2020 (6) TMI 429 - AT - Income Tax

Capital gain computation - reference made u/s 55A - value of immovable property determined by the District Valuation Officer - AO adopted the fair market value of the property as on 01.04.1981 as determined by DVO for the purpose of computation of long term capital gain - scope of provisions of section 55A(a) as amended - HELD THAT - Amended provisions of section 55A(a) is applicable from 01.07.2012, that is, (previous year 01.07.2012 to 31.03.2013) for assessment year 2013-14 onwards. Whereas the assessee sold the property on 21.07.2011, therefore amended provisions of section 55A(a) does not apply to the assessee under consideration. In assessee s case the assessment year is A.Y. 2012-13 whereas amended provisions of section 55A(a) of the Act are applicable from A.Y. 2013-14. Hence, pre-amended section 55A(a) is applicable to the assessee wherein the terminology used is is less than its fair market value . We note that assessee s qualified Registered Valuer of Income Tax had valued the property at fair market value on 01.04.1981 at ₹ 18,51,000/- which is not less than the fair market value done by the District Valuation Officer of Income Tax Department at ₹ 5,82,083/-. Based on the position in law as explained above, we direct the assessing officer to take the fair market value of the property as on 01.04.1981 at ₹ 18,51,000/- for the purpose of computation of long term capital gain. - Decided in favour of assessee.

Summary

Issues:
1. Delay in filing the appeal for Assessment Year 2012-13.
2. Determination of fair market value of immovable property for computation of long term capital gain.

Issue 1: Delay in filing the appeal for Assessment Year 2012-13:
The appellant filed an appeal for Assessment Year 2012-13, which was delayed by 73 days. The appellant cited living in a hilly area far from Kolkata as the reason for the delay. The appellant's counsel requested the Bench to condone the delay, which was eventually granted after hearing both parties. The appeal was admitted for hearing despite the delay.

Issue 2: Determination of fair market value of immovable property for computation of long term capital gain:
The main grievance of the appellant in the appeal was regarding the determination of the fair market value of an immovable property as on 01.04.1981. The District Valuation Officer valued the property at ?5,82,083, while the appellant's registered valuer valued it at ?18,51,000. The Assessing Officer, based on the DVO's valuation, adopted the lower value for computation of long term capital gain. The CIT(A) upheld the AO's decision, leading the appellant to appeal to the ITAT Kolkata.

During the proceedings, the ITAT analyzed the provisions of Section 55A of the Income Tax Act, which allows the AO to refer the valuation of a capital asset to a Valuation Officer. The ITAT noted that the amended provision of Section 55A(a) was not applicable to the appellant as the property was sold before the amendment came into effect. Therefore, the pre-amended Section 55A(a) applied, which stated that if the value claimed by the assessee is not less than the fair market value, the AO should consider the claimed value.

Considering the legal position, the ITAT directed the AO to adopt the fair market value of the property as on 01.04.1981 at ?18,51,000 for the computation of long term capital gain. The ITAT also excluded the lockdown days while pronouncing the order due to the Covid-19 pandemic, following a precedent set by the Mumbai Tribunal.

In conclusion, the ITAT allowed the appeal of the assessee, setting aside the lower valuation by the DVO and directing the AO to consider the higher fair market value for computation of long term capital gain.

This detailed analysis covers the issues of delay in filing the appeal and the determination of fair market value comprehensively, providing an in-depth understanding of the legal judgment.