TMI Blog2017 (9) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee’s assertions in this regard based on coloured material and other documents are accordingly rejected. Whether both the lower authorities have correctly valued assessee’s plot @Rs.250/- only than the above sample property sold on 01.10.1981 @Rs.484.10/- per sq.mtr.? - Held that:- Although the assessee’s valuation @Rs.700/- cannot be accepted in toto so are both the lower authorities’ findings drastically reducing the above valuation to ₹ 250/- only without any concrete evidence. All this makes us to observe that application of thumb rule in such a case would meet larger interest of justice. We therefore take average of sale price of ₹ 484.10/- per sq.mtr. and the price in question taken by the lower authorities @Rs.250/- ; coming to ₹ 367.05 per sq.mtr. as the appropriate fair market value of the assessee’s property as on 01.04.1981. We make it clear that our instant adjudication is based on the above peculiar facts and circumstances shall not be treated as a precedent. The Assessing Officer shall accordingly finalize consequential computation. The assessee therefore partly succeeds on merits. The assessee’s first plea is that the Assessing Officer coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ₹ 7,35,750/- only @ ₹ 250/- per sq.yd as well as in deleting Section 54 EC deduction disallowance of ₹ 50lacs; respectively, in proceedings u/s. 143(3) r.w.s. 144 of the Income Tax Act, 1961; in short the Act . 2. We come to assessee s appeal first seeking to delete the above long term capital gains addition of ₹ 65,50,266/-. We notice at the outset that the CIT(A) s findings under challenge comprise of a very detailed discussion, assessee s explanation and Assessing Officer s conclusion as follows: 4.1. During the course of appellate proceedings, the appellant filed written submission as under:- 3.0 FMV as on 01.04.1981 at ₹ 7,35,750/- instead of ₹ 25,78,300/-. 3.7 The first effective ground of appeal relates to the rejecting FMV as on 01.04.1981 shown at ₹ 25,78,300/- by the appellant as per registered valuers report dated 30.10.2010 and taking at ₹ 7,35,750/-, It is discussed in para 4.3 to 4.5 of the impugned order. It is observed by AO that in view of the location of the immovable property sold by the appellant vis-a-vis the comparable instance given by the valuer, the FMV was estimated at ₹ 250 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hram Road which is 30.50 meters wide road (as against 30 feet width stated by the valuer) whereas the appellant's plot was about 2 km. inside main Ashram Road so that it cannot have higher commercial value. The appellant contents that the PUC was situated in well developed area abutting to Ashram Road and near Paldi junction as stated by Regd. Valuer. Since, the Ashram Road extends from Kochrab Ashram, Paldi Junction to Vadaj cross roads and as noticed from the certified map annexed by AO, its distance cannot be 2 kms. as stated by AO. ( ii) The next contention of AO that having regard to the value ₹ 484.10 p. per square yard of plot bearing P.P. No.840, the value of PUC could be estimated at ₹ 250 per sq. yard should be rejected because it is mere a presumption and surmise. The perusal of the size of the plot relating to P.P. No. 840 as given in valure's report shows that it admeausered about 2418 sq. Mt and sold during the period of ULC Act whereas the PUC was not covered under ULC Act as per the order dated 30.11,1982 of Dy. Collector and Competent Authority, ULC, Abad. Therefore, the PUC would naturally fetch higher value than P.P. No.840. It may be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property, development of surrounding area shape and size of the plot and prevailing market rate of land in vicinity abutting on T.P. road on 2 sides and sale data available I evaluate the land value at ₹ 7007- per sqr. Yd. Thus the valuer has taken the cost of acquisition @ ₹ 700/- per sqr. yd. for the appellant's property which was higher as against the sale instance of final plot at ₹ 484.10 per sqr. Yd. Further during the course of assessment proceedings the AO made the necessary inquiries from the Municipal Corporation, registered valuer and from the appellant and it is found that the Plot No.850/1 of the appellant was situated inside 2 Kms. away from the Ashram Road at 40 Ft. wide road while the sale instance property as taken by the valuer was situated on the main road of the Ashram Road on 30.50 Mtrs wide road. So the sale instance property was on a far far better location being situated on much wider road on the main Ashram Road while the property of the appellant was situated firstly on the less wider road and that too on the 2 kms. away from the main Ashram Road. Therefore the cost of acquisition of the appellant's property as on 1.4.1981 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but it was excessive to the fair market value. Thus, the provisions of Section 55A in these circumstances does not apply for making a reference to the registered valuer. So in fact the provisions of Section 55A are applicable in respect of the estimation to determine the fair market value of a property with regard to estimation of the sale