2014 (10) TMI 1027 - AT - Income Tax

Capital gain computation - treat fair market value ( FMV ) of the assessee s land acquired @ ₹ 5,16,200/- per ground as on 1.4.1981 OR ₹ 10,000/- per ground treated in re-assessment framed on 11.11.2011 - Revenue s only grievance is that the CIT(A) ought to have taken FMV of the property as on 1.4.1981 as per the Sub-Registrar s correspondence - HELD THAT - A co-ordinate bench of the 'tribunal' has already averaged the two values qua the same property in assessment year 2006-07. AO has re-opened the assessment on the basis of his findings in the said assessment year. Revenue fails to point out any distinction on facts. In these circumstances, we hold that the CIT(A) has rightly adopted average of the two valuations in partly accepting the assessee s contentions. The CIT(A) s findings under challenge are affirmed. The Revenue s grounds stand rejected.

Summary

Issues:
- Appeal against order of the Commissioner of Income-tax (Appeals) II Chennai for assessment year 2007-08 under section 143(3) r.w.s 147 of the Income-tax Act, 1961.
- Challenge to deletion of long term capital gains addition by CIT(A) by adopting fair market value (‘FMV’) of land acquired @ &8377; 5,16,200/- per ground as on 1.4.1981 instead of &8377; 10,000/- per ground.

Analysis:
1. The Revenue's appeal challenged the CIT(A)'s order regarding the deletion of long term capital gains addition. The Assessing Officer had treated the fair market value (‘FMV’) of the assessee's land acquired @ &8377; 10,000/- per ground in re-assessment. However, the CIT(A) directed the Assessing Officer to consider the FMV as &8377; 5,16,200/- per ground as on 1.4.1981. This decision was based on the valuation adopted by a registered valuer's report, resulting in a substantial difference in the amount of long term capital gains.

2. The assessee, a company engaged in manufacturing and trading, had filed its return admitting income of &8377; 8,76,690/-. The acquisition of a part of the assessee's land for road widening led to compensation under acquisition laws, resulting in additional income of &8377; 3,05,60,871/-. The Assessing Officer re-opened the assessment based on the valuation adopted in the previous year and calculated the long term capital gains at &8377; 3,02,41,406/- by using a lower FMV of &8377; 10,000/- per ground.

3. The CIT(A) relied on a tribunal order in the assessee's own case for the assessment year 2006-07, where the FMV of the same property was determined at &8377; 5,16,200/-. The Revenue contended that the FMV should be as per the Sub-Registrar's valuation, but the CIT(A) upheld the average of the two valuations. The tribunal affirmed the CIT(A)'s decision, stating that no factual distinction was pointed out by the Revenue, leading to the rejection of the Revenue's grounds.

4. In conclusion, the tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to consider the average FMV of the property as on 1.4.1981. The tribunal found no merit in the Revenue's arguments and affirmed the CIT(A)'s findings, ultimately rejecting the Revenue's grounds of appeal.