2014 (6) TMI 143 - AT - Income Tax

Determination of LTCG as per section 50C of the Act Valuation of property Held that - The assessee has filed a valuation report in support of his claim that the value adopted by the stamp duty valuation authority is on the higher side - the assessee can object to the value adopted by the stamp valuation authority and if this is done, the AO may refer the valuation to the valuation officer - the AO has not followed the procedure - If the assessee has filed a report of the approved valuer, the AO may either accept the valuation of the property on the basis of this report or refer the question of valuation to the department valuation officer in accordance with section 55A of the Act thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee. Dismissal of the claim of cost of acquisition FMV provided u/s 55(22)(b)(i) of the Act as on 01.04.1981 Held that - An option is given to the assessee to substitute fair market value as on 01.04.1981 if the property became the property of the assessee before 01.04.1981 - the assessee has claimed that the property was acquired in 1963, the cost of acquisition should be the fair market value as on 01.04.1981 thus, the matter is remitted back to the AO for verification - Decided in favour of Assessee. Denial of deduction u/s 80C of the Act Tuition fee for education - the AO has referred to the claim of deduction u/s. 80C relating to the payment of housing loan - in the assessment order while computing the assessed income, no deduction u/s. 80C in respect of tuition fees has been allowed by the AO - The AO is directed to allow the claim of the assessee for deduction u/s. 80C of the Act in relation to the payment of housing loan along with the claim of payment of tuition fees Decided in favour of Assessee.

Summary

Issues:
1. Determination of Long Term Capital Gains based on Sec. 50C of the I.T. Act.
2. Adoption of fair market value for working out Long Term Capital Gains.
3. Denial of deduction u/s. 80C for tuition fees.

Analysis:
1. The appeal challenged the order of the CIT(A) regarding the determination of Long Term Capital Gains on the sale of property. The AO invoked Sec. 50C of the I.T. Act to consider stamp duty value as full consideration, leading to a dispute on the property's fair market value. The CIT(A) upheld the AO's decision, prompting the assessee to appeal. The ITAT noted that the AO did not refer the valuation to the department's valuation officer despite the objection raised by the assessee. The ITAT directed the AO to refer the matter to the DVO for a fresh decision, emphasizing the need to consider the fair market value as per the approved valuer's report.

2. The second issue revolved around the adoption of fair market value for computing Long Term Capital Gains. The assessee claimed that the property was acquired before 01.04.1981, thus the cost of acquisition should be the fair market value as on that date. The ITAT agreed with this contention and directed the AO to verify the claim and, if satisfied, adopt the fair market value as on 01.04.1981 for calculating Long Term Capital Gains.

3. The final issue pertained to the denial of deduction u/s. 80C for tuition fees. The AO allowed deduction for housing loan but omitted tuition fees while computing the assessed income. The ITAT directed the AO to permit the deduction for tuition fees along with the housing loan amount, provided necessary details are submitted by the assessee. Consequently, the appeal was allowed for statistical purposes, and the order was pronounced in May 2014.

This detailed analysis highlights the key legal aspects and procedural steps involved in the judgment, focusing on the assessment of Long Term Capital Gains, fair market value considerations, and the allowance of deductions under relevant sections of the Income Tax Act.