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2017 (4) TMI 349 - AT - Income TaxIncome from sale of agricultural land - Computation of LTCG - cost of acquisition computation - Held that:- Though, the assessee tried to substantiate the sale agreement, he failed to prove the genuineness of sale agreement with necessary evidences. All the evidences filed by the assessee in the form of affidavit from the parties who acted as witnesses to the transactions has been negated by the A.O. by bringing a clear fact to the effect that the party to the agreement Shri P.V. Prasad has given a statement, wherein he has categorically disowned the agreement. Therefore, we are of the view that the assessee failed to prove the unregistered sale agreement with necessary evidences to accept his claim that he has made outright sale of agricultural land to Shri P.V. Prasad. Sale consideration stated to be received from sale of land - Held that:- A.O. has brought out a clear fact to the effect that the assessee himself has executed individual sale deeds in favour of the buyers of the flats and consideration has been directly paid to the assessee. The A.O. further observed that the consideration shown in the sale deed is lesser than the guidance value of the property as per the sub-registrar value for the purpose of payment of stamp duty. Accordingly, the A.O. has worked out a sale consideration of ₹ 4,46,99,501/- and applied the provisions of section 50C of the Act for the purpose of computation of long term capital gain. We find that as per the provisions of section 50C of the Act, when the sale consideration shown in the sale deed is less than the guidance value of the property for the purpose of payment of stamp duty, the SRO value has to be considered as deemed consideration for the purpose of transfer of property. In this case, the assessee has executed sale deeds and the consideration agreed in the sale deed is less than the guidance value of the property. Therefore, we are of the view that the A.O. was right in computing the long term capital gain based on the guidance value of the property as per the SRO value. Cost of acquisition of the property - Held that:- Though, the assessee furnished a copy of registered document vide document no.2201 dated 25.3.1980, the A.O. observed that the document furnished by the assessee relates to sale of vacant residential flat, which cannot be applied to sale of agricultural lands. We find force in the findings of the A.O., for the reason that the lands sold by the assessee are agricultural lands and market value of the property as on 1.4.1981 has to be taken as per the SRO value, which is applicable to the agricultural lands, but not for the vacant residential flats. The A.O. has obtained a certificate from the SRO, which indicates the market value of the agricultural land as on the date of sale. Therefore, we are of the view that the A.O. was right in re-computing cost of acquisition by adopting value of ₹ 25,000/- per acre. Application of the provisions of section 45(2) - Held that:- A.O. was erred in not considering the alternative plea of the assessee for computation of income from sale of land by applying the provisions of section 45(2) of the Act. We further opined that, it is for the A.O. to compute the income by applying appropriate provisions of the Act, even though the assessee has made an incorrect claim to compute the income. In this case, although the assessee made alternative plea for computation of income by applying the provisions of section 45(2) of the Act, the A.O. has rejected the plea without assigning any reasons. Therefore, we are of the view that the A.O. was erred in not considering the plea of the assessee, with reference to the provisions of section 45(2) of the Act. The CIT(A) after considering the relevant provision has rightly observed that, the case of the assessee squarely fall within the provision of section 45(2) of the Act and the A.O. was erred in not considering the assessee’s plea for application of Section 45(2) of the Act. Therefore, we deem it appropriate to remit the issue back to the file of the A.O. for the limited purpose of verification of computation filed by the assessee and direct the A.O. to consider the alternative plea of the assessee with reference to the relevant materials and direct him to recompute the income by applying the provisions of section 45(2) of the Act. Appeal filed by the revenue is allowed for statistical purposes.
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