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TMI Blog2016 (11) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of calculation of long-term capital gain. - I. T. A. No. 260/Chd/2014 - - - Dated:- 9-8-2016 - Bhavnesh Saini (Judicial Member) And Maharishi Prashant Kumar (Accountant Member) For the Appellant : Sudhir Sehgal For the Respondent : Sushil Kumar, Departmental Representative ORDER Bhavnesh Saini (Judicial Member) 1. This appeal filed by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals)-II, Ludhiana dated January 2, 2014 for the assessment year 2006- 07 on the following grounds : 1. That the learned Commissioner of Income-tax (Appeals)-II, Ludhiana has erred in confirming the addition of ₹ 5,81,80,344 as made by the learned Assessing Officer under the head of long-term capital gain. 2. That the learned Commissioner of Income-tax (Appeals)-II, Ludhiana has also erred in confirming the action of the Assessing Officer that in assessing the long-term capital gain in respect of 1708 sq. yards land sold by the assessee by adopting fair market value of land as on April 1, 1981 at ₹ 600 per sq. yard. 3. That the learned Commissioner of Income-tax (Appeals)-II, has also erred in not consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area of land sold by the assessee and the other co-owners was approximately 4006.8 sq. yards. The Assessing Officer noted that during the years 1980-81 and 1981-82, the commercial area situated opposite the house property sold by the assessee was developed by Improvement Trust, Ludhiana. The Assessing Officer collected information from Improvement Trust, Ludhiana regarding the prevailing market rate in this area during the year 1981. Ludhiana Improvement Trust vide letter dated October 22, 2008 provided a copy of the allotment letter dated March 12, 1981 in respect of shop-cum-flat No. 18 allotted in the name of Shri Vinod Kumar S/o Shri Hari Chand. As per this letter, market price of the property was ₹ 635 per sq. yard. The Assessing Officer observed that it was a matter of common knowledge that rate for commercial property was always higher than rate for residential property and that the rate of small piece of land was always higher than the rate of larger piece of land. All these facts were confronted to the assessee and the Assessing Officer proposed a fair market value for this land sold by the assessee at ₹ 400 per sq. yard as on April 1, 1981. The assessee once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income of ₹ 5,98,84,092. 7. Aggrieved with the order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals)-II, Ludhiana, who vide his order dated November 26, 2009 in Appeal No. 345/IT/CIT(A)-II/Ldh/08-09 dismissed the appeal of the assessee and confirmed the above addition. Against this order the assessee filed appeal before the Income-tax Appellate Tribunal, Chandigarh, who vide its order dated April 29, 2011 in ITA No. 119/Chandi/2010 has restored the matter to the file of the Assessing Officer with the directions to decide the issue of cost of acquisition as on April 1, 1981 afresh in conformity with law after giving reasonable opportunity of hearing to the assessee. The matter was restored by the Income- tax Appellate Tribunal, in the background of the facts that (i) The cases of other co-owners which have been reopened and the issue of determination of cost of acquisition as on April 1, 1981 was being considered afresh by the respective Assessing Officers and that (ii) The reference to Valuation Officer for valuation of the property which was not received by the Assessing Officer with the result that the Assessing Officer had to comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rothers, namely Sh. Rachhpal Singh and Sh. Harbans Singh. After their death, the land devolved on the survivors/legal heirs of both the brothers as under : (i) K.P. S. Gill S/o Sh. Rachhpal Singh (ii) Smt. Virinder Grewal D/o Sh. Rachhpal Singh (iii) Smt. NeenaBal D/o Sh. Rachhpal Singh (iv) Sh. Birender Singh Gill S/o Sh. Rachhpal Singh (v) Sh. KiratBrar S/o Sh. Harbans Singh (vi) Sh. Simranpal Singh Gill S/o Sh. Harbans Singh 3. Though, the land had devolved to other persons also, but since some of the persons had died/left their right and the abovenamed persons jointly, became the beneficial owners of the land. 4. All the co-owners jointly sold the land to 'OMEX Constructions Ltd.', and this land was sold by way of two separate deeds, one measuring 4006 sq. yards for a consideration of ₹ 14,84,28,600 and the second registration deed was effected for 1845 sq. yards for a consideration of ₹ 5,95,71,400 and, thus, the total consideration for sale of plot was ₹ 20,80,00,000 for 5851 sq. yards giving the average rate of ₹ 35,550 per sq. yard. This rate of sale was in September 2005 and against which, the circle r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as to correctly work out the cost of acquisition as on April 1, 1981. The Assessing Officer shall consider and dispose of all the submissions made by the assessee in the matter.' 6. Thereafter, the Assessing Officer took up the assessment proceedings and the report from the District Valuation Officer was called for, who submitted the report, dated September 24, 2010 on March 13, 2013, which was received by the Assessing Officer on September 19, 2013, wherein he determined the cost at ₹ 600 per sq. yard of 1680 sq. yard as on April 1, 1981 and to which, the asses see raised various objections and which were forwarded to the DVO and the Assessing Officer without considering the directions given by the hon'ble Bench in the order to verify the rate as adopted as on April 1, 1981 in the case of other co-owners, reproduced the finding given in earlier order, dated December 26, 2008 and framed the assessment and, thus, the directions of the hon'ble Bench have been ignored, totally and, therefore, under such circumstances, the appeal has been filed by the assessee against that order. 