TMI Blog2012 (5) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... d this aspect of the matter - this matter needs to be reconsidered - remanded for fresh hearing by the Learned Tribunal – in favour of assessee - IT APPEAL NO. 1778 (KOL.) OF 2009 - - - Dated:- 14-3-2012 - MAHAVIR SINGH, C.D. RAO, JJ. S.M. Surana for the Appellant. S.K. Roy and S.B. Dey for the Respondent. ORDER Mahavir Singh, Judicial Member This appeal by assessee is arising out of the order of CIT(A)-XIX, Kolkata in Appeal No 352/CIT(A)-XIX/Addl. CIT-Range-31/Kol/08-09 dated 2/7/09. Assessment was framed by Add C.I.T., Range-31, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') for assessment years 2006-07 vide order dated 30/12/2008. 2. At the out set, it is to be narrated that Hon'ble Calcutta High Court in ITAT No.199 of 2010 (GA No.2879 of 2010) in assessee's case has formulated following substantial question of law:- "Whether the Learned Tribunal is justified in accepting the valuation made by the assessing officer as confirmed by the Commissioner of Income Tax (Appeal) without considering the materials produced by the assessee ?" The Hon'ble High Court has set aside this appeal to Tribunal to decide afre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long-term capital gain (LTCG) should not be computed by adopting deemed full value of consideration at Rs. 1,24,14,400/- u/s 50C of the Act. The assessee objected to the valuation made by Registrar of Assurance. Hence AO referred the matter to Valuation Officer of Income-tax Department u/s 50C(2)(b) of the Act. The Valuation Officer valued the property at Rs. 1,24,13,670/- and valuation report received vide letter dated 29/12/2008. The AO assessed the deemed full value of consideration at Rs. 1,24,13,670/- and computed LTCG accordingly. Aggrieved, assessee preferred appeal before CIT(A), who confirmed the action of the A.O. by giving following finding in paras 6 to 8 of his appellate order:- "(6) I have considered the submission of the appellant and also gone through the assessment made by the A.O. The section 50C of the I.T, Act, which was introduced, by the Finance Act, 2002 w.e.f. 01.04.2003, contains for a special provision for valuation of consideration in certain cases. Section 50C(1) provides that where consideration received or accruing as a result of transfer by an assessee of a capital asset, consisting of land or building or both, is less than the value adopted or asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2), the A.O. has adopted the value of the property at Rs. 1,24,13,670/- for the purposes of computation of capital gain u/s. 48 of the I.T. Act as against the value of Rs. 1,24,14,400/- adopted by the Stamp Valuation Authority. (8) Under the circumstances, I am of the opinion that the A.O. has acted as per the provisions of Section 50C of the I.T. Act and accordingly he was justified in adopting the sale consideration of the property at Rs. 1,24,13,670/- as against the sale consideration shown by the appellant at Rs. 65,00,101/-. The action of the A.O. is upheld in this regard. The ground no. 1 is dismissed." Aggrieved, assessee preferred appeal before Tribunal and Tribunal vide order dated 07/5/2010 dismissed the appeal of the assessee and upheld the orders of lower authorities, against which assessee preferred appeal before the Hon'ble Calcutta High Court u/s. 260A of the Act and Hon'ble High Court has set aside the matter to the file of Tribunal to reconsider in the light of the direction reproduced as above. 4. This appeal was fixed for hearing before us, in view of the direction of Hon'ble Calcutta High Court, first time on 11/01/2012 and on that date, the matter was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipality, CA-Car Parking Area. 2. S.D. Regn. Fees are calculated on the basis of information and transaction Description/code provided in the Requisition Form. If those information are found to be given is incorrect, the assessment made stands invalid. 3. Assessed market value is valid for one month. 4. Standard User charges of Rs. 175/- (rupees one hundred seventy five) only inclusive of all taxes per transaction upto 15 (fifteen) pages and Rs.6/- (Rupees six) only for each additional page will be applicable. Sd/- Registering Office A.D.S.R. Sutahata" Further, learned counsel for the assessee took us to Valuation Officer's report vide No F.No.1911/DVO/ITD/KOL/07-08-09/654 dated 29/12/2008, whereby the value was determined at Rs. 1,24,13,670/- in respect to this property sold by assessee. The relevant abstract of the report reads as under:- "Abstract of Cost Determination of fair market value of property at 1472 Basudevpur, HPL Link Road, Haldia. The building is G+3 RCC framed structure. The property is located on main HPL Link Road and has huge commercial potential value. The