Income Tax Appellate Tribunal - Ahmedabad
Ito, Ward-3(1),, Ahmedabad vs Dharmishthaben J. Patell,, Ahmedabad on 23 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "C" BENCH
(BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
& SHRI S. S.GODARA, JUDICIAL MEMBER)
ITA. No: 2622/AHD/2014
(Assessment Year: 2010-11)
Income Tax Officer, Ward- V/S Dharmishthaben J. Patel,
3(1), Ahmedabad 88, Keshavnagar Society,
Nr. Subhashbridge,
Sabarmati, Ahmedabad-
38005
(Appellant) (Respondent)
PAN: AAUPP1802D
Appellant by : Shri Prasoon Kabra, Sr. D.R.
Respondent by : Shri S. N. Divatia, Adv.
(आदे श)/ORDER
Date of hearing : 22 -03-2018
Date of Pronouncement : 23 -03-2018
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:
1. With this appeal, the revenue has challenged the validity of the order of the Ld. CIT(A)-6, Ahmedabad dated 14.07.2014 pertaining to A.Y. 2010-11.
2 ITA No. 2622/Ahd/2014. A.Y. 2010-11
2. The substantive grievance of the revenue read as under:-
1. The CIT(A) erred in law and on the facts by deleting the addition of Rs.90,30,430/-
towards Long Term Capital Gain(LTCG).
2. The CIT(A) has erred in ignoring the facts of the case as the property in question was first held by the assessee on 7.4.1993 on the death of her father Shri Jayantilal Keshavlal Patel and as per Explanation (iii) to section 48 of the Act, the assessee is eligible for indexation from 1993-94 instead of 1981-82 as claimed by the assessee.
3. The CIT(A) has further erred in directing to consider the reference to DVO as bad in law on the ground that AO has not resorted to sub-clause(ii) of the Clause (b) of Section 55A without appreciating the fact that the AO has resorted the provision of Section 55(b)(ii) while dealing with the reference of valuation to the DVO.
3. The grievance relating to the eligibility of indexation from 1981-82 is no more res integra. Since the property sold was first held by the father of the assessee and the assessee received the said property through bill on the death of his father, the indexation benefit would be available from A.Y. 1981-82. This issue is well settled in favour of the assessee and against the revenue by the decision of the Hon'ble High Court of Bombay in the case of Manjula J Shah 355 ITR 474 and by Hon'ble Gujarat High Court in the case of Rajesh V Patel in Tax Appeal No. 13 of 2013 dated 17.04.2013. Since the First Appellate Authority has followed the decision of the Hon'ble High Court (supra), we decline to interfere.
4. The second grievance relates to the adoption of FMV as on 01.04.1981 by discarding the valuation report of the DVO.
3 ITA No. 2622/Ahd/2014. A.Y. 2010-11
5. The Hon'ble High Court of Gujarat in the case of Garangiben S. Shodhan in Tax Appeal No. 149 to 151 of 2013 has held that prior to the amendment of Section 55A, the A.O. was not vested with any power to refer the matter to the DVO for ascertaining the FMV as on 01.04.1981.
6. Since the A.O. has framed the assessment on the basis of the valuation report of the DVO, in the light of the decision of Hon'ble High Courts (supra), the reference to the DVO is void ab initio and the DVO's report is treated as non est. The only issue which have to be decided is now whether the FMV as on 01.04.1981 as stated by the assessee become sacrosanct and cannot be disturbed. Clause (b) (ii) of Section 55A states "that having regard to the nature of the asset and other relevant circumstances, it is necessary to do."
7. The assessee has furnished a valuation report from the approved valuer who determined the FMV as on 01.04.1981. The basis of arriving at the land rate and the instances of comparable sales of immovable properties in the locality as mentioned by the approved valuer read as under:-
A. By considering and comparing directly or indirectly the instances of the sales of similar properties of N.A. land executed/registered during the period of last three years preceding from the date of Valuation in terms of situation, area, locality, surrounding development & developmental potentiality, additional facilities it any available B. By making local inquiries and inquiries to the concerned Govt./Semi Govt. Deptts and Real Estate Developers.
C. Devaluation of Rupees and Liquidity in Capital Market.
D. Factor Fl of property tax bill of this area,
4 ITA No. 2622/Ahd/2014
. A.Y. 2010-11
E. Increasing trend in the market values of the immovable properties at
accelerated/rapid rates in real estate market due to growing economy at present.
