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2013 (7) TMI 689 - AT - Income TaxFMV adopted on the date 1/4/81 for the purpose of computation of Capital Gain - Assessee has declared the FMV as on 1.4.81 on the basis of the report of the Registered Valuer who has determined the value of the building at Rs.20,04,207/- and that of the land at Rs 44,25,600/- totalling to Rs.64,29,807/- - By taking FMV of the building consisting of basement, ground floor and first floor, has arrived at a depreciated cost of the Building as on 1.4.1981 of Rs.20,04,207/- - As per RV the cost of the land comes to Rs.3,66,36,191/-, at the time of its sale. The registered valuer has adopted the decrease in land rate @7 % per annum per square foot and has arrived at its FMV as on 1.4.81 at Rs. 44,25,600/- - Thus, the total cost of the property in question comes to Rs.64,30 lakhs - Held that - Even as per the backward indexation by taking advantage of CBDT Circular No. 636 dated 31.07.1992 the value of the land as on 1.4.1981 would be around the same as determined by the Registered Valuer Also, relying upon the decision in the cases ITO vs. Smt. Lalitaban B. Kapadia 2007 (9) TMI 294 - ITAT BOMBAY-K , value so claimed by the assessee is FMV of the Capital Asset Decided against the Revenue.
Issues:
Appeal against deletion of addition in Long Term Capital Gain calculation based on valuation discrepancy. Analysis: The appeal before the Appellate Tribunal ITAT Jodhpur stemmed from the Department challenging the deletion of an addition of Rs.75,27,253 in Long Term Capital Gain by reducing the value of cost of acquisition. The dispute arose from the variance in valuation of land purchased before 01/04/1981, with the Approved Valuer valuing it at Rs. 228/- per sq. ft., while the DVO determined the value at Rs. 36.42 per sq. ft., leading to the Assessing Officer adopting the latter value for calculation. The assessee, in response, relied on the decision of ITAT Jodhpur Bench in a similar case involving the application of the time gap method or reverse indexation method. The CIT(A) subsequently deleted the addition, citing the precedent set by the ITAT decision in the case of Deen Dayal Rathi, Jodhpur vs. Income Tax Officer -3(4), Jodhpur. During the appeal hearing, the counsel for the assessee highlighted the applicability of the ITAT order dated 4th April, 2013, further emphasizing the consistency in approach with the aforementioned case law. The Department, represented by the learned D.R., failed to counter this argument effectively, leading to a lack of substantial opposition to the assessee's position. The Tribunal, after considering the submissions from both parties and the material on record, noted the clear alignment of the present issue with the principles established in the referenced ITAT order. The Tribunal specifically referenced the findings from the previous order, emphasizing the importance of adhering to the valuation methodology based on the cost inflation index for determining the fair market value as on 1.4.1981. Furthermore, the Tribunal highlighted the legal aspect concerning the reference to DVO by the AO under section 55 A, stressing the necessity for the AO to establish that the claimed value by the assessee is less than the Fair Market Value (FMV) of the capital asset before such a reference. This legal standpoint was supported by various judicial decisions cited in the judgment, reinforcing the Tribunal's decision to allow the issue in favor of the assessee. Ultimately, the Appellate Tribunal dismissed the Department's appeal, upholding the CIT(A)'s decision to delete the addition in Long Term Capital Gain calculation. The judgment, pronounced on 10/07/2013, concluded the matter in favor of the assessee based on the consistent application of legal principles and precedents established in relevant case laws.
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