Income Tax Appellate Tribunal - Chandigarh
Sh. Simran Pal Singh Gill, Ludhiana vs Assessee on 9 August, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND SHRI MAHARISHI PRASHANT KUMAR, ACCOUNTANT MEMBER
ITA No. 260/Chd/2014
(Assessment Year : 2006-07)
Sh.Simran Pal Singh Gill Vs. The D.C.I.T.,
3, Govind Avenue, Circle -VI,
Opp. Councilor House, Ludhiana.
Ludhiana.
PAN: AGMPG2748M
(Appellant) (Respondent)
Appellant by : Shri Sudhir Sehgal
Respondent by : Shri Sushil Kumar, CIT DR
Date of hearing : 01.08.2016
Date of Pronouncement : 09.08.2016
O R D E R
PER BHAVNESH SAINI, J.M. :
This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-II, Ludhiana dated 2.1.2014 for assessment year 2006-07 on the following grounds :
"1. That the learned CIT(A)-II, Ludhiana has erred in confirming the addition of Rs.5,81,80,344 as made by the learned Assessing Officer under the head of long term capital gain.2
2. That the learned CIT(A)-II, Ludhiana has also erred in confirming the action of Assessing Officer that in assessing the long term capital gain in respect of 1708 Sq. Yards land sold by the assessee by adopting fair marketvalueoflandason01.04.1981 @ Rs. 600/- per Sq. Yard.
3. That the Ld. CIT(A)-II, has also erred in not considering the facts that the cost of acquisition as on 01.04.1981 of 1708 Sq.yards of land sold has been rightly been adopted by the assessee @ Rs. 8000/- per Sq.Yard on the basis of report of Halka Patwari, Dated 26.10.2006, countersigned by Sub Registrar (West), Ludhiana as well as on the basis of regd. Valuer report dated 06.11.2006.
4. That the CIT (A)-II, has failed to appreciate that in the adjoining land of the co-owner, the rate of Rs.5500/- per sq.yard had been accepted by the department and, as such, adoption of rate of Rs. 600/- per sq. yard is uncalled for.
5. That the above said addition has been confirmed by the Ld. CIT(A)-II, Ludhiana is against the facts and circumstances by not considering our submissions properly.
2. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record.
3. Brief facts are that in this case the assessee filed return declaring income of Rs.14,38,800/- on 31.3.2007. During the course of assessment proceedings, the Assessing Officer noted that the assessee had shown sale of property on 14.9.2005 3 for an amount of Rs.6,32,73,600/-. The assessee for the purpose of calculating Long Term Capital Gain had adopted cost of acquisition of this property as on 1.4.1981 at Rs.1,36,64,000/-. The assessee enclosed a report of the Revenue Officer, counter signed by the Sub Registrar (West), Ludhiana dated 31.10.2006 as per which the prevailing market rate in the area where property was sold during the year 1981 was Rs.8,000/-
per sq. yard. It was also mentioned in the report that there was no solid proof available for this report for this rate and the rate given by him was as per the property dealers of the area. There was no documentary evidence in support of this rate. The Assessing Officer referred the matter to Valuation Officer under section 55A of the Income Tax Act, 1961 (in short 'the Act') for this purpose.
However, no report was received from the Valuation Officer till the completion of assessment proceedings.
4. The Assessing Officer noted that the house property sold by the assessee was situated near Bhai Bala Chowk at Ferozpur Road. The Assessing Officer also noted that the area of land sold by the assessee and the other co-owners was approximately 4006.8 sq.yards. The Assessing Officer noted that during the years 1980-81 and 1981-82, the commercial area situated opposite the house property sold by the assessee was developed by Improvement Trust, Ludhiana. The Assessing Officer collected information from Improvement Trust, Ludhiana 4 regarding the prevailing market rate in this area during the year 1981. Ludhiana Improvement Trust vide letter dated 22.10.2008 provided a copy of the allotment letter dated 12.3.1981 in respect of shop-cum-flat No.18 allotted in the name of Shri Vinod Kumar S/o Shri Hari Chand. As per this letter, market price of the property was Rs.635/-
per sq. yard. The Assessing Officer observed that it was a matter of common knowledge that rate for commercial property was always higher than rate for residential property and that the rate of small piece of land was always higher than the rate of larger piece of land. All these facts were confronted to the assessee and the Assessing Officer proposed a fair market value for this land sold by the assessee at Rs.400 per sq. yard as on 1.4.1981. The assessee once again referred to the report of the area Patwari dated 26.10.2006 counter signed by Sub Registrar (West) and contended that the fair market value at Rs. 8,000 per sq. yards was taken correctly.
5. The Assessing Officer collected more information regarding sale of land in and around the residential house sold by the appellant. The details collected by the Assessing Officer are summarized as under:
S.No. Details of property Vasika No. & Area of Total sale Rate per Date plot sold consideration Sq.
(Rs.) yard(Rs.)
