COMMISSIONER OF INCOME TAX Vs. HIRABEN GOVINDBHAI PATEL

JUDGEMENT

(1.) The Revenue is in appeal against the judgment of the Income tax Appellate Tribunal, Ahmedabad ("the Tribunal" for short) dated May 17, 2013, raising the following questions for our consideration:

(2.) With respect to the fair market value on April 1, 1981, the assessee relied on the valuation report of a registered valuer who had indicated the price band of Rs. 250 to Rs. 800 per sq. yard and that is how the fair market value of Rs. 2 crores as on April 1, 1981. The Assessing Officer did not dispute this valuation but adopted the patent valuation of Rs. 250 per sq. yard.

(3.) The assessee carried the matter in appeal. The Commissioner of Income-tax (Appeals) as well as the Tribunal both ruled in favour of the assessee. With respect to the sale consideration, the assessee pointed out that 50 per cent of the land was subject to reservation, and, therefore, not available for development to the prospective buyer. After entering into MOU, which was principally for creation of partnership and not for sale or purchase of the land, negotiations were held out between the parties and ultimately reduced price was agreed to be paid. It was pointed out that a supplementary deed was also signed on January 18, 2007, in which it was agreed that if the reservation problem for green belt is resolved and the purchaser gets the use of full land being sold, the seller would receive the remaining price, as indicated in the MOU.