TaxTMI 
TaxTMI 
2023 (6) TMI 181
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....peals, we shall take up ITA No. 218/Viz/2020 as a lead appeal. ITA No.218/Viz/2020 (AY: 2012-13) (Pydi Venkata Ramana) 3. Briefly stated the facts of the case are that the assessee being an individual filed his return of income for the AY 2012-13 admitting total income of Rs.9,69,932/-. The case was selected for scrutiny under CASS and the assessment was completed U/s. 143(3) of the Act assessing the total income of Rs. 6,51,81,350/-. On verification of the return of income, the Ld. AO noticed that the assessee has sold an immovable property along with two others namely Smt. Pydi Varahlamma and Mr. Pydi Giridhar Babu as per the details given below: Sl No Sale Deed No. & Year Date of Registration before SRO Value as per sale deed executed (Rs.) SRO, Dwarakanagar Stamp Duty Value(Rs.) 1. 1826/2011 07/07/2011 30,00,000 48,08,000 2. 1789/2011 28/06/2011 1,25,00,000 6,90,34,000 3. 1788/2011 28/06/2011 2,50,00,000 12,68,08,000 4. 1827/2011 07/07/2011 10,00,000 22,14,000 4,15,00,000 20,28,64,000 The Ld. AO observed that there is a difference in valuation of the property as mentioned in the sale deeds and the market value adopted by th....
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.... Rs 2,03,88,330/-. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 4. Originally, the assessee has raised Four Grounds in his appeal however, later revised to one ground of appeal which is extracted herein below for reference: "In the facts and circumstances of the case and as per law the Ld. CIT (A) is not justified in adopting the fair market value of the property sold under section 50C as determined by the DVO as full value of consideration for the purpose of section 48 instead of the fair market value determined as per the provisions of the Urban Land Ceiling and Regulation Act, 1976, or the amount determined as per rent capitalization method by the DVO in contiguous properties similarly placed or the amount of actual consideration received by the assessee as per the registered sale deed whichever is higher as claimed by the assessee before the Assessing Officer and also the Commissioner of Income Tax (Appeals)." 5. The Ld. AR argued that the assessee has entered into 99 years lease of the impugned property and still there is an unexpired lease period of 52 years as on the date of sale of property. The Ld. AR also referred to the proceedings u....
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....iod. The Ld. AR also submitted that the valuation of the property as per the rent capitalization method determined in accordance with the Schedule-3 of the Wealth Tax Act, 1957 which stood at Rs. 37,45,070/- as against the sale consideration received by the assessee and others aggregating to Rs. 4,15,00,000/-. We find merit in the argument of the Ld. AR that the similar valuation was adopted in the case of the adjacent property as demonstrated by the Ld. AR. A reference was made by the Ld. AR to the CBDT Circular which is available in page 55 of the paper book which states as follows: "(i).......... (ii).......... (iii)......... (iv) Cases where acquisition proceedings are in advance stage and the intention of the Government to acquire the property is indicated or in case where notice U/s. 10(1) & 10(3) of UL (C&R) Act, 1976 have been issued by the Government. Mere declaration of land surplus under Urban Land (Ceiling Regulation) Act, 1976 does not deprive the land lords from his rights, title and interest in the excess vacant land. Those will not be extinguished till the date of publication of notification under section 10(3) of UL (C&R) Act, 1976, to acquire the excess ....
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.... over by the Government, he will receive the compensation of Rs.2 lakhs only. We are not oblivious of those categories of buyers who may buy "disputed properties" by taking risks with the hope that legal proceedings may ultimately be decided in favour of the assessee and in such a eventuality they are going to get much higher value. However, as stated above, hypothetical presumptions of such sales are to be discarded as we have to keep in mind the conduct of a reasonable person and "ordinary way" of the presumptuous sale. When such a presumed buyer is not going to offer more than Rs.2 lakhs, obvious answer is that the estimated price which such asset would fetch if sold in the open market on the valuation date(s) would not be more than Rs.2 lakhs. Having said so, one aspect needs to be pointed out, which was missed by the Commissioner (Appeals) and the Tribunal as well while deciding the case in favour of the assessee. The compensation of Rs.2 lakhs is in respect of only the "excess land" which is covered by Sections 3 and 4 of the Ceiling Act. The total vacant land for the purpose of Wealth Tax Act is not only excess land but other part of the land which would have remained with t....