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TMI Blog2014 (4) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... deceased brother Shri Digambar V. Juwarkar, even when whose right over the subject property has neither been recognized in the original gift deed nor recognized by any court. 3. The Ld. CIT(A) has erred in adopting the cost of the land as on 01.04.1981 at the rate of Rs. 17 per sq.mtr. on adhoc basis & without giving proper reasoning as against Rs. 3.75 per sq. mtr. adopted by the AO which was the cost of the land nearest to that date and nearest to that area based on Inspector‟s report. In the Cross Objections filed by both the Assessees, the common ground reads as under : 1. The Learned Commissioner of Income Tax (Appeals) erred in not accepting the registered valuers report wherein the registered valuer has determined the market value of the capital asset as on 01.04.1981 at Rs.65/- per metre. 2. The Learned Commissioner of Income Tax (Appeals) erred in ignoring the report of the Inspector of Income Tax wherein several sale instances had been cited and the value of the capital asset arrived at Rs. 25/- per metre. 2. The first ground relates to the deduction of Rs. 3 crores in computation of Long Term Capital Gains allowed by CIT(A). The brief facts relating to this gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... division of the assets by filing a civil suit in Panaji. The court by its interim order directed the two brothers to give the third brother his share in the income of the property until the main suit was decided. Subsequently, against the interim order, the matter went before the Hon'ble High Court and in the High court, consent order was passed and as per the consent order, the third brother has to be given a sum of Rs. 3.50 crores which was subsequently reduced to Rs.3 crores as per the modified order of the Hon'ble High Court dt. 1.6.2007. The Assessee claimed the payment being made to the third brother, Shri Digambar Juwarkar as deduction out of the Capital Gains which was denied by the AO. 2.1 The matter went before the CIT(A). CIT(A) directed the AO to allow the deduction of Rs. 3 crores to the Assessee by observing as under : "8. I have gone through the assessment order, detailed directions and analogy adopted by the Addl. CIT u/s 144A, arguments and submissions of the learned counsel of the appellant and other relevant details and documents. There are certain facts, which emerge from the discussion and documents on record, which can be summarised as under: The subject l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant is allowed accordingly." 2.2 Before us, the Assessee reiterated the submissions made before CIT(A) and pointed out that the Assessee had sold the said property but while computing the Capital Gains, the Assessee claimed deduction for a sum of Rs. 3 crores paid to his brother, Shri Digambar Juwarkar as per the consent order of the Hon'ble High Court dt. 24.5.2006 which was modified vide order dt. 1.6.2007. The said property was gifted to the Assessee and his brother, Shri Shripad Juwarkar by their grandmother through gift deed dt. 24.10.1950. The third brother, Shri Digambar Juwarkar was not born at the time when the gift was given to the Assessee and his brother. At the death of their father, during inventory proceedings, Shri Digambar Juwarkar required inclusion of the subject property in the assets to be inventorised. The other two brothers disputed it as they had already received it in gift. Shri Digambar Juwarkar went before the Civil Court being Inventory Proceedings no. 33/93/A. The Civil Court vide its interim order dt. 15.9.2004 decided as under : "For the discussion made herein the cabeca de casal is ordered to pay interim income of Rs. 30,000/- per annum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the rival submissions and carefully considered the same. We have also perused the matter on record alongwith the order of the tax authorities below. We have also gone through the facts of the case. We noted that the Assessee and his brother, Shri Shripad Juwarkar had become the exclusive owners of the said property by way of gift dt. 24.10.1950 executed by their grandmother in their favour. At that time, Shri Digambar Juwarkar was not born. Subsequently, when the father of the Assessee expired, Shri Digambar Juwarkar initiated Inventory Proceedings bearing no. 33/93/A to partition the estate of his father, Shri Vinayak Sinai Juwarkar, his mother and her late husband, Yeshwant Sinai Juwarkar. The Assessee being the eldest son was appointed as Administrator/Cabeca de Casal. He filed list of assets belonging to the estate of the said inventoried/inventariados. Shri Digambar Juwarkar on/about 15.2.1994 raised objection to the said list stating that the property which was sold by the Assessee also formed part of the estate of the said inventoried and was liable to be listed, whereupon the suit property was also listed. Subsequently, Shri Digambar Juwarkar on/about 29.6.2005 filed appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough Respondent No. 1 as guardians of Respondents Nos. 2 and 3 a total amount of Rs. 3,50,00,000/- (Rupees Three Crores Fifty Lakhs Only) in the following manner: (a) On signing these terms Rupees 25,000/- (Rupees Twenty Five Thousand Only) by cheque No. 564921 dated 24/05/2006 drawn on Syndicate Bank, Vasco Da Gama, receipt of which the Respondents acknowledge. (b) On or before 31/08/2006 Rupees 34,75,000/- (Rupees Thirty Four Lakhs Seventy Five Thousand Only). (c) On or before 30/11/2006 Rupees 52,50,000/- (Rupees Fifty Two Lakhs Fifty Thousand Only). (d) On or before 28/02/2007 Rupees 87,50,000/- (Rupees Eighty Seven Lakhs Fifty Thousand Only). (e) On or before 31/05/2007 Rupees 1,75,00,000/- (Rupees One Crore Seventy Five Lakhs Only). The amounts shall be paid on the name of the Respondent No. 1." Subsequently, the said consent order was amended vide order dt. 1.6.2007 and by the amended order, the total consideration of Rs. 3.50 crores was reduced to Rs. 3 crores as stated under para 5 of the Hon'ble High Court order dt. 24.5.2006. Copies of the orders are available at pg. 52 & 54 of the paper book. From the order of the CIT(A) we noted that CIT(A) although has duly r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermination of the Fair Market Value as on 1.4.1981 as is permissible while computing the Capital Gains u/s 48 r/w Sec. 55 of the Income Tax Act. The brief facts relating to this ground are that while computing the Capital Gains, the Assessee has opted to take the Fair Market Value at Rs. 65/- per sq. mtr. as per the Valuation carried out by the approved Valuer, copy of which is available at pg. 4-13 of the paper book. The AO appointed the Inspector. The Inspector had verified the record of the Sub-Registrar for the year 1980, 1981 and 1982 and arrived at the average price of Rs. 25/- per sq. mtr. The Sub-Registrar has also certified that there was no sale statistics from 1981 for Gualim Maula Village in which the impugned property was situated but furnished the details for Batim village being the nearest village. The average price is shown at Rs.15-16/- per sq. mtr. The AO after noting from the Valuation Report of the registered Valuer that the registered Valuer has also not given comparative instances of the village but of the other village and of very small plot measuring 300-500 sq. mtrs. rejected the Valuation Report and determined the Fair Market Value as on 1.4.1981 at Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Value since in the case of the Assessee, the Inspector of the same office has duly verified the nature of the land and has also collected the various sale instances of the comparative villages, therefore, it will be appropriate, in our opinion, that the Fair Market Value as on 1.4.1981 be taken at Rs. 25/- per sq. mtr. The Fair Market Value in relation to a capital asset means the price that capital asset would ordinarily fetch on sale in the open market on the relevant date. It is also a fact that there is no rule prescribed for the determination of the Fair Market Value. In this regard, under these facts and circumstances of the case, in our opinion, it will be fair and reasonable to adopt the Fair Market Value as has been worked out by the Inspector of the Department. We, therefore, set aside the order of CIT(A) on this issue and direct the AO to work out the Fair Market Value as on 1.4.19981 at Rs. 25/- per sq. mtr. Thus, the ground taken by the Revenue stands dismissed while the grounds taken by the Assessee in their Cross Objections are partly allowed. 4. In the result, both the Appeals filed by the Revenue are partly allowed for statistical purposes and the Cross Objections ..... X X X X Extracts X X X X X X X X Extracts X X X X
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