AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 530
X X X X Extracts X X X X
X X X X Extracts X X X X
.... matter before ld. CIT(A), who vide order dt.28.11.2013 (in appeal No.Pn/CIT(A)-III/ITO Wd-2(3)/Sol/545/2010-11/561) dismissed the appeal of the assessee. Aggrieved by the order of ld. CIT(A), assessee is now in appeal before us and has raised the following grounds : "1. On the facts and in the circumstances of the case and in law, the lower authorities have erred in adopting the value of net consideration at Rs. 2,52,70,000/- as against the actual sale consideration as per the agreement and summarily disregarding appellants contention in this regard. 2. On the facts and in the circumstances of the case and in law, the Departmental Valuation officer has erred in arriving at the fair market value of the property by not giving sufficient opportunity of hearing and also by not considering various limitations under which appellant has sold the land." Subsequently, assessee has also prayed for admission of the following additional ground: "On the facts and in the circumstances of the case and in law, the Learned Assessing Officer erred in invoking the provisions of the Sec.50C of the Income Tax Act, 1961, the subsequent events in the transaction clearly reflects that appellant's rig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect cost of land and the correct cost of acquisition as on 01.04.1981 the matter was referred by AO to Valuation Officer. The Valuation Officer determined the fair market value of land at Rs. 2,52,70,000/- as on 21.04.2007 i.e., the date of sale and the fair market value of the land (as on 01.04.1981) was determined at Rs. 5,98,500/-. The AO taking into consideration the valuation as determined by the Valuation Officer, determined the taxable "Capital Gains" at Rs. 1,71,37,431/-. (The value was subsequently corrected to Rs. 1,70,26,176/- vide order passed u/s 154 of the Act.) Aggrieved by the order of AO, assessee carried the matter before ld. CIT(A), who dismissed the appeal of the assessee by holding as under : "5. The crux of the issue to be decided in this appeal is the applicability of sec. 50C and the resultant valuation u/s 50C(2) in respect of the sale of property by the appellant. The stamp duty value in respect of property at CTS nos. 1157 and 1158 was Rs. 2,62,00,000/- as per sale deed. Thus, the deemed value of consideration as per sec. 50C works out at Rs. 2,62,00,000/-. While there can be no dispute that the expression "full value of consideration" used in section 48....
X X X X Extracts X X X X
X X X X Extracts X X X X
....refore, no hesitation in holding that the Assessing Officer has correctly invoked the provisions of section 50C in the present case. 5.2. Having held that section 50C is applicable, what remains to be seen is whether the provision of sub-sec. (2) to sec. 50C has been correctly applied or not. It is seen from the assessment order that the appellant has not disputed the stamp duty valuation before any Authority, Court or High Court but has objected before the Assessing Officer that the value adopted by the stamp valuation authority exceeds the fair market value as on the date of transfer. In such a situation, although the reading of the sec. 50C(2) shows that the Assessing Officer 'may' refer the valuation of the capital asset to the DVO, the Courts have held that where assessee disputes the stamp duty valuation, the Assessing Officer has to necessarily refer the matter to the DVO. These include Pune ITAT decision in KK Nag Ltd vs Addl.CIT 52 SOT 381, Mumbai ITAT decisions in the cases of Mrs. Nandita Khosla vs ITO 46 SOT 90 (Mum) and Ajmal Fragrances and Fashions (P) Ltd. vs ACIT 34 SOT 57 (Mum), and Bangalore ITAT decision in Smt. T.V. Nagasena vs ITO 53 SOT 166 (Bang). Further, i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lth-tax Act that these provisions mandate that after the Assessing Officer receives report of Valuation Officer under section 50C, he has to act in conformity with the valuation of the capital asset worked out therein. When these provisions are looked into, it follows that such valuation officer is an independent & distinct statutory forum for resolving the controversy regarding determination of the market value of the property with all necessary powers; Its order or report is made binding on the Assessing Officer and, thus, he enjoys equivalent status." 5.4. Therefore, in view of the decision of the jurisdictional High Court order, it is held that there is no infirmity in the Assessing Officer's action in computing the capital gains based on the fair market valuation as on the date of sale as determined by the DVO. 5.5. The appellant's first ground of appeal is that proper opportunity of hearing was not given by the DVO in passing the order u/s 50C(2). In this regard, it is seen that the matter was referred to the DVO on 02.11.2010 for deriving the fair market value of the properties as on the date of sale i.e. as on 21.04.2007 as well as the fair market value as on 01.04.1981i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reehold and under self- occupation of the owners without any encumbrances, as can be seen from their registered sale deed (copies of which have been supplied). I have examined sale deed relating to Land & Building at CTS No. 437/A/2, Narayan Peth, Pune appearing at serial no.1 at para 4.1 supra. The property was sold in the year 1936 by Shri Vasantrao Jaywantrao Barve to Shri Dattatray Hari Date but actually belong to the joint undivided family of 03 brothers namely Dattatray, Gajanan and Krishnaji Date. The property was partitioned in the year 1939, wherein it was assigned to Shri Krishnaji Date, and following his death in the year 1980, the names of all his legal heirs namely three sons and five daughters were mutated in the property register. Thereafter, there was an oral settlement between the various members of the family, which was reduced to writing on 08.07.1984. Although, the sale deed mentions that the building admeasuring 2060 sq.ft. is in the peaceful possession of the vendors, it is very apparent that only part of the premises was in occupation of the vendors and that the property was otherwise in the possession of other tenants and was