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2019 (3) TMI 1630 - AT - Income TaxComputation of long term capital gains - reference to DVO - FMV declared by assessee as on 01.04.1981 - DVO had valued the said property as on 01.04.1981 at a lesser figure - Section 55A(a) of the Act in 2012 by which the words is less then the fair market value is substituted by the words is at variance with its fair market value - HELD THAT - We find no merit in the stand of authorities below. AO or CIT(A) is precluded from adopting the fair market value as on 01.04.1981 at a value lesser than the value declared by the assessee while computing the long term capital gains in view of the ratio laid down by the Hon ble Bombay High Court in CIT Vs. Puja Prints 2014 (1) TMI 764 - BOMBAY HIGH COURT . No reference can be made u/s 55A in order to value the cost of acquisition of property as on 01.04.1981 at a figure lesser than the value declared by the assessee. We direct the Assessing Officer to adopt the fair market value declared by assessee as on 01.04.1981 in order to compute the income from long term capital gains in the hands of assessee. - decided in favour of assessee.
Issues Involved:
1. Validity of proceedings under Section 148. 2. Validity of the assessment order under Section 143(3) read with Sections 147/148. 3. Restriction of relief and estimation of property valuation. 4. Non-granting of equitable relief considering co-ownership. 5. Interest charged under Sections 234A and 234B. 6. Additional grounds regarding capital gain restriction and cost of transfer deductions. Detailed Analysis of Judgment: 1. Validity of Proceedings under Section 148: The assessee challenged the validity of the proceedings initiated under Section 148. However, this issue was rendered academic as the Tribunal first addressed the core issues related to property valuation and capital gains. 2. Validity of the Assessment Order under Section 143(3) read with Sections 147/148: The assessee also contested the validity of the assessment order passed under these sections. Similar to the first issue, this was deemed academic and not further deliberated upon due to the resolution of the primary issues. 3. Restriction of Relief and Estimation of Property Valuation: The primary contention revolved around the valuation of the property as on 01.04.1981. The assessee declared a valuation based on a registered valuer’s report, which the Assessing Officer (AO) did not accept, referring the matter to the Departmental Valuation Officer (DVO) under Section 55A of the Act. The DVO's lower valuation was used to compute capital gains. The CIT(A) upheld the AO's decision but estimated the property value independently. The Tribunal found no merit in the authorities' stand, citing the Hon’ble Bombay High Court’s ruling in CIT Vs. Puja Prints, which precludes the AO from adopting a lower fair market value than that declared by the assessee. The Tribunal directed the AO to adopt the fair market value as declared by the assessee. 4. Non-Granting of Equitable Relief Considering Co-Ownership: The assessee argued that equitable relief was not granted considering the co-ownership status, where the assessee held only a 1/9th share. The Tribunal’s decision to adopt the fair market value declared by the assessee inherently addressed this issue, as the capital gains would be computed based on the correct valuation. 5. Interest Charged under Sections 234A and 234B: The assessee denied the liability of interest charged under these sections and sought deletion. This issue became academic following the Tribunal's decision on the primary valuation issue. 6. Additional Grounds Regarding Capital Gain Restriction and Cost of Transfer Deductions: The additional grounds included restricting the capital gain to the assessee's 1/9th share and granting deductions for costs of transfer (stamp duty, registration, legal fees). The Tribunal’s directive to adopt the fair market value declared by the assessee for computing capital gains addressed the primary concern. The Tribunal did not specifically address the cost of transfer deductions but implied that the correct valuation would inherently adjust the capital gains computation. Conclusion: The Tribunal allowed the appeal, directing the AO to adopt the fair market value declared by the assessee as on 01.04.1981 for computing long-term capital gains, thus rendering the other grounds academic. The decision was pronounced on March 12, 2019.
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