IN THE ITAT COCHIN BENCH
Deputy Commissioner of Income-tax
IT APPEAL NOS. 606 (COCH.) OF 2011 & 131 (COCH.) OF 2012
[ASSESSMENT YEAR 2008-09]
DECEMBER 21, 2012
N.R.S. Ganesan, Judicial Member
Both the appeals of the two independent taxpayers are directed against the independent orders of the Commissioner of Income-tax(A)-III, Kochi dated 27-10-2011 and 30-04-2012 respectively for the assessment year 2008-09.
2. The first issue arises for consideration is the fair market value as on 01-04-1981 for the purpose of computation of capital gain. Shri T.M. Sreedharan, the ld. senior counsel for the taxpayers submitted that the taxpayers adopted the fair market value as on 01-04-1981 at Rs. 5,588 per cent. However, the assessing officer on the basis of the letter said to be received from Sub Registrar has fixed the fair market value at Rs.466 per cent. This was confirmed by the Commissioner of Income-tax(A). According to the ld. senior counsel in the case of one Shri C.R. Ravindran Nair, whose land was situated next to that of the taxpayers , the fair market value was adopted at Rs.2,300 per cent as on 01-04-1981. Therefore, the value fixed by the lower authorities at Rs.466 per cent is very low.
3. On the contrary, Smt. S Vijayaprabha, the ld. DR submitted that the taxpayers have accepted in the statement recorded u/s 131 that he purchased the land in the year 1978 at an approximate cost of Rs.1,000 per cent. The Sub Registrar, Trivandrum in his letter dated 30-11-2007 informed the assessing officer that the fair market value as on 01-04-1987 was at Rs. 466 per cent. This value was adopted by the assessing officer. Referring to the assessment order of Shri C.R. Ravindran Nair, the ld. DR submitted that it is not known where exactly the land was situated. According to the ld. DR it may be on the National Highway. Therefore, the value adopted in the case of Shri C.R. Ravindran Nair may not be applicable in the present case.
4. We have considered the rival submissions on either side and also perused the material available on record. The only dispute is with regard to the fair market value as on 01-04-1981. Wherever the land was acquired prior to 01-04-1981 the taxpayers are given option to adopt the fair market value as on 01-04-1981 as the basis for computing the capital gain. It is not in dispute that the property was acquired in the year 1978 by the taxpayers. Therefore, the taxpayers opted to adopt the market value as on 01-04-1981. It is well settled principles of law that fair market value is nothing but a price that probably may be agreed between a willing purchaser and a willing seller. The fair market value may fluctuate depending upon the area of the land, location, accessability to the infrastructure facilities, potentiality for future development, etc. Therefore, for the purpose of estimating the fair market value as on 01-04-1981 we have to take into consideration the locality in which the land is situated, the accessability to infrastructure facilities, comparative sale instances in the locality, potentiality for future development, distance between the land and the bus stand, railways station, air port, etc. The guideline value fixed by the Sub Registrar is only a guideline value to ascertain the market value. The guideline value fixed by the government to guide the Sub Registrar may be a basis for fixing the formal market value for collection of stamp duties. Therefore, though the guideline value fixed by the government to guide the Sub Registrar may be one of the factors to be taken into consideration for estimating the fair market value, however, it cannot be the sole basis for fixing the fair market value as on 01-04-1981. In the case before us the assessing officer has taken the fair market value as on 01-04-1981 fixed by the government as sole basis for taking the fair market value. The taxpayers now claim that in the case of the neighbour Shri C.R. Ravindran Nair, the fair market value as on 01-04-1981 was fixed at Rs.2,300. If the land is nearer to the taxpayer’s land and it was similarly located then this also has to be taken into consideration while fixing the fair market value. Unfortunately, all these facts were not considered by the assessing authority. Therefore, this Tribunal is of the considered opinion that the assessing officer has to reconsider the issue in the light of all factors mentioned above and thereafter take a decision. Accordingly the orders of the lower authorities are set aside and the issue is remitted back to the file of the assessing officer. The assessing officer shall reconsider the issue afresh in the light of the factors referred above and thereafter determine the fair market value as on 01-04-1981 after providing opportunity of hearing to the taxpayer.
5. The next issue is with regard to exemption u/s 54, 54F and 54EC. We have heard the ld. senior counsel and the ld. DR. Admittedly, the taxpayers have deposited the amount in the fixed deposit in State Bank of Travancore, Pettah Branch, Trivandrum. The amount was not deposited in the capital gain bond. The claim of the taxpayers before this Tribunal is that the money was intended to be deposited in the capital gain bond. However, the bank deposited the amount in the fixed deposit. We are unable to accept the claim of the taxpayers. The legislature has framed the scheme for the purpose of giving exemption from the capital gain tax by asking the taxpayer to deposit the amount in the capital gain bond scheme. Therefore, if the taxpayer wants to take benefit of the scheme the money has to be deposited in the capital gain bond. Deposit of money in the fixed deposit cannot be construed as deposit in the capital gain bond. If at all there was any negligence on the part of the bank then it is open to the taxpayer to claim damages against the bank for the negligence, if any, committed by the officials of the bank. However, under the Income-tax Act, since the money was not deposited in the capital gain bond, the taxpayers are not eligible for exemption at all. Therefore, the orders of lower authorities are confirmed.
6. The next issue is with regard to indexed cost of improvement. We heard the ld. senior counsel for the taxpayer and the ld. DR. On the inspection of the land, the revenue authorities found that no improvement was undertaken by the taxpayers. No material is available on record to suggest that the taxpayer has undertaken any improvement in the land. In the absence of any material evidence mere oral statement cannot be a basis for allowing the claim of the taxpayers. Therefore, we do not find any infirmity in the orders of the lower authority. Accordingly, the same are confirmed.
7. In the result, the appeal of the taxpayer is partly allowed for statistical purpose.