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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 ..... act the learned CIT(A) did to determine fair market value of the property as on 01-04- 1981 under the provisions of Section 55 and 55A of the Act. We donot find any infirmity in the order of the learned CIT(A) as the fair market value of the property is dependent on several factors which influence valuation and there is no scientific or straight jacket method to value the property at a 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 We are inclined to accept the valuation as adopted by the learned CIT(A) by following mean of the valuation adopted by DVO/VO and the assessee’s government approved valuer who is a and we donot find any infirmity in the order of the learned CIT(A) which we affirm/sustain, keeping in view factual matrix of the case. - Decided against revenue - I. T. A. No.5987 / Mum/ 2013 - - - Dated:- 12-7-2016 - Shri Saktijit Dey, Judicial Member And Shri Ramit Kochar, Accountant Member For the Revenue : Shri Sanjeev Kashyap, DR For the Assessee : Shri J.P. Bairagra ORDER Per Ramit Ko ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... November, 2011 u/s 55A of the Act to the assessee. The DVO-I, Mumbai further referred the matter to the DVO II,Mumbai vide letter dated 21st December, 2011 for some plots as the jurisdiction was lying with him. The DVO-II, Mumbai informed the A.O. that the valuation of property will take some time and as such the A.O. was requested to pass a protective order as the case was getting time barred. The A.O. accordingly passed the assessment order dated 30-12-2011 u/s 143(3) of the Act based upon the information available on record and it is stated in the assessment order dated 30-12-2011 passed by the AO that the appropriate action will be taken once the DVO report is received. During assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the assessee was asked by the AO to justify the adoption of rates as per the definition of the developed land , and reliance by the assessee in context thereof on the reference in the agreements that the land is developed because there were structures standing thereon and in certain cases there were notification by Collector that the areas are notified to be slums. The A.O. observed that as per reckoner of valuation of propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,77, Published in the Maharashtra Government Gazettee dated 8th February, 1979 issued by the Deputy Collector (ENC) Competent Authority, Sub Division, Kurla-II. It is further found that the purchaser agreed and undertook 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. In view of the above, the plot of land is encroached by the slum rehabilitant and it is undeveloped properties as on 0 l.04.1981, hence the cost of acquisition is taken as ₹ 26 per SQFT as for undeveloped land which comes to ₹ 2,12,078/ - . (iii) CTS No. 238, 239, 240, 241, 245, 214, 215, 216, 217, Area: 290,493.45 SQFTS, The assessee has only 2l.5% of shares in these property. As per para No. N of deed of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and also not fulfill the condition of developed property, the cost of acquisition is taken as ₹ 20/- per SQFT which comes to ₹ 13,40,915/-. Thus, it was observed by the A.O. that properties claimed to be present on the plots sold by the assessee are in the nature of slums/encroachments and are not approved building per-se. The A.O. observed that the assessee has also not proved the other conditions as per the aforementioned definition of developed land. It was also observed by the AO that some properties are under the force of reservations. Thus , the A.O. adopted the rate of undeveloped land for the purpose of valuation of cost of acquisition as on 01- 04-1981 as per the ready reckoner rates and recomputed the capital gains accordingly, vide assessment orders dated 30-12-2011 passed by the AO u/s 143(3) of the Act. 4. Aggrieved by the assessment orders dated 30-12-2011 passed by the A.O. u/s 143(3) of the Act, the assessee filed first appeal before the learned CIT(A). 5. Before the learned CIT(A), the assessee submitted that the only issue involved in this appeal is regarding computation of long term capital gain on sale of seven properties in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dwellers and sell the balance property, meaning redevelopment of property. It was submitted by the assessee before the learned CIT(A) that DVO has done valuation of only one property and valuation of the remaining six other properties has been done by the Valuation Officer and the reports were submitted by the assessee before the learned CIT(A) of DVO/VO. The comprehensive chart showing the valuation of 1/3rd share of the assessee as on 01-04-1981 was also furnished before the learned CIT(A) comprising the value declared by the assessee in the return of income filed with the Revenue, the value as estimated by the A.O. in the assessment order , the value as made by DVO/Valuation officer and the value as per the assessee s valuer Shah Shah which was submitted before the DVO/VO while raising the objection against the draft valuation reports , were all furnished before the ld. CIT(A) during appellate proceedings by the assessee. In the light of above, the assessee submitted before the learned CIT(A) that the value adopted by the A.O. as on 1-4-1981 by treating the land as undeveloped land was not justified and the assessee s valuation as per ready reckoner rate of 1-4-1981 by treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough they have not accepted the ready reckoner rates but adopted the valuation as