TMI Blog2023 (6) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-2023 - Shri Duvvuru Rl Reddy, Hon ble Judicial Member And Shri S Balakrishnan, Hon ble Accountant Member For the Assessees : Sri I. Kama Sastry, AR For the Revenue : Sri ON Hari Prasada Rao, Sr. AR ORDER PER S. BALAKRISHNAN, ACCOUNTANT MEMBER : The captioned two appeals are filed by the assessees (Pydi Venkata Ramana and Pydi Giridhar Babu) against the orders of the Ld. Commissioner of Income Tax (Appeals)-1, Visakhapatnam [Ld. CIT (A)] in ITA No.10206/2018-19/CIT(A)-1/VSP/2020-21 (ITA No. 218/Viz/2020) and ITA No. 10080/2019-20/CIT(A)- 1/VSP/2020-21 (ITA No. 219/Viz/2020), dated 14/09/2020 for the AY 2012-13. Since the issues involved in both these appeals are identical, for the sake of convenience, these appeals are clubbed, heard together and disposed off in this consolidated order. Appeal wise adjudication is given in the following paragraphs. 2. Considering the similarity of the issues involved in these two appeals, we shall take up ITA No. 218/Viz/2020 as a lead appeal. ITA No.218/Viz/2020 (AY: 2012-13) (Pydi Venkata Ramana) 3. Briefly stated the facts of the case are that the assessee being an individual filed his return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e directions of the ITAT, the Ld. AO referred the matter to the District Valuation Officer (DVO). The Ld. DVO submitted its preliminary valuation report dated 19/12/2018 determining the Fair Market Value (FMV) of the property at Rs. 12,23,30,000/- as on the date of transfer and accordingly the assessee s share in the consideration worked out to Rs.4,07,77,000/-. The assessee filed its objections vide letter dated 28/12/2018 on the FMV determined by the Ld. DVO in his preliminary report. The Ld. AO observed that the District Valuation Officer in his preliminary report has dealt with all the objections raised by the assessee and therefore, treated the FMV as determined by the Ld. DVO in his preliminary report and accordingly determined the deemed sale consideration U/s. 50C of the Act at Rs. 4,07,77,000/- being the assessee s share of the property as long term capital gains and computed the tax thereon. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A). During the appellate proceedings, the Ld. CIT(A) received the final report of theDVO dated 22/11/2019 on 6/3/2020 wherein theDVO has determined the value of the property at Rs. 6,11,65,000/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue as per the registered sale deeds. The Ld. AR further submitted that similar facts existed in the case of the assessee and therefore the sale consideration received by the assessee as per the sale deed is to be treated as fair market value of the property, which is a subject matter for proceedings under Urban Land (Ceiling and Regulation) Act, 1976. Per contra, the Ld. DR submitted that in the case of the property referred by the Ld. AR which is adjacent to the similarly placed property contiguous to the property sold by the assessee, the lease deed was cancelled by a clause in the sale deed itself. However, the Ld. DR submitted that in the instant case, firstly the lease deed was cancelled and then the sale deed was executed. The Ld. DR therefore pleaded that at the time of sale of the impugned property it has become a free hold land and not a lease hold land. The Ld. DR supported the order of the Ld. CIT(A). 6. We have heard both the sides and perused the material available on record as well as the orders of the Ld. Revenue Authorities. Admittedly, from the submissions made by the Ld. AR, we find that the Tashildar has taken possession of the impugned property situated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be valued at the rate contained in section 11(i) of the Act. 7. The arguments of the Ld. DR that since the lease agreement was cancelled first and then sale agreement was entered into by the assessee which is on the same day, cannot alter the character of the land to free hold land, could not be accepted. Further, in our view it does not make any difference when the lease deed was cancelled vide a clause in the sale deed as against two separate deeds in the instant case on the same day. Further, the Revenue has also not disputed the proceedings under the Urban Land (Ceiling and Regulation) Act, 1976 for the impugned property. The Hon ble Supreme Court in the case of S.N. Wadiyar (Dead) through LR vs. Commissioner of Wealth Tax (supra) in para 31 of its judgment held as follows: 31. When the asset is under the clutches of the Ceiling Act and in respect of the said asset/vacant land, the Competent Authority under the Ceiling Act had already determined the maximum compensation of Rs.2 lakhs, how much price such a property would fetch if sold in the open market? We have to keep in mind what a reasonably assumed buyer would pay for such a property if he were to buy t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned Authorities. Since, the impugned property is covered under the proceedings under Urban Land Ceiling and Regulation Act, 1976, it is impracticable to fetch a higher market value. In the instant case, since the property is under dispute and the proceedings are pending before the Hon ble High Court of Andhra Pradesh, we are of the considered view that this property cannot fetch a fair value when compared to the properties which are not under litigation. Further, the value as per the rent capitalization method is also far below to the actual consideration received by the assessee. We therefore are of the considered view that the sale consideration received by the assessee is to be adopted for the purpose of computing capital gains and accordingly the Ld. AO is hereby directed to consider Rs.1,38,33,333/- being the share of the assessee from the impugned sale of land and thereby allow the appeal of the assessee. It is ordered accordingly. 9. In the result, appeal filed by the assessee is allowed. ITA No.219/Viz/2020 (AY 2012-13) (Pydi Giridhar Babu) 10. In this appeal, the assessee has originally raised four grounds of appeal however, later revised to one ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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