ITAT allows 25% reduction in DLC Rate considering restriction on use of land, Section 50C addition deleted

Ajay Kumar Jain Vs ITO (ITAT Jaipur)

Introduction: In the case of Ajay Kumar Jain vs ITO, adjudicated by the Income Tax Appellate Tribunal (ITAT) Jaipur, a significant decision was made regarding the application of Section 50C of the Income Tax Act. The tribunal allowed a 25% reduction in the District Level Committee (DLC) Rate based on restrictions imposed on land use. This resulted in the deletion of the Section 50C addition. This article provides an analysis of the case details, arguments presented, and the final ruling by the ITAT.

Analysis: The case revolved around an assessee who sold a property at a certain consideration. The Assessing Officer (AO) invoked Section 50C, adding the difference between the sale consideration and the DLC rate as income. The assessee contested the valuation, highlighting the presence of an Indian Oil Corporation Limited (IOCL) gas pipeline passing through the land and additional restrictions imposed by the State Government. The appellant appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who directed the matter to the District Valuation Officer (DVO). The DVO valued the property at the same rate but did not grant the 25% reduction based on certain assumptions.

The appellant argued that the DVO overlooked the specific disadvantages related to the IOCL pipeline and state-imposed restrictions. The appellant’s valuer had justified a 25% reduction in the DLC rate. The appellant’s conduct in seeking valuation before the sale and agreeing with the valuation report supported their claim. The appellant emphasized that they were not attempting to evade Section 50C but were genuinely disadvantaged due to the land’s conditions.

Conclusion: Upon thorough examination of the facts, the ITAT concluded that the appellant’s claim of a 25% reduction in the DLC rate was reasonable and justifiable. The tribunal considered the disadvantageous conditions caused by the IOCL pipeline and government restrictions. This decision aligns with previous judicial precedents where similar disadvantages were recognized and relief was granted. Consequently, the Section 50C addition was deleted, acknowledging the legitimate impact of land use restrictions on property valuation.

FULL TEXT OF THE ORDER OF ITAT JAIPUR

This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 23/03/2023 [here in after (NFAC)] for assessment year 2013-14, which in turn arise from the order of the ITO Ward 5(2), Jaipur dated 13.01.2016 passed under 143(3) of the Income Tax Act, [ here in after referred to as Act ].

2. The assessee has marched this appeal on the following grounds:-

“1. That on the law and in the facts and in the circumstances of the case, the ld CIT(A) grossly erred in confirming the addition of Rs.44, 13,704/- made by the Id. Assessing Officer u/s 50C of the Act.

1.2. That on the law and in the facts and in the circumstances of the case the Id. CIT(A) grossly erred in not providing the opportunity of hearing and to submit objection on the valuation report dated 04.05.2018 issued by Divisional Valuation Officer.

1.3. That on the law and in the facts and in the circumstances of the case the ld. CIT(A) grossly erred in relying upon the valuation report 04.05.2018 issued by the Id. Divisional Valuation Officer without considering the drawback factor i.e. IOCL Gas Line passing through middle of the Land.

1.4. That on the law and in the facts and in the circumstances of the case the ld. DVO grossly erred in taking the Value of agriculture land at Rs 1,69,13,700/- against Rs 1,25,00,000/- by holding that P & MP Act do not put any restriction on use of land whereas proviso of sub clause 1 of section 9 of P & MP Act 1962 imposed restriction, i.e., any construction over land, any construction or excavate of well, reservoir or dam or plant any tree.

2. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing.”

3. The fact as culled out from the records is that the assessee has filed return of income on 27.09.2013 at Rs. 4,19,770/-. The case of the assessee was selected under CASS and therefore, notices were issued from time to time in compliance the notices, the assessee filed various details as called for by the ld. AO. During assessment proceedings, the Assessing Officer has observed from the return of income that the assessee the assessee sod a property for a sale consideration at Rs. 1,25,00,000/-. The DLC rate of that property was at Rs. 1,69,13,704/-. Therefore, assessee was issued a show cause notice requesting him to show cause as to why the difference of Rs. 44,13,704/- [ 1,69,13,704/-less 1,25,00,000/- ] be not added as per provision of section 50C of the Act. The assessee has filed detailed reply but ld. AO did not find the reply satisfactory and finally completed the assessment making addition of Rs. 44,13,704/- u/s 50C of the Act.

