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2016 (9) TMI 1452 - AT - Income TaxAddition of amount u/s. 50C - computation of capital gains and the treatment given by AO towards sale of shares as ‘short term capital gain’ and not as ‘long term capital gain’ as claimed by assessee - Held that:- AO has referred the valuation to the Valuation Officer and adopted the value of ₹ 79,20,000/- which is indeed very much less than the market value for stamp duty purposes but more than what assessee has received. AO has to give a fair opportunity to assessee with reference to the Valuation Officer’s report and obtain objections if any from assessee, before determining the value when assessee admits that the property was sold for ₹ 20 Lakhs on certain special considerations. Since no opportunity was given to assessee before adopting the value, we are of the opinion that assessee should be given due opportunity by following the principles of natural justice. On that reason alone adoption of the sale value cannot be approved. Assessment of income in the hands of assessee -addition of income of the minors - Held that:- Since assessee is only having 1/3rd share in the property sold, capital gains to that extent alone should be taxed in her hand. As far as the income of the minors are concerned, if the capital gains if any arises in their hand, that has to be determined first separately and then only the same can be ‘clubbed’ in the hands of the mother. The AO has not considered this aspect at all and entire sale consideration is brought to tax in the hands of assessee alone. He should have determined the share of each person separately, determine the capital gains in each hand and then only provisions of Section 64 & 65 can be invoked. Since AO’s computation is per se not according to the provisions of the Act, that also requires re-consideration. Capital gains computation on sale of shares - AO is directed to examine the issue again as assessee has given various dates for acquisition of shares. Even though shares could have been allotted later, whether assessee can get benefit of cost of indexation having invested the money much earlier in the company which is their private limited company. Since, these aspects requires re-examination, we hereby set aside the computation of Long Term Capital Gain and Short Term Capital Gain on sale of shares for re-examination. The sale deeds indicate that the shares were sold piece-meal during the year under consideration.
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