2016 (11) TMI 1036 - AT - Income Tax

Calculation of long-term capital gain - adoption of cost of acquisition - land was inherited by the assessee along with other co-owners - Held that - There is no merit in the submissions of the learned Departmental representative that the same facts were there earlier, which have not been contradicted by the assessee in the subsequent proceedings. The assessee in the subsequent proceedings has been able to satisfy that in the case of co-owner, Shri Birender Singh Gill, the cost of acquisition as on April 1, 1981 have been accepted by the Revenue Department at ₹ 5500 per sq. yard in respect of the same property, which was sold through two different sale deeds. Therefore, the Revenue authorities should not have ignored the directions given by the Tribunal earlier. Considering the above we set side the orders of the authorities below and direct the Assessing Officer to adopt the cost of acquisition of land under consideration as on April 1, 1981 in a sum of ₹ 5500 per sq. yard as against ₹ 600 adopted by the authorities below for the purpose of calculation of long-term capital gain.

Issues Involved:
1. Confirmation of the addition of ?5,81,80,344 under the head of long-term capital gain.
2. Adoption of fair market value of land as on April 1, 1981, at ?600 per sq. yard by the Assessing Officer.
3. Non-consideration of the assessee's claimed rate of ?8,000 per sq. yard based on the Halka Patwari and Registered Valuer's reports.
4. Discrepancy in the rate adopted for adjoining land of the co-owner at ?5,500 per sq. yard.
5. Alleged failure of the Commissioner of Income-tax (Appeals) to properly consider the assessee's submissions.

Detailed Analysis:

1. Confirmation of the Addition of ?5,81,80,344:
The appeal was against the order confirming the addition of ?5,81,80,344 as long-term capital gain. The assessee had declared income of ?14,38,800 and shown the sale of property for ?6,32,73,600, adopting a cost of acquisition as on April 1, 1981, at ?1,36,64,000. The Assessing Officer (AO) proposed a fair market value of ?400 per sq. yard and later adopted ?600 per sq. yard, resulting in the addition. The Commissioner of Income-tax (Appeals) confirmed this addition.

2. Adoption of Fair Market Value at ?600 per sq. yard:
The AO had collected information from Improvement Trust, Ludhiana, and other sources, indicating market rates between ?70 and ?500 per sq. yard. The AO also referred the matter to the District Valuation Officer (DVO), who estimated the fair market value at ?600 per sq. yard. This value was based on various instances of property sales in the area and was confirmed by the Commissioner of Income-tax (Appeals).

3. Non-Consideration of Assessee's Claimed Rate of ?8,000 per sq. yard:
The assessee had adopted ?8,000 per sq. yard based on reports from the Halka Patwari and Registered Valuer. However, the AO noted that these reports lacked solid proof and documentary evidence. The Commissioner of Income-tax (Appeals) did not accept the assessee's contention, holding that the AO's valuation was based on substantial evidence, including the DVO's report.

4. Discrepancy in Rate for Adjoining Land of Co-owner:
The assessee argued that the rate of ?5,500 per sq. yard had been accepted for the adjoining land of a co-owner, Birender Pal Singh Gill. The Commissioner of Income-tax (Appeals) found this claim factually incorrect, stating that the AO had adopted ?600 per sq. yard for the joint property sold by Birender Pal Singh Gill. The Tribunal had earlier directed uniformity in adopting the cost of acquisition for all co-owners, but the AO and Commissioner of Income-tax (Appeals) did not follow this directive.

5. Alleged Failure to Consider Assessee's Submissions:
The assessee contended that the Commissioner of Income-tax (Appeals) failed to properly consider their submissions and objections regarding the valuation. The Tribunal found merit in this contention, noting that the AO and Commissioner of Income-tax (Appeals) did not adequately address the assessee's objections and the valuation accepted in the case of co-owner Birender Pal Singh Gill.

Conclusion:
The Tribunal set aside the orders of the authorities below and directed the AO to adopt the cost of acquisition of land as on April 1, 1981, at ?5,500 per sq. yard, ensuring uniformity with the valuation accepted for the co-owner. The appeal of the assessee was partly allowed.

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