per sale instances. Thus, it was submitted that the A.O. s action in valuing the land as undeveloped though agreeing with the ready reckoner rate is not justified. The ld. CIT(A) rejected the contention of the assessee observing that the A.O. has passed the order due to time barring of the assessment and there is no infirmity in the action of the AO keeping in view the factual matrix of the case. The ld. CIT(A) observed that different authorities have valued the land differently which is evident from the following tabulation:- Asses see s valution AO valuation Valuation as per assess ee valuer Valuation as per VO/ DVO Sr No Description of property address Area in Sq,feets Per sq.fee t Total value Per sq. feet Total value Per.sq. feet Total value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64.07 5,212,56 5.41 21.5% of item No. 3 5,496,13 6.07 1,498, 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 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion valued by the assessee s valuer were of Hariyali village situated in Vikhroli . The sale instances cited by the assessee s valuer were much closer to assessee s properties. It was also observed that the DVO/VO had taken the sale instances of the year 1983 and 1985 whereas the assessee s valuer had taken the sale instances of the year 1982 which is 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 Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total of (1+2+4+5+6+7 9,125,664. 07 5,212,565.4 1 -- 7188621.4 8 21.5% of item No. 3 5,745,960. 44 3,597,470.8 8 -- 4684206.8 8 Gross total 14,871,624 .51 8,810,036.3 0 -- 11872828. 36 1/3 share of assessee 4,957,208. 17 2,936,678.7 7 -- 3957609.4 5 6. Aggrieved by the appellate orders dated 15-07-2013 of the ld. CIT(A), the Revenue is in appeal before the Tribunal whereby Revenue has challenged adopting of mean value of the properties based on valuation reports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) has adopted mean of the valuation as adopted by DVO/VO report and the valuation as adopted by the assessee s valuer, which is not allowed as per the provisions of the Act. 8 The ld. Counsel for the assessee submitted that the mean of the value adopted by the different experts i.e. DVO/VO on behalf of the revenue and the registered valuer of the assessee was the method adopted by the ld. CIT(A) which under the circumstances was rightly done by learned CIT(A) to arrive at fair market value of the land as on 01-04-1981 u/s 55 and 55A of the Act. He submitted that it is a developed land which is accepted by the DVO/VO. 1/3 share is owned by the assessee and 2/3 share is owned by the co- owners. It is an ancestral property. It is also submitted that in case of co- owners no additions have been made by the Revenue. The ld. Counsel submitted that there were some structure constructed on the land by slum dwellers who encroached the land, hence, it is developed land as it also has water, electricity, road and drainage as well non agricultural permission. It was submitted that assessee's valuer report was duly given to the DVO/VO at the time of filing objections. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 1985 and are closer to 01-04-1981 . It was also submitted before DVO/VO that structures existing on the property has not been considered by DVO/VO in their proposed valuation. The said objections of the assessee s valuer was filed before the DVO while filing objections to the DVO s proposed valuation . The DVO has contended that sales instances relied upon by it are more reliable and closer to the property under consideration keeping in view the status of the land under consideration in 1981 and the property sale instances relied upon by the DVO/VO were more developed than the assessee s land in 1981 and hence the assessee is not prejudiced . The learned CIT(A) went ahead to determine the value of the property as on 01-04-1981 being fair market value based on mean of the valuation adopted by the DVO/VO and the assessee s valuer which in our considered view was appropriate keeping in view the factual matrix and prevailing circumstances of the case as no exact sales instances in the area were available . Thus, the learned CIT(A) was required to find out the fair market value of the property as on 01-04-1981 as per provisions of Section 55 and 55A of the Act and in-fact while compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are relevant but in case the two experts differ, perhaps the only method available at this stage would be to adopt the mean of the value adopted by the two experts i.e. District Valuation Officer/Valuation Officer on behalf of the Revenue and registered valuer, M/s Shah Shah on behalf of the appellant. Accordingly, in the peculiar facts of the case and to meet the end of justice, the fair market value of the capital assets in question is adopted as average rate given by the District Valuation officer/Valuation Officer and the appellant s registered valuer . Our above view is fortified by the decision of the Chennai Tribunal in the case of ACIT v. MIL Industries Limited reported in (2013) 142 ITD 428(Chennai Trib) as under: 18. Except the above, on all other aspects we agree with the Commissioner of Income-tax(Appeals) and the approach adopted by him. Earlier there was a valuation. The value was ₹ 1.21 crores. The valuation was made by the assessee's bankers. The guideline value is ₹ 3,95,91,000/-. But the valuation made by the DVO is less than the guideline value. The DVO's estimation was at ₹ 3,54,73,536/-. When all these variables are chan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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