TMI Blog2013 (2) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... ded word "land" in the provision of Section 55(2(a) and therefore, the provision of section 55(2)(a)(ii) of the Act would not be applicable while valuing the "cost of acquisition" of the land for the purpose of computation of "long term capital gain" of the assessee. Accordingly, the value of the lease-hold rights in the land in question of the assessee, has to be determined in accordance with the provision of section 48 by valuing "fair market value" of the land as on 1.4.1981 and the index cost of acquisition has to be determined in order to assess long term capital gains in the hands of the assessee. Fair market value of the land in question as on 1.4.1981 for the lease hold right of the assessee in the land at Ashram Road, Ahmedabad - Held that:- Approved valuer's valuation report has one glaring mistake by not making suitable deduction on account of assessee's right in the land being only that of "lessee" for 98 years and the assessee not being owner thereof. As the approved valuer has recorded that he has taken into consideration surrounding sales and its location, size, frontage, neighbourhood, prospects of developments, distance to the commercial establishments etc. whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n he levied in respect of the sale of the leasehold land since the provisions of sec.55(2)(a) prescribing 'Nil' cost in respect of certain capital assets apply inter alia to Tenancy Rights and not to Leasehold Rights and arc, therefore. not applicable to the facts of the case and therefore, the old decisions still hold good in respect of the transaction in question. It is, therefore, submitted that the said capital gains be excluded from the purview of the total income and that assessment be directed to be modified accordingly. 3. That the C.I.T.(Appeals) further erred in holding that the A.O. had given an opportunity of hearing to prove the cost of acquisition of land before denying the deduction of Rs. 2,99,72,250 u/s 48 r.w.s. 55(2)(b) of the I.T. Act in respect of the sale of the leasehold land in spite of the fact that no such opportunity of hearing was given with regard to the cost of acquisition of the land during the course of the assessment proceedings and thereby the principles of natural justice were clearly violated. It is. therefore, submitted that the assessment order passed by the AO, be held to be bad-in-law on the ground of violation of the principles of natura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said land remain the property of the lessee only. He referred to the relevant portions of the assessment order as well as appellate order passed by the CIT(A) in support of the case of the Revenue. He submitted that the cost of construction of cinema hall could not be attributed to the cost of taking land on lease and the assessee has already demolished the building before it had transferred back the lease hold land in question. He relied on the order of the AO and the CIT(A). 5. We have considered rival submissions and have perused the orders of the AO and the CIT(A) and copies of the various documents filed in the compilation before us including the copy of the lease deed dated 15.9.1966 and also copy of the valuation report dated 11.9.2006 for fair market value as on 1.4.1981. We find that the Revenue authorities in this case have been influenced and have based their decision on the fact that the assessee has not paid any "cash" at the time of execution of lease deed on 15.9.1966 and has only committed to invest in the construction of cinema building at a minimum cost of Rs. 4 lakhs. We find that in accordance with the scheme of the Act and in particular the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon by the Revenue is applicable to the case of the assessee to value the land in question as on 1.4.1981, even though the land was acquired by the assessee for NIL value. We have already held in the foregoing paras of this order that where the assessee has acquired some land for NIL value prior to a year starting from 1.4.1981, even then the provision of section 48 shall be applicable and the fair value of the land in question as on 1.4.1981 along with indexed cost of acquisition has to be determined in order to arrive at the figure of "long term capital gain" and the value for which the assessee has acquired the land in question prior to 11.4.1981 is not relevant for determining the "fair market value" of the land as on 1.4.1981. However, the Revenue has relied on the amended provision of Section 55(2)(a)(ii) and have submitted that in accordance with this amended provision of law, in such a case as that of the assessee, the cost of acquisition shall be taken at NIL. None of the parties could cite any decision of Hon'ble Court or the Tribunal in their favour on this issue. Thus, important law point before us for adjudication is that whether in view of amended provision of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in sub-section (2) of section 64 at any time after the 31st day of December, 1969, and in this type of cases, the cost of acquisition of the asset shall be cost for which the previous owner of the property acquired it as increased by the cost in improvement of the assets etc. We find that the provision of section 55(2)(a) shall apply in relation to the capital assets mentioned in Section 55(2)(a) of the Act only. The capital assets as mentioned in Section 55(2)(a) are exhaustive and all inclusive of capital assets, such as goodwill, trade mark brand name, right to manufacture, produce or process any article or thing or right to carry on any business, tenancy rights, stage carriage permits or loom hours, and being an exhaustive list of capital assets, any other capital asset such as land etc. could not be included for the purpose of valuation of "cost of acquisition" for sections 48 and 49 of the Act. It is well settled that when certain provision of law has clear language and leaves no room for ambiguity, there should be no violence to the provision as enacted by the Legislature and no words should be added or omitted while reading a specific provision of law. We find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fair market value as on 1.4.1981 would be to value free hold land as on the relevant valuation date, and thereafter due deduction on account of the land being leasehold may be allowed. We find that no specific sale instances of free hold/lease hold lands in the vicinity of the land in question have been cited either by the assessee or by the Revenue. The AO has chosen not to refer the issue of valuation of the land in question as on 1.4.1981 to the Departmental Valuation officer. The assessee has filed a copy of the valuation report of the Approved valuer dated 11.9.2006 valuing the land in question as on 1.4.1981 at Rs. 57,75,000/- and copy thereof has been filed in the compilation before the Tribunal. We find that no effort has been made by the Revenue to controvert the value of the land as on 1.4.1981 as estimated by the approved valuer. We have perused the copy of the Approved valuer's valuation report filed in the compilation before us. We find that the approved valuer has committed one glaring mistake in its valuation report by not making suitable deduction on account of assessee's right in the land being only that of "lessee" for 98 years and the assessee not being owner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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