TaxTMI 
TaxTMI 
2019 (6) TMI 284
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....essee, as per lead case in ITA No. 1644/Kol/2018, for A.Y. 2013-14, is that the ld CIT(A) erred in upholding the addition of Rs. 4,85,77,093/- on account of Long Term capital gain on sale of immovable property, and reference to Departmental Valuation Officer for the Valuation of immovable property as on 01.04.1981 be held to be bad in law. 4. The facts of the case which can be stated quite shortly are as follows: The assessee along with his other co-owners had entered into an agreement for sale with M/s Bangabhumi Housing Private Limited for sale of a property at 119 Park Street Kolkata measuring 2 Bigha and 2 Chittak and 2 Sq ft owned by them (by inheritance) which was already leased to Park Chambers Private Limited for 61 years from 24/01/1979, the lease was in force till 2040 and the monthly lease rent as on date of sale was Rs. 10,000 per month. The assessee was the co owner of the property having 1/6th share in the property. The details of all co owners are as follows: Co-owners Share 1 Sri Jyotirmoy Ghosh 1/6th 2 Sri Avijit Ghosh 1/6th 3 Sri Surajit Ghosh 1/6th 4 Smt. Jayeeta Singha Roy 1/2nd Total 100% ....
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....to the provisions of rules 4, 5, 6, 7 and 8, for the purposes of sub-section (1) of section 7, the value of any immovable property, being a building or land appurtenant thereto, or part thereof, shall be the amount arrived at by multiplying the net maintainable rent by the figure 12.5 : Provided that in relation to any such property which is constructed on leasehold land, this rule shall have effect as if for the figure 12.5,- (a) where the unexpired period of the lease of such land is fifty years or more, the figure 10.0 had been substituted ; and (b) where the unexpired period of the lease of such land is less than fifty years, the figure 8.0 had been substituted : i) In view of the above and applying the valuation method of rent capitalization the valuation of the property sold as on the date of sale u/s 50C(2) of the IT Act 1961 should be as follows: Annual Rent Rs. 1,20,000 Multiplier - 8 factor as lease is for 28 years i.e. less than 50 years. Fair Market Value Rs. 1,20,000 * 8 = Rs. 9,60,000 ii) The total sale value of the property was Rs. 12 crore and the assessee share was 1/6th in the same. The value as per Secti....
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....f the said Rules, the valuation of the residential buildings can be determined by multiplying the net maintainable rent by 100/8. The method is also approved by judicial precedents. 7. The Supreme Court in State of Kerala v. Hassan Koya, AIR 1968 SC 1201, observed that when the property sold is land with building, it is often difficult to secure reliable evidence of instances of sale of similar lands with buildings proximate in time to the date of the notification under Section 4. Therefore, the method which is generally resorted to in determining the value of the land with buildings especially those used for business purposes, is the method of capitalization of return actually received or which might reasonably be received from the land and the buildings. No doubt that case related to the acquisition under the Land Acquisition Act, but the principles can be applied in other cases too. The aforesaid case was followed by this court in CIT v. Prem Nath Anand [1977] 108 ITR 549. There, the Tribunal had fixed the fair market value on the basis of multiplying the annual return by 12. It was held by the learned Division Bench that the method adopted by the Tribunal was not open ....
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....rein, on similar facts, the Hon'ble Calcutta High Court held as follows: "We next take up for consideration whether the Tribunal erred in law in accepting the contentions of the respondent in respect of the valuation of the said property and rejecting the valuation as made by the valuer for the Department. In the order under appeal, the Tribunal has noted the following contentions of the respondent: (a) only the rent received by the vendors at the time of the sale should be taken into account ; (b) there were persons in unauthorised occupation of the said property who did not pay rent to the vendors; (c) tenants in the property had sublet portions in their occupation to others without surrendering their own tenancy; (d) there were several title suits pending in respect of the said property for a long time ; (e) the property in question was a joint property; (f) the items of deductions from the rent received on account of repairs, municipal rates and collection charges were not computed or estimated by the Inspecting Assistant Commissioner. The Tribunal has recorded in its order that it had considered the totali....
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....should not be called upon to do so in an appeal on a question of law. 11. Hon`ble Delhi High Court in the case of CIT Vs. New India Construction Co. 123 ITR 68, has held as follows: "However, the fair market value of the property on the basis of cost of land and building method would have been relevant if it was self-occupied by the transferor and he was in a position to hand over vacant possession thereof to the transferee. Instead there were three old tenants residing in the property, and it was also subject to the rent control restrictions against ejectment. In this respect, we are in agreement with the Tribunal that the value of such properties cannot be measured by the values of those properties which are self-occupied. Of course, eviction proceedings were pending against the tenants at the time of the sale. However, there was no certainty that they would essentially result in the transferee obtaining vacant possession. That transferee in fact took a big risk while effecting purchase of the property, as it could as well be that the evictions did not fructify. Even ultimately what brought success in that direction was not the favourable culmination of evict....
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....s. 300 per square yard while it was above Rs. 3,000. Secondly, he did not take into account the potentialities of the property for future. We in this regard find that the valuer had of course referred to the valuation of the property by this land and building method and had grossly under-valued the land and not taken into consideration the future potentialities of the property. However, where we do not agree with the revenue is whether, in the circumstances of the present case,where the entire property was lying let out that method could provide a safe guide for determining the fair market value? In our opinion, the proper course was to have resorted to the method of capitalization of the rental value by multiplying a number of years' yield. In its context the value adopted by the transferor's valuer, and that shown in the sale deed could not be treated as undervaluation which could have justified resort to acquisition proceedings. We are, therefore, unable to interfere with the order of the Tribunal quashing the acquisition." 12. We note that Coordinate Bench of ITAT Kolkata in the case of Prafulla Kr. Bhose vs. ITO in I.T.A. No. 316/Kol/2015, for assessment year 2007-0....