4. Aggrieved from the said order of the Assessing Officer, the assessee has preferred an appeal before the ld. CIT(A) raising this issue as the assessee has raised the contentions that the valuation of property need to be evaluated by the DVO considering the peculiar set of fact. The being so that in the impugned land sold by the assessee which though agricultural land but from the middly of the said land IOCL Gaspipeline passing to the property and therefore, the assessee justify the reference to the DVO. Based on the detailed facts and record placed before the ld. CIT(A), he has in the appellate proceeding directed the AO to refer the matter to the DVO. DVO made the valuation of the property as on the date of sale i.e. 20.02.2018 at Rs. 1,69,13,700/-. The DVO adopted the same rate as the assessee has submitted in his valuation report but has not granted the benefit of 25% lessor market value based on the reason. The ld. CIT(A) given the DVO’s report to the assessee for his comments. But the assessee did not controvert the finding of the DVO and has not filed any submission. The ld. CIT(A) also confirm that the consideration be adopted at Rs. 1,69,13,700/- and the appeal of the assessee was decided and the relevant observation of the ld. CIT(A) is reiterated here in below:

“5.2 The addition of Rs.44,13,704/- made u/s.50C of the Act and the submissions made by the appellant have been perused. During the course of appeal proceedings, the erstwhile CIT(A)-2, Jaipur’s letter vide No.3345 dated 16.02.2018 directed the AO to refer the matter of cost of property to the DVO for correct valuation of the property. Accordingly, the AO vide his letter No. ITO/W-5(2)/JPR/2017-18/2157 dated 22.02.2018 made a reference to the DVO to make valuation of the property as on the date of transfer i.e. 20.02.2018. In view of the above reference, the Valuation Officer, Income Tax Department, Jaipur vide his letter dated 03.05.2018 forwarded the report wherein the said property was estimated by Valuation Cell at Rs.1,69,13,700/- as against declared by the appellant at Rs.1,25,00,000/-. The said valuation was made by the team of Valuation Office, Jaipur on 18.04.2018 in the presence of the appellant and the AO forwarded the Valuation Report vide his letter dated 04.05.2018 to the CIT(Appeals)-2, Jaipur.

5.3 In view of the above, the report of the Valuation Cell was forwarded to the appellant for his comments/objections. However, there was no compliance from the appellant on the Valuation Report. Thus, it is clear that the property under consideration is valued at Rs.1,69,13,700/- which is the same as per the Sub- Registrar, Amer, Jaipur. Therefore, the action of the Assessing Officer is upheld and Ground No. 1 is dismissed.”

5. Feeling dissatisfied with the order of the ld. CIT(A), the assessee has preferred present appeal before this tribunal on the grounds as raised in para 2 above. To support the various contentions so raised, the ld. AR of the assessee has filed a paper books containing following evidences and cases laws :

S. No.	Compilation	Page No.
		From	To
1	Affidavit stating the facts on oath	01	02
2	Guidelines of the Government for land on which petroleum pipeline passing through.	02A	02A
3	Section 9 of the P & MP Act, 1962	03	04
4	CIT    vs.    Rameshwar    Prasad    Kacholia   DBITA    51/2014 (Rajasthan High Court) dated 15.10.2015	05	11
5	Ravi Kant vs. ITO [2007] 110 TTJ 297 (Delhi ITAT)	12	15
6	Jai Kumar Chawla vs. ITO [2013] 39 taxmann.com 188 (Indore ITAT)	16	22
7	Reshma R. Daryanani v. ITO [(2015) 57 taxmann.com 414	23	25

–

S. No.	Compilation	Page No.
		From	To
1	Copy of written submission before Commissioner of Income Tax (Appeals)	01	06
2	Copy of Registered valuer’s report	07	14
3	Copy of registered sale deed dated 20.12.2012	15	23
4	Copy of letters submitted by the Appellant to the ld. Assessing Officer	24	26
5	Copy of letter submitted by the Assessing Officer to the Divisional Valuation Officer dated 20.02.2018	27	27
6	Copy of letter submitted by the Assessing Officer to the Commissioner of Income Tax (Appeals)-2 dated 04.05.2018	28	33

6. The ld. AR of the assessee in addition to the above documents and judgments relied upon, vehemently argued that lower authority failed to appreciate peculiar set of facts that in the middle of agriculture land of the assessee IOCL Gas pipeline passing through. In support of this contentions, assessee filed an affidavit confirming the facts that the Gas pipeline is passing from his land. The content of affidavit is as under :-

AFFIDAVIT

I, Ajay Kumar Jain son of Shri Chain Roop Jain aged about 48 Years R/o B- 249, Janta Colony, Adarsh Nagar, Jaipur-302004 do hereby takes an oath and state as under:

1. That assessee is registered with the PAN No. ABAPJ0715A and regularly filing the Income-tax return and also filed the taxable return during the assessment year 2013-2014.

