Mrs. Manjula Singhal, UDAIPUR v. ITO, UDAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR BEFORE SHRI S.V. MEHROTRA ACCOUNTANT MEMBER AND SHRI V.D. RAO JUDICIAL MEMBER ITA NO. 290/JU/2009 ASSTT. YEAR : 2004-05 MRS. MANJULA SINGHAL VS. INCOME-TAX OFFICER C/O M/S. G. AGARWAL & CO. WARD 2(1) UDAIPUR. CHARTERED ACCOUNTANTS GOVINDAM 6 BHAN BHAG NEW FATEHPURA UDAIPUR. (PAN ALGPS 7213 L) ITA NO. 302/JU/2009 ASSTT. YEAR : 2004-05 INCOME-TAX OFFICER VS. MRS. MANJULA SINGHAL WARD 2(1) UDAIPUR. C/O M/S. G. AGARWAL & CO. CHARTERED ACCOUNTANTS GOVINDAM 6 BHAN BHAG NEW FATEHPURA UDAIPUR. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI A.R. REVENUE BY : SHRI AVADHESH KUMAR D.R. O R D E R PER S.V. MEHROTRA A.M : THESE CROSS APPEALS FILED BY ASSESSEE AND THE DEPA RTMENT ARISE OUT OF THE ORDER DATED 19.03.2009 OF LEARNED CIT(A) UDAIPUR WHEREB Y THE ASSESSEES APPEAL WAS ALLOWED IN PART. 2. THE ASSESSEE HAS FILED RETURN OF INCOME DECLARIN G INCOME OF RS. 96 67 754/- WHICH INCLUDED RENTAL INCOME FROM PROPERTY CAPITAL GAIN INTEREST INCOME FROM VARIOUS PARTIES AND BANK INTEREST ON FDRS. THE ASSESSMENT W AS COMPLETED AT A TOTAL INCOME OF 2 RS.92 16 716/- INTER ALIA DETERMINING LONG-TERM CAP ITAL GAIN ON UDAIPUR PROPERTY AT RS.30 01 535/- AND LONG-TERM CAPITAL GAIN ON MUMBAI PROPERTY AT RS.51 15 670/-. THE MATTER WAS CARRIED BEFORE THE LEARNED CIT(A) WHO W HILE PARTLY ALLOWING THE ASSESSEES APPEAL CONFIRMED THE LONG-TERM CAPITAL GAIN IN RES PECT OF SWAROOP SAGAR PROPERTY AT UDAIPUR. HOWEVER AS REGARDS THE MUMBAI PROPERTY T HE LEARNED CIT(A) ACCEPTED THE ASSESSEES CONTENTION IN ADOPTING THE FAIR MARKET V ALUE OF THE PROPERTY AS ON 01.04.1981 AS PER THE REPORT OF REGISTERED VALUER AT RS.9 76 0 00/-. BEING AGGRIEVED WITH THE ORDER OF LEARNED CIT(A) BOTH THE ASSESSEE AND THE DEPARTMEN T HAVE PREFERRED APPEALS BEFORE US. FIRST WE TAKE UP THE ASSESSEES APPEAL. 3. THE GROUNDS RAISED IN APPEAL BY ASSESSEE READ AS UNDER : 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) U DAIPUR GROSSLY ERRED IN LAW AS WELL AS ON FACTS OF THE CAS E BY CONFIRMING THE SALE VALUE OF THE SWAROOP SAGAR PROPERTY AT RS.97 89 450 /- U/S. 50-C OF THE IT ACT ON THE BASIS OF VALUE TAKEN BY THE STAMP VALUA TION AUTHORITY FOR STAMP DUTY PURPOSE AS AGAINST ACTUAL SALES CONSIDE RATION OF THE SAID PROPERTY WAS RS.60 00 000/- WHICH IS UNJUSTIFIED U NWARRANTED AND BAD IN LAW. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) U DAIPUR FAILED TO APPRECIATE THAT THE ACTUAL SALE VALUE WAS ONLY THE FAIR MARKET VALUE OF THE AFORESAID PROPERTY IN OPEN MARKET AS T HE PROPERTY WAS SITUATED NEAR SWAROOP SAGAR LAKE UDAIPUR WHICH IS NOTIFIED AS RESTRICTED AREA WHERE CONSTRUCTIONS ARE BANNED BY THE STATE GO VERNMENT THEREFORE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) UDAIPUR FOR IGNORING THE ABOVE FACTS IS UNJUSTIFIED UNWARRANT ED AND BAD IN LAW. