2013 (1) TMI 919 - AT - Income Tax

Summary

Issues involved:
The appeal concerns the deletion of an addition of Long term capital gain by the ld. CIT(A) based on the total cost of acquisition determined by a registered valuer.

Details of the judgment:

Issue 1: Cost of acquisition determination
The assessee derived income from Long term capital gain from the sale of a property inherited in 2001. The AO determined the cost of acquisition at a lower value compared to the assessee's claim. The ld. CIT(A) accepted the fair market value estimated by a registered valuer as on 01-04-1981, directing the AO to consider this value for calculating capital gain. The ld. CIT(A) invoked Section 55(2)(b)(ii) of the Act, allowing the assessee to choose between the cost of acquisition to the previous owner or the fair market value. The Tribunal upheld the ld. CIT(A)'s decision, emphasizing the importance of fair market value determination for computing capital gains accurately.

Issue 2: Legal precedents and interpretation
The ld. AR cited legal precedents and highlighted the assessee's right to determine the cost of acquisition based on fair market value as on 01-04-1981. The Tribunal referred to a similar case where the assessee's choice to adopt fair market value was upheld. The Tribunal emphasized the assessee's right to choose the value as per the provisions of the Act, especially when modifying capital gains working based on different sale values. The Tribunal directed the AO to accept the fair market value determined by the registered valuer for calculating capital gains, in line with legal provisions and precedents.

Conclusion:
The Tribunal dismissed the Department's appeal, affirming the ld. CIT(A)'s decision to consider fair market value for cost of acquisition and compute Long term capital gain accordingly. The Tribunal upheld the importance of accurate valuation in determining capital gains and tax liability, in line with legal provisions and precedents.

This judgment highlights the significance of fair market value determination and the assessee's right to choose the cost of acquisition method for accurate computation of Long term capital gains.