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2011 (10) TMI 693 - AT - Income TaxCapital gain computation - FMV adoption - AO proceeded to rework the fair market value of this land as on 01.04.1981 - Held that:- egarding the fair market value as on 01.04.1981. The Sub-Registrar cannot do that. He can only tell about a guideline value on a given date. But, astonishingly, he has given two distantly divergent values and arrived at an Arithmetic Mean, which is not in his domain. Moreover, it is a common factor that the guideline values were not updated in earlier period. The valuer’s report has taken into account all the relevant factors. Therefore, we left with no option but to accept the valuer’s report. The Assessing Officer could confront the chartered valuer, if he was not satisfied with the valuer’s report. The Assessing Officer has not done anything in this direction and has simply rejected the report without any reasons and rhymes. To our great chagrin, when the fair market value has to be ascertained on the date of sale, the Department itself refused to rely on guideline value and it is only when the cost of asset (land) is being ascertained, the Assessing Officer usually try to take shelter under the guideline value. On the contrary, the approved valuer in his report has relied on the market value, which is based on local enquiries made from the surroundings and he has also relied on the local status of this land existing in that year. Hence, we accept the computation given by the assessee and delete the entire addition made in this regard. TDS u/s 195 - Disallowance under section 40(a)(i) non-deduction at source on the amount paid to FSC for the time charter hire - Held that:- Section 172 is a complete code by itself. Thus, the amount paid by the assessee to the FSC on time charter agreement would not amount to ‘royalty’ neither under Explanation 2 or under section 9(1)(b)(ii) or under the DTAA and in this case only section 172 applies. This, no tax is needed to be deducted at source under section 195 as the amount paid does not amount to ‘royalty’. Therefore, the disallowance under section 40(a)(i) for non-deduction at source on the amount paid to FSC for the time charter hire is erroneous and the same is set aside. Disallowance under section 40A r.w. Rule 8D has been correctly held by the ld. CIT(A) to be applicable from the assessment year 2008-09 onwards and not for the earlier assessment years. Therefore, he has rightly restricted the disallowance under section 40A of the Act.
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