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TMI Blog2017 (9) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... at much far distance in a different locality 250/- only without any concrete evidence. All this makes us to observe that application of thumb rule in such a case would meet larger interest of justice. We therefore take average of sale price of 484.10/- per sq.mtr. and the price in question taken by the lower authorities @Rs.250/- ; coming to 367.05 per sq.mtr. as the appropriate fair market value of the assessee’s property as on 01.04.1981. We make it clear that our instant adjudication is based on the above peculiar facts and circumstances shall not be treated as a precedent. The Assessing Officer shall accordingly finalize consequential computation. The assessee therefore partly succeeds on merits. The assessee’s first plea is that the Assessing Officer could not have interfered in registered valuer’s report u/s.55A(a) of the Act since the amendment in question authorizing him to proceed on such basis w.e.f. 01.07.2012 does not apply with retrospective effect. We however notice that clause(b) sufficiently answers assessee’s former legal plea being inclusive in nature since having crucial expression “in any other case”. Same is the outcome of assessee’s latter legal argument that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. During the course of appellate proceedings, the appellant filed written submission as under:- 3.0 FMV as on 01.04.1981 at ₹ 7,35,750/- instead of ₹ 25,78,300/-. 3.7 The first effective ground of appeal relates to the rejecting FMV as on 01.04.1981 shown at ₹ 25,78,300/- by the appellant as per registered valuers report dated 30.10.2010 and taking at ₹ 7,35,750/-, It is discussed in para 4.3 to 4.5 of the impugned order. It is observed by AO that in view of the location of the immovable property sold by the appellant vis-a-vis the comparable instance given by the valuer, the FMV was estimated at ₹ 250/- per sq. yard as on 01.04.1981. Accordingly, the cost of acquisition for ½ share of the appellant worked at ₹ 3,67,875/- and indexed cost at ₹ 26,15,591/- instead of ₹ 91,65,957/- which resulted into addition of ₹ 65,50,266/-. 3.2 The appellant begs to submit that the impugned addition made by AO is wholly unjustified both on facts and in law as under : (a) Firstly, the AO has failed to appreciate that in order to ascertain a FMV as on 01.04.1981 of any capital asset 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 ..... at having regard to the value ₹ 484.10 p. per square yard of plot bearing P.P. No.840, the value of PUC could be estimated at ₹ 250 per sq. yard should be rejected because it is mere a presumption and surmise. The perusal of the size of the plot relating to P.P. No. 840 as given in valure's report shows that it admeausered about 2418 sq. Mt and sold during the period of ULC Act whereas the PUC was not covered under ULC Act as per the order dated 30.11,1982 of Dy. Collector and Competent Authority, ULC, Abad. Therefore, the PUC would naturally fetch higher value than P.P. No.840. It may be noted as observed by valuer in his clarification dated. 20.05,2014 that even in respect of plots nearby Ashram Road, the FMV was taken at ₹ 1200 per sq. yard (copy enclosed). The appellant submits that this explanation should not be treated as fresh evidence because the regd. Valuer was examined by AO on 06.02.2014 wherein he had explained the basis of valuation made by him. In view of above facts and circumstances of the case, the valuation of land estimated by Regd. Valuer at ₹ 700 per sq. yard cannot be said to be arbitrary or excessive as alleged by AO so that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is found that the Plot No.850/1 of the appellant was situated inside 2 Kms. away from the Ashram Road at 40 Ft. wide road while the sale instance property as taken by the valuer was situated on the main road of the Ashram Road on 30.50 Mtrs wide road. So the sale instance property was on a far far better location being situated on much wider road on the main Ashram Road while the property of the appellant was situated firstly on the less wider road and that too on the 2 kms. away from the main Ashram Road. Therefore the cost of acquisition of the appellant's property as on 1.4.1981 ought to have been much less than the sale rate of 484.10 per sqr. Yd. of the final plot No. 840 taken as a sale instance by the valuer. The detailed discussions about the inquiries and the outcome of such inquiries are discussed in the assessment order by the A.O. A copy of the T.P. Scheme No. obtained from the Ahmedabad Municipal Corporation has been made part of the assessment order also from which it is very much apparent that the locations of the sale instance property was well located and its value might have been much higher than the appellant's property value. Considering these factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e valuation officer u/s.55A by saying that the reference in the instant case also would have been illegal in view of certain judgments quoted in the written submission. By saying this the appellant's thought that whatever rate he has adopted as a cost of acquisition i.e. R5.700/-/per sqr. Yd. as on 1.4.1981 became the final and neither the AO would estimate at his