2. That during the year under consideration I had sold the agriculture land i.e. Khasra number 1524 & 1525/1, Gram-Kukas, Tehsil Amer, District Jaipur at Rs 1,25,00,000/-.

3. That in the agricultural land sold by me, IOCL Gas line was passing through the central of land and due to this adverse factor therefore no one wants to buy the land in the market.

4. That with much difficulty I found one buyer who agreed to buy the land at its fair market value at Rs. 1,25,00,000/-.

5. That due to my financial need and due to the norms of the IOC maximum land should always keep vacate for safety purpose, I was left with no other alternate accept to sold the land on below reserve price fixed as per DLC rates.

6. That section 9 of the P & MP Act, 1962 imposes restriction that any construction over land, excavation of well, reservoir, dam or planting of trees, etc.

7. That prior to prior to selling the land I even obtained the valuation report of registered value and also approached to the sub-registrar to reduce the DLC because of adverse factor associate with the land but the buyer was not allowing more time so the sale deed was registered below the DLC rate.

8. That the valuation report from the registered valuer which was received prior to the sale of land was also submitted before the ld. Assessing Officer & also to the ld. DVO. However, they refused to consider the same.

9. That I am law abiding citizen of the country and never intended to evade tax so help me God.”

7. The ld. AR of the assessee also filed a copy of section 9 of Petroleum and Mineral Pipeline Act, 1962 and the relevant section under which the assessee is supposed to follow the law is reproduced here in below:-

“9. RESTRICTIONS REGARDING THE USE OF LAND

(1) The owner or occupier of the land with respect to which a declaration has been made under sub-section (1) of section. 6 shall be entitled to use the land for the purpose for which such land was put to use immediately before the date of the notification under sub-section (1) of section 3.

Provided that, such owner or occupier shall not after the declaration under sub-section (1) of section 6-

(i) construct any building or any other structure;

(ii) construct or excavate any tank, well, reservoir or dam: or

(iii) plant any tree,
On that land,

(2) The owner or occupier of the land under which any pipeline has been laid not do any act or permit any act to be done which will or is likely to cause any damage in any manner whatsoever to the pipeline.

(3) Where the owner or occupier of the land with respect to which a declaration has been made under sub-section (1) of section 6-

(a) constructs any building or any other structure, or

(b) constructs or excavate any well, thank, reservoir or dam, or

(c) plants any tree,

On that land, the Court of the District Judge within the local limits or whose jurisdiction such land is situate may, on an application made to it by the competent authority and after holding such inquiry as it may deem-fit, cause the building, structure, reservoir, dam or tree to be removed or the well or tank to be filled up, and the costs of such removal or filling up shall be recoverable from such owner or occupier in the same manner as if the order for the recovery of such costs were a decree made by that Court.”

8. The ld. AR of the assessee has also filed the guideline of the State Government directing the assessee to leave 5 feet on each side and the assessee cannot use this land for 65 feet on which site in addition to 120 feet area of pipeline passing through the assessee’s land. Whereas opposite to this fact in the report of the department valuation officer in the valuation report (assessee’s paper book page 31) he has noted as under :-

“4.6 Comments on the Regd. The valuer has applied a rebate of 25% on Valuer’s report DLC rates for agricultural land on account of
IOCL piple line passing through the land. But the P & MP Act do not put any restriction regarding the use of land with respect to which, a declaration has been made to use the land for the purpose for which such land was put to use immediately before the date of the notification.

