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TMI Blog2019 (11) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... e fair market value of the land as on 1.4.1981 on the basis of available material. The valuer has adopted the rate of ₹ 33.19 per sq.ft. on the basis of sale instances of developed housing sites located within the municipal limits. Further, the impugned land is located within 2.50 kms of municipal limits. These factors could be taken as a guidance, in the facts and circumstances of the case, particularly in the absence of any other sale instances for land of identical nature. There should not be any dispute that an industrial land would command higher rate than an agricultural land. Hence, on a conspectus of the matter, we are of the view that this controversy may be put to rest by adopting the fair market value of impugned land at 1/3rd value of rate determined by the approved valuer, i.e., at ₹ 11/- per sq.ft. Accordingly, we set aside the order passed by CIT(A) and direct the AO to determine the fair market value of impugned land by adopting the rate of ₹ 11/- per sq.ft - Appeal of the assessee is partly allowed. - ITA No.617/Bang/2019 - - - Dated:- 6-11-2019 - Shri B.R Baskaran, Accountant Member And Smt. Beena Pillai, Judicial Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, the AO called for details of fair market value from various sub-registrar office located around the impugned land. The AO noticed that the impugned land was located in 7th mile, 4th furlong, Kanakapura Main Road, Khata No.1004/832/1015/1, Sy No.46/2A1B, which fell in the jurisdiction of Doddkalasandra Village. The extent of land was 2 acres and 3 guntas and the same was converted into industrial land from the status of agricultural land. The sub-registrars reported that the guide line rates fixed by Government of Karnataka was available only from 1989 onwards in respect of converted lands. The value of converted land per acre in Dodakallasandra Village for FY 1989-90 was ₹ 21,500/-. By adopting the cost inflation index prescribed by the CBDT, the AO made back ward calculation and arrived at the value as on 1.4.1981 at ₹ 12,500/- per acre. Accordingly, the AO determined the fair market value of the impugned land at ₹ 25,625/-. Before the AO, the assessee had placed its reliance on the Valuation report obtained from Government approved valuer. The AO rejected the same by citing following reasons:- 11. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t many Industrially Converted Lands in that area, how the Valuer got an estimate at ₹ 30 per sqft is doubtful. In that case, why did the assessee enter an amount of ₹ 2,70,975/- as the book value and not ₹ 30 Lakhs. It is to be noted that the Asset was introduced into the books of accounts of the assessee through its partner's capital account. Hence due to the above reasons, the value adopted by the assessee at ₹ 30 lakhs is found to be doubtful hence incorrect. The Ld CIT(A) confirmed the order passed by the AO and hence the assessee has filed this appeal before the Tribunal. 4. The Ld A.R submitted that the assessee has obtained a valuation report from a Government Approved valuer, who has determined the fair market value of the land by citing certain sale instances and also by making due enquiries from land brokers. She further submitted that the AO has taken support of report obtained from Sub-registrar officer and most of them pertained to agricultural land and residential plots. She further submitted that the land sold by the assessee is an industrial land and hence the AO was not justified in ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value as on 1.4.1981 at ₹ 33.19 per Sq.ft. Accordingly, he has valued the impugned land at ₹ 30.00 lakhs as on 1.4.1981. 7. There should not be any dispute that the value of a residential plot located in a well-developed area, that too located within municipal limits, would command higher rate than an industrial land located outside the municipal limits in an under developed area. As rightly pointed out by the AO, the residential plots are generally quoted at the rate per Sq.ft., while the agricultural land/industrial land would be quoted at the rate per acre. Further it is a general rule that the bigger the size of plots, lower the price it could fetch. This rule is applicable even to residential plots located in a well-developed area. When the questions relate to agricultural lands/industrial lands, the rates are quoted for per acre and the same would be far lesser than the rates quoted for residential plots. Hence we agree with the view taken by the AO that the sale instances of residential plot cannot be taken as the basis for valuing the impugned industrial land. In fact, the assessee is strongly opposing the Sub-registrar rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even between the plots/land having same characteristics, the bigger plot/land would command low rates than the smaller plot/land. Further the size of the plot/land, location, access to main road, availability of other amenities etc. would also determine the market rates. The Ld A.R contended before us that the sale instances cited by the Valuer are within 2.50 kms and hence the same can also be adopted. However, the assessee has not brought on record any other characteristics or positive factors related to the land which would enable it to command higher rates. Hence the so called shorter distance alone could not be a factor that should influence a probable buyer to pay the same rates as are available to a residential plot located in a developed area. 11. We have noticed that both the parties could bring on recoed any comparable sale instances of similarly placed land. Hence, we have no other option, but to estimate the probable fair market value of the land as on 1.4.1981 on the basis of available material. The valuer has adopted the rate of ₹ 33.19 per sq.ft. on the basis of sale instances of developed housing sites located within the muni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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