TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 1573
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....ent fair market value of the property and overlooked the valuation report of registered valuer, comparative sales instances and also overlooked the adverse factors which were attached to the said property. 1.2 That on the facts and in the circumstances of the case, the ld. lower authorities grossly erred in blindly relying upon the DVO report when the DVO report itself was based upon DLC rates itself thereby defeating the purpose and intent of section 50C(2) of the Act. 2. That on the facts and in the circumstances of the case, the learned lower authorities grossly erred in disallowing the deduction amounting of Rs. 28,04,925/- claimed u/s 54F by the assessee appellant in his revised computation of Income. 3. That on the facts and in the circumstances of the case, the learned lower authorities grossly erred in disallowing the deduction of Rs. 40,50,510/- claimed u/s 54B by the assessee appellant in his revised computation of income." 2. Firstly, regarding Ground No. 1, briefly stated, the facts of the case are that during the year under consideration, the assessee has sold immovable properties at village Chaksu, Jaipur vide two sale deeds dated 24.12.2012 for a considera....
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....e lower of the valuation determined by DVO and the stamp duty authority and accordingly he confirmed the finding of the Assessing Officer. Against the said finding, the assessee is now in appeal before us. 5. We now refer to the contentions advanced by the ld. AR. The ld. AR submitted that the assessee sold immovable property being land converted for non-agricultural use, however, without getting any regularization, map approval and any development, measuring 3.525 hectares and agricultural land measuring 0.045 hectares for consideration of Rs. 1,27,00,000/- and Rs. 72,600/- respectively. During the assessment proceedings, the assessee raised objections u/s 50C(2) of the I. T. Act regarding excessive valuation by stamp duty authority. For determination of fair market value of the impugned immovable properties, the AO accordingly referred the matter to the DVO and the DVO considering DLC rate as sacrosanct of fair market value made valuation at Rs. 3,58,96,520/- and Rs. 2,03,200/- solely relying on the DLC rate. Subsequently, the AO by virtue of provision of section 50C considered the full value of consideration at Rs. 3,58,21,800/- and Rs. 72,600/- respectively. 6. The first co....
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....ant vs. ITO (2007) 110 TTJ 297 for the proposition that sole reliance on DLC value by DVO will defeat the very purpose of bringing section 50C(2) into the statute books. 7. The second contention which has been raised by the ld. AR is that the DVO has wrongly considered the land & building method as only method for evaluating fair market value. It was submitted that DVO overlooked that there were other allowable methods for evaluating FMV & in fact, the development method of valuation was more realistic & pragmatic considering the undeveloped status & large chunk size of the land and availability of sale instances of small plots on record in immediate vicinity of land in & around the date of transfer. It was further submitted that the observations of DVO itself supports that method of valuation should have been development cost method rather than Land & Building Method. In this regard, our reference was drawn to the guidelines for valuation of immovable properties issued by the Income Tax Department wherein our reference was drawn to Para 5.2.3 which reads as under:- "This method of valuation of large extent of land is adopted in the following situations. (a) When the compar....
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....mitted that the DVO overlooked that for converting land into residential plots, 40% of entire land would have to be earmarked for facility purposes i.e. for roads & parks & community service. 11. In this regard, our reference was drawn to the Hon'ble Supreme Court decision in case of Major General Kapil Mehra and Ors. V. Union of India and Anr. (2015) 2 SCC 262 wherein it was held as under:- "P. 41....... In our view, it is appropriate to make 35% deduction towards utilization of the land area in the layout for roads, drains, parks, playgrounds and civic amenities. So far as the expenditure for development of the large extent of land into a developed area by construction of proper roads, underground drainage, sewerage and erection of electricity lines, it is appropriate to make further deduction of 25%, through 35% of the value was deducted in Lal Chand case (supra) towards development charges. Two components taken together, the total deduction to be made would be 60%. Rs. 14,974/- per sq. yard is maintained." 12. Reliance was placed on the Hon'ble Supreme Court decision in Chandrashekar (D) By Lrs. & Ors vs. Land Acquisition Officer & Anr (Civil Appeal No. 1743 of 2006 date....
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....ble for plotting being Green Belt & no construction zone. In this regard, it was submitted that the DVO observed that IOCL pipe line was passing from centre of the land but rejected apparent fact just because evidence of timing of laying the same was not in possession of Assessee ignoring the news paper cuttings evidencing the existence of pipe line in Chaksu prior to transfer of land. It was further submitted that in case, the DVO would have been desirous of unveiling truth, he would have contacted tehsil office, IOCL pump house Chaksu & even enquired from other nearby land holders. It was submitted that the DVO failed to exercise power of Civil Court conferred under Section 37 of Wealth Tax Act for enforcing attendance of person to collect evidenced therefore the assessee cannot be penalized for lack of enquiry/inadequate enquiry and non exercise of conferred statutory powers by the DVO. It was submitted that the assessee cannot be asked to prove the contrary when the existence of pipe line on date of inspection was evident & observed by the DVO. In this regard, reference was drawn to the Hon'ble Supreme Court decision in case of Daulat Ram Rawat Mul (1973) 87 ITR 349 wherein it ....
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....uation report of the registered Valuer dated 18.01.2016 as submitted by the assessee. 19. We find that the DVO has determined the fair market value of the land as on the date of transfer @ 850 per sq.yds which is the same rate as which the land has been valued by the stamp duty authorties. As per the DVO, he has written to Sub Registrar, Chaksu and the DLC rate of area was received. Further, the assessee did not provide the reliable contemporary sale instances and earlier submitted sale instances are not comparably relevant and the subject property is situated just adjacent to main road of ward No. 23 of Chaksu, i.e. best locality of this ward. The property is already residential converted land and in the absence of reliable, comparable, contemporary sale instances, the rate adopted is fair market land rate of the property. We therefore find that the DVO has taken the DLC rate as determined by the stamp duty authority and in terms of determining the comparable sale instances, has put the onus entirely on the assessee. On her part, the assessee has submitted two comparable sale instances. Where such comparable sale instances are not accepted by the DVO, in our view, the DVO should....
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....ding method as presently adopted, however, we find that there is nothing on record to suggest that the DVO has even examined the feasibility of carrying out the necessary exercise for applying such valuation methodology as so specified in the guidelines laid down by the Department itself. 21. Further, we find that once the assessee has raised the objections against the valuation so determined by the DVO, the ld. CIT(A) should have considered those objections and should have given his findings on merits. The DVO report is no doubt binding on the Assessing Officer but once the matter is before the ld. CIT(A) and the assessee is aggrieved with the report of the DVO so adopted by the Assessing Officer, the ld. CIT(A) being the first appellate authority should have considered the assessee's objections and should not have been guided solely by the report of the DVO. In other words, the report of the DVO is binding on the Assessing Officer, however, the same is not binding and can be challenged before the appellate authorities. The law is very clear on this aspect as can be seen from the provisions of section 23A of the Wealth Tax Act which have been incorporated with necessary modifica....