yielding a meagre income to be a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to hand over the property to M/s J.J. Construction for development. The sale deed clearly mentioned that M/s J.J. Construction was to settle compensation payable to the tenants. Therefore, it can be seen that the appellant's objection that none of these properties are comparable sale instances since these are not tenanted properties, is not borne out from the record. In each of these sale instances the developer has entered into the agreement, being fully aware that seller of the property is not in complete physical possession of the properties. In some of the cases the ownership as per the land record is also disputed as discussed supra with reference to sale instance no. 3 (land and building at Survey no. 540, Narayanpeth). In the property referred to Sl. No. 1 (Land & Building at CTS No. 437/A/2, Narayanpeth, Pune) a portion of the property admeasuring 70.90 sq.m. has even been acquired by the PMC for parking purposes. Therefore, it is seen from the above discussion that all the comparable sale instances relied upon by the DVO are disputed properties or they have tenants, whom the builder has undertaken to clear and vacate before developing the land. It is Shri Dhane's contenti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....usted by time factor, size, tenancy encumbrances and co-ownership has been taken into consideration in arriving at the land rate. The DVO has explained the reasons that the fair market value adopted by him, which is the 'comparable sale instance' method after considering encumbrances, is the one that the property would fetch or the prudent buyer would offer if put to sale in an open market. 6.4. He has also discussed why the appellant's registered valuer's report cannot be relied upon. The appellant had relied upon the sale instance of a flat admeasuring 867 sq.ft. at Sadashiv Peth which was sold on 12.02.2001, as per which the valuer has worked out the land rate at 1661 per sq.ft. The appellant has taken the gross rate at Rs. 2820 per sq.ft. (as per sale deed), reduced cost of structure at Rs. 600/- and builders profit at 20% at Rs. 565/- to arrive at the land rate of Rs. 1661 per sq.ft. Thereafter, the appellant's valuer has deducted 50% for tenants to arrive at the value of the land at Rs. 830.5 per sq.ft. and similarly, arrived at the government rate for stamp duty purpose at Rs. 948 per sq.ft. (being 50% of the government rate of Rs. 1895 per sq.ft.). The DVOs replý to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....prudent buyer would demolish the old structure at the time of development of the property, which would add to the value and potential of the property. Therefore, this objection of the appellant is also not correct. 6.6. The fourth objection is that the appellant's property is located at Sadashiv Peth, whereas the comparable sale instances cited by the DVO are at Narayapeth, Pune and are therefore in different location. The appellant contends that those sale instances are comparatively better located than the appellant's plot, which in a congested area. The time lag between the comparable sale instances relied upon by the DVO has also been questioned. These are also not acceptable objections, being factually incorrect. There is no dispute with the legal proposition as per the case laws relied upon by the appellant, that the rate of sale instances in nearby location should be considered and that situated far away should be ignored, while determining the fair market value of the property. However, in the appellant's case, it is seen that Narayanpeth and Sadashiv Peth are located on opposite sides of Laxmi road in Pune Central area and Sadashiv Peth is considered a far more prime loca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nnection, well laid-out roads, drainage facility, electric connections. Etc. The process necessary involves deduction of the cost of factors required to bring the undeveloped lands on a par with the developed lands on a par with the developed lands. An extent 20per cent of the total land acquired is normally taken as a reasonable deduction for the space required for roads., but the cost of development may range from 20 to 33 per cent spending on the nature of the land, its situation and the stage of development., etc. in the circumstances of the present to make a deduction it would be only proper to make a deduction of 25 per cent from the value of the land as development costs." On the contrary, the appellant's plot is located in a developed area within the heart of Pune city with prime potential. The facts of the case in Nanabhai Rathod's case(supra) cannot therefore be applied to the facts of the present case. 6.9. As can be seen from the discussion in the preceding paragraphs, none of the objections raised by the appellant can be said to be valid objections. In fact, as against the stamp duty rate of Rs. 2,62,00,000/- fixed by the Stamp Valuation authorities, the DVO has arriv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Warad had entered into a sale deed on 21.04.2007 with U.K. Enterprises for sale of their respective share on "as is where is basis". On 12.04.2007 another legal heir, Mr. Dilip Gangadhar Sopal, filed an application before City Survey Officer stating that Smt. Trivenibai Anant Veerkar has executed a Codicil on 16.12.1984 and bequeathed the share of assessee in favour of Mr. Dilip Gangadhar Sopal. Based on the aforesaid application of Mr. Dilip Sopal, City Survey Officer vide order dt.30.04.2008 added the name of Mr. Dilip Gangadhar Sopal in the place of assessee in the revenue records. Thereafter, against the aforesaid order assessee filed appeal before Deputy Director, City Survey, Pune on 23.08.2008 and the Appellate Authority vide order dated 10.09.2008 has granted the stay. He further submitted that assessee had given Power of Attorney dt.19.10.2012 to U.K. Enterprises for representing the matter in appeal on behalf of the assessee. He further submitted that USK Ventures (erstwhile U.K. Enterprises) has given to assessee surety and bond dt.19.10.2012 for not claiming any sale proceeds, cost etc in respect of sale deed dt.21.04.2007. He further submitted that Dilip Gangadhar Sopa....