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TMI Blog2016 (4) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. 2. The revenue in its appeal is aggrieved for deletion of addition by the CIT(A) while computing long term capital gain whereas the assessee has filed cross objection in respect of part addition sustained by the CIT(A). 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is a firm engaged in the business of Builders Developers. During the year under consideration, the assessee sold a property at CTS. No. 2883, 2884 2885 at Survey No. 144A, Hissa No. 4, 5 6 admeasuring 4188 sq. mts. During the course of assessment proceedings, the assessee worked out Long Term Capital Gains (LTCGs) on the sale of this property and filed a computation of the same before the A.O. showing the LTC Loss of ₹ 1,38,585/-. The property was sold for an amount of ₹ 45,00,000/- on 29.07.2008. The value of the property for the purpose of stamp duty was fixed at ₹ 2,09,40,000/-. The assessee worked out the cost of acquisition of the property as on 1.4.1981 at ₹ 825/- per sq.mt. on the basis of a valuation report prepared by a Government Approved Valuer. The long term capital loss worked out by the assessee was as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .04.1981 adopted at ₹ 115/- per sq.mtr. 115X4390X582/100 Rs.29,38,227/- Long term capital gain Rs.1,80,01,773/- 5. By the impugned order the CIT(A) restricted the addition to the extent of ₹ 20,33,148/- after having the following observation :- 17. I have considered the appellant's submissions, the observations of the A.O. in the assessment order and the facts of the case. As far as the sale consideration is concerned, there is no dispute regarding the same because the appellant has itself adopted the value as determined for the stamp valuation purposes at ₹ 2,09,40,000/-. The only dispute is with regard to valuation of the property as on 01.04.1981. The appellant had bought this property in the year 1970 and 1972 for a total amount of ₹ 60,000/- i.e. @ ₹ 13.67 per sq.mt. The appellant claimed the value of this property at ₹ 825/- per sq.mt. as on 01.04.1981 on the basis of the report of a Government approved valuer. The A.O. did not accept this valuation by holding that this was at a much higher rate as compared to some of the sale instances which have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration various factors like physical location of the land. However, no working has been attached by the DVO with the report to show how he had arrived at the FMV and what was the basis of the reverse working of the valuation from 1989 to 1981. With regard to the sale instances quoted by the appellant, the only reason why the DVO has not taken these instances into consideration is that the sale instances were in respect of constructed properties i.e. the properties comprised of both land and building and in the absence of details of built up area, the DVO was not in a position to find out the value of the land. (Moreover, while arriving at valuation of the property, the DVO, in his report at point No.6.1. mentioned that he had given due consideration for various factors influencing the value of the property regarding its physical, legal, social and economical aspects, as shown in Annexure-A. However, on a perusal of Annexure A it is seen that no such factors are listed to throw light as to what had influenced the DVO's mind while arriving at the valuation of the property. At point No. 9.1. the DVO has simply stated that he was determining the FMV of the property as on 0l.04.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 140/3 231 -- Rs.1330/- km. 3329 260 916.66 -- Rs.1278/- km. 21. The weighted average value of per sq.mt. of the constructed property from the above mentioned sale instances works out at ₹ 1237.3 per sq.mt. Even, if 40% of this value is held to be in respect of building / construction (though as already observed above the value of a property mainly and to a large extent is on account of the value of the land, still the average value of land as per these instances will be ₹ 742.38 per sq.mt. As these instances are located very near to the appellant's land i.e. within km, the average rate of land as worked out from these sale instances is applied to the appellant's land and it is therefore held that the Fair Market Value of the land as on 01.04.1981 was ₹ 740 per sq.mt. Based on this valuation, the Long term capital gains resulting to the appellant from the sale of property is worked out as under - Sale consideration ₹ 2,09,40,000/- Value of property as on 01.04.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al gain on the sale of property. The assessee worked out long germ capital gain by adopting cost of acquisition of property as on 1-4-1981 at ₹ 825/- per sq.mtr. on the valuation of report prepared by the Government approved valuer. However, the AO did not agree with the valuation so offered by the assessee and the AO made a reference to the valuation officer. Finally the AO computed capital gain by adopting ₹ 6/- per sq.ft. as on 1-4-1981 as done by the Joint District Registrar, Thane. The AO observed that the registered valuer had not reported any comparable sale instances of the nearby land as on 1-4-1981. By the impugned order the CIT(A) reworked out the long term capital gain by observing that the land was situated very near to the railway station even at a walkable distance. The CIT(A) observed that valuation made by the department valuation officer cannot be relied upon because of the various objection raised by the assessee were not considered by him. It was observed by the CIT(A) that DVO has not given any working while applying the rates from State Government Ready Reckoner. It was also observed that DVO has not given any working to show how he had arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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