×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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The assessee has filed this appeal challenging the order dated 30-01-2019 passed by Ld CIT(A)-4, Bengaluru and it relates to the assessment year 2007-08. Though the assessee has raised several grounds, all of them are directed against a single issue, viz., the determination of fair market value as on 01-04-1981 of the industrial land sold by the assessee.
2. The assessee herein is a partnership firm. The land sold by the assessee is an industrial land having an extent of 2 acres and 2 guntas. This is third round of proceeding. In the first round, the Tribunal noticed that the land was acquired by the assessee-firm from one of its partners by way of his capital introduction. The concerned partner’s capital account was credited on 01-04-1981 with an amount of Rs.2,70,975/- towards the value of land brought in by him into the partnership firm as his capital contribution. During the year under consideration, the above said land was sold by the assessee and while computing the long term capital gain on sale of above said land, the assessee adopted ‘fair market value as on 1.4.1981’ as Rs.30.00 lakhs. The AO rejected the same and he adopted the value of Rs.2,70,975/- as shown in the books of accounts, as the partnership firm has valued the land at Rs.2,70,975/- as on 1.4.1981, when the partner introduced the land into partnership firm as his capital contribution. When the dispute reached the ITAT, the Tribunal took the view that the value of Rs.2,70,975/- adopted for book purposes is only a notional value and hence, the same cannot be taken as Fair Market Value as on 1.4.1981 for the purpose of computation of capital gain. Accordingly, the Tribunal restored the issue to the file of the AO. In the second round, the AO adopted the very same value of Rs.2,70,975/- as on 1.4.1981 and accordingly computed long term capital gains. In the second round, the Tribunal observed that the AO has not followed the direction given by it in the first round. Accordingly, the issue was restored again to the file of the AO.
3. In the third round of proceedings, the AO called for details of “fair market value” from various sub-registrar office located around the impugned land. The AO noticed that the impugned land was located in 7th mile, 4th furlong, Kanakapura Main Road, Khata No.1004/832/1015/1, Sy No.46/2A1B, which fell in the jurisdiction of Doddkalasandra Village. The extent of land was 2 acres and 3 guntas and the same was converted into industrial land from the status of agricultural land. The sub-registrars reported that the “guide line rates” fixed by Government of Karnataka was available only from 1989 onwards in respect of converted lands. The value of converted land per acre in Dodakallasandra Village for FY 1989-90 was Rs.21,500/-. By adopting the cost inflation index prescribed by the CBDT, the AO made back ward calculation and arrived at the value as on 1.4.1981 at Rs.12,500/- per acre. Accordingly, the AO determined the fair market value of the impugned land at Rs.25,625/-. Before the AO, the assessee had placed its reliance on the Valuation report obtained from Government approved valuer. The AO rejected the same by citing following reasons:-
“11. The Valuation Report submitted by the assessee is not acceptable on four "counts. Firstly, it is seen from the above that the Valuation was done with references to Residential sites and not Industrial land. Though assessee claims that as per Form no. 22, the valuation certificate was applied for Industrial Converted land of Banashankari Area in the year 1982-83, the Data provided by the Sub Registrar is of the residential sites. The difference of measurement of an open Area and residential sites Is indicated by Acre and sft respectively and the Sub Registrar has provided as per Sg.ft. Secondly, the comparable references made by the Valuer is not the same as the property is situated in Doddakalasandra Village which is away from the City limits whereas, the valuation is adopted with reference to Banashankari 2nd Stage, which is within the city limits. Thirdly, the Valuer in Part II of the Report has stated that enquiries were carried out with a number of old real estate agents to know the prevailing market rate. This office has also learnt upon discreet enquiry with a lot of old real estate agents, that Rs. 33 per sqft was not accurate. Since there is a difference of opinion, there is reasonable doubt that the estimate cannot be undisputed. The assesee in his submission had stated that no specific enquiries has been made to the Valuer and that no site visit has been carried out by this Office. However, the assesseee was extended every opportunity possible to substantiate, providing copies obtained from the Sub Registrar's and to justify their claim. Besides, the onus lies on the assessee to proof that the Valuer from whom the Valuation was done is authentic and that hisvaluation is beyond doubt. These contention is just to hoodwink the Department into justifying that proper opportunity was not provided. If the assessee so wished to prove that the Valuer is genuine, it is his right to produce the Valuer and explain to the Assessing Officer, the authenticity of his Valuation. The Office has never debarred the assessee from exercising his rights to produce the Valuer. No request has been receive in this regard from the assessee. Fourthly, when the Sub Registrars themselves stated that the converted value for such lands were not available in their records and assessee himself had said that there were not many Industrially Converted Lands in that area, how the Valuer got an estimate at Rs. 30 per sqft is doubtful. In that case, why did the assessee enter an amount of Rs. 2,70,975/- as the book value and not Rs. 30 Lakhs. It is to be noted that the Asset was introduced into the books of accounts of the assessee through its partner's capital account. Hence due to the above reasons, the value adopted by the assessee at Rs. 30 lakhs is found to be doubtful hence incorrect.”
The Ld CIT(A) confirmed the order passed by the AO and hence the assessee has filed this appeal before the Tribunal.