consideration and not for estimation of the cost of the acquisition. In view of the above discussion, the appellant's contention is found not acceptable. Even the appellant himself is contradicting his own stand of requirement of the reference by the A.O. to the valuation officer u/s.55A by saying that the reference in the instant case also would have been illegal in view of certain judgments quoted in the written submission. By saying this the appellant's thought that whatever rate he has adopted as a cost of acquisition i.e. R5.700/-/per sqr. Yd. as on 1.4.1981 became the final and neither the AO would estimate at his own considering the comparable instances, nor the registered valuer could have determined the fair market value as on 1.4.1981 u/s.55A of the I.T. Act which is totally against the provisions of law and never intende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave disturbed his registered valuer s report without making Section 55A reference to the DVO. Case law (2014) 367 ITR 238 (Guj) CIT vs. Gauranginiben S. Shodhan Individual is also referred to buttress the above legal arguments. 5. Mr. Divatia thereafter refers to assessee s additional evidence application dated 16.11.2016 seeking to highlight location of two properties by way of various diagrams in coloured version and the fact that the sample property plot no.840 came under the Urban Ceiling Law whereas there was no such restriction in the impugned capital asset sold. He takes us to paper book pages 469, 470 to 472 in paper book. The Assessing Officer also appears to have attached relevant sketch of the town planning scheme, Ellis Bridge indicating assessee s capital asset, the above sample property. Mr. Divatia s case is that all this material sufficiently indicates that both the lower authorities have erred in disturbing assessee s valuation report in question. 6. Learned Departmental Representative on the other hand draws strong support from both the lower authorities action under challenge arriving at the impugned fair market value. He takes us to the relevant annexure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has come on record that the latter plot was sold on 01.10.1981 though a registered sale deed for ₹ 484.10/- per sq.mtr. despite the fact that it was situated on the main road whereas assessee s capital asset falls much interior than the said road. We therefore see no reason or justification on assessee s part in seeking to enhance fair market value of his plots sold to ₹ 700/- despite the fact that the same location suffers from various depreciating factors as well as its distance from main road seeming to be at least between 500 to 1kmtr. These crucial facts make it clear that the assessee s plot did not enjoy much commercial value since sandwiched between Sabarmati river on the one hand and Ashram Road on the other. There is further no material that the said plot s value in anyway suffered because of Urban Land Ceiling Law or its effect thereupon. We therefore do not find any justification in travelling further to adopt valuation of Natraj or G. S. Shodhan situated at much far distance in a different locality scheme than the above sample plot. The assessee s assertions in this regard based on coloured material and other documents are accordingly rejected. 9. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentions are therefore rejected. It case law (supra) is not found to be applicable in facts of the instant case as their lordships dealt with an instance of application of Section 55A(a). We therefore decline assessee s legal arguments. Its main case ITA No.2804/Ahd/2014 partly succeeds on merits. 11. We now proceed to deal with Revenue s appeal ITA No.3190/Ahd/2014 raising sole substantive ground in seeking to revive Section 54EC deduction disallowance of ₹ 50lacs. We notice herein as well that the CIT(A) s finding under challenge duly take note of assessment order as well as assessee s arguments as under: 5.1. In the assessment order, the A.O. observed as under:- 5. Deduction u/s. 54EC 5.1 In the computation of income, the assessee claimed deduction u/s. 54EC of the Act at ₹ 1.00 crore. As per provisions of section 54EC, deduction was restricted to ₹ 50.00 lakhs by inserting a proviso to section 54EC by Finance Act, 2007. 5.2 A bare reading of the above provisions makes it clear that investment in Long Term Specified Assets has been restricted to ₹ 50,00,000/- by inserting of the first proviso to section 54EC. The assessee m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that when the decision of jurisdictional tribunal was available, the AO ought not to have followed the decision of Jaipur Bench which was not binding upon him. 4.2.3 The appellant further submits that the ceiling on investment for the purpose of exemption u/s. 54EC was introduced in view of the non availability of prescribed bonds to the general public on account of heavy investment made by corporate and other entities. This section permitted the assessee to make investment not exceeding ₹ 50 lacs in each financial year and it was not connected with the capital asset sold. In other words, the assessee may have sold different capital assets during the previous year but the ceiling of ₹ 