Income Tax Appellate Tribunal - Pune
Raosaheb Babasaheb Mangire,, Solapur vs Income-Tax Officer,, on 13 January, 2017
आयकर अपील य अ धकरण] पण
ु े यायपीठ "बी" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
सु ी सष
ु मा चावला, या यक सद य एवं
ी अ नल चतव
ु द
# , लेखा सद य के सम&
BEFORE MS. SUSHMA CHOWLA, JM AND
SHRI ANIL CHATURVEDI, AM
आयकर अपील सं. / ITA No.195/PUN/2014
नधा(रण वष( / Assessment Year : 2008-09
Raosaheb Babasaheb Mangire,
1819, Koreves, Azad Chowk,
At-Barsi, Dist. Solapur - 413401. .......... अपीलाथ /
Appellant
PAN : AIZPM 6591M
बनाम v/s
Income Tax Officer, .......... यथ /
Ward -2(3), Solapur.
Respondent
अपीलाथ क ओर से / Appellant by : Shri Pramod Shingte
यथ क ओर से / Respondent by : Shri P.L. Kureel
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 02.01.2017 Date of Pronouncement: 13.01.2017
आदे श / ORDER
PER ANIL CHATURVEDI, AM :
This appeal filed by the assessee is emanating out of the order of Commissioner of Income Tax (A) - III, Pune dt.28.11.2013 for the assessment year 2008-09.
2. The relevant facts as culled out from the material on record are as under :-
2 ITA No.195/PUN/2014AY.No.2008-09 2.1 Assessee is an individual who electronically filed his return of income for A.Y. 2008-09 on 28.07.2008 declaring capital gains of Rs.4,01,580/-. The case was selected for scrutiny and thereafter the assessment was framed u/s 143(3) vide order dt.28.12.2010 and the total taxable income was determined at Rs.1,81,70,880/-
by considering taxable long term capital gains at Rs.1,71,37,431/-.
Thereafter an order u/s 154 of the Act was passed on 18.01.2011 and the total taxable long term capital gains was determined at Rs.1,70,26,176/-. Aggrieved by the order of the AO, assessee carried the matter before ld. CIT(A), who vide order dt.28.11.2013 (in appeal No.Pn/CIT(A)-III/ITO Wd-2(3)/Sol/545/2010-11/561) dismissed the appeal of the assessee. Aggrieved by the order of ld.
CIT(A), assessee is now in appeal before us and has raised the following grounds :
"1.On the facts and in the circumstances of the case and in law, the lower authorities have erred in adopting the value of net consideration at Rs.2,52,70,000/- as against the actual sale consideration as per the agreement and summarily disregarding appellants contention in this regard.
2. On the facts and in the circumstances of the case and in law, the Departmental Valuation officer has erred in arriving at the fair market value of the property by not giving sufficient opportunity of hearing and also by not considering various limitations under which appellant has sold the land."
Subsequently, assessee has also prayed for admission of the following additional ground:
"On the facts and in the circumstances of the case and in law, the Learned Assessing Officer erred in invoking the provisions of the Sec.50C of the Income Tax Act, 1961, the subsequent events in the transaction clearly reflects that appellant's right in the land got vitiated and ultimately said right is given up by your appellant therefore the amount received is merely a capital receipt and therefore not covered by relevant provisions of the Act. Your appellant prays for 3 ITA No.195/PUN/2014 AY.No.2008-09 setting aside the matter for fresh verification to the file of Learned Assessing Officer in the interest of natural justice."
3. With regard to request for admission of the additional ground raised, it was submitted that the additional ground raised goes to the root of the matter wherein AO has invoked Sec.50C of the Act. It is assessee's contention that by virtue of subsequent events, provisions of Sec.50C of the Act are not applicable. It is therefore contended that the grounds being legal ground, the same may be admitted. Ld. D.R. did not seriously object to the admission of additional ground. Considering the aforesaid, the additional ground raised by assessee is admitted.
