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2021 (8) TMI 746 - AT - Income TaxCapital gain computation - LTCG - addition invoking section 50C - as per AO assessee had transferred certain ancestral plot of land by way of his capital contribution as a partner in two partnership firms - HELD THAT:- As decided in own case [2019 (10) TMI 1453 - ITAT MUMBAI] once the price recorded in the joint venture's books is treated as full value of consideration, the provisions do not permit substitution of any value so as to make addition under section 45(3). In fact the approach of the A.O. is also not correct in the sense that under section 45(3) once the full value of consideration is taken as the amount recorded in the books of the joint venture, the capital gain can be worked out by reducing the cost of purchase as per the books of assessee. In case the A. O. substitutes the cost of purchase, by whatever means, then that cost price has to be adjusted in the capital gains. This may result in a loss of equal amount as the books of joint venture show the book value as consideration and substituted cost price (value determined by AO in the order) as a deduction. This working would result in a loss but not a gain. This simple arithmetic calculation was missed by the A.O and he ma de the addition under section 45 (3) which does not permit him to substitute the full value of consideration other than the amount recorded in the books of account of the joint venture. As the Assessing Officer's action is not according to the provisions of Sec 45 (3) , there is no justification or upholding the contentions of Revenue CIT(A) had rightly vacated the addition that was made by the A.O by substituting the market value of the property as per the ready reckoner rates u/s 50C, as against the amount recorded in the “books of accounts‟ of the respective firms, which was adopted by the assessee as the “full value of consideration” received or accruing as a result of the transfer. - Decided in favour of assessee.
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