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) U DAIPUR ASSUMED WITHOUT ANY BASIS THAT THE SALE VALUE WAS T HE HIGHER THAN THAT OF THE DECLARED IN THE INSTRUMENT OF SALE AND WHOLE SA LE CONSIDERATION WAS PAID BY THE BUYER THROUGH ACCOUNT PAYEE CHEQUES ONL Y WHICH WAS VERIFIABLE AND STANDS VERIFIED BY THE LD. ASSESSING OFFICER FROM THE BANK ACCOUNTS OF THE APPELLANT. 3 4. THE BRIEF FACTS APROPOS THE ISSUE ARE THAT DURIN G THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD A PROPERTY SITUATED AT PLOT NO. 5 SW AROOP SAGAR UDAIPUR FOR A CONSIDERATION OF RS.60 00 000/- BUT THE STAMP DUTY WAS PAID WITH REFERENCE TO VALUATION OF PROPERTY AT RS.97 89 450/-. THE ASSESSING OFFICE R REQUIRED THE ASSESSEE TO SHOW AS TO WHY IN VIEW OF THE PROVISIONS OF SECTION 50C THE V ALUE ADOPTED BY THE SUB-REGISTRAR SHOULD NOT BE ADOPTED FOR CALCULATION OF CAPITAL GA IN ? THE ASSESSEES REPLY HAS BEEN REPRODUCED FROM PAGE 3 TO PAGE 5 OF THE ASSESSMENT ORDER IN WHICH THE ASSESSEE PRIMARILY PLEADED THAT THE PROPERTY IN QUESTION WAS SITUATED NEAR SWAROOP SAGAR LAKE WHERE CONSTRUCTION WAS BANNED BY THE STATE GOVERNMENT. FU RTHER UIT THROUGH ITS NOTIFICATION HAD ALSO BANNED ANY SORT OF CONSTRUCTION NEAR THE L AKE SIDE IN ORDER TO AVOID POLLUTION. FURTHER THE PROPERTY WAS OWNED BY JOINT OWNERS WHI CH ADDED TO ITS DISADVANTAGE. IT WAS FURTHER SUBMITTED THAT NO MATERIAL OR EVIDENCE WAS ON RECORD THAT THE ASSESSEE HAD RECEIVED ANYTHING IN EXCESS OF THE SALE CONSIDERATI ON STATED IN THE SALE DEED. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE ASSE SSEES CONTENTION. IN VIEW OF THE PROVISION OF SECTION 50C INSERTED W.E.F. 01.04.2003 HE POINTED OUT THAT THERE IS NO NEED TO PROVE BY THE REVENUE FOR CALCULATING THE CAPITAL GAIN THAT THE ASSESSEE HAD RECEIVED EXCESS OF THE SALE CONSIDERATION THAN THAT MENTIONE D IN THE SALE DEED. HE FURTHER POINTED OUT THAT AS PER RULES MADE BY UIT THERE WAS NOT A TOTAL BAN ON THE CONSTRUCTION IN THAT AREA BUT ONLY CERTAIN RESTRICTIONS WERE MADE AS TH E AREA WAS NEARBY THE LAKE. FURTHER THE AUTHORITIES WOULD HAVE CONSIDERED ALL THE FACTS WHI LE DECIDING RATES FOR STAMP DUTY PURPOSES. HE ALSO GAVE A SALE INSTANCE OF THE SAME AREA AND POINTED OUT THAT A PROPERTY WAS SOLD FOR RS. 70 00 000/- BY M/S. CHETANYA KUMAR MEHTA HUF TO M/S. BULA 4 CONSTRUCTION ON 16.11.2005 AND THE SUB-REGISTRAR HA S ALSO VALUED THE PROPERTY ON THE SAME VALUE I.E. RS.70 00 000/-. THEREFORE THE ST AMP DUTY VALUATION WAS REASONABLE. HE THEREFORE CONTENDED THAT THE PROVISIONS OF SECTION 50C ARE CLEARLY APPLICABLE TO THE ASSESSEE. THEREFORE HE ADOPTED THE SALE CONSIDERAT ION AT RS.97 89 450/-. 