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TMI Blog2005 (4) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... each in the 1I3rd share of Mr. RK. Mathur over the property. The three assessees thus had 1/9th share each over the whole property. 4. During the previous year relevant to asst. yr. 1994-95, this property was sold for a total consideration of Rs. 3,25,00,000. The three assessees received a sum of Rs. 36,11,111 each towards their share of the sale consideration. The capital gain on sale of the property was offered for taxation by the assessees. Under s. 48 of the Act, the mode of computation is to deduct from the full value of consideration received on transfer, the cost of acquisition of the property which was transferred. There is no dispute with regard to the sale value of consideration received on transfer in the present case. The dispute is with regard to the cost of acquisition of the property to the assessees. Sec. 55(2) of the Act explains the meaning of 'cost of acquisition' for the purpose of s. 48. Depending on the capital asset that is subject-matter of transfer and the mode of its acquisition, the said s. 55(2) lays down the mode of computation of capital gain. In the present case, the relevant provisions applicable are s. 55(2)(b)(i) which reads as follows: Sec. 55( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to claim and recover a specified part of the unearned increase in the value of the land at the time of the transfer of the property, the value of such property as determined under r. 3 shall be reduced by the amount so liable to be claimed and recovered or by an amount equal to fifty per cent of the value of the property as so determined, whichever is less, as if the property had been transferred on the valuation date. Explanation: For the purpose of this rule, "unearned increase" means the difference between the value of such land on the valuation date as determined by the Government or such authority for the purpose of calculating such increase and the amount of the premium paid or payable to the Government or such authority for the lease of the land 6. The assessee was confronted with the report of the DVO in the case of S.C. Mathur and the assessee was called upon to show cause as to why the value as shown by the DVO as FMV as on 1st April, 1981, be not adopted as the cost of acquisition. The assessee filed the report of a registered valuer, one Shri Goel, wherein the FMV of the property as on 1st April, 1981, was adopted without giving any deduction for unearned increase in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. The AO however, rejected both these contentions on behalf of the assessee. He held that the correct FMV can be arrived at only after giving deduction for unearned increase in value of land as contemplated in law. He also held that the valuation report of the same property obtained in the case of a co-owner was very much relevant. The AO thus held that the FMV as on 1st April, 1981, was to be arrived at after deducting unearned increase in the value of the land. 10. Aggrieved by the order of the AO, the assessee preferred appeal before CIT(A), reiterating contentions with regard to using report of DVO obtained in the case of some other persons. It was further contended as follows. A reference to the Government Valuation Cell is not called for under s. 55A of the IT Act as that section is not attracted. Sec. 55A is applicable in cases where the valuation of asset claimed by the assessee in accordance with the estimate made by his registered valuer is less than its fair market value. That such was not the case in the case of the three assessees. The law pertaining to deduction of 50 per cent unearned increase is not provided in the IT Act/IT Rules. The provisions pertaining to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sentative who principally relied on the order of the AO and also brought to our notice the provisions of s. 2(22B) of the Act defining FMV. The learned counsel for the assessee reiterated submissions which were on the same lines as made before the Revenue authorities. The learned counsel for the assessee also submitted that he has no objection in this Tribunal deciding the issue, viz., whether the reduction for unearned increase has to be made or not. 13. We have considered the rival submissions. We are of the view that the CIT(A) was not correct in holding that the AO was not justified in relying on the report of the DVO obtained in some other case and on that basis further holding that the FMV as determined by the AO was to be set aside. We say so because, there is materially no difference in the valuation as done by the approved valuer on behalf of the assessee and the DVO, except deduction for unearned increase in the value of the land. Even if we were to ignore the report of the DVO, the AO would be well within his rights to fall back upon the provisions of r. 7 of Sch. III to the WT Act and hold that value of unearned increase in rent was to be deducted while arriving at FMV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum towards unearned increase in value of land has to be accepted as FMV as on 1st April, 1981, and the capital gain is directed to be computed accordingly. The ground of appeal of the Revenue is dismissed. The order of CIT(A) is confirmed but for different reasons as given above. 15. The second common ground of appeal in all the three appeals reads as follows: 'On the facts and in the circumstances of the case, the learned CIT(A) has erred in law and on facts in allowing of exemption under s. 54 of the IT Act, when the property in question is not registered in the name of the assessee." These grounds are relevant only in the case of Deepti Patni and Aditi Sharma (appellants in ITA Nos. 3985 and 3986/Del/1998). In the case of Deepti Patni and Aditi Sharma the AO did not allow deduction under s. 54 amounting to Rs. 8.16,025 and Rs 6,13,687, respectively. The claims of the assessees were not allowed by the AO on the ground that property purchased is not registered in the name of the assessee. Before the CIT(A), the assessee contended that the requirement of s. 54 is purchase of property and not registered ownership of property. The assessee filed before the CIT(A) documents showi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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