1975-VIL-02-ITAT-DEL

Equivalent Citation: TTJ 010, 347,

Income Tax Appellate Tribunal DELHI

Date: 04.12.1975

INCOME TAX OFFICER.

Vs

NAWAB MOHD. MANSUR ALI KHAN

BENCH

Member(s)  : G. Krishnamurthy.

JUDGMENT

2. On appeal, the AAC determined the value of the land at Rs. 150 per sq. yd. and on that basis computed the capital gains at Rs. 1,95,450. The assessee is in appeal urging that the adoption of the price of land at Rs. 150 per sq. yd. was highly excessive in utter disregard of other comparable instances of sale and no capital gains actually arose to the assessee. The Department is in appeal contending that the AAC had no basis to reduce the value of the land from Rs.200 per sq. yd. to Rs. 150 per sq. yd.

3. After hearing both the parties at length, we have come to the conclusion that the AAC had clearly erred in adopting the value of the land at Rs. 150 per sq. yd. The AAC observed in paragraphs 3 and 4 under:

"3. The arguments as advanced by the authorised representative of the appellant before my collegue and before the Tribunal were repeated and some instances were also given wherein the value of the plots sold was at the much lower figure. The ITO was accordingly confronted with this evidence, i.e. the sales made wherein the price varied between Rs. 27 to Rs. 40 per sq. yd. On the other hand the ITO also quoted certain transactions wherein the sales were made at a higher figure. It is again not disputed that the WTO had estimated the value of these plots in Chankyapuri at Rs. 200 per sq. yd., which were not disputed in appeal. I further find that the appellant sold two properties, namely 19, Sardar Patel Marg and 20, Sardar Petal Marg which were constructed on the land as allotted by the Government. I further find that the instances quoted by the appellant regarding the sales transactions are in respect of very small plots situated inside the colony and not on the main road.

4. After hearing Shri Chawla, the authorised representative of the appellant and also Shri S.S. Malik the ITO, I am of the view that the fair market value of the plots of land as on the date of allotment would be Rs. 150 per sq. yd. (the Land and Development Officer has estimated the fair value of Rs. 175 per sq.yd. when the sales took place.) The capital gain is accordingly computed as under:

This should be substituted for Rs. 5,97,150."

It will be seen from the above that the instances of sales pointed by the assessee at the relevant time varied between Rs. 27 and Rs. 40 per sq. yd. except for the solitary instance of the sale of Rs. 150 sq. yd., that too on26th Nov., 1968, roughly seven years after the allotment. Neither the AAC nor the ITO has been able to point out as to how the instances cited by the assessee were incomparable. For what is more, those prices were for much smaller plots and that too admittedly for plots and that too admittedly for plots lying interior, whereas the assessee’s plots lying interior, whereas the assessee's plots are on the main road and a very large area. The plot with a smaller area will always fetch a higher price than a plot that has large area as 9,200 sq. yds. This natural course of market forces appear to have been totally ignored. That a part, the order of the AAC would show that, in fixing the value at Rs.150 per sq. yd. he was influenced by the sale of the plot that took place on26th Nov., 1968worked out by the ITO at Rs. 150 per sq.yd. This has been wrongly worked out. The correct price would come to Rs. 105 per sq.yd. Even if it is held that the transaction of the sale of 31,Saradar Patal Roadis more comparable than the other instances pointed out by the assessee, still the average rate of this plot worked out to only Rs. 105 per sq.yd. and not Rs. 150 as appears to have been wrongly supposed by the AAC. If we adopt the correct price of Rs. 105 as the price obtaining seven years earlier still there would be no capital gain at all. In this view of the matter and in view of the fact that the other instances pointed out by assessee were not shown to be incomparable, we have come to the above conclusion that the AAC clearly erred in adopting the market value of this plot at Rs. 150 per sq.yd. We are not called upon to recompute the capital gains or loss. For the present purpose, it will be sufficient for us if we hold that there is no justification for the adoption of the value of the land at Rs. 150 per sq. yd. If the land value is taken at Rs. 105 per sq.yd. there will be a capital loss but as observed earlier, it is not the case of either party that we should compute capital loss. We, therefore, hold that on the facts and circumstances of the case, there is no capital gains because the sale value of the land was erroneously adopted by the AAC at a far higher figure of Rs. 150 per sq.yd. which was not at all the market price ruling at the relevant time.

4. This means, the assessee's appeal succeeds and the Departmental appeal fails and is dismissed.

 

DISCLAIMER: Though all efforts have been made to reproduce the order accurately and correctly however the access, usage and circulation is subject to the condition that VATinfoline Multimedia is not responsible/liable for any loss or damage caused to anyone due to any mistake/error/omissions.