TaxTMI 
TaxTMI 
2019 (10) TMI 979
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.... sq. ft. (43,339 sq. ft. x Rs. 684 per sq. ft. x 1024/100) based on Registered Valuer's Report and has worked out LTCG at Rs. 6,20,08,639/-. 2.1 During the assessment proceedings the AO issued notice u/s.133(6) to the SRO, Adyar and asked him to furnish guideline value of the land in question as on 01.04.1981. The SRO furnished the guideline value @ Rs. 20,000/- per ground (2400 sq. ft.) which works out to Rs. 8.33 per sq. ft. as on 01.04.1981. Based on this, the AO show caused to the assessee saying that why the cost of acquisition should not be arrived at based on the guideline value furnished by the SRO as on 01.02.1989. The assessee clarified before the AO that in 1975-77 there was no immediate public demand for land in Guindy Estate. As such, the Government has allotted the land to the assessee almost free, so that industries can develop and that is why the rate of land was at the rate of Rs. 1.26 per sq.ft. During the period 1975-1980, the amenities and infrastructure development took place in the industrial area of Guindy and it is evident from the approved valuer's report that the rate of land in 1975 was at Rs. 1.26 per sq.ft. In 1975-80, development took place and ther....
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....e impugned land was assigned during 1975- 77 and major infrastructure developments took place during 1975-1981, transforming the agricultural lands into a neighbourhood township. 2. The Appellant firm engaged Sri. S. Ramamurthy B.E., F.I.V. Retd. Valuation Officer, Income Tax Department (Government of India), LT. Registered Valuer CAT-1/486/2000-2001, Approved Valuer of Institution of Valuers No.F-9, who has inspected the site, made extensive inquiries and valued the same at Rs. 684 per sq ft. in 1981. Even though all infrastructure developments were made by the Government only during 1975-1981, the valuer has adopted only 63% of the average increase method. 3. The Assessing Officer called for the 1981 Valuation from the Sub- Registrar who replied that the 1981-1982 records are damaged and are not available. However, he gave a ridiculously low Guideline value of Rs. 8.33 per sq ft. in 1981. 3. It is submitted that the Honorable Supreme Court in the case of R. Sai Bharath Vs J. Jayalalithaa and others has held the Guideline value is not the Fair Market Value. It is Trite Law that the Guideline Value published by the Registration Department is not a conclus....
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....ould have referred the matter to the DVO to ascertain the fair market value. Therefore, we deem it fit to remit this issue back to the AO who shall refer the matter to DVO and proceed to determine the issue in accordance with law. The assessee's corresponding grounds of the appeal are treated as allowed for statistical purpose 5. The next is in connection with the additional ground. It is submitted that the assessee firm had given guarantee / security for the borrowals made by other entities. The assessee did not receive any benefit or accrue any benefits from the transfer and therefore , the levy of Capital Gains Tax is not correct. "The assessee contends that since it has not received any benefit from the transfer of its property given as security to bank & others for borrowals made by other entities, no capital gain is leviable. The Appellant relies on the case law ITA (2006) 102 ITD 227 (Delhi) - Additional Commissioner of Income-Tax, Special Range-26, New Delhi Vs. Glad Investments (P) Ltd., a copy of which is enclosed. The Appellant submitted that the property was sold for Rs. 30 crores, the sale proceeds of which were disbursed to Bank and credi....
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....ficer nor the appellate authority agreed with the assessee and the assessee went up in further appeal to the Income-tax Appellate Tribunal. 6. The Tribunal upheld the assessee's claim. According to it, the full sale price realised by the sale of the immovable property had two components; the first represented the price which could be ascribed to the interest of the assessee in the immovable property and the rest represented the arrears of debt and interest due to the State. In its opinion, as there was a clear charge or mortgage over the immovable property, the amount realised under the charge or mortgage was an amount which never reached the hands of the assessee but which reached the Government by overriding title. 7. From out of the judgment and order of the Tribunal, the questions aforestated were placed before the High Court for its consideration. The High Court observed that the undisputed fact was that the immovable property was mortgaged to the State. Thereby, an interest in the property was created in favour of the State. When the immovable property was sold by public auction, its value had to be reduced to the extent of the interest that was created ....