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2016 (2) TMI 880 - AT - Income TaxCost of acquisition - capital gain on account of sale of TDR as long term capital gain - assessee along with his family members owned an ancestral land near Parvati, Pune which was reserved and subsequently acquired by PMC - Held that - As regards the contention of the assessee that since the land was acquired by the PMC in the F.Y. 1999-2000 and TDR was received in the month of March 2000 for which the gain arising on account of acquisition of the land could not be taxed in A.Y. 2001-02 is without any merit. The tax has been levied on the basis of the sale of TDR during the impugned assessment year. The TDR has been obtained on account of acquisition of land by PMC. It is not a case that the value of the land is not ascertainable. Therefore, the argument of the Ld. Counsel for the assessee that the assessee is not liable to capital gain tax at all or that it cannot be taxed in this year because it relates to A.Y. 2000- 2001 is without any merit. Therefore the additional ground on this issue is dismissed. Adoption of rate of ₹ 120.98 per sq.ft. as the sale consideration is concerned, we find the Ld.CIT(A) on the basis of the entries found on the seized documents of the loose paper Bundle No.12 has computed rate per sq.ft. at ₹ 120.98 per sq.ft. The Ld. Counsel for the assessee could not controvert the factual analysis done by the Ld.CIT(A) on the basis of the seized document. Merely because the department did not find any unaccounted asset cannot be a ground to adopt the sale consideration at ₹ 80/- per sq.ft. as against ₹ 120.98 per sq.ft. computed by the CIT(A) on the basis of the seized document. In view of the detailed reasoning given by the CIT(A) adopting the rate per sq.ft. at ₹ 120.98 per sq.ft. and in absence of any cogent material brought to our notice by the Ld. Counsel for the assessee against the same the order of the CIT(A) determining the rate per sq.ft. at ₹ 120.98 per sq.ft. is upheld and the ground raised on this issue is accordingly dismissed. Determination of FMV per sq.ft. as on 01-04-1981 - in absence of any satisfactory reply from the valuer whose statement was recorded u/s.131 on 15-09-2004 the AO rejected the valuation report given by the valuer - Held that - We find a somewhat similar case had come up before the Pune Bench of the Tribunal in the case of Sathe Biscuit and Chocolate Company Ltd. (2010 (9) TMI 1107 - ITAT PUNE) Tribunal after considering the above circular considered the rate of the land as on 01-04-1981 at 40% of the value determined as on 01-04-1989. After considering the fact that the property of the assessee was having at a better location and holding that the stamp valuation rates are generally lesser than the FMV, the Tribunal determined the FMV at ₹ 630/- per sq.mtr. Adopting the principle laid down by the Pune Bench of the Tribunal in the case of Sathe Biscuit and Chocolate Company Ltd. (Supra) we find the FMV of the said land as on 01-04-1981 comes to ₹ 55.74 per sq.ft. if the ready reckoner rate of 1989 at ₹ 1,500/- per sq.mtr is considered. Since the assessee has adopted the rate of ₹ 20/- per sq.ft. as against ₹ 55.74 per sq.ft. as per the ready reckoner rate of 1989 and proportionately brought down to 1981 rate the same appears to be reasonable. In this view of the matter, we direct the AO to adopt the rate of ₹ 20/- per sq.ft. as the cost of acquisition as on 01-04-1981 and compute the capital gain. Taxation of entire amount in this year - the assessee has sold the TDRs in different assessment years - Held that - The assessee in the paper book filed has furnished the details of party-wise summary along with copies of TDR/DRC allotted by PMC on 03-03-00 at paper book pages 248 to 348. These documents were very much available before the AO as well as the CIT(A). Even the AO in the assessment order at page 3 has mentioned the date of issue of DRC as on 03-01-00 and 03-03-00. The details of utilization of DRC and transfers, copies of which are placed at pages 256 to 347 show the sales in different financial years. For example Certificate No.0002195 shows sale of 297 sq.mtrs on 01-02-00 to Shri D.M. Bhutala, another 392 sq.mtrs on 01-02-00 to Shri S.S. Raut. The assessee has sold 69 sq.mtrs on 18-10-00 to Shri Vimalkumar Jain and another 25 sq.mtrs on 11-11-00 to Shri V.D. Dhattar, 100 sq.mtrs on 19-12-00 to Shri Anjum Parvez Patel. The assessee has sold 62 sq.mtrs on 27-04-2002 to Shri Anjum Parvez Patel. As per Certificate No.0002196 the assessee has sold 561 sq.mtrs to Shri Vimalkumar Jain on 18-10-00. As per