4. During the course of assessment proceedings, AO noticed that assessee had along with Smt.Jaidevi Mallikarjun Warad had sold property situated at CTS No.1157 and 1158, Sadasiv Peth, Pune admeasuring 878.77 sq.mtrs and 3572.08 sq.mtrs to U.K. Enterprises for a consideration of Rs.1,50,00,000/-. AO noted that the property originally belonged to Smt. Anandibai Mahadev Veerkar (Shete) and on her death Smt. Trivenibai Anant Veerkar (Shete) who was daughter-in-law of Anandibai, became the owner of the property. Smt. Trivenibai Anant Veerkar was aunt of the assessee and had bequeathed the property by registered Will dt.16.12.1984 amongst Raosaheb Babasaheb Mangire (assessee), Smt. Jaidevi Mallikarjun Warad, Shri Yogesh Sudhir Sopal and Shri Manoj Ratnakar Andikar in equal shares i.e., 1/4th share each. It was also noted that the shares were undivided and the 4 ITA No.195/PUN/2014 AY.No.2008-09 demarcation of the individual share of each owner by metes and bounds was not practically possible. During the year, as agreed upon between UK Enterprises, Raosheb Mangire and Smt. Jaidevi Mallikarjun Warad, the property was sold for a consideration of Rs.1,50,00,000/- (i.e., Rs.75,00,000/- each) plus one plot each in the housing scheme at B Building, Kakade City, Higane, Karve Nagar, Pune at Rs.10,34,700/- including stamp duty and registration expenses. Thus according to assessee the agreed sale price for each 1/4th share was Rs.85,34,700 = (Rs.75,00,000/- + Rs.10,34,700/-) With a view to arrive at a correct cost of land and the correct cost of acquisition as on 01.04.1981 the matter was referred by AO to Valuation Officer. The Valuation Officer determined the fair market value of land at Rs.2,52,70,000/- as on 21.04.2007 i.e., the date of sale and the fair market value of the land (as on 01.04.1981) was determined at Rs.5,98,500/-. The AO taking into consideration the valuation as determined by the Valuation Officer, determined the taxable "Capital Gains" at Rs.1,71,37,431/-. (The value was subsequently corrected to Rs.1,70,26,176/- vide order passed u/s 154 of the Act.) Aggrieved by the order of AO, assessee carried the matter before ld.
CIT(A), who dismissed the appeal of the assessee by holding as under :
"5. The crux of the issue to be decided in this appeal is the applicability of sec. 50C and the resultant valuation u/s 50C(2) in respect of the sale of property by the appellant. The stamp duty value in respect of property at CTS nos. 1157 and 1158 was Rs.2,62,00,000/- as per sale deed. Thus, the deemed value of consideration as per sec. 50C 5 ITA No.195/PUN/2014 AY.No.2008-09 works out at Rs. 2,62,00,000/-. While there can be no dispute that the expression "full value of consideration"
used in section 48 does not refer to market value but to consideration bargained by the parties, as has been held by the Hon'ble Supreme Court in George Henderson & Co. 66 ITR 622 and CIT vs Smt. Nilofer I. Singh (2009) 176 Taxman 252, section 50C has created an exception to this legal position. It is noteworthy that section 50C of the Income tax Act, was brought into the statute w.e.f. 1.4.2003. The provisions of this section have been explained in Board's Circular No. 8/2002 dated 27.8.2002, as follows :
37. Computation of capital gains in real estate transactions 37.1 The Finance Act, 2002 has inserted a new section 50C in the Income-tax Act to make a special provision for determining the full value of consideration in cases of transfer of immovable property.
37.2 It provides that where the consideration declared to be received or accruing as a result of the transfer of land or building or both, is less than the value adopted or assessed by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall be deemed to be the full value of the consideration, and capital gains shall be computed accordingly under section 48 of the Income-
tax Act.
5.1. From the above circular and from the unambiguous language of the provisions of sec. 50C, it is clear that where the consideration declared to be received or accruing from the transfer of the land is less than the stamp duty value (as is the fact in this case) the stamp duty value shall be deemed to be the full value of consideration, and capital gains are mandatorily to be computed adopting the said value as the full value of consideration for the purposes of section 48. The constitutional validity of sec. 50C has been upheld by the Madras High Court in K.R. Palanisamy vs Union of India reported in 306 ITR 61 and by the Bombay High Court in the case of Bhatia Nagar Premises Co- operative Society Ltd. vs Union of India reported in 234 CTR 175 and it has been held that even though the section 50C applies only to capital asset and not to trading assets or stock in trade, the same is not discriminatory or violative of article 14 of Constitution of India. The transaction under consideration was admittedly undertaken in the previous year 2007-08, relevant to A.Y. 2008-09, which is well after the provisions of section 50C came into force. I have therefore, no hesitation in holding that the Assessing Officer has correctly invoked the provisions of section 50C in the present case.
