2020 (2) TMI 707 - AT - Income Tax

Capital gain computation - assessee is aggrieved with the report of the DVO - HELD THAT - First objection relates to determination of fair market value as against DLC value and the fall in the fair market value especially due to the fact that the shops of the assessee are situated just in front of the railway bridge and due to such railway bridge, commercial value of shops has come down drastically which has been duly considered and addressed by the DVO in its report dated 30.10.2015. In his report, the DVO has stated that the shops are situated on main 100 feet wide road having all commercial amenities and regarding railway bridge, the assessee has not provided any alignment map/route map of bridge and at present, the work is stopped and as on date of sale, the bridge is not in existence. The said findings of the DVO remain uncontroverted before us and we therefore don t find any justifiable reason to interfere with the said findings of the DVO and the first objection is hereby dismissed. Regarding the other objection raised by the ld AR regarding adoption of CPWD rates as against PWD rates, we agree with ld AR that where the shops are situated in the jurisdiction of state PWD, State PWD rates should be applied for estimation of cost of construction of shops. The same is the consistent position of this Bench following the decision of Hon'ble Supreme Court in the case of CIT Vs. Sunita Mansingha 2017 (4) TMI 303 - SUPREME COURT including the decision of CIT Vs. Hotel Joshi 2017 (4) TMI 303 - SUPREME COURT . In absence of any contrary precedent brought to our notice, we direct the adoption of state PWD rates for determination of cost of construction of shops and to this limited extent, the matter is remanded to the file of AO/DVO to determine the value of the shops after considering state PWD rates. Thus, first ground of appeal is dismissed and the second ground of appeal is allowed for statistical purposes.

Summary

Issues: Valuation of property under Section 50C and adoption of CPWD rates

Issue 1: Valuation under Section 50C
The appeal was filed against the order of the ld. CIT(A)-II, Jaipur for the Assessment Year 2013-14. The Assessing Officer observed a variance in the sale consideration of three shops, leading to a discrepancy in valuation. The assessee contested the valuation, requesting a fair market value determination by a valuation officer. The Valuation Officer initially valued the shops at &8377; 11,94,402, later revised to &8377; 11,45,000. The assessee's objections based on location near a railway bridge affecting commercial value were not accepted by the Assessing Officer, who relied on the Valuation Officer's report. The ld CIT(A) upheld the valuation, leading to the appeal.

Issue 2: Adoption of CPWD rates
The second ground of appeal related to the adoption of CPWD rates by the Valuation Officer instead of State PWD rates for construction valuation. The assessee argued that State PWD rates should apply, citing the impact of the property's location near a railway bridge. The Tribunal agreed with the assessee, directing the adoption of State PWD rates for construction valuation. This decision was based on legal precedents, including the Hon'ble Supreme Court's ruling in CIT Vs. Sunita Mansingha. The matter was remanded to the Assessing Officer/Valuation Officer for valuation based on State PWD rates.

In conclusion, the Tribunal partially allowed the appeal, dismissing the first ground and allowing the second ground for statistical purposes. The decision highlighted the importance of considering fair market value and appropriate valuation rates in property assessments.