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2016 (5) TMI 1022 - ITAT KOLKATA

2016 (5) TMI 1022 - ITAT KOLKATA - TMI - Computation of long term capital gain - whether value as on the date of sale as estimated by the DVO should be taken as full consideration received on transfer? - Held that:- The claim of the assessee made before CIT(A) and the manner of computation of long term capital gain has to be accepted. We hold and direct the AO to accept the said computation in view of the above conclusion that there is no necessity to decide on the correctness of the fair market .....

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er dated 05.03.2013 of CIT(A)-XVI, Kolkata, relating to AY 2009-10. 2. The facts and circumstances gave rise to the present appeal by the assessee are as follows : The Assessee and his brother one Mr. Dilip Kumar Addy, were co-owners of the property at 71/1, Hazra Road, Kokata-700019 (herein after referred to as property). The assessee and his brother had half share each over the property. By a registered sale deed dated 04.03.2009, the property was sold for a consideration of ₹ 90 lakhs. .....

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ows: Sec.48: The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :- (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto....... As per Sec 50C, where the consideration received or accruing as a result of t .....

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is relevant in the present case is clause (b)(i) which reads thus: (2) For the purposes of sections 48 and 49, "cost of acquisition",- (b) in relation to any other capital asset,- (i) where the capital asset became the property of the assessee before the 1st day of April, 1981, means the cost of acquisition of the asset to the assessee or the fair market value of the asset as on the 1st day of April, 1981, at the option of the assessee; It can be seen that clause (b)(i) of Sec.55(2)(b) .....

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stimated at ₹ 43,40,400/-. The aforesaid fair market value as on 01.04.1981 was also supported by a report by a registered valuer one Shri N.K.Chakravarty. The computation of long term capital is given by the assessee as follows :- Particulars Amount Total value of property as at 1/04/1981 determined by Govt. Regd. Valuer (see Page no.25 to36) Rs.43,40,400.00 Indexed Cost -Rs.43,400 x 582/100 Rs.2,52,61,128.00 Sales Value as determined by Stamp Valuation Authority Rs.2,76,76,138.00 Long Te .....

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es. The AO however noticed in the case of the other coowner Shri Dilip Kumar Addy, a reference was made by his AO to DVO and DVO had estimated the fair market value of the property as on 1.04.1999 at ₹ 14,56,208/-. The AO adopted the fair market value of the property as on 1.4.1981 at ₹ 14,56,208/- as given in the DVO s report and allowed indexation thereon. The AO computed long term capital gain as follows :- The L.T.C.G. on property sale is calculated as under :- Sale price of prop .....

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stimated the fair market value of the property as on the date of sale i.e. 04.03.2009 at ₹ 1,68,82,444/- . If that value is adopted as full value of consideration received on transfer there would be no capital gain chargeable to tax in the hands of the assessee. The assessee gave the computation of long term capital gain if the sale value as per DVO is adopted as on 04.03.1999 , the date of transfer, as follows :- Sale price given by the DVO : Rs.1,68,82,444.00 Indexed cost as on 01/04/198 .....

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rence being the AO referred the matter to the DVO as directed by the CIT(Appeals), the Hon ble Bench dismissed the Department s appeal and upheld the decision of the CIT(A) directing the AO to accept the DVO s report as regards the value on the date of sale in place of the Stamp Duty Authority s value for registration. 7. CIT(A) however did not accept the aforesaid submissions and he held as follows :- I carefully considered the material before me. I found that the appellant filed return in resp .....

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and indexed cost of property as on 01/04/1981 came to ₹ 84,75,131/-. The appellant was owner of 50% of the property. The argument of the AIR that AO is duty bound that he should accept the sale value of the property which determined by the DVO in his brother's case of the said property. In this case, the appellant in return of income himself shown the sale value of the property of ₹ 1,38,38,069/-. Then, the AO rightly taken the value which shown by the appellant in his return of .....

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see and the other co-owner of the assessee Shri Dilip Kumar Addy vide ITA No.227/Kol/2013 dated 16.09.2015 wherein this Tribunal held that the value as on the date of sale as estimated by the DVO should be taken as full consideration received on transfer for the purpose of computation of long term capital gain. The following observations of the ITAT are as follows :- 7. We have heard the rival submissions and perused the materials available on record. The AO has taken the sale proceeds as record .....

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of such transfer, the value so adopted or assessed shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) Without prejudice to the provisions of sub-section (1), where - (a) the assessee claims before any Assessing Officer that the value adopted or assessed by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer ; (b) the value so adop .....

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tion 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation - For the purposes of this section , Valuation Officer shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). (3) Subject to the provisions contained in sub-s .....

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cer, contemplated under section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the district sub registrar for the purpose of the stamp duty. The legislature has taken care to provide adequate machinery to give fair treatment to the citizen/Tax payer