6 ITA No.195/PUN/2014AY.No.2008-09 5.2. Having held that section 50C is applicable, what remains to be seen is whether the provision of sub-sec. (2) to sec. 50C has been correctly applied or not. It is seen from the assessment order that the appellant has not disputed the stamp duty valuation before any Authority, Court or High Court but has objected before the Assessing Officer that the value adopted by the stamp valuation authority exceeds the fair market value as on the date of transfer. In such a situation, although the reading of the sec. 50C(2) shows that the Assessing Officer 'may' refer the valuation of the capital asset to the DVO, the Courts have held that where assessee disputes the stamp duty valuation, the Assessing Officer has to necessarily refer the matter to the DVO. These include Pune ITAT decision in KK Nag Ltd vs Addl.CIT 52 SOT 381, Mumbai ITAT decisions in the cases of Mrs. Nandita Khosla vs ITO 46 SOT 90 (Mum) and Ajmal Fragrances and Fashions (P) Ltd. vs ACIT 34 SOT 57 (Mum), and Bangalore ITAT decision in Smt. T.V. Nagasena vs ITO 53 SOT 166 (Bang). Further, in the recent decision dated 22.07.2013, the Hon'ble High Court of Madras in the case of S. Muthuraja vs CIT reported in 37 taxmann.com 352 upheld the assessee's stand that once the stamp duty valuation is objected to, the Assessing Officer has to refer the matter to DVO u/s 50C(2). The High Court held that not only the ITO but also the appellate forums erred in not adverting to sec. 50C(2), when specific objection has been made by the assessee in the following words :-
"When specific objection was made by the assessee as to the Assessing Officer adopting the market value, under section 50C(2), the Assessing Officer ought to have referred the valuation of the capital asset to the Valuation Officer, whereas the authorities below referred to section 50C(1) alone without adverting to section 50C(2). [Para 5] A reading of the order of the Assessing Officer shows that having found such an objection, the Assessing Officer committed serious error in not adverting to section 50C(2). The error proceeded throughout before every appellate forum. There is no justification in the order of the Tribunal taking the view that there is nothing on record to show that the assessee had disputed the sale consideration of Rs. 39,63,900 adopted for the purpose of stamp duty for the purposes of working out capital gains. In such view of the matter, the matter is restored to the files of the Assessing Officer to work out capital gains by invoking section 50C(2). [Para 6]"
5.3. Therefore, there is seen to be no infirmity in the Assessing Officer's action in referring the matter to the DVO u/s 50C(2) particularly in the background that the appellant objected to the stamp duty valuation during assessment proceedings. Having held so, the question that arises is that once the DVO has arrived at a particular valuation, whether the Assessing Officer is bound to accept that valuation or is obliged to adopt the value said to be received as per the sale deed. In this regard, it is seen that the Bombay High Court in the case of CIT vs. Prabhu Steel Industries Ltd. reported in 36 taxmann.com 393, has held that the Assessing Officer 7 ITA No.195/PUN/2014 AY.No.2008-09 is bound to act in conformity with the valuation of the capital assets as arrived at by the DVO, reason being that the DVO is an independent and statutory for resolving such controversies. To quote from the High Court order :-
"It is apparent from section 16A of Wealth-tax Act that these provisions mandate that after the Assessing Officer receives report of Valuation Officer under section 50C, he has to act in conformity with the valuation of the capital asset worked out therein.
When these provisions are looked into, it follows that such valuation officer is an independent & distinct statutory forum for resolving the controversy regarding determination of the market value of the property with all necessary powers; Its order or report is made binding on the Assessing Officer and, thus, he enjoys equivalent status."
5.4. Therefore, in view of the decision of the jurisdictional High Court order, it is held that there is no infirmity in the Assessing Officer's action in computing the capital gains based on the fair market valuation as on the date of sale as determined by the DVO.
