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2019 (3) TMI 275 - AT - Income TaxCapital gain computation - cost of acquisition of the asset as on 01.04.1981 - valuation report of the DVO Vs. Registered valuer Report - entire basis of the DVO is based on the value given in the Nabhi s guide and thereafter, he has made certain adjustment - FMV ascertainment - deduction u/s.54 claimed - HELD THAT - Nabhi s rates are nothing but merely compilation of DDA s auction rate based on reasonable estimation and if he is applying the auction rate of Safdarjung area during the year 1981 which cannot be held to be applicable for the locality of Vasant Vihar which is far more developed area. If the authorities while fixing the circle rate for a particular area has categorized any area to be a A-category, then it cannot be compared with the area categorized as B-category having a lower circle rate. Thus, this factor alone vitiates the DVO s report and the basis adopted by him. If assessee has filed Approved Valuer s report taking into consideration various factors applicable for the area of Vasant Vihar, then same does not loses his credence to DVO s report. It has to be given a credible importance and it cannot be said that the DVO s report should supersede the Approved Valuer s report. Even, the comments of the DVO on the registered valuer report is not adverting to the point, as to why Safdarjung rate has been applied at Vasant Vihar. Looking to the fact that Approved Valuer have given a report on the basis of which assessee has estimated a fair market value of the property as on 1.4.1981, is to be accepted. We hold that the value of the property as on 1-4-2018 has to be taken at ₹ 69,26,000/- as determined by the registered valuer, and therefore, the addition made by the Assessing Officer is directed to be deleted - Decided in favour of assessee.
Issues involved:
Valuation of property for Long Term Capital Gain computation based on DVO report versus approved valuer report. Analysis: 1. The appeal was filed against the order passed by the CIT(Appeals) for the quantum of assessment under section 143(3) for the Assessment Year 2014-15. The main issue raised was the addition of ?83,80,455 on account of the difference in the cost of acquisition of the asset as on 01.04.1981, based on the report of the DVO. 2. The assessee sold a property and declared Long Term Capital Gain, claiming deduction under section 54. The property was shared, and the dispute arose regarding the cost of acquisition. The Assessing Officer referred the matter to the DVO, who estimated the fair market value lower than the assessee's declared value, resulting in the addition to the capital gain computation. 3. The assessee objected to the DVO's valuation report, citing discrepancies in the methodology and locality categorization. The CIT(A) directed the Assessing Officer to provide a remand report and consider the objections raised. The DVO defended the valuation based on guidelines and historical auction rates, emphasizing the development disparity between Safdarjung and Vasant Vihar. 4. The CIT(A) rejected the approved valuer's report submitted by the assessee and upheld the DVO's valuation, leading to the sustained addition by the Assessing Officer. The assessee challenged this decision, arguing against the applicability of Safdarjung rates to Vasant Vihar and the precedence of the approved valuer's report. 5. The ITAT considered the submissions and found discrepancies in the DVO's valuation methodology, emphasizing the importance of locality categorization and the approved valuer's report. Relying on precedent judgments, the ITAT concluded that the approved valuer's report should prevail, directing the deletion of the addition made by the Assessing Officer. 6. The ITAT allowed the appeal, emphasizing the significance of the approved valuer's report in determining the property's value for Long Term Capital Gain computation, overruling the DVO's valuation based on Safdarjung rates. This detailed analysis highlights the key arguments, decisions, and reasoning presented in the judgment, focusing on the valuation dispute and the ITAT's final decision in favor of the approved valuer's report over the DVO's valuation.
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