1. Plot situated in Ghumar Mandi 7063/18.03.1981 90-2/3 18134/- 201/-
2. Plot situated in Krishna Nagar 234/08.04.1981 109-1/9 29460/- 270/-
Near Ghumar Mandi
5
3. Shop situated in Kara Bara 3207/20.08.1980 60 30000/- 500/-
(Gurdev Nagar)
4. Plot in Krishna Nagar Near 1133/05.05.1981 642 44600/- 70/-
Ghumar Mandi
5. Plot situated in Krishna Nagar 1154/06.05.1981 642 44600/- 70/-
Near Ghumar Mandi
6. Plot situated in Feroze Gandhi 12810/31.01.1984 181-50 64070/- 100/-
Market
7. Plot situated in Kara Bara 4951/01.02.1980 518-5 5 1850/- 100/-
Gurdev
8. Plot situated in Ghumar Mandi 3345/12.09.1980 156 1 2000/- 77/-
6. From all the aforesaid facts the Assessing
Officer held that the fair market value of the property sold by the assessee as on 01.04.1981 was Rs.600 per sq. yard.
The Assessing Officer accordingly, recomputed the Long Term Capital Gains from the property at Rs. 5,81,80,344/-
The assessment was completed under section 143(3) of the Act on 26.12.2008 at total income of Rs.5,98,84,092/-.
7. Aggrieved with the order, the assessee preferred an appeal before CIT(A)-II, Ludhiana, who vide his order dated 26.11.2009 in appeal No. 345/IT/CIT(A)-II/Ldh/08- 09 dismissed the appeal of the assessee and confirmed the above addition. Against this order the assessee filed appeal before ITAT, Chandigarh, who vide its order dated 29.04.2011 in ITA No. 119/Chandi/2010 has restored the matter to file of Assessing Officer with the directions to decide the issue of cost of acquisition as on 01.04.1981 afresh in conformity with law after giving reasonable opportunity of hearing to the assessee. The matter was restored by ITAT, in the background of the facts that i) The cases of other co-owners which have been re-opened and the issue of determination of cost of acquisition as on 1.4.1981 was being considered afresh by respective 6 Assessing Officers and that ii) The reference to Valuation Officer for valuation of the property which was not received by the Assessing Officer with the result that the Assessing Officer had to complete the impugned assessment without having the benefit of Valuation Report of the Valuation Officer as the assessment getting barred by limitation.
8. The Assessing Officer initiated proceedings as per the directions of the Hon'ble ITAT and asked the assessee to file requisite documents/evidence in support of the cost of acquisition of the property under consideration. The Assessing Officer also requested DVO to send a report pertaining to the reference made by the Assessing Officer vide letter dated 17.12.2008. The Assessing Officer received the Valuation Report dated 24.9.2010 from the DVO. As per this report, the Fair Market Value as on 1.4.1981 of 1680 sq yards of the land belonging to the assessee was estimated at Rs.600 sq. yard. A copy of this report was brought to the notice of the assessee. The assessee referred to the case of Shri Birender Pal Singh Gill, a co-owner, in whose case the fair market value as on 1.4.1981 had been accepted by the concerned Assessing Officer i.e. ACIT, Circle-I(1), Chandigarh at Rs.5,500 per sq. yards. The assessee also raised certain objections regarding the valuation done by the DVO. The Assessing Officer considered the assessee's submissions and held that the situation remained the 7 same as it was during the original assessment proceedings in as much as the assessee had failed to rebut the registration deeds on which the Assessing Officer had relied upon for taking the value of land as on 1.4.1991 at Rs.600 per sq. yard. The Assessing Officer also observed that the assessee had failed to produce any material to the contrary in spite of number of opportunities provided to the assessee. Keeping in view the aforesaid facts and the report of the DVO the Assessing Officer once again held that the fair market value of the property sold by the assessee, as on 1.4.1981 was Rs.600 per sq. yard. The Long Term Capital Gain were once again recomputed at Rs.5,81,80,344/-.
9. The assessee challenged the addition before the learned CIT (Appeals) and vide written submissions submitted as under :
The brief facts of the case are that the assessee was a co-owner of one property measuring 5851 Sq. yards, located on the Main Ferozepur Road and that land originally belonged to two brothers, namely Sh. Rachhpal Singh and Sh. Harbans Singh. After their death, the land devolved on the survivors/legal heirs of both the brothers as under:-
i. K.P. S. Gill S/o Sh. Rachhpal Singh
ii. Smt. Virinder Grewal D/o Sh. Rachhpal Singh
iiii. Smt.NeenaBal D/o Sh. Rachhpal Singh .
iv. Sh. Birender Singh Gill S/o Sh. Rachhpal Singh
v. Sh. KiratBrar S/o Sh. Harbans Singh
8
vi. Sh. Simranpal Singh Gill S/o Sh. Harbans Singh
3. Though, the land had devolved to other persons also, but since some of the persons had died/left their right and the above named persons jointly, became the beneficial owners of the land.
