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TMI Blog2021 (3) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... hed at the time of inspection is a finding of fact which is not disputed by either authorities and in fact, the AO has thereafter carried out the valuation of the building on his own which goes to show that as far as physical presence of the assessee at the time of inspection is concerned, the same should not have come in the way of the DVO in determining the value of the building as per the built up area and other specification so given in the sale deed. Secondly, regarding the response to the DVO s letter No.93 dated 19.01.2015, we find that the assessee did respond to the said notice vide its submission dated Nil sent vide speed post on 31.01.2015. We therefore find that various contentions advanced by the assessee regarding determination of fair market value and evidences already brought on record have not been properly addressed by the DVO and even though, the DVO report is binding on the AO and when the matter was brought to the notice of ld CIT(A), the later is well within her jurisdiction to consider those contentions and where so required, the matter could have been referred to the DVO to seek his comments. Therefore, considering the entirety of facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing the Long Term Capital Gain. 2. (a) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in not considering the dispute involved in the property for further reduction of the value as determined by the ld. DVO. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by accepting the sale consideration at ₹ 25,00,000/- (1/8 of ₹ 2,00,00,000/-), as declared by the assessee, for computing the Long Term Capital Gain. (b) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. DVO in not considering the dispute involved in the property for estimating the fair market value. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by accepting the sale consideration at ₹ 25,00,000/- (1/8 of ₹ 2,00,00,000/-), as declared by the assessee, for computing the Long Term Capital Gain. 3(a). In the facts and circumstances of the case and in law ld. CIT(A) has erred in confirming the action of ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O on 17-2-2015. The subject properties were inherited properties in which the appellant had 1/8th share. The above mentioned properties being located in Jodhpur were not looked after regularly and, therefore, were occupied by some illegal occupants. Therefore, the market value of the property got substantially reduced and, thus, was sold at a price lower than the value adopted by the Stamp valuation authority. During the course of assessment proceedings, the property was referred for valuation to DVO u/s 50C(2). Ld. AO while computing the capital gain on sale of above inherited residential properties, substituted the transaction value with the valuation done by Stamp Valuation Authority, being lower than the valuation made by DVO. Ld. AO as well as ld DVO has not given any cognizance to the fact that property was occupied by unauthorized persons and, therefore, the market value of the property has been substantially reduced. Ld. CIT(A) restricted the deemed sale consideration under section 50C against the property No. 9 to 14, to the value adopted by DVO of ₹ 3,27,52,913 and, thus, reduced the value of the said property by ₹ 43,80,712 as per the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law to consider the various deficiencies/ disadvantages associated with the sold property which had significantly reduced the sale consideration. Thus, the cases relied upon by Ld. CIT(A) were not at all relevant for issue before her. During the course of appellate proceedings for the proposition that ld. DVO was duty bound to consider the deficiency/disadvantages for arriving at a proper valuation, reliance was placed on the following two judicial pronouncements: * Chandra Bhan Vs. ACIT [2012] 21 taxmann.com 133 (Kol.) * Ravi Kant Vs.ITO [2007] 110 TTJ 297(DELHI) 6. The Ld. CIT(A) has neither distinguished the above case laws nor followed the same. Ld. CIT(A) has rejected the claim of the appellant, contending that the "appellant did not respond to the DVO's letter No. 93 dated 19.01.2015 and was not present on the date of inspection of the property on 17.02.2015.". 7. It was submitted that the appellant gave his reply to the said letter within time (Copy of reply is placed in Paper Book Page 99-104). It is further submitted that after giving the written reply on the matter, there was no necessity of appellant to be physically present at the time of inspection of the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue ascertained as mentioned in sub-section (2) exceeds the value adopted, assessed or assessable by the stamp valuation authority, such valuation of the authority would prevail, in other words, for the purpose of capital gains it would be the lesser of the two valuations, that adopted by the State Valuation Authority or one suggested by the Department Valuation Officer, which would prevail. In the instant case, it is noticed that the value of the first property being plot no.9 to 14 is determined by the DVO at ₹ 3,27,52,913/- as against ₹ 3,71,33,625/- adopted by the Stamp Valuation Authority which is lesser by ₹ 43,80,712/-, however, the AO has adopted the higher value of ₹ 3,71,33,625/- only. Therefore, as per provisions of sec. 50C(3), the value of plot no. 9 to 14 adopted by the AO at ₹ 3,71,33,625/- is reduced by ₹ 43,80,712/- as per valuation done by the DVO. The appellant gets partial relief. The deemed sale consideration of the second property, being plot nos. 15 & 16, taken by the AO at ₹ 2,11,40,805/- as per the value assessed by the Stamp Valuation Authorities is upheld. The ground nos. 1 & 2 raised by the appellant regarding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/-) is more than the value assessed by the Stamp Valuation Authority. In respect of the second property being plot Nos.15 & 16, the value determined by the DVO at ₹ 2,19,34,836/- being more than the value adopted by the Stamp Valuation Authorities at ₹ 2,11,40,805/-, the AO held that the value adopted by the Stamp Valuation Authority is correct and should be taken for computation of capital gains. The AO accordingly computed the long term capital gain by taking the deemed sales consideration as per Section 50C of the Act at ₹ 5,82,74,430/- (₹ 3,71,33,625/- + ₹ 2,11,40,805/-) as per values assessed by the Stamp Valuation Authorities. 11. Regarding the contention advanced by the assessee that the property was sold at a price lower than the market value as the property was occupied by some illegal persons and which is a precise reason for referring the matter to the DVO, we find that there is no finding recorded by the DVO in his report. However, the AO in the assessment order has taken cognizance of the said contention and held that the explanation given by the assessee is not enough to substantiate that he had to actually sell the property at a price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our mind, the DVO has recorded a finding that at the time of inspection, the building stood demolished by the buyer and thus, he is unable to determine the value of the building. Therefore, the fact that the building was demolished at the time of inspection is a finding of fact which is not disputed by either authorities and in fact, the AO has thereafter carried out the valuation of the building on his own which goes to show that as far as physical presence of the assessee at the time of inspection is concerned, the same should not have come in the way of the DVO in determining the value of the building as per the built up area and other specification so given in the sale deed. Secondly, regarding the response to the DVO's letter No.93 dated 19.01.2015, we find that the assessee did respond to the said notice vide its submission dated Nil sent vide speed post on 31.01.2015. We therefore find that various contentions advanced by the assessee regarding determination of fair market value and evidences already brought on record have not been properly addressed by the DVO and even though, the DVO report is binding on the AO and when the matter was brought to the notice of ld CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf carry out the valuation exercise. Therefore, the valuation of building done by ld AO cannot be taken for computation of capital gain. In view of the above, the capital gain may please be directed to be computed by taking Fair Market Value as on 01- 04-1981 as declared by appellant disregarding the valuation done by DVO/AO. 14. Per contra, the ld DR relied on the findings of the AO and that of the ld CIT(A) and our reference was drawn to the findings of the ld. CIT(A) which are contained at para 6.2 of her order which are reproduced as under: "6.2. I have carefully considered the assessment order and appellant's submissions. The appellant estimated the value of the property sold as on 01.04.1981 on estimate basis based on information gathered by him. The DVO estimated the fair market value of the property as on 01-04-1981 on the basis of comparable sale instance of the area. The AO completed his assessment by considering the fair market value of the property as estimated by the DVO. Comparative position of the value estimated by the appellant and by the DVO is as under: Property Description Valuation by the DVO Value Adopted by the Appellant Plot No. 9 & 14 (Origin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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