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TMI Blog2019 (12) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... ther and a common order is being passed as under: 2. Facts of the case are taken from the appeal of Smt.Ankitam Jagga Row Indrani in I.T.A. No.684/Viz/2013 and the facts are identical to other appeals. The assessee filed the return of income on 16.02.2012 declaring total income of Rs. 64,55,376/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short 'Act') and the case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer (AO) found that the assessee along with Shri Ankitam Venkata Adeep Jagga Row and Shri A.V.Monish Samerender Row sold the land situated at T.S.No.1176/Part, Block No.36, Allipuram Ward, Dabagardens, Visakhapatnam and received the total consideration of Rs. 4,79,00,000/-. The assessee admitted her 1/3rd share of Rs. 1,59,66,667/- for capital gains and after claiming the indexed cost of acquisition of Rs. 1,03,77,440/-, the assessee admitted the long term capital gains of Rs. 55,89,227/- as under : 1/3rd of Total consideration (4.79,00,000 x 1/3) Rs. 1,59,66,667/- Less Cost of Acquisition : 8210 sq.yards @200 = 16,42,000 (Market value taken @200 per square yard as on 1.4.1981. Therefore i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on CIT(A), though it is binding on the AO and held that the factors/disadvantages referred to such as location, co-ownership, pollution, availability of buyers, presence of weaker sections at the main entrance side and irregular frontage and the lease hold rights are not the major factors influencing the cost of land and applicable to any other property, therefore, viewed that the value determined by the Valuation Officer is incorrect and erroneous to the extent of allowances given in respect of the above factors and accordingly directed the AO to give allowance to the extent of 65% from the base rate and arrive at the full value consideration for the purpose of computation of capital gains. For the sake of clarity and convenience, we extract relevant part of the order of the Ld.CIT(A) in para No.5.3 to 5.4 which reads as under : "5.3. It is relevant to go into the valuation report, which has given the basis for arriving at the value as under : Rate Analysis based on Ground Reality of the Plot Rs. Base rate per one sq.yd = 25,000.00 Rate influencing factors 1. Location Add or medium commercial location on the building side 10.00% 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors, such as leasehold right etc. The appellant's only objection to the stamp duty value was that her property was not freehold and was encumbered on account of the lease transactions entered with the purchaser in 1971, and as a result of which the market value would be less. A perusal of the valuation report shows that allowance to the extent of 65% (refer items 2,3 & 4 of the table) has been given on account of encumbrance created by way of lease which can be considered justified in the facts of the case. The other factors (refer items 1,5,6,7,8 & 9 of table above) considered in the valuation report do not relate to encumbrance on account of leasehold right and are applicable to any property situate in that location or survey number and are not in any way unique or specific to the subject land. These factors (referred in items 1,5,6,7,8 & 9 of the report) are generally considered in fixing the market value for the purpose of stamp duty valuation. Therefore, apparently there is no justification for further allowance on account of these factors in the appellant's case. The value determined by the valuation officer is incorrect and erroneous to the extent that allowance was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of these factors in the appellant's case. The value determined by the valuation officer is incorrect and erroneous to the extent that allowance was given in respect of these factors (items 5,6,7,8 & 9) and accordingly the value after excluding the allowance in respect of the factors mentioned in items 5,6,7,8 & 9 of table may be taken to reflect the fair market value of the property. Therefore the AO Is directed to give allowance in respect of factors referred in item 2,3 & 4 to arrive at the full value of consideration and on that basis the capital gains may be recomputed." 4. Against the order of the Ld.CIT(A), the assessee as well as the department have filed cross appeals. Initially, the assessee's appeals were decided by this Tribunal vide order in I.T.A. No.684/Viz/2013 and 685/Viz/2013 dated 07.03.2014. At the time of deciding the assessee's appeals, neither the department nor the assessee brought to the notice of the ITAT regarding the pendency of departmental appeals. Therefore, the ITAT has decided the assessee's appeal without considering the departmental appeal. Subsequently, the department has filed Miscellaneous Application and the ITAT has recalled it's orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the property was under dispute with pending litigation arising of lease hold rights given by the assessee and the location of the property was not conducive due to commercial establishments on the building site and pollution due to proximate port, dockyard for coal dust and other polluting material. The area 8210 square yards is very bigger area, the assessee was not in a position to find a buyer for such large track of the land with all the existing problems. These were some of the reasons given by the assessee for fetching lesser rate. Apart from the above factors, such irregular frontage and the presence of weaker sections at the main entrance were also contributed for reduction in the market rent. The Ld.AR further submitted that above factors were brought to the notice of the AO and the AO has referred the valuation to the DVO, who has valued the FMV at Rs. 6,28,06,500/- as per section 50C(2) of the Act. Once the AO being satisfied with objections raised by the assessee and referred the valuation of the property to the Valuation Officer, the value determined by the DVO is binding on the AO and the AO has to take the full value of consideration as determined by the DVO. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compromise agreement dated 25.03.2005 and the vendors have agreed to sell the scheduled property to the purchaser for total consideration of Rs. 2,62,35,000/- and agreed to complete the sale transaction before 31.03.2005 before the Lok Adalat. Due to Urban Land Ceiling Certificates or ULC problems, the assessee could not transfer the land to the purchaser till 31.03.2009 mean while the rates have gone up and both of them have agreed for total consideration of Rs. 4,79,00,000/-. The purchaser initially paid the part of sale consideration of Rs. 20,00,000/- to Smt. Indrani Jagga Row, Shri Ankitam Venkata Addep Jagga Row and Shri A.V.Monish Samerender Row @ Rs. 6,66,667/- to each co-owner by cheques drawn on Union Bank of India, Visakhapatnam branch on 06.08.2007. Subsequently, the assessee made the remaining payment of Rs. 4,59,00,000/- to the vendors @ 1,53,00,000/- each by way of cheques drawn on Union Bank of India, Hyderabad dated 28.07.2008 and the vendors have registered the sale deed on 30.07.2009 and stamp duty value was fixed by SRO at Rs. 20,93,55,000/-. As seen from the sale deed, the purchaser has made advance dates back to 06.08.2007 and the entire payment was paid to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o valuation officer and the value assessed by the valuation officer is binding on the department, there is no reason to enhance the value assessed by the Valuation Officer when the Act does not permit the AO or the CIT(A) to do so. In case the CIT(A) is not convinced with the value determined by the DVO, as an extension of assessing authority, the Ld.CIT(A) ought to have referred the issue to the DVO again for reconsideration of the value. The valuation officer being expert, the Ld.CIT(A) is not allowed to tinker with the expert opinion without further reference to the DVO and in the process, the Ld.CIT(A) also has to give opportunity to the assessee to cross examine and to present his case before Departmental Valuation Officer along with the observations of the Ld.CIT(A). The entire process of examination, reexamination, reference was not conducted in the instant case. Therefore, there is no reason to not to accept the value determined by the valuation officer. Thus we are unable to sustain the order of the Ld.CIT(A) and hold that the assessing authority has no option except to accept the FMV determined by the DVO after making reference and proceed to compute capital gains by foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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