2013 (4) TMI 42 - AT - Income Tax

Computation of capital gain on sale of land - Valuation - CIT(A) adopted the average of four values and determined the value as on 01-04-1981 at Rs. 49,000/- per cent as against Rs. 15,000/- per cent determined by the AO - assessee submitted that the land sold by the assessee is located on the main road whereas the two lands referred by the Sub-Registrar are located on the side roads - Held that - The land sold by the assessee is located on a main road called Keston Road and the lands referred by the Sub-Registrar are located in the side roads of Belhaven Gardens. Before the CIT(A), the assessee has filed valuation reports given by two different registered valuers and also the assessment record pertaining to Dr. Nirmala Devi Ravindran who had also sold a property located in that area. Hence, on a conspectus of the matter, the CIT(A) has determined the value as on 01-04-1981 at Rs. 49,000/- by taking average of all available datas. Thus it can be fairly concluded that CIT(A) has taken a conscious decision after taking into consideration all the factors relating to the issue. AO has blindly placed reliance on the comparable cases collected from the Sub Registrar, without factoring in the price advantage commanded by the impugned property due to its strategic location. Thus no necessity to interfere with the decision taken by the CIT(A), as the principle of averaging generally evens out the abnormalities - against revenue.

Summary

Issues:
1. Determination of the value as on 01-04-1981 for computing capital gain on land sale.

Analysis:
The appeal before the Appellate Tribunal ITAT Cochin involved the determination of the value as on 01-04-1981 for calculating the capital gain on the sale of land. The Revenue challenged the decision of the Ld. CIT(A) who had determined the value at Rs. 49,000/- per cent, differing from the Assessing Officer's determination of Rs. 15,000/- per cent. The land in question was sold by the assessee along with others, and discrepancies arose regarding the valuation method used by the Assessing Officer based on comparable properties identified by the Sub-Registrar.

The assessee objected to the Assessing Officer's proposed value of Rs. 15,000/- per cent and provided valuation reports from registered valuers and a comparable case to support a higher valuation. The Ld. CIT(A) considered all available data and arrived at an average value of Rs. 49,000/- per cent, taking into account the various valuations presented. The Revenue, aggrieved by this decision, appealed to the ITAT Cochin.

During the proceedings, the Ld. Counsel for the assessee argued that the strategic location of the land on the main road should command a higher value compared to the properties used for comparison by the Assessing Officer. The Ld. DR, on the other hand, contended that the Assessing Officer's valuation of Rs. 15,000/- per cent was reasonable based on the comparable cases identified. The Tribunal examined the location of the properties involved, the valuation reports submitted, and the arguments presented by both parties.

After careful consideration, the ITAT Cochin upheld the decision of the Ld. CIT(A) to adopt the average value of Rs. 49,000/- per cent as on 01-04-1981 for computing the capital gain on the land sale. The Tribunal noted that the averaging of valuations helped mitigate any anomalies and that the Assessing Officer's reliance on comparable cases did not adequately consider the premium value associated with the land's prime location. Consequently, the appeal filed by the Revenue was dismissed, affirming the valuation determined by the Ld. CIT(A).