Income Tax Appellate Tribunal - Jaipur
Shri Kamlesh Tiwari, Jaipur vs Income Tax Officer, Ward-5(3), Jaipur on 29 November, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA. No. 771/JP/2018
fu/kZkj.k o"kZ@Assessment Years : 2008-09
Smt Kamlesh Tiwari cuke Income Tax Officer,
1, Nandwan, Mahaveer Nagar, Vs. Ward 5(3)
Tonk Road, Jaipur Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AANPT4872G
vihykFkhZ@Appellant izR;FkhZ@Respondent
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s Assessee by : Shri Vinod Gupta (CA)
jktLo dh vksj ls@ Revenue by: Shri J. C. Kulhari (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 25/10/2018
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 29/11/2018
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT (A)-2, Jaipur dated 12.03.2018 for Assessment Year 2008-09 wherein the assessee has taken the following grounds of appeal:-
"1. That the impugned order passed u/s 143 (3)/148 of the Income-tax Act, 1961 by Learned ITO, Ward-5(3) and being upheld by Learned CIT (Appeals)-2, Jaipur, is bad in law as well as on facts being against the principal of natural justice and for other reasons.2 ITA No. 771/JP/2018
Kamlesh Tiwari, Jaipur vs. ITO, Jaipur
2. That Ld. Assessing Officer has erred in the law and facts by accepting report of the DVO without considering the various objections raised by the appellant on the valuation of Rs. 47,34,400/- made by DVO as against Declared Value of Rs. 27,00,000/-.
3. That the Ld. Assessing Officer has failed to appreciate and give findings on the following objections raised by the Appellant on the Valuation Report dated 28.12.2015 sent by DVO and Ld. CIT (Appeals-2) not appreciating the submissions of the Assessing Officer:
(i) That there is a IOC Pipeline passing beneath the land and which in turn causes restriction on excavation and other use of land and, therefore, the market value of the land cannot be realized.
(ii) That an further addition of 10% on the DLC Value of the commercial land on the ground that location is just at the end of the bridge, is absolutely unfounded rather in our submission, we have stated that there is a bridge in front of the land, the market value drastically goes down being approach issue and traffic not taking U-turn to reach the venue.
(iii) That there was a mandatory condition in the Sale Deed of leaving 10% of the area for passage, which was to be given for the other landholders behind the land was also not considered."
2. Briefly stated, the facts of the case are that the assessee is a an individual deriving income from salary, rental income and interest 3 ITA No. 771/JP/2018 Kamlesh Tiwari, Jaipur vs. ITO, Jaipur income who has filed her return of income on 29.07.2008 declaring total income of Rs. 8,43,060/-. The assessee had purchased a piece of land at Khasra No. 124, Village Saladvas Thamer, Jaipur Delhi Road for consideration of Rs. 8 Lacs vide Deed of Sale dated 7th August, 2004. Subsequently, the assessee entered into a memorandum of understanding with M/S. Sterling Constructions, Jaipur on 19th September, 2005 for development of the property, which started the construction thereon. However, the construction was not completed by the buyer in stipulated period and project remains without full execution. As the assessee was in need of money, she agreed to give the land to the buyer on agreed price of Rs. 27 Lacs, on as is where is basis and the construction as was done by the buyer also got passed on to buyer who in fact had incurred all the expenses thereon. However, for the purpose of registering the property, the Sub-Registrar while registering the property took the value of land at Rs. 47,34,400/- and cost of construction at Rs. 50,85,756/-(Total Rs.98,20,156/-). The Assessing Officer for calculation of capital gain took the same value without excluding the construction value vide order dated 15.12.2011.
3. On Appeal, the ld CIT(A) deleted the addition of Rs. 50,85,756/- as cost of the construction, which was not part of the sale consideration vide his order dated 19.03.2013. But, since the valuation report of the land was not available, no relief was granted on the value of the land which was taken at Rs. 47,34,400/-. On further appeal by the assessee, the Tribunal vide its order dated 27.2.2015 directed that "The Assessing Officer is directed to refer the valuation of land to DVO for the purpose of valuation of the land on the date of sale. Accordingly, the matter is set aside to the Assessing Officer."
4 ITA No. 771/JP/2018Kamlesh Tiwari, Jaipur vs. ITO, Jaipur
4. The Assessing Officer referred the matter to Valuation Officer who valued the land at Rs. 47, 34,400/- instead of declared value of Rs. 27.00 Lacs. Before the Assessing officer, the assessee raised certain objections on the valuation, which were not considered by Valuation Officer. However, Assessing Officer followed the valuation of land as done by DVO at Rs. 47, 34,400/- instead of declared value of Rs. 27.00 Lacs. On appeal, the ld. CIT(A) upheld the order of Ld. AO.
