9911796707
TMI Blog2013 (2) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... lease period pursuant to the Lease Deed, it is, therefore, submitted that the indexed fair market value of Rs. 29972250 be allowed in computing the Long-term Capital Gains and that the assessment be directed to be modified accordingly. 2. Without prejudice to above, it is also submitted that if it is to be held that the appellant has not incurred any cost for acquiring the leasehold land, the provisions of section 48 relating to the computation fail and, therefore, no capital gains can he levied in respect of the sale of the leasehold land since the provisions of sec.55(2)(a) prescribing 'Nil' cost in respect of certain capital assets apply inter alia to Tenancy Rights and not to Leasehold Rights and arc, therefore. not applicable to the facts of the case and therefore, the old decisions still hold good in respect of the transaction in question. It is, therefore, submitted that the said capital gains be excluded from the purview of the total income and that assessment be directed to be modified accordingly. 3. That the C.I.T.(Appeals) further erred in holding that the A.O. had given an opportunity of hearing to prove the cost of acquisition of land before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Tribunal. 4. The learned DR has opposed the submissions of the learned counsel for the assessee. He submitted that no cost of acquisition was incurred by the assessee as per the terms and conditions of the registered lease deed, and therefore in accordance with the provision of section 55(2)(a)(ii) of the Act, the cost of acquisition has to be taken at NIL. He referred to the term-4 of the lease deed dated 15.9.1966 wherein it was agreed that all the building and structure put up by the lessee on the said land remain the property of the lessee only. He referred to the relevant portions of the assessment order as well as appellate order passed by the CIT(A) in support of the case of the Revenue. He submitted that the cost of construction of cinema hall could not be attributed to the cost of taking land on lease and the assessee has already demolished the building before it had transferred back the lease hold land in question. He relied on the order of the AO and the CIT(A). 5. We have considered rival submissions and have perused the orders of the AO and the CIT(A) and copies of the various documents filed in the compilation before us including the copy of the lease deed da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t value of the land in question as on 1.4.l981 along with the indexed cost of acquisition has to be determined in order to arrive at the figure of "long term capital gain". In our considered view, the value for which the assessee has acquired the land in question prior to 1.4.1981 is not relevant for the determination of the "fair market value" of the land as on 1.4.1981. 6. We find that the important issue before us for adjudication is whether the provision of section 55(2)(a)(ii) of the Act relied upon by the Revenue is applicable to the case of the assessee to value the land in question as on 1.4.1981, even though the land was acquired by the assessee for NIL value. We have already held in the foregoing paras of this order that where the assessee has acquired some land for NIL value prior to a year starting from 1.4.1981, even then the provision of section 48 shall be applicable and the fair value of the land in question as on 1.4.1981 along with indexed cost of acquisition has to be determined in order to arrive at the figure of "long term capital gain" and the value for which the assessee has acquired the land in question prior to 11.4.1981 is not relevant for determining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed family or under a gift or will or by succession, inheritance or devolution, or any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the 1st day of April, 1987, or on any distribution of assets on the liquidation of a company, or under a transfer to a revocable or an irrevocable trust, or under any such transfer as is referred to in certain clauses of section 47 or in the case of HUF by the mode referred to in sub-section (2) of section 64 at any time after the 31st day of December, 1969, and in this type of cases, the cost of acquisition of the asset shall be cost for which the previous owner of the property acquired it as increased by the cost in improvement of the assets etc. We find that the provision of section 55(2)(a) shall apply in relation to the capital assets mentioned in Section 55(2)(a) of the Act only. The capital assets as mentioned in Section 55(2)(a) are exhaustive and all inclusive of capital assets, such as goodwill, trade mark brand name, right to manufacture, produce or process any article or thing or right to carry on any business, tenancy righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue" of such lease hold rights of the assessee, is by capitalizing the "net annual income" of the land of certain number of years purchase in accordance with the prevailing rate of interest and by deducting the annual rent payable to the lessor out of the total income of the assessee. However, no such exercise was undertaken by the assessee or by the department to find out the net annul income of the land in this case and no data of net annual income is available. In such a situation, other method of valuation of fair market value as on 1.4.1981 would be to value free hold land as on the relevant valuation date, and thereafter due deduction on account of the land being leasehold may be allowed. We find that no specific sale instances of free hold/lease hold lands in the vicinity of the land in question have been cited either by the assessee or by the Revenue. The AO has chosen not to refer the issue of valuation of the land in question as on 1.4.1981 to the Departmental Valuation officer. The assessee has filed a copy of the valuation report of the Approved valuer dated 11.9.2006 valuing the land in question as on 1.4.1981 at Rs. 57,75,000/- and copy thereof has been filed in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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