5.5. The appellant's first ground of appeal is that proper opportunity of hearing was not given by the DVO in passing the order u/s 50C(2). In this regard, it is seen that the matter was referred to the DVO on 02.11.2010 for deriving the fair market value of the properties as on the date of sale i.e. as on 21.04.2007 as well as the fair market value as on 01.04.1981in order to arrive at the indexed cost of acquisition under the proviso to sec. 48(ii). The DVO issued notice to the appellant to submit certain relevant documents by 15.11.2010, which has been compiled with by the appellant. Subsequently, the property was inspected by the DVO in the presence of appellant and his Chartered Accountant. The preliminary valuation report was forwarded to the appellant by the DVO vide letter dated 06.12.2010 and the appellant was asked to state objections, if any, by 14.12.2010, which were so done by the appellant on that date. The appellant's objections are that sufficient time was not given by the DVO, who took two weeks for inspection and another three weeks for preparing the preliminary report but the appellant was only given one week's time for raising objection.
5.6. I have considered this objection and find that all the objections raised by the appellant vide letter dated 14.12.2010 have been discussed and considered while evaluating the market value of the property as on the date of sale. Further, the DVO has also discussed, in great detail, why the sale instance relied upon by the appellant's registered valuer is not acceptable. In view of the same, it is held that sufficient opportunity was given by the DVO to the appellant in raising his objection to the preliminary report and each and every objection has been addressed by the DVO. Ground no. 1 fails.
8 ITA No.195/PUN/2014AY.No.2008-09
6. The second ground of appeal relates to the specific issues, which as per the appellant, the learned DVO has not considered in arriving at the fair market value of the property and is being considered with the third ground since the issue relates to the most appropriate fair market value of the property. In this regard, the Bombay High Court in the case of CIT vs. Prabhu Steel Industries Ltd. reported in 36 taxmann.com 393 held that it was necessary to afford and opportunity of being heard to the District Valuation Officer in view of the obligation cast upon the appellate authorities by virtue of the proviso of sec. 24(5) of the Wealth Tax Act, 1957 r.w.s. 50C(2) of the IT Act. Accordingly, the learned DVO, Solapur Shri E.P. Dhane was requested to be present and was duly heard on the various objections raised by the appellant on 19.11.2013. The first objection is that the comparable sale instances relied upon by the DVO are not of the tenanted properties but they are freehold and under self- occupation of the owners without any encumbrances, as can be seen from their registered sale deed (copies of which have been supplied). I have examined sale deed relating to Land & Building at CTS No. 437/A/2, Narayan Peth, Pune appearing at serial no.1 at para 4.1 supra. The property was sold in the year 1936 by Shri Vasantrao Jaywantrao Barve to Shri Dattatray Hari Date but actually belong to the joint undivided family of 03 brothers namely Dattatray, Gajanan and Krishnaji Date. The property was partitioned in the year 1939, wherein it was assigned to Shri Krishnaji Date, and following his death in the year 1980, the names of all his legal heirs namely three sons and five daughters were mutated in the property register. Thereafter, there was an oral settlement between the various members of the family, which was reduced to writing on 08.07.1984. Although, the sale deed mentions that the building admeasuring 2060 sq.ft. is in the peaceful possession of the vendors, it is very apparent that only part of the premises was in occupation of the vendors and that the property was otherwise in the possession of other tenants and was yielding a meagre income to be able to support the family of the vendor (clauses O and P of the sale deed refer) 6.1. Coming to the second sale instance, appearing at Sl no. 2 of the table, it pertains to land and building at Survey no. 139, Narayanpeth registered vide document no. 3719 dated 18.06.2003. Perusal of the sale deed shows that the property was purchased by Shri Jaywant Jagade from one Shri Ramchandra Maruti Shelke in 1985 and two-storey building along with car park was constructed thereon. The names of his legal heirs were registered on the property card after his death on 07.12.1996. Although the sale deed does not specifically mention the fact that the building is tenanted, the DVO Shri Dhane has asserted that his Junior Engineer has specifically requisitioned and been provided, the sale instances of tenanted properties only from the O/o Sub-Registrar, Haveli-1. So far as the third sale instance is concerned, appearing at the