TMI Blog2015 (1) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... ovt. approved agricultural valuer then the matter should have been referred to the Govt. Valuer for valuation if the valuation report was not accepted. Nothing has been discussed by the Assessing Officer as well as the Ld. CIT(A) why the valuation made by the approved valuer is not correct. We, therefore, allow the Ground No. 2 and direct the Assessing Officer to accept the valuation of the trees as made by the approved valuer as on 01-04-1981 and accordingly worked out the capital gain. - Decided in favour of assessee - ITA No. 1070/PN/2012, ITA No. 1131/PN/2012 - - - Dated:- 28-11-2014 - R. S. Padvekar, JM And R. K. Panda, AM,JJ. For the Petitioner : Shri Mazhar Akram For the Respondent : Shri Kishore Phadke ORDER Per R. S. Padvekar,JM. These two cross appeals one by the assessee and another by the Revenue are filed challenging the impugned orders of the Ld. CIT(A)-II, Pune dated 23-01-2012 for the A.Y. 2008-09. We first take the assessee s appeal being ITA No. 1070/PN/2012 for disposal. The assessee has taken the following grounds in the appeal: 1. In the facts and circumstances of the case and in law, the learned C.I.T.(A) has erred in denying deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reased to that extent. 2.1 In respect of the second issue, the Assessing Officer noticed that the valuer had arrived at the fair market value of the property as 01-04- 1981 of ₹ 16.90 lacs which included ₹ 11,60,000/- on account of value of trees standing on the said land. The assessee contended that the sale value of land is inclusive of the value of trees standing thereon. However, the Assessing Officer held that the land sold was an agricultural land which was as on where is basis i.e. the trees and the structure on it was inclusive and also that there was no record or evidence of the existence of the trees on the land as on the date of FMV i.e. as on 01-04-1981. The Assessing Officer also inferred that the basis on which the approved valuer had arrived at the FMV of ₹ 11.60 lacs was without any supporting evidence and in the sales consideration record of the sale of land there was no separate demarcation of the value of land and trees thereon. Thus, on the basis of the above findings, the Assessing Officer reduced the FMV as on 01-04-1981 to the extent of ₹ 11.60 lacs for arriving of indexed cost of acquisition. 2.2 In respect of the third issue, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lers for vacating the land before its sale amounted to cost of improvement and considered as an allowable expenditure u/s 48 read with Sec 55. In this cas.e, the hutment dwellers were in possession or occupation of the property in question and they had claimed occupancy rights over the land, secondly giving vacant possession of the land was a condition precedent under the terms of the negotiation cum acquisition agreement and that by removing the hutment dwellers, the property improved in value. However, in the present case the appellant is the absolute owner and is in possession of the property, therefore, the facts of the case relied upon by the appellant is not applicable and distinguishable. 3.6 In the case of CIT Vs Srinivasa Rao (1987) 166 ITR 593 (AP) wherein the land was compulsorily acquired and the assessee who was landlord paid to the protected tenant amount to get the land vacated to enable the assessee to give vacant possession to the acquiring authority, it was held that the amount was not deductible u/s 48(i). It was observed that amount could not be said to have been paid to perfect the title because there was neither statutory nor contractual obligations on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the parties and perused the record. The Ld. AR explained in his argument how the property was inherited by the assessee from his grandmother. He submitted that Mrs. Aarti Sameer Nimgaonkar is the sister of assessee who through her Lawyer gave notice to the assessee claiming the right in the property. He submits that even if as per the entire record the said Mrs. Aarti Sameer Nimgaonkar has no right in the property which was sold to M/s. Suvidha Developers but at the same time the assessee was forced to settle with Mrs. Aarti Sameer Nimgaonkar as the purchaser of the land M/s. Suvidha Developers could not have completed the deal. He submits that it was a compulsion of the assessee to make the payment to Mrs. Aarti Sameer Nimgaonkar. He pleaded for allowing the deduction. Per contra, the Ld. DR who supported the order of the authorities below. 5. The assessee was having the agricultural land/property situated at Pirangut, Tal.-Mulashi, Distt.