5. BEFORE THE LEARNED CIT(A) THE ASSESSEE REITERAT ED THE CONTENTIONS AS WERE MADE BEFORE THE ASSESSING OFFICER INTER ALIA POINTING O UT THAT THE STAMP VALUATION AUTHORITY COMPLETELY IGNORED THE FACT THAT THE SAID PROPERTY WAS UNDER SEVERE RESTRICTIONS. IT WAS FURTHER SUBMITTED THAT THE SALE CONSIDERATION ADOPT ED BY THE ASSESSEE WAS JUSTIFIABLE FROM THE APPROVED VALUERS REPORT WHO HAD VALUED THE PRO PERTY AT RS.60.70 LACS. THE LEARNED CIT(A) HOWEVER DID NOT ACCEPT THE ASSESSEES CONT ENTIONS AND POINTED OUT THAT THE ASSESSING OFFICER ADOPTED THE SALE CONSIDERATION IN ACCORDANCE WITH THE PROVISIONS OF SECTION 50C OF THE ACT. 6. THE LEARNED COUNSEL FOR THE ASSESSEE NARRATED TH E FACTS AS NOTED ABOVE AND SUBMITTED THAT BECAUSE OF THE RESTRICTIONS OF UIT THERE COULD NOT BE ANY CONSTRUCTION BY THE SIDE OF THE LAKE. HE REFERRED TO PAGE 50 OF THE PAPER BOOK WHEREIN THE VALUATION REPORT DATED 28.12.2006 OF THE REGISTERED VALUER IS CONTAINED WHO HAS DETERMINED THE MARKET VALUE OF THE PROPERTY AS ON 01.04.2003 AT RS .60.70 LACS. THE LD. COUNSEL REFERRED TO SECTION 50C SUB-SEC.(2) AND POINTED OUT THAT IN VIEW OF THE PROVISIONS CONTAINED IN THIS SECTION THE ASSESSING OFFICER HAD ONLY TWO OPTIONS FIRST EITHER TO ACCEPT THE REGISTERED VALUERS REPORT AND IF HE WAS NOT ACCEPTING THE ASS ESSEES REGISTERED VALUERS REPORT THEN THE MATTER SHOULD HAVE BEEN REFERRED TO THE DVO FOR VALUATION. THE LD. COUNSEL SUBMITTED 5 THAT SINCE THE ASSESSING OFFICER DID NOT REFER THE MATTER TO THE DVO THEREFORE IMPLIEDLY HE SHOULD HAVE ACCEPTED THE REGISTERED VALUERS REP ORT. 7. THE LEARNED DR SUBMITTED THAT IN SUB-SECTION (2) THE DISCRETION HAS BEEN GIVEN TO THE ASSESSING OFFICER FOR REFERRING THE MATTER TO T HE DVO AS THE TERM USED IS MAY AND NOT SHALL. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RECORD OF THE CASE. SECTION 50C HAS BEEN INSERTED BY THE FINANCE ACT 2002 W.E.F. 01.04.2003 AND READS AS UNDER :- 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCR UING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER THE VALUE SO ADOPTED O R ASSESSED SHALL FOR THE PURPOSES OF SECTION 48 BE DEEMED TO BE THE FULL VA LUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SE CTION (1) WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFI CER THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATIO N AUTHORITY UNDER SUB- SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PR OPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUT ED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY O THER AUTHORITY COURT OR THE HIGH COURT THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS M ADE THE PROVISIONS OF SUB-SECTION (2) (3) (4) (5) AND (6) OF SECTION 1 6A CLAUSE (I) OF SUB- SECTION (1) AND SUB-SECTION 35 AND SECTION 37 OF TH E WEALTH-TAX ACT 1957 6 (27 OF 1957) SHALL WITH NECESSARY MODIFICATIONS APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THA