TMI Blog2018 (1) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... ng room facility was not constructed due to dispute with the owner. It was only constructed in setback area illegally. Further the stairways were common and other facilities like overhead water tank were also common with part owner of plot, which reduces the fair market value in terms of salable price and also in terms of the rent. It is also important to note that the property was in dispute and the court cases were going on. The assessees were residing outside the Jaipur. It was difficult for them to travel to Jaipur every time to negotiate the deal when they were senior citizens. The structure was very old as it was constructed in 1972. Considering all we hold that the District Valuation Officer has not considered all these various aspects which has direct bearing on the fair market value of the land on the date of transfer. The facts of the case also suggest that it can be termed as distress sale, therefore, the District Valuation Officer was not justified in estimating the fair market value by adopting rent capitalization method, therefore, direct to delete the same. - ITA No. 826/JP/2016 And ITA No. 827/JP/2016 - - - Dated:- 20-9-2017 - SHRI BHAGCHAND, ACCOUNTANT MEMBE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,500/-. The assessee s share in the property was 50%, hence, the AO took the sales consideration of the property in the hands of the appellant at ₹ 22,20,750/-. As the sales consideration of the property has been adopted by the AO at ₹ 22,20,750/- only after referring the property for valuation to the Valuation Officer at the request of the assessee as provided u/s 50C(2), therefore, I find no infirmity in the action of the A.O. adopting the sales consideration of the property at ₹ 22,20,750/- U/s 50C. Accordingly, the addition of ₹ 10,70,750/- made by the A.O. under the head capital gain is hereby confirmed. The ld. CIT(A) has also given similar finding in the case of Smt. Tara Devi Paliwal and dismissed the appeal. 5. Now the assessee is in appeal before the ITAT by taking following grounds of appeal: Grounds of ITA No. 826/JP/2016 1.1 The very action taken u/s 147 r/w 148 is bad in law without jurisdiction and being void ab-initio hence, the same kindly be quashed. Consequently the impugned assessment framed u/s 143(3)/147 dated 24.06.2014 also kindly be quashed. 1.2 The impugned order u/s 143(3)/147 dated 24.06.2014 is ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eleted in full. 3. The Id. AO further erred in law as well as on the facts of the case in charging interest u/s 234A, 234B, 234C 234D of the Act and as also in withdrawing interest u/s 244A of the Act. The appellant totally denies its liability of charging and withdrawal of any such interest. The interest so charged/withdrawn, being contrary to the provisions of law and facts, kindly be deleted in full. 4. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. Similar identical grounds have also been taken in ITA No. 827/JP/2016 6. Ground Nos. 1.1 and 1.2 of the appeals were not pressed at the time of hearing, therefore the same are dismissed as not pressed. 7. Grounds No. 2.1 to 2.4 of the appeal are with regard to sustain the addition on account long term capital gain. In this case, the ld AR of the assessee has submitted that the sale was a distress sale where neither the rent capitalization method nor land and building method could be applied to work out fair market value and it tried to establish that there were peculiar facts and circumstances of the case, which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand because of this continuous and vexed litigation, the assessee was not finding suitable buyers. The fact of litigation was in the knowledge of the neighbors and also well known to the nearby property dealers, as a result of which, it became a case of a disputed property. A copy of certificate of a property broker was submitted support the contention (PB 7) who even confirmed that the assessee sold the property below price which remained undisputed who even confirmed that assessee sold the property below price which remained undisputed. On the one hand, the assessee being in the financial needs wanted to sale the property at the earliest possible however, the litigation was delaying the sale, on the other. This has resulted in a considerable downfall in the offers being made by the prospective buyers of the property to the assessee sellers. 1.4 It is further submitted that the present owner M/s Biranani Safe Deposit Vaults Pvt. Ltd., Jaipur had already been under negotiation with the assessee seller since long and the parties almost reached to a common consensus of the deal to be finalized at ₹ 23,00,000/- or around. However, it was only because of non settleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pitalization method for estimating fair market value is without jurisdiction and improper. 2.2 It is submitted that because of the dispute going on as stated above, the assessee s were not getting any rent at least till A.Y.2005-06 and it was only in A.Y. 2006-07 when an out of court settlement was reached between the parties, pursuant to which the assessee were paid the full and final amount of lease rent. However, in A.Y. 2007-08 the property stood sold and therefore, the lease amount, if any, accrued to the new buyer and not to the assessee hence, no rental income shown by the assessee in the ROI filed for A.Y. 2007-08 (PB 1-3). Under these circumstances when, there was no rent received/receivable at the time of sale, the Rent Capitalization Method was not proper method to be applied. 