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TMI Blog2020 (8) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of a report of a registered valuer - HELD THAT:- Our attention was drawn to a decision in the case of Late Smt. Krishna Bajaj Vs ACIT [ 2013 (12) TMI 544 - KARNATAKA HIGH COURT] wherein it was laid down that in the context of fair market value for the purpose of computing capital gain, that market value of property is generally far more than higher than the guideline value. The claim of the assessee for FMV as on 01.04.1981 is supported by a report of the registered valuer and facts of the present case, we are of the view that the claim of the assessee for adopting FMV as on 01.04.1981 at ₹ 150/- per sq.ft. is reasonable and the same is directed to be accepted. Benefit of indexation to the assessee - HELD THAT:- Property was acquired by M. Gunasheela on 10.09.1979 and that on his death on 30.11.2004, wife of Gunasheela released her 1/3rd share in favour of her two daughters and thereby, the assessee and his sister got half share each of the property. This deed of release was dated 30.09.2009. Provisions of section 55(2)(b)(ii) of the Act are relevant and the same provides that if the capital asset becomes property of the assessee by way of succession, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal). Thus, the assessee and Dr. Madhavi N. Gunasheela became owners of 1/2 share each of the property. On 29.09.2011 the assessee and her sister Dr. Madhavi N. Gunasheela sold the property for a sale consideration of ₹ 3,02,40,000/-. The assessee received a sum of ₹ 1,51,20,000/- as her share in the sale consideration for sale of share of right title and interest over the property. 3. For assessment year 2012-13, the assessee filed a Return of income, declaring Long term Capital Gain on sale of her share of the property. The computation of long term capital gain given by the assessee was as follows: Computation of Capital Gains on transfer of commercial property at Basavanagudi jointly held by Dr. Madhavi Dr. Devika Sale Consideration - Devika share 1,5120000 Less: Expenses on transfer @ 2% 302400 Net Sale consideration 14817600 Less: Cost of Acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n arises from the transfer of a long-term capital asset, other than capital gain arising to a nonresident from the transfer of shares in, or debentures of, an Indian company referred to in the first proviso, the provisions of clause ( ii ) shall have effect as if for the words cost of acquisition and cost of any improvement , the words indexed cost of acquisition and indexed cost of any improvement had respectively been substituted. Explanation ( iii ) to section 48 defines indexed cost of acquisition to mean an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later; Long term capital are recorded at cost price in books. Despite increasing inflation, they exist at the cost price and cannot be revalued. When these assets are sold, the profit amount remains high due to the higher sale price as compared to purchase price. This also leads to a higher income tax. The cost inflation index is applied to the long-term capital a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal asset; or (iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head Income from house property . 8. For Exemption u/s.54 54F, the assessee is given 2 years to purchase the house property or 3 years for construction of the house property, but the capital gain on the transfer of original house property is taxable in the previous year in which transfer took place. Hence, the assessee will have to take a decision for the purchase/construction of the house property till the date of furnishing of the return otherwise the capital gain would become taxable. The amount of capital gain, which is not utilized by the assessee for the purchase or construction of the new house before the date of furnishing of the return of income, shall be deposited by him under the Capital Gains Account Scheme, before the due date of furnishing the return. In the present case the Assessee deposited the unutilized capital gain in capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 2/3rd of property from F.Y. 2004-05 1,20,000x785/480 = 1,96,250 For 1/3rd of property from F.Y. 2009-10 60,000 x 785/632 = 74,525 Total indexed cost of acquisition = 2,70,775 12. The A.O. also did not allow the claim of the assessee for commission as a deduction in computing capital gain for want of proof. Finally, the A.O. computed the Long term Capital Gain as follows: The above analysis of facts and law necessitates the re-computation of taxable LTCG as under: 1. Sale consideration: ₹ 1,51,20,000/- 2. Cost of acquisition: ₹ 1,80,000/- 3. Indexed cost of Acquisition: ₹ 2,70,775/- 4. Commission paid: ₹ 0/- 5. Long term capital gain: ₹ 1,48,49,225/- 13. Aggrieved by the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issues c d are concerned, the CIT(A) held as follows: 2.7.3 However, in this case, since land in the said locality is valued at ₹ 100/- as detailed in the Assessment order based upon the guidance value intimated by the sub-registrar, and under findings of the Assessing Officer that the valuation certificate had certain flaws as brought in the Assessment order itself, the appellant is unable to justify the cost at ₹ 150/- per sq.ft. as on 1.4.1981. Moreover, this is a case of estimation, and not a case of an actual transfer of property on 1.4.1981, at a rate higher than that intimated by the sub-registrar that a rate higher than the guidance value should be accepted without any evidence thereof. Under such facts, I hold that the Assessing Officer has been reasonable and fair in adopting the value at ₹ 100/- per sq.ft. The same is upheld. 3. However, as regards indexation, I agree with the appellant that in the light of judicial decisions cited by the appellant, particularly in the case of Karnataka High Court in the case of Smt. Kaveri Thimmaiah and others reported in 369 ITR 81, the appellant is eligible to indexed cost of acquisition from date of hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house properties and that two out of the three house properties were not buildings that were sold out by the assessee but were only a lease of land over which, the tenants had put up construction. The following table and the reasons recorded for reopening as set out in the aforesaid order of assessment were brought to our notice: 2. In the original return of income the assessee has declared income from House Property as under: Particulars House Property 1 House Property 2 House Property 3 Total Rent Received 2,69,345 1,00,000 3,79,125 7,48,470 Less: Rent not realized 11,215 -- -- 11,215 Annual value 2,58,130 1,00,000 3,79,125 7,37,255 Less: Deduction u/s 24(a) 77,439 30,000 1,13,738 2,11,177 Income from House Property 1,80,691 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. We hold and direct accordingly. 21. As far as the FMV as on 01.04.1981 is concerned, the assessee had adopted the value as on 01.04.1981 at ₹ 150/- per sq.ft. on the basis of a report of a registered valuer. It is not disputed by the A.O. and the right that the guideline value of the property as on 01.04.1981 was ₹ 100/- per sq.ft. It is the plea of the assessee that fair market value and guideline value are two different values and generally, the fair market value is higher than the guideline value. In this regard, our attention was drawn to a decision of the Hon ble Karnataka High Court in the case of Late Smt. Krishna Bajaj Vs ACIT 267 CTR 172 (Karn.), wherein it was laid down by the Hon ble Karnataka High Court that in the context of fair market value for the purpose of computing capital gain, that market value of property is generally far more than higher than the guideline value. Keeping in view the law laid down as above and also having note of the fact that the claim of the assessee for FMV as on 01.04.1981 is supported by a report of the registered valuer and factsw of the present case, we are of the view that the claim of the assessee for adopting FMV as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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