T ACT. EXPLANATION. FOR THE PURPOSES OF THIS SECTION V ALUATION OFFICER SHALL HAVE THE SAME MEANING AS IN CLAUSE OF SECTION 2 O F THE WEALTH-TAX ACT 1957 (27 OF 1957). (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB-SEC TION (2) WHERE THE VALUE ASCERTAINED UNDER SUB-SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORITY REFERRED TO IN SUB-SECTION (1) THE VALUE SO ADOPTED OR ASSESSED BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF THE TRANSFER. 9. THE INGREDIENTS OF THE SECTION ARE AS UNDER : (I). IF THE VALUATION ADOPTED OR ASSESSED FOR STAMP DUTY PURPOSES IS MORE THAN THE STATED CONSIDERATION IN THE SALE DEED THEN THE VALUATION FOR STAMP DUTY PURPOSES WILL BE DEEMED TO BE THE SALE CONSIDERATIO N. (II). IF THE ASSESSEE DISPUTES THE STAMP DUTY VALUA TION BEFORE THE ASSESSING OFFICER HE MAY REFER THE VALUATION OF THE CAPITAL ASSET TO DVO SUBJECT TO THE CONDITION THAT VALUATION ADOPTED BY THE STAMP VALUA TION AUTHORITY HAS NOT BEEN DISPUTED BY THE ASSESSEE BEFORE ANY HIGHER FORUM. (III). IF THE VALUE ASCERTAINED BY THE DVO IS LESS THAN THE VALUATION AS PER STAMP VALUATION AUTHORITY THEN THE DVOS VALUATION WILL BE ADOPTED. (IV). IF THE VALUATION AS PER THE DVO IS MORE THAN THE VALUATION AS PER STAMP VALUATION AUTHORITY THEN THE VALUATION AS PER STAMP VALUATION AUTHORITY HAS TO BE ADOPTED. 7 10. NOW THE MAIN ISSUE FOR CONSIDERATION IS THAT I F THE ASSESSEE DISPUTES THE VALUATION AS PER STAMP VALUATION AUTHORITY BEFORE THE ASSESSI NG OFFICER THEN WHETHER THE ASSESSING OFFICER IS BOUND TO REFER THE MATTER TO THE DVO OR NOT IMPLIEDLY WHETHER THE TERM USED MAY IS TO BE READ AS SHALL OR NOT. WE FIND THAT IN SUB-SECTION (2) AN EXCEPTION HAS BEEN CARVED OUT TO THE ADOPTION OF VALUATION AS PER STAMP VALUATION AUTHORITY AND IF THE CONDITIONS LAID DOWN IN THE SUB-SECTION ARE FULFILL ED THEN THE CLAIM OF THE ASSESSEE THAT THE VALUATION AS PER STAMP VALUATION AUTHORITY IS M ORE THAN THE FAIR MARKET VALUE CANNOT BE REJECTED BY THE ASSESSING OFFICER WITHOUT COMPLY ING WITH THE PROCEDURE LAID DOWN IN THE SAID SUB-SECTION. THE DISCRETION OF THE ASSESSI NG OFFICER IS CIRCUMSCRIBED BY THE FULFILLMENT OF THE CONDITIONS AS CONTEMPLATED IN SU B-SECTION (2). EVERY QUASI-JUDICIAL AUTHORITY HAS TO EXERCISE ITS DISCRETION JUDICIOUSL Y AND NOT ARBITRARILY. THE DISCRETION HAS BEEN CONTROLLED BY THE CONDITIONS CONTEMPLATED IN T HE SECTION ITSELF. THEREFORE IN OUR OPINION THE TERM MAY USED IN SUB-SECTION (2) IS TO BE READ AS SHALL AND IF THE STAMP VALUATION ADOPTED BY THE STAMP VALUATION AUTHORITY IS DISPUTED BEFORE THE ASSESSING OFFICER THEN HE HAS TO REFER THE MATTER TO THE DVO FOR DETERMINING THE FAIR MARKET VALUE OF THE PROPERTY. THE LEARNED COUNSEL SUBMITTED THAT SINCE THE ASSESSING OFFICER DID NOT REFER THE MATTER TO THE DVO THEREFORE HE