2015 (3) TMI 484 - AT - Income Tax

Computing capital gain on sale of 75.046 cents of land - determination of fair market value as on 01-04-1981 - Held that - The land is admittedly situated few metres away from the bypass road which is part of NH 47. It is also an admitted fact that NH 47 and bypass road was formed even in the year 1981. The subject matter of land has proximity to the national highway. It has potential for future development because of its location. The land was sold for construction of a multi-storey building consisting of 80 apartments. By taking into consideration all these factors, this Tribunal is of the considered opinion that the land would definitely fetch nearly ₹ 45,000 per cent. Even though the approved valuer estimated the value of the land at 51,272 per cent, since the assessee claims the value of the land only at ₹ 45,000 per cent, this Tribunal is of the considered opinion that the lower authorities have not justified in restricting the same at ₹ 3,000 per cent. The land compared by the assessing officer is 2 kms away from the subject matter of land, therefore, the value of that 5 cents of land cannot be taken as a comparable case for estimating the fair market value of the subject matter of land. Therefore, the lower authorities may not be justified in taking the value of the land at ₹ 3,000 per cent. Accordingly, the orders of the lower authorities are set aside, and the assessing officer is directed to take ₹ 45,000 per cent as fair market value as on 01-04-1981. - Decided in favour of assessee. Valuation of the building - though the assessee claims the value of the old house at ₹ 12,54,327 the assessing officer restricted the same at ₹ 7 lakhs - Held that - The assessee claims that the old house was nalukettu with teakwood and rose wood and it was well maintained by renovation from time to time. There is no reference about this house in the valuation report. There is no other material available on record to suggest that the house was built with teak wood and rose wood. In the absence of any material, this Tribunal is of the considered opinion that the assessing officer has rightly estimated the value at ₹ 7 lakhs. In respect of the other house, the assessee claims value at ₹ 16 lakhs. However, the assessing officer has taken the value at ₹ 15 lakhs. The approved valuer has not expressed any opinion about the value of this house. The remand report is also silent. No material is available on record to suggest the type of construction or otherwise to indicate the value of the land. In the absence of any material, this Tribunal is of the considered opinion that the assessing officer has rightly taken the value at ₹ 15 lakhs. - Decided against assessee.

Summary

Issues Involved:

1. Determination of fair market value as on 01-04-1981 for the land.
2. Valuation of residential houses on the land.

Detailed Analysis:

1. Determination of Fair Market Value as on 01-04-1981 for the Land:

The primary issue in this case was the determination of the fair market value of 75.046 cents of land as on 01-04-1981 for the purpose of computing capital gains. The assessee estimated the fair market value at Rs. 45,000 per cent, while the assessing officer restricted it to Rs. 3,000 per cent. The assessee's valuation was based on a report by an approved valuer, who estimated the value at Rs. 51,272 per cent, considering factors like location, proximity to NH 47, and potential for future development. The assessing officer, however, relied on a registered document dated 19-01-1980 for a 5 cents land, estimating its value at Rs. 3,000 per cent. The Tribunal noted that the subject land was situated much closer to the bypass road compared to the 5 cents land, which was 2 km away. Given the infrastructure and development potential, the Tribunal found that the lower authorities were not justified in restricting the value to Rs. 3,000 per cent and directed the assessing officer to accept the fair market value at Rs. 45,000 per cent as on 01-04-1981.

2. Valuation of Residential Houses on the Land:

The second issue was the valuation of two residential houses situated on the land. The assessee claimed the value of the old house at Rs. 12,54,327, while the assessing officer estimated it at Rs. 7 lakhs. The Tribunal found no substantial evidence to support the higher valuation claimed by the assessee, noting the lack of material to confirm the construction quality with teakwood and rosewood. Consequently, the Tribunal upheld the assessing officer's valuation of Rs. 7 lakhs for the old house.

Regarding the second house, the assessee estimated its value at Rs. 16 lakhs, but the assessing officer valued it at Rs. 15 lakhs. The Tribunal observed that there was no valuation report or material evidence to support the higher valuation claimed by the assessee. Therefore, the Tribunal upheld the assessing officer's valuation of Rs. 15 lakhs for the second house.

Conclusion:

The Tribunal partly allowed the appeal, directing the assessing officer to adopt Rs. 45,000 per cent as the fair market value of the land as on 01-04-1981 while upholding the assessing officer's valuations of Rs. 7 lakhs and Rs. 15 lakhs for the two residential houses, respectively.

Order Pronounced:

The order was pronounced in the open court on 17th October 2014.