TMI Blog2013 (8) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration, the assessee sold agricultural land and declared capital gains in the returns filed by them. From the record, we found that the assessee Gaurav Chawla jointly with his father Shri Jai Kumar Chawla sold land situated at Gram Niranjanpur (Indore) admeasuring 3594.26 mtr., for a consideration of ₹ 2.96 crores on 15th October, 2007, to Govind Chawla, Smt. Nimmi Devi Chawla Sagar Chawla. This land was purchased on 19th February, 2007, for ₹ 2,88,33,000/-. Since the share of assessee was 50%, short term capital gain of ₹ 2,83,500/- on their respective shares was offered in the return of income filed by both assessees for the assessment year 1988-89 under consideration. As per the valuation done by the Stamp Duty Authority, the same worked out at ₹ 4,56,35,000/- on 10th October, 2008. Assessee raised objection before the stamp duty authority with respect to value of land adopted by him. Assessee also requested the Assessing Officer to refer the matter to DVO. However, the Assessing Officer issued commission u/s 131(1)(d) of the Income-tax Act, 1961, to the DVO to determine the fair market value of the said property u/s 50-C. The DVO vide his order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h less since road was proposed by the IDA which was going through the land of the assessee and thus no prudent person would purchase the land at its current market value when court case and acquisition proceedings are pending. The transaction was more of family settlement rather than actual sale. The purchasers and the sellers are from the same family and their main business is that of Builders and Developers. This property was also purchased with the only intention of constructing a multistoried building on the said land. Meanwhile there were disputes between the brothers and finally they separated themselves and the properties were divided with mutual settlement. Accordingly, the alleged property was transferred by the family of one brother to the family members of other brother. Otherwise no prudent businessman would have incurred Registration Expenses of more than 33 lakh for a short period of near about 8 months. The impugned land was purchased by this assessee just 8 months back, prior to its sale. This land was purchased for ₹ 2,55,30,000/- on 19th February, 2007. The market value at the time was determined at ₹ 3,18,00,000/-. Thereafter, on 15th October, 2007 (j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty will go down. Similarly, reliance was placed on the decision of Coordinate Bench in the case of Ajiz Ahmed Siddique in I.T.A.No. 166/Ind/2012, wherein it was held that where the land was in adverse possession, the market value of the land will go down substantially as nobody would dare to buy such land. 8. On the other hand, the ld. Senior DR relied on the orders of lower authorities and contended that as per provisions of Section 50C, the Assessing Officer was justified in taking the valuation arrived at by the DVO, which was lower than the value determined by the Stamp Duty Authority. 9. We have considered the rival submissions and have gone through the orders of the authorities below as well as valuation report prepared by the DVO and also valuation report of Chartered Engineer (Approved Valuer) submitted by the assessee. We had also gone through the objections filed by the assessee with regard to shortcomings in the land while arriving at the valuation by the DVO/Stamp Duty Authority. From the record, we found that the assessee was jointly owning the agricultural land alongwith his father measuring 3594.26 Mtrs. This land was purchased on 19t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before us, there are two issues for determination, namely:- (i) Legality of reference made by the Assessing Officer u/s 55A to the DVO. (ii) Correctness of Valuation arrived at by DVO. 12. Legality of reference made by Assessing Officer u/s 55A is a question of law. As per provisions of Section 55A when the Assessing Officer finds that value of the asset as claimed by assessee is at a variance with its fair market value, with a view to ascertain the fair market value of a capital asset for the purpose of computing capital gains under Chapter IV of Income-tax Act, 1961, the Assessing Officer may refer the valuation of capital asset to a DVO. Since Assessing Officer, was computing capital gains, issue of commission u/s 131(1)(d) to the DVO for ascertaining the fair market value u/s 55A was justified. Thus, we do not find any infirmity for the reference made to Valuation Officer u/s 55A for ascertaining the fair market value of the property. Accordingly, the legal ground raised by ld. Authorized Representative is dismissed. 13. The question of correctness of valuation by DVO, is a purely question of fact. In a reference made u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land at ₹ 2,88,92,540/- as against value arrived at by the DVO at ₹ 3,65,25,500/-. However, no defect was pointed out by any of the lower authorities in the valuation so arrived at by the approved valuer. Keeping into account all these factors, which are going to adversely affect fair market value of land, we direct the Assessing Officer to reduce the valuation arrived at by the DVO by 20 %. Accordingly, the Assessing Officer is to recompute the gain after reducing the valuation arrived at by the DVO by 20 % or the actual sale consideration received by assessee, whichever is higher. The gain so computed is to be divided amongst both the assessees equally since land was owned by them equally. We direct accordingly. 15. In the result, the appeals are allowed in part in terms indicated hereinabove. Controversy in the instant case revolves around computation of capital gains with reference to the provisions of Section 50C. As per provisions of clause (a) of sub Section (2) to Section 50C, where the assessee claims before the Assessing Officer that the value adopted or assessed by the Stamp Valuation Authority exceeds the fair market value of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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