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2007 (9) TMI 459 - AT - Income TaxFair Market Value - Computation of Capital gains - cost of acquisition of shares sold - deduction claimed u/s 54F - HELD THAT:- In this case, shares have been sold at the rate of Rs. 1,83,250 per share. That value has been accepted but if value of the shares sold on the date of sale as on 28-9-2000 is taken under rule 1D, it is much less than the price received. Obviously the price charged has not been worked as per rule 1D. Therefore, it will not be legally fair or equitable to apply rule 1D for working out the cost of acquisition. One cannot have a different approach in fixing the price of same asset for a single purpose of computing capital gain. Further, written down value or value shown in the balance sheet is just a fraction of the value of main asset held by the company, i.e., Natraj Cinema. If one takes only a fraction of the market value for computing value of share as on 1-4-1981, the value taken, can by no stretch of imagination, be said to be the fair market value of the asset. Obviously one acts not only contrary to the statutory provisions but also advance injustice. Therefore, we see no justification for not taking the fair market value of Cinema building as on 1-4-1981 on which no dispute has been raised. We further see no justification why above market value of the Cinema should not be adopted in taking the value of the unquoted shares of the company. There is no justification for taking only a fraction of market value on some technical grounds. Thus, we are of view that value as adopted in other cases of Sri H.R. Anand, Shri Pawan Anand, Shri Ramesh Anand and Smt. Neeru Anand as on 1-4-1981 and, thereafter indexed, be adopted in all the appeals now under discussion. We order accordingly. Deduction claimed u/s 54F - During the course of hearing of appeals, it was contended that membership of housing society was purchased for acquiring a residential house. This was clear from the Brochure issued by Baroda House NRGE Co-operative Group Housing Society Ltd. Copy of Brochure is placed at Supplementary Paper Book. It was contended that for claiming relief u/s 54F, it was not necessary that house should be the first purchase and that house should not be owned by any one else before its purchase. Further condition of investment of sale consideration was duly fulfilled in this case it was contended that the alleged case of CIT v. Pradeep Kumar [2006 (4) TMI 99 - MADRAS HIGH COURT] relied upon by learned CIT (Appeals) could not be traced. On the other hand in the case of Smt. Shashi Varma v. CIT [1996 (3) TMI 65 - MADHYA PRADESH HIGH COURT] has held that in case of allotment of flat under the self-financing scheme is to be treated as case of construction of house for claiming exemption under the capital gains. Further definition of ‘transfer’ u/s 2(47)(vii ) clearly support that transaction would involve obtaining acquisition of share in a Co-operative Society. The learned counsel for the assessee also relied upon transfer deed between Shri Sagar Tyagi and Smt. Madhu Tyagi dated 12-3-2001, copy of which is available at Supplementary paper book. It was accordingly contended that learned CIT (Appeals) erroneously denied claim of exemption to the assessee. In our considered opinion, documentary evidence and relevant case law now placed before us was not considered by the lower authorities. Entire evidence was not made available to them. In other words claim of assessees u/s 54F is required to be reconsidered objectively and in accordance with law. In the interest of justice, we set aside impugned orders of CIT (Appeals) in above two cases and restore this issue to the file of the Assessing Officer for re-determination of issue in accordance with law, after allowing reasonable opportunity of being heard to the assessees. Appeals on this issue, in the above two cases, are allowed for statistical purposes. Claim made u/s 54F in the case of Shri Sagar Tyagi was also given up. Above claims are accordingly rejected. In the result, all the above appeals are allowed, in terms stated above.
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