Jayashree Ajit Darekar, Pune vs Department Of Income Tax

The Asst. Commissioner of Income Tax, Circle 9, Pune .... Appellant

Vs.

Jayashree Ajit Darekar Jayajit, Sector No.27, Plot No.438, PCNTDA, Nigdi, Pune - 411044

PAN: AGHPD1686J .... Respondent

Appellant by : Mr. B.C. Malakar Department by : Mr. Jayant Pendse Date of hearing : 15-01-2015 Date of pronouncement : 28-01-2015

ORDER

PER G. S. PANNU, AM

The captioned appeal is directed against an order of the Commissioner

of Income Tax(Appeals)-V, Pune dated 26.12.2012 which in turn has arisen

from an order passed by the Assessing Officer u/s 143(3) of the Income Tax

Act, 1961 (in short "the Act") dated 23.12.2010 pertaining to the assessment

year 2006-07.

2. In this appeal, the Revenue has raised the following Grounds of

Appeal:-

1. Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in directing the A.O. to adopt the value of land as on 1.4.1981 in respect of lands at S.No.118A at Rs.200 per sq. mtr. and at S.No.129 at Rs.150 per sq. mtr on presumptive / estimate basis, without bringing on record any comparable instance or any other proof.

2 ITA No.685/PN/2013 3. The only dispute in the present appeal relates to the capital gain earned

by the assessee on sale of land at Survey Nos.118A and 129, Parvati. The

difference between assessee and the Revenue with regard to the computation

of capital gains was the adoption of the Fair Market Value of the property as

on 01.04.1981 in order to determine its cost of acquisition. The assessee had

declared the Fair Market Value of the property as on 01.04.1981 on the basis

of the Report of registered Valuer for Rs.27,93,212/- and Rs.6,00,000/- with

respect to Survey Nos.118A and 129, respectively. The Assessing Officer

adopted the total Fair Market Value of the land as on 01.04.1981 at

Rs.1,54,000/-. As a consequence, the Assessing Officer determined long term

capital gain at Rs.71,53,300/- as against a capital loss of Rs.66,72,403/-

computed by the assessee.

4. In appeal, the CIT(A) allowed partial relief to the assessee by directing

the Assessing Officer to adopt the Fair Market Value of land at Survey

Nos.118A and 129 at Rs.200/- per sq. mtr. and Rs.150/- per sq. mtr.,

respectively as on 01.04.1981. As a consequence, the long term capital gain

has been computed at Rs.18,66,931/- instead of Rs.71,53,300/- determined by

the Assessing Officer. Against the direction of CIT(A) in adopting the Fair

Market Value of land as on 01.04.1981 at Rs.200/- per sq. mtr. and Rs.150/-

per sq. mtr. for land at Survey Nos.118A and 129, respectively, the Revenue is

in appeal before us.

5. The learned Departmental Representative has relied upon the order of

Assessing Officer in order to justify the estimation of the Fair Market Value of

land as on 01.04.1981, whereas the learned Representative appearing for the

respondent assessee pointed out that the CIT(A) was quite justified in dis-

regarding the estimation made by the Assessing Officer for the reasons

contained in the impugned order.

3 ITA No.685/PN/2013

6. We have carefully considered the rival submissions. The crux of the

controversy relates to the Fair Market Value of the land sold as on 01.04.1981

for the purposes of computing capital gains. The CIT(A) has observed that the

value as on 01.04.1981 adopted by the Assessing Officer at 1/50th of the sale

consideration has no basis. At the same time, the CIT(A) has also come to a

finding that the valuation report furnished by the assessee from a registered

Valuer also did not contain any reliable basis. Considering the aforesaid, the

CIT(A) has estimated the Fair Market Value of the land as on 01.04.1981 by

making following discussion:-

"14. I have carefully considered the facts of the case as well as reply of the appellant. In this case, the Assessing Officer, after considering the appreciation in properties in areas which are far off from the property situated at Parvati has adopted the value as on 01.04.1981 at 1/50th of the sale consideration which has no basis. The appellant too has inflated the cost on the basis of valuer's report as on 01.04.1981 in order to reduce the capital gains. Therefore, the Assessing Officer is right in holding that problems associated with land due to which sale consideration was low, was also applicable for valuation of cost of properties as on 01.04.1981. The appellant in his submission has stated that considering 50% price of Prime areas, the value of land will be ₹ 20-25 per sq.ft. Therefore, in my view ends of justice will meet if value of land at Survey No.118A is adopted at 200 sq.mtrs and value of land at Survey No.129 is taken at ₹ 150/- per sq.mtr.

Accordingly, cost of land is calculated as under:

i. Survey No.118A Amount (₹) Area - 6207.13 sqmtrs. x 200 = 12,41,426/-

ii. Survey No.129 Area 1744.61 sqmtr. x 150 = 2,61,692/-

iii. S.No.722(CTS 212) = 1,40,000/-

Total 16,43,118/-

Accordingly, L.T.C.G is computed as under:

Sale Consideration = 77,00,000/-

Index Cost of Acquisition - 16,43,118 x 497/140 = 58,33,069/-

Long Term Capital Gains = 18,66,931/-

Accordingly, the Assessing Officer is directed to adopt the value of Long Term Capital Gains at ₹ 18,66,931/- instead of ₹ 71,53,300/-. Thus, the ground is partly allowed."

4 ITA No.685/PN/2013 7. Before us, the learned Departmental Representative has not

demonstrated any cogent reasons to dis-regard the estimation of Fair Market

Value made by the CIT(A) especially, in the background of the fact that the

estimation made by the Assessing Officer lacked any basis. Therefore, we

hereby affirm the order of the CIT(A) on this aspect and accordingly, Revenue

fails.

8. In the result, appeal of the Revenue is dismissed.

Order pronounced on 28 th January, 2015.

Sd/- Sd/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER

Pune, Dated: 28 th January, 2015.

GCVSR

Copy of the order is forwarded to: - 1) The Assessee; 2) The Department; 3) The CIT(A)-V, Pune; 4) The CIT-V, Pune; 5) The DR "B" Bench, I.T.A.T., Pune; 6) Guard File.

By Order //True Copy//

Assistant Registrar I.T.A.T., Pune