Wto Vs. Surender Singh - Court Judgment

Excerpt:
counsels: g.r meghwal, for the revenue satya deo saraf, for the assessee head note: income tax wealth tax valuation--plot of landcomparable sale instances catch note: authorised valuation officer valued assessee's plot on basis of built-up plot in another locality, instead of sale instance of land in vicinity of assessee's plot--assessee contended that valuation should be made on basis of sale instance of plot of same vicinity given by him and also deduction of 18 per cent for his plot should be allowed to him because of irregular size of his plot--court held that plot quoted by assesese was similar plot as comparable with assessee's own plot, so authorised valuation officer is directed to value the plot on the basis of sale instance of plot in vicinity cited by assessee without any adjustment on account of location and shape of plot. ratio: value of open plot of land should not be decided on basis of built-up plot in another locality disregarding sale instances of plot which was in vicinity of assessee's plot, so assessing officer directed to determine value on basis of above comparable sale instances in same locality. held: the assessee is owner of three plots the value of which has been determined by the authorised valuation officer on the basis of a sale instance of a constructed plot, i.e., a building situated opposite to assessee's plot. for the purpose of valuation of land the established principle of comparable cases of the vicinity should be followed. the authorised valuation officer has not relied upon any sale instance of the same vicinity and he has compared a built-up plot with open plot whereas the assessee has quoted a sale instance of the same locality. instance of sale should be of similar plot of land in similar locality. instance of plots in different areas cannot be compared when the sale instance comparable with the same area is filed by the transferee. price of a plot of land which has been built upon cannot compare favourable with that of an unbuilt area. therefore, the authorised valuation officer and the wealth tax officer/commissioner of wealth tax (appeals) should have decided the case on the basis of sale instance of the plot of the same vicinity given by the assessee. the learned authorised representative while comparing the deduction of valuation with plot of sale instance has asked for deduction of 25 per cent as the plot was a corner plot and he has also asked deduction of 18 per cent for his plot being of irregular size. these two plots are situated in the same locality. therefore, no such deductions can be allowed. however, the assessing officer is directed to adopt the value of these three plots on the basis of sale instance. case law analysis: cwt v. miss (dr.) vinay rae (1994) 75 taxman 600 (raj) followed. cit v. leatherite industries ltd. (1984) 147 itr 655 (p&h) and mani singh avtar singh v. iac (acqn.) (1985) 151 itr 233 (p&h) applied application: also to current assessment year. decision: partly in favour of assessee. wealth tax act 1957 s.7 in the itat, jodhpur bench s.r. chauhan, j.m. & b.l. khatri, a.m. - - this best comparable case has been ignored though claim was made before the authorised valuation officer. ) vinay rai (1994) 120 ctr (raj) 389, valuation made ignoring the best comparable case was not valid. 14 giving credit and debit for the factors like plot being of irregular size whereas the sale instance of plot no. it means that the authorised valuation officer had not seen the sale deed and the entire exercise was without any basis and unreliable.orderb.l. khatri, a.m.in this case the revenue has filed three appeals against the order of commissioner of wealth tax (appeals), jodhpur, for assessment years 1987-88, 1988-89 and 1990-91, and the assessee has also filed c.os. for all the three assessment years, i.e., assessment years 1987-88, 1988-89 and 1990-91. for assessment years 1987-88 the revenue agitated on the ground that the commissioner of wealth tax (appeals) was not justified in disposing of the appeal by observing that whatever final position remains in assessment year 1988-89, the same proportionate value will be followed for assessment year 1987-88. for assessment year 1988-89 the revenue agitated on the ground that the commissioner of wealth tax (appeals) erred in setting aside the assessment by placing reliance on the order for assessment year 1987-88 wherein reference was made to the future decision of this year. for assessment year 1990-91, the revenue agitated on the ground that the commissioner of wealth tax (appeals) erred in directing the assessing officer that whatever position remains in assessment year 1989-90 the same will be followed for this year also with regard to the valuation of three plots situated at ramesh nagar, delhi.2. for all three years, the assessee has given the following grounds of cross-objections :(1) the learned commissioner of wealth tax (appeals) erred in not considering and appreciating the submissions made by the assessee and further erred in not deciding the appeal on merit.(2) the learned commissioner (appeals) also erred in directing the wealth tax officer to valuate the three plots of late s. gurbax singh at ramesh nagar, new delhi, on the basis of comparable sale of plot no. 14/10, corner plot in ramesh nagar which is quite in proximity and quite comparable.