2015 (6) TMI 893 - AT - Income Tax

Computation of long term capital gains - whether there is not cost of acquisition ascertained in this case u/s.49(1)(i) in the hands of previous owner for computing impugned capital gains? - two additional grounds that stamp duty valuation as stated on the partition deed has been wrongly adopted as fair market value as on the date of acquisition of the property And the impugned long term capital gains have been wrongly assessed in his hands instead of that in case of eponymous HUF - Held that - We put up a specific query to the ld AR as to whether the said HUF has ever shown the capital asset in question in its books or admitted impugned long term capital gains in its case. He has replied in negative. Nor does he place on record HUF s record showing his asset s ownership in the past. The case file demonstrates that the said HUF holds a PAN (page no.78). Therefore, we observe that the assessee is not entitled to shift assessment of impugned capital gains in HUF s hands. Therefore, the assessee s arguments challenging assessment of capital gains in his hands rather than HUFs fail. Valuation of the property on the basis of partition deed dated 16.9.1975 - Held that - As already narrated that this asset came from an earlier HUF after a registered partition. The value of the total assets was determined at ₹ 2,67,750/- and the impugned capital asset was valued at ₹ 55,050/-. We reiterate that that it s a duly registered document enjoying presumption of correctness. The assessee also fails to rebut contents thereof that the valuation of the earlier HUF asset was not proper. We observe that in absence of other material on record or assessee s evidence demonstrating any other value of the asset in question, the authorities below have rightly adopted the value of the asset sold at ₹ 55,050/- in accordance with the above stated registered partition deed. The assessee s second substantive argument also fails. Fair market value of the property sold as on 1.4.1981 for the purpose of computation of capital gains - Held that - The authorities below have not granted him the benefit of appreciation of the asset s value for the period from 1975 to 1.4.1981 in computing long term capital gains. The Revenue fails to rebut this factual position. We deem it appropriate to observe that the impugned assessment year is 2008-09. Much water has flown down the stream. Thus, instead of remanding this issue back, we feel that larger interest justice would be met in case we ourself apply thumb rule on this subjective issue and direct the Assessing Officer to adopt fair market value of the asset sold as ₹ 1 lac as on 1.4.1981 and re-compute long term capital gains by passing a consequential order. We order accordingly. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Assessment of long term capital gains in individual's hands.
2. Challenge to valuation of property based on partition deed.
3. Fair market value determination for computation of capital gains.

Analysis:

Issue 1: Assessment of long term capital gains in individual's hands
The Assessing Officer (AO) assessed long term capital gains in the individual's hands based on the value stated in the partition deed. The CIT(A) upheld this decision, rejecting the appellant's claim that the property was inherited and the cost of acquisition could not be ascertained. The appellant's reliance on a previous case was deemed misplaced as the property was not acquired by conquest but inherited. The AO correctly applied Section 55(3) to determine the fair market value at the date of partition. The appellant's failure to exercise the option under Section 55(3) led to the dismissal of the appeal.

Issue 2: Challenge to valuation of property based on partition deed
The appellant challenged the valuation of the property based on the partition deed dated 16.9.1975. The tribunal noted that the asset came from an earlier Hindu Undivided Family (HUF) after a registered partition. The value of the impugned asset was determined in the partition deed and was considered correct. The appellant failed to provide evidence to rebut this valuation, leading to the rejection of this argument.

Issue 3: Fair market value determination for computation of capital gains
The tribunal observed that the authorities did not consider the appreciation of the asset's value from 1975 to 1.4.1981 in computing long term capital gains. To ensure justice, the tribunal directed the Assessing Officer to adopt a fair market value of the asset sold as Rs. 1 lac as on 1.4.1981 and re-compute the long term capital gains. This decision partially succeeded in favor of the appellant.

In conclusion, the tribunal partially allowed the appellant's appeal, directing a re-computation of long term capital gains based on the fair market value determined as of 1.4.1981. The judgment provided a detailed analysis of the issues related to the assessment of capital gains and the valuation of the property, ensuring a fair and just outcome in accordance with the Income Tax Act, 1961.