2015 (7) TMI 1369 - AT - Income Tax

Capital gain computation - Correctness of valuation report of D.V.O. - allowability of 25% of DM Circle Rate - for working out this value the D.V.O. has considered and accepted two demerits i.e. availability of no parking space and having graveyard on one side of the property and has allowed rebate of 10% as against DM Circle rate - HELD THAT - The difference between the value declared by the assessee at 49.397 lac and as determined by D.V.O. at 57.036 lac the difference is only 8.639 lac which works out to 15.15%. This is also to be noted that as per the judgment in the case of Bimla Singh 2008 (10) TMI 62 - PATNA HIGH COURT as held that difference between cost of construction shown by the assessee and as determined by the Assessing Officer being less than 15% same is to be ignored for the purpose of addition. Hence if it is accepted that the rebate allowed by D.V.O. on account of demerits is less such rebate should be 25% as against 10% allowed by the D.V.O. there will be no difference between the value declared by the assessee and value as per D.V.O. Since the rebate allowed by D.V.O. is estimated rebate without any basis indicated by D.V.O. in his report we feel it proper that in the facts of the present case such rebate should be 25% of DM Circle Rate and as a result there is no difference between the value as per D.V.O. and value as per the assessee and as a result no addition survives. - Decided in favour of assessee.

Summary

Issues:
1. Validity of assessment procedure and selection for scrutiny assessment
2. Acceptance of full value of consideration determined by departmental valuation officer
3. Consideration of declared sale value for computing capital gain
4. Adequacy of rebate for adverse property features
5. Comparison of sale consideration with similar properties
6. Relief from fair market value estimation
7. Reliance on judgments and principles of natural justice

Issue 1:
The appeal challenged the assessment order for the assessment year 2004-2005, questioning the selection for scrutiny assessment and lack of communication regarding the basis for scrutiny selection. The appellant argued that the regular assessment order was flawed due to these reasons.

Issue 2:
The appellant contested the addition of Rs. 8,63,903 to the assessed value, claiming that the full value of consideration at Rs. 57,03,623 determined by the departmental valuation officer was excessive. The appellant sought direction to accept the declared sale consideration of Rs. 48,39,720 for computing long-term capital gain.

Issue 3:
Regarding the valuation of the property, the appellant argued that the rebate for adverse features allowed by the valuation officer was insufficient due to the property's drawbacks. The appellant highlighted discrepancies in the valuation reports and sought a higher rebate for adverse property features.

Issue 4:
The appellant contended that the nature of adverse property features, such as the lack of parking space and proximity to a graveyard, warranted a higher rebate than the 10% allowed by the valuation officer. The appellant sought a more significant deduction to account for these drawbacks.

Issue 5:
The appellant presented instances of lower sale considerations for similar properties in the vicinity to support the argument that the declared sale consideration of Rs. 48,39,720 should be accepted. The appellant emphasized the need for a fair comparison with other property transactions in the area.

Issue 6:
The appellant sought further relief from the fair market value of Rs. 57,03,623 estimated by the district valuation officer. The appellant argued that the amendment in the Uttar Pradesh Stamp Rules was clarificatory and should result in a deduction of Rs. 9,39,998 from the fair market value.

Issue 7:
The appellant challenged the reliance placed by the CIT(A) on various judgments, arguing that they were misplaced and distinguishable on facts. The appellant contended that the order appealed against was contrary to facts, law, and principles of natural justice.

In the detailed analysis, the Tribunal considered the valuation reports, demerits of the property, and the adequacy of the rebate allowed by the valuation officer. Citing relevant judgments, the Tribunal concluded that the difference between the declared value and the valuation officer's assessment could be eliminated by increasing the rebate for adverse property features to 25%. Consequently, the appeal of the assessee was allowed, and no addition to the assessed value was upheld.