4. All the co-owners jointly sold the land to "OMEX Constructions Ltd.", and this land was sold by way of two separate deeds, one measuring 4006 sq. yards for a consideration of Rs.14,84,28,600/- and the 2nd registration deed was effected for 1845 Sq. yards for a consideration of Rs.5,95,71,400/- and, thus, the total consideration for sale of plot was Rs.20,80,00000/- for 5851 sq. yards giving the average rate of Rs.35,550/- per sq. yard. This rate of sale was in September 2005 and against which, the circle rate was Rs.
8000/- to 9000/- per sq. yard. Thus, the registration deed was effected at much higher rate than the circle rate, meaning thereby, that the land had been registered at the "Fair Market Value ".
5. The share of the assessee i.e. Sh. Simranpal Singh was 1680 sq. yard out of 5851 sq. yards and during the original assessment proceedings, the assessee had filed his return declaring the cost of acquisition at Rs. 8000/- per sq. yard as on 1.4.1981 on the basis of the report of the registered valuer and the report of Halka Patwari and, thereafter, the matter was carried to the Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench, and the Hon'ble ITAT had set aside the matter to the file of the Assessing Officer and the finding has been given by the ITAT, Chandigarh Bench in para 26 of the order, dated 19.04.2011 and which is being reproduced as under:-
9"We shall now turn to the estimation of cost of acquisition being the fair market value of the property as on 1.4.1981. The property sold by the assessee is a part of bigger property sold by other co-owners. It is reported by the Id. DR that the cases of other co-owners have been reopened and the issue as regards the determination of cost of acquisition as on 1.4.1981 is being considered afresh in those cases by the respective AOs. It is submitted by the parties that the matter of valuation of the property was referred by the AO to the Valuation Officer but the valuation report from him was not received by the AO with the result that the AO had to complete the impugned assessment without having the benefit of valuation report of the Valuation Officer as the assessment was getting barred by limitation. In order to ensure uniformity in adopting the cost of acquisition in the cases of all co-owners, it is concerned appropriate to restore the matter to the file of the AO with the direction to decide the issue of cost of acquisition as on 1.4.1981 afresh in conformity with law after giving reasonable opportunity of hearing to the assessee. We order accordingly. The AO shall be free to make relevant inquiries and to seek valuation report from the Valuation Officer in conformity with law so as to correctly work out the cost of acquisition as on 1.4.1981. The AO shall consider and dispose of all the submissions made by the assessee in the matter. "
6. Thereafter, the Assessing Officer took up the assessment proceedings and the report from the District Valuation Officer was called for, who submitted the report, dated 24.09.2010 on 13.03.2013, which was received by the Assessing Officer 10 on 19.09.2013, wherein he determined the cost at Rs.600/- per sq. yard of 1680 Sq. yard as on 1.4.198l and to which, the assessee raised various objections and which were forwarded to the DVO and the Assessing Officer without considering the directions given by the Hon'ble Bench in the order to verify the rate as adopted as on 1.4.1981 in the case of other co- owners, reproduced the finding given in earlier order, dated 26.12.2008 and framed the assessment and, thus, the directions of the Hon'hie Bench have been ignored, totally and., therefore, under such circumstances, the appeal has been filed by the assessee against that order.
7. We have already reproduced the direction of the Han'ble Bench and these directions the nutshell are as under:
a. To enquire about the rate adopted as adopted by the Department on 1.4.1981 in respect of other co-owners in order to ensure the uniformity in adopting the cost of acquisition.
b. To get the report from the Valuation Officer.
c. To make any other enquiry in conformity with the law in order to come to the correct value as on 1.4.1981.
8. As regards the report from the Valuation Officer is concerned, it is submitted that though, the report has been received by the Assessing officer, but our objections have not been taken care off, either by the Assessing Officer or by the DVO before the finalization of the assessment proceedings. The Assessing Officer was required to look into the objections raised by the assessee and other judgments as relied upon by us and on various other issues and he has only reproduced the earlier order and his finding in para 5 that the position remains 11 the same is contrary to the material on record, both on facts and on legal position and rather the Assessing Officer has not applied his mind on the basis of the various submissions filed before him and the case of one of the co-owner and, therefore, the addition made by him deserves to be deleted.
9. The adoption of value of land as on 1.4.1981 at Rs. 600/- per sq. yard is contrary to the material facts with regard to the "Fair Market Value" of the land as, defined infection 2 (22B) of the Act and copy of the objections alongwith paper book was submitted to the Assessing Officer and which have been summarily ignored by him. Thus, the finding of the Assessing Officer that the assessee has not submitted any explanation or led any evidence is contrary to the material facts on record and, thus, the addition as made by him deserves to be deleted.
10. It is also submitted that the rate on which the land was sold is at average rate of Rs.35,550/- per sq. yard and which is against the circle rate of Rs.8000/- to Rs. 9000/- per sq. yard and therefore, the reliance by the DVO and AO on the basis of registered consideration, as on 1.4.1981 is not been justified, because of much higher rate on which the sale has been effected and since, the sale has been effected on the "Fair Market Value", as such, the value as on 1.4.1981 has to on the basis of "Fair Market Value " and not the registered consideration as per title deeds.
11. Reliance is also being placed in the judgment of ITAT, Cochin Bench in ITA No. 606/Cochin/2011, in which, it has been held that guidelines for adopting the market value as on 1.4.1981 on the basis of rates of Sub-Registrar may be one of the factor but that cannot be the sole basis for fixing the "Fair Market Value. Reliance is also being placed in the Judgment of Andhra Pradesh High Court as reported in [2013] 218 12 Taxman 74, wherein, it has been held that the guidelines value emanating from Sub-Registrar's office could not be adopted in a mechanical manner and "Fair Market Value" as on 1.4.1981 at Rs.750/- was accepted against the rate of Rs.8/- per sq. yard by the Assessing Officer on the basis of registered deed. In this judgment, the Hon'ble Andhra Pradesh High Court took note of the judgment of Income Tax Appellate Tribunal, wherein the Cochin Bench of the IT AT has taken into consideration the fair market value as defined in section 2(22B) and it has been held that the valuation as per Sub-Registrar is only guidance for the purpose of fixing the stamp duty and not for adopting "Fair Market Value". Copy of the judgment is being enclosed herewith. Thus, the Assessing Officer has grossly erred in adopting the value of Rs. 600/- per sq. yard as on 1.4.1981.
12. Our rate of Rs. 8000/- per sq, yard as on 1.4.1981 is further justified, if we do the reverse calculation on the basis of "Cost Inflation Index". In the Income Tax Act, the "Cost of Inflation" in the Year 2005 was 497 and the cost as on 1.4.1981 by taking into consideration rate of Sale at Rs.35,368/-, the rate as on 1.4.1981 by reverse calculation comes to Rs.7152/- and a separate calculation chart in this respect is being submitted herewith in the Paper Book at Pages 91 and 91A. This is being submitted to prove that our rate of Rs. 800/- per sq. yard is very much in order.
13. The Hon'ble Bench had also directed the Assessing Officer in their order to look into the rates as adopted in the case of co- owners as on 1.4.1981 and which fact has totally been ignored by the Ld. Assessing Officer because it never suited to the Assessing Officer.
1314. In the case of one of the co-owner namely, Sh. Birender Singh, the cost of acquisition as on 1.4.1981 has been adopted in respect of front portion and the major portion is in "no construction zone", the cost has been adopted as on 1.4.1981 at Rs.5500/- per sq yard and even during the course of proceedings u/s 148, the same value as on 1.4.1981 has been adopted and, which fact, was brought to the notice of the Assessing Officer in our reply submitted to him during the course of assessment proceedings, after the case had been remanded from the Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh. The same has been ignored summarily and the finding of the Hon'ble bench in the order that uniformity should be ensured in adopting the cost of acquisition in the cases of other co-owners and which have not been considered at all and, therefore, since the cost of acquisition in the case of other co-owner have been accepted by the department and the assessee is having the same land and is co- owner in the entire land and, therefore, the same rate of Rs.5500/- per sq. yard should have been adopted. Thus, compared with that, our rate of Rs.8000/- per sq. yard is totally fair since 75% of the area of Shri Birender Singh is under "no construction zone" and whereas our is totally a "construction zone"
15. It is also submitted that we have already submitted the valuation report of the approved Valuer of Sh. Birender Singh during the course of assessment proceedings wherein the registered valuer has applied a rate of Rs.5500/- per. Sq. yard and that report has been totally ignored by Assessing Officer and accepted by the Assessing Officer in the case of co-owner.14
16. Even our reliance to the judgment of Chandigarh Bench in the case of Sh. Manjit Singh as reported in (2013) 151 TTJ (Chd) 1 has not been taken into consideration wherein, it has been held that the sale consideration of an asset as recorded in the registered sale deed is generally under stated and hence cannot be taken as fair market value as on 1.4.1981 for the purpose of computation of capital gain and for that reference was made to earlier judgment of Chandigarh bench in the case of Smt. Baljinder Kaur and Others. While delivering the above said judgment, a reference have been made to section 2(22B) of the Income Tax Act, 1961 if///? regard to the definition of "Fair Market Value" and it was held that "Fair Market Value " could not be equated with the "registered consideration ".
17. We are also placing reliance on the Judgment of Amritsar Bench of Income Tax Appellate Tribunal in the case of Abdul Rashid in IT A No. 104/Chd/2009, which is on the similar facts and circumstances. In this judgment also in para-6, section 2 (22B) of the Income Tax Act, with regard to "Fair Market Value" has been considered, and therefore, there also the average rate as per registered consideration was much lower than the "Fair Market Value" and the Hon'ble Bench held that "Fair Market Value" has to be considered, which is always higher than the registered sale consideration.
18. We are submitting herewith the location plan of our commercial site, which will give your honour an idea of the location of the property in question and it is, therefore, requested that as per the direction of the Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, the valuation be adopted as claimed by the assessee, because the comparable 15 case of the co-owner, which is immediate adjoining, wherein the rate of 5500/- has been accepted by the department in which on 75% portion of that area, no construction can be raised and comparing the same with ours area, which has the 100% constructed area, the valuation as adopted as on 1.4.1981 is extremely fair and deserves to be accepted and also on the basis of the case laws as narrated above.
10. The learned CIT (Appeals) after perusing the reply of the assessee directed him to file the following details :
i) Site plan of the total property indicating the share of each of the co-owners.
ii) The cost of acquisition adopted by the AOs of the respective co-owners in proceedings under section 148 of the I.T. Act alongwith evidence.
iii) Evidence regarding the cost of acquisition of Rs.5500/- per sq. yard having been adopted by the Assessing Officer during the course of proceedings under section 148.
iv) Evidence that the issue of cost of acquisition of front portion in respect of Shri Birender Singh which was claimed as Rs.5500/- per sq. yard was examined and adopted by the Assessing Officer.
v) The cost of acquisition adopted by the Assessing Officer with regard to the back portion of Shri Birender Singh.
11. The assessee filed further submissions along with evidence before the CIT (Appeals) as under :
16"a). The site plan of the property is being enclosed herewith as desired.
(b). We have already submitted the evidence with regard to cost of acquisition as accepted by the department in the case of one of the co-owner, namely Sh. Birender Singh during the course of proceedings u/s 148.
Regarding the other co-owners, we are not aware about their facts and nor we have good relations with them.
(c). We have already submitted some extracts of the order of the Assessing Officer, at Chandigarh and Sh. Birender Singh is being assessed with the Assessing Officer, Circle-I(1), Chandigarh and it is requested that the same may, please, be got verified from the concerned Assessing Officer of Sh. Birender Singh. As per our information, the cost of acquisition of Rs.5500/- remains unchanged.
(d) We shall request you to kindly get the verification from the Assessing Officer concerned as already requested above and according to our information, we have furnished the substantial evidence that in the original assessment proceedings of Sh. Birender Singh that the cost of the land was adopted by the assessee and accepted by the Assessing Officer at Rs.5500/- per Sq. yard. It is further submitted that the assessee had claimed some cost of constructed portion as per computation of income of Sh. Birender Singh already filed to your goodself and that was disallowed in the original assessment proceedings and only the value of land of Rs. 5500/- per sq. yard as on 01.04.1981 was adopted. Your goodself may, if desire, verify from the concerned Assessing Officer.
17(e) As regards the back portion is concerned, the cost was originally claimed by the assessee at Rs.1000/- per sq. yard in the computation of income and was assessed u/s 143(3) by the Assessing Officer, but, lateron, in the proceedings u/s 148, the same was reduced to Rs.600/-per sq. yard as adopted in our case and, this has been discussed in some extracts of the order u/s 143(3) of Sh. Birender Singh as filed by us and the same may be verified by your goodself, if desired from Circle-I(1), Chandigarh.
Lastly, it may be stated that the Hon'ble Income Tax Appellate Tribunal has observed in para 26 of the order that in order to have uniformity of cost of acquisition, the cost as adopted in the case of other co-owners may be taken into consideration.
Your goodself's attention is also invited to section 2(22B) of the Act with regard to "Fair Market Value" and the judgment of the Cochin Bench, confirmed by the Andhra Pradesh High Court and which have elaborately been discussed by us in para-11 of our submissions, dated November 13, 2013 and the judgment of the Chandigarh Bench of the Income Tax Appellate Tribunal as per para 16 that "Fair Market Value" cannot be equated with the registered consideration.
12. The learned CIT (Appeals), however, did not accept the contention of the assessee and dismissed the appeal of the assessee holding as under :
"4.9. I have carefully considered the appellant's submissions. The only issue to be considered here is the fair market value 18 of property sold by the appellant as on 01.04.1981. While the appellant has contended that the fair market value of this property as on 01.04.1981 was Rs. 8,000 per sq. yards, the AO held that the fair market value as on 01.04.1981 was Rs. 600 per sq. yards. The AO has relied on the following facts and instances for estimating the fair market value of the properly as on 01.04.1981 at Rs. 600 per sq yards:
(i) Ludhiana Improvement Trust had developed the commercial property situated opposite the property sold by the appellant during the year 1980-81 and 1981-82.
The plots were allotted at Rs. 635 per sq yards.
(ii) As per the instances of sale collected by the AO, the rate of property in the area varied from Rs.70 per sq. yards to Rs. 500 per sq. yards as per following details:
S.No. Details of property Vasika No. & Area of Total sale Rate per Date plot sold consideration Sq.
(Rs.) yard(Rs.)
1. Plot situated in Ghumar Mandi 7063/18.03.1981 90-2/3 18134/- 201/-
2. Plot situated in Krishna Nagar 234/08.04.1981 109-1/9 29460/- 270/-
Near Ghumar Mandi
3. Shop situated in Kara Bara 3207/20.08.1980 60 30000/- 500/-
(Gurdev Nagar)
4. Plot in Krishna Nagar Near 1133/05.05.1981 642 44600/- 70/-
Ghumar Mandi
5. Plot situated in Krishna Nagar 1154/06.05.1981 642 44600/- 70/-
Near Ghumar Mandi
6. Plot situated in Feroze Gandhi 12810/31.01.1984 181-50 64070/- 100/-
Market
7. Plot situated in Kara Bara 4951/01.02.1980 518-5 5 1850/- 100/-
Gurdev
8. Plot situated in Ghumar Mandi 3345/12.09.1980 156 1 2000/- 77/-
(iii) As per the report of the DVO, the fair market value of the property as on 01.04.1981 has been estimated at Rs. 600 per sq. yards.
