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TMI Blog2016 (7) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee by adopting mean value of the properties based on valuation reports submitted by the DVO and assessee valuer for the purpose of cost of acquisition of land as on 01.04.1981 without giving credence to value adopted by District Valuation Officer u/s 55A. 2. On the facts and circumstances of the case and in law, Id. CIT(A) has erred in not appreciating the fact that the Income-tax does not permit mean value of Government Valuer and Register Value for the purpose of cost of acquisition as on 01.04.1981. 3. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. The Appellant pray that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored." 3. The brief facts of the case are that the assessee is an individual deriving income from house property, capital gains and also income from other sources. During assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the assessee submitted all the supporting documents for computation of capital gains , like agreements, rates as per the ready reckoner, maps of the plot sold. The assessee has shown the sale consideration as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been declared as slum vide Gazette Notification No. SLM-OCK-II-WS-I-3025 dated 6th April, 1984. It is further mentioned that: "We hereby also agree and undertake to develop the said slum notified property as mentioned hereinabove under the Slum and the same herein under the prescribed guidelines of Development Control regulation for Greater Bombay, 1991, 33(10), 33(14-D) of Mumbai Municipal Corporation and conformity with SRA(Slum Rehabilitation Authority) or any other scheme permissible by law by demolishing the existing structures and construction new building in its place as per Slum Rehabilitation Scheme under the Maharashtra Slum Area(Improvement, clearance and Re-development) Act, 1971". It is clear from the above facts, the land has been purchased for develop the same which is also clear from the Indemnity Bond filed by M/S. Kanchi Koncept it and as per the stamp duty authority also the land has Zero value for the purpose of stamp duty. The said land had already declared as slum as on 6th April, 1984 indicated that land is not developed as on 0l.04.1981. Hence, Fair Market Value of land taken by the assessee as developed land is not justifiable. Accordingly, the F.M.V is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deed of conveyance it is clear that this property is already encroached and was not having any approved buildings or meets the other criteria as per definition of developed land. Hence, cost of acquisition is taken as Rs. 32/ - per SQFT as for undeveloped land which comes to Rs. 19,200/ -. (vi) CTS No.181(PT) of Village Hariyali, Area: 44,132.40SQFT, cost of acquisition taken by the assessee as Rs. 52/ - per SQFT(as developed land) The aforesaid property has been notified as slum area vide the Notification No. SLM-OC-K-l1, 77, Published in the Maharashtra Government Gazette, dated 8th February, 1979. It is also found from the deed of conveyance, the property has various reservations in force on various portion of the said property. Further, the property was sold to develop the slum area. In view of the above and also since it does not fulfill the conditions of developed land, the cost of acquisition is taken as Rs. 20/- per SQFT as for undeveloped land which comes to Rs. 8,82,648/-. (vii) CTS No. 215,221,231 of Village Hariyali, Area: 67045.73 SQFT, cost of acquisition taken by the assessee as Rs. 25/- per SQFT. The aforesaid property has been notified as slum area vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etting time barred. Thus, the A.O. has estimated the value on his own and held that appropriate action will be taken once the report from the DVO is received and in view of time barring date, the assessment order u/s 143(3) of the Act was passed based on the information available on record. In the absence of the DVO report, the A.O. finalised the assessment by estimating value and agreed to adopt the ready reckoner rate of 1-4-1981 but he had taken the rate of undeveloped land while the assessee has adopted the ready reckoner rate of developed land. The assessee explained that developed land means land that has approved building and has facilities of road, electricity, drainage and water or has got non- agricultural permission. The A.O. rejected the contentions of the assessee on the ground that these lands are declared as slum by the Maharashtra Government and the purchaser of the land has to develop the property. The assessee averred before the learned CIT(A) that the A.O. erred in not considering the facts that on these lands structures created by the inhabitants called slum dwellers are existing, there are facilities like road electricity, drainage and water on these lands and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee M/s Shah & Shah in the report given to the DVO valued the said land at Rs. 49,57,208/- whereby the assessee valuer cited the sale instances of that year in the vicinity. It was objected that the A.O. cannot extend the time barring limit of the assessment if the DVO report is not received. In support the assessee relied on the decision of Hon'ble Calcutta High Court in the case of Reliance Jute & Industries Ltd. v. ITO, 150 ITR 643 (Cal.) and in the case of Shahdara (Delhi) Sarangpur Light Railway Co. Ltd. v. CIT, 208 ITR 882 (Cal.). It was further submitted that all the lands are developed lands having structure, road, electricity, drainage and water facilities and are non agricultural lands as per non-agricultural permission and merely because they are occupied by hutments, it cannot be said that they are not developed lands. The ld. CIT(A) observed that the A.O. has made the addition by valuing the land as undeveloped land based on the ready reckoner rate as on 01-04-1981 as the DVO report was not received and the assessment was getting time barred. The A.O. has made the assessment by stating that appropriate action will be taken once