WAS BOUN D TO ACCEPT THE REGISTERED VALUERS REPORT SUBMITTED BY THE ASSESSEE. WE ARE UNABLE TO ACCEPT THIS CONTENTION OF THE LD. COUNSEL FOR THE SIMPLE REASON THAT NOWHERE IN SECTI ON 50C SUCH A CONDITION HAS BEEN CONTEMPLATED. IN VIEW OF OUR ABOVE DISCUSSION WE R ESTORE THE MATTER TO THE ASSESSING OFFICER WITH THE DIRECTION TO REFER THE VALUATION O F THE PROPERTY TO VALUATION OFFICER FOR DETERMINING THE FAIR MARKET VALUE AND THEREAFTER DE CIDING THE ISSUE DE NOVO IN ACCORDANCE WITH LAW. 8 11. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 12. NOW WE COME TO THE DEPARTMENTS APPEAL. THE ON LY GROUND RAISED BY THE DEPARTMENT READS AS UNDER : ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ADOPT THE F AIR MARKET VALUE OF THE PROPERTY SITUATED AT MUMBAI AS ON 01.04.1981 AT RS. 9 76 000/- AS AGAINST RS.1 91 000/- TAKEN BY THE AO. 13. THE BRIEF FACTS APROPOS THE ISSUE ARE THAT DURI NG THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD A FLAT NO. 165 SITUATED AT JOLLY MAKE R APARTMENT CUFF PARADE MUMBAI FOR A CONSIDERATION OF RS.80 00 000/-. THIS PROPERTY WAS ACQUIRED BY THE ASSESSEE AS PER GIFT DEED DATED 31.05.2001 FROM SHRI GAURANG SINGHAL. SI NCE THE PROPERTY WAS ACQUIRED THROUGH GIFT THE COST OF ACQUISITION OF THE PROPER TY TO THE ORIGINAL OWNER WAS TO BE ADOPTED AND THE SAME WAS RS. 96 600/- ON 29.09.1977 . SINCE THE FLAT WAS PURCHASED ON 29.09.1977 THE ASSESSEE ADOPTED THE FAIR MARKET VA LUE OF THE PROPERTY AS ON 01.04.1981 AT RS.11 76 000/-. THE ASSESSING OFFICER REQUIRED T HE ASSESSEE TO JUSTIFY THE VALUATION AT RS.11 76 000/- AS ON 01.04.1981. THE ASSESSEE FILED COPY OF VALUATION REPORT PREPARED BY CHAWALA ARCHITECTS & CONSULTANTS PVT. LTD. MUMBAI. THE ASSESSING OFFICER NOTICED THAT THE VALUATION REPORT WAS PREPARED ON THE BASIS OF T RANSACTION MADE ON SOME PROPERTIES SITUATED AT CUMBALLA HILL MUMBAI. THE ASSESSING OF FICER DID NOT ACCEPT THE ASSESSEES VALUATION FOR VARIOUS REASONS ENUMERATED FROM PAGE 7 TO PAGE 10 OF HIS ORDER IN WHICH APART FROM ENUMERATING THE DIFFERENCES BETWEEN THE PROPERTIES HE POINTED OUT THAT THE 9 PROPERTY UNDER CONSIDERATION WAS PURCHASED FOR RS.9 6 600/- IN SEPTEMBER 1977 AND THE VALUATION ADOPTED AS ON 01.04.1981 WAS RS.11 76 000 /- I.E. 12.17 TIMES. HE POINTED OUT THAT THERE CANNOT BE POSSIBILITY OF SUCH A TREMENDO US INCREASE IN THE COST OF PROPERTY IN A SHORT PERIOD OF FOUR YEARS. HE FURTHER DEMONSTRATED THAT IF THE ASSESSEES CLAIM WAS TO BE ACCEPTED THEN THE ANNUAL GROWTH RATE IN THE COST OF PROPERTY WOULD BE 86.80% AND THE COST OF PROPERTY FROM THE SAME GROWTH RATE SHOULD H AVE BEEN RS.1 10 079 CRORES IN THE YEAR 2003. HE HAS GIVEN A DETAILED TABLE IN THIS RE GARD. HE POINTED OUT THAT AS AGAINST THE ABOVE WIDE VARIATION IN THE COST OF PROPERTY THE A SSESSEE HIMSELF HAS SHOWN THE FAIR