Since the land prior to the laying of IOCL pipe line was agricultural and the status as on the date of sale is also agricultural hence no rebate due to IOCL pipe line can be allowed. ”

9. The ld. AR of the assessee further submitted that the valuation report submitted by the assessee from registered valuer who is approved from the Income Tax Department, Mr. Arun Bohra wherein he has given 20% lesser amount prevailing DLC rate. Therefore, the DVO’s report is to the extent of not granting and rebate of 25% on the DLC rate contending that P & MP Act do not put restrictions regarding use of land is contrary to the fact on record of the State Government produced by the assessee. Based on these set of facts, the ld. AR of the assessee that the DLC rate applied by both the valuation is correct, the DVO has not considered the reduction in rate at 25% on wrong assumption on fact. No such restrictions are put is against the set of facts and therefore, the assessee prayed that relief of 25% granted by the registered valuer be given to the assessee. The ld. AR of the assessee further submitted that valuation report obtained by him or dated 01.12.2012 whereas the sale agreement is subsequent to the valuation report dated 20.12.2012. This shows the conduct of the assessee, not to defeat the provisions of section 50C of the Act.

10. As the assessee has not found any favour from the appeal so filed before the ld. CIT(A), the assessee filed an appeal before this tribunal on the various grounds as reproduced here in above. To support grounds so raised by the assessee the ld. AR of the assessee relied upon the following written submissions.

“During the year under consideration the assessee appellant had sold an agricultural land situated at Gram Kukas, Tehsil Amer, Jaipur for total consideration of Rs. 12,500,000/-.

GROUND NO. 1 [VALUATION U/S. 50C]

1. Prior to selling the aforesaid agricultural land the assessee appellant obtained a report from the Registered Valuer of the Income Tax Department, Shri Arun Bohra who value the property at Rs. 1,27,00,000/- Copy of registered valuer’s report is at PB 7-14.

1.1. The Registered Valuer of the Income Tax Department who inspected the aforesaid agricultural land on 01.12.2012 has stated as under:

S. No.	Questionnaire	Comments
18	Does the land fall in an area including in any  town planning  scheme or any development plan of government or any statutory body?  If so, give particulars. (Road widening / Expansion of existing road / acquisition for public utility)	IOCL gas pipe line passing through the property   (photo attached) PB 9
20	Has the whole or part of the land been notified for acquisition by Government or any  statutory   body? Give details of notification	Yes, IOCL gas pipe line passing through  the    property   (photo attached) PB 10
CONCLUSION
property, Value of	But due to IOCL Gas Pipe line passing through the said the rates can be assumed 25% lesser than the prevailing rates …….  the impugned property: Rs. 1,27,00,000/- PB 11

2. During the year under consideration the assessee appellant sold the aforesaid agricultural land for total consideration of Rs. 12,500,000/-. The sub-registrar adopted the total value at Rs. 16,913,704/-. Copy of registered sale deed dated 20.12.2012 is at PB 15-23. There is a variation of 26.10%.

3. During the course of assessment proceedings the assessee appellant by letters submitted to the ld. Assessing Officer as follows PB 24-25 & PB 26:

3.1. That your honour shall notice that the ld. Assessing Officer has blindly applied the rates adopted by the Sub-Registrar without any comments on the Registered Valuer’s Report and the submissions of the assessee appellant that due to adverse factors associated with the impugned agricultural land sold by the assessee appellant.

4. We also wish to refer to the following authorities in this regards:

a. Hon’ble Jurisdictional Rajasthan High Court in CIT v. Rameshwar Prasad Kacholia (DBITA 51/2014 dated 15.10.2015) PB 27-33 wherein the property was sold for Rs. 70.00 lacs and the property was valued by the Sub-Registrar for Rs. 1.39 crores, the Hon’ble Court has upheld the relief granted by CIT(A) @ 20% and further relief granted by the ITAT @ 20% by holding as under:

It is also on record that while the valuer Mr. V. Padmanabhan computed fair market value of the property at Rs. 71.00 lacs as per the valuation certificate placed before lower authorities, the second valuer Shri Govind Singh Bapna computed the fair market value of the property at Rs. 72,14,400/- as per copy of the report placed before the lower authorities and it is also finding recorded by the Tribunal that the AO did not comment adversely on these reports.

