Ramu subbiah v. The Assistant Commissioner of Income-tax, Non-Corporate Circle – 12, Chennai
[Citation -2016-LL-0923-74]

Citation 2016-LL-0923-74
Appellant Name Ramu subbiah
Respondent Name The Assistant Commissioner of Income-tax, Non-Corporate Circle – 12, Chennai
Court ITAT-Chennai
Relevant Act Income-tax
Date of Order 23/09/2016
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags exemption from capital gain • full value of consideration • district valuation officer • transfer of capital asset • infrastructure facility • registered sale deed • agricultural income • sale consideration • fair market value • registered valuer • sale of property • transfer of land • comparable sale
Bot Summary: Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the assessee sold a property to M s Surana Corporation on 25.03.2011 for a total consideration of 2,20,0,000 -. Referring to the copy of patta and adangal, the Ld.counsel for the assessee submitted that the State Revenue Department classified the land as dry land and the assessee was cultivating the same. The Ld.counsel for the assessee further submitted that the assessee has sold the land as a single piece in Sholinganallur Village. The Ld.counsel for the assessee further submitted that the assessee claimed before the Assessing Officer and also before Departmental Valuation Officer that the land at Perumbakkam was taken at 250 per sq. The Departmental Valuation Officer however, rejected the comparable sale instance suggested by the assessee on the ground that the value adopted under Section 47A of the Stamp Act cannot be made applicable to the assessee. According to the Ld. D.R., the assessee claimed before the Assessing Officer that what was sold by the assessee is agricultural land it cannot be a capital asset. The assessee has produced a copy of the sale deed to indicate that the sale consideration disclosed by the assessee is the fair market value.


IN INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI, BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER . ITA No.2058 Mds 2016 Assessment Year : 2011-12 Shri Ramu subbiah, Assistant Commissioner of C o S. Sridhar, v. Income Tax, A.S. Sriraman, Advocates, Non-Corporate Circle 12, New No.14, Old No.82,Flat No.5, Chennai. 1st Avenue, Indira Nagar, Adyar, Chennai - 600 020. PAN : AELPR 7916 R ( Appellant) ( Respondent) Appellant by : Shri S. Sridhar, Advocate Respondent by : Shri A.V. Sreekanth, JCIT Date of Hearing : 29.08.2016 Date of Pronouncement : 23.09.2016 O RDER PER N.R.S. GANESAN, JUDICIAL MEMBER: This appeal of assessee is directed against order of Commissioner of Income Tax (Appeals) -13, Chennai, dated 19.05.2016 and pertains to assessment year 2011-12. 2 I.T.A. No.2058 Mds 16 2. Shri S. Sridhar, Ld.counsel for assessee, submitted that assessee sold property to M s Surana Corporation on 25.03.2011 for total consideration of `2,20,0,000 -. area of land was 2.02 acres. Similarly, assessee sold another property to extent of 4.09 acres at Sholinganallur, to M s Chennai Cybercity (P) Ltd. for sum of `5,74,12,000 -. In respect of Sholinganallur property, assessee claimed before Assessing Officer that this is agricultural land subjected to cultivation, therefore, cannot be considered as capital gain. Assessing Officer found that distance between Sholinganallur property and Perumbakkam municipality was approximately 13.5 KMs. However, assessing authority found that population of municipality was 15,519 as per Census of 2001. Ld.counsel further submitted that assessee has returned agricultural income regularly. In fact, for assessment year 2010-11, assessee has returned sum of `53,200 -. Similarly for assessment years 2011-12 and 2012-13, assessee has returned agricultural income of `53,200 - each. This claim of assessee was disallowed on ground that agricultural income disclosed by assessee was very less for total area of 6.11 acres. According to Ld. counsel, assessee has disclosed 3 I.T.A. No.2058 Mds 16 agricultural income earned from cultivation. Therefore, merely because agricultural income was very less, claim of assessee that property was agriculture in nature cannot be rejected. When agricultural income disclosed for earlier assessment years was admitted, merely because assessee was claiming exemption from capital gain on transfer of land, Assessing Officer cannot turn around and say that property is not agriculture in nature. 3. Referring to copy of patta and adangal, Ld.counsel for assessee submitted that State Revenue Department classified land as dry land and assessee was cultivating same. Therefore, according to Ld. counsel, CIT(Appeals) is not justified in confirming order of Assessing Officer. 