serial no. 3 of the table, it pertains to land and building at Survey no. 540, 9 ITA No.195/PUN/2014 AY.No.2008-09 Narayanpeth registered vide document no. 901 dated 22.03.2004. The property originally belonged to Smt. Kesarbai Bhandari after whose death on 15.07.1945, the property devolved upon her two daughters Smt. Ramkunwar Chandak and Ayodhyabai Lahoti. The properties of Smt. Kesarbai Bhandari were distributed between the two sisters in 1957 and this property was given as the share of Smt. Ramkunwar Chandak. Property at Survey no. 138B was given to Smt. Ayodhyabai Lahoti. However, Smt. Ayodhyabai Lahoti's name remained to be removed from the property card, which dispute is still pending at the time of signing the development agreement. Therefore, it is seen from the registered sale deed itself that the property is disputed property and was jointly held by 08 co-owners, who have together sold/transferred the property to the developer. The last and fourth sale instance referred by DVO, appearing at Sl. No. 4 of the table pertains to land and building at survey no. 273, Narayanpeth, Pune, registered by document no. 4023 on 16.07.2004. At the time that the property was handed over to M/s J.J. Construction for development purposes, it is noticed that there were 8 tenants on the property, who were paying rent to the owner Shri N.B. Lahoti. However, since the rent collected was very negligible and Shri Lahoti could not paid corporation charges/taxes out of the rent so collected, he decided to hand over the property to M/s J.J. Construction for development. The sale deed clearly mentioned that M/s J.J. Construction was to settle compensation payable to the tenants. Therefore, it can be seen that the appellant's objection that none of these properties are comparable sale instances since these are not tenanted properties, is not borne out from the record. In each of these sale instances the developer has entered into the agreement, being fully aware that seller of the property is not in complete physical possession of the properties. In some of the cases the ownership as per the land record is also disputed as discussed supra with reference to sale instance no. 3 (land and building at Survey no. 540, Narayanpeth). In the property referred to Sl. No. 1 (Land & Building at CTS No. 437/A/2, Narayanpeth, Pune) a portion of the property admeasuring 70.90 sq.m. has even been acquired by the PMC for parking purposes. Therefore, it is seen from the above discussion that all the comparable sale instances relied upon by the DVO are disputed properties or they have tenants, whom the builder has undertaken to clear and vacate before developing the land. It is Shri Dhane's contention that normally only a couple of comparable sale instances are considered in deriving the market value of the land but in the present case, since more than two sale instances were available, he has taken into account all four sale instances so that a reasonable fair market value can be arrived at. The DVO has considered the appellant's contention that there were no buyers for the captioned property with the counter that in the congested part in the city of Pune, almost all the properties are encumbered with tenants or litigation with tenants. However, due to scarcity of land in the city area, these pieces of land still have 10 ITA No.195/PUN/2014 AY.No.2008-09 number of willing buyers as can be seen from the sale instances cited by him having similar conditions.
6.2. It has also been contended by way of second objection that the DVO has not given detailed working as to how he has arrived at the land value of Rs.22,710/- per sq.m. The DVO's valuation report clearly mentions that the same has been arrived at by comparable sale instances method. During the course of appellate proceedings, Shri Dhane explained that the land rate has been adjusted for suitable inflation/time factor to arrive at the fair market value of the property as on 21.04.2007, which is the date of sale by the appellant. The land rate calculation as on the date of valuation/date of sale i.e. 21.04.2007 has been arrived at by the DVO as under :
(i) Sale Instance No. 1 Rate 14758
Add for time gap of 3 8854.8
years & 11 months at
60%
TOTAL 23612.8
Add for location at 20% 4722.56
TOTAL 28335.4
(ii) Sale Instance No. 2
Rate 19934
Add for time gap of 3 11960.4
years & 10 months at
60%
TOTAL 31894.4
Add for location at 15% 4784.16
TOTAL 36678.6
(iii) Sale Instance No. 3
Rate 18100
Add for time gap of 3 9050
years & 2 months at
50%
TOTAL 27150
Add for location at 15% 4072.5
TOTAL 31222.5
(iv) Sale Instance No. 4
Rate 15126
Add for time gap of 3 6504.18
years & 9 months at
43%
TOTAL 21630.2
Add for location at 15% 3244.53
TOTAL 24874.7
Average Rate
30277.8
Less for size, undivided share & -
litigations/disputes with tenants 7569.45
and tenancy encumbrances etc
at 25% 22708.3
11
ITA No.195/PUN/2014
AY.No.2008-09
Say Rs.