3.1 Moreover, as per Guidelines for Valuation of Immovable Properties, 2009 published by the Directorate of Income Tax, Income Tax Department, Delhi (For official Use only), has provided that approach and method of valuation should be rational. It has been guided that Normally there would be an appropriate method for a particular situation. For instance for owner occupied propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urages the buyer and he takes help in bargaining to reduce the sales consideration. No commercial activity. ( iii) No lease Deed was executed by the bank due to disputed property. The bank was without the strong room. 3. Regarding lease deed the matter is in between lessee and lessor. This is their matter will may not be commented. DVO did not comment but also ignored that due to this RCM was not applicable. ( iv) No strong room was constructed by the bank as the portion was constructed after covering the set back portion of the house and due to dispute with owner. The stairs are common for whole building. 4. The construction of strong room is requirement of bank does not change the nature of commercial. The focus was on the fact that the construction of strong room was done in the set back area which is against the building by laws and such construction was illegal. Therefore, a prospective buyer shall certainly make a discount in the sale consideration. DVO completely ignored this aspect. ( v) Over h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. It is provided that for determination of fair market value of commercial properties if compared to land and building method, the profit method indicates lesser value, then the former should be applied. It should correctly reflect the real life situation. All factors affecting value should be considered, like. * Shape, size, location, low lying, allowable FAR etc., for land valuation. * Type of foundation, specification, No. of storeys, standard of construction and finishing planning efficiency etc for building valuation. * Lease hold or free hold. * Under litigation or not. * Title is clear or not: owner ship possession. * Tenanted or Self-occupied. * Encroachment / unauthorized occupant exist or not etc. * Valuation should be correctly done. * The following points should be carefully noted. * Plinth area rates should be correctly applied. * Cost indices of relevant time place should be considered. Guidelines of Valuation of Immovable Properties 96 * Extra items should be properly framed based on correct rates of materials and labour. * For ascertaining comparable land values public auction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are there on the basis of which out of the various methods by which the valuation of the immovable property can be made, appropriate method is to be adopted. It depends on the location of the property, the purpose for which the property is used, the nature of the property, the time when the agreement is entered into and similar other objective factors. The valuation, therefore, has to be done by a method which is more objective and could furnish the reliable data to arrive at a just conclusion. 13. In respect of the land, the comparable cases provide the better guide. The comparable cases could be which are in respect of the land having similar character and is in the proximity of the land under agreement having similar advantages and amenities. The proximity in time is also the important factor in such a case. The location, frontage, transport facility and other amenities beside the size of the plot are the relevant considerations. The method of belting is also applied in respect of land having large area as the front of the land on the main side fetches higher price than of the next belt and so on. In this method the plot is divided into belts on the basis of distance from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court as noticed before. ( iv) Which one of the various methods would be suitable for a particular case must depend upon the nature of the property, the location of the property, the purpose for which the property is used and several other objective factors, viz., the time when the valuation is made, the prospect of buying and selling in respect of the property at the relevant time and also special features in respect of the property, if there be any. Taking all these factors into consideration it is, therefore, necessary to determine which one of the various methods will be most suitable to reach as accurate as possible guess as to the valuation on the valuation date. ( v) Another factor that has to be borne in mind is that such a method should be preferred which has more objective reliable data to rely upon than mere subjective opinions. For instance, if there are more objective data to work out in respect of one method more reliable than another, then that method for a particular land should be preferred. If, however, there is any objective reliable evidence of any transaction of sale of the land or property similar in quality or of the same type and in approxima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, no such amendments is found in provisions of S. 246A. The assessee feeling aggrieved from the addition made by the AO, only after considering the report of the DVO, was aggrieved and its appeal was fully maintainable as was also rightly admitted by the ld. CIT(A). The ld. CIT(A) having admitted such an appeal, also admitted that the appellant was aggrieved by the addition which was based/consequent to the DVO s report. Therefore also, the ld. CIT(A) could not have rested his decision solely on the report of the DVO. He was supposed to make his comment and grant relief, if thought fit. By not doing so and by not rejecting the specific factual and legal submission made duly supported by the binding judicial pronouncements, it has to be presumed that ld. CIT(A) had nothing to rebut/negate the same and hence his confirmation was completely contrary to the provisions of law and facts. Hence the impugned addition kindly be deleted in full. 8. After hearing both the sides and considering the factual position of the property, I hold that basically the property was a residential property. The property was let out but it was constructed in the back portion of the plot of land. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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