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Issues involved: Determination of capital gains u/s 256(2) of the Income-tax Act based on sale price discrepancy and market value estimation as on 1-4-1981.
Capital gains determination based on sale price: The High Court considered the issue of capital gains determination in connection with the sale of property by the respondent-assessee to a company. The Court noted that the actual sale price was &8377; 32.5 lakhs, higher than the declared amount of &8377; 18 lakhs. Relying on connected IT appeals, the Court reversed the Tribunal's order and upheld the assessment based on the actual sale price of &8377; 32.5 lakhs. Market value estimation as on 1-4-1981: The Court addressed the discrepancy in the market value estimation by the Assessing Officer and the Tribunal as on 1-4-1981. The property was originally purchased for &8377; 65,000 in 1974, raising doubts about the low valuation of &8377; 2 lakhs in 1981. Considering the significant increase in property prices in recent years, the Court set aside the Tribunal's valuation and directed a reassessment of the market value as on 1-4-1981 for accurate determination of capital gains. The Tribunal was instructed to reevaluate the market value within three months from the date of the judgment. Conclusion: The Income-tax Reference was disposed of in favor of the revenue and against the assessee, with the Court directing a reassessment of the market value for the determination of capital gains, based on the actual sale price of the property.
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