22710/-
6.3. The above working made by the DVO, Solapur shows that the average rate as adjusted by time factor, size, tenancy encumbrances and co-ownership has been taken into consideration in arriving at the land rate. The DVO has explained the reasons that the fair market value adopted by him, which is the 'comparable sale instance' method after considering encumbrances, is the one that the property would fetch or the prudent buyer would offer if put to sale in an open market.
6.4. He has also discussed why the appellant's registered valuer's report cannot be relied upon. The appellant had relied upon the sale instance of a flat admeasuring 867 sq.ft. at Sadashiv Peth which was sold on 12.02.2001, as per which the valuer has worked out the land rate at 1661 per sq.ft. The appellant has taken the gross rate at Rs. 2820 per sq.ft. (as per sale deed), reduced cost of structure at Rs. 600/- and builders profit at 20% at Rs.565/- to arrive at the land rate of Rs.1661 per sq.ft. Thereafter, the appellant's valuer has deducted 50% for tenants to arrive at the value of the land at Rs.830.5 per sq.ft. and similarly, arrived at the government rate for stamp duty purpose at Rs.948 per sq.ft. (being 50% of the government rate of Rs.1895 per sq.ft.). The DVOs replý to the appellant's registered valuer's report is reproduced herein under :-
"The assessee has submitted the Registered valuer's report in the form O-1 by one Mr. Shekhar L. Thite, whose registered number is quoted as CAT-A-22/1988.
First of all the sale instances cited by you is of flat, which is not at all comparable. Further the regd. valuer has deducted the cost of construction and builders profit randomly without supporting documentary evidences. Moreover the builder charges on saleable area which is 25% to 30% more than the actual built up area. Thus the built up area excluding common circulating area, balcony area and terrace area etc. it works out to 70% of salable area. In city area the permissible FSI is 2 or more Considering FSI = 2, the land area appurtenant to the flat works out to be 35% of the salable area and the land rate works out to be much on higher side (in this case 1661X100/35 = 4756/- per sqft.) The logic of deduction of 50% for tenants is totally incorrect. As per rent control Act at best the tenants right is protected to the equivalent area in his possession while redeveloping the property with revised standard rent. The tenants cannot share 50% of the consideration.
Further he states that the area in possession of the tenants in total is 7500 sqft. And adopted 50% rate on the total area which is random and unacceptable. As such the valuers report cannot be relied upon.12 ITA No.195/PUN/2014
AY.No.2008-09 As regards value of the structures, it is not included in the fair market value, as the prudent buyer will demolish the old structure while redeveloping the property, as it has substantial balance potential.
In view of the above the fair market value worked out, based on sale instances with similar conditions is just and fair."
6.5. The third objection of the appellant is that in his case, the structure of the building does not belong to him, whereas it is not known from the sale instance as to who built the structure further in the appellant's case, the structure is very old (some of it constructed even before the year 1950), semi-permanent and even temporary, whereas the type of structure in the instances of sale taken by DVO may not be of this type. However, as can seen from the above remarks of the DVO in the valuation report, he has not taken the cost of the old and depreciated structure in the fair market value for the reason that normally the developer or prudent buyer would demolish the old structure at the time of development of the property, which would add to the value and potential of the property. Therefore, this objection of the appellant is also not correct.
6.6. The fourth objection is that the appellant's property is located at Sadashiv Peth, whereas the comparable sale instances cited by the DVO are at Narayapeth, Pune and are therefore in different location. The appellant contends that those sale instances are comparatively better located than the appellant's plot, which in a congested area. The time lag between the comparable sale instances relied upon by the DVO has also been questioned. These are also not acceptable objections, being factually incorrect. There is no dispute with the legal proposition as per the case laws relied upon by the appellant, that the rate of sale instances in nearby location should be considered and that situated far away should be ignored, while determining the fair market value of the property. However, in the appellant's case, it is seen that Narayanpeth and Sadashiv Peth are located on opposite sides of Laxmi road in Pune Central area and Sadashiv Peth is considered a far more prime location than Narayanpeth. In fact, the valuation report of the DVO specifically refers to the fact that the location of the flat cited for comparable sale instance is far inferior to the appellant's property, which is incidentally located on Hatti Ganpati Road, Opposite Bhave High School in Sadashiv Peth, Pune and therefore, is more centrally located than the sale instance cited. Therefore, it has to be held that the DVO has correctly considered them as nearby locations and adopted the value of the properties at these locations for comparable sale instances. So far as time gap is concerned, the appellant's registered valuer is himself relying on the sale instance of February 2001, which in fact predates the sale instances of the years 2003 and 2004 taken into consideration by the DVO.
