Income Tax Appellate Tribunal - Jaipur
M/S Accurate Buildcon Pvt Ltd., Jaipur vs Income Tax Officer, Ward-5-1, Jaipur on 25 July, 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 BHAGCHAND, AM
vk;dj vihy la-@ITA No. 502/JP/2018
fu/kZkj.k o"kZ@Assessment Years : 2012-13.
M/s. Accurate Buildcon Pvt. Ltd., cuke The Income Tax Officer,
8-A, Takteshahi Road, Vs. Ward 5(1),
Kanota Bagh, Jaipur.
Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AACCA 9803 C
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@Assessee by : Shri S.L. Poddar &
Ms. Isha Kanoongo (Advocates)
jktLo dh vksj ls@ Revenue by : Smt. Poonam Rai (DCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 24.07.2018.
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 25/07/2018.
vkns'k@ ORDER
PER VIJAY PAL RAO, J.M.
This appeal by the assessee is directed against the order dated 12th March, 2018 of ld. CIT (A)-2, Jaipur for the assessment year 2012-13. The assessee has raised the following grounds of appeal :-
" 1. Under the facts and circumstances of the case the learned CIT (A) has erred in confirming the addition of Rs. 26,97,750/- on account of long term capital gain by invoking the provisions of section 50C of the Income Tax Act, 1961.
2. Under the facts and circumstances of the case the learned CIT (A) has erred in confirming the addition of Rs. 26,97,750/- on account of long term capital gain on the basis of DVO's report 2 ITA No. 502/JP/2018 M/s. Accurate Buildcon Pvt. Ltd., Jaipur.
who has not given opportunity for making objection to the assessee on proposed valuation.
3. Under the facts and circumstances of the case the learned CIT (A) has erred in confirming the addition of Rs. 26,97,750/- on account of long term capital gain on the basis of DVO's report which is not on the basis of actual facts but on the basis of surmises and conjectures because the market rate is much lower than the DLC rates.
4. The assessee craves your indulgence to add, amend or alter all or any grounds of appeal before or at the time of hearing.
2. The assessee is a company engaged in the business of real estate, builders and developers. During the course of assessment proceedings, the AO noted that the assessee has shown sale of office at Ganpati Plaza, Jaipur for Rs. 7,50,000/- and after deducting index cost of acquisition, assessee has claimed long term capital loss of Rs. 4,78,656/-. On query from the AO, the assessee explained that the sale consideration of the office in question is Rs. 11,51,000/- as per the sale agreement and assessee has wrongly taken the sale consideration at Rs. 7,50,000/-. The AO proposed to adopt the DLC rate as full value consideration under section 50C of the Act. The assessee objected to the adoption of DLC rate as full value and consequently the AO referred the valuation to the DVO. The DVO finally vide his valuation report dated 25th February, 2015 has determined the value of the property in question at Rs. 39,26,406/- as against the declared value of Rs. 11,51,000/-. The AO accordingly assessed the capital gain arising from the transaction at Rs. 26,97,750/-. Aggrieved by the order of the AO, the assessee filed appeal before the ld. CIT (A) and raised the objection against the valuation determined by the DVO by 3 ITA No. 502/JP/2018 M/s. Accurate Buildcon Pvt. Ltd., Jaipur.
taking the DLC rate as basis of the valuation. The ld. CIT (A) upheld the action of the AO as well as the valuation determined by the DVO.
3. Before us, the ld. A/R of the assessee has submitted that the DVO has adopted the DLC rate as fair market value of the property which is not proper when the valuation was referred to the DVO for determination of fair market value. The ld. A/R has further contended that the DVO has done nothing but adopted the DLC rate which was objected by the assessee and consequently the matter was referred to the DVO for valuation of the property in question. He has referred to the guidelines issued by the CBDT for valuation of immovable properties and submitted that as per the guidelines issued in the year 2009 the CBDT has set out various parameters and considerations to be taken into consideration for determination of fair market value of the property being land and building. The valuation determined by the DVO is not in conformity with the guidelines of the CBDT. The ld. A/R has thus contended that the DVO was required to take into consideration the sale instances for determination of the fair market value. However, the DVO has adopted the DLC rate which is not justified. Hence, he has pleaded that the matter may be remitted to the record of the AO/DVO for determination of the fair market value of the property and consequential capital gain.
4. On the other hand, the ld. D/R has submitted that the DVO has determined the fair market value after considering all the relevant facts and even the objections of the assessee were invited by the DVO prior to the valuation report. She has further submitted that but for the scrutiny assessment, the assessee would not have disclosed the correct sale consideration of the property in question as pointed out by 4 ITA No. 502/JP/2018 M/s. Accurate Buildcon Pvt. Ltd., Jaipur.
the AO that the assessee has shown the sale consideration in the return of income at Rs. 7,50,000/- as against the sale consideration of Rs. 11,51,000/- shown in the sale deed. The DVO has conducted a proper enquiry and then determined the fair market value of the property in question. She has relied upon the orders of the authorities below.
5. We have considered the rival submissions as well as the relevant material on record. As per the provisions of section 50C(2) in case the assessee has objected to the adoption of full value consideration proposed by the AO under section 50C of the Act, the matter of valuation has to be referred to the DVO for determination of fair market value. Thus once the assessee has raised the objection against the value adopted or assessed by the authority of stamp valuation then the objections so raised by the assessee are to be taken into consideration and the valuation officer shall determine the fair market value of the property being land and building by considering the sale instances on or around the date of sale of similarly situated immovable properties. We note that in the Valuation Report the DVO has conducted the enquiry only to measure the area of the property and even has not made any attempt to find out any comparable sale instances for determination of the fair market value of the property. The valuation determined by the DVO is based on the DLC rates as per para 7.1 and 8.1 of the report in question. Therefore, the sole basis of determination of fair market value is the DLC rate which is not proper and justified. Once the assessee has objected to the adoption of DLC rates as full value consideration and consequently the matter was referred to the DVO for determination of fair market value, then the DVO was required to determine the fair 5 ITA No. 502/JP/2018 M/s. Accurate Buildcon Pvt. Ltd., Jaipur.
market value by taking into consideration various sale instances and as per the guidelines issued by the CBDT at least three instances of sale on or around the sale dates and in the locality in question. The various factors which are relevant for the purpose of determination of valuation are discussed in the guidelines issued by the CBDT being the guidelines for valuation of immovable properties 2009. Hence, in the facts and circumstances of the case, we find that the determination of fair market value of the property requires a fresh consideration and adjudication at the level of AO/DVO. Accordingly, we set aside this matter to the record of the AO with the direction to refer the matter to the DVO again for determination of fair market value of the property in accordance with the guidelines of the CBDT.
6. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 25/07/2018.
Sd/- Sd/-
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(BHAGCHAND) ( VIJAY PAL RAO )
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated:- 25/07/2018.
das/
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant-M/s. Accurate Buildcon Pvt. Ltd., Jaipur.
2. izR;FkhZ@ The Respondent-The ITO Ward 5(1), 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. 502/JP/2018} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 6 ITA No. 502/JP/2018 M/s. Accurate Buildcon Pvt. Ltd., Jaipur.