5. During the course of hearing, the ld. AR did not press Ground No. 1, 4 & 5. Hence, the same are dismissed as not pressed.
6. Regarding Ground No. 2 & 3, during the course of hearing, the ld. AR submitted that in compliance to the direction of the Tribunal, the matter of determination of FMV as on date of sale i.e. 30.8.2007 was referred to the DVO by Ld. A.O. vide letter dated 2.9.2015. A detailed objection was filed on 18.12.2015 on proposed FMV. Thereafter, DVO determined the FMV vide his order dated 28.12.2015 wherein, annexed his comments to the objections. It was submitted that the DVO has carried out entire exercise in a manner to arrive at value determined by Sub-registrar, which is evident from discussion made hereinafter:-
6.1 It is relevant to note that as evident on last Para on Page 5 continue to Page 6 of Sale Deed that a 10 Feet wide passage has to be kept open, to be used by the Land Owner of Khasra No. 125/580.
Perusal of the said clause makes it abundantly clear that said passage has been left to be solely used by said land owner. There is no right of buyer to use the said passage commonly. It was submitted that the lower Authorities have erred by observing or sustaining that 50% of the common area shall be used by the buyer and 50% shall be used by the 5 ITA No. 771/JP/2018 Kamlesh Tiwari, Jaipur vs. ITO, Jaipur Seller, therefore, 5% downward adjustment has been given. The observation is incorrect due to (i) perusal of the clause shows that it is for the use of land owner of Khasra No. 125/580, therefore, drawing the inference that the passage shall be common area is factually incorrect. (ii) Moreover, even otherwise it is also stipulated obligation on the buyer not to construct anything on said passage. Under the said obligation, it is clear that said passage or any part thereof does not remain a commercial land or a normal land which can fetch any value.
(iii) It is relevant to point out that the factor of adjustment has been calculated on ad-hoc basis, rather the same should be calculated on actual basis after taking into account the correct fact, which comes to 11.11% (200 Sq. Mtrs. divided by 1800 Sq. Mtrs.). Therefore, the factor needs to be revised downward by 11.11% instead of 5%.
6.2 The assessee further submitted that an Oil Gas Pipeline is passing beneath the land under consideration. In support of her contention, request letter made to SDM, Amer and the reply of the Patawari confirming that such pipeline is passing through the land under consideration was filed. Ld. DVO held that Patawari is not competent to issue such letter; rather, it should be issued by the IOC. It is further held that assessee failed to show alignment of IOC Pipeline. It was further submitted that such pipeline create hindrance and restriction regarding the use of the land to a certain extent and in support of her claim a warning letter issued by the IOC to the adjacent land owner was also filed and same were ignored by saying that it is in the name of Smt. Pooja Tiwari who is the owner of Khasra No. 125/580 and daughter-in-law of assessee. Similarly, it is stated that there is already building and structure means there is no hindrance under purview of 6 ITA No. 771/JP/2018 Kamlesh Tiwari, Jaipur vs. ITO, Jaipur 9(I) of Petroleum Pipelines (Acquisition of Right of User in Land) Act, 1962.
6.3 In this regard, it was submitted by the ld AR that the assessee has filed letter from Patawari confirming her contention of passing pipeline, which is authentic evidence and from office of Government of Rajasthan. The contention has not been accepted without any contrary evidence. It is also important to note that even then, vide letter dated 18.12.2015, it was requested to DVO that any further information is required, may be called from IOC or Tehsildar. The DVO is fully empowered to call any information to his satisfaction and in the instant case, without exercising, such power, he choose to ignore the evidence filed by the assessee. The action of the Ld. DVO is unjustified and arbitrary. Since, it is not his case that evidence filed by the assessee is false. Therefore, under the facts and circumstances, without any material, he should not draw any inference which is contrary to evidence filed. More so, evidence filed by the assessee has been ignored by creating certain doubts based upon suspicion. It is settled legal position, suspicion cannot take place of the evidence, how so ever, strong the evidence may be. It was further submitted that perusal of the Patawari letter clearly shows that pipeline is passing underneath the land under consideration and details of alignment visible in the adjacent land have also been given. Hindrance and restrictions has not denied with the land passing underground pipeline. The only objection raised is that letter of warning is in the name of Smt. Pooja Tiwari and related to adjacent land. Therefore, once, it is admitted on the basis of appreciation of evidence filed that a gas pipeline is passing through the land under consideration, downward adjustment have to be given. Regarding the observation of DVO that there is already construction and 7 ITA No. 771/JP/2018 Kamlesh Tiwari, Jaipur vs. ITO, Jaipur hence the question of pipeline is not relevant, it was submitted that the construction is on around 50% of ground coverage; further underground pipeline per se does not mean that on entire plot, no construction can be made. Restriction on construction is limited to adjacent area to pipeline only. The facts discussed hereinbefore shows that conclusion has been drawn without appreciating the facts, hence, unjustified and untenable. Further, alternatively, even for sake of argument, construction on restricted area if any, is not only dangerous but also illegal and against the stipulation of IOC. Therefore, such assumption is not only irrational and unsustainable. Under the facts and circumstances, the value of the land shall always be effected due to underground pipeline.
