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2022 (6) TMI 1067 - AT - Income TaxCapital gain computation - FMV determination - reference to DVO - indexed cost of acquisition - addition u/s. 50C of the Act on account of difference in the value adopted by the DVO and the sale consideration taken by the assessee in his return of income - cost of indexation - HELD THAT - As decided in in assessee s co-owner case DHARMENDRA B. PATEL VERSUS THE DCIT, CIRCLE-1 (3) , SURAT. 2021 (7) TMI 247 - ITAT SURAT Since the process of sale has been initiated from the date of Sale Agreement, the character of the transaction vis-a-vis Section 50C of the Income tax Act should also be determined on the basis of the conditions that prevailed on the date the transaction was initially entered into. Accordingly, the applicability of the provisions of section 50C should be looked at only on the date of Agreement to Sell. Cost of indexation claimed - Also in the above case of assessee's co-owner we find that the dispute between the assessee and the assessing officer is the rate of ₹ 825/- per square meter, as fair market value as on 01.04.1981, whereas the DVO has estimated the fair market value as on 01.04.1981 at the rate of 114.30 per square meter. We note that the DVO has himself stated in his report that the impugned land was situated at more appropriate location as compared to sale instances considered by him. We also agree with assessee s land is situated in New City Light Area of Surat, which is costly area and prices of the land in the said area is very higher side. Therefore, considering the entirety of the facts and taking a holistic view the fair market value @ 607 per square meter should be adopted to meet the end of justice. Accordingly, the AO is directed to apply rate of ₹ 607 per sq. meter for calculation of indexed cost of acquisition for the purpose of computation of long-term capital gain in the hands of the assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Determination of the fair market value (FMV) of the property as on 01.04.1981 for the purpose of computing long-term capital gains (LTCG). Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appeal was filed by the assessee with a delay of 1457 days. The assessee requested the Bench to condone the delay, explaining that the delay occurred due to a mistake by the Authorized Representative (AR) who failed to file the appeal on time. The AR realized the omission only after the appeal of the assessee's brother, involving the same issue, was conducted. The assessee argued that the case was meritorious and covered by the decision in the brother's case, and that not condoning the delay would cause irreparable loss. The Revenue objected, alleging that the appeal was filed to take advantage of the favorable decision in the brother's case and that the delay should not be condoned. The Tribunal, however, noted that the appeal was filed before the decision in the brother's case was pronounced, thus rejecting the Revenue's argument of mala fide intention. The Tribunal emphasized that the term "sufficient cause" should be liberally construed to advance substantial justice, especially when no negligence or inaction is imputable to the assessee. Citing precedents, the Tribunal condoned the delay, emphasizing the importance of substantial justice over technicalities. 2. Determination of Fair Market Value (FMV) as on 01.04.1981: The assessee, along with co-owners, sold an immovable property and declared the FMV as on 01.04.1981 at Rs. 825 per sq. meter based on a valuation report by an approved valuer. The Assessing Officer (AO), however, found this valuation to be on the higher side compared to sale instances from the Sub-Registrar, which ranged from Rs. 2.85 to 6.45 per sq. meter. The AO referred the matter to the Valuation Officer (DVO), who valued the property at Rs. 114.30 per sq. meter. The Tribunal noted that in the assessee's brother's case, the Tribunal had accepted the FMV at Rs. 825 per sq. meter. The Tribunal observed that the DVO's valuation did not consider the specific advantages and potential of the assessee's land, which was in a prime location. The Tribunal also cited several precedents where the valuation by a government-approved valuer was preferred over the DVO's valuation if the latter did not adequately account for all relevant factors. The Tribunal concluded that the FMV should be determined by considering the location, potential, and other relevant factors. It adopted a pragmatic approach and decided that the FMV of Rs. 607 per sq. meter, as suggested by the assessee's method of reverse calculation, was reasonable and should be used for calculating the indexed cost of acquisition. Conclusion: The Tribunal allowed the appeal, condoning the delay and directing the AO to adopt the FMV of Rs. 607 per sq. meter for the purpose of computing the indexed cost of acquisition and long-term capital gains. The decision was based on the principles of substantial justice and the precedents set in similar cases, including the assessee's co-owner's case. The appeal was thus partly allowed in favor of the assessee.
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