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2016 (5) TMI 1022 - AT - Income TaxComputation of long term capital gain - whether value as on the date of sale as estimated by the DVO should be taken as full consideration received on transfer? - Held that - The claim of the assessee made before CIT(A) and the manner of computation of long term capital gain has to be accepted. We hold and direct the AO to accept the said computation in view of the above conclusion that there is no necessity to decide on the correctness of the fair market value as on 01.04.1999 because the fair market value as on 01.04.1999 and also the value of the property as on the date of sale as given by the DVO is being accepted in toto. - Decided partly in favour of assessee
Issues Involved:
1. Determination of the fair market value of the property as on 01.04.1981. 2. Adoption of the full value of consideration received on transfer for computing capital gains. 3. Acceptance of the DVO's valuation over the Stamp Valuation Authority's value. 4. Application of Section 50C of the Income Tax Act. 5. Computation of long-term capital gains. Detailed Analysis: 1. Determination of the Fair Market Value of the Property as on 01.04.1981 The Assessee and his brother, co-owners of the property, sold it for ?90 lakhs. The Registrar of Assurances valued the property at ?2,76,76,138 for stamp duty purposes. The Assessee estimated the fair market value of the property as on 01.04.1981 at ?43,40,400, supported by a registered valuer's report. The AO, however, referred to the DVO's report for the other co-owner, which estimated the fair market value as on 01.04.1981 at ?14,56,208. 2. Adoption of the Full Value of Consideration Received on Transfer The Assessee adopted the full value of consideration based on the Stamp Valuation Authority's value for computing capital gains. The AO, however, used the DVO's lower valuation for the other co-owner, leading to a higher computation of long-term capital gains. 3. Acceptance of the DVO's Valuation Over the Stamp Valuation Authority's Value The Assessee argued that the DVO's valuation as on the date of sale should be adopted, which would result in no capital gains chargeable to tax. The CIT(A) rejected this argument, stating that the Assessee had initially accepted the Stamp Valuation Authority's value in his return. 4. Application of Section 50C of the Income Tax Act Section 50C mandates that if the consideration received on transfer is less than the value adopted by the Stamp Valuation Authority, the latter value should be deemed the full value of consideration for computing capital gains. The Tribunal referenced the case of Sunil Kumar Agarwal vs. CIT, where it was held that the DVO's valuation should be considered to avoid miscarriage of justice. 5. Computation of Long-Term Capital Gains The Assessee's computation of long-term capital gains was based on the Stamp Valuation Authority's value, resulting in a taxable gain of NIL after investments in 54EC Bonds. The AO's computation, based on the DVO's lower valuation for the other co-owner, resulted in a higher taxable gain. The Tribunal ultimately directed the AO to adopt the DVO's valuation as on the date of sale for computing capital gains, aligning with the decision in the Assessee's brother's case. Conclusion The Tribunal concluded that the value of the property as on the date of sale, as estimated by the DVO, should be taken as the full consideration received for computing long-term capital gains. This decision aligns with the precedent set in the Assessee's brother's case and the legal provisions under Section 50C. The appeal of the Assessee was partly allowed, and the AO was directed to accept the Assessee's computation of capital gains based on the DVO's valuation.
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