the valuation report is received from DVO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,498, 946.20 5,745,9 60.44 3,597,47 0.88 Gross total 13,159,0 16.79 4,265, 493.98 14,871, 624.51 8,810,03 6.30 1/3 share of assessee 4,386,33 8.93 1,421, 831.33 4,957,2 08.17 2,936,67 8.77 The ld. CIT(A) held that after the receipt of the report of the DVO/VO there was no dispute that the capital assets in question were developed land and hence the value adopted by the A.O. was not correct method of estimating the fair market value as on 1-4-1981 as it suffered from a major fallacy. The major reasons for the difference in value adopted by the DVO/VO and the assessee's registered valuer as submitted by the assessee before the learned CIT(A) are as under:- "(i) Out of 7 properties, 6 properties are situated in Village Hariyali, Vikhroli (East) and (West) and only one property is situated in village Kanjur (West). (ii) The sale instances relied on by the DVO/VO are of Mulund (West), Ghatkopar (East) and Bhandup (West) whereas the sale instances relied on by the appellant's registered valuer are of Hariyali Villag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s much closer to 1-4-1981. However, neither the DVO/VO nor the assessee's valuer had given the exact sale instances of the areas in question or the date under consideration i.e.1.4.1981, thus, none of the two can be said to be the perfect method for valuing the property. The ld. CIT(A) observed that the opinions expressed by the experts were relevant but in case the two experts differ, the only method available would to adopt the mean of the value adopted by the two experts i.e. DVO/VO and the assessee's valuer. Thus, keeping in view the ends of justice, the ld. CIT(A) adopted the mean rate given by the DVO/VO and the assessee's valuer which are tabulated as under, vide appellate orders of the learned CIT(A) dated 15-07-2013:- Sr No Description of the property Address Area in sq. mtr. Area in sq. feets. Valuation as per Assesse valuer Per Sq Total Feet value Valuation as per VO & DVO Per sq. Total Value Ave. Total Avg. Rate value 1 CTS No. 7/1 Village Hariyali 952.20 10,249.4 8 99.00 1,014,698. 52 52.20 535,022.86 76 778960.48 2 CTS No. 122(PT) Village Hariyali 757.79 8,156.85 99.00 807,528.15 47.00 383,371.95 73 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the DVO Mumbai for determination of cost of acquisition and sale value u/s 50C & 55A of the Act on 22nd November, 2011. He submitted that since the matter was getting time barred, the DVO wrote to the A.O. that the valuation of the property will takes some time and so requested the AO to pass a protective order. He submitted that seven pieces of land were encroached by the slum dwellers and it is not developed land and the rates mentioned for developed land is defined as "land that has approved building and has facilities of road, electricity, drainage and water or has got non-agricultural permission." It is submitted that the assessee has adopted the rates as on 01-04-1981 based upon the ready reckoner rates for developed land , whereas the A.O. has adopted the ready reckoner rates for undeveloped land as on 01-04-1981. It is submitted that as per the assessee's valuation, total valuation comes to Rs. 4,386,338/-, while as per the A.O.'s valuation comes to Rs. 1,421,831/-. The valuation as per the assessee's valuer was at Rs. 4,957,208.17 while the valuation as per the DVO/VO's comes to Rs. 2,936,678.77. It was submitted that no valuation report was furnished by the assessee b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for undeveloped land as on 01-04-1981 on the premise that the land is encroached by slum dwellers and does not have approved building as per definition of developed land, while the assessee contended the same to be developed land as it was notified slum by State of Maharashtra having structures built by slum dwellers . The AO did not had the benefit of valuation determined by DVO/VO report , nor the valuations as per sale instances submitted by the assessee vide objections filed before DVO/VO of the assessee's government approved registered valuer. The assessee has submitted comparative sale instances prepared by assessee's government approved registered valuer while filing objections to the DVO proposed value, the assessee has submitted and claimed that the sale instances relied upon by his valuers are to be in vicinity of the land under consideration while filing objections to the proposed value by DVO/VO and the assessee's relied upon valuations were duly considered by DVO/VO. The DVO/VO as well as valuer appointed by the assessee has relied upon the sale instances stated to be in the vicinity of the said land , but the assessee is contending that the DVO/VO has relied upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular point of time and somewhere estimation element will definitely creep in while determining the fair market value of the property as on date keeping in view the mandate of Section 55 and 55A of the Act, the learned CIT(A) rightly observed as under : " 2.4.10 On perusal of the submissions made by the ld AR , I find that the District Valuation Officer /Valuation Officer has mostly taken the sales instances of Mulund(West) , Ghatkopar(East) and Bhandup(West) whereas the sale instances relied on by the appellant's registered valuer are of Hariyali Village , where the capital assets in question are situated. It is also seen instances cited by the appellant's registered valuer are much closer to the appellant's properties while the sale instances cited by District Valuation Officer/Valuation Officer are little far away. Similarly, the District Valuation Officer/Valuation Officer have taken the sale instances of the year 1983 and 1985 while the appellant's registered valuer has taken the sale instances of the year 1982 which is much closer to 01-04-1981.Nevertheless, there is no gain saying the fact that neither District Valuation Officer/Valuation office nor the appellant's re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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