4.10. The appellant has referred to number of case laws and contended that the valuation as per the rates of Sub Registrar can be one of the factors but cannot be sole basis for fixing the 19 fair market value. The appellant has also contended that the rate at which the property was sold was at average rate of Rs.35,550/- per Sq. yards as against the circle rate of Rs.8,000 to 9,000 per Sq. yards and therefore the value as on 01.04.1981 has to be on the basis of fair market value and not on the basis of registered consideration as per the title deeds. I do not agree with this contention of the appellant. As discussed above, the fair market value adopted by the AO as on 01.04.1981 is not based merely on the title deeds or on the basis of rates of Sub Registrar. The AO has specifically referred to the cases of property sold/allotted by the Ludhiana Improvement Trust in the year 1981-82. Such sale/allotments by the government agencies are a fair indicator of the market rate of property in that area during the relevant period. Moreover, the AO has collected number of instances of sale of property in that area during the relevant period. From these instances of sale it is evident that the rate as per the registered title deeds varied from Rs.70 per sq. yards to Rs.500 per Sq. yards. It is therefore incorrect to assume that the AO has estimated the fair market value on the basis of the rates as per the title deeds or the rates as per the Sub Registrar only. Moreover, the AO had also referred the matter to the DVO who has estimated the fair market value @ Rs. 600 per sq. yards. In these facts and circumstances of the case the case laws referred to by the appellant are clearly distinguishable on facts.
4.11. The appellant has referred to the order of the Hon'ble I.T.A.T. and the issue of the rate adopted as on 01.04.1981 in the case of other co-owners and has contended that the rate adopted By the AO in the case of Sh. Birender Pal Singh Gill was Rs.5500/- per sq. yards. In this regard it may be relevant to refer to the facts of the case once again. As per the facts and the documents submitted by the appellant, two properties were purchased by M/s Omaxe Construction Ltd. on 14.09.2005.
204.12. One of these properties was a joint property owned by the following co-owners:
1. Mr. Kanwar Pal Singh Gill.
2. Smt. Virinder Grewa.1.
3. Mrs. Neena Bal.
4. Sh. Birender Singh Gill.
5. Sh. Kirat Brar.
6. Sh. Simranpal Singh Gill the appellant.
This property measured 4006.8 yards and was sold for total consideration of Rs.14,84,28,600/-. A copy of the site plan of this property sold, as provided by the appellant, is enclosed as Annexure A-l of this order.
4.13. The second property purchased by M/s Omaxe Construction Ltd. on 14.09.2005 was owned exclusively by Sh. Birender Singh Gill. This property measuring approximately 1485.25 sq. yards was sold for a consideration of Rs. 5,95,71,400/-. The site plan of this property sold by Sh. Birender Singh Gill, as provided by the appellant, is enclosed as Annexure A-2 of this order. Site plan of the total property indicating the share of each of the co-owners is enclosed as Annexure A-3 of this order.
4.14. It may be noted that both the aforesaid properties were sold through separate sale deeds registered separately. Sh.
Birender Singh Gill was a co-owner of the property sold through the sale deed referred to in para 4.11 above and was the sole owner of the property sold through sale deed referred to in para 4.12 above.
4.15. It is evident that the reference to the uniformity in the fair market value of properties sold by co-owners pertains to the land measuring 4006.8 sq. yards which were sold jointly by the co-owners. In this joint property, the share of Sh. Birender 21 Singh Gill was 230 sq. yards. As per the copy of the assessment order passed by the AO of Sh. Birender Singh Gill, as provided by the appellant, the fair market value of 230 sq. yards as on 01.04.1981 has been adopted at Rs.600 per sq. yards.
4.16. Keeping in view the aforesaid facts and circumstances of the case, the contention of the appellant that the cost of land adopted in the case of joint property sold by Sh. Birender Pal Singh Gill has been adopted by AO at Rs. 5500 per sq. yards is factually incorrect. It is also seen from the copy of the assessment order in the case of Sh. Birender Pal Sngh Gill that the only issue before the AO was with respect to the fair market value of the 230 sq. yards of joint property sold by Sh. Birender Pal Singh Gill. Sh. Birender Pal Singh Gill had adopted a rate of Rs.1000 per sq. yards for this property as against which the AO held the fair market value to be Rs. 600 per sq. yards.