(3) the valuation of assessee's three plots on the basis of sale of that plot with plus and minus points worked at about rs. 5,50,000 and the learned commissioner of wealth tax (appeals) should have directed the wealth tax officer to value the plots on that basis.3. in all the three appeals and in all the three cross-objections for all the three years, the common point of dispute is regarding valuation of three plots at ramesh nagar, new delhi. therefore, all these appeals and c.0s. are being decided through a consolidated order.4. the learned departmental representative relied upon the orders of the assessing officer.5. the learned authorised representative filed detailed written submissions. the authorised valuation officer valued the property on the basis of a built-up property no. j-3/133, rajori garden, new delhi, built on 133.78 square meters freehold plot which was alleged to have been sold on 19-9-1986, for rs. 11 lakhs. the authorised valuation officer deducted the cost of built-up superstructure at rs. 2,65,000 and arrived at the sale price of the land at rs. 9,35,000 giving per square metres rate of rs. 6,242. the authorised valuation officer determined the value of this property at rs. 18,99,420 as on 31-3-1988. therefore, for assessment year 1988-89 the wealth tax officer has adopted the value of three plots at rs. 18,99,420 as determined by the authorised valuation officer. for assessment year 1987-88 the wealth tax officer has also followed this valuation report. however, keeping in view the increase in prices he estimated the fair market value for assessment year 1987-88 at rs. 17 lakhs, for assessment year 1990-91 he has estimated the same value as per assessment year 1988-89, i.e., rs. 18,99,420 as determined by the authorised valuation officer.6. while adopting the fair market value of these plots on different dates, the assessing officer did not consider the objection of the assessee. the learned authorised representative submitted that the authorised valuation officer in his report had not denied the fact of sale of plot no. 14 in the same block no. 10 of ramesh nagar which was within 200 yards from the assessee's plot and 7th plot after last plot no. 7 of the assessee. it is not denied that it was sold as plot and had the same advantages and disadvantages and was similarly situated. this best comparable case has been ignored though claim was made before the authorised valuation officer. in view of the hon'ble supreme court decision in r.c. cooper v. union of india : [1970]3scr530 and hon'ble rajasthan high court decision in cwt v. miss (dr.) vinay rai (1994) 120 ctr (raj) 389, valuation made ignoring the best comparable case was not valid.7. in co the assessee has prayed that the valuation as made by the wealth tax officer was against the principles of valuation enunciated by the hon'ble supreme court in r.c. cooper v. union of india (supra) and hon'ble rajasthan high court decision in cwt v. mss (dr.) vinay rai (supra).8. the assessee's three plots nos. 5, 6 and 7 were in block no. 10 of ramesh nagar, new delhi. while two plots were of irregular size, one plot had depth of 60 feet while it was only 15 feet wide. during the course of assessment proceedings and also before the commissioner (appeals) in all the appeals, the assessee had filed photostat copy of the sale deed of plot no. 14 situated in the same block no. 10 of ramesh nagar in the immediate vicinity having same advantages and disadvantages and covered by the same rules of limits of construction. all the plots were leasehold plots which were allotted to the persons migrated from pakistan after partition. the sale deed of plot no. 14, copy of which is at pages 18 to 22 of paper book reveals that it was a plot of 200 square yard and was a corner plot and was sold for consideration of rs. 2,50,000 vide sale deed registered on 12-8-1985. vide submissions dated 6-7-1994, the assessee had prayed that the valuation of assessee's plots to be made on the basis of sale of the plot no. 14 giving credit and debit for the factors like plot being of irregular size whereas the sale instance of plot no. 14 being a corner plot and the sale being about 19 months prior to valuation date for the assessment year 1987-88. the working given in that submission appearing at page 8 of the paper book would show that on comparison with that sale, the value of the assessee's three plots would be about rs. 5 lakhs for assessment year 1987-88 and about rs. 5.50 lakhs for the later assessment years.9. though with letter dated 24-5-1989, the assessee had filed with the authorised valuation officer, new delhi, photostat copy of the sale deed of plot no. 14 and requested him to determine the fair market value of the plots on the basis of that comparable sale instance the avo had ignored the comparable sale.10. the authorised valuation officer has valued the assessee's plots on the basis of sale of property no. j-3/133, rajori garden, new delhi. the authorised valuation officer had admitted that reference of this sale was recorded in his office. it means that the authorised valuation officer had not seen the sale deed and the entire exercise was without