2012 (8) TMI 1103 - AT - Income Tax

Summary

Issues Involved:
1. Estimation of Fair Market Value (FMV) of the property as on 01.04.1981 for calculating Long Term Capital Gain (LTCG).
2. Validity of the valuation methods and evidence used by the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)].

Summary:

1. Estimation of Fair Market Value (FMV):
The Revenue challenged the CIT(A)'s estimation of the FMV of the sold property at Rs. 6000/- per marla, arguing that the AO's valuation of Rs. 1000/- per marla should be upheld. Conversely, the assessee contested the CIT(A)'s valuation of Rs. 4000/- per marla, asserting that the valuation should be Rs. 8000/- per marla based on the report of an approved valuer.

2. Validity of Valuation Methods and Evidence:
The AO processed the returns u/s 143(1) and later scrutinized the cases, questioning the basis of the FMV adopted by the assessees. The AO relied on the Inspector's report and the Tehsildar's report, which suggested much lower values. The assessees argued that their property, being commercial and located on a main road, had a higher value compared to the agricultural land cited by the AO.

The CIT(A) partly allowed the appeals, directing the AO to recompute the capital gain using an estimated FMV of Rs. 6000/- per marla for Sh. Ravi Kant Jain and Rs. 4000/- per marla for M/s. Basant Metal Works. Both parties were dissatisfied and appealed to the ITAT.

ITAT's Decision:
The ITAT noted that the AO did not refer the matter to a Valuation Officer, which is a procedural lapse. Despite this, the CIT(A) provided a reasonable determination based on the available evidence. The ITAT upheld the CIT(A)'s order, finding no need for further interference.

Conclusion:
Both appeals by the Revenue and the assessee were dismissed, and the CIT(A)'s order was upheld, maintaining the FMV at Rs. 6000/- per marla for Sh. Ravi Kant Jain and Rs. 4000/- per marla for M/s. Basant Metal Works.