TaxTMI 
TaxTMI 
2019 (10) TMI 239
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....sessee submitted before the Assessing Officer that the sale consideration was Rs. 1.80 crore and after deducting Rs. 90,000/- towards brokerage paid, the net consideration came to Rs. 1,79,10,000/-. From this, the assessee deducted the cost of acquisition by taking fair market value as on 1.4.1981 (which was based on the valuation report obtained by the assessee from a registered valuer). The indexed cost of acquisition came to Rs. 77,48,905/- and the resultant long term capital gain was computed at Rs. 1,01,61,095/- which was claimed as exempt u/s 54 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") as amount spent towards purchase of a flat in Mumbai. 2.1 The Assessing Officer noted that in the valuation report submitted by the assessee, the rate of land had been taken at Rs. 5800/- per sq mtr. The Assessing Officer also noted that the average rate of land as per the various sales instances given in Annexure 'A' of the valuation report was only Rs. 1160/- per sq mtr. The Assessing Officer noted that the assessee had increased the rate of land by five times. Accordingly, a show cause notice was issued to the assessee wherein the assessee was asked to show cause ....
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....ported that the property in question was inspected along with the assessee. However, the property was non-existent on the date of inspection as the purchaser had dismantled the old construction and new apartments were being constructed. The DVO expressed his inability to carry out the valuation of the property as there was no existing structure which could be measured for the purpose of arriving at the fair market value of the property. 2.4 The Ld. CIT (A), while disposing the assessee's appeal, noted that the Assessing Officer had pointed out that the valuation report itself had referred to actual sale deeds wherein the sale price of the land in the area was around Rs. 1160/- per sq mtr and, therefore, there was no justification whatsoever for valuing the fair market value at five times the value at which a number of other sale deeds in that area were registered. The Ld. CIT (A) held that the Assessing Officer was fully justified in estimating the fair market value as on 1.4.1981 at Rs. 1160/- per sq mtr. Accordingly, this ground of the assessee was dismissed. However, the Ld. CIT (A), after duly noting the observations of the Assessing Officer with regard to the assessee's clai....
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.... of sale was Rs. 1500/- per sq mtr whereas the said plot had been actually sold at Rs. 1 lakh per sq mtr which was more than 6½ times of the circle rate. It was submitted that if the circle rate of the fair market value are to be the same, then there was no reason for the actual sale price of the impugned plot to be Rs. 1 lakh per sq mtr. It was submitted that, thus, the registered valuer had correctly taken the rate of Rs. 5800/- per sq mtr for the purpose of determining the fair market value. The Ld. AR also placed reliance on certain judicial precedents of the Coordinate Benches of the Tribunal in support of the contention that the rates of the registered valuer could not be rejected by the Assessing Officer without having referred the matter to the DVO. 4.0 In response, the Ld. Senior Departmental Representative (Sr. DR) supported the orders of the lower authorities. It was submitted that there was no basis for the registered valuer to have adopted a rate which was five times more than the existing rates for the purpose of determining the fair market value. It was submitted that subsequent sales @Rs. 1 lakh per sq mtr had no bearing on the determination of fair market ....
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.... order of ITAT Chandigarh Bench in the case of Barjidner Singh Bhatti vs. ITO in ITA No. 1101/CHD/2014 wherein vide order dated 15.7.2015, the Bench had ruled in favour of the assessee by holding that if the Assessing Officer was not satisfied with the report of the registered valuer, he should have made a reference to the DVO and in absence of such a reference, the Assessing Officer should not have made his own calculation for the purpose of computation of capital gains. Reliance is also placed on the order of the ITAT, Lucknow Bench in the case of Adarsh Kumar Agrawal vs. ACIT in ITA No. 66/LKW/2014 wherein vide order dated 23.03.2014, it was held that where the assessee had submitted the valuation report of the registered valuer and the matter was not referred by the Assessing Officer to the DVO, the Assessing Officer has to accept the report of the registered valuer regarding the fair market value of the land as claimed by the assessee. ITAT Cochin Bench in the case of Mrs. Susamma Paulose Vs JCIT reported in 79 TTJ 573 (Coch.) on identical facts held as under: ".....A registered valuer is competent to value properties as per the provisions of the IT Act and Rules made there....