2015 (11) TMI 1276 - AT - Income Tax

Valuation of the assessee s plot sold and building erected thereupon as on 01-04- 1981 - computation of long term capital gains of assessee-an HUF - Held that - It is evident that the assessee s registered valuer took into account file sale instances (supra) for evaluating its plots value to be ₹ 800 per sq. yd as on 01-04-1981. The plot in question measures 1032.15 sq. yd. The Assessing Officer adopted average value of two sale deeds having area of 1019 sq. yd with rate of ₹ 519.66 sq. yd executed on 03-01-1980 and the other one dated 23-03-1981 involving area of 1034.18 sq. yd with sale price of ₹ 600 sq per yd; coming to ₹ 560 per sq. yd. The other three sale instances forming part of record stand totally brushed aside without any finding to the contrary. We observe in these circumstances that both the authorities below have erred in overruling assessee s registered valuer s report without quoting any material or making necessary reference to the DVO. We hold in these peculiar fact that a remand order simplicitor would not be in the interest of justice. More so, when they impugned long term capital gains on both plots sold and constructed portion are of ₹ 11,63,540/- only to be assessed @ 20%. We take into account all these facts and circumstances and conclude that both the Assessing Officer as well as CIT(A) has wrongly rejected assessee s valuation of the plot sold based on a registered valuer s report. We accept its arguments and direct the assessing authority to adopt value of the plot sold as on 01- 04-1981 as ₹ 800/- per sq. yd. Constructed area valuation - It is to be seen that the assessee s valuer has elaborated his findings at page 10 of the paper book in determining valuation thereof @ ₹ 1550/- per sq. yd. The lower authorities treat a sum of ₹ 500/- per sq. yd only as on 01-04-1981 to be just and proper. We find from the valuation report that this was an old construction raised in 1952 and 1967 having been renovated from time to time. We reiterate that ascertaining cost of construction; and that too from back date may not be always accurate. And it may also require some guess work. We feel it appropriate in larger interest of justice that this cost of construction @ ₹ 700/- per sq. yd would be justifiable. Ordered accordingly. The Assessing Officer shall accordingly frame the necessary computation. - Decided partly in favour of assessee.

Summary

Issues Involved:
Valuation of plot and construction as on 01-04-1981 for computing long-term capital gains.

Analysis:
The appeal pertains to the assessment year 2006-07 and involves substantive grounds related to the valuation of a plot and building for computing long-term capital gains. The appellant disputed the valuation done by the Assessing Officer and raised concerns regarding the method used for determining the value of the property sold. The registered valuer of the appellant valued the land at Rs. 800 per sq. yd, taking into account multiple sale instances, while the Assessing Officer adopted an average value of two sale deeds, resulting in a lower valuation of Rs. 560 per sq. yd. The Tribunal found that both the Assessing Officer and CIT(A) erred in rejecting the appellant's valuer's report without proper justification or reference to the Departmental Valuation Officer (DVO). The Tribunal held that the appellant's valuation based on the registered valuer's report should be accepted, directing the assessing authority to adopt the value of the plot sold as Rs. 800 per sq. yd.

Moving on to the valuation of the constructed area, the appellant's valuer valued it at Rs. 1550 per sq. yd, while the lower authorities considered Rs. 500 per sq. yd to be appropriate as of 01-04-1981. The Tribunal acknowledged the challenges in determining the cost of construction retrospectively and decided that a valuation of Rs. 700 per sq. yd for the construction would be justifiable in the interest of justice. Consequently, the Assessing Officer was directed to adjust the computation accordingly. The Tribunal partially allowed the appeal, emphasizing the importance of accurate valuation in determining long-term capital gains.

In conclusion, the Tribunal's decision focused on rectifying the valuation discrepancies in the assessment of long-term capital gains for the appellant's plot and building. By upholding the appellant's valuer's report for the plot valuation and adjusting the construction valuation for fairness, the Tribunal aimed to ensure a just outcome in the assessment process. The judgment highlighted the significance of proper valuation methods and considerations in determining capital gains, emphasizing the need for a balanced and justified approach in such assessments.