4.17. In any case, the cost of land i.e. the fair market value of property as on 01.04.1981 adopted by the AO of Sh. Birender Pal Singh Gill for the front portion of property of which Sh. Birender Pal Singh Gill was the sole owner and which was sold separately through a separate sale deed is not the deciding factor for this purpose. Keeping in view the evidences collected by the AO as referred to above, the report of the DVO obtained by the AO as well as the fact that the AO of Sh. Birender Pal Singh Gill has also adopted a rate of Rs. 600 per sq. yards for the 230 sq. yards i.e. the share of Sh. Birender Pal Singh Gill in the joint property, I hold that the AO was fully justified in adopting the fair market value of the property (share of Sh. Simran Pal Singh Gill) as on 01.04.1981 at Rs. 600 per sq. yards. The addition made by the AO is confirmed. These grounds of appeal are dismissed.
225. In the result, the appeal of the appellant is dismissed.
13. The learned counsel for the assessee reiterated the submissions made before the authorities below. He has submitted that the total area of the land, which has been sold jointly, was 5851 sq. yards by way of two separate sale deeds i.e. 4006 sq. yards sold for Rs.14.84 crores and 1845 sq. yards for Rs.5.95 croes. The copies of the sale deeds are filed at pages 1 to 30 of the Paper Book. It is undisputed fact that the assessee was a co-
owner of a property located on Main Ferozepur Road and that land originally belonged to two brothers, namely S/Shri Rachhpal Singh and Harbans Singh. After their death, the land devolved on the survivors/legal heirs as mentioned at page 6 of the appellate order including the assessee. Since the land was in the co-ownership of all these six owners, therefore, the same were sold by way of two separate sale deeds. It is undisputed fact that for the sake of convenience and for proper distribution of the amount of sale proceeds and to avoid future dispute, two separate sale deeds were executed. The property was jointly held by all the co-owners. The second sale deed is executed by Shri Birender Singh Gill but since the land was in joint co-ownership, the names of the other co-
owners have been mentioned in the second sale deed being confirming parties. Shri Birender Singh Gill has disclosed the cost of the land as on 1.4.1981 of the front portion of 23 the land, which has been held as joint co-ownership and, in which other co-owners were confirming parties and as on 1.4.1981, the cost has been taken at Rs.5500/- per sq. yard as per PB-94, which is his computation of income and which fact has attained finality. The case of Shri Birender Singh Gill was reopened under section 148 of the Act but no change was made in the cost as on 1.4.1981, which he adopted for front portion, which majority the area was in no construction zone. The only change was made in respect of sale proceeds of land measuring 230 sq. yards for which the cost was adopted as Rs.600/- per sq. yard. This share of Birender Singh Gill was thus in joint co-ownership. The CIT (Appeals), therefore, wrongly gave the finding that Birender Singh Gill was sole owner of the property. Earlier the Tribunal has directed to adopt the cost of acquisition in all the cases of co-owners uniformly. Since in the case of Birender Singh Gill, one of the co-owner, the rate of land has been accepted at Rs.5500/- per sq. yard, in which 70% of the area fell under no construction zone, therefore, the same rate should have been adopted by the Assessing Officer. The learned counsel for the assessee relied upon the judgment of Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Mrs.Ravinder Kaur in ITA No. 240 of 2009 dated 21.8.2014, in which the Hon'ble High Court was seized of the valuation of some property in the case of one co-
24owner and it was held that once the department has accepted the valuation in the case of one of the co-
owner, the appeal of the Revenue would not be maintainable. The learned counsel for the assessee also placed on record re-assessment order under section 148 of the Act in the case of Shri Birender Singh Gill, co-owner.
14. On the other hand, the learned D.R. relied upon the orders of the authorities below and submitted that same questions were raised earlier in the proceedings before the Tribunal and there is no new fact brought on record. The Assessing Officer had already adopted the higher rate as compared with the rate shown in the assessment order. The findings of fact of CIT (Appeals) have not been disputed. Therefore, no interference is called for in the matter.
15. We have considered the rival submissions. It is not disputed that the assessee was a co-owner of impugned property measuring 5851 sq. yards located on the Main Ferozepur Road. This land was inherited by the assessee alongwith other co-owners as mentioned above, after the death of the original owner. All the co-owners jointly sold the land to OMEX Constructions Ltd., copy of the first sale deede dated 14.9.2005 is filed in Paper Book at pages 1 to 14 alongwith map. The area of the land was 4006 sq. yards for a consideration of Rs.14.84 crores.
25The second sale deed is executed for the remaining area of 1845 sq. yards for a consideration of Rs.5.95 crores, copy of this sale deed is filed at pages 16 to 30 of the Paper Book. As per the second sale deed, the same is executed by Shri Birender Singh Gill in favour of OMEX Constructions Ltd. and the other co-owners including the assessee have also signed as confirming parties. These facts would clearly disclose that may be Shri Birender Singh Gill executed the second sale deed but other co-
owners including the assessee have confirmed the sale transactions conducted by Shri Birender Singh Gill being co-owner of the property in question. This sale deed for a larger area was shown in the map on the backside of the property and the smaller portion is shown through sale deed on the front side of the property at Ferozepur Road.
