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TMI Blog2015 (12) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed written submissions wherein it is stated that this ground of appeal is not being pressed by the respective assessees. Thus, these grounds in both the above appeals are rejected as not pressed. For the sake of brevity and convenience, as common issue is involved in these appeals of the family members and co-owners of the same property, all the appeals were heard together and are disposed of by this common and consolidated order. 2. The grounds of appeal raised in the case of Shri Mohd. Zia Baig are as under- "1. The order of the CIT(Appeals)-IV, Hyderabad, is erroneous in law and is against the facts and circumstances of the case. 2. The CIT(Appeals) is wrong in rejecting the plea of the assessee that the dates of Agreement, i.e. 20-05.2005, in which the amount of consideration was fixed will have to be taken into consideration for the purpose of stamp duty valuation, based on the first proviso to Section 56(2)(vii)(b) which provides that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken. 3. The Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Mohd. Zia Baig and Shri Abdul Arif Baig, owned adjacent immovable properties at Road No.3 Banjara Hills, Hyderabad and the shares of all the assessees in the properties are specified. They sold their properties together for a sale consideration of Rs. 3,35,60,000 vide registered document No.1264 of 2006 and Rs. 3,54,40,000 vide Regd. Document No.1262 of 2006 both dated 6.3.2006. The sale consideration was shared by the co-owners in the ratio of their land ownership. The assessees computed long term capital gains from the above transaction on the sale consideration received by them and arrived at the long term capital gains in the hands of each of these assessees. Subsequently, it came to the notice of the Department that the market value of the property in the above transaction was adopted at Rs. 4,50,62,000 by the Sub-Registrar for the purposes of payment of stamp duty at the time of registration. 4. Observing that the capital gains should have been computed adopting the deemed consideration of Rs. 4,50,62,000 as per the provisions of S.50C of the I.T. Act, the Assessing Officer held that proportionate deemed consideration has to be brought to tax. Since the assessee fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch more than the market value as per the Market Value Guideline fixed by the Sub-Registrar's Office. 5. It was accordingly submitted that the sale deeds in respect of the above property was executed on 6.3.2006 and were registered on 10.3.2006 vide Document No.1261 and 1262 of 2006; and that the Sub-Registrar, Hyderabad adopted the market value of the said properties at Rs. 4,50,62,000, for an area of 1785 sq. yards which works out to Rs. 25,444 per sq. yard on the basis of the guide line value relating to the commercial area which is Rs. 25,000 per sq. yard. He submitted that the value adopted by the Sub- Registrar is totally wrong and baseless, because the property was in residential area and not in commercial area. 6. It was also submitted that even though circle rates are applied in respect of valuation of land in an area, there could be huge variations in the prices of land falling even within the circle on account of location factors and hence same value cannot be adopted for all the plots in the area. It was accordingly requested to drop the proceedings initiated under S.147 of the Act. 7. The Assessing Officer, however, rejected the objections of the assessee and proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes. The assessees again filed their objections. The Assessing Officer, however, was not convinced with the contentions of the assessee and adopting the Fair Market Value at Rs. 4,50,62,000 as deemed total consideration for the sale of the property, computed the capital gains accordingly in the hands of all the other co-owners. 9. Aggrieved, assessees preferred appeals before the CIT(A) stating as under a. The property was located in a residential area. b. The plot had an odd shape. c. The plot was to abutting the main road and there was no separate passage or approach road for individual plots. d. The land had been unlucky for its previous owner and consequently, it had acquired an evil nature. e. The land had been sold pursuant to an MOU dated 20.05.2005. A reference had been made in the sale deed to the MOU. f. The fair market value of the land as on 20.05.2005 was Rs. 8,250 per sq. yd. as per the certificate issued by the Jt. Sub-Registrar vide his letter dated 3.11.2011. g. The rate fixed in the MOU was Rs. 18,800 which was much more than the SRO's market value as on 20.5.2005. h. The land was earmarked for residential use as per GO Ms. No.574 MA, dated 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the cited case, the agreement of sale involved transfer of certain rights in respect of the capital asset with reference to which Hon'ble Supreme Court held that the transfer had taken place entitling the assessee to a deduction under S.54, whereas S.50C applies with reference to the transfer of only land or building or both and hence, the said decision is not applicable to the assessee's case. 10. As regards the merits of the valuation by the DVO, the CIT(A) rejected the assessee's contention that the SRO value for commercial property cannot be applied to a residential property. Even with regard to the irregular shape of land and the lack of direct access to main road and such other aspects of the said property, contentions of the assessee were rejected by the CIT(A) by holding that the alleged negative aspects were apparently negligible enough to be ignored by the purchaser to offer a price that was much higher than the SRO rate, as contended by the assessee. Thus, the assessment order was confirmed lby the CIT(A). 