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2013 (7) TMI 516 - AT - Income TaxCost of acquisition - land transferred by the deceased assessee during this year - whether no income under the head Capital Gain was chargeable to tax. - Held that - It is admitted fact that the assessee was the tenant of the property in question and because of this fact only, the assessee became the owner of this land property upon coming into force of the Devstan Inam Abolition Act, which means the tenancy rights were converted into ownership right and hence, the provisions of Section 55(2)(a) as per which in the case of tenancy right, the cost of acquisition is required to be take as nil because only tenancy right having nil cost of acquisition was converted into ownership right, the ownership right sold by the assessee is also having nil cost of acquisition. Hence, this argument of the assessee that there will be no capital gain because there is no cost of acquisition, has no merit. - Decided against the assessee. Sale consideration - Rs.7.36 crores as per CIT(A) as against the amount of Rs.14.71 crores - Held that - CIT(A) has given a clear finding that the MOU and no other document can be a basis for the conclusion reached by the A.O. and on the basis of these documents, a presumption cannot be raised abut receiving the cash by the assessee. No specific evidence is referred to by the A.O. about the allegation that assessee has been paid any amount in excess of the price of Rs.7.36 crores as per the documents. It is also noted that this price has been accepted by the stamp duty authority and it is not disputed by the authority. Hence, there is no infirmity in the order of CIT(A) on this issue. Determination of value of property - at Rs.800/- per sq. yard or Rs 250/- per sq. yard - While adopting the value as on 01.04.1981 @ Rs.250/- per sq. yard as against Rs.800/- per sq. yard the basis of the A.O. was that as per this report of the registered valuer, various sales instances considered by him which are for smaller plots but for a larger plot like that of the assessee, the value will be much less per sq. yard - Held that - The registered valuer has given various sale instances form 25.03.1980 to 30.08.1982 and the lowest value as per these sales instances is Rs.211.57 per sq. yard and the highest value as per these sales instances is Rs.971.73 per sq. yard as per the instance noted at Sl. 6, the rate is Rs.971.73 only. Sl. No.7 it is Rs.700/-, Sl. No.8 it is Rs.773.41 and as per Sl. No.9, it is Rs.800/- per sq. yard. The stand of the A.O. that the value of larger plot has to be lesser is without any basis and it depends on many factors. In some cases, the A.O. may be right that the price of a larger plot will be lesser but in other cases, it may be different and it may be found that price of larger plot is higher and, therefore, no decision can be taken on the basis of these presumptions. In the absence of any valid basis adopted by the A.O. to substitute the rate adopted by the assessee on the basis of a valuation report of a registered valuer, no interference is called for in the order of CIT(A) to accept the value of property as on 01.04.1981 at Rs.800/- per sq. yard. - Decided against the revenue.
Issues Involved:
1. Cost of acquisition and applicability of Section 55(2)(a) of the Income Tax Act, 1961. 2. Determination of the sale consideration amount. 3. Fair market value of the property as on 01.04.1981. Issue-wise Detailed Analysis: 1. Cost of Acquisition and Applicability of Section 55(2)(a): The assessee contended that there was no cost of acquisition for the land transferred, thus no capital gain should be chargeable. The Tribunal examined the sale deed which indicated that the land was acquired under the Devstan Inam Abolition Act, converting tenancy rights into ownership. According to Section 55(2)(a) of the Income Tax Act, the cost of acquisition for tenancy rights is taken as 'nil'. The Tribunal rejected the assessee's argument, stating that the ownership rights derived from tenancy rights should also have a nil cost of acquisition. Therefore, the capital gain is taxable. 2. Determination of the Sale Consideration Amount: The revenue argued that the sale consideration should be Rs.14.71 crores based on an MOU, while the assessee declared Rs.7.36 crores. The Tribunal noted that the MOU was not solely for the sale of land but also for forming a partnership firm. The MOU mentioned a high land value possibly to compensate for the lower profit share (45%) given to the assessee. Additionally, no cash or unaccounted assets were found during the search, and the sale price declared was accepted for stamp duty purposes. The Tribunal upheld the CIT(A)'s decision to consider the sale consideration at Rs.7.36 crores, rejecting the revenue's claim. 3. Fair Market Value of the Property as on 01.04.1981: The assessee claimed a fair market value of Rs.800 per sq. yard as on 01.04.1981, supported by a registered valuer's report. The AO adopted Rs.250 per sq. yard, arguing that larger plots have lesser value. The Tribunal cited previous decisions, stating that the AO cannot substitute the registered valuer's report without obtaining a DVO report. The Tribunal found the AO's basis for a lower value without merit and upheld the CIT(A)'s decision to accept the assessee's valuation of Rs.800 per sq. yard. Conclusion: The Tribunal dismissed both the cross objection of the assessee and the appeal of the revenue, affirming the CIT(A)'s decisions on all issues. The cost of acquisition was determined as 'nil' under Section 55(2)(a), the sale consideration was fixed at Rs.7.36 crores, and the fair market value as on 01.04.1981 was accepted at Rs.800 per sq. yard.
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