TaxTMI 
TaxTMI 
2018 (1) TMI 183
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....ving 50% shares in the property. On the assessee's request, the matter was referred to the valuation sale as per the provisions of Section 50C(ii) of the Act. The Assistant Valuation Officer, Jaipur proposed the value at Rs. 46,75,000/- and also invited objection from the assessee for the proposed valuation. The assessee submitted the objections before the Assistant Valuation Officer, Jaipur. After considering the objections and after physical inspection, it was assessed at Rs. 44,41,500/- and 50% of the same has been adopted the value by the Assessing Officer in each of the case while working out the long term capital gain. 4. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who after considering the submissions, dismissed the appeal of the assessee by holding as under:- I have gone through the assessment order, statement of facts, grounds of appeal and written submission carefully. It is seen that the assessee had sold Plot No. 471, Adarsh Nagar, Jaipur, the consideration of which, as per the registered sale deed was Rs. 23 lacs. The Sub Registrar valued the property at Rs. 48,60,591/- u/s 54 of the Stamp Du....
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....ry to the provisions of law and facts of the case hence, the sale consideration as declared by the appellant, kindly be considered. 2.3 The Id. CIT(A) erred in law as well as on the facts of the case in not at all considering the various objections raised u/s 50C(2) of the Act and in blindly adopting the valuation done by the DVO as a final word even though the impugned valuation so made seriously suffered from various deficiencies apparent from the record itself, but were ignored & confirmed without any application of mind and therefore, the Id. CIT(A) erred in wrongly adopting the full value of sale consideration at Rs. 22,20,750/- for the half share. Therefore, this part of the order of the Id. CIT(A) kindly be quashed being highly perverse and the declared sale consideration at Rs. 11,50,000/- kindly be accepted and the consequent addition, kindly be deleted in full. 2.4 Rs. 84,161/-: The Id. CIT(A) further erred in law as well as on the facts of the case in not correctly & judiciously appreciating the facts that as against the LTCG of Rs. 10,70,750/- computed by the AO afresh, the appellant had already declared LTCG of Rs. 84,161/- in the computation of total....
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....ly with equal share. In the one half of portion the sellers continued to occupy/reside. The subjected property was sold on 23.04.2006 for total consideration of Rs. 23,00,000/- i.e. Rs. 11,50,000/- each buyers. At the time of sale, the ground floor was under lease to State Bank of Patiala on monthly lease rental of Rs. 12,400/- per month whereas the first floor was under lease to OTIS Elevators Co. (India) Ltd. on monthly lease of Rs. 17,000/- per month which continued till the end of A.Y.2006-07. It is submitted that unfortunately, right since the very purchase of the said property, a dispute was raised by the bank, who denied to make the payment of the entire lease rent to the buyers/lessees (assessee), mainly on the reasoning that late Shri Ramlal Bhatia had availed a loan which was to be repaid, partly out of the lease rent payable by the bank to Shri Bhatia (and now to Paliwals) and hence the bank was not making any payment of lease to the Paliwals. Accordingly, a suit was filed before the Trail Court in case no. 167/2001 which was decided vide order dated 10.12.2002 and against the same, the bank approached the Hon'ble High Court by way of revision registered as CMA ....
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.... case and non-payment of rent by bank." However, the DVO in Pr-6 (PB 8-19) rejected the same stating that: "6. The assessee has put the paper related to the year 2002-03. In the year or date of sale the property has free from encumbrance or any dispute (copy of sale deed page enclosed is proof) hence does not call any discount." The AO/DVO did not appreciate that because of prolonged adverse publicity due to continued litigation which fact is not denied, it was a case of distress sale. Various prospective buyers though initially willing but having the knowledge of dispute, did not turn up. Dispute settled only in March, 2006. 1.6 Unfortunately however, the ld. Sub registrar while adapting the value u/s 54 of the Registration Act and estimating the value at Rs. 48,60,591/- and also the ld. DVO while estimating the value u/s 50C at Rs. 44,41,500/-, did not take into consideration these facts and there implications, judiciously. 2. Rent Capitalization method not applicable: 2.1 It is submitted that admittedly the bank was not paying rent to the assessee since long and the dispute between the assessee and bank was pending before cou....