11. Against the order of the CIT(A) all the assessee-co-owners have preferred appeals before us. 12. While the learned counsel for the assessee placed re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered Bank, Rajbhavan branch, Hyderabad and that the said cheque was deposited by him in his SB Account No.19721 in Indian Overseas Bank, Lakdikapool Branch, Hyderabad, which has been credited to his account. A copy of the bank statement issued by Indian Overseas Bank is also submitted and it reflected the deposit of Rs. 5 lakhs on 10th of March, 2006. On perusal of the said bank account, it is noticed that Opening Balance as on 1.3.2006 was NIL. When enquired, the learned counsel for the assessee explained that the assessee did not have any bank account in Indian Overseas Bank prior to March, 2006 and it was only in the month of March that the assessee opened the bank account to receive the cheque payment from the vendees. Therefore, according to him, the recitals in the sale deed with regard to execution of MOU on 20.5.2005 are correct. 14. On this aspect, the Learned Departmental Representative submitted that the assessees have failed to produce the copy of the MOU to prove that the agreement of sale has been entered into by them on 20.5.2005. In the absence of the same, according to him, the agreement of sale dated 20.5.2005 is not acceptable as major portion of the sale consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of transfer for the purpose of allowing the deduction u/s. 54 of the Act, the ratio laid down by the Apex Court that 'by executing an agreement to sell in respect of an immovable property, a right in personam is crated in favour of the transferee/vendee and when such a right is created in favour of the vendee, the vendor is restrained from selling the said property to some one else because the vendee, in whose favour the right in personam is created, has a legitimate right to enforce specific performance of the agreement, if the vendor, for some reason is not executing the sale deed", is very much applicable to the case before us. 17. In the case of K.P.Verghese V/s. ITO and Anr. reported in (1981) 131 ITR 597, the Hon'ble Apex Court, while considering the scope and ambit of S.52(2) of the Act, while explaining the consequences of strict literal interpretation of a statutory provision, has at para-6 observed as under- "It is a well recognised rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided. There are many situations in which a purely literal construction of sub-sec. (2) of S..52, would lead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended by the assessee. There is not even a receipt issued in evidence thereof. Therefore, the moot question is whether the recitals in the sale deed alone can be considered as the evidence in support of the MOU. We find that none of the authorities below have examined this issue as they have proceeded on the premise that the date of execution of sale deed is the date to be considered for valuation under S.50C. 20. A transaction involving such immovable property in such prime locality of the city of Hyderabad and involving such financial implications would definitely not take place overnight. The purchaser would require time to verify the legal and clear title of the owners and also about the encumbrances on the property before proceeding to make the payment and get the sale deeds executed. All this would consume time and money. For this purpose, they would have negotiated with the owners about the sale consideration before embarking on this exercise, Therefore, it cannot be said that the transaction has been agreed to as well as executed on the same date. Thus, there had to be an agreement to sell, either oral or in writing. But what is such date is the question before us and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property etc. and that the comparison should be with similar properties in the same location. The DVO has not held the assessee's contentions to be wrong, but has only stated that due consideration and weightage has been given to all the incriminating factors shown by the assessee and the market value is worked out in a fair and judicious manner. Thus, the assessee's objection is that the nature of the property has not been dealt with by the DVO. 22. There cannot be any dispute that the nature of the property on the date of transfer/sale is to be considered. As pointed out by the learned counsel for the assessee, the encumbrance certificate mentions the property as residential property, but as rightly held by the CIT(A), Encumbrance Certificate merely reflects the registration of the documents and no more can be read into this description. But the learned counsel for the assessee had also relied upon the GO(Ms) No.574 M.A. dated 25.8.21980 and the letter dated 26.3.2013 issued by the Director(Planning), HMDA certifying that Road No.3, Banjara Hills, near Sultan-Ul-Uloom Engineering College, as earmarked for residential use, as per the above G.O. We find that none of the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleted on 30.12.2008 by adopting the SRO value of the property for computing the capital gains. Thereafter, the assessment was reopened under S.147 of the Act, after receipt of the DVO report on the value of the property and during the assessment proceedings under S.143(3) read with S.147 of the Act, the Assessing Officer observed that the DVO value was more than the SRO value and since it was already taken care of in the assessment proceedings under S.143(3) of the Act, the assessment under S.143(3) read with S.147 got merged with assessment order under S.143(3) and accordingly stands disposed off. 26. Aggrieved, the assessee preferred an appeal before the CIT(A), who dismissed the same holding that the additions/disallowances appealed against were not made in the order under S.143(3) read with S.147 dated 10.3.2014 and that both the grounds raised by the assessee owe their genesis to the order under S.143(3) dated 30.2.2008. Aggrieved, assessee is in appeal before us, raising the following grounds of appeal- "1. The order of the CIT(Appeals) IV, Hyderabad, is erroneous in law and is against the facts and circumstances of the case. 2. The CIT(A) in tee very first paragraph a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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