-Pune and he got the said property through the WILL executed by his late grandmother Mrs. Shantabai Shriniwas Phulmamdikar. On perusal of the sale deed between the assessee and M/s. Suvidha Developers it is seen that history of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the death of Mrs. Shantabai, in clear terms the entire interest title in the property was given to the assessee and his father was only given the life time enjoyment of the income from the said property. We have also perused the copy of the notice in the Compilation at Page Nos. 57 and 58 and English translation Page No. 59 which is allegedly given by the Mrs. Aarti Sameer Nimgaonkar to the assessee. On perusal of the said notice it is seen that it is very cryptic and does not mention how the Mrs. Aarti Sameer Nimgaonkar was having any interest in the property in question. The argument of the Ld. AR is that genuineness of the actual payment made by the assessee is not disputed. In our opinion merely because the payment is made to Mrs. Aarti Sameer Nimgaonkar that will not give the right to claim the deduction unless the assessee demonstrate that in fact Mrs. Aarti Sameer Nimgaonkar had any interest in the said property. It is also certainly strange that no release deed is executed nor there is any reference in the sale deed with M/s. Suvidha Developers in respect of the settlement between the assessee and Mrs. Aarti Sameer Nimgaonkar. Even Mrs. Aarti Sameer Nimgaonkar is not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bhore family and it was mentioned in the deed of the relinquishment of the rights that the said ancestral lands were owned by the members of the Bhore family and female members of the Bhore family who were paid the said sum were the married daughters. It was also claimed that by said assessee that as per the Hindu Law the said married female members had limited rights of maintenance in the ancestral property. In our opinion there was no dispute in the said case in respect of the rights of the female members in the ancestral property which was belonging to the Bhore family and there was evidence in favour of the said assessee but in the present case there is no release deed or any other deed or any agreement nor there is mentioned in the sale deed in respect of the rights of Mrs. Aarti Sameer Nimgaonkar. We, therefore, hold that the decision relied on the Ld. AR in distinguishable facts of the case. 7.2 We therefore, hold that even if the assessee has made the payment to his sister Mrs. Aarti Sameer Nimgaonkar the said payment was not for removing any encumbrance. Moreover, as per the WILL and other documents the said Mrs. Aarti Sameer Nimgaonkar was not having any interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be more. The evidence regarding the yield of the mango trees so as to judge its economic importance has not been brought on record by the appellant and the earnings made on an year to year basis as agricultural income has also not been furnished by the appellant so as to help in arriving at its proper value, therefore, the observations made by the Assessing officer with respect to the basis of its valuation, is very much correct and becomes important and is of relevance. However, the value of the trees as adopted on the basis of associate valuer (Horticulture) clearly indicates the existence of trees and this fact also cannot be overlooked while deciding the issue. Nonetheless, out of the total number of trees as indicated by the valuer and as submitted by the appellant, the mango trees are of economic importance as the same are yielding fruits, however, if the trees do not bear fruits, the economic importance of the wood is much less in comparison to 'teak', 'sagawan' and 'shisham' which are traditionally more important and widely used for its good quality and durability of wood. It is a matter of cpmmon knowledge that in respect of mango trees, which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of acquisition. It held further that in terms of Sec. 48, what is liable to be deducted from the full value of the consideration received as a result of the transfer of the asset is the expenditure incurred wholly or exclusively in connection with such transfer, the cost of acquisition of the capital asset and the cost of improvement thereto. In view of the above, the court upheld the finding of the tribunal that the sale of trees would give rise to capital gains and that the tribunal was justified in determining the cost of purchase of the shade trees at ₹ 1,50,000/- . The Tribunal had arrived at the figure of Rs.I.50 lacs based on the price of the coffee land in the year 1980-81 which was around 20,000 to 25,000 per acre. The Tribunal came to the conclusion that the price of the shade trees standing on the coffee estate could be taken to be approximately 1710th of the total price paid by the assess fee and on that basis worked out the cost of the shade trees at ₹ 1,50,000/-. In the present case, the value taken by the appellant as on 01.04.1981 of mango trees at ₹ 11,,60,000/- whereas the cost of land is only ₹ 5,15,000/- which prima facie does not give t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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