VANDANA KISHOR NAIK ,NAGPUR vs. INOCME TAX OFFICER WARD 5(3), NAGPUR

आदेश / ORDER

PER S.S. GODARA, JM: This assessee’s appeal for AY 2011-12 arises against the CIT(A)-1, Nagpur’s order dated 29-04-2019 passed in case No. CIT(A)- 1/310/2013-14 involving proceedings under Section 143(3) of the Income Tax Act, 1961, in short ‘the Act’.

Case called twice. None appears at assessee’s behest. She is accordingly proceeded ex parte. 2. Coming to the assessee’s sole substantive grievance that both the lower authorities have erred in law and on facts in making long term capital gains addition of Rs.8,52,586/- after invoking section 50C of the

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Act. We note that the CIT(A)’s detailed discussion upholding the

Assessing Officer’s findings to this effect reads as under :

“Decision: 5.0 Ground No.1: Addition of Rs. 8,63,775/- Long Term Capital Gain: The submission of the appellant is considered and the assessment order is perused. The assessee entered into an Agreement to Sale on 27/12/2010 for sale of her plot (Survey no.33) at Kachimet Mauza, within the city limits of NMC for an agreed value of Rs. 50 lacs when the Ready Reckoner value of the said plot of 278.79 sqmts in 2010 was Rs. 22000/- per sq. mts. The property was ultimately sold on 25.02.2011 through a registered deed, on which stamp duty was paid by the purchaser, for stamp duty valuation at Rs.66,89,000/-. The AO sought to apply the provisions of sec. 50C and has referred the valuation to the DVO as the assessee raised objections for the same.

5.1 During the DVO’s valuation process, the assessee has submitted her objection to adoption of rate of Rs.24,000/- psm as per Ready Reckoner of 2011. According to assessee, the Ready Reckoner rates are annually re-fixed, and the assessee raised the objection that the property was agreed to be sold in December considering the rates prevalent in 2010. Secondly, the assessee had, pursuant to the agreement in December, also received the initial token of Rs.5,00,000/- through cheque no. dated 27.12.2010 Therefore, the property ought to be valued at prevailing rates in December 2010.

5.2 The DVO has overruled these objections by holding that the agreement to sale of December was only on stamp paper and not registered, and cannot be considered. Secondly, he adopted the valuation on comparable basis of two other properties sold on 24.6.2011 and 5.5.2012 in the same area which is Khasra no. 41/42, whereas the assessee’s plot is situated in Khasra no 38/3. The land rates as found by DVO in these two sale instances were Rs. 23,123 for the land registered in 2012, and Rs.21,035 for the plot registered in 2011. The DVO therefore adopted a value at the rate of Rs. 20975/- psm, calculating the FMV at Rs. 58,46,000/- as on 25.2.2011, as against the Circle Rate of Rs. 24,000/- for this Khasra as in 2011. It is noted that the Circle Rate as per Ready Reckoner for 2010 was Rs. 22.000/- psm. 5.3 The assessee has therefore argued that the DVO ought to have considered the provisions of sec. 50C(1) which provides that-

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"Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer". The DVO has however ignored this argument as according to him the agreement was not registered. On considering the assessee’s plea, it is quite evident from the proviso that the Act does not require such agreements to be registered in order to be considered. The Act in fact has clearly stated that wherein in pursuance of any such agreement, part consideration was received in cheque (other than cash), it shall be deemed that the valuation applicable for the purpose of sec 50© would be the year in which such agreement was entered. In this case, the same is to be considered at the rate prevailing for 2010, and not 2011. Therefore, this argument is found tenable. 5.4 The assessee’s second argument is that the comparisons were made with property which were near to the Main Road and hence had better prospects of fetching good price. Whereas, the property description as per DVO clearly states that the land was 90-100 mtrs away from Main Road, and hence the FMV of the property cannot be compared, and was far lower. In my view, the DVO found sale instances and applied the same- as these were the instances available for the said period of time, however, the differences were about 4 months to a year later. For example one comparison was with a property registered in 2012, not 2011. 5.5 Be that as it may, at this point of time, what is available before me is only the DV0’s report. The assesses has not provided any other document that can give an indication of sale instances of 2010 in that area, or a Govt, approved Valuers report separately that can justify the rate adopted of Rs. 17,940/- psm by the assesses. The sale value of the property of Rs.50,00,000/- was agreed by adopting the rate of Rs.17,940/- psm, whereas the circle rates for 2010 was Rs. 22,000 psm, and whereas, the DVO has valued the plot at the rate of Rs. 20,975 psm, which is found to be lower than the circle rate prevailing in 2010. Therefore, I have no option but to agree with the DVO’s valuation at Rs.58,46,000/-. The AO’s action in accepting the DVO’s valuation is not faulted for this very reason that no alternate sale instances or valuation report was available. Therefore, the assessment u/s. 50C is sustained and the consequential

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addition of the difference in the sale consideration and the deemed value as per sec 50C is upheld. Ground no. 1 is dismissed.”

had duly made a reference to the DVO, who in turn, determined the fair market value of the assessee’s land at the rate of Rs.2,097/- per sq.mtr

as against the stamp value of Rs.24,000/- adopted by the registration authorities.

the case may be. We thus affirm the impugned long term capital gains addition in very terms.

Order pronounced in the open Court on 09th December, 2022.

Sd/- Sd/- (DIPAK P. RIPOTE) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे Pune; �दनांक Dated : 09th December, 2022 Satish

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आदेश क� ��त�ल�प अ�े�षत/Copy of the Order is forwarded to:

आदेशानुसार/ BY ORDER,

// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

S.No Details Date Initials Designation 1 Draft dictated on 30.11.2022 Sr. PS/PS 2 Draft placed before author 06.12.2022 Sr. PS/PS 3 Draft proposed & placed JM/AM before the Second Member 4 Draft discussed/approved by AM/AM Second Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order