own considering the comparable instances, nor the registered valuer could have determined the fair market value as on 1.4.1981 u/s.55A of the I.T. Act which is totally against the provisions of law and never intended so. Further the appellant has simply contended that the plot in P.P. No.840 was sold during the period of ULC Act whereas the PUC was not covered under ULC Act and therefore the PUC would naturally fetch higher value than the FP. No.840. This contention has been taken by the appellant first time and without any base and working. In the Incometax Act the fair market value has to be determined as on 1.4.1981 and accordingly the appellant himself has taken a comparable instance of the sale property on 01.10.1981. So the sale instance was comparable and the sale rate needs to be adjusted according to the loca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 472 in paper book. The Assessing Officer also appears to have attached relevant sketch of the town planning scheme, Ellis Bridge indicating assessee's capital asset, the above sample property. Mr. Divatia's case is that all this material sufficiently indicates that both the lower authorities have erred in disturbing assessee's valuation report in question. 6. Learned Departmental Representative on the other hand draws strong support from both the lower authorities' action under challenge arriving at the impugned fair market value. He takes us to the relevant annexure attached with the assessment order indicating inter alia the property in question to be situated on road having width of 40ft. only as against the sample property 840 situated on main Ashram Road having width of 30mtrs. His case is that the assessee's registered valuer stated this Ashram Road's width to be 30ft. only. He then once again asks us to stay back on the above town planning scheme annexure indicating assessee's capital asset to be adjoining a cremation ground having very serious depreciating effect in valuation. He then submits that the capital asset in question had seen partition as well. He accordingly s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njoy much commercial value since sandwiched between Sabarmati river on the one hand and Ashram Road on the other. There is further no material that the said plot's value in anyway suffered because of Urban Land Ceiling Law or its effect thereupon. We therefore do not find any justification in travelling further to adopt valuation of "Natraj or G. S. Shodhan" situated at much far distance in a different locality & scheme than the above sample plot. The assessee's assertions in this regard based on coloured material and other documents are accordingly rejected. 9. The next question that arises on merits for our apt adjudication is as to whether both the lower authorities have correctly valued assessee's plot @Rs.250/- only than the above sample property sold on 01.10.1981 @Rs.484.10/- per sq.mtr. We rely on our above discussion to observe that both these plots admittedly form part of the same scheme wherein one of them is situated on main Ashram Road and the other one falls in residential area as on 01.04.1981. The former property therefore can be held to be having commercial potential whereas assessee's plot is in purely residential area having its on value. We therefore consider i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessment order, the A.O. observed as under:- 5. Deduction u/s. 54EC 5.1 In the computation of income, the assessee claimed deduction u/s. 54EC of the Act at ₹ 1.00 crore. As per provisions of section 54EC, deduction was restricted to ₹ 50.00 lakhs by inserting a proviso to section 54EC by Finance Act, 2007. 5.2 A bare reading of the above provisions makes it clear that investment in Long Term Specified Assets has been restricted to ₹ 50,00,000/- by inserting of the first proviso to section 54EC. The assessee made investment in such assets at ₹ 1 crore and claimed exemption. Therefore the assessee vide this officer notice datred 23/09/2013 was requested to explain. 5.4 The above submissions of the assessee are considered carefully. It is seen that the assessee claimed that the two investments of ₹ 50 lakhs wach made within six months in each financial year were eligible for deduction u/s. 54EC. The assessee has also relied upon the orders of Ahmedabad ITAT in the case of Shri Aspi Ginwala Vs. Asst. Com. of income-tax in IT A No. 322/Ahd/2011 dated 30/03/2012 and ITAT Chennai Bench in the case of Coromandel Industries (P) Ltd. Vs. Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious year but the ceiling of ₹ 50 lacs would not operate qua the capital assets. To illustrate, if the assessee has exhausted that limit by investing ₹ 50 lacs in financial year No. 1 and he again makes investment of ₹ 50 lads in F. Y. No. 2, the further investment in the second year cannot be made by him in respect of the capital assets sold in that F. Y. Thus, in none of the years, the prescribed limit exceed as contemplated by the legislature. It would be taking a two narrow view of the beneficial provisions of section 54EC when it is intended to grant relief to the assessee from taxation of capital gains. Recently, Hon'ble Apex Court in case of Sanjiv Lal ( 365 ITR 389)has observed that a purposive interpretation should be made so as to allow the benefit of exemption and wherever two views are possible, the view favourable to the assessee should be adopted as held in case of Vikrant Tyres Ltd ( 274 ITR 821)(SC) and Vegitables Products Ltd.