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....he sake of reference together with our submissions on the observations made by the DVO thereon: S. No. Assessee DVO Our comment (i) That this property is a residential house property and built up by, covering the set back portion of the house. Ex owner is still residing in balance portion house. 1. The AR of assessee submitted in para that the property is residential is totally wrong. The subject property is fully The fact was not denied that the property was a residential property and half Portion i.e. 129.40 Sqmtr of Ground Floor and 106.25 Sqmtr of First Floor was occupied by the original seller Bhatia family and admittedly, no application was filed by any one concern for change use / conversion from residential to commercial. Notably, DVO itself in para 6.4 page 3 (PB 10) has stated Particulars of tenants/ leases /licences etc and portions occupied by each - fully self occupied. Even the subjected registered sale deed itself, in the preamble, states the property to be a residential property (PB 20-31). (ii) No site plan was sanctioned by Nagar Nigam, Jaipur. 2. Assessee did not submitted any site plan may not be commented. The use is commercial ....
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....vidence brought by the AO & DVO. It cannot be said that the property was free from encumbrance / any dispute and facts of prolonged negative cannot be ignored. (ix) That the house was constructed in the year 1972 and building was rented out in the year 2006 to the bank. The building is 43 years old, no deduction of deprecation has been given by your honour. 9. Here AR mentioned the year of constructed depreciation. There it is mention that property is valued on the basis of rent capitalization method hence does not call any change. The depreciation is being ---- on L & B method only. Since Land & Building Method is appropriate hence depreciation has to be reduced as admitted by the DVO also. 3.3 Guidelines for Valuation of Immovable Properties 2009 published by the Directorate of Income Tax, Income Tax Department, Delhi (For official Use only), has not kept in mind by the DVO. It has been provided that Approach and method should be rational. It is provided that for determination of fair market value of commercial properties if compared to land and building method, the profit method indicates lesser value, then the former should be applied. It sh....
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....rt of the other expert, has to be applied, being a report by a technical expert. There is no contrary evidence or report was brought by the AO of an expert, following the same method. Therefore, it is requested that the valuation done by the registered valuer at Rs. 23,14,948/- must be accepted. 5. Supporting Case Laws: 5.1 In Krishna Kumar Rawat & Ors. v/s Union of India & Ors. (1995) 123 CTR 61/214 ITR 610 (Raj) held that "12. ----------- The respondents have to make the valuation of the property by taking into consideration all relevant facts and thereafter a decision has to be taken by the Appropriate Authority. The Viscount Simon, J. in Gold Coast Selection Trust Ltd. vs. Humphrey (Inspector of Taxes) (1949) 17 ITR (Suppl) 19 (HL) observed that, 'valuation is an art, not an exact science, mathematical certainty is not demanded nor is possible. Certain element of guess has to be there based on objective factors having reasonable nexus with the evidence on record. The various factors are there on the basis of which out of the various methods by which the valuation of the immovable property can be made, appropriate method is to be adopted. It d....
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....vable property would fetch on the valuation date imagining a willing buyer to purchase the property from a willing seller in respect of the property; (ii) In respect of the immovable property there is no fixed market such as market for shares or for other commodities, like sugar, cloth, etc. In order to arrive at a valuation in respect of the property, there must necessarily be certain element of guess. But the guess must be based on certain facts and according to certain principles which would be, in the facts and circumstances of each case, as fair as possible to the Revenue as well as to the assessee in trying to imagine reasonably and intelligently the price which was expected to be fetched if it was possible to sell the property in question on the relevant valuation date. (iii) Such a determination, therefore, involves adopting certain methods in determining the valuation and there are different kinds of methods, as mentioned in the circulars of the Board and the principles enunciated in the several decisions of the Court as noticed before. (iv) Which one of the various methods would be suitable for a particular case must depend upon the nature of th....
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....n to neighbors and property dealers, which factors were completely ignored by the AVO/DVO and ld. CIT(A) while valuing the property. 6. All these detailed submissions together with the facts and legal position were submitted before the ld. CIT(A), which he has even reproduced in his order from Pages 3 to 9 unfortunately however, he did not utter a single word thereon but dismissed the appeal by merely and blindly relying upon the report of the DVO, as if that was the final word. He did not appreciate that the DVO acted only in the capacity of a commissioner who was appointed by the Trial Court judge/ Appellate Authority and such report given by the commissioner was to be considered objectively by the Appellate Authority, who was not at all bound by the report of the DVO. Has this being the intention of the legislature, after filing the objection u/s 50C(2) and getting a report from the department valuation officer, the law wouldn't have provided any appeal even u/s 246A against the addition resulting after giving effect to the report of the DVO. However, no such amendments is found in provisions of S. 246A. The assessee feeling aggrieved from the addition made by the AO, o....