9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (9) TMI 944 - AT - Income TaxRe-computation of the long term capital gains - Reference valuation of capital asset to a Valuation Officer for ascertaining the fair market value of a capital asset - HELD THAT - As per the provisions of the Act the AO may refer the valuation of capital asset to a VO for ascertaining the fair market value of a capital asset if the AO is of opinion that the value claimed by the assessee is at variance with its fair market value. We have gone through the order of the AO and find that no justification has been given by the AO while referring the matter to the DVO. AO mentions that he was not satisfied about the correctness of the report without bringing any material on record as to how the valuation report given by the assessee is not acceptable. Hence at the outset the reference to the valuation officer by the AO cannot be upheld. We have gone through the valuation report submitted by the assessee. FMV has been determined by the registered valuer taking into consideration the sale deeds from the Income Tax Department auction and from the other comparable registries. The land rate has been determined per sq. yards and cost of construction is determined at Rs. 120/- per sq. ft. as on 01.04.1981. On the other hand the departmental valuation officer determined the cost of land at Rs. 6, 895/- per sq. yards and cost construction was determined at Rs. 53/- per sq. ft. DVO has not considered any comparable cases of the relevant year while determining the value.The DVO has worked backwards deducting 1.5%/month for 27 months from the value of 1983 rates. DVO deducted 41.41% from the value of the properties in 1983 for determining the value in 1981. DVO assumed a rise of 41% from 1981 to 1983. Hence the methodology applied by the DVO has got inbuilt incongruencies hence cannot be validated. Ergo we hold that the re-computation of the long term capital gains made by the AO as confirmed by the ld. CIT(A) cannot be sustained.
Issues Involved:
The issues involved in the judgment are violation of principles of natural justice by the Assessing Officer, discrepancies in valuation reports, and the re-computation of long term capital gains. Violation of Principles of Natural Justice: The appellant raised concerns regarding the Assessing Officer's failure to provide a reasonable opportunity of being heard and not furnishing the valuation report. The appellant contended that the order passed under section 154 of the Act was arbitrary, unjustified, and against the law. The appellant argued that the actions of the ld. CIT (A) were arbitrary and violated natural justice principles. The appellant highlighted the interconnectedness of all grounds of appeal and the tax effect thereof. Discrepancies in Valuation Reports: The Valuation Officer (VO) did not provide the full valuation report to the assessee during the objection filing process. The appellant argued that disparities in the valuation report were ignored by the ld. CIT (A), which could have been addressed if the full report was provided timely. The appellant contended that the actions of the ld. CIT (A) were arbitrary, unjustified, and against the law. The appellant emphasized the interconnectedness of all grounds of appeal and the cumulative tax effect. Re-computation of Long Term Capital Gains: The appellant, a non-resident Indian, declared long term capital gains from the sale of a property. The Assessing Officer referred the valuation of the property to a Valuation Officer who determined a lower value, leading to a re-computation of the capital gains. The ld. CIT (A) confirmed the addition made by the Assessing Officer. The Tribunal found that the Assessing Officer did not provide justification for referring the matter to the DVO and that the methodology applied by the DVO had inconsistencies. Consequently, the re-computation of long term capital gains was deemed unsustainable, and the appeal of the assessee was allowed. Separate Judgment by Judges: The judgment was pronounced by Dr. B. R. R. Kumar, Accountant Member, and Sh. Kul Bharat, Judicial Member on 03/08/2023.
|