any basis and unreliable. rajouri garden, new delhi, is a different locality and there was no comparison with the plots of the assessee which are in ramesh nagar. the learned authorised representative submitted that the authorised valuation officer had not supplied a copy of sale deed of comparable case and the valuation report based on that sale was in violation of natural justice. he referred to the case of sona builders v. union of india : [2001]251itr197(sc) . in this case it was held that the appropriate authority gave most inadequate time to the appellant and no copy of document relating to the sale instance was furnished by the appropriate authority to the appellant along with notice or at any time whatsoever. the court held that on both the counts there had been gross breach of principle of natural justice. the authorised valuation officer has submitted that no reliance can be placed on the registered sale deed of sale instance in view of delhi admn's land & building department's letter dated 3-5-1990. the learned authorised representative submitted that it is suffice to say that the sale consideration shown in the registered sale deed is real unless otherwise proved. the apparent is real unless otherwise proved. the sale consideration was accepted by the sub-registrar for the purpose of registration and stamp duty and even the income tax officer assessing the seller s. inder singh accepted the sale consideration for the purpose of capital gain. the seller is assessed to income-tax in ward-a, sriganganagar, and the return of income for the relevant year had been accepted. at the end the learned authorised representative requested that the issue should be decided on merit and the following value on the basis of sale instance may be adopted :comparable sale instance of 200 square yard plotsale price rs. 2.5 lakhsrate comes to rs. 1,250 per square yardless : (1) the plot no. 14/10 was a corner plot having 25 per cent higher value as compared to two side open plots (-)25 per cent(2) for irregular size (-)18 per cent(3) the sale of plot no. 14/10 was in aug., 1985 while valuation date for 1987-88 is 31-3-1987 rise in value @ 12 per cent per annum for 19 months (+)19 per centnet(-)24 per centthe value will be 1,250x761100, i.e., rs. 950 per square yard or about rs. 1,220 per square metervalue rs. 4,58,000.11. we have considered the rival submissions. we have perused the records. the assessee is owner of three plots in ramesh nagar, new delhi, the value of which has been determined by the authorised valuation officer on the basis of a sale instance of a constructed plot, i.e., a building situated in rajouri garden. rajouri garden is opposite to ramesh nagar. the learned authorised representative has relied upon the case of cit v. miss (dr.) vinay rai (supra). in this case it was held that for the purpose of valuation of land the established principle of comparable cases of the vicinity should be followed. we find that the authorised valuation officer has not relied upon any sale instance of the same vicinity and he has compared a built-up plot with open plot whereas the assessee has quoted a sale instance of the same locality. instance of sale should be of similar plot of land in similar locality. it was thus held in the case of cit v. leatherite industries ltd. . instance of plots in different areas cannot be compared when the sale instance comparable with the same area is filed by the transferee. it was also thus held that in the case of mani singh avtar singh v. iac (acqn.) . in this case it was also held that price of a plot of land which has been built upon cannot compare favourable with that of an unbuilt area. therefore, we hold that the authorised valuation officer and the wealth tax officer/commissioner of wealth tax (appeals) should have decided the case on the basis of sale instance of the plot of the same vicinity given by the assessee. the learned authorised representative while comparing the deduction of valuation with plot of sale instance has asked for deduction of 25 per cent as the plot no. 14/ 10 was a corner plot and he has also asked deduction of 18 per cent for his plot being of irregular size. we are of the opinion that these two plots are situated in the same locality, that is, ramesh nagar. therefore, no such deductions can be allowed. however, we direct the assessing officer to adopt the value of these three plots on the basis of sale instance as under :rs.area of plot no. 14/10 at ramesh nagar 449 suare yard 1,250 5,61,250the sale of plot no. 14110 was in august, 1985 where valuation date of assessment year 1987-88 is 31-3-1987, rise in value @ 12 per cent per annum for 19 months, i.e., 9 per cent 1, 06,637as on 31-3-1987 (assessment year 1987-88) 6,67,687the value of the above plot with 12 per cent increase in assessment year 1988-89 comes to rs. 7,48,033. in this way, the value of the above plot with 12 per cent increase in assessment year 1990-91 comes to rs. 9,38,333. therefore, the wealth tax officer is directed to allow necessary relief to the assessee for all the three years. this also disposes of the three c.os. of the assessee.12. in the result, the appeals for all the three years by the revenue are allowed in part and the c.os. of the assessee are allowed in part.

