TaxTMI 
TaxTMI 
2012 (10) TMI 796
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.... to be held as co-owners namely;- a) Mizar Annappa Pai- Karta b) Mrs Mizar Ashalatha Pai (Wife) c) Mrs Mizar Anita Pai (Daughter) d) Mr. Mizar Ajith Pai (Son) During the previous year the aforesaid co-owners sold the following properties; i) Property at Kankanady 'B' Village bearing survey no.6/5A1P1, 26/5A1P2, 25/5A3, 70/1B measuring 2.90 acres. This will be herein after referred to as the First property. ii) Property at Kankanady 'B' village in survey no.27/3 measuring 0.46 acre. This will be herein after referred to as the Second property. iii) Property at former Casba Bazar Village, Central Ward, bearing survey no.797/1 measuring 3.85 cents. This will hereinafter be referred to as "the Third Property". 4. The first property was sold for a sale consideration of Rs.1,71,12,500/-. The first property apart from land area also had a building with a plinth area of 11,925 sq.ft which had been built in the year 1956. The assessee Smt. Mizar Anita Pai, computed capital gains on sale of her 1/4th share of right, title and interest....
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.... half cents) 398.12 Sq.ft Rs.8,000 06-01-1981 76/6B1B & D.No.6-8-3 12 cents 42 Sq.ft Rs.25,000 02-03-1981 The AO found that the difference in the FMV as on 01-04-1981 in the comparable instances obtained by him and the value adopted by the assessee showed substantial variation. The AO therefore, summoned Shri. Satish Rao Iddya, the registered valuer, based on whose report the assessee had adopted the FMV as on 01-04-1981 of the land at Rs.11,000/-per cent. Shri Iddya, was questioned with regard to the local enquiries that he claimed to have made in arriving at the FMV as on 01-04-1981. He could not give the names and address of the persons whom he contacted in this regard. The AO therefore, concluded that there is no credibility in the claim of Shri Iddya, that he has estimated the FMV on the basis of local enquiries. He could not also explain as to why he did not try to get comparable sale instances for arriving at the FMV. Shri Iddya, was also shown the comparable sale instances which were obtained by the AO from the Sub-Registrar's office. As far as the property located at survey no.26/13, is concerned, he accepted that it was in the same locality, whe....
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..... e) The property as on 01-04-1981 was under the Kankanady Panchayat". 7. With regard to the valuation of the building, the AO made the following observations; " In respect of the building, the cost of construction has been taken at Rs.60 per sq.ft. as in 1956 and from that depreciation has been worked at 2% per year. In the case of one of the sale instances (I property) procure from Sub-registrar, there is a sale of 398 sq.ft building with stone foundation, mud walls and tiled roof, by taking the cost of the building as on 01-04-1981 at Rs.6,000/-, thus the cost as on 01-04-1981 come to around Rs.15 per sq.ft. The year of construction is stated to be 1961 and therefore working backwards with appreciation of 2% per year, the cost of construction as on 1961 comes to Rs.25 per sq.ft and as on 1956 come to Rs.28 per sq.ft as against Rs.60 per sq.ft claimed by the assessee. There are some minor differences in respect of the structure of the building but even considering these it can be seen that the regd. Valuer has adopted a higher value for the cot of construction". 8. Finally, the AO computed the LTCG on the sale of the first propert....
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....as on01/04/1981 (Rs.3000x46x519/100) Rs.1,79,055 Long term capital gains Rs.5,67,820 10. As far as the third property is concerned, the same was sold for a consideration of Rs.3,65,750/-. The assessee declared her share of LTCG as follows; Date of transfer: 14th Feb.2007 Sale consideration(3,650,750/4) Rs.91,438 Les: acquisition details: Indexed cost of fair market value as on 01/04/1981 (Rs.14,000x3.85 cent x 519/100) + 4 Rs.69,935 Long term capital gains Rs.21,503 The AO obtained the comparable sale instances in Kasba Bazaar village pertaining to AY: 1981 and obtained the following details from the Sub-registrar's office. T.S.No R.S.No Land extent Bldg. on the land, any Total value of transaction D/o transaction 153/1 783/1 2 3/4 cents 625 sq.ft bldg. constructed in 1965 Rs.35,000 10.07.1981 On the basis of the above, the AO came to the conclusion that the cost of the land would be Rs.4,477/- per cent. 11. The assessee cited comparable sale instances of property in Kasba Bazaar village on 10-07-1981 whereby the value of land value was adopted at Rs.35,000/- per cent. When the said documents wa....
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....Kankanady Vill. Mangalore Tq. 29,87,500 4,60,000 1,38,000 5,75,626 (Note No.2) 3. Property in RS No.797/1Kasba Bazaar Vill. Mangalore q. 3,65,750 53,900 26,950 70,472 (Note No.3) Note No.1 1,71,12,500 x 100 519 = 32,97,206 = 8,24,301 Note No.2: 29,87,500 x 100 519 = 5,75,626 = 1,43,906 Note No.3: 3,65,750 x 100 519 = 70,472 = 17,618 16. Our attention was drawn to the decision of the Hon'ble Karnataka High Court in the case of Smt. S. Neelaveni Vs CWT, Karnataka (125 ITR 665) wherein the Hon'ble Karnataka High Court has expressed the view, that the best evidence in regard to the market value would be the value of the property itself if it has been the subject of purchase near about the valuation date. According to the learned counsel for the assessee, the sale value of the properties were therefore, adopted by him and backward working of the value done. Further, reliance was also placed on the decision of the Hon'ble Gujarat High Court in the case of Shantadevi Gaekwad Vs DCIT (2012) 72 DTR Guj. 241, wherein the Hon'ble Guj. High Court held as follows: "Capital gains- cost of a....
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....of similar nature of land and similar to the time of the transaction -use of the land makes a lot of difference in the value of land rates of commercial land are much higher than that of agricultural land. Instances taken by the AO cannot be regarded t be the comparable instance for the purpose of estimating the fair market value of the land. Therefore, the fair market value of the land as estimated by the assessee @Rs.20 per sq.metr. as sustainable". 17. The learned DR on the other hand, placed reliance on the order of the AO and the CIT(A). In particular, the learned DR drew our attention to the decision of the Hon'ble Karnataka High Court in the case of Smt. S. Neelaveni, (supra) wherein the Hon'ble Court has expressed the view that the next best evidence would be the value fetched for a similar property in the vicinity at about the same time. According to her, the AO has followed the method as advocated in the decision of The Hon'ble Karnataka High Court and therefore, the same should e accepted. 18. We have given a very careful consideration to the rival submissions. As far as the decision of the Hon'ble Karnataka High Court in the case of Smt.S. Neelaveni, (supra) is co....