TaxTMI 
TaxTMI 
2024 (9) TMI 1277
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....ax Appellate Tribunal has erred in law and on facts in determining fair market value of Rs. 800 per sq yd as on 1.4.1981 by ignoring the fair market value determined by the approved valuer at Rs. 1200/- per sq yd? (ii) Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal has erred in law and on facts in sitting over an appeal over wisdom of approved valuer and rejecting the fair market value determined by approved valuer in spite of the fact that revenue has made no efforts to controvert the value of the land as on 1.4.1981 as estimated by approved valuer? In view of peculiar background, learned advocate jointly requested to take up this cross objection for final adjudication as early as possible. Considering such request, relist the matter on 1.5.2023." 3. The brief facts of the case are as under: 3.1. The appellant filed return of income for Assessment Year 2007-08 on 31.07.2007 declaring total income of Rs. 1,33,32,509/- which was processed under Section 143 (1) of the Income Tax Act, 1961 (for short "the Act") accepting the income as return. Thereafter the return was accepted for scrutiny and the notice was served upon the assessee under ....
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....long period of 98 years vide registered deed dated 15.9.1966. The land is situated at the main Ashram Road, Ahmedabad and is a prime commercial location. The land is facing main Ashram Road on east side and TPS road on its south side. Before us, both of the parties have submitted that the cinema building was already demolished and plot was plain plot of land as on the date of sale of the property. The land in question is surrounded by the commercial buildings, viz. cinema theatres, handloom houses, petrol pumps, Reserve Bank of India, Chinubhai Tower, Neptune Building, Karaka Building, Time of India Building, GIDC offices, Income Tax Office, Navdeep Building, etc. are within one km. from the property. We find that the assessee was having only leasehold right for a long period of 98 years in the land, and it is well established principles for valuation of "fair market value" of such lease hold rights of the assessee, is by capitalizing the "net annual income" of the land of certain number of years purchase in accordance with the prevailing rate of interest and by deducting the annual rent payable to the lesser out of the total income of the assessee. However, no such exercise was un....
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....ull owner of the land. We find that at the time of sale of the land, during the relevant assessment year 2007-2008, the assessee has received 60% of the proceeds and the balance 40% of the sale proceeds have gone to the lessor. However, while the transaction of sale has taken place on 11.5.2006, when the lease period of about 40 years have passed, out of the total lease period of 98 years with the assessee, the lease period of 15 years only had passed as on the relevant valuation date of 1.4.1981, as the lease deed was executed on 15.9.1966 conveying the lease hold rights on the assessee for a period of 98 years. We find that with the passage of 25 more years of lease after the relevant valuation date i.e. 1.4.81, the share of assessee-lessee in the value of the land will definitely be less and the share of the owner (lesser) will definitely be more. Considering the entire factual matrix of the case and holding that fair market value of the land in question as on 1.4.81 has been reasonably estimated at Rs. 1,200/- per square yard by the approved valuer as on 1.4.1981, we hold that it shall be fair and justified to value the leasehold rights of the assessee in the land at Ashram Roa....
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....l submitted that the valuation report placed on record by the appellant-assessee is from the perspective of a lessor as an owner of the land in question and the value arrived at Rs. 57,75,000/- is the valuation of the land as on 01.04.1981 from the perspective of the owner of the land and not from the lessee. 5.1. It was further submitted that the Tribunal after taking into consideration the valuation report has suitably valued the lease hold rights of the appellant-assessee at Rs. 800/- as on 01.04.1981 instead of Rs. 1,200/- considered by the valuer in the valuation report. 5.2. It was therefore submitted that there is no error in the impugned order of the Tribunal which requires any interference in the cross-objection filed by the appellant as the appellant had already accepted the cost as determined by the Tribunal but for the appeal filed by the Revenue, the appellant would not have approached this Court and therefore no substantial question of law can be said to have arisen from the impugned order of the Tribunal so far as the aspect of valuation of the land in question which is purely a question of fact as observed by the Tribunal. It was therefore submitted that the appea....
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....oning, distance to school, temples, transportation, commercial establishments, level of the PCIT, rules and regulations of local authority, land rate is estimated at Rs. 1200/- per sq.yd. Hence land value comes to...... 5082 syds. X Rs.1200/sq yd.=Rs.60,90,400. (B) Net value of the property = B-A =Rs. 60,38,400/- - Rs.3,23,500/- =Rs 57,74,900/- Say Rs. 57,75,000/- (RUPEES FIFTY SEVEN LACS SEVENTY FIVE THOUSAND ONLY)" 7. On perusal of the valuation report, it is apparent that the valuer has taken into consideration the property as lease hold land and after deduction of the annual lease rent at the rate of 10% for ten years has made deduction of Rs.3,23,500/- from the valuation of the land arrived at applying the rate of Rs. 1,200/- per square yard. Therefore, the Tribunal was not justified in observing as under:- "However, this value of the land estimated at Rs. 1,200/- per square yard may be reasonable for a free hold land as on 1.4.1981, but the value of a free hold land could not be equated with the value of leasehold rights of "lessee" in a particular piece of land. No mention of the fact that whether the approved valuer has considered this fact while estimating the....