Income-tax---

----Immovable property, purchase of ---Assessee purchased agricultural land for setting up an industrial unit---Assessing Officer rejected the value of land declared by assessee which was supported by registered sale-deed and estimated a higher value---Assessing Officer, in his assessment order had not cited any parallel case of a higher value or documentary evidence of understatement of value in the registered sale-deed---Held, Assessing Officer was not right in imputing understatement to the value shown in the registered sale-deed in circumstances.

Zia H. Rizvi for Appellant (in I.T.As. Nos. 563/1,13 of 1989-90 and 367/1,13 of 1990-91).

Agha Sarwar Qazilbash (D.R.) for Appellant (in I.T-As. Nos.647/LB of 1989-90 and 432/1,13 of 1990-91).

Agha Sarwar Qazilbash (D.R.) for Respondent (in I.T.As. Nos.563/LB of 1989-90 and 367/1,13 of 1990-91).

Zia H. Rizvi for Respondent (in I.TAs. Nos. 647/1,13 of 1989-90 and 432/1,13 of 1990-91).

Date of hearing: 21st March, 1991.

ORDER

ABRAR HUSSAIN NAQVI, JUDICIAL MEMBER---These are four appeals, two by the assessee and two by the department relating to the assessment years 1987-88 and 1988-89. The assessee is an individual deriving income from sale of pipes. The only issue involved in both the appeals is the valuation of the land purchased by the assessee.

2. The facts of the case are that in the assessment year 1987-88 the assessee purchased land measuring 42 kanals 17 marlas in consideration of Rs.5,04,277 giving an average rate of Rs.1.1,768 per kanal. In assessment year 1988-89 the assessee purchased another piece of land measuring 11 kanals 5 marlas for Rs.1,70,000 at the average purchase rate of Rs.15,000 per kanal. The I.T.O. rejected the valuation shown by the assessee and after making certain inquiries estimated the value of the land at Rs.27,000 per kanal in the assessment year 1987-88 and at Rs.35,000 per kanal for the assessment year 1988-89. On appeal the learned CIT(A) reduced the valuation at Rs.20,000 per kanal in the assessment year 1987-88 and Rs.30,000 per kanal in the assessment year 1988-89. The assessee is aggrieved against the order of the learned CIT(A) and pleaded the acceptance of the' declared value while the department is aggrieved against the reduction in value given by the learned CIT(A).

3. The learned counsel for the assessee has placed on our record copies of registered sale deeds, site plan (Aks Shajra) and compromise deed to establish that the land was disputed one and away from the road. It was further submitted by the learned counsel that the land was situated at a place where pre-emption laws are applicable. It was submitted that the land was an agricultural land situated at the defence road off Multan Road 35 Kilometres away from Lahore. It was contended that where pre-emption laws are applicable there cannot be any under-valuation in the registered sale deeds as there is always a fear of pre-emption suit against the purchaser. We are inclined to agree with the learned counsel for the assessee as the assessee has also filed documentary evidence to show that actually pre-emption suits had been filed in respect of the land in the same village. Therefore, the assessing officer's suspicion that the land had been purchased at a higher value than had been shown in the registered sale deed is without any basis. The learned D.R., on the other hand, contended that the ITO had estimated the value on the basis of inquiry conducted by the Inspector according to which in the year 1986-87 the value was not less than Rs.40,000 per kanal as it was being used for setting up industrial units. However, the ITO had not given any instance of sales at higher sale rate in the vicinity of the land purchased by the assessee. The fact that the land was being purchased as an industrial site is an important consideration but still, as stated above, the land has to be purchased as agricultural land on which pre-emption laws are applicable. Therefore, the purchaser cannot take the risk of under-valuing the land purchased by him as possibility of pre-emption suit is always there. Therefore, the concept of under valuation which is generally in practice in urban properties, is not available on the purchase of agricultural land where pre-emption laws are applicable. Nobody can take the risk of under-stating the value of land it registered deed for fear of pre-emption suit. The assessing officer has himself conceded that the land was deep. The learned counsel for the assessee has also filed copy of Aks Shajra (plan) to indicate that the land purchased by the assessee was not on the road and had no direct access. Another facto highlighted by the learned counsel was that it was a disputed land which naturally has lower value.

4. For the foregoing reasons and in the absence of any documentary, evidence against the assessee and in view of the registered deeds filed by the assessee in the case of other purchasers as well as other documentary evident we direct that the declared value in the registered deeds should be accepted.

5. As a result the assessee's appeals are accepted but those of the department are dismissed.

M.BA./1215/TAssessee's appeals allow&