50 lacs would not operate qua the capital assets. To illustrate, if the assessee has exhausted that limit by investing ₹ 50 lacs in financial year No. 1 and he again makes investment of ₹ 50 lads in F. Y. No. 2, the further investment in the second year cannot be made by him in respect of the capital assets sold in that F. Y. Thus, in none of the years, the prescribed limit exceed as contemplated by the legislature. It would be taking a two narrow view of the beneficia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant has claimed that the investment limit of ₹ 50lakhs is applicable to a financial year only and he can make another investment of ₹ 50 lakhs in the subsequent year also but within 6 months from the date of transfer of the property. He has mentioned that the language of the proviso to Section 54EC (w.e.f. 1.4.2007) that the investment of ₹ 50 lakhs can be made in any financial year . So the assessee has made the first investment in the year under consideration and subsequent investment in another assessment year and as such the proviso does not debar the assessee to claim the deduction in the subsequent year although made within the time limit of 6 months from the date of transfer. In support of the same he has relied upon various decisions. 5.7. In the case of Aspi Ginwala, Shree Ram Engineering Manufacturing Industries Vs. ACIT, Circle, Baroda in IT appeal No.3226 of 2011 vide order dtd. 30.03.2012 the Hon'ble ITAT Bench-C, Ahmedabad has granted the deduction of ₹ 1 crore in two different financial years made but within six months from the transfer. Relevant portion of the findings are as under:- The dispute which is to be decided i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), Chennai [2013] 32 taxmann.com 118 (Chennai - Trib.) Section 54EC of the Income-tax Act, 1961 - Capital gains - Not to be charged on investment in certain bonds - Assessment year 2008-09 - Whether where assessee invested ₹ 1 crore in capital bonds in two equal installments in two different financial years within six months period from date of transfer of capital asset, assessee was eligible to claim exemption up to ₹ 1 crore - Held, yes. Further in the case of ITO, Wd-2, Margas, Goad, Vs. Ms. Rania Faleiro [2013] 33 taxrnann.com 611 (Panaji - Trib.) Section 54EC of the Income-tax Act,1961 - Capital gains - Not to be charged on investment in certain bonds [Quantum of exemption] - Assessment year 2008-09 - Whether condition for availing of exemption under section 54EC requires that investment can be made within a period of 6 months and if 6 months fall within two different financial years, assessee can make investment in two different financial years provided in a financial year investment made did not exceed ₹ 50 lakhs - Held, yes - Assessee sold a property on 5.2.2008 and computed capital gain at ₹ 1.16 crores - She had invested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months from the date of the transfer of capital asset giving rise to Long Term Capital Gain in the hands of the assessee. Accordingly, the assessee claimed exemption of ₹ 1 crore u/s.54EC of the Act in the return filed for the Assessment Year 2008-09 which was denied by the Assessing Officer in view of the proviso to sub-section (1) of Section 54EC of the Act, inser4ted by the Finance Act, 2007, w.e.f. 01.04.2007. He further supported his action by the Explanatory Notes on the provisons of Finance Act, 2007 and CBDT Circular No. 3/2008 dated 12.03.2008 as well as by the Finance Minister Speech and the notification No.380/2006 dated 22.12.2006, wherein specific reference was made to paragraph 28.2 of such Explanatory Notes which stated that the Government decided to impose a ceiling on the quantum of investment that could be made in such bonds. Accordingly, the said section has been amended so as to provide for a ceiling on investment by an assesgee in such long-term specified assets. 12. On appeal, the Commissioner of Income-tax (Appeals) confirmed the action of the Assessing Officer. 13. Before us the Authorized Representative of the assessee submitted that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which reads as under:- Provided further that the investment made by an asses see in the long-term specified asst, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. 18. We find that the decision of Jaipur Bench of the Tribunal in the case of Shri Raj Kumar Jain Sons (HUF), which was cited by the Departmental Representative, was considered by the Bangalore Bench of the Tribunal in the case of Shri Vivek Jairazbhoy (supra) and thereafter it was held that the proviso to section 54EC does not limit the amount of exemption which is available as per provision of section 54EC. We, therefore, find that the lower authorities were not justified in not allowing exemption u/s 54EC to the assessee in respect of investments made in specified capital bonds ofRs. 1 crore which were within the limit of proviso to section 54EC i. e. ₹ 50 lakhs in a financial year and were within the specified period of six months. We, therefore, set aside the orders of the lower authorities and direct the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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