7. We have already reproduced the direction of the hon'ble Bench and thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market value' and not the registered consideration as per title deeds. 11. Reliance is also being placed in the judgment of the Income-tax Appellate Tribunal, Cochin Bench in ITA No. 606/Cochin/2011, in which, it has been held that guidelines for adopting the market value as on April 1, 1981 on the basis of rates of Sub-Registrar may be one of the factor but that cannot be the sole basis for fixing the 'fair market value'. Reliance is also being placed in the judgment of the Andhra Pradesh High Court as reported in CIT v. Ashven Datla [2013] 218 Taxman 74 (AP) (Mag.), wherein, it has been held that the guidelines value emanating from Sub-Registrar's office could not be adopted in a mechanical manner and fair market value as on April 1, 1981 at ₹ 750 was accepted against the rate of ₹ 8 per sq. yard by the Assessing Officer on the basis of registered deed. In this judgment, the hon'ble Andhra Pradesh High Court took note of the judgment of the Income-tax Appellate Tribunal, wherein the Cochin Bench of the Income-tax Appellate Tribunal has taken into consideration the fair market value as defined in section 2(22B) and it has been held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our rate of ₹ 8,000 per sq. yard is totally fair since 75 per cent. of the area of Shri Birender Singh is under no construction zone and whereas our is totally a 'construction zone'. 15. It is also submitted that we have already submitted the valuation report of the approved valuer of Sh. Birender Singh during the course of assessment proceedings wherein the Registered Valuer has applied a rate of ₹ 5,500 per. sq. yard and that report has been totally ignored by the Assessing Officer and accepted by the Assessing Officer in the case of co-owner. 16. Even our reliance to the judgment of Chandigarh Bench in the case of Sh. Manjit Singh as reported in Manjit Singh v. Deputy CIT [2013] 21 ITR (Trib) 149 (Chandigarh) ; [2013] 151 TTJ (Chd) 1 has not been taken into consideration wherein, it has been held that the sale consideration of an asset as recorded in the registered sale deed is generally understated and hence cannot be taken as fair market value as on April 1, 1981 for the purpose of computation of capital gain and for that reference was made to earlier judgment of Chan digarh Bench in the case of Smt. Baljinder Kaur and others. While delivering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was claimed as ₹ 5,500 per sq. yard was examined and adopted by the Assessing Officer. (v) The cost of acquisition adopted by the Assessing Officer with regard to the back portion of Shri Birender Singh. 11. The assessee filed further submissions along with evidence before the Commissioner of Income-tax (Appeals) as under : (a) The site plan of the property is being enclosed herewith as desired. (b) We have already submitted the evidence with regard to cost of acquisition as accepted by the Department in the case of one of the co-owner, namely Sh. Birender Singh during the course of proceedings under section 148. Regarding the other co-owners, we are not aware about their facts and nor we have good relations with them. (c) We have already submitted some extracts of the order of the Assessing Officer, at Chandigarh and Sh. Birender Singh is being assessed with the Assessing Officer, Circle-I(1), Chandigarh and it is requested that the same may, please, be got verified from the concerned Assessing Officer of Sh. Birender Singh. As per our information, the cost of acquisition of ₹ 5,500 remains unchanged. (d) We shall request you to kindly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt as on April 1, 1981. While the appellant has contended that the fair market value of this property as on April 1, 1981 was ₹ 8,000 per sq. yard, the Assessing Officer held that the fair market value as on April 1, 1981 was ₹ 600 per sq. yard. The Assessing Officer has relied on the following facts and instances for estimating the fair market value of the properly as on April 1, 1981 at ₹ 600 per sq yard : (i) Ludhiana Improvement Trust had developed the commercial property situated opposite the property sold by the appellant during the years 1980-81 and 1981-82. The plots were allotted at ₹ 635 per sq. yard. (ii) As per the instances of sale collected by the Assessing Officer, the rate of property in the area varied from ₹ 70 per sq. yard to ₹ 500 per sq. yard as per the following details : Sl. No. Details of property Vasika No. amp; Date Area of plot sold Total sale consideration (Rs.) Rate per sq. yard (Rs.) 1. Plot situated in Ghumar Mandi 7063/18.3.1981 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allotted by the Ludhiana Improvement Trust in the year 1981-82. Such sale/allotments by the Government agencies are a fair indicator of the market rate of prop erty in that area during the relevant period. Moreover, the Assessing Officer has collected number of instances of sale of property in that area during the relevant period. From these instances of sale it is evident that the rate as per the registered title deeds varied from ₹ 70 per sq. yard to ₹ 500 per sq. yard. It is therefore incorrect to assume that the Assessing Officer has estimated the fair market value on the basis of the rates as per the title deeds or the rates as per the Sub-Registrar only. Moreover, the Assessing Officer had also referred the matter to the DVO who has estimated the fair market value at ₹ 600 per sq. yard. In these facts and circumstances of the case the case law referred to by the appellant are clearly distinguishable on facts. 