13 ITA No.195/PUN/2014AY.No.2008-09 6.7 The fifth and the final objection is that the sale instances that have been relied upon by the DVO are very small portions of land admeasuring between 100 to 500 sq.m., whereas in the appellant's case the land involved is more than 4450 sq.m. in total, which is about 9 to 44 times the size of the land relied upon. This objection is also not acceptable since firstly, the appellant share out of the total land of area of 4450 sq.m. is only 1112 sq.m. (being ¼ share). Secondly, the DVO Shri Dhane has stated that in fact, smaller plots would fetch comparatively less price as compared to larger size plots as that gives the developer more potential to develop the land. With the DP plan that is envisaged for Pune city, developers tend to acquire larger chunks of land from owners having contiguous pieces of land so that they can develop clusters of housing.
6.8. The appellant is relying upon the Bombay High Court order in the case of State of Maharashtra & others vs Nanabhai Rathod & others( AIR 1989 BOMBAY 9) which decided a case of compulsory acquisition of land located within the municipal limits of Gondia by the state government of Maharashtra. In the facts of the case, since the land was undeveloped, located in an inaccessible area and the soil was unsuitable for construction, the High Court held that the development method had to be adopted for large undeveloped lands. It was thus held "where there is a large area of undeveloped land under acquisition , provision has to be made for provision has to be made for providing the minimum amenities of town life such as water connection, well laid-out roads, drainage facility, electric connections. Etc. The process necessary involves deduction of the cost of factors required to bring the undeveloped lands on a par with the developed lands on a par with the developed lands. An extent 20per cent of the total land acquired is normally taken as a reasonable deduction for the space required for roads., but the cost of development may range from 20 to 33 per cent spending on the nature of the land, its situation and the stage of development., etc. in the circumstances of the present to make a deduction it would be only proper to make a deduction of 25 per cent from the value of the land as development costs." On the contrary, the appellant's plot is located in a developed area within the heart of Pune city with prime potential. The facts of the case in Nanabhai Rathod's case(supra) cannot therefore be applied to the facts of the present case.
6.9. As can be seen from the discussion in the preceding paragraphs, none of the objections raised by the appellant can be said to be valid objections. In fact, as against the stamp duty rate of Rs.2,62,00,000/- fixed by the Stamp Valuation authorities, the DVO has arrived at a FMV of Rs. 2,52,70,000/- after duly considering the facts relating to co- ownership, tenancy encumbrances, size and location of land. The comparative sale instances are also those relating to tenanted and disputed properties. It is also noted that the Karnataka High Court in V.C. Ramachandran vs CWT reported in 126 ITR 157, disagreed with the proposition that the principle applicable for the interpretation of taxing 14 ITA No.195/PUN/2014 AY.No.2008-09 statute namely that if two opinions/interpretations were available, the one which is favourable to the assessee should be adopted and held that if there are more than one valuation of the same property, the one which is reasonable and nearest to the correct market value, having due regard to all the relevant facts and circumstances of the case alone should be accepted even if the said valuation is a higher valuation. Hence, there can be no infirmity in the Assessing Officer's action in adopting the DVO's report u/s 50C(2). Accordingly, Ground Nos. 2 and 3 stand dismissed.
7. Unnumbered ground of appeal says that appellant be allowed to add, amend, alter or delete any ground of appeal at the time of appellate proceedings. No such option has been exercised by the appellant during the appellate proceedings. Therefore, it is clear that this ground of appeal is academic in nature and no decision is required in respect of this ground of appeal. For the statistical purpose, this should be taken to be dismissed ground of appeal."
Aggrieved by the order of ld. CIT(A), the assessee is now in appeal before us.
