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TMI Blog2011 (5) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) erred in holding that the payment of the employees contribution within the grace period allowed as per the provident fund and employees state insurance laws is allowable as a deduction. It is contended that the CIT(A) overlooked the Explanation below clause (va) of sub-section (1) of sec.36 of the IT Act. Reliance is placed on the judgment of the Calcutta High Court in the case of CIT v K.L. Thirani Co. Ltd. (218 ITR 149). 3. This issue now stands covered in favour of the assessee by the judgments of the Madras High Court in CIT v Sankar Spg. Mills Pvt. Ltd (181 CTR 328) and Shree Ganapathy Mills Company Ltd. (243 ITR 879) in which it was held that payments made within the grace period allowed by the relevant statute should be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of acquisition of the plot, measuring 5,51,456 s.ft. on 26-9-1980. It was shown at ₹ 90,00,000. 5. In the assessment made u/s.143(3) the capital gains as declared were accepted. There is no discussion in the assessment order. 6. The assessee filed an appeal against the assessment order to the CIT(A) objecting to certain additions/disallowances made therein. By way of an additional ground, it also questioned the computation of the capital gains, contending that it had the option to substitute the fair market value of the property as on 1-4-1981 in the place of the original cost of the same under sec.55(2)(b) and that the fair market value on the aforesaid date, as per the valuation report of the approved valuer, was ₹ 4,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barred by limitation and the consequence was that the option that was exercised in the return, namely, that the cost of acquisition would be deducted from the sale proceeds in the computation of capital gains, stood. 9. The CIT(A) held that even at the time of filing the return, the assessee had mentioned in the computation of long-term capital gains that the fair market value as on 1-4-1981 was being ascertained and would be substituted for the cost of acquisition and the fair market value was ascertained on the basis of the valuer s report and it was put on the record of the Assessing Officer vide letter dated 16-2-2005 which letter had not been considered at all by the latter. He accordingly held that the assessee was entitled to adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty as on 1-4-1981 for the purpose of computing the capital gains but it could not compute the capital gains on that basis because the f.m.v. had not been ascertained at the time when the return was filed. The assessee had to declare the capital gains in the return and for purposes of such disclosure it had to adopt the cost of acquisition of the property. The question of choice can arise only when both the cost of acquisition and the fair market value as on 1-4-1981 are available to the assessee at the time of filing the return. Since the f.m.v. was not available at that time, the assessee had perforce to adopt the cost of acquisition; but it was careful enough to reserve its right to exercise its option in favour of adopting the f.m.v. as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in the place of the cost of acquisition. 12. However, the plea of the learned CIT-DR to the effect that the claim should be examined on merits by the Assessing Officer must be accepted, having regard to the fact that he had had no opportunity to do so. He had focussed on the preliminary issue whether the assessee had at all exercised the option and if so, at what point of time and whether it should be done only by filing a revised return and therefore had not examined the approved valuer s report on the fair market value as on 1-4- 1981. The CIT(A) has also not done so. We therefore accept the plea of the learned CIT-DR and restore the question of the fair market value of the land as on 1-4-1981 to the Assessing Officer for being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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