F. Restriction and Control of ULC (C&R) Act 1976 as on 01/04/1981. G. ULC (C&R) Act 1976 repealed in August 1999 and not in force at present in Gujarat.
Rs.1100.00 per sq.mt as on 01/04/1981 The statement showing the instances of the sales of executed/registered during the period of last two years preceding from the dated valuation and as on 1981 is attached herewith. The minimum rate is Rs. 385.80 per sq mt and maximum rate 823.83 per sq. mt.
It is observed that instances of the sales available are found to be undervalued and do not reflect the true/fair market value in comparison with the rates actually prevailing due to three main reasons.
I. Involvement of unaccounted money upto more/much higher extent at the time of dealing and execution of the sale/transfer of the properties II. To save the Stamp Duty to be paid on higher side/rate at the time of the registration of the documents of sale/transfer of the properties. III. Control and restriction on the Urban lands due to ULC (C&R) Act 1976 was in force.
Hence lawful registration of the documents showing true/fair consideration (sale/value) of the immovable properties were almost absent in this area. Hence it is not easy to quote the specific instances of the sales to be relied upon to and direct comparable to the land/property u/r in terms of the locality, situation, shape, size, plot, area etc. In these circumstances, the increased trend in the gold price can also provide the basis for arriving at the land rate/value as on 1981. This commodity is generally sold/purchased by accounted money. Hence it's trend is useful for comparison. In April 1981, the gold price fixed by the Reserve Bank of India was Rs.162.50 per 5 ITA No. 2622/Ahd/2014 . A.Y. 2010-11 one gramme. The percentage increase was 100. While in 2002 it was Rs. 506.00 per one and percentage increase was 31 1.38. It was more and more during the years 2003 to 2010.
At present at the time of sale deed executed/registered on 19-02-2010. It was approx Rs. 1625A per one gramme. It is ten times more than the value as on April 1981. At present the rate for the plot/land u/r is prevailing at Rs. 8000/- per sq mt according to ASR 2006 (Annual Statement of Rates - 2006) for the stamp duty purpose come into force with effect from 01/04/2008. The period of more than four years has been lapsed in 2006 and Govt. has not yet revised the rates of A.S.R.2006.
The rate of A.S.R.2006 is not reflecting the rate prevailing at present in this area. It has come to know that the rate of developed land prevailing at present is Rs. 15,000/- per sq mt. The gold price may be applicable for fixing the land value 10 (ten) times less, it would be Rs. 15007- per one gramme.
Keeping in view all the criteria of Valuation benefits of FS1 etc at present in comparison with FSI prevailing in 1981 and analogy of increased gold price index, the average rate of the land u/r rate is assessed at Rs. 1100/- per sq.mt. as on 01/04/1981 as stated in Item No.13
8. A perusal of the above shows that the approved valuer himself as determined the range from Rs. 385.80 per sq. mtr. to 823.83 per sq. mtr. However, it can be seen that in spite of the range determined by him, he has adopted Rs. 1100 per sq.mtr. In doing so, the valuer has considered some extraneous consideration inasmuch as he has given much weigtage to the involvement of unaccounted money at the time of dealing and execution of the sale/transfer of the properties.
9. When this was pointed out to the ld. counsel, the ld. counsel himself agreed that the observations of the approved valuer are unwarranted and uncalled for.
6 ITA No. 2622/Ahd/2014. A.Y. 2010-11 The ld. counsel fairly conceded that the average of the range rates may be taken as the FMV as on 01.04.1981 which comes to around Rs. 605 per sq. mtr.
10. On such concession and on finding that the FMV of Rs. 1100 per sq. mtr.
adopted by the approved valuer is not based upon sound principles, we direct the A.O. to re-compute the capital gains tax liability, if any, by adopting the FMV as on 01.04.1981 at Rs. 605 per sq. Mtr.
11. Since our findings are based upon the peculiar facts of the case in hand, we do not find this to be a fit case for consideration as precedence in any other case. We direct accordingly. This ground is partly allowed.
12. In the result, the appeal filed by the Revenue is partly allowed.
Order pronounced in Open Court on 23 - 03- 2018
Sd/- Sd/-
(S. S. GODARA) (N. K. BILLAIYA)
JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER
Ahmedabad: Dated 23 /03/2018
Rajesh
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad