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2014 (2) TMI 424 - AT - Income TaxValuation of property Cost of acquisition valued at FMV Held that - reference by the Assessing Officer to the DVO under section 55A for valuation of FMV of the property as on 1-4-1981 is not valid for the reasons that FMV declared by the assessee as per Government registered valuer s report was more than the FMV as estimated by the DVO. Since determination of the FMV as on 1-4-1981 was based on the report of the DVO, the same is held to be invalid. - the order of the CIT(A) set aside and the AO is directed to adopt the valuation as given and relied upon by the assessee Decided partly in favour of Assessee.
Issues Involved:
1. Valuation of property for calculating capital gains. Analysis: Issue 1 - Valuation of property for calculating capital gains: The appellant contested the addition of Rs. 29,54,102 under section 50C for an Agreement of Development, where the market value was adopted as Rs. 1,68,85,645 by the Income Tax Department, higher than the declared value of Rs. 90,34,200. The first ground was not pressed and rejected. The second ground focused on the valuation of the property. The Assessing Officer (AO) referred the matter to the District Valuation Officer (DVO) to ascertain the fair market value as on 01.04.1981 at Rs. 5,21,913, differing from the value declared by the registered valuer at Rs. 16,91,025. The issue was discussed in a similar case, where it was held that the reference to DVO was invalid if the value declared by the assessee was higher than the fair market value. Citing various decisions, it was concluded that the AO's reference to DVO for valuation was not valid, and the FMV declared by the assessee should be accepted. The appellant's plea was allowed, directing the AO to adopt the FMV at Rs. 6,25,590 as on 01.04.1981 and recalculate the capital gain accordingly, with necessary indexation. The order of the CIT(A) was set aside, following the decision in the coowner's case for consistency. In conclusion, the appeal was partly allowed based on the valuation of the property for calculating capital gains.
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