Judgment:
ORDER

B.L. Khatri, A.M.

In this case the revenue has filed three appeals against the order of Commissioner of Wealth Tax (Appeals), Jodhpur, for assessment years 1987-88, 1988-89 and 1990-91, and the assessee has also filed C.Os. for all the three assessment years, i.e., assessment years 1987-88, 1988-89 and 1990-91. For assessment years 1987-88 the revenue agitated on the ground that the Commissioner of Wealth Tax (Appeals) was not justified in disposing of the appeal by observing that whatever final position remains in assessment year 1988-89, the same proportionate value will be followed for assessment year 1987-88. For assessment year 1988-89 the revenue agitated on the ground that the Commissioner of Wealth Tax (Appeals) erred in setting aside the assessment by placing reliance on the order for assessment year 1987-88 wherein reference was made to the future decision of this year. For assessment year 1990-91, the revenue agitated on the ground that the Commissioner of Wealth Tax (Appeals) erred in directing the assessing officer that whatever position remains in assessment year 1989-90 the same will be followed for this year also with regard to the valuation of three plots situated at Ramesh Nagar, Delhi.

2. For all three years, the assessee has given the following grounds of cross-objections :

(1) The learned Commissioner of Wealth Tax (Appeals) erred in not considering and appreciating the submissions made by the assessee and further erred in not deciding the appeal on merit.

(2) The learned Commissioner (Appeals) also erred in directing the Wealth Tax Officer to valuate the three plots of Late S. Gurbax Singh at Ramesh Nagar, New Delhi, on the basis of comparable sale of plot No. 14/10, corner plot in Ramesh Nagar which is quite in proximity and quite comparable.

(3) The valuation of assessee's three plots on the basis of sale of that plot with plus and minus points worked at about Rs. 5,50,000 and the learned Commissioner of Wealth Tax (Appeals) should have directed the Wealth Tax Officer to value the plots on that basis.

3. In all the three appeals and in all the three cross-objections for all the three years, the common point of dispute is regarding valuation of three plots at Ramesh Nagar, New Delhi. Therefore, all these appeals and C.0s. are being decided through a consolidated order.

4. The learned Departmental Representative relied upon the orders of the assessing officer.

5. The learned authorised representative filed detailed written submissions. The Authorised Valuation Officer valued the property on the basis of a built-up property No. J-3/133, Rajori Garden, New Delhi, built on 133.78 square meters freehold plot which was alleged to have been sold on 19-9-1986, for Rs. 11 lakhs. The Authorised Valuation Officer deducted the cost of built-up superstructure at Rs. 2,65,000 and arrived at the sale price of the land at Rs. 9,35,000 giving per square metres rate of Rs. 6,242. The Authorised Valuation Officer determined the value of this property at Rs. 18,99,420 as on 31-3-1988. Therefore, for assessment year 1988-89 the Wealth Tax Officer has adopted the value of three plots at Rs. 18,99,420 as determined by the Authorised Valuation Officer. For assessment year 1987-88 the Wealth Tax Officer has also followed this valuation report. However, keeping in view the increase in prices he estimated the fair market value for assessment year 1987-88 at Rs. 17 lakhs, For assessment year 1990-91 he has estimated the same value as per assessment year 1988-89, i.e., Rs. 18,99,420 as determined by the Authorised Valuation Officer.

