2021 (1) TMI 1281 - AT - Income Tax

Long term capital gain - FMV determination - CIT(A) adopted the Fair Market Value(FMV) of cost of acquisition as on 01.01.1981 @ Rs.14.18 sq. mtr on the basis of report of District Valuation Officer(DVO) - HELD THAT - Considering the fact that in assessee s co-owner s case 2019 (7) TMI 1961 - ITAT SURAT the Tribunal has directed the AO to adopt the Fair Market Value of land @100 per sq.mtr as on 01.04.1981, therefore, respectfully following the order of coordinate bench the AO is directed to follow the order of the Tribunal above accordingly, appeal of the assessee partly allowed.

Summary

Issues:
Assessment of Long Term Capital Loss on sale of agricultural land - Fair Market Value determination as on 01.04.1981 - Validity of Valuation methods - Reference to District Valuation Officer - Compliance with Section 55A of the Act.

Analysis:

Issue 1: Assessment of Long Term Capital Loss on sale of agricultural land
The appeals by the assessees were against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2012-13. The assessees claimed Long Term Capital Loss on the sale of agricultural land. The Assessing Officer collected information from the Sub-Registrar's office and calculated Long Term Capital Gain based on that information. The assessees contended that the Fair Market Value (FMV) of the land as on 01.04.1981 should be determined based on a Valuation report prepared by a Government approved registered valuer using the Reverse Index Method.

Issue 2: Fair Market Value determination as on 01.04.1981
The Commissioner of Income Tax (Appeals) adopted the Fair Market Value of the land as on 01.04.1981 based on the report of the District Valuation Officer (DVO), granting partial relief to the assessees. The assessees raised grounds of appeal challenging the rejection of the Valuation report prepared by the registered valuer and the adoption of the FMV by the CIT(A) as determined by the DVO. The Tribunal considered the valuation methods and the variation in rates provided by different authorities.

Issue 3: Validity of Valuation methods and Compliance with Section 55A of the Act
The Tribunal referred to a previous case where it was held that if the value claimed by the assessee is in accordance with the estimate made by the Registered Valuer, then a reference to the DVO can be made if the AO believes the value claimed is less than the FMV as on 01.04.1981. The Tribunal considered the rates provided by the Government Registered Valuer, DVO, and CIT(A) and arrived at an average rate for the FMV. The Tribunal directed the Assessing Officer to work out the Long Term Capital Gain based on the average FMV rate.

In conclusion, the Tribunal partly allowed the appeals of the assessees based on the valuation methods and the determination of Fair Market Value as on 01.04.1981. The orders were announced in a Virtual Court hearing on 13th January 2021.