MARKET VALUE IN THE YEAR 2003 AT RS.80 00 000/-. HE DETERMINED THE FAIR MARKET VALUE AS ON 01.04.1981 BY CONSIDERING THE PURCHASE CONSIDERA TION IN 1977 AT RS.96 600/- AND THE FAIR MARKET VALUE IN 2003 AT RS.80 00 000/- AND POI NTED OUT THAT AS PER THESE FIGURES FOR ARRIVING ANY PROPERTY OF RS.96600/- IN THE YEAR 197 7 TO RS.80 00 000/- IN THE YEAR 2003 THE GROWTH RATE WOULD BE 18.52% PER YEAR AND BY APP LICATION OF THE SAME THE VALUATION OF THE PROPERTY AS ON 01.04.1981 WOULD BE RS.1 91 0 00/-. HE DETERMINED THE LONG-TERM CAPITAL GAIN AT RS.51 15 670/- ACCORDINGLY. 14. BEFORE THE LEARNED CIT(A) THE ASSESSEE SUBMITT ED ANOTHER VALUATION REPORT ALONGWITH OTHER DOCUMENTARY EVIDENCE UNDER RULE 46A . THESE BEING FRESH DOCUMENTS THE LEARNED CIT(A) REFERRED THEM TO THE ASSESSING OFFIC ER. THE REMAND REPORT HAS BEEN REPRODUCED BY THE LEARNED CIT(A) IN HIS ORDER. DURI NG THE REMAND PROCEEDINGS THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE THE COPY OF INSTRUMENT SHOWING FAIR MARKET VALUE @ 874/- PER SQ. FT. FOR THE PROPERTY U NDER SALE BETWEEN M/S. HARI BHAI ESTATE PVT. LTD. AND M/S. MAKER & MAKER ON 02.05.19 80 ON WHICH THE REGISTERED VALUER 10 WHILE VALUING THE PROPERTY UNDER QUESTION BASICALL Y RELIED. HOWEVER THE ASSESSEE FAILED TO PRODUCE ANY SUCH EVIDENCE. THE ASSESSEE HOWEVER SUBMITTED THAT THE GOVERNMENT REGISTERED ESTATE VALUER M/S. KANTI KARMESEY & CO. MUMBAI VALUED THE AFORESAID PROPERTY BASED ON SIMILAR PROPERTY IN CUFFE PARADE AREA. THE REGISTERED VALUER VALUED THE PROPERTY UNDER SALE @ RS.1150/- PER SQ. FT. RELYING ON THE FACTOR OF APPRECIATION IN COST OF PROPERTY FROM RS.874/- PER SQ. FT. AS ON 02.05.1980 TO THE DATE OF VALUATION I.E. 01.04.1981 AND OTHER VALUATION DOCUMENTS. THE ASSES SING OFFICER ALSO POINTED OUT THAT IN THE REPORT THE VALUER HIMSELF HAS CALCULATED THE A PPRECIATED VALUE OF THE PROPERTY BASED ON INTERPOLATION AT RS.1000/- PER SQ. FIT. AS ON 01 .04.1981. HE FURTHER POINTED THAT THE REGISTERED VALUER HAS ADOPTED THE VALUE OF PARKING AT RS.10 000/- WHICH IS NOWHERE UNDER SALE. HE FURTHER POINTED OUT THAT THE PARKING AMENI TIES WERE ATTACHED WITH PROPERTY UNDER SALE AND NEITHER THE ASSESSEE PAID ANY COST FOR THA T NOR IT WAS SEPARATELY TRANSFERRED. THE LEARNED CIT(A) AFTER CONSIDERING THE REMAND REPORT INVITED THE ASSESSEES COMMENTS. THE ASSESSEE INTER ALIA POINTED OUT THAT THE ASSESS ING OFFICER HAS ACCEPTED THE VALUE TAKEN BY THE GOVERNMENT REGISTERED ESTATE VALUER M/S. K ANTI KARAMSEY & CO. MUMBAI. THE LEARNED CIT(A) POINTED THAT THE GOVERNMENT REGISTER ED ESTATE VALUER HAD VALUED THE PROPERTY AT RS.9 76 000/- AS ON 01.04.1981. HE POIN TED OUT THAT THE VALUATION REPORT WAS SENT TO THE ASSESSING OFFICER FOR COMMENT BUT HE H AS NOT GIVEN ANY SPECIFIC COMMENT ON THE VALUATION REPORT. HE THEREFORE FURTHER