6. While adopting the fair market value of these plots on different dates, the assessing officer did not consider the objection of the assessee. The learned authorised representative submitted that the Authorised Valuation Officer in his report had not denied the fact of sale of plot No. 14 in the same block No. 10 of Ramesh Nagar which was within 200 yards from the assessee's plot and 7th plot after last plot No. 7 of the assessee. It is not denied that it was sold as plot and had the same advantages and disadvantages and was similarly situated. This best comparable case has been ignored though claim was made before the Authorised Valuation Officer. In view of the Hon'ble Supreme Court decision in R.C. Cooper v. Union of India : [1970]3SCR530 and Hon'ble Rajasthan High Court decision in CWT v. Miss (Dr.) Vinay Rai (1994) 120 CTR (Raj) 389, valuation made ignoring the best comparable case was not valid.

7. In Co the assessee has prayed that the valuation as made by the Wealth Tax Officer was against the principles of valuation enunciated by the Hon'ble Supreme Court in R.C. Cooper v. Union of India (supra) and Hon'ble Rajasthan High Court decision in CWT v. Mss (Dr.) Vinay Rai (supra).

8. The assessee's three plots Nos. 5, 6 and 7 were in block No. 10 of Ramesh Nagar, New Delhi. While two plots were of irregular size, one plot had depth of 60 feet while it was only 15 feet wide. During the course of assessment proceedings and also before the Commissioner (Appeals) in all the appeals, the assessee had filed photostat copy of the sale deed of plot No. 14 situated in the same block No. 10 of Ramesh Nagar in the immediate vicinity having same advantages and disadvantages and covered by the same rules of limits of construction. All the plots were leasehold plots which were allotted to the persons migrated from Pakistan after partition. The sale deed of plot No. 14, copy of which is at pages 18 to 22 of paper book reveals that it was a plot of 200 square yard and was a corner plot and was sold for consideration of Rs. 2,50,000 vide sale deed registered on 12-8-1985. Vide submissions dated 6-7-1994, the assessee had prayed that the valuation of assessee's plots to be made on the basis of sale of the plot No. 14 giving credit and debit for the factors like plot being of irregular size whereas the sale instance of plot No. 14 being a corner plot and the sale being about 19 months prior to valuation date for the assessment year 1987-88. The working given in that submission appearing at page 8 of the paper book would show that on comparison with that sale, the value of the assessee's three plots would be about Rs. 5 lakhs for assessment year 1987-88 and about Rs. 5.50 lakhs for the later assessment years.

9. Though with letter dated 24-5-1989, the assessee had filed with the Authorised Valuation Officer, New Delhi, photostat copy of the sale deed of plot No. 14 and requested him to determine the fair market value of the plots on the basis of that comparable sale instance the AVO had ignored the comparable sale.

10. The Authorised Valuation Officer has valued the assessee's plots on the basis of sale of property No. J-3/133, Rajori Garden, New Delhi. The Authorised Valuation Officer had admitted that reference of this sale was recorded in his office. It means that the Authorised Valuation Officer had not seen the sale deed and the entire exercise was without any basis and unreliable. Rajouri Garden, New Delhi, is a different locality and there was no comparison with the plots of the assessee which are in Ramesh Nagar. The learned authorised representative submitted that the Authorised Valuation Officer had not supplied a copy of sale deed of comparable case and the valuation report based on that sale was in violation of natural justice. He referred to the case of Sona Builders v. Union of India : [2001]251ITR197(SC) . In this case it was held that the appropriate authority gave most inadequate time to the appellant and no copy of document relating to the sale instance was furnished by the appropriate authority to the appellant along with notice or at any time whatsoever. The court held that on both the counts there had been gross breach of principle of natural justice. The Authorised Valuation Officer has submitted that no reliance can be placed on the registered sale deed of sale instance in view of Delhi Admn's Land & Building Department's letter dated 3-5-1990. The learned authorised representative submitted that it is suffice to say that the sale consideration shown in the registered sale deed is real unless otherwise proved. The apparent is real unless otherwise proved. The sale consideration was accepted by the sub-registrar for the purpose of registration and stamp duty and even the Income Tax Officer assessing the seller S. Inder Singh accepted the sale consideration for the purpose of capital gain. The seller is assessed to income-tax in Ward-A, Sriganganagar, and the return of income for the relevant year had been accepted. At the end the learned authorised representative requested that the issue should be decided on merit and the following value on the basis of sale instance may be adopted :

