, improper and very excessive. The same should have been assessed at Rs.40,00,000 as declared by the Appellant; (b) There was no justification on the part of the D.V.O. to have increased the Commercial Circle Rate of the property by 50% over and above the Circle Rates declared by the State Govt. for which no basis, whatsoever had been given by him. (c) Deduction for tenancy @ 30% by the D.V.O. in both the properties as allowed has been quite inadequate thereby ignoring the Supreme Court judgment in the case of Mangat Ram & Others vs. State of Haryana & Ors 1996 AIR 3347 (SC), wherein such allowance had been given at 75%. 3) That the learned Assessing Officer has erred on facts and in law holding that such objections should have been raised by the assessee before the D.V.O. and had no relevance at this stage. 4) That the learned Assessing Officer did not afford an adequate and reasonable opportunity of being heard in accordance with the directions of the hon'ble l.T.A.T. order dt. 30.03.2010 and as contemplated by law and deprived of natural justice.
All the above four grounds of appeal are against the adjustment to circle rate made in valuation report submitted by departmental valuation officer.
3. The assessee is an individual and for impugned Assessment year original assessment was made under section 143(3) of the act vide order dated 15.09.2005 on the total income of Rs. 7 6,00,134/-. This income included a long-term capital gain of Rs. 74,15,381/-. Subsequently vide order dated 30th March 2010 Page 3 of 7 ITAT has set aside this issue to the file of assessing officer to refer the matter to the valuation officer as provided under section 50 (2) of the Income Tax Act. In view of the direction of ITAT, the matter was referred to valuation officer by AO vide letter dated 11/11/2011. The departmental valuation officer submitted his valuation report vide letter dated 09/12/2011, wherein the value of the land admeasuring 4138.12 square meter at Maliyana Village Meerut was determined at Rs 55,82,194/- against the sales consideration received by the assessee of Rs. 40,00,000/-. Subsequently, on receipt of valuation report notice was issued to the assessee asking that why the value determined by departmental valuer should not be adopted to compute the long- term capital gain arising out of sale of the property. Against this, assessee objected that the valuation officer has increased the commercial Circle rate of the property by 50% over and above the Circle rates without providing any cogent reasons. Further, it was submitted by assessee that allowance for vacancy was granted at 30% on this property, whereas such allowances should have been granted at 75%. In response to that Ld. assessing officer refused to adjust valuation adopted by DVO stating that this objection should have been raised before departmental valuation officer and not before assessing officer. Assessee further objected about the cost of acquisition taken as on 1-4-1981 by the assessing officer at Rs. 88908/- as per value declared by assessee for wealth tax purposes in A.Y. 1982-83. Against this, assessee preferred appeal before CIT (A) who in turn rejected the appeal of the assessee stating that that ITAT had remitted the issue to the file of the assessing officer to refer the matter to the valuation officer for the valuation of the property u/s50C (2) of the Act which was followed. Therefore, in his Page 4 of 7 view assessing officer has referred the matter to the valuation officer and adopted the value so determined for the purpose of computation of capital gains under section 50 C of the Income Tax Act in accordance with the direction of ITAT. Therefore assessee is in appeal before us.
4. Learned authorized representative of the appellant submitted before us that the the departmental valuer has taken the value of the land at prevailing Circle rate and adjusted it with its advantages and disadvantages. He referred to the Annexure-A attached along with the valuation report where the notified Circle rate of the land is Rs. 2500/- per square meter and this rate has been further increased by 50% for the reason that land is located on the main road and it has possibility of more commercial potential. The valuer further granted the reduction at the rate of 30% because of the reasons as this land was under tenancy since 1971. The grievance of the assessee was that he has adopted 50% increase over the Circle rate without any basis. He further submitted that that reduction of 30% granted by the valuation officer is also very less for this, he relied on the decision of Inder Prasad V UOI 1994 SCC 239 (SC) and Mangat Ram & Others V State of Haryana 1996 AIR 3347 (SC) very the Hon’ble Supreme Court has held that tenants are entitled to 3/4th of the compensation. Therefore, it was contended that that reduction on account of tenancy should be increased to 75%.
Learned departmental representative relied on the orders of the assessing officer as well as the Commissioner of income tax appeals. It was a submission that that as the direction of ITAT Page 5 of 7 was to to refer the matter to the valuation officer for the valuation of the property in accordance with provisions of section 50 C of the Income Tax Act therefore assessing officer as well as CIT (A) has rightly dismissed the appeal of the assessee. He further stated that this entire objection should have been taken before the departmental valuer by the assessee which has not been taken, and therefore the valuation adopted by the DVO should be treated as final.
We have carefully considered the rival contentions. We find that that the valuation adopted by the DVO of Circle rate of Rs. 2500/- per square meter has been further increased by 50%. This increase has been suggested by the DVO for the reason that according to him land is located on the main road and there is a possibility of better commercial exploitation. Ongoing through the valuation report it has been mentioned by DVO at para 7.1 that method adopted by him is prevailing Circle rate adjusted with its advantages and its disadvantages. However, there is no reason or basis given by the DVO in the valuation report about increasing Circle rate by 50%. Further, the reduction granted on account of tenancy of 30% is also challenged by the assessee which is based on 2 decisions of Hon’ble Supreme Court of India. However, both this decisions were not before DVO/Ao/CIT(A). Ongoing through the valuation report it is also noticed that the valuer has not given any opportunity of hearing to the assessee to submit its contention before the DVO. Assessing officer has rejected the arguments of the assessee stating that that it is a technical matter, and therefore this objection should have been raised before the DVO. Learned CIT (A) has also held that as the direction of tribunal was very specific to refer the matter to the Page 6 of 7 departmental valuer there was no occasion to consider all these issues by assessing officer. We have perused the order of ITAT. In that order. It has been directed that in the interest of Justice, the matter is remitted to the file of assessing officer to consider the same issue in light of the discussion in the paragraphs mentioned in the order of the tribunal. It was further directed that the assessee should be given adequate opportunity of being heard. Conveniently assessing officer as well as CIT (A) has omitted to consider the direction of the tribunal about giving adequate opportunity of being heard to the assessee. Hence, we cannot approve the finding of lower authorities. Therefore, in the interest of the Justice we once again set aside the matter to the file of assessing officer who in turn should consider all the objections raised by the assessee and also decide the issue in consultation with DVO. Assessing officer is further directed to deal with any adjustment to the Circle rate adopted for the purpose of stamp duty with cogent and evidence based reasons. If there is any upward or downward adjustment required to be made same is to be done after giving cogent reasons for such adjustment and affording reasonable opportunity to the assessee of rebutting such adjustments. Regarding the deduction on account of tenancy rights, both the decision cited by the Ld. AR may be considered and if the facts of those cases are similar, then same should be followed. Accordingly, we set aside all the grounds of appeal back to the file of the assessing officer to deal with them in accordance with law, as directed above. In the result. All the grounds of this appeal are allowed with above direction.
Page 7 of 7 7. In the result appeal of the assessee is allowed for statistical purposes.