TaxTMI 
TaxTMI 
2019 (11) TMI 1092
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....e same has been passed without calling for and ignoring the details and documents available with the assessee to substantiate its case. 5. On the facts and circumstances of the case, the ld. CIT (A) has erred both on facts and in law in upholding the addition of Rs. 32,84,000/- by relying on action of the AO of applying provisions of section 56(2)(vii) of the Act. 6. On the facts and circumstances of the case, the ld. CIT (A) has erred both on facts & in law in considering the deemed purchase value of the property at Rs. 56,09,000/- ignoring the fact that the value of remaining half portion of the property has been taken by Stamp Authority at Rs. 23,50,000/- for stamp valuation. 7. On the facts and circumstances of the case, ld. CIT (A) has erred both on facts and in law considering the value taken Sub Registrar by merely change of opinion on account of title of the property from residential to commercial, without any basis. 8. On the facts and circumstances of the case, ld. CIT (A) has erred both on facts and in law considering the value of property on the basis of "Commercial title" of the property despite considering the true title of the property which is "Residenti....
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.... Tribunal, the ld. Counsel for the assessee has submitted that the Stamp Duty Authority has revised the valuation by treating the property in question as commercial whereas as per the record the plot of land is residential and it remained as residential. She has further pointed out that the purchased ½ portion of the plot in question and the second half was also sold by the owner after a short period and, therefore, there was a comparable sale instance of remaining part of the same plot of land which was required to be considered by the DVO while determining the fair market value. She has referred to the correspondence made by the DVO to the Sub Registrar and submitted that the DVO has determined the fair market value only by considering the DLC rate provided by the Sub Registrar instead of considering the DLC of the residential plot of land, the DVO also considered the DLC rate of commercial land. Thus the ld. Counsel has submitted that the DVO has committed a serious error while determining the fair market value by adopting the DLC rate of commercial land in the area instead of considering the nature of the property in question itself. She has then referred to the another ....
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....rial on record. There is no dispute that the assessee has purchased ½ share of the plot no. 15A, Sanjay Nagar, Kalawar Road, Jhotwara, Jaipur vide sale deed registered on 21st March, 2014. The said plot of land was a leasehold property allotted by the JDA in favour of one Sh Ram Dayal Nayak as per section 90B of Rajasthan Land Revenue Act, 1956. It is also stated in the sale deed that the said plot of land was allotted for residential purpose. The revenue has not disputed that the plot of land was allotted by the JDA as residential plot for residential purpose and till it was purchased by the assessee it remained as residential plot of land. Therefore, as far as the authorized use of the plot of land is concerned, the same is residential though in the surrounding area there are commercial properties but potential use of the plot for commercial is irrelevant till it is converted by the authority for commercial use. Thus the property remains as a residential property until and unless it is converted into non residential purpose through a proper process. Therefore, merely because the property is situated at a location which is surrounded by commercial complexes and establishmen....
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....rea, on account of location factors and possibilities of commercial use, there can be wide variations in the prices of land. However, circle rates disregard all these factors and adopt a uniform rate for all properties in that particular area. If the circle rate fixed by the stamp valuation authorities was to be adopted in all situations, there was no need of reference to the DVO under s. 50C(2). The sweeping generalizations inherent in the circle rates cannot hold good in all situations. It is, therefore, not uncommon that while fixing the circle rates, authorities do err on the side of excessive caution by adopting higher rates of the land in a particular area as the circle rate. In such circumstances, the DVO's blind reliance on circle rates is unjustified. The DVO has simply adopted the average circle rate of residential and commercial area, on the ground that interior area of the locality, where the assessee's property is situated, is mixed developed area i.e. shops and offices on the ground floor and residence on the upper floors. When DVO's valuation required to compare the same with the valuation by the stamp valuation authority, it is futile to base such a repo....
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....he property concerned. The value of a property cannot be stated in an abstract form and it varies from time to time and can only be stated with reference to so many factors, i.e. the locality, situation, general appearance in the area, availability of shopping and marketing facilities, condition of public ways and transportation, availability of utilities, and many other things. As far as "cost" is concerned, it indicates cost to the purchaser for the purchase of the property after the purchase has been completed or agreed to. The provisions of sec. 50C of the Act, in the present context, state the fair market value and value is estimation of a probable price of the property, i.e. the deeming fiction. The deemed value is to be ascertained and for that, as discussed above, sec. 50C of the Act has postulated certain conditions. In the present case, the fair market value estimated by DVO has been challenged as DVO's report has no basis, because it has not discussed any of the factors, such as locality, situation, general appearance in the area, availability of shopping and marketing facilities, conditions of public ways and transportation, availability of utilities etc. and etc. W....
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.... (ii) proximity from situation angle. (7) Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis-a-vis land under acquisition by placing the two in juxtaposition. (8) A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do. (9) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors. (10) The exercise indicated in clauses (7) to (9) has to be undertaken in a common sense manner as a prudent man of the world of business would so. We may illustrate some such illustrative (not exhaustive) factors:- Plus factors Minus factors 1. Smallness of size. 1. Largeness of area 2. Proximity to a road. 2. Situation in the interior at a distance from the road. 3. Frontage on a road. 3. Narrow stri....
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....ation, rental basis or yield basis method, municipal valuation method etc. In this case, the DVO has not ascertained any market value to which a willing, reasonable and prudent purchaser would pay for this property. Even the DVO has not considered the factors having any depressing or appreciative effect on the value of the property including guidelines laid down by Hon'ble Supreme Court, as noted above. Even DVO was asked to present to support his valuation report and in terms of proviso to section 24 of Wealth Tax Act, 1957, he was allowed opportunity. The DVO, Shri S.B. Dey was present but he fairly conceded that the valuation made is on the basis of value determined by Stamp Valuation Authority for charging stamp duty and his valuation is not based on any factors as enumerated by Hon'ble Supreme Court in the above-referred cases. These, above referred cases of Hon'ble Supreme Court, were confronted to DVO. Even Ld. Sr. DR, Shri S.K. Roy could not support the valuation report and fairly conceded that at the time of registration of sale deed of the assessee's property, there was no circle rates for assessing the fair market value for the purposes of collection or l....
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.... contention of the assessee. There is no dispute that the property in question as per record is a residential property however, the location of the property as well as the actual use of the property for commercial purposes has led to the stamp duty authority as well DVO to adopt commercial rates for the purpose of valuation. The stamp duty authority has initially applied the residential rate at the time of sale deeds but subsequently the value was revised by adopting commercial rates. This appears to be based on the actual used of the property in question. Even the assessee has not disputed the actual used of the property as for commercial purpose and due to such unauthorized used the Nagar Nigam issued a show cause issued dated 24.12.2012. The assessee has also filed the sanctioned plan of the property in question as additional evidence in support of the claim that at the time of sale the property was a residential one and subsequent misuse of the same for commercial purpose will not enhance the fair market value. It is pertinent to note that though the locational advantage and actual use of the property for commercial purpose are certainly relevant factors for determining fair ma....