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TMI Blog2024 (3) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... stered valuer - what method of valuation of unquoted shares, held by the assessee in a private company, should be adopted for determining the market value as on 31.03.1981? HELD THAT:- A perusal of the file reveals that on one hand the AO computed the value of shares as per the breakup method, as approved method, after accepting the fair market value of building as per the report of the approved valuer, but excluded the value of land on the ground that the said land belongs to Vikramaditya Singh, whereas, on the other hand, the AO in the case of Shri Vikramditya Singh though had made the assessment but did not include the value of land. Therefore, we are in agreement with the learned Tribunal that the action of AO was apparently erroneous a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are also in agreement with the learned Tribunal that the lease hold interest in the land is an asset of the company and is capable of valuation; as such the same is to be included in the value of asset of M/s. Jyoti Private Limited so as to determine the fair market value of shares held by the assessee as well as other shareholders. No substantial question of law arises for our consideration out of the judgment rendered by the Income Tax Appellate Tribunal. - HON BLE MR. JUSTICE TASHI RABSTAN , JUDGE And HON BLE MR. JUSTICE PUNEET GUPTA , JUDGE For the Petitioner / Appellant : Mr. Suraj Singh Wazir, Advocate Ms Pariksha Parmar, Advocate For the Respondent : Mr. C.S. Aggarwal, Sr. Advocate, with Mr. Subash Dutt, Advocate Mr. Sachin Sharma, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instead of Rs.14,48,59,000/-. As such, the Assessing Officer was of the view that out of rupees ten crore being the sale price, there was a capital gain of Rs.7,66,76,700/- as having been received by the assessee. 3. Against the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Jammu. The CIT(A) vide order dated 21.03.2007 deleted the addition made by the Assessing Officer on the ground that as on the date of sale of shares, the lease period of beyond 20 years was still left with M/s. Jyoti Pvt. Ltd. and hence the land value in the hand of the lessor was practically nil or negligible and for all practical purposes M/s. Jyoti Pvt. Ltd. was de facto owner of the underlying land. The value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the arguments also relied upon the judgments, reported as, Commissioner of Income Tax vs Lakhani Footwear Ltd., 248 ITR 701 (Punj); Joint Commissioner of Income Tax vs Haryana Co-operative Sugal Mills Ltd., 248 ITR 813 (Punj); Gulab Chand vs Commissioner of Income Tax, 252 ITR 719 (Punj); Assistant Commissioner of Income Tax vs Ajay Vijay Traders, 254 ITR 642 (Raj) and Commissioner of Income Tax vs Fazilka Cooperative Sugar Mills Ltd., 255 ITR 411 (Punj). 8. Thus, the dispute was: as to what method of valuation of unquoted shares, held by the assessee in a private company, should be adopted for determining the market value as on 31.03.1981. 9. We have heard learned counsel appearing for the respective parties, considered their rival conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to determine the fair market value of the shares transferred/sold on the basis of break-up method, i.e., by adopting the fair market value of the hotel building as per the report of the approved valuer to be divided by the number of shares held by the assessee-Dr. Karan Singh and other shareholders, which came to Rs.3262/- per share after indexation. After calculation, the Assessing Officer was of the view that there was a capital gain of Rs.7,66,76,700/- as having been received by the assessee. 12. The assessee, on the other hand, computed the fair market value of the asset of the company as per the report of registered valuer and the average fair market value of each share was computed at Rs.6151.64 and, after indexation, the fair market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting the plea of revenue to adopt the value of assets as reflected in the balance sheet as provided under Rule 11 of the Wealth Tax Rules, has rightly held that the Assessing Officer had himself applied the Fair Market Value of buildings and other assets while computing capital gain in the assessment order. Also, it is the fair market value, and not book value, of an asset which is relevant for determining the cost of acquisition as envisaged under Section 55(2)(b)(ii) of the Income Tax Act, 1961 for determining capital gain under Section 45 of the Act. The fair market value is defined under Section 2(22B) of the Act as the price that such asset would ordinarily fetch on sale in open market on 01.04.1981. Therefore, for the purposes of com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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