property under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he full value of consideration for the purpose of computation of capital gains u/s 48 of the Act. However, if the fair market value, so determined by the DVO, is more than the value adopted or assessed for stamp duty purposes, the AO shall not adopt such fair market value and shall take the full value of consideration to be the value adopted or assessed for stamp duty purposes. In view of the provisions of sub-sec. (2) of sec. 50C of the Act, the AO may refer the capital asset, i.e. the land and building or both, for valuation to DVO and where any such reference is made, following provisions will apply:- - sub-sections (2), (3), (4), (5) and (6) of section 16A, - clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, - sub-section (5) of section 24, - section 34AA, - section 35 and - section 37 of the Wealth-tax Act, 1957 (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 section 16A(1) of that Act 27 of 1957. 6. In the present case before us, the property with land and building was sold for total considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... becomes vitiated in law. There is no difference between the import of the terms "cost", "price" and "value". As a matter of fact, a price indicates a fact that has already occurred in practice, a completed affair after a property has been, or agreed to be sold. On the other hand, "value" indicates the estimation of a probable price of the property concerned. The value of a property cannot be stated in an abstract form and it varies from time to time and can only be stated with reference to so many factors, i.e. the locality, situation, general appearance in the area, availability of shopping and marketing facilities, condition of public ways and transportation, availability of utilities, and many other things. As far as "cost" is concerned, it indicates cost to the purchaser for the purchase of the property after the purchase has been completed or agreed to. The provisions of sec. 50C of the Act, in the present context, state the fair market value and value is estimation of a probable price of the property, i.e. the deeming fiction. The deemed value is to be ascertained and for that, as discussed above, sec. 50C of the Act has postulated certain conditions. In the present case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery proximate, (2) genuine and (3) the acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects. (6) The most comparable instances out of the genuine instances have to be identified on the following considerations: ( i ) proximity from time angle ( ii ) proximity from situation angle. (7) Having identified the instances which provide the index of market value the price reflected therein may be taken as the norm and the market value of the land under acquisition may be deduced by making suitable adjustments for the plus and minus factors vis-a-vis land under acquisition by placing the two in juxtaposition. (8) A balance-sheet of plus and minus factors may be drawn for this purpose and the relevant factors may be evaluated in terms of price variation as a prudent purchaser would do. (9) The market value of the land under acquisition has thereafter to be deduced by loading the price reflected in the instance taken as norm for plus factors and unloading it for minus factors. (10) The exercise indicated in clauses (7) to (9) has to be undertaken in a common sense manner as a prudent ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lines to be applied with understanding informed with common sense." 8. From the above, we can visualize that DVO has not discussed anything while determining fair market value, rather he has based his opinion on the basis of fair market value assessed by A.D.S.R., Sutahata for ascertaining value for stamp valuation purposes. Even the DVO without discussing anything has applied plinth area rate per sq. mt. He has not discussed the method of valuation, i.e. primarily land and building method, contractor's method of valuation, rental basis or yield basis method, municipal valuation method etc. In this case, the DVO has not ascertained any market value to which a willing, reasonable and prudent purchaser would pay for this property. Even the DVO has not considered the factors having any depressing or appreciative effect on the value of the property including guidelines laid down by Hon'ble Supreme Court, as noted above. Even DVO was asked to present to support his valuation report and in terms of proviso to section 24 of Wealth Tax Act, 1957, he was allowed opportunity. The DVO, Shri S.B. Dey was present but he fairly conceded that the valuation made is on the basis of value determ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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