2016 (5) TMI 160 - AT - Income Tax

Capital gain computation - year of assessment - Held that - In view of contradictory agreements/documents executed by assessee himself it would be always preferred to give credence to the document that has been submitted before the land revenue authorities. In this case, before land revenue authorities sale deed is executed where assessee has confirmed that possession of the property is given at the time of execution of sale deed. The other agreement which is agreement to sell, which is not registered with any statutory authority, but only between buyer and sellers which is notarized does not give any credence to the transaction entered by the assessee. Further, before the assessing officer and Commissioner (A) , it was never controverted by the assessee that why on the reverse of page 1 of the sale agreement fact of agreement without giving possession to the buyer is mentioned. In view of this facts, we confirm the order of CIT (A) s and hold that the no weightage can be given to a notarized agreement to sell executed between the parties on 14th may 2007 in preference to registered sale deed executed by the assessee before registrar wherein it is stated that the possession is given along with the sale deed executed on that date. In view of this, we are of the view the capital gain is required to be assessed in assessment year 2009 10, and there is no error in the order of assessing officer as well as Commissioner of income tax (A). Cost of acquisition - Held that - We could not find any ground taken by the assessee regarding adoption of the cost of acquisition and thereby determining the fair market value of the property on 1-4-1981. On reading order of the assessing officer, also we could not find any objection before the assessing officer on adoption of such rate. It is undisputedly concurrently before the lower authorities, the assessee has accepted the price, which has been determined by the assessing officer. However, rates adopted by the assessing officer of ₹ 70 per square yard did not have any basis. Similarly, the valuation report relied upon by the assessee of some other property belonging to somebody else cannot also be accepted. Therefore, in the interest of Justice We set aside this ground of appeal to the file of the assessing officer to determine a fresh the fair market value of the property as on 01/04/1981. That assessee may be granted proper opportunity of hearing and producing evidence-supporting value as fair market value of the asset as on 01/04/1981

Summary

Issues:
1. Assessment of capital gains on property transfer.
2. Adoption of cost of acquisition for property valuation.

Issue 1: Assessment of Capital Gains on Property Transfer:
The appeal was filed against the order passed by the Commissioner of Income Tax (Appeals) regarding the assessment of capital gains on the transfer of property. The assessee contended that the full consideration for the transfer was received at the time of the agreement for sale, and possession was given to the purchaser before the assessment year in question. The assessing officer assessed the capital gains based on the possession date and sale deed execution date. The Appellate Tribunal upheld the lower authorities' decision, emphasizing the importance of possession transfer at the time of the sale deed execution. The Tribunal found discrepancies in the dates of possession transfer mentioned in the agreements, giving more weight to the registered sale deed over the notarized agreement to sell. Consequently, the Tribunal confirmed the assessment of capital gains for the relevant assessment year, dismissing the appeal on this ground.

Issue 2: Adoption of Cost of Acquisition for Property Valuation:
The second ground of appeal pertained to the adoption of the cost of acquisition for property valuation as of 01/04/1981. The assessee raised concerns about the low valuation rate of &8377; 70 per square yard used by the assessing officer, presenting a valuation report of another property to support a higher valuation range. However, the Tribunal noted that the assessee did not raise this issue before the lower authorities, and no objection was made during the assessment process. While acknowledging the lack of a proper basis for the valuation rate used by the assessing officer, the Tribunal set aside this ground of appeal and directed the assessing officer to reassess the fair market value of the property as of 01/04/1981. The assessee was granted the opportunity to provide evidence supporting the property's value on the specified date. Consequently, the Tribunal partially allowed the appeal on this ground.

In conclusion, the Appellate Tribunal upheld the assessment of capital gains on the property transfer for the relevant assessment year, emphasizing the importance of possession transfer at the time of the sale deed execution. Additionally, the Tribunal directed a reassessment of the fair market value of the property for property valuation purposes, granting the assessee an opportunity to present supporting evidence.