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TMI Blog2016 (11) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. During the course of assessment proceedings, the A.O. noticed that the assessee has sold an immovable property and computed long term capital gain. To ascertain the correctness of computation of long term capital gain, the A.O. issued a show cause notice and asked to furnish details of properties and mode of computation of long term capital gain. In response to show cause notice, the assessee has filed letter and submitted that he had sold immovable property consisting of land admeasuring 489 sq.yd. along with building consisting of 4 floors measuring 12620 sq.ft. for a consideration of Rs. 1,50,00,000/-. The assessee further submitted that he had acquired the property by way of partition deed dated 28.5.2007 from his father, in turn his father has acquired the property prior to 1.4.1981. Since, he had acquired right over the property by way of one of the mode referred to in section 49(1) of the Act, he had adopted fair market value of the property as on 1.4.2001 and computed cost of acquisition by applying indexation from 1.4.1981 to ascertain the cost of acquisition of property. The assessee further submitted that he has obtained certificate from the registered valuer, to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther held that the SRO has furnished a certificate, wherein fair market value of the property as on 1.4.1981 towards site is fixed at Rs. 150 p.sq.yd. and towards structure with RCC roof was fixed at Rs. 34.10 p.sq.yd. Since the value adopted by the assessee is not supported by any valid evidences, rejected cost of acquisition adopted by the assessee and adopted SRO value and determined cost of acquisition by applying indexation benefit from the assessment year 2008-09 and re-computed long term capital gain of Rs. 1,89,42,855/-. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The assessee further submitted that the A.O. was erred in adopting fair market value of the property based on the SRO certificate which is a circle rate fixed for the purpose of determining stamp duty payable on transfer of property. The assessee further submitted that the assessing officer ought to have adopted fair market value given by the approved valuer which was duly filed during the course of assessment. It is also further submitted that the approved valuer's report contains detaile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indexed cost of improvement and then deduct the same from the sale consideration to arrive at long term capital gain. If indexation is linked to the period of holding asset and in the case of assessee covered u/s 49(1) of the Act, the period of holding of the asset has to be determined by including the period for which, the said asset was held by the previous owner, then obviously in arriving at the indexation, the first year in which the said asset was held by the previous owner would be the first year for which said asset was held by the assessee. With these observations, directed the A.O. to adopt indexation from the year in which the asset was held by the previous owner or from 1.4.1981, whichever is beneficial to the assessee. As regards cost of acquisition of the property, the CIT(A) held that the assessee has adopted cost of acquisition of the property as on 1.4.1981, based on the valuation report issued by the approved valuer. The assessee has substantiated fair market value of the property as on 1.4.1981 with valuer's report, whereas the A.O. has adopted SRO value fixed by the stamp duty authorities for the purpose of determination of stamp duty without any basis, with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, as a result of transfer of capital asset". The A.O. was erred in considering full value of consideration as a result of transfer to substitute the fair market value of the property for determining cost of acquisition of the property. In support of his argument relied upon the decision of Hon'ble High Court of Karnataka in case of N. Govindaraju Vs. ITO (2015) 377 ITR 243. As regards the indexed cost of acquisition, the A.R. submitted that the A.O. was erred in applying indexation benefit from the date in which the asset was held by the assessee. As per the provisions of section 49(1) of the Act, when the assessee becomes the owner of the property by way of inheritance or succession, the assessee is eligible for indexation benefit from the date when asset was first acquired by the previous owner. In the present case, the assessee got right over property by way of partition deed in the year 2007-08, which was acquired by his father before 1.4.1981, therefore, the assessee has rightly computed indexation benefit from 1.4.1981. To support his argument relied upon the decision of Hon'ble High Court of Mumbai in the case of CIT Vs. Majula J. Shah (2013) 355 ITR 474. 9. We have hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice received on transfer of capital asset and the later would be the price of a capital asset would ordinarily petch on sale in open market on the relevant date. In the present case on hand, the assessee has adopted fair market value of the property as on 1.4.1981 as cost of acquisition which is based on a certificate issued by the registered valuer. The A.O. without assigning any reasons disbelieved registered valuer's report and adopted SRO value of the property for the purpose of determination of computation of cost of acquisition, when Act specifically provides powers to the A.O. under the provisions of section 55(2) of the Act, to refer the valuation of the property to the valuation officer, when he is of the opinion that the fair market value of the property adopted by the assessee is higher than the fair market value of the property. The A.O., without exercising the option of referring the matter to the valuation officer, simply adopted SRO value which is fixed in a different context to determine the cost of acquisition of the property. Therefore, we are of the opinion that the A.O. was erred in adopting SRO value to substitute the fair market value adopted by the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the A.O. to substitute value adopted by the assessee as fair market value of the property as on 1.4.1981 to compute cost of acquisition. We do not find any reasons to interfere with the CIT(A) order. Hence, we inclined to upheld CIT(A) order and reject ground raised by the revenue. 14. The next issue that came up for our consideration is benefit of indexation. The facts relating to the issue are that the assessee has sold a property which he had acquired by way of partition deed in the year 2007-08. The assessee claims that he got right over the property by way of partition deed, which was acquired by his father prior to 1.4.1981. The assessee further submitted that as per the provisions of section 49(1) of the Act, when he got right over the asset by way of any modes specified u/s 49(1) of the Act, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it as increased by the cost of any improvement of the asset incurred or born by the previous owner or the assessee as the case may be. Since, he got right over property by way of inheritance or succession, as per the provisions of the Act, he has adopted fair mark ..... X X X X Extracts X X X X X X X X Extracts X X X X
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