5. Before us, ld. A.R. reiterated the submissions made before AO and ld. CIT(A) and submitted that the provisions of 50C are not applicable because what the assessee had sold was his right in the land not the land or building. He further submitted that though the Co-ordinate Bench of the Tribunal in the case of Smt. Jaydevi Mallikarjun Warad (in ITA No.162/PN/2014 dt.16.09.2015) (in the case of co-owner) had granted partial relief to the assessee but there are certain events which have taken place subsequently after the passing of order in the case of co-owner and that those events go to the root of the matter and have the bearing on the issue in appeal. He therefore submitted that the issue will need to be re-looked in the light of those events. The subsequent events as per ld.A.R. are that assessee along with co-owner Jaidevi Mallikarjun Warad had entered into a sale deed on 21.04.2007 with U.K. 15 ITA No.195/PUN/2014 AY.No.2008-09 Enterprises for sale of their respective share on "as is where is basis". On 12.04.2007 another legal heir, Mr. Dilip Gangadhar Sopal, filed an application before City Survey Officer stating that Smt. Trivenibai Anant Veerkar has executed a Codicil on 16.12.1984 and bequeathed the share of assessee in favour of Mr. Dilip Gangadhar Sopal. Based on the aforesaid application of Mr. Dilip Sopal, City Survey Officer vide order dt.30.04.2008 added the name of Mr. Dilip Gangadhar Sopal in the place of assessee in the revenue records. Thereafter, against the aforesaid order assessee filed appeal before Deputy Director, City Survey, Pune on 23.08.2008 and the Appellate Authority vide order dated 10.09.2008 has granted the stay. He further submitted that assessee had given Power of Attorney dt.19.10.2012 to U.K. Enterprises for representing the matter in appeal on behalf of the assessee. He further submitted that USK Ventures (erstwhile U.K. Enterprises) has given to assessee surety and bond dt.19.10.2012 for not claiming any sale proceeds, cost etc in respect of sale deed dt.21.04.2007. He further submitted that Dilip Gangadhar Sopal vide registered sale deed dated 23.05.2011 had sold above portion of land to M/s. Natu Developers. He also placed on record the copy of the aforesaid orders and registered sale deeds in the paper book. He therefore submitted that since the subsequent event as described hereinabove go to the root of the matter and since those were not before the AO, in the light of these developments the matter be re-examined and prayed that the matter be remanded to AO for fresh examination. He further assured of co-operating by furnishing all the necessary documents as required by the AO. Ld. 16 ITA No.195/PUN/2014 AY.No.2008-09 D.R. on the other hand supported the order of ld. CIT(A) and did not seriously object to the prayer of ld.A.R. of remanding the matter to AO in the light of developments stated by ld.A.R.
6. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to computation of capital gains. Before us ld.A.R. has submitted that certain material developments had taken place like bequeathing assessee's share in land in favour of Dilip Sopal, City Survey Officer passing the order by replacing the name of assessee with that of Dilip Sopal, assessee obtaining stay against the inclusion of name of Dilip Sopal in place of assessee and Dilip Sopal subsequently selling the portion of land to another developer. We are of the view that the aforesaid developments are material developments which goes to the root of the matter and the entire issue needs to be re-looked into in the light of the aforesaid developments. Assessee has also placed on record the copy of the aforesaid orders, documents as additional evidences.
Considering the totality of the aforesaid facts and in the interests of justice, we are of the view that the issue needs to be re-
examined. We therefore without expressing any views on the merits, set aside the issue to the file of AO for deciding the matter afresh in view of the aforesaid developments. We thus, restore the issue back to the file of AO with a direction to him to decide the issue afresh after considering the submissions of the assessee and in accordance with the law. Needless to state that AO shall grant 17 ITA No.195/PUN/2014 AY.No.2008-09 adequate opportunity of hearing to the assessee. Thus, the grounds of assessee are allowed for statistical purpose.
7. In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced on the 13th day of January, 2017.
Sd/- Sd/-
(SUSHMA CHOWLA) (ANIL CHATURVEDI)
या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
पुणे Pune; दनांक Dated : 13th January, 2017.
Yamini आदे श क* + त,ल-प अ.े-षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. Commissioner of Income Tax-(Appeals) - III, Pune
4. Commissioner of Income Tax-IV, Pune 5 #वभागीय &त&न'ध, आयकर अपील य अ'धकरण, "बी/ DR, ITAT, "B" Pune;
6. गाड, फाईल / Guard file आदे शानस ु ार/ BY ORDER,स या////// True Copy //T // // // True Copy // //True Copy// सहायक रिज12ार/ Assistant Registrar, आयकर अपील य अ'धकरण ,पुणे / ITAT, Pune.