TMI Blog2016 (11) TMI 1646X X X X Extracts X X X X X X X X Extracts X X X X ..... and direct the AO to adopt the valuation as reported by the Registered valuer at ₹ 3,36,451/-. This issue is decided in favour of the assessee and against the revenue. Entitled for indexed cost of improvement - AO has not allowed the indexed cost of improvement on the basis that no evidence has been furnished - HELD THAT:- No direct evidence with regard to the expenditure is placed on the record demonstrating the incurrence of the expenditure. But the fact that in the agricultural land such expenditures are incurred in the course of time. This fact cannot be lost sight of. Therefore, after considering the facts, we allow 50% of the indexed cost of improvement as claimed by the assessee being the reasonable expenditure incurred by the agriculturist on the improvement of the land. The assessee gets relief of ₹ 6,52,398/-. This ground of the assessee is partly allowed. Claim of deduction u/s 54B for making investment in the agricultural land in the name of the wife - HELD THAT:- As decided in KALYA VERSUS COMMISSIONER OF INCOME-TAX [ 2012 (6) TMI 239 - RAJASTHAN HIGH COURT] the word assessee used in the Income Tax Act needs to be given a legal interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee by : (i) Taking the indexed cost of acquisition at ₹ 1,48,630/- as against ₹ 16,72,161/- claimed by the assessee. (ii) Not allowing the deduction for indexed cost of improvement at ₹ 13,04,795/- by holding that no reliable evidence has been placed on record by the assessee to support the improvement cost claimed. (iii) Not allowing the deduction of ₹ 10,50,000/- claimed u/s 54B by holding that the investment in the agricultural land is made in the name of wife. (iv) Not allowing the deduction of ₹ 21,03,799/- u/s 54F in respect of construction expenses incurred on the house purchased by the assessee. 2. The assessee craves right to add, alter or amend any of the grounds of the appeal. 2. Briefly stated the facts are that the case of the assessee was reopened for scrutiny and the assessment under section 147/143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 24th March, 2014. While framing the assessment, the AO computed Long Term Capital Gain on sale of agricultural land at ₹ 1,75,92,370/- and declined deductions under section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, therefore, got the FMV of the land as on 01.04.1981 determined through the registered valuer. The registered valuer considering that the agricultural land is just adjacent to the residential premises of the village and the land rate announced by the Government of Rajasthan in the year 1973 worked out the FMV of the land as on 01.04.1981 at ₹ 3,36,451/-. The AO ignored the valuation report of the registered valuer, relied upon the information received from DG Stamps. The ld. Counsel submitted that the AO has no powers under the Act to disregard the FMV of the property made by the registered valuer as on 01.04.1981 and to substitute it on the basis of his own assumption or by adopting any other method except in terms of the provisions of section 55A. The ld. Counsel submitted that from the plain reading of section 55A, it can be noted that if the AO is not satisfied with the FMV of the capital asset adopted by the assessee he can ascertain the same only by making reference to the Valuation Officer. Therefore, the AO cannot substitute the FMV of the property adopted by the assessee by relying on any other material except by making reference to the Valuation Officer. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The ld. Counsel submitted that in this judgment, the Hon ble High Court referred to the judgments of Hon ble Delhi High Court in 330 ITR 309 and Hon ble Punjab Haryana High Court in 306 ITR 335 that the investment had to be of the same assessee whose agricultural land was sold. Therefore, the Hon ble Rajasthan High Court held that the word assessee used in the Act needs to be given a legal interpretation and not a liberal interpretation, otherwise it would tantamount to giving a free hand to the assessee and his legal heirs and it shall curtail the revenue of the Government which the law does not permit. The ld. Counsel submitted that subsequent to this decision, the Hon ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd., 367 ITR 466 has laid down the ratio that there cannot be imposition of any tax without the authority of law. Such a law has to be unambiguous and should prescribe the liability to pay taxes in clear terms. If the concerned provision of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the interpretation which favours the subjects, as against there the revenue, has to be preferred. The ld. Counsel submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Gita Duggal vs. CIT, 357 ITR 153 (Del.) and the judgment of Hon ble Karnataka High Court rendered in the case of D. Anand Basappa vs. ITO, 309 ITR 329 (Kar.). The ld. Counsel submitted that in view of these case laws, the assessee deserves to be granted deduction under section 54B and 54F of the Act. 4.1. On the contrary, the ld. D/R supported the orders of the authorities below and placed reliance on the judgment of the Hon ble Punjab Haryana High Court rendered in the case of Jai Narayan vs. ITO, 306 ITR 335 in respect of allowability of deduction under section 54B wherein the Hon ble High Court has held that purchse of agricultural land in the name of son and grandson does not qualify u/s 54B of the Act. The ld. D/R has also placed reliance on the judgment of the Hon ble Rajasthan High Court rendered in the case of Shri Kalya vs. CIT wherein the Hon ble Jurisdictional High Court has held that the word assessee used in the Income Tax Act needs to be given a legal interpretation and not a liberal interpretation as contended by the ld. Counsel for the appellant. If the word assessee is given a liberal interpretation, it would be tantamount to giving a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to nearby area of Sodala Thana only the property in question is far away from the property hence factoring it as linearly upto the location of property, the rate as fair market rate in 1973 becomes as ₹ 10.00 per sq.mts as median rate for the whole similar type of areas. As the particular property in question has its own location and other parameter as very important mentioned in the above parameter of factor affecting the valuation report, hence increasing it by 10% cumulatively upto 1981, which becomes ₹ 21.43 per sq.mts for the year 1991. Hence he adopted the land value at ₹ 3,36,451/-. However, the AO has adopted the rate on the basis of sale deed registered with the Stamp Valuation Authority situated in the nearby area. The law is well settled that the DG Stamps valuation would not be a proper indicator for ascertaining the Fair Market Value. However, the registered valuer has applied the rate as per the Circular issued by the Government of Rajasthan. Such valuation ought not to have been set aside without referring the matter to the DVO as per section 55A(a) of the Act. Therefore, we set aside the order of the AO on this issue and direct the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it would be tantamount to giving a free hand to the assessee and his legal heirs and it shall curtail the revenue of the Government, which the law does not permit . In view of the above binding precedents, the ground raised in the appeal is dismissed. This issue is decided against the assessee. 7. Next issue is not allowing the deduction of ₹ 21,03,799/- u/s 54F of the Act. 7.1. The ld. Counsel for the assessee reiterated the submissions as made in the written brief. The submissions of the assessee are as under :- The assessee was residing at Kirti Bhawan, Meena Mohalla, Ajmer Road, Bhankrota. After sale of the agricultural land, considering the need of the family, he purchased a residential house for ₹ 41 lacs on 31.12.2005 adjoining to the existing house. Thereafter, the existing house was demolished and a new house was reconstructed during FY 2005-06 to 2006-07 so that the house purchased and house reconstructed meet the requirement of the family. On such construction he incurred a sum of ₹ 21,03,799/- for which Valuation report obtained by him is at paper book page 52-71. The AO allowed the deduction u/s 54F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D/R supported the orders of the authorities below and submitted that the law is clear that u/s 54F deduction is available to residential houses. 7.3. We have heard rival contentions, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the assessee had purchased a residential house for ₹ 41 lacs and subsequently a new house was reconstructed, on this he incurred an expenditure of ₹ 21,03,799/-. The AO has not doubted the valuation of the assessee but has declined the benefit u/ 54F on the basis that deduction u/s 54F can only be allowed for purchase of a new residential house and the investment in the construction of old house after the purchase of new house cannot be allowed. The ld. CIT (A) affirmed this view on the basis that the demolition of old house is subsequent to purchase of new house. Accordingly he was of the view that the AO has rightly disallowed the claim of deduction under section 54F of the Act. As per section 54F deduction is allowable if the assessee within a period of one year or after two years of the date of transfer took place purchased, or has ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
