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2018 (10) TMI 278 - AT - Income TaxValuation of property u/s 50C - computation of capital gain - reference to DVO - land as situated in the interior area of Narayanapuram Varisai and there was no proper approach road, therefore, the Approved Valuer has rightly valued the property at ₹ 50,40,000/- - taking sale consideration of property - Held that:- A perusal of the Departmental Valuation Officer’s report shows that the method prescribed under the Wealth Tax Act was not followed. Moreover, the factors such as the location of property, availability of infrastructure facility around the area, potential development in the near future, accessibility to the infrastructure facility such as road, airport, educational institutions, etc. were not properly considered either by the Approved Valuer or by the Departmental Valuation Officer. In those circumstances, relying upon both the Valuer’s report would not reflect the correct fair market value of the property. Therefore, when the assessee claims that what was received is only ₹ 50,00,000/-, the Approved / Registered Valuer estimated the property at ₹ 50,40,000/- and the Departmental Valuation Officer estimated at ₹ 81,68,304/-, this Tribunal is of the considered opinion that estimation of value of the property after considering the infrastructure facilities and other factors as referred above, at ₹ 69,00,000/- would meet the ends of justice. Accordingly, the orders of both the authorities below are modified and the Assessing Officer is directed to take the sale consideration of the property at ₹ 69,00,000/- and thereafter compute the capital gain. Coming to development charges the assessee has produced the receipt from Shri K. Manikandan for filling up the land to the extent of ₹ 3,10,000/-. This Tribunal is of the considered opinion that when the assessee has produced the receipt for filling the land, the Assessing Officer is not justified in disallowing the claim of the assessee. The cost of filling of land has to be allowed while computing the capital gain. The payment of brokerage was also disallowed by the Assessing Officer. It is a fact that in the real estate business, the assessee has to pay 2% to 3% of sale consideration as brokerage for negotiating the price of the property to the prospective purchasers. Therefore, this Tribunal is of the considered opinion that 2% of the total sale consideration has to be allowed as brokerage charges. Accordingly, the Assessing Officer is directed to allow 2% of ₹ 69,00,000/- as brokerage while computing the capital gain. Eligibility for exemption u/s 54 - Held that:- In the eyes of common / Hindu law, husband and wife are considered to be one and same even though they are independent and distinct assessable entity under the Income-tax Act. In a joint family system, particularly, male dominated society, the investment would always be made in the name of eldest male member of the family. Since the property sold was admittedly belonging to the assessee, Tribunal is of the considered opinion that the investment made in the property belonged to the assessee’s husband, has to be construed as investment made by the assessee. The additional construction, which was not disputed as not an independent residential unit, belonging to the assessee, therefore, the assessee is eligible for exemption under Section 54F in respect of the investment made. Accordingly, both the authorities below are not justified in disallowing the claim of the assessee. Hence, the orders of both the authorities below are set aside and the AO is directed to allow the claim of exemption under Section 54F. Now coming to development expenditure of ₹ 3,20,000/-, it is not in dispute that the property was sold on 22.01.2010. But, the quotation for so-called development was obtained from M/s Thirumalai Construction only on 20.03.2010. Therefore, after the sale of property, this Tribunal is of the considered opinion that the assessee would not have incurred the expenditure. Therefore, as rightly submitted by the D.R., the claim of ₹ 3,20,000/- is not justified. The disallowance of development expenditure of ₹ 3,20,000/- is confirmed. - Appeal of assessee partly allowed.
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