4.11. The appellant has referred to the order of the hon'ble Income-tax Appellate Tribunal and the issue of the rate adopted as on April 1, 1981 in the case of other co-owners and has contended that the rate adopted by the Assessing Officer in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted by Assessing Officer at ₹ 5,500 per sq. yard is factually incorrect. It is also seen from the copy of the assessment order in the case of Sh. Birender Pal Singh Gill that the only issue before the Assessing Officer was with respect to the fair market value of 230 sq. yards of joint property sold by Sh. Birender Pal Singh Gill. Sh. Birender Pal Singh Gill had adopted a rate of ₹ 1,000 per sq. yard for this property as against which the Assessing Officer held the fair market value to be ₹ 600 per sq. yard. 4.17. In any case, the cost of land, i.e., the fair market value of property as on April 1, 1981 adopted by the Assessing Officer of Sh.Birender Pal Singh Gill for the front portion of property of which Sh. Birender Pal Singh Gill was the sole owner and which was sold separately through a separate sale deed is not the deciding factor for this purpose. Keeping in view the evidences collected by the Assessing Officer as referred to above, the report of the DVO obtained by the Assessing Officer as well as the fact that the Assessing Officer of Sh. Birender Pal Singh Gill has also adopted a rate of ₹ 600 per sq. yard for the 230 sq. yards, i.e., th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 230 sq. yards for which the cost was adopted as ₹ 600 per sq. yard. This share of Birender Singh Gill was thus in joint co-ownership. The Commissioner of Income-tax (Appeals), therefore, wrongly gave the finding that Birender Singh Gill was sole owner of the property earlier the Tribunal has directed to adopt the cost of acquisition in all the cases of co-owners uniformly. Since in the case of Birender Singh Gill, one of the co-owner, the rate of land has been accepted at ₹ 5500 per sq. yard, in which 70 per cent. of the area fell under no construction zone, therefore, the same rate should have been adopted by the Assessing Officer. The learned counsel for the assessee relied upon the judgment of the hon'ble Punjab and Haryana High Court in the case of CIT v. Mrs. Ravinder Kaur in ITA No. 240 of 2009, dated August 21, 2014, in which the hon'ble High Court was seized of the valuation of some property in the case of one co-owner and it was held that once the Department has accepted the valuation in the case of one of the co-owner, the appeal of the Revenue would not be maintainable. The learned counsel for the assessee also placed on record reassessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no question of holding that Shri Birender Singh was sole owner of the property in reference to second sale deed. Shri Birender Singh Gill filed his return of income for the assessment year 2006-07 under consideration. Copy of the acknowledgment of filing of the return is filed at page 92 of the paper book along with computation of total income, filed at pages 93 and 94 of the paper book supported by the report of Registered Valuer, in which the land value as on April 1, 1981 of 1825 sq. yards was shown at ₹ 5500 per sq. yard. This value was disclosed in the computation of income filed along with the return of income. The Revenue did not dispute this fact while assessing the income of the assessee Shri Birender Singh originally. When his case was reopened under section 148 of the Act, all the facts were mentioned in the reassessment order and the issue was examined in respect of land measuring 230 sq. yards only. The income earlier assessed was taken into consideration and to the returned income the Assessing Officer made addition of ₹ 4,57,240 computing the total income at ₹ 80,16,711 under section 148 of the Act. These facts clearly prove on record that Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the issue of cost of acquisition as on April 1, 1981 and that the report of Valuation Officer was not received by the Assessing Officer. The Tribunal, therefore, directed to ensure the uniformity in adopting the cost of acquisition in the cases of all co-owners. Therefore, the authorities below were bound to follow the directions of the Tribunal issued earlier and should have adopted the uniform approach in adopting the cost of acquisition in cases of all co-owners as on April 1, 1981. 17. The learned Departmental representative contended that the facts were same as were pleaded earlier before the Tribunal. However, the Tribunal did not accept the valuation adopted by the Assessing Officer on the basis of details collected by the Assessing Officer earlier as well as information collected from Improvement Trust Ludhiana. Therefore, there is no merit in the submissions of the learned Departmental representative that the same facts were there earlier, which have not been contradicted by the assessee in the subsequent proceedings. The assessee in the subsequent proceedings has been able to satisfy that in the case of co-owner, Shri Birender Singh Gill, the cost of acquisition as o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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