Once the Tribunal has found as a finding that there was congestion underneath the flyover and the commercial activities were adversely affected, in our view, allowing rebate of 20% cannot be said to be unjust and once Tribunal has taken into consideration rebate of 20%, may be on estimate basis, in our view, does not call for interference of this Court and is a finding of fact recorded on the basis of appreciation of evidence and material available on record, particularly the report of the two approved valuers who were technical experts in their fields.

b. In ITO v. Ms. Kumudini Venugopal [2011] 16 com 136 (Chennai ITAT) PB 34-38 it was held:

Section 50C of the Income-tax Act, 1961 – Capital gains – Special provision for full value of consideration in certain cases – Assessment year 2005-06 – Assessee had sold certain agricultural land – In course of assessment, provision of section 50C were applied to assessee’s case and valuation of property as per guideline value of stamp valuation authority was accepted because same was found to be higher than sale consideration disclosed by assessee – Assessee invoked provisions of section 50C(2) and claimed that value as fixed by stamp valuation authority was on higher side – Assessing Officer thus referred valuation of property to DVO – DVO valued property at a figure much lower than value as fixed by stamp valuation authority – Whether on facts, claim of assessee was true and correct and, therefore, Assessing Officer was to be directed to accept sale consideration as admitted by assessee in her return of income – Held, yes.

c. In Ravi Kant v. ITO [2007] 110 TTJ 297 (Delhi ITAT) PB 39-42 it was held:

On a perusal of valuation report, however, we find that even the valuation by the DVO has placed too much of emphasis on the assessment or valuation by the stamp valuation authority. This is neither desirable nor permissible. The reason is this. The valuation by the stamp valuation authority is based on the circle rates. These circle rates adopt uniform rate of land for an entire locality, which inherently disregards peculiar features of a particular property. Even in a particular area, on account of location factors and possibilities of commercial use, there can be wide variations in the prices of land. However, circle rates disregard all these factors and adopt a uniform rate for all properties in that particular area. If the circle rate fixed by the stamp valuation authorities was to be adopted in all situations, there was no need of reference to the DVO under Section 50C(2). The sweeping generalizations inherent in the circle rates cannot hold good in all situations. It is, therefore, not uncommon that while fixing the circle rates, authorities do err on the side of excessive caution by adopting higher rates of the land in a particular area as the circle rate. In such circumstances, the DVO’s blind reliance on circle rates is unjustified. The DVO has simply adopted the average circle rate of residential and commercial area, on the ground that interior area of the locality, where the assessee’s property is situated, is mixed developed area i.e. shops and offices on the ground floor and residence on the upper floors. When DVO’s valuation required to compare the same with the valuation by the stamp valuation authority, it is futile to base such a report on the circle report itself. Such an approach will render exercise under Section 50C(2) a meaningless ritual and an empty formality. In our considered view, in such a case, the DVO’s report should be based on consideration stated in the registration documents for comparable transactions, as also factors such as inputs from other sources about the market rates. For the reasons set out above, and with these observations, we remit the matter to the file of the AO. The DVO will value the property de novo, in the light of our above observations, and in case the valuation so arrived at by the DVO is less than Rs. 11,42,100, the AO shall adopt the fresh valuation so done by the DVO for the purpose of computing capital gains under Section 48 of the Act. We direct so.

d. In Suresh C. Mehta vs. ITO [(2013) 35 com 230 (Mumbai ITAT) PB 43-47 it was held:

Valuation report of DVO is not binding upon CIT (A) and he is bound to look into the objections of the assessee.

e. In Chandra Bhan Agarwal vs. Addl. CIT [(2012) 21 com 133 (Calcutta ITAT) PB 48-57 where in the report of the DVO was ignored since objections of the assessee were not properly disposed and accordingly consideration given by the Assessee was accepted.

f. In Jai Kumar Chawla v. ITO [(2013) 39 com 188 (Indore ITAT) PB 58-64 it was held:

Valuation in case of land should be arrived at by taking into account adverse factors attached to land. Keeping into account all these factors, which are going to adversely affect fair market value of land, we direct the Assessing Officer to reduce the valuation arrived at by the DVO by 20 %. Accordingly, the Assessing Officer is to recompute the gain after reducing the valuation arrived at by the DVO by 20 % or the actual sale consideration received by assessee, whichever is higher.

g. In Reshma R. Daryanani v. ITO [(2015) 57 com 414 (Mumbai ITAT) PB 65-67 it was held:

Where AO had not examined whether assessee could have sold her plot at a price which was stipulated by stamp duty authorities and assessee had given a detailed clarification about low price, addition made on basis of stamp duty valuation was to be deleted.

GROUND NO. 2

Not pressed.

Kindly consider, grant relief and oblige.”