(_88 ITR_92). In view of above, the exemption u/s.54EC to the extent of ₹ 50 lacs as denied by AO should be allowed. Decision: 5.5. I have considered the facts of the case and submission made by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of transfer. In support of the same he has relied upon various decisions. 5.7. In the case of Aspi Ginwala, Shree Ram Engineering & Manufacturing Industries Vs. ACIT, Circle, Baroda in IT appeal No.3226 of 2011 vide order dtd. 30.03.2012 the Hon'ble ITAT Bench-C, Ahmedabad has granted the deduction of ₹ 1 crore in two different financial years made but within six months from the transfer. Relevant portion of the findings are as under:- "The dispute which is to be decided in this case is whether as per the provisions of section 54EC the assessee is entitled for exemption of ₹ 1 crore as six months period for investment in eligible investment involves two financial years. If the answer to this question is 'yes', whether investment made by the assessee in NHAI Bonds on 26-5-2008 beyond six months period is eligible for exemption in view of the fact that no subscription for eligible investment was available to the assessee from 1.4.2008 to 26.5.2008. It is clear from proviso to section 54EC that where assessee transfers his capital asset after 30th September of the financial year he gets an opportunity to make an investment of ₹ 50 lakhs each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 2008-09 - Whether condition for availing of exemption under section 54EC requires that investment can be made within a period of 6 months and if 6 months fall within two different financial years, assessee can make investment in two different financial years provided in a financial year investment made did not exceed ₹ 50 lakhs - Held, yes - Assessee sold a property on 5.2.2008 and computed capital gain at ₹ 1.16 crores - She had invested in Capital Gains Bonds a sum of ₹ 50 lakhs on 31.3.2008 and a sum of ₹ 50 lakhs on 30.6.2008 - In return of income for assessment year 2008-09, she claimed exemption under section 54EC of capital gain amounting to Rs. One crore - Whether assessee was eligible for exemption under section 50EC for Rs.one crore - Held, yes." Further in the case of Coromandel Industries (P) Ltd. Vs. Assistnat Commissioner of Income-tax, Company Circle 1(3), Chennai [2013] 36 taxmann.com 6 (Chennai - Trib.) "Section 54EC of the Income-tax Act, 1961 - Capital gains - Not to be charged on investment in certain bonds [Limit of investment] - Assessment year 2009-10 - Assesse sold capital assets and earned longterm capital gain of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government decided to impose a ceiling on the quantum of investment that could be made in such bonds. Accordingly, the said section has been amended so as to provide for a ceiling on investment by an assesgee in such long-term specified assets. 12. On appeal, the Commissioner of Income-tax (Appeals) confirmed the action of the Assessing Officer. 13. Before us the Authorized Representative of the assessee submitted that the issue is covered in favour of the assessee by the following decisions of the Tribunal:- i) IT AT Bangalore in the case of Shri Vivek Jairazbhoy in ITA No.236/Bang/2012 ii) ITAT Chennai in the case of Smt. Sriram Indubal, reported in 32 taxmann.com 118 in) ITAT Panaji in the case of Ms. Raina Faleiro, 33 taxmann.com iv) ITAT Ahmedabad in the case of Smt. Pritiben Gautambhai Adani, in ITANo.808/Ahd/2012 14. On the other hand, the Departmental Representative supported the order of the lower authorities and relied upon the decision of Jaipur "A " Bench of the Tribunal in the case of ACIT v. Shri Raj Kumar Jain & Sons (HUF) (supra). 15. We find that the first proviso to section 54 EC, inserted by the Finance Act, 2007, w.e.f. 01.04.2007, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities were not justified in not allowing exemption u/s 54EC to the assessee in respect of investments made in specified capital bonds ofRs. 1 crore which were within the limit of proviso to section 54EC i. e. ₹ 50 lakhs in a financial year and were within the specified period of six months. We, therefore, set aside the orders of the lower authorities and direct the Assessing Officer to allow exemption to the assessee u/s 54EC in respect of both the investments i.e. ₹ 50 lakhs on 02.08.2008 and ₹ 50 lakhs on 30.06.2008. Thus, this ground of appeal of the assessee is allowed. 19. In the result, the appeal of the assessee is allowed. In view of the aforesaid discussion including the decision of jurisdictional ITAT which is binding upon this office on the identical issue, there is no case to make the disallowance of the second investment made in the subsequent year but within 6 months from the date of the transfer of the property. It is seen from the various decisions of the ITAT referred above except Jaipur Bench, the investment made u/s.54EC to the extent of ₹ 1 crore in two financial years but the last investment within 6 months from the date of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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