2010 (2) TMI 1252 - AT - Income Tax

Summary

Issues involved: Dispute over cost of acquisition for computing capital gains u/s 50C of the Income Tax Act, 1961.

Details of the judgment:

Issue 1: Valuation of property for computing capital gains
The assessee sold an office premises and claimed the fair market value (FMV) as the cost of acquisition for computing capital gains. The Assessing Officer adopted a lower FMV based on D.V.O. valuation, which the assessee contested. The learned CIT(A) upheld the Assessing Officer's decision, citing the binding nature of D.V.O. valuation u/s 55A of the Income Tax Act, 1961. The Tribunal, however, found the D.V.O.'s valuation lacking legal basis and emphasized the reliability of market indicators like press reports and Indian Valuer Directory. Considering various factors, the Tribunal directed the Assessing Officer to recompute capital gains based on a higher valuation, partially allowing the assessee's appeal.

Key points:
- Dispute on cost of acquisition for computing capital gains.
- D.V.O. valuation deemed unreliable by the Tribunal.
- Emphasis on market indicators like press reports and Indian Valuer Directory.
- Tribunal directs re-computation of capital gains based on a higher valuation.

Significant legal references:
- Section 50C of the Income Tax Act, 1961.
- Section 55A of the Income Tax Act, 1961.
- Sub-section (6) of section 16A of the W.T. Act, 1957.

Conclusion:
The Tribunal partially allowed the assessee's appeal, directing the Assessing Officer to recompute capital gains based on a higher valuation, differing from the D.V.O.'s assessment.