POINTE D OUT THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS FOR ADOPTING RS.1 91 000/- AS FAIR MARKET VALUE AS ON 01.04.1981. HE FURTHER POINTED OUT THAT THE SECOND VALUATION REPOR T WAS BASED ON THE VALUE PREVAILING IN PARTICULAR AREA IN WHICH ASSESSEES PROPERTY WAS SI TUATED AND THIS COULD BE ADOPTED AS FAIR MARKET VALUE AS ON 01.04.198 AS THE ASSESSING OFFI CER DID NOT DISPUTE THIS VALUE. HE 11 ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO ADOP T THE FAIR MARKET VALUE AT RS.9 76 000/- AS ON 01.04.1981. 15. THE LEANED DR REFERRED TO THE ASSESSMENT ORDER AND POINTED OUT THAT THE ASSESSING OFFICER HAD ADOPTED THE GROWTH RATE AT 18.52% PER Y EAR AND APPLIED THE SAME TO THE COST OF THE PROPERTY FOR DETERMINING THE VALUATION AS ON 01.04.1981. THIS WAS DONE IN VIEW OF THE SALE OF THE PROPERTY IN THE YEAR 2003 AT RS.80 00 000/- WHICH WAS ACQUIRED IN 1977 FOR RS.96 600/-. HE FURTHER SUBMITTED THAT IN THE VALUA TION REPORT ITSELF THE VALUATION HAS BEEN CALCULATED ON THE BASIS OF APPRECIATED VALUE O F THE PROPERTY BASED ON INTERPOLATION AT RS.1000/- PER SQ.FT. THEREFORE THERE WAS NO JUSTI FICATION IN ADOPTING AVERAGE RATE AT RS.1150/- PER SQ.FT. 16. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 38 OF THE PAPER BOOK WHEREIN THE READY RECKONER OF RATES OF LAND PLUS BUILDING A S ADOPTED BY THE REGISTERED VALUERS IS CONTAINED CONTENDED THAT THE RATE IN REGARD TO LAN D AT NAVY NAGAR TOWARDS COLABA PORTION SOUTH OF DR. HOMI BHABHA ROAD FOR RESIDEN TIAL UNIT WITHOUT LIFT WAS RS.1200/- AND WITH LIFT IT WAS RS.1280/- PER SQ. FT. WHICH WA S CONSIDERED BY THE VALUER. THE LD. COUNSEL REFERRED TO THE DECISION OF ITAT IN THE CAS E OF SHRI MANOHAR SINGH JODHPUR V. DCIT CIRCLE-2 JODHPUR IN ITA NO. 122/JU/2010 AND REFERRED TO PARA 18 OF THE SAID DECISION WHEREIN IT HAS BEEN OBSERVED THAT THE ASS ESSING OFFICER IS NOT A TECHNICAL EXPERT AND THEREFORE THE VALUATION ADOPTED BY THE REGIST ER VALUER CANNOT BE REJECTED. 12 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE PERUSED THE RECORD OF THE CASE. THE SHORT DISPUTE IS WHETHER THE VALUATION AS ON 01.04.1981 DETERMINED BY THE ASSESSING OFFICER AT RS.1 91 000/- IS TO BE ACCEPTE D OR THE VALUATION AS PER REGISTERED VALUERS SECOND REPORT HAS TO BE ACCEPTED. THERE CA NNOT BE ANY QUARREL WITH THE POSITION THAT SINCE THE VALUER IS AN EXPERT OF HIS FIELD TH EREFORE HIS OPINION CANNOT BE SUBSTITUTED BY THE OPINION OF A NON-TECHNICAL PERSON. ADMITTEDL Y THE ASSESSING OFFICER IS NOT A TECHNICAL PERSON TO DETERMINE THE VALUATION OF PROP ERTY AND THEREFORE UNDER THE NORMAL CIRCUMSTANCES THE VALUATION AS PER REGISTERED VALU ERS REPORT HAS TO BE GIVEN WEIGHTAGE THAN THAT DETERMINED BY THE ASSESSING OFFICER. THIS IS ALSO EVIDENT FROM THE OBSERVATIONS OF THE TRIBUNAL WHICH ARE REPRODUCED HEREUNDER : 18. IN SO FAR AS ASSESSEES CLAIM FOR ADOPTING COS T AS ON 01.04.1981 ON THE BASIS OF APPROVED VALUERS REPORT S WHO ARE TECHNICAL IN THE MATTER OF VALUATION IS CONCERNED IT CAN BE SEE N FROM THE RECORD THAT THE ASSESSEE ACTED BONA FIDELY BY TAKING OPINION FR OM EXPERTS AND TAKING LEAST OF THE COST AS ON 01.04.81 ESTIMATED BY THE T WO APPROVED VALUERS. THE SECOND VALUATION REPORT SUBMITTED BY ARUN KUMAR GOYAL WAS A VALID REPORT AS THE SAME MERELY CORRECTED THE CALCULATION ERRORS IN HIS FIRST REPORT. THE ASSESSING OFFICER HIMSELF IS NOT A PERS ON COMPETENT TO COMMENT ON TECHNICAL MATTERS. THIS VIEW ADMITTEDLY HAS BEEN TAKEN BY SUPREME COURT IN THE CASE OF SARSWATI INDUSTRIAL SY NDICATE LTD. VS. CIT 237 ITR 1 (SC). THE ASSESSING OFFICER DID NOT MAKE REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER AND PLACED HIMSELF I N THE SHOES OF AN EXPERT WHICH IS CONTRARY TO THE LAW STATED BY HONB LE SUPREME COURT. THE SOLITARY EXAMPLE OF THE LAND RATE IN AREA COULD NOT BE TAKEN AS A BASIS FOR DISCARDING THE EXPERTS OPINION ON WHICH THE ASSESS EE HAS RELIED. THE ORDER OF THE ASSESSING OFFICER AS WELL AS LD. CIT(A ) DOES NOT STAND FOR LEGAL SCRUTINY IN REJECTING THE EXPERTS OPINION ON WHICH THE ASSESSEE HAS RELIED AND PLACING COST OF THE PROPERTY AS ON 1.4.8 1 ON THE BASIS OF A SOLITARY EXAMPLE WHICH IN FACT COULD NOT BE APPLIE D TO THE CIRCUMSTANCES AND THE FACTS OF THE ASSESSEES CASE. WE THEREFORE DIRECT THE ASSESSING OFFICER TO ADOPT THE COST AS ON 01.04.1981 AS PER S ECOND VALUATION REPORT OF THE APPROVED VALUER OF SHRI ARUN KUMAR GOYAL AND WORK OUT INDEX COST ACCORDINGLY FOR WORKING OUT THE INCOME FROM CAPITAL GAINS. GROUND OF THE ASSESSEE ON THIS REASONING STANDS ALLOWED. 13 18. THE MAIN OBJECTION OF THE ASSESSING OFFICER DUR ING THE REMAND PROCEEDINGS WAS THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN REGARD TO THE SALE OF PROPERTY FROM M/S. HARI BHAI ESTATE PVT. LTD. TO M/S. MAKER & MAK ER MUMBAI. HOWEVER THE VALUER HAS ALSO TAKEN INTO CONSIDERATION THE VALUE AS PER THE READY RECKONER OF REGISTERED VALUATION WHICH HAS NOT BEEN DISPUTED. THE DATE OF SALE INSTANCE TAKEN BY THE VALUER WAS 02.05.80 AND THE SAME HAS BEEN DETERMINED AT RS.100 0/- PER SQ. FT. BY INTERPOLATION AS ON 01.04.1981. HOWEVER AS PER THE MANUAL THE RATE WA S RS.1280/- PER SQ. FT. IN RESPECT OF THE BUILDING WITH LIFT. THEREFORE THE VALUATION ON THE BASIS OF AVERAGE RATE AS RS.1150/- PER SQ. FT. IN OUR OPINION CANNOT BE DISPUTED. WE ACCORDINGLY CONFIRM THE ORDER OF CIT(A). 19. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.02.11 . SD/- SD/- (V.D. RAO) (S.V. MEHROTRA) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED : 9 TH FEBRUARY 2011 *AKS/- COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. INCOME-TAX OFFICER 4. CIT 5. D/R 6. GUARD FILE