4. Ld.counsel for assessee further submitted that assessee has sold land as single piece in Sholinganallur Village. assessee also sold another land at Perumbakkam Village. guideline value adopted by Sub-Registrar in Sholinganallur land was at `5,74,12,000 -. In respect of Perumbakkam land, guideline value adopted by Sub- Registrar was `2,20,18,000 -. Both Sholinganallur land and 4 I.T.A. No.2058 Mds 16 Perumbakkam land are one piece of property. According to Ld. counsel, Assessing Officer without any justification divided same into two properties. Even though assessee executed two different sale deeds and property found in two different villages, it is one piece of land, therefore, there cannot be any two different guideline value for purpose of valuation. According to Ld. counsel, there cannot be higher value for one part of land and lesser value for other part of land. Referring to Departmental Valuation Officer s report, Ld.counsel submitted that this valuation was in respect of 2400 sq.ft. of land, which is otherwise considered to be one ground. What was sold by assessee is 6.11 acres of land. entire 6.11 acres of land is single piece of land. In other words, what was sold by assessee is 2,66,151 sq.ft. of land. Therefore, comparing small piece of 2400 sq.ft. of land with large jungle of 2,66,151 sq.ft. of land is not justified. 5. Ld.counsel for assessee further submitted that assessee claimed before Assessing Officer and also before Departmental Valuation Officer that land at Perumbakkam was taken at `250 per sq.ft. Sholinganallur Village is next to Perumbakkam Village and land at Perumbakkam Village is 5 I.T.A. No.2058 Mds 16 adjacent to Sholinganallur land. Therefore, there is no justification in valuing land at Perumbakkam at `250 - per sq.ft. and valuing land which falls in Sholinganallur Village at `750 per sq.ft. Referring to comparable sale instances, Ld.counsel submitted that land of 2.14 acres adjacent to assessee s land, was sold for `2,14,00,000 - at `100 lakhs per acre. assessee, in fact, gave copy of registered sale deed to Departmental Valuation Officer. Departmental Valuation Officer however, rejected comparable sale instance suggested by assessee on ground that value adopted under Section 47A of Stamp Act cannot be made applicable to assessee. According to Ld. counsel, when document was referred to Collector for determination of market value and market rate was adopted under Section 47A of Stamp Act, Departmental Valuation Officer cannot say that value determined under Stamp Act cannot be applied to assessee. According to Ld. counsel, value determined by Collector under Section 47A of Stamp Act is equally applicable while determining fair market value of assessee s land. Therefore, according to Ld. counsel, valuation adopted by Departmental Valuation officer at rate of `750 - per sq.ft. at Sholinganallur Village is not justified. 6 I.T.A. No.2058 Mds 16 6. On contrary, Shri A.V. Sreekanth, Ld. Departmental Representative, submitted that assessee sold 2.02 acres of land on 25.03.2011 for sum of `2,20,00,000 - to Surana Corporation. fair market value was determined by adopting value declared by assessee at `2,20,00,000 -. property was situated at Perumbakkam Village. On same day, assessee also executed another document in respect of property at Sholinganallur Village for sale consideration of `5,74,12,000 -. However, registration authorities determined fair market value of land at Sholinganallur at `13,37,43,000 -. According to Ld. D.R., assessee claimed before Assessing Officer that what was sold by assessee is agricultural land, therefore, it cannot be capital asset. Assessing Officer found that distance between Sholinganallur property and Perumbakkam municipality was approximately 13.5 KMs. However, Sholinganallur had population of 15,519 as on 2001 Census. Therefore, according to Ld. D.R., Assessing Officer rejected claim of assessee and levied capital gain tax. 7. Referring to claim of assessee that agricultural income was disclosed in earlier assessment years, Ld. D.R. 7 I.T.A. No.2058 Mds 16 submitted that assessee has disclosed only meagre income from agriculture. Therefore, Assessing Officer treated income disclosed as agricultural income as non-agricultural income and brought same for taxation under head other sources . Referring to order of CIT(Appeals), Ld. D.R. submitted that Revenue authorities classified land as dry land, and there is no evidence of cultivation of land by assessee. Moreover, comparable instance reported by assessee was rejected on ground that value was determined under Section 47A of Stamp Act. According to Ld. D.R., fair market value determined under Section 47A of Stamp Act cannot be basis for computing fair market value under Section 50C of Act. Therefore, according to Ld. D.R., CIT(Appeals) has rightly confirmed order of Assessing Officer. 8. We have considered rival submissions on either side and perused relevant material available on record. Admittedly, assessee has sold property at Perumbakkam Village and Sholinganallur Village. Sholinganallur property was to extent of 4.09 acres and Perumbakkam Village property was of 2.02 acres. assessee claims that both lands are adjacent to 8 I.T.A. No.2058 Mds 16 each other and they form part of single piece of land. assessee claims that sale consideration of Sholinganallur property was `5,73,67,520 - which comes to nearly `215 - per sq.ft. Perumbakkam Village land was sold for `2,20,00,000 - which comes to `250 per sq.ft. There is no dispute with regard to valuation adopted by authorities below in respect of Perumbakkam Village. valuation adopted by Revenue authorities in respect of Sholinganallur property was disputed by assessee. 