6.4 Regarding the uneven size of land, detailed objections filed before the lower authorities were reiterated and it was submitted that the presence of deep Nallah just behind the land makes the air stink all the time. It is difficult to stand there, especially in rainy season. Due the Nallah, land gets isolated and disconnected from the backside. The possibility of backward expansion, by purchasing more land, is also not there. The land is of uneven size, the depth of plot varies radically, and in the depth in south side is almost half to the depth in north side. The front side and back side of the land is not parallel, which makes the land unfit for construction. Out of the total land area, if a rectangular portion is worked out, it will come to only approx. 950 sq. meters, this itself shows that almost half of the land is unfit for construction. With so many abnormalities and vastu imperfections, almost 25% of the total land area is not constructible. Therefore, the factor needs to be revised downward by 25%. It was submitted that perusal of the comments of the DVO shows that facts regarding abnormality in the land size and 8 ITA No. 771/JP/2018 Kamlesh Tiwari, Jaipur vs. ITO, Jaipur shape are undisputed. However, without assigning the reason, the request of downward adjustment by 25%, Ld. DVO only make adjustment of 5% and had not given any rationality for taking his action. The submission of assessee is backed by undisputed facts and figures; hence, the request should be accepted in full and cannot be accepted in part without any basis.
6.5 The ld AR further submitted that the ld. DVO has made upward adjustment of 10% even on sub-registrar rates by stating that land location is just near to end of bridge as the hotel/commercial property will cater more users. In this regard, it is submitted that the rate applied by the sub-registrar, as well as by DVO is of land situated on Main Road and type of land is commercial. Therefore, once DVO have already taken the rate of land on main road having type "Commercial", than making any further upward adjustment on the basis that land is near to the end of bridge suitable for hotel and commercial property is not justified. Since, the rate of the commercial use has already applied. It was submitted that there is no U-Turn-Cut in front the land. The customers/users on the other side of road (from Jaipur Side) will have to travel extra miles and have to take U-Turn thereafter to approach the land. It was submitted that the facts have not properly appreciated and it is wrongly concluded that due to bridge other side visitors can come directly, whereas, in fact, there is no u-turn and person have to come by taking regular u-turn, hence, it is clear that bridge does not have any convenience as stated.
6.6 It was further submitted that the assessee is an old age lady. She sold land to meet her financial needs, which is evident from the page no. 4 of the sale deed. It is relevant to mention here that as per the 9 ITA No. 771/JP/2018 Kamlesh Tiwari, Jaipur vs. ITO, Jaipur Memorandum of Understanding, the sale was a distress sale, as the seller was in financial crunch and did not want to continue for a long time with the developer . Therefore, we request you to kindly treat the transaction as distress sale and keeping in view, the vulnerable position of the seller, suitable adjustment should be allowed.
