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TMI Blog2015 (9) TMI 1560X X X X Extracts X X X X X X X X Extracts X X X X ..... vacant possession by the owner. Therefore, we find merit in the arguments of the assessee that when a property having 8 tenants fetches lesser price than a property free from encumbrance, the property having 52 tenants will definitely fetch lesser price than the property having 8 tenants. Therefore, the 4 instances taken by the DVO are not comparable instances. DVO has increased the valuation of the property of comparable instances on account of time gap and locational advantage. So far as the locational advantage is concerned we find all the properties are situated in the heart of the city and therefore benefit of locational advantage cannot be a factor for increasing the value of the property sold by the assessee. So far as the time gap is concerned, we find the DVO has not considered the cost inflation index published by the income tax department. Further the DVO has given reduction @25% on account of factors like size of the property, undivided share and occupation by the tenants etc. on presumption basis. There is no finding by the AO or material in his possession that the assessee has received any extra amount other than what is declared as sale consideration. The purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aheb Mangire sold a property situated at CTS No.1157 and 1158, Sadashiv Peth, Pune admeasuring 878.77 sq.mtr and 3572.08 sq.mtrs to M/s. U.K. Enterprises for a consideration of ₹ 1,50,00,000/- vide purchase deed dated 21-04-2007. Further, the assessee was also found to have sold another property situated at CTS No.990, Sadashiv Peth, Pune admeasuring 150.50 sq.mtrs to the same party for a consideration of ₹ 17,00,000/-. The value of these properties for the purpose of stamp duty was adopted by the registering authorities at Rs,2,62,00,000/- and ₹ 31,60,000/- respectively as per the respective sale deeds totaling ₹ 2,93,60,000/-. The AO noted that the property at CTS No.1157 1158, Sadashiv Peth, Pune was a joint property held by four persons, viz., Shri Raosaheb Babasaheb Mangire, Sou. Jaidevi Mallikarjun Warad (Assessee), Shri Yogesh Sudhir Sopal and Shri Manoj Ratnakar Andalkar. All the four persons were found to have equal undivided share in the property. Of the four joint owners, Shri Yogesh Sudhir Sopal and Shri Manoj Ratnakar Andalkar did not sell their share in the property. The AO noted that the property in question originally belonged to Smt. Anand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with by the DVO while determining the value at ₹ 2,86,87,000/-. The long term capital gain arising out of the transactions was thus computed by the AO in the case of the assessee as under : Sale consideration as per valuation report Rs.2,86,87,000/- Less : Cost of acquisition as on 01-04-1981 i) In respect of property at CTS No.1157 1158 = ₹ 5,98,500 x 551/100 Rs.32,97,735/- ii) In respect of property at CTS No.990 ₹ 20,237 x 551/100 Rs.1,11,505/- Rs.34,09,240/- Rs.2,52,77,760/- Long Term Capital Gains : Less : Investment u/s.54F Rs.6,34,834/- Investment u/s.54EC Rs.40,00,000/- Rs.46,34,834/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen in valuation is the market value of the land in the market and not the value calculated in an abstract manner applying a multiplier with reference to some unknown sale. It was stressed that the fair market value is linked with the price the property would ordinarily fetch in the open market, i.e. the price a willing purchaser would pay to the willing seller for a property, having due regard to its existing condition, existing advantages and its potential possibilities when laid out in the most advantageous manner. The assessee also emphasized that even for the purpose of sec. 50C(2) the DVO has to consider this position. Citing that in the case of the assessee, there were several adverse factors like joint and undivided ownership, out of 4 owners, only 2 owners were selling the property, fully tenanted property, not even a square inch in the possession of the owners, situated in the congested area, immediate possession not available to the buyer etc. it was argued that the market value as taken for the purpose of stamp duty as the fair market value in the present case. It was accordingly pleaded that the value adopted by the assessee for the purpose of computation of capital g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.4 So far as the objection of the assessee that the property is located at Sadashivpeth whereas the comparable sale instances cited by the DVO are at Narayanpeth and therefore in different locations is concerned, the Ld.CIT(A) held that time lag between the comparable sale instance relied upon by the DVO has not been questioned. The DVO has considered the fact that the location of the flat cited for comparable sale instance is far inferior to the property of the assessee and the property of the assessee is more centrally located than the sale instance cited. 