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2016 (3) TMI 17 - ITAT JAIPUR

2016 (3) TMI 17 - ITAT JAIPUR - TMI - Calculation of capital gain - entitlement to benefit of indexation - appreciated compounded cost of appreciation applied - selection of cost of acquisition - Held that:- Capital gain is required to be calculated in case of transfer of capital asset by calculating the cost of acquisition of the capital asset and for the purpose of calculating the cost of acquisition, the fair market value is required to be determined as would have been prevailed as on 01.04.1 .....

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₹ 4002.65 per bigha by giving the compounded appreciation of 30.6% on the original cost of acquisition.

Cost inflation index has been duly applied by the AO on the initial cost of acquisition of capital assets. Since the initial cost of acquisition is available, in our view, the AO has rightly applied the appreciated compounded cost of appreciation @ 30.6% in accordance with provisions of law. In the light of above, the appeal of the assessee is dismissed and the order passed b .....

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r u/s 147/143(3) dated 20.08.2010 are bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted. (2) ₹ 1,31,894/- : The ld. CIT (A) erred in law as well as on the facts of the case in confirming the enhancement of Long Term Capital Gain at ₹ 33,87,989/- as against ₹ 32,56,095/- declared by adopting the fair market value as on 01.04.1984 at ₹ 4,84,466/ as against ₹ 3,52,572/- declared. The addition so .....

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xplained that there was no delay on the part of the assessee. He submitted that - That so far as the correct date of receipt is concerned, it is submitted that the impugned order was not properly served, in other words, the same was never served upon the assessee or anybody authorized by him to receive the order in this behalf. This fact can be got verified from the office of the ld. CIT (A)-III, Jaipur also. The person who got the order left the papers at the place of the assessee and then only .....

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pressed. Ground No. 2 : 4. The brief facts of the case are that the assessee filed his return of income on 31.07.2007 declaring total income of ₹ 1,35,580/- which was processed u/s 143(1) on 19.12.2007 on the declared income. Later on the return was revised on 25.07.2008 declaring total income of ₹ 2,66,111/-. Subsequently it was found that the assessee had suppressed his income from capital gain by overstating the cost of acquisition. In the revised return assessee had adopted the c .....

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accordingly issued notice u/s 148 of the IT Act on 03.04.2009 after recording reasons for belief that income to the extent of ₹ 32,57,456/- had escaped assessment. In compliance, the assessee filed his return of income on 29.06.2009 declaring total income of ₹ 33,91,673/- including long term capital gain of ₹ 32,56,095/-. In the meanwhile matter was transferred to ACIT Sikar as the declared income was more than ₹ 5 lacs. 4.1. In compliance to notice u/s 148, the assessee .....

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exed cost of sold property may not be adopted at ₹ 3,52,572/- as against ₹ 4,84,466/- adopted by the assessee. The assessee explained vide letter dated 20.08.2010 that DLC rate of the sold property in the year 1993 was ₹ 1 lac per bigha and on that basis rate of land as on 01.04.1981 would be ₹ 17,825/- per bigha. It was further contended that looking to the above fact the cost of acquisition as on 01.04.1981 at ₹ 5500/- per bigha adopted by the assessee is justifie .....

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.1981 would be ₹ 4002.65 per bigha. The AO arrived at this value while recording reasons, taking yearly appreciation at the compound appreciation rate of 30.6%. Thus value of 16.972 bigha of the sold land as on 01.04.1981 was ₹ 67,932/- and the indexed cost for the relevant year F.Y. 2006-07 would be ₹ 3,52,572/- (67932 x 519/100) and hence capital gain is computed by adopting indexed cost of acquisition at ₹ 3,52,572/- as against ₹ 4,84,466/- adopted by the assesse .....

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81 is not available, the FMV has to be estimated otherwise. The reverse working of cost inflation index from 1993 to 1981 is not a very sound and scientific method since the cost of property does not increase or decrease as per cost inflation index notified by CBDT. Indexation was allowed only to neutralize the general inflation. It does not reflect the increase in the cost of property. AO has allowed compound appreciation of 30.6% which is more than reasonable. Hence, the cost of property as on .....

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o be based on some material. The material could be in the shape of an expert opinion or comparable case/s brought by any of the party in support of their respective contentions however, such material in absence of the other logical way to make fair estimation based on comparable cases. 1.2 The ld. AO in his wisdom considered the property purchased by his father on 27.09.1965 @ ₹ 55/88 per bigha and on that basis he computed FMV as on 01.04.1981 at ₹ 4,002/65 per bigha i.e. ₹ 67 .....

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endent and third parties could be more reliable. The appellant on the other hand, considered DLC rates which are much preferred as against the father-son transaction cited by the ld. AO. 1.3 The appellant on the other hand, considered an example of the year 1993 when the DLC rate was ₹ 1 Lac per bigha and again adopted the Cost Inflation Index (CII) notified by the CBDT. A reverse working was made. This way, the FMV as on 01.04.1981 was estimated at ₹ 17,825 per bigha however, the ap .....

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) did not appreciate that the CII is being notified by the CBDT itself every year through notifications and such index has to be adopted for the purpose of computation of the very capital gain only therefore, it is wrong to say that any working based thereon (whether forward or reverse) is not very sound and scientific method since the cost of property does not increase or decrease as per CII notified by CBDT and that indexation was allowed only to neutralize the general inflation. It does not r .....

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h CII while computing LTCG even for the purposes of computing FMV as on 01.04.1981. Such a basis having the legislation sanction and notified by CBDT, is thus the best material/basis for estimation as on 1.4.1981. 2.2. The other facts are not under dispute. Thus, there appears no convincing reason from the CIT(A) to reject the basis of estimation adopted by the assessee. However, at the same time while affirming the action of the AO though he found his basis of estimation to be more than reasona .....

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e have heard rival contentions and perused the material available on record. In our view, capital gain is required to be calculated in case of transfer of capital asset by calculating the cost of acquisition of the capital asset and for the purpose of calculating the cost of acquisition, the fair market value is required to be determined as would have been prevailed as on 01.04.1981 and thereafter the benefit of indexation is required to be given with a view to calculate the cost of acquisition. .....

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explanation to section 48 of the Act, the indexed cost of acquisition has been provided as under :- Explanation.-For the purposes of this section,- (i) foreign currency 48 and Indian currency 48 shall have the meanings respectively assigned to them in section 2 of the Foreign Exchange Regulation Act, 1973 (46 of 1973); (ii) the conversion of Indian currency into foreign currency and the reconversion of foreign currency into Indian currency shall be at the rate of exchange prescribed in this beha .....

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