7. Per contra, the ld DR vehemently argued the matter and submitted that in respect of the objections so claimed by the ld AR as not considered and appreciated by the ld CIT(A), the said contention of the ld AR is not correct and our reference was drawn to the findings of the ld CIT(A) which are reproduced as under:
"During the present proceedings, it is submitted that a confirmation from Patwari, Chandwasi was submitted to claim that there is a pipeline of Indian Oil Corporation beneath the land, a letter received from IOC dated 29.10.2005 in the name of Anirudda Tiwari & Pooja Tiwari who own the adjacent land which warned the owners of serious consequences if excavation work was undertaken and a mandatory condition of leaving 10% inside for passage which was a restrictive clause and that these objections have been raised before the valuation officer and same have been addressed by him in his report. Regarding the IOC pipeline, it is mentioned that the assessee's Authorized Representative failed to show the alignment of IOC pipeline at the time of inspection, the letter from IOC was not in the name of the assessee and did not deal with those Khasra numbers and most importantly in the said piece of land, the structure already construction and Hotel/Restaurant/Commercial establishment is running which means the said land does not come under the purview of section 9(i) of annexure "A. It is also seen as discussed in detail in the CIT(A) order dated 10 ITA No. 771/JP/2018 Kamlesh Tiwari, Jaipur vs. ITO, Jaipur 19.3.2013 in the first round that the assessee had entered into the development agreement with the builder named Sterling Construction through MOU dated 19.9.2005 as per which the proprietor of Sterling Constructing was to construct shops, how rooms and residences on this land for sale/commercial exploitation and the appellant was to share 45% of net profit and builder 55% profit of the project. Since the builder did not keep its promise of completing the construction, the appellant agreed to sell land only. At the time of sale, construction is valued at Rs. 50, 85,786/- and was claimed to have been made by the builder. Thus, it is clear that this factor of IOC pipeline was not a hindrance and the agreement and construction had taken place as recorded by the valuation officer and a commercial complex existed on that land. Thus, this factor did not appear to have reduced the cost of the land and the finding of the valuation officer is also to this effect. Further, the valuation officer has given deduction of 51% for one side common passage for entry to Khasra No. 125/580 and 5% for uneven land and undulation.
In view of the discussion as above, the value adopted by the Assessing Officer based on the report of the valuation officer which has considered the various objections of the appellant, is found to be in order and confirmed. Ground of appeal is dismissed."
8. We have heard the rival contentions and perused the material available on record. The DVO has determined the value of the converted land for commercial use measuring 1800 sq. meters equivalent to 2152 sq. yards at Rs 47,34,400 by determining the commercial value of the land at the rate of Rs 2200/sq. yards after adjustment towards location of the land (+10%), common passage (-5%) and uneven size of plot (-5%) and no adjustment has been done 11 ITA No. 771/JP/2018 Kamlesh Tiwari, Jaipur vs. ITO, Jaipur in respect of underneath IOC pipeline. Firstly, we donot see any basis for upward adjustment towards the location of the land where the commercial value of the land @ Rs 2200 per sq yard has been adopted at the first place by the DVO. Regarding adjustment towards the common passage, the facts as emanating from the sale deed is that there is a passage measuring 200 sq. meters which has to be kept open for entry to the adjacent piece of land bearing Khasra no. 125/580 and on which no construction activity shall be undertaken by the assessee. At the same time, there is no prohibition that the assessee cannot use the same. The facts remains that the said portion of land is like a common passage which is in ownership of the assessee and as far as right of use is concerned, the adjacent land holder is equally entitled to use the same. In light of the same, downward adjustment by 11% (200/1800 sq. meters) as claimed by the assessee would not be correct as the same will effectively reduce the value of said piece of land to nil and adjustment of 5% as done by the DVO is hereby confirmed. Further, on perusal of letter written by Patwari dated 17.12.2015, it is amply clear that the IOC pipeline is running underneath khasra no. 122 to 125 including the impugned Khasra no. 124 and there are sign posts at khasra no. 122 and at 125 depicting clearing the same. In light of the same and in absence of anything contrary which has been brought on record, the said fact has clearly impacted the valuation of the land as compared to any other commercial land (without such underneath pipeline) which has formed the basis for comparability and consequent valuation at first place of Rs 2200/sq. yards. The AO is accordingly directed to make an adjustment to the extent of 10% on account of such pipeline which has effected the valuation of such land. Similarly, in respect of adjustment towards the uneven size of plot of land which remain undisputed, we deem it appropriate to increase the adjustment 12 ITA No. 771/JP/2018 Kamlesh Tiwari, Jaipur vs. ITO, Jaipur to 10% as against 5% done by the DVO. With the above directions, the matter is set-aside to the file of the AO to recompute the value of the land after taking into consideration the various adjustments as per aforesaid discussion.
In the result, the appeal of the assessee is partly allowed with above directions.
Order pronounced in the open Court on 29/11/2018.
Sd/- Sd/-
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(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 29/11/2018
*Ganesh Kr.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Smt. Kamlesh Tiwari, Tonk Road, Jaipur
2. izR;FkhZ@ The Respondent- ITO, Ward 5(3), Jaipur
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File { ITA No. 771/JP/2018} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar