2014 (1) TMI 1886 - AT - Income Tax

Computation of Long Term Capital Gain - CIT-A taking the fair market value of land as on 01/04/1981 at ₹ 200/- per sq. yards as against ₹ 1,400/- per sq. yards claimed by assessee - HELD THAT - In the present case, it appears that the comparable case cited by the assessee was either not brought to the notice of the authorities below or due to oversight it was not considered by the AO/Ld. CIT(A). We, therefore, deem it appropriate to restore this issue back to the file of the AO to be decided afresh in accordance with law after providing due and reasonable opportunity of being heard. The legal heirs of the deceased-assessee are also free to adduce any evidence in support of their claim. - Appeal of the assessee is allowed for statistical purpose.

Summary

Issues:
Computation of Long Term Capital Gain.

Analysis:
The appeal before the Appellate Tribunal ITAT Jaipur involved a dispute regarding the computation of Long Term Capital Gain by the Legal Heir of a deceased-assessee. The deceased-assessee had sold a property in Jaipur, and the grievance primarily centered around the valuation of the property for calculating the capital gain. The deceased-assessee had valued the property at a higher rate, while the Assessing Officer (AO) adopted a lower fair market value based on a comparable case. The dispute led to an appeal before the Ld. CIT(A) and subsequently to the ITAT Jaipur.

The deceased-assessee sold a house in Jaipur for a certain amount, and the value of the property was assessed differently by the deceased-assessee and the AO. The deceased-assessee valued the property higher, resulting in a lower Long Term Capital Gain calculation, whereas the AO adopted a lower fair market value based on a comparable case involving a property in the same locality. The Ld. CIT(A) directed the AO to adopt a slightly higher fair market value than initially determined, considering the location and nature of the property sold by the deceased-assessee.

During the proceedings, the legal representative of the deceased-assessee argued that the authorities did not consider a crucial sale instance of another property in the vicinity, which was sold for a higher amount despite being incomplete. The legal representative contended that the deceased-assessee's property had superior characteristics due to its location and shape, justifying a higher valuation. The legal representative provided evidence of the sale deed of the comparable property to support the argument.

In response, the Department's representative supported the Ld. CIT(A)'s decision based on the comparable case considered and the fair market value determined. After considering the submissions from both parties and reviewing the available material, the ITAT Jaipur decided to remand the issue back to the AO for fresh consideration. The ITAT emphasized providing a fair opportunity for the legal heirs of the deceased-assessee to present any additional evidence supporting their claim. Ultimately, the appeal of the assessee was allowed for statistical purposes, indicating a procedural victory without altering the substantive tax liability.

In conclusion, the judgment by the Appellate Tribunal ITAT Jaipur highlighted the importance of considering all relevant factors and comparable instances in determining the fair market value for computing Long Term Capital Gain. The decision to remand the matter back to the AO for a fresh assessment underscored the need for a thorough and fair evaluation of the valuation aspects, ensuring a just outcome for the legal heirs of the deceased-assessee.