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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 ..... 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/- per square meter as on1.4.1981 instead of adopting the rate of the land that would have been sold in the market (Market Value) i.e. at the rate 344.28 sq.mt as on 1.4.1981. II. The ld Hon'ble CIT Nashik-I ought to have considered the fact that the land as on 1.4.81 was an agricultural land and converted into nonagricultural land on 1.2.2001 and on the same date the said land introduced as stock in trade. The demarcated plotted area of land was sold in AY 2004-05. III. The ld Hon'ble CIT Nashik-I failed to appreciate the fact that appellant sold the demarcated plotted ea of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition 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 aforesaid determination of long term capital gain related to the ascertainment of cost of acquisition as on 01/04/1981. The assessee adopted a rate of Rs.344.28 per sq.mtrs. to determine the cost of acquisition on 01/04/1981 which has also been accepted as such by the Assessing Officer in the assessment order dated 25/07/2006. However, as per the Commissioner the cost of acquisition as on dated 01/04/1981 was to be ascertained by adopting a rate of Rs.125 per sq. mtr. as per the report of the Registered Valuer. The Commissioner has disagreed with the determination of long term capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 seen that assessee received 42,100 sq. mtrs. of land on partition and on its conversion into stock-in-trade, the plotted area reduced to 21827.13 sq. mtrs., as the balance area was left for common amenities, open space, roads etc. The saleable area thus remained at 21,827.13 sq.mtr., out which plots admeasuring 5102.66 sq. mtrs. were sold during the year under consideration. In this background, the Ld.Counsel for the assessee referred to the report of the Registered Valuer, placed at pages 44-56 of the Paper Book to explain as to how the rate as on 01/04/1981 has been determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 since the assessee had only left with a saleable area of 21827.13 per sq.mtr., the said amount was to be spread over the area of 21827.13 per sq. mtr. Even on this score, the stand of the Commissioner was wrong and finally it is submitted that there was no error in the determination of capital gain as declared by the assessee and thereafter accepted in the assessment order dated 25/07/2006. 5. However, the Ld. DR relied upon the order of the Commissioner and pointed out that when the assessee has introduced the gross land area of 42100 sq.mtrs. as stock in trade, it is not correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sought to be pointed by the Commissioner in the instant assessment order to invoke Section 263 of the Act. Our discussion in the earlier paragraphs show that as per the Commissioner the cost of acquisition as on 01/04/1981 has been wrongly adopted by the assessee, which has resulted in an erroneous assessment that is prejudicial to the interests of the Revenue. As per the Commissioner, fair market value of land as on 01/04/1981 is to be adopted at the rate of Rs.125 per sq.mtr. In this connection, we have perused the Valuation report placed at pages 44-56 of the Paper Book. As pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rea 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 plots, the total saleable area or in other words, the net plotted area remained 21827.13 sq.mtr and the balance was left for open space, roads, common amenities, etc. For computation of Capital gains on the sale of the net plotted area, the cost of acquisition of the asset has to be ascertained and in this regard, it is seen that the fair market value as on 01/04/1981 of the land area of 42100 sq. mtrs. inclusive of the construction, pump, etc. thereon is Rs.75,14,715/- (and for bare land is Rs.52,60,500/-). Ostensibly, the fair market value of entire gross area of 42100 sq. mtrs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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