Comparable sale instance of 200 square yard plotsale price Rs. 2.5 lakhsRate comes to

Rs. 1,250 per square yard

Less : (1) The plot No. 14/10 was a corner plot having 25 per cent higher value as compared to two side open plots

(-)25 per cent

(2) For irregular size

(-)18 per cent

(3) The sale of plot No. 14/10 was in Aug., 1985 while valuation date for 1987-88 is 31-3-1987 rise in value @ 12 per cent per annum for 19 months

(+)19 per cent

Net

(-)24 per cent

The value will be 1,250x761100, i.e., Rs. 950 per square yard or about Rs. 1,220 per square metervalue Rs. 4,58,000.

11. We have considered the rival submissions. We have perused the records. The assessee is owner of three plots in Ramesh Nagar, New Delhi, the value of which has been determined by the Authorised Valuation Officer on the basis of a sale instance of a constructed plot, i.e., a building situated in Rajouri Garden. Rajouri Garden is opposite to Ramesh Nagar. The learned authorised representative has relied upon the case of CIT v. Miss (Dr.) Vinay Rai (supra). In this case it was held that for the purpose of valuation of land the established principle of comparable cases of the vicinity should be followed. We find that the Authorised Valuation Officer has not relied upon any sale instance of the same vicinity and he has compared a built-up plot with open plot whereas the assessee has quoted a sale instance of the same locality. Instance of sale should be of similar plot of land in similar locality. It was thus held in the case of CIT v. Leatherite Industries Ltd. . Instance of plots in different areas cannot be compared when the sale instance comparable with the same area is filed by the transferee. It was also thus held that in the case of Mani Singh Avtar Singh v. IAC (Acqn.) . In this case it was also held that price of a plot of land which has been built upon cannot compare favourable with that of an unbuilt area. Therefore, we hold that the Authorised Valuation Officer and the Wealth Tax Officer/Commissioner of Wealth Tax (Appeals) should have decided the case on the basis of sale instance of the plot of the same vicinity given by the assessee. The learned authorised representative while comparing the deduction of valuation with plot of sale instance has asked for deduction of 25 per cent as the plot No. 14/ 10 was a corner plot and he has also asked deduction of 18 per cent for his plot being of irregular size. We are of the opinion that these two plots are situated in the same locality, that is, Ramesh Nagar. Therefore, no such deductions can be allowed. However, we direct the assessing officer to adopt the value of these three plots on the basis of sale instance as under :

Rs.

Area of plot No. 14/10 at Ramesh Nagar 449 suare yard 1,250

5,61,250

The sale of plot No. 14110 was in August, 1985 where valuation date of assessment year 1987-88 is 31-3-1987, Rise in value @ 12 per cent per annum for 19 months, i.e., 9 per cent

1, 06,637

As on 31-3-1987 (assessment year 1987-88)

6,67,687

The value of the above plot with 12 per cent increase in assessment year 1988-89 comes to Rs. 7,48,033. In this way, the value of the above plot with 12 per cent increase in assessment year 1990-91 comes to Rs. 9,38,333. Therefore, the Wealth Tax Officer is directed to allow necessary relief to the assessee for all the three years. This also disposes of the three C.Os. of the assessee.

12. In the result, the appeals for all the three years by the revenue are allowed in part and the C.Os. of the assessee are allowed in part.