2022 (10) TMI 545 - AT - Income Tax

Computing the income from LTCG - adoption of market value by the Ld.CIT(A) as against the market value adopted by the SRO at the time of registration - reverse formula adopted by the CIT(A) would work out the market value - assessee could not obtain the certificate of market value of the property as on 01.04.1981 as the records of the Sub-Registrar were destroyed for the period prior to 01.01.1989 due to riots - HELD THAT - As relying on ASHVEN DATLA 2012 (11) TMI 1098 - ANDHRA PRADESH HIGH COURT CIT(A) has considered the reverse indexation method submitted by the Ld.AR and has rightly directed the AO to adopt the same. Therefore, find no interference in the order of the Ld.CIT(A) and accordingly dismiss the grounds raised by the revenue.

Summary

Issues:
Condonation of Delay; Computation of Long Term Capital Gains; Adoption of Fair Market Value for Cost of Acquisition; Appeal against CIT(A) Order.

Condonation of Delay:
The appeal was filed by the revenue with a delay of 11 days, seeking condonation. The revenue explained the delay due to procedural requirements. The Tribunal, after hearing the arguments, found a reasonable cause for the delay and decided to condone it, allowing the appeal to proceed.

Computation of Long Term Capital Gains:
The case involved an individual deriving income from various sources, including capital gains. The dispute arose regarding the computation of long-term capital gains (LTCG) on the sale of inherited property. The Assessing Officer (AO) and CIT(A) differed on the fair market value (FMV) as on 01.04.1981 for determining the cost of acquisition. The AO's calculation was contested by the CIT(A), who proposed a logical method for estimating the FMV. The CIT(A) partially allowed the appeal, directing the AO to adopt a revised cost of acquisition, impacting the LTCG computation.

Adoption of Fair Market Value for Cost of Acquisition:
The disagreement centered on the adoption of FMV for cost of acquisition. The AO's adhoc approach was challenged by the CIT(A), who advocated for a logical estimation method. The CIT(A) referred to the market value as on 01.01.1989 and applied cost inflation indexes to determine the FMV as on 01.04.1981. This revised FMV impacted the cost of acquisition and subsequent LTCG computation.

Appeal against CIT(A) Order:
The revenue appealed the CIT(A) decision, disputing the adoption of FMV and the resulting impact on LTCG computation. The grounds of appeal highlighted discrepancies in the valuation methods used. The Tribunal heard arguments from both parties and referenced a relevant High Court decision supporting the CIT(A)'s approach. Ultimately, the Tribunal dismissed the revenue's appeal, upholding the CIT(A) order based on the logical estimation method applied.

This detailed analysis covers the issues of delay condonation, LTCG computation, FMV adoption for cost of acquisition, and the appeal against the CIT(A) order, providing a comprehensive overview of the legal judgment delivered by the Appellate Tribunal ITAT VISAKHAPATNAM.