11. On the other hand, the ld. DR representing, the revenue has relied upon the finding of the lower authority and submitted that the assessee has not given the correct fact before the DVO and ld. CIT(A) and therefore, the ld. AR of the assessee cannot take. Further, benefit even the assessee has not objected to the DLC rate and has accepted rate of DLC rate and therefore, the contention of the assessee cannot be accepted at this stage. The ld. CIT(A) has accepted the request of the assessee and has preferred the matter to DVO and DVO has also confirmed the DLC rate valuation. Based on these observations, heavily relied upon the finding of ld. CIT(A) in the rejoinder of the ld. AR of the assessee submitted that the purpose of referring or taking ground before ld. CIT(A) is to challenge the DVO rate and therefore, relying upon the jurisdictional High Court decision an affidavit of the assessee, the matter may be decided considering the fact of the case that the assessee is not compelled with those aspects whose land are not under any such restrictions as in the case of the assessee. Therefore, he heavily relied upon the document provisions of P & MP Act and decisions jurisdictional High Court in the case of CIT v. Rameshwar Prasad Kacholia DBITA 51/2014 (Rajasthan High Court) dated 15.10.2015.

12. We have heard the rival contentions and perused the material placed on record. The bench noted that it is not controvert by the ld. AO through ld. DR that the assessee put in adverse conditions on account of passing of IOCL gas pipeline in the middle part of his land and that pipeline is protected under the provision of section 9 of Petroleum and Mineral Pipelines Act, 1962. We have persuaded the provisions of the said section from the assessee is facing the adverse situation, the extract from the said provision of the act reads as under:

“9. RESTRICTIONS REGARDING THE USE OF LAND

(1) The owner or occupier of the land with respect to which a declaration has been made under sub-section (1) of section. 6 shall be entitled to use the land for the purpose for which such land was put to use immediately before the date of the notification under sub-section (1) of section 3.

Provided that, such owner or occupier shall not after the declaration under sub-section (1) of section 6-

(i) construct any building or any other structure;

(ii) construct or excavate any tank, well, reservoir or dam: or

(iii) plant any tree,

On that land,

(2) The owner or occupier of the land under which any pipeline has been laid not do any act or permit any act to be done which will or is likely to cause any damage in any manner whatsoever to the pipeline.

(3) Where the owner or occupier of the land with respect to which a declaration has been made under sub-section (1) of section 6-

(a) constructs any building or any other structure, or

(b) constructs or excavate any well, thank, reservoir or dam, or

(c) plants any tree,

On that land, the Court of the District Judge within the local limits or whose jurisdiction such land is situate may, on an application made to it by the competent authority and after holding such inquiry as it may deem-fit, cause the building, structure, reservoir, dam or tree to be removed or the well or tank to be filled up, and the costs of such removal or filling up shall be recoverable from such owner or occupier in the same manner as if the order for the recovery of such costs were a decree made by that Court.”

13. In addition to the above, even the State Government also placed restrictions on the assessee on the impugned land of the assessee and assessee was directed spare the 5 sq. ft. on both the side of pipe line and assessee directed to maintain that nothing long is growing on that part of the land. Thus, this restrictions are in addition to the provision of P & MP Act. We note that the finding of DVO that IOCL pipeline passing through the assessee’s land does not put any restrictions is against the fact and we also persuade that the DVO rate adopted by both the valuer price not under dispute. The dispute before us as challenged is that whether considering the restrictions put u/s 9 of P&MP Act on account of passing through IOCL pipeline in the middle part of land . The DLC rate can be subjected to deductions to certain extent or not. On these issues, we have gone through the various judicial precedent cited by the ld. AR of the assessee of which the decisions cited is of the jurisdictional High Court wherein the similar issue decided by the Hon’ble Rajasthan High Court in the case of CIT vs. Rameshwar Prasad Kacholia DBITA 51/2014 (Rajasthan High Court) dated 15.10.2015 wherein the Hon’ble High Court has confirmed the action of ITAT allowing 20% more benefit than 25% given by the ld. CIT(A) and thereby has reduced the rate to the extent of 45% whereas in this case, the assessee has before entering into a sale agreement obtained valuation report and therefore, claimed by the assessee to the extent of 25% of the DLC rate is justified. The provision of section 50(2)(iii) of section 50C provide that where assessee claim before the ld. AO that the value adopted by the stamp authority, u/s 50C(1) exceed fair market value of the property as on date of proceeding and unless such valuation is subject the matter of litigation before any authority or court. The ld. AO may refer the matter of determination of fair market value of property in question to DVO herein. We note that the ld. CIT(A) has already referred the matter to the DVO and DVO has also confirmed the DLC rate without considering the plea of the assessee. The assessee is at disadvantage on account of passing of gas pipeline restrictions put by provision of section 9 of P&MP Act which the DVO has commented upon and the assessee in his affidavit submitted that due to disadvantage, he was unable to find suitable buyer at the DLC rate and therefore, as he was in need has sold property at Rs. 1,25,00,000/-. He has obtained the valuation report before entering the transaction and sold the land at rate which in agreement with the valuation report obtained by the assessee. This conduct of the assessee itself shows that the assessee has acted with due care and concern for which the revenue cannot take undue benefit of the contentions placed on record by the assessee. The valuer while considering the relief @ 25 in the DLC rate noted that the assessee’s land is suffering on account of the restrictions put forth by P & M P Act and even by the State Government. This is more supported by an affidavit stating that the assessee was at disadvantage which the ld. CIT(A) has not considered though he referred the matter to DVO but DVO and ld. CIT(A) failed to consider the specific disadvantage and thereby the claim of 25% relief in that DLC rate considering overall fact placed before us stands justified. We also take support of the decision of the jurisdictional high court in the case of Rameshwar Prasad Kacholia DBITA 51/2014 wherein the court has held as under:-