The majority of the area of front side was 'no construction zone'. It is also highlighted by the learned CIT (Appeals) in the map attached in the impugned order. These facts would clearly prove that the assessee alongwith others including Shri Birender Singh Gill were the co-owners of both the properties under sale through two separate sale deeds. Therefore, there is no question of holding that Shri Birender Singh was sole owner of the property in reference to second sale deed. Shri Birender Singh Gill filed his return of income for assessment year 2006-07 under consideration. Copy of the acknowledgement of 26 filing of the return is filed at page 92 of the Paper Book alongwith computation of total income, filed at pages 93 and 94 of the Paper Book supported by the Report of Registered Valuer, in which the land value as on 1.4.1981 of 1825 sq. yards was shown at Rs.5500/- per sq. yard.
This value was disclosed in the computation of income filed alongwith the return of income. The Revenue did not dispute this fact while assessing the income of the assessee Shri Birender Singh originally. When his case was reopened under section 148 of the Act, all the facts were mentioned in the re-assessment order and the issue was examined in respect of land measuring 230 sq. yards only. The income earlier assessed was taken into consideration and to the returned income the Assessing Officer made addition of Rs.4,57,240/- computing the total income at Rs.80,16,711/- under section 148 of the Act. These facts clearly prove on record that Shri Birender Singh Gill being joint co-owner of the property in question when sold 1845 sq. yards of land after confirming the transaction by the assessee and other co-
owners declared capital gain in his return of income and shown the value of the land as on 1.4.1981 at Rs.5500/-
per sq. yard, which have been accepted by the Revenue Department in original assessment as well as did not dispute the same in the re-assessment order under section 148 of the Act. The Hon'ble Punjab & Haryana High Court in the case of Mrs. Ravinder Kaur (supra) in para 7 held as under :
27"7. It may be noticed that the assessee had 25% share in SCO No. 52-53, Sector 9, Chandigarh. Her husband was also a co-sharer holding 25% share. The assessee had declared the value of the cost of construction at Rs.14,13,860/- as against Rs.23,73,012/- assessed by the Departmental Valuation Officer (DVO). The difference, thus, came to Rs.9,59,152/- which on bifurcation between assessment years 1994-95 and 1995-96 came to Rs.7,29,436/- and Rs.2,20,176/- respectively. The 25% share of the assessee therein resulted in addition of Rs.l,82,359/- for assessment year 1994-95 and Rs.58,825/- for the assessment year 1995-96. It was not disputed by learned counsel for the revenue that the husband of the assessee, Shri Paramjit Singh also had 25% share in the said property and in his case, the Tribunal had adjudicated the issue in his favour and accepted the valuation shown by him and the order of the Tribunal was accepted by the revenue as no further appeal was filed against it. In such circumstances, it would not be appropriate to adopt two different valuations in respect of identical shares in the same property for the same period."
16. When in the case of one of the co-owner, the rate of Rs.5500/- has been accepted as on 1.4.1981, which was also in respect of 'no construction zone' land, the Revenue Department should accept sale rate of Rs.5500/- per sq. yard on 1.4.1981 in respect of the remaining land for which first sale deed was executed by all the co-owners. When the matter was taken up by the Tribunal earlier, the Tribunal restored the matter back to the file of the Assessing Officer because the cases of other co-owners have been reopened for determining the issue of 28 cost of acquisition as on 1.4.1981 and that the report of Valuation Officer was not received by the Assessing Officer. The Tribunal, therefore, directed to ensure the uniformity in adopting the cost of acquisition in the cases of all co-owners. Therefore, the authorities below were bound to follow the directions of the Tribunal issued earlier and should have adopted the uniform approach in adopting the cost of acquisition in cases of all co-owners as on 1.4.1981.
17. The learned D.R. contended that the facts were same as were pleaded earlier before the Tribunal.
However, the Tribunal did not accept the valuation adopted by the Assessing Officer on the basis of details collected by the Assessing Officer earlier as well as information collected from Improvement Trust Ludhiana.
Therefore, there is no merit in the submissions of the learned D.R. that the same facts were there earlier, which have not been contradicted by the assessee in the subsequent proceedings. The assessee in the subsequent proceedings has been able to satisfy that in the case of co-owner, Shri Birender Singh Gill, the cost of acquisition as on 1.4.1981 have been accepted by the Revenue Department at Rs.5500/- per sq. yard in respect of the same property, which was sold through two different sale deeds. Therefore, the revenue authorities should not have ignored the directions given by the Tribunal earlier.
Considering the above discussion in the light of re-
29assessment order in the case of Shri Birender Singh Gill and in the light of earlier order of the Tribunal and considering the judgment of Hon'ble Punjab & Haryana High Court in the case of Mrs. Ravinder Kaur (supra), we set side the orders of the authorities below and direct the Assessing Officer to adopt the cost of acquisition of land under consideration as on 14.1981 in a sum of Rs.5500/-
per sq. yard as against Rs.600/- adopted by the authorities below for the purpose of calculation of Long Term Capital Gain.
18. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court.
Sd/- Sd/- (MAHARISHI PRASHANT KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 9 t h August, 2016 *Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
Assistant Registrar, ITAT, Chandigarh