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2022 (8) TMI 1292 - AT - Income TaxLong term capital gain computation - FMV Determination - Reference to DVO - lower authorities action adopting fair mark value of the capital asset in the issue as on 01.04.1981 after making reference to the DVO thereby rejecting his valuation report - HELD THAT - We note in this factual background that section 55(A); as in assessment year 2012-13 before us contained, only the statutory expression is less than its fair market value before its subtutions by Finance Act 2012 w.e.f. 01.07.2012 as is at variance with its fair market value in an instance involving the registered valuer s report. Hon‟ble jurisdictional high court decision in CIT V/s Pooja Prints 2014 (1) TMI 764 - BOMBAY HIGH COURT holds forgoing amendment to be having prospective effect only. That being the case, we conclude that learned lower authorities have erred in law and on facts in making the impugned long term capital gain addition after reference to the DVO u/s. 55A(a) of the Act. The assessee s corresponding grounds in the instant appeal are accepted.
Issues:
1. Addition of long term capital gains on sale of property based on valuation report. 2. Adoption of fair market value by the CIT(A) and rejection of the appellant's valuation. 3. Correctness of interest liability computation under section 234B. Analysis: Issue 1: Addition of Long Term Capital Gains The assessee contested the addition of Rs. 1,70,11,837 as long term capital gains on the sale of property, challenging the CIT(A)'s decision to adopt the fair market value of the property as on 01.04.1981 based on the DVO's valuation report. The assessee argued that the CIT(A) erred in not accepting the fair market value claimed by the assessee based on the valuation report of a Government Approved Valuer, which was higher. The Tribunal noted that the statutory expression "is less than its fair market value" in section 55(A) before its amendment in 2012 was applicable in this case. Referring to a jurisdictional high court decision, the Tribunal held that the lower authorities erred in law and on facts by making the addition after referring to the DVO. Consequently, the assessee's grounds in the appeal were accepted. Issue 2: Adoption of Fair Market Value The main grievance of the assessee was against the adoption of the fair market value of the property by the lower authorities, which was lower than the value claimed by the assessee. The Tribunal found that the lower authorities had erred in rejecting the valuation report of the Government Approved Valuer and making the addition based on the DVO's report. The Tribunal concluded that the action of the CIT(A) was not justified on facts and in law, leading to the acceptance of the assessee's contentions regarding the valuation of the property. Issue 3: Interest Liability Computation under Section 234B The assessee also raised a concern regarding the computation of interest liability under section 234B, arguing that the AO incorrectly computed the interest on the assessed income instead of the returned income. The Tribunal directed the AO to compute the interest under section 234B on the returned income, thereby addressing the assessee's grievance on this issue. In conclusion, the Tribunal allowed the assessee's appeal, condoning the delay in filing due to the Covid-19 pandemic and pronounced the order in favor of the assessee on 29th August 2022.
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