8.5 So far as the time gap is concerned he noted that the assessee s, registered valuer himself has relied on the sale instance of February 2001 which infact predates the sale instances of the year 2003 and 2004 taken into consideration by the DVO. 8.6 So far as the objection of the assessee that the sale instances taken by the DVO are very small portions of land admeasuring between 100 to 500 sq,mtrs. whereas in the assessee s case the land involved is more than 4450 sq. mts is concerned the same was rejected by the CIT(A) on the ground that the assessee s share out of the total land area of 4450 sq, mrs is only 1112 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Referring to the order of the DVO, who has valued the property, he submitted that the DVO has considered the average rate per sq.ft at ₹ 22710/- by considering 4 comparable instances which are for the period 2003-04. However, he did not give basis for arriving at fair market value at ₹ 22,710 per sq.ft. 12. Referring to the order of the CIT(A) he submitted that the Ld.CIT(A) in her order has given the basis of working which can be summarized as under : 437/A/2 139 540 273 Year of Sale May 2003 June 2003 Feb2004 July 2004 Rate as per sale deed 14758 19934 18100 15126 Time gap in years 3 yrs 11 mths 3 yrs 10 mths 3 yrs 2 mths 2 yrs 9 mths Increase for time gap of about 3 years and few months 60% 60% 50% 43% Increase in amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned sale instances of tenanted property only. On the basis of the assertion of the DVO, the CIT(A) held that the property is tenanted property. Referring to the copy of the sale deed placed at pages 123 to 147 of the paper book he submitted that there is no reference in the sale deed that the said property is occupied by the tenants. Therefore, simply on the basis of the assertion of the DVO that he has considered only tenanted properties the Ld.CIT(A) was not justified in holding that the property at Survey No.139 was also tenanted property. 15. So far as the property at Survey No.540 is concerned he submitted that according to the CIT(A) there is some dispute and name of Shri Ayodhyabai Lahoti has remained on the property card and the dispute is pending at the time of entering into the agreement. The Ld. Counsel for the assessee referring to the said agreement, copies of which are placed at pages 148 to 183 of the paper book, drew the attention of the Bench to the English Translation at pages 183 to 191 of the paper book and submitted that there is no dispute in respect of the said property and at page 187 at para 6 it has been clearly mentioned that the said property is fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee should be dismissed. 20. The Ld. Counsel for the assessee in his rejoinder submitted that the assessee is not bothered for the valuation adopted by the stamp valuation authority since the stamp duty is paid by the purchaser. He submitted that out of the 4 instances given by the DVO, 3 properties are not tenanted. Therefore, the same should be rejected. The assessee had taken objections before the AO as well as CIT(A). Referring to the letter addressed to the DVO on 27-12-2010, a copy of which is placed at pages 83 to 86 of the paper book, the Ld. Counsel for the assessee submitted that before the AO the assessee has objected to the sale instance taken by the DVO. Referring to the letter addressed to the CIT(A), copies of which are placed at pages 81 to 104, he submitted that objection was also taken before CIT(A). Even before the DVO also the assessee has taken objection of the same, a copy of which is placed at pages 61 to 69. 21. Referring to the cost inflation index to the rates based on the sale instances year and to A.Y. 2008-09 he submitted that the average rate comes to 20,047. Therefore, if 50% reduction for tenants etc. is given, the rate comes to 10,024/- whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined by the DVO and computed the capital gain which has been upheld by the CIT(A). It may be pertinent to mention here that the DVO while calculating the fair market value of the property has considered 4 sale instances and arrived at the fair market value of the properties. 23. It is the submission of the Ld. Counsel for the assessee that both these properties are tenanted properties and there are about 52 tenants in both the properties. The assessee is not in possession of a single square foot of land and the tenancy has been approved by the court. According to the Ld. Counsel for the assessee the property which is tenanted one will fetch lesser price than the property which is free from any encumbrance. Since the DVO has considered 4 sale instances out of which 3 are not tenanted and the fourth property has only 8 tenants whereas the assessee has got 52 tenants, therefore, those instances are not comparable with that of the assessee. Further, the DVO has given reduction of 25% on account of factors like size of the property, undivided share and occupation by the tenants etc. whereas such benefit should have been much more. 24. We find some force in the arguments adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. Counsel for the assessee that the above 3 properties considered by the DVO as comparable sale instances cannot be considered as comparable sale instances for the property sold by the assessee which are tenanted properties. 27. So far as the fourth property is concerned, i.e. property situated at Survey No.273 we find from the various details furnished by the assessee that the same was sold in the year 2004 at a selling rate of 15,126 per square foot. From the sale instances given by the Ld. Counsel for the assessee, we find the tenanted property fetches lesser consideration which is apparent from the 4 sale instances given by the DVO. From the various details furnished by the Ld. Counsel for the assessee, we find the sq.ft rate of property at survey No.139 was ₹ 19,934/- and selling rate of property situated at survey No.540 was at ₹ 18,100/- whereas the property at survey No.273 which has been sold at ₹ 15,126/- per sq.ft . This shows that a tenanted property fetches lesser rate than a property free from any encumbrance and having vacant possession by the owner. Therefore, we find merit in the arguments of the Ld. Counsel for the assessee that when a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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