Fair Market Value Determination Set Aside: AO Must Refer to DVO After Proper Hearing; Interest on Substituted Loan Allowable Under Section 48

The ITAT set aside the CIT(A)'s findings regarding fair market value determination of the Nellore property. The Tribunal held that the AO improperly adopted the SRO rate (33.88 lakhs) without providing the assessee an opportunity to present their case, despite the sale document showing 9 lakhs consideration. The matter was remanded to the AO to refer valuation to the DVO after giving the assessee proper hearing. Regarding the Jubilee Hills property, the Tribunal followed a coordinate bench ruling that interest paid on a loan used to substitute the housing loan had direct nexus with property acquisition and was allowable as a deduction under section 48. The interest expense disallowance and corresponding indexed cost disallowance were directed to be deleted. The appeal was partially allowed. .....

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