TMI Blog2014 (2) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... mation of fair market value depends on the advantage/disallowance-advantages attached with the property - since the valuation arrived at by Stamp Duty Authority was excessive, the Assessing Officer has made a reference to the Valuation Officer u/s 55A for ascertaining/estimating the fair market value as on the date of transfer - On the basis of such estimation/value arrived at by the DVO, the capital gain on transfer of property is being ascertained - All the factors are having definite bearing on the fair market value of land - By taking all these adverse factors into consideration, the approved valuer had valued the land as against value arrived at by the DVO - no defect was pointed out by any of the lower authorities in the valuation so arrived at by the approved valuer – the AO is to recompute the gain after reducing the valuation arrived at by the DVO by 20 % or the actual sale consideration received by assessee, whichever is higher – Decided partly in favour of Assessee. - I.T.A.No. 195,196/Ind/2013 - - - Dated:- 26-8-2013 - JOGINDER SINGH AND R.C.SHARMA, JJ. For the Appellant : S.S. Sheetal. For the Respondent : R.A. Verma. ORDER:- PER : R.C. Sharma T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area was much less ( as per approved valuer's report and court's documents ). c) The construction made was of no use since road was proposed on the said land and thus it had to be demolished sooner or later. Thus it had no market value for sale purposes." 4. The Assessing Officer did not accept the assessee's contentions and taking the market value at Rs. 3,68,25,000/-as determined by the DVO, made the addition of Rs. 36,12,750/- and assessed the total income at Rs. 39,26,920/-as against the returned income of Rs. 3,14,170/-. The CIT(A) also dismissed the assessee's appeal. Against the order of the Assessing Officer/CIT, the assessee is in further appeal before us. 5. Before us, the ld. Authorized Representative challenged the reference made by the Assessing Officer u/s 131(1)(d) and contended that there is a separate provision for reference to valuation officer u/s 55A for ascertaining the fair market value of the property, which is not covered u/s 131(1)(d). Thus, the reference itself is illegal and without jurisdiction and any report obtained by making an illegal reference is also illegal and cannot be acted upon. Not only this but the order passed by the DVO u/s 55C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was of no use since road was proposed on the said land and thus it had to be demolished sooner or later. Thus, it had no market value for sale purpose. Further, when the DVO himself has considered the market value of the impugned land at a much lesser figure than as assessed by the stamp authorities, it indicates that still there is a wide scope of difference in assessing the market value of the property and thus it is submitted that the actual value of transaction should be considered as the real assessable value. In the case of Ravi Kant v. ITO [2007] 110 TTJ Delhi 297, in para 9 of the order, it has been commented by the Hon'ble Bench that "The valuation by the stamp valuation authority is based on the circle rates. These circle rates adopt uniform rate of land for an entire locality, which inherently disregards peculiar features of a particular property. Even in a particular area, on account of location factors and possibilities of commercial use, there can be wide variations in the prices of land. However, circle rates disregard all these factors and adopt a uniform rate for all properties in that particular area. If the circle rate fixed by the stamp valuation author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred by the family members of one brother to the family members of the other brother. As per contention of ld. Authorized Representative, the land was purchased by the family member for construction of multi-storied building. The land so purchased and sold was business assets, therefore, the provisions of Section 50C cannot be applied while computing profit on sale of such land and actual sale consideration so received is to be taken into account for computing the net profit in the transaction of sale. Our attention was also invited to the amendment brought in Finance Act No.2 of 2013, according to which the provision of Section 50C was made applicable in respect of the land held as stock in trade by the persons engaged in construction and development of building, w.e.f. assessment year 2014-15. As per ld. Authorized Representative , even as per the amended law, the provisions of Section 50C is not applicable to the assessee for the assessment year 2008-09 under consideration, in so far as amended provisions are applicable only w.e.f. assessment year 2014-15. 10. Controversy in the instant case revolves around computation of capital gains with reference to the provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ascertained. In the instant case, we are concerned with the correctness of estimation arrived at by the DVO in a reference made by the Assessing Officer to the Valuation Officer u/s 55A of the Income-tax Act, 1961, which is purely a question of fact. Now we analyze the advantages and disadvantages attached with the valuation of property in the instant case. 14. From the record, we found that a road was proposed in the impugned land by the Government, which reduces the usable area of the land. Part of land attributable to such road was also under process of acquisition by the Government and Court case was there. It is a case of valuation of land where value is effected by the advantage/disallowance-advantages attached to such land. There was some construction which was also going to be demolished, when the road was proposed by Government on the said area of construction. Fact that part of land was under acquisition proceedings and court case was also pending, the fair market value of such land is affected by such adverse factors. The fact that the land was transferred by the family members to another member, thus, it was more precisely a family settlement and not a commercial tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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