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TMI Blog2012 (7) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 - - - Dated:- 25-5-2012 - SHRI I.C.SUDHIR, SHRI G.S.PANNU, JJ. Appellant by: Mr.Nikhil Pathak, C.A. Respondent by: Mr.Adarsh Kumar Modi/ Ms. Neera Malhotra ORDER PER G.S.PANNU, AM: This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-I, Nashik dated 30.03.2009 passed under section 263 of the Income-tax Act, 1961 (in short the Act), for the assessment year 2004-05. The Grounds of appeal raised by the assessee in this appeal are as follows: I. The ld Hon ble CIT Nashik-I has erred in law and in facts in enhancing the capital gain by Rs 51,80,558/- involving the provisions u/s 263 by adopting the rate of the cost of acquisition of land at rate Rs 125/- p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner on a single issue relating to the determination of long term capital gains. In order to appreciate the error noticed by the Commissioner in the determination of long term capital gain the following discussion is relevant. During the year under consideration i.e. assessment year 2004-05, the assessee sold plots of land admeasuring 5102.66 sq.mts., and declared long term capital gain on such sale, computed in the following manner and which was accepted by the Assessing Officer in the assessment order passed on 25/07/2006 :- Sale of plots Rs 86,74,522/- Less: Cost of acquisition at 1.4.1981 (Rs.17,56,744/-) Indexed Cost Rs 81,33,725/- Long term capital gain Rs 5,40,797/- 3. As per the Commissioner the only error in the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly capital gain on conversion of capital asset into stock-in-trade was liable to be taxed in the present year as per the provisions of Section 45(2) of the Act. While computing the Capital gain u/s. 45(2) of the Act with respect to the plots sold during the year, assessee adopted the cost of acquisition as on 01/04/1981 @ Rs.344.28 per sq. mtr. as per the report of the Registered Valuer, accordingly the cost of acquisition as on 01/04/1981 was computed at Rs.17,56,744/- and indexed cost was arrived at Rs.81,33,725/-. The Commissioner, however was of the view that the cost of acquisition as on 01/04/1981 be adopted at Rs.125 per sq.mtrs. and not Rs.344.28 per sq.mtr, as per the same report of the Registered Valuer. On this aspect, it is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. were in existence over the impugned land and therefore fair market value of the capital asset for the purpose of computation of capital gain shall be taken by including the fair market value of the land as well as the construction thereon and that the Commissioner was wrong in including only the value of land and that too on a wrong basis. In support, reference has been made to the decision of the Agra Bench of the Tribunal in the case of Subhash Chand Kapoor vs.ITO (2010) 46 DTR (Agra)(Trib) 314. It is further contended that adoption of Rs.125 per sq.mtr. by the Commissioner is otherwise also wrong. In this regard, it is pointed out that the value of land was adopted at Rs.52,62,500/- by the valuer for the gross area of land and that si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment year 2006-07 dated 12/09/2011 has been placed on record. 7. We have carefully considered the rival submissions. The power of revision u/s.263(1) of the Act is to be exercised by the Commissioner only if circumstances prescribed therein exist. The two circumstances prescribed are, namely, that the order should be erroneous; and, that such error should be prejudicial to the interests of the Revenue. It is a well settled proposition that an the order of the Assessing Officer cannot be construed as erroneous unless the same is found to be unsustainable in law or on facts, as opined by the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT 243 ITR 83(SC). 8. In this background we may now examine the error so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. thereon. Under the circumstances of the present case, the Commissioner was wrong in taking the fair market value only of the bare land alone. The fair market value of the construction, pipeline, well motor pumps etc. was also to be considered and the same in our view, was rightly considered by the assessee and thereafter accepted in the assessment order dated 25/07/2006. The second point made by the appellant is that even the adoption of the rate of Rs.125 per sq.mtr. for the bare land is also wrong. In this connection, it is evident that the assessee received a total land area of 42100 sq.mtr. on partition, which was subsequently converted into stock-in-trade in the business of land development. After developing the land into smaller pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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