Certificate No.0002340 apart from sale of TDR during F.Y. 2000-01 the assessee has sold 28.81 sq.mtrs to Shri Sayed Abbas Zaidi on 16-12-2002. These are only some of the examples. The various certificates filed in the paper book show sale of TDR in different financial years and the entire sale does not relate to the current assessment year. Although documents were very much available with the AO as well as the CIT(A) they have not considered the year of taxability on the basis of sale of TDR. Therefore, we find some force in the submission of the Ld. Counsel for the assessee that correct income has to be taxed in the impugned assessment year. We therefore direct the AO to verify from the details furnished before him from the utilization of DRC and transfer certificates and bring to tax the correct income for the impugned assessment year. So far as sale proceeds in the assessment years other than the impugned assessment year the AO will follow due process of law for bringing to tax the capital gain on transfer of TDRs in respective years. We hold and direct accordingly. Actual area transferred by the Raut family - Held that - Restore the issue to the file of the AO with a direction to verify the exact area considering the actual area of TDR sold and compute the capital gain accordingly.
Issues Involved:
1. Determination of sale consideration rate per sq.ft. 2. Adoption of Fair Market Value (FMV) as on 01-04-1981. 3. Year of taxability of capital gains. 4. Correct area of land considered for computation of capital gains. 5. Opportunity for cross-examination and principles of natural justice. Issue-wise Detailed Analysis: 1. Determination of Sale Consideration Rate per sq.ft.: The assessee declared the sale consideration of Transferable Development Rights (TDR) at Rs. 80 per sq.ft. The Assessing Officer (AO) determined it at Rs. 120 per sq.ft. based on seized documents. The CIT(A) computed the rate at Rs. 120.98 per sq.ft. based on detailed analysis of the seized documents. The Tribunal upheld the CIT(A)'s determination, stating that the factual analysis by the CIT(A) was not controverted by the assessee, and the absence of unaccounted assets did not justify adopting the rate at Rs. 80 per sq.ft. 2. Adoption of Fair Market Value (FMV) as on 01-04-1981: The AO rejected the assessee's valuation of Rs. 20 per sq.ft. based on the valuer's report, citing inconsistencies and lower comparable rates from public authority acquisitions. The AO adopted Rs. 8 per sq.ft., while the CIT(A) increased it to Rs. 9 per sq.ft. The Tribunal, considering the ready reckoner rate of 1989 and the principle laid down in similar cases, directed the AO to adopt Rs. 20 per sq.ft. as the cost of acquisition as on 01-04-1981. 3. Year of Taxability of Capital Gains: The assessee argued that the capital gain should be taxed in A.Y. 2000-01 as the land was acquired by PMC and TDR was issued in March 2000. The Tribunal dismissed this argument, stating that the tax was levied on the sale of TDR during the impugned assessment year and not on the acquisition of land by PMC. Thus, the additional ground on this issue was dismissed. 4. Correct Area of Land Considered for Computation of Capital Gains: The assessee contended that there was an error in the area of land considered for computation. The Tribunal directed the AO to verify the actual area of TDR sold and compute the capital gain accordingly, ensuring the correct income is taxed in the impugned assessment year. 5. Opportunity for Cross-examination and Principles of Natural Justice: The assessee argued that the AO relied on documents and statements without giving due opportunity for cross-examination. The Tribunal did not explicitly address this issue in detail but focused on the correctness of the sale consideration and FMV adopted by the authorities. Separate Judgments: The Tribunal's order applied to multiple appeals filed by different family members of the assessee, with identical grounds and issues. The decisions for each appeal were consistent with the primary case discussed, directing similar actions for verification and computation by the AO. Conclusion: The Tribunal upheld the CIT(A)'s determination of the sale consideration rate at Rs. 120.98 per sq.ft. and directed the AO to adopt Rs. 20 per sq.ft. as the FMV as on 01-04-1981. The additional ground regarding the year of taxability was dismissed. The AO was directed to verify the actual area of TDR sold and compute the capital gain accordingly, ensuring the correct income is taxed in the respective assessment years.
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