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2022 (2) TMI 770 - AT - Income TaxCapital gain computation - considering the guideline value of the land as mentioned in section 50C of the Act as fair market value on the date of conversion of said land into stock-in- trade u/s.45(2) - CIT-A noted that the provisions of section 45(2) of the Act is applicable in the case of capital asset and agricultural land is not a capital asset - assessee’s own agricultural land admeasuring 7.54 acres converted as stock-in-trade and held as capital asset in the name of the assessee - HELD THAT:- As gone through the definition given in the Act in the provision for section 2(22B) of the Act, whereby it is defined that as to how the fair market value is to be substituted in place of cost of acquisition. According to Section 2(22B) of the Act, it is the price which the capital asset would ordinarily fetch if sold in the open market on the relevant date i.e., date of acquisition of asset in the stock-in-trade. This concept of fair market value is now well settled in the Income-Tax law and other cogent fiscal statutes bringing the question of hypothetical seller and the hypothetical buyer in the hypothetical market. For example and for the purpose of income-tax Act, this has been explained and elaborated in section 55 wherein specified date for cost of construction as also for substituting the fair market value for cost of construction is given, like in the present case before us, where the conversion took place as on 20.02.2012. The fair market value can be determined by taking the surrounding circumstances like sale instances of the area, urbanization of that area, future prospects, valuation of similar properties by the Revenue Department or scope of industrialization or growth of these can be considered by determining the fair market value. But for this purpose, the fair market value if could not be ascertained by the Income Tax Officer, the same can be referred to a technical person as conceded by both the sides. Hon’ble Supreme Court in the case of Groz-Beckert Saboo Ltd [1978 (11) TMI 2 - SUPREME COURT] we are of the view that this matter needs reconsideration just to ascertain the fair market value of assessee’s agricultural land of 7.54 acres converted into stock-in-trade and held as capital asset. The AO has to refer this matter to the DVO to ascertain the fair market value based on the above factors enumerated. Hence, we set aside the orders of the lower authorities and restore the matter back to the file of the AO with the above direction. Appeal filed by the assessee is allowed for statistical purpose.
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