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2021 (7) TMI 328 - ITAT PUNEAddition under the head “Capital Gains” - Fair Market Value of the salable area - Joint Development Agreement (JDA) of land by adopting a higher value of consideration by the AO - HELD THAT:- AO is not empowered to substitute the agreed consideration by Fair Market Value except in situations envisaged u/s 50C of the Act. Whenever the Parliament intended to substitute the actual sale consideration by the Fair Market Value, it has done so, by enacting specific provisions for example the provisions of Sec.45(4) etc. The method adopted by the Assessing Officer to compute Fair Market Value of salable constructed are is flawed for the following reasons viz (1) invoking the provisions of Sec.45(5A) of the Act which is inserted by the Finance Act, 2017 w.e.f. A.Y. 2018-19 is bad-in-law in as much as that the Assessing Officer should have applied the provisions of Sec.45(5A) in its entirety not in part i.e., only by adopting the value for stamp duty purpose of the saleable area, (2) not applying other limb of provisions, which determines the tax of chargeability of “Capital Gains” to tax. It is suffice to say that the action of the Assessing Officer is bad-in-law without delving into issue whether the said provisions have retrospective effect or not. Secondly, the Assessing Officer should not have adopted ready reckoner value for the purpose of determining fair market value of the saleable constructed area, in as much as, it does not reflect the Fair Market Value as held by the jurisdictional High Court in the case of CIT Vs. Nirman Laxmanarayan Grovver [1994 (12) TMI 3 - BOMBAY HIGH COURT] Thirdly, the Assessing Officer can adopt only discounted value of the ready reckoner value even if ready reckoner value is held to be Fair Market Value. Arguments advanced by the ld.CIT D.R. are only on the aspect of computation of the fair market value, since we held that in the absence of any enabling provision under the Income Tax Act, 1961 the Assessing Officer is not empowered to substitute the agreed consideration by fair market value except in the situations envisaged under the provisions of Sec.50C of the Act. we need not deal with arguments of the ld.CIT D.R. Therefore, what follows from the above discussion is that first of all the Assessing Officer ought not have embarked upon exercise of substituting the agreed consideration by Fair Market Value of the salable area in the facts of the present case nor the values adopted can be approved in the light of the discussions cited above. Thus, according to us, the orders of the lower authorities are contrary to the law. Therefore, we hereby set aside the orders of ld.CIT(A) and the Assessing Officer and allow the grounds of appeal filed by the assessee.
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