2009 (4) TMI 531 - AT - Income Tax

Summary

Issues Involved:
1. Adoption of the date for the purpose of Fair Market Value (FMV).
2. Confirmation of the value of the land at Rs. 1,000 per cent as on 1-4-1981.
3. Non-allowance of full deduction u/s 54EC.

Summary:

1. Adoption of the date for the purpose of Fair Market Value (FMV):
The assessee argued that the FMV should be adopted as on 6-1-1994, the date when the land was designated as a capital asset by a Central Government Notification, rather than 1-4-1981. The Chartered Accountant contended that the Notification did not intend to treat the property as a capital asset retrospectively. However, the Tribunal held that the statutory date for FMV as per the Income-tax Act is 1-4-1981 for assets acquired before that date. The Notification changes the character of the asset but does not alter the statutory FMV date. The Tribunal concluded that the Assessing Officer rightly adopted the FMV as on 1-4-1981, and the first ground raised by the assessee failed.

2. Confirmation of the value of the land at Rs. 1,000 per cent as on 1-4-1981:
The assessee challenged the FMV determined by the Assessing Officer at Rs. 1,000 per cent, arguing that the value should be Rs. 94,132 per cent based on a valuation report. The Tribunal noted that the valuation report was additional evidence not presented before the lower authorities and thus not admissible. The Tribunal found the FMV determined by the Assessing Officer to be fair and reasonable, considering the property was marshy land in 1975 and had not developed significantly by 1981. The second ground raised by the assessee also failed.

3. Non-allowance of full deduction u/s 54EC:
The assessee claimed that the full deduction u/s 54EC was not allowed. During the hearing, the Chartered Accountant agreed that the assessee had not invested the entire capital gains in eligible bonds, and the Assessing Officer had already granted proportionate relief as prescribed in section 54EC(1)(b). Therefore, this ground also failed.

Conclusion:
The appeal filed by the assessee was dismissed in its entirety.