ITAT rules in favor of assessee, cites failure to follow directions, sets fair market value at Rs. 300/sq. yard.

The ITAT allowed the assessee's appeal, finding that the CIT(A) and AO failed to adhere to the ITAT's directions and consider the comparable sale instance of Bhawani Singh Road. The ITAT reiterated that the fair market value of the land as of 01-04-1981 should be Rs. 300 per sq. yard, leading to a favorable outcome for the assessee.

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Issues Involved:
1. Whether the CIT(A) erred in confirming the order passed by the AO without following the ITAT's directions.
2. Whether the CIT(A) erred in computing the long-term capital gain by taking the fair market value (FMV) of land as on 01-04-1981 at Rs. 200 per sq. yard instead of Rs. 1,400 per sq. yard as claimed by the assessee.
3. Whether the CIT(A) erred in adopting the FMV based on non-comparable properties and ignoring the ITAT's previous determination of Rs. 300 per sq. yard.

Issue-wise Detailed Analysis:

1. Error in Confirming AO's Order Without Following ITAT's Directions:
The assessee contended that the CIT(A) confirmed the AO's order without adhering to the ITAT's directions to consider comparable cases. The ITAT had set aside the original assessment order, noting that a comparable case cited by the assessee had not been considered. The AO, upon reconsideration, arrived at the same capital gains as in the original proceedings, leading to the assessee's appeal.

2. Computation of Long-term Capital Gain:
The CIT(A) confirmed the AO's computation of long-term capital gain by taking the FMV of the land as on 01-04-1981 at Rs. 200 per sq. yard, based on the DVO's opinion. The assessee had claimed the FMV at Rs. 1,400 per sq. yard based on a registered valuer's report. The AO had initially taken the land rate at Rs. 140 per sq. yard, which was later adjusted to Rs. 154 per sq. yard considering it was a corner plot. The CIT(A) increased the FMV to Rs. 200 per sq. yard, while the ITAT had previously determined the FMV at Rs. 300 per sq. yard.

3. Adoption of Non-comparable Properties for FMV:
The CIT(A) and AO relied on sale instances from Shiv Marg, Bani Park, and Madho Singh Road, which the assessee argued were not comparable to the land at Ghiya Marg. The ITAT had previously determined the FMV at Rs. 300 per sq. yard, considering the property was on a main road and a corner plot, which would fetch a higher price. The DVO's report provided sale instances with varying rates, which were considered by the CIT(A) and AO. The assessee's contention was that these instances were not comparable and that the ITAT had directed to consider the sale instance of Bhawani Singh Road, which was ignored by the lower authorities.

Conclusion:
The ITAT, after considering the submissions and evidence, found that the CIT(A) and AO did not properly follow the ITAT's directions and did not adequately consider the comparable sale instance of Bhawani Singh Road. The ITAT reiterated that the FMV of the land as on 01-04-1981 should be Rs. 300 per sq. yard, which was fair and reasonable given the circumstances. The appeal of the assessee was allowed on these terms. The order was pronounced in the open court on 26/12/2017.

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