9. first contention of assessee is that land in question is agricultural land, therefore, it cannot be considered to be capital asset. Admittedly, land in question was classified as dry land. No doubt, dry land can also be subjected to cultivation. adangal extract produced by assessee does not disclose indicate any cultivation. Therefore, this Tribunal is of considered opinion that when land was classified as dry land in revenue records, and adangal extract does not indicate any cultivation of crop, it cannot be considered to be agricultural land at all for purpose of Income-tax Act. matter would stand in different footing if land was classified as wet land by State Revenue 9 I.T.A. No.2058 Mds 16 authorities. When it was specifically classified as dry land, it is for assessee to produce necessary material that land was under cultivation. One of basic document to prove cultivation is adangal extract. Since adangal extract does not disclose any cultivation, this Tribunal is of considered opinion that land in question cannot be considered to be as agricultural land. Therefore, it has to be treated as capital asset. 10. Now coming to valuation, as observed earlier, in respect of Perumbakkam Village, there is no dispute about value adopted by Valuation Officer and Assessing Officer. dispute is with regard to property at Sholinganallur. assessee has produced copy of sale deed to indicate that sale consideration disclosed by assessee is fair market value. This comparable document produced by assessee was rejected by authorities below and Valuation Officer on ground that fair market value was determined by appellate authority under Section 47A of Stamp Act. This Tribunal is of considered opinion that guideline value prescribed by authorities is only to guide registration authorities to determine fair market value. Sub-Registrar or registration authority 10 I.T.A. No.2058 Mds 16 has to determine fair market value by taking guideline value as one of factors. fair market value would depend upon various factors such as location of property, area of property, potentiality for future development, infrastructure facility available around area and infrastructure facilities such as airport, railway station, bus stand, etc. Therefore, guideline value as such cannot be considered to be fair market value. 11. We have carefully gone through provisions of Section 50C of Act. Section 50C clearly says that when consideration received by assessee for transfer of capital asset is less than value adopted or assessed by authorities under Stamp Act, matter can be referred to Valuation Officer. Therefore, guideline value can be one of factor for determining fair market value under Section 50C of Act. Even Section 50C of Act clearly says that value adopted by stamp authorities has to be taken as market value or full value of consideration for transfer of property. In case before us, authorities below has taken guideline value of Sub-Registrar and not fair market value. Of course, guideline value was 11 I.T.A. No.2058 Mds 16 higher than sale consideration said to be received by assessee. 12. question arises for consideration is can authorities below, including Valuation Officer, ignore sale instance on ground that value was adopted by appellate authority under Section 47A of Stamp Act? This Tribunal is of considered opinion that fair market value determined by appellate authority under Section 47A of Stamp Act is also one of valuations which cannot be rejected merely because same was determined under Section 47A of Stamp Act. Moreover, sale instance referred by Departmental Valuation Officer was in respect of sale of property to extent of `2400 - per sq.ft. of land. In case before us, what was sold by assessee is to extent of 2,66,151 sq.ft. Therefore, comparison made by Departmental Valuation Officer between 2400 sq.ft. and 2,66,151 sq.ft. is not justified. comparison has to be made in respect of similarly placed property. By taking into consideration of location of property and comparable sale instance, this Tribunal is of considered opinion that value adopted for Perumbakkam property has to be adopted for 12 I.T.A. No.2058 Mds 16 Sholinganallur property also. This Tribunal is of considered opinion that report of Valuation Officer and report of Registered Valuer and sale comparable instance mentioned by assessee and District Valuation Officer clearly establish that Sholinganallur property cannot fetch more than `250 per sq.ft. Therefore, value adopted by Assessing Officer at ` 750 per sq.ft. is highly exorbitant. Accordingly, while confirming finding of authorities below that land in question is capital asset and valuation of Perumbakkam property at `250 per sq.ft., orders of authorities below fixing value of Sholinganallur property at `750 - per sq.ft. is set aside Assessing Officer is directed to adopted value of Sholinganallur property also at `250 per sq.ft. 13. In result, appeal filed by assessee is partly allowed. Order pronounced on 23rd September, 2016 at Chennai. sd - sd - (A. Mohan Alankamony) (N.R.S. Ganesan) Accountant Member Judicial Member Chennai, rd Dated, 23 September, 2016. Kri. 13 I.T.A. No.2058 Mds 16 Copy to: 1. Appellant 2. Respondent 3. ( ) CIT(A)-13, Chennai 4. Principal CIT-8, Chennai-34 5. DR 6. GF. Ramu subbiah v. Assistant Commissioner of Income-tax, Non-Corporate Circle – 12, Chennai
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