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TMI Blog2015 (9) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... f sale consideration by Assessing Officer and CIT (A), between the land and building is absolutely without any basis. The historical cost of building or WDV of building cannot be determinative of market value of building on the date of sale. Similarly end use of building by the buyer is also not relevant for determining market value of building on the date of sale. Considering the facts of the case in our opinion the allocation of sale consideration between the land and building by the assessee deserves to be accepted and we order accordingly.- Decided in favour of assessee. Enhancement by CIT(A) by denying the option of fair market value as on 1-4-1981 which was accepted by the Assessing Officer - Held that:- From the reading of the order of the ITAT which is reproduced above in para-6, it is evident that it was a limited set aside for the purpose of giving opportunity to the Assessing Officer with reference to the additional evidence i.e. letter of GIDC. In the above circumstances, in our opinion, enhancement was made by the CIT(A), in respect of altogether new point which was not taken by the Assessing Officer in the assessment order, was not an issue before the CIT (A) or I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The sale consideration relating to building was reduced from the block of building available with the Assessee. However, the capital gain of ₹ 12,63,766/- was worked out in respect of sale consideration relating to land as under:- Long term capital gain on Land Sale consideration relatable Less: Indexed cost of land Land area 5241 MB MV [App.] on 81-82 at the rate of ₹ 125/- per sq.mt. 32,75,000 M. V. 5241 x 125 6,55,125 Indexed cost 655125 x 307 100 20,11,234 Long Term Capital gain taxable. 12,63,766 4. The Assessing Officer did not accept the allocation of sale consideration between the land and building by the Assessee. He allocated only ₹ 1,24,001/- towards factory building and remaining towards the land and accordingly worked out the long term capital gain of ₹ 47,47,765/- as under:- Total sale consideration as shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dtd. 23-02-2000, it appears that there is a typing mistake in mentioning the date.). The letters of Assessee dated 09-03-2000 and 28-01-2000 filed by the Assessing Officer have not been considered by the Assessing Officer as contended by the Ld. A. R. From the facts of the case, it is clear that the Assessing Officer did not consider certain materials/letters which are stated to be filed before the Assessing Officer. However, the CIT (A) considered those material/letters and decided the issue on those materials and evidence without providing opportunity of hearing to the Assessing Officer. The jurisdictional High Court in the case of CIT v/s. Valimohmed Ahmedbhai 134 ITR 214 (Guj.) wherein it has been held that if the Assessee produces evidence it is necessary to provide opportunity of hearing to the Assessing Officer to oppose it and to test the additional evidence or counter the effect thereof or to produce evidence in rebuttal. In the light of above discussion and keeping in view the principle of natural justice, we think it proper to send back this matter to the file of the CIT (A) with the direction to decide the issue afresh in accordance with law after providing opportuni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the building is very old and its value cannot be ₹ 36,08,000/-. He therefore adopted the WDV of factory building at ₹ 1,24,001/- as value of the building on the date of sale. The balance sale consideration i.e. ₹ 67,58,999/- was allocated towards the land. The Assessing Officer has not given any reason or justification how the value of the land on the date of sale was ₹ 67,58,999/-. The CIT (A) had accepted the Assessee s allocation of the sale consideration between the land and building on the basis of GIDC certificate. Admittedly, GIDC certificate was produced for the first time before the CIT (A) and he has not called for the Remand Report from the Assessing Officer. Therefore, the ITAT set aside the matter back to the file of CIT (A) with a direction to him to provide opportunity to the Assessing Officer in this regard. After the order of the ITAT, the CIT (A) called for the remand report from the Assessing Officer and in the remand report the Assessing Officer reiterated the stand taken in the assessment order. The relevant portion of the Remand Report reads as under:- 3.1. In respect of price of land and factory building, the assessee relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as the CIT (A) were of the view that since the building was old one and the buyer has dismantled the building and therefore so far as buyer is concerned the factory building was of no use. Therefore, the Assessing Officer considered only the WDV as the fair sale consideration of building while the CIT (A) directed to consider the value of the gross block of the building. However, neither the Assessing Officer nor the CIT (A) has held that how the sale consideration allocated by them towards land is a proper sale consideration allocable to land when the GIDC was selling the plot in the Industrial estate @ Rs.,550/- per sq. mt. + frontage charges, then the value determined by the Assessing Officer and the CIT (A) at almost double the rate as per GIDC can be justified. In our opinion, the WDV of the building or construction cost cannot be proper base for determining the Fair Market Value of the factory building. If the historical cost is to be considered then the cost of the plot of the land of the Assessee was only ₹ 75,589/-. Therefore, historical cost whether of the land or of the building is not relevant for allocating the sale consideration of the factory premises w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely a jugglery of figures on the part of the Assessing Officer but is not based on any evidence regarding the value of either land or building. In my view as far as the valuation of the land is concerned, I hold that it has been correctly worked out as per GIDC valuation and has to be accepted on the same lines due to lack of any evidence to the contrary. Secondly, it has to be accepted that the WDV is no guideline to the market value of the factory building on the date of sale. It would suffice to mention that even the boundary wall 16 ft. high totally encircling the property would have more market value than the WDV shown in the record. The appellant has given at his end a very fair and reasonable basis for valuation of the building. Even otherwise, the lumpsum consideration minus the value of land would certainly have to be taken as the value of the building. 13. The above finding of the CIT (A) was set aside by the ITAT on the limited ground that the certificate of GIDC was not available with the A. O. and the CIT (A) has not allowed any opportunity to the A. O. to rebut the above additional evidence furnished before him. Now after the set aside CIT (A) has confronted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate and residual value is allocated to the building. But the allocation of sale consideration by Assessing Officer and CIT (A), between the land and building is absolutely without any basis. The historical cost of building or WDV of building cannot be determinative of market value of building on the date of sale. Similarly end use of building by the buyer is also not relevant for determining market value of building on the date of sale. Considering the facts of the case in our opinion the allocation of sale consideration between the land and building by the assessee deserves to be accepted and we order accordingly. 15. Now we come to the second question in this appeal i.e. enhancement by the CIT (A). We have already mentioned that the ITAT has set aside the matter back to the file of CIT (A) for the purpose of allowing opportunity of being heard to the Revenue with reference to additional evidence produced before the CIT (A) in the first round. In the remand report the A. O. has no where requested for enhancement. From the reading of the order of the ITAT which is reproduced above in para-6, it is evident that it was a limited set aside for the purpose of giving opportuni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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