“3. The matter was carried in appeal before the Commissioner of Income Tax (Appeals) (for short, CIT(A)), who after taking into consideration the various factors and the contention of the assessee, while adopted the value @ Rs. 2905/- per sq. ft. as per the DLC rate, however, added 5% on account of the two side open plot but reduced the value by giving a relief of 25% for bigger size plot and he accordingly determined the value Rs. 1,09,92,000/- as against Rs. 1.39 crores.

4. Both, the AO as well as the assessee carried the matter in appeal before the Tribunal. The Tribunal, taking into consideration various factors, not only upheld the order of the CIT(A) but also took into consideration the report of the two approved valuers being technical persons and allowed further deduction of 20% on the value of Rs. 2905/-per sq. ft. which is assailed herein by the Revenue.

7. In our view, the order of the Tribunal is just and proper and is not required to be interfered with particularly when there is a finding of fact recorded by the Tribunal to come to the conclusion that it was reasonable to allow a rebate to the extent of 20% on account of the fact that admittedly, the highway went away many feet above the ground and the land of the respondent-assessee was left with congestion. The Tribunal has taken into consideration the fact that there are reports of two approved valuers namely; Mr. V. Padmanabhan and Mr. Govind Singh Bapna, who were technical experts and who in their valuation reports opined that the flyover of bridge construction got completed in the year 2002 and the so-called highway went away many feet above the ground. The underneath of flyover was left with congestion. The commercial activities were adversely affected so much so that the people had either to close the business or to sale their properties. The construction of flyover of bridge near the respondent’s property was a negative factor and had adversely affected the fair market value of the property as on the day of transfer.

8. It is also on record that while the valuer Mr. V. Padmanabhan computed the fair market value of the property at Rs.71 lacs as per the valuation certificate placed before the lower authorities, the second valuer Mr. Govind Singh Bapna computed the fair market value of the property at Rs.72,14,400/- as per copy of the report placed before the lower authorities and it is also a finding recorded by the Tribunal that the AO did not comment adversely on these reports.

9. Once the Tribunal has found as a finding that there was congestion underneath the flyover and the commercial activities were adversely affected, in our view, allowing rebate of 20% cannot be said to be unjust and once the Tribunal has taken into consideration rebate of 20%, may be on estimated basis, in our view, does not call for interference of this Court and is a finding of fact recorded on the basis of appreciation of evidence and material available on record, particularly the report of the two approved valuers who were technical experts in their field.

10. Taking into consideration the above factors, in our view, the finding arrived at by the Tribunal is essentially a finding of fact and in our view, no question of law much less substantial question of law can be said to arise out of the order passed by the Tribunal.”

14. Considering the judicial decisions cited wherein also the assessee was prevented and put with disadvantage and therefore, in that case the relief was allowed in rate to the extent of 25% stands justified, considering the restrictions placed in the middle part of the land and accordingly 25% deduction in DLC rate claimed by the assessee is found fair market and reasonable and does not require any adjustment to the return of income filed by the assessee.

15. For the reason, set out and discussed hereinabove, the appeal filed by the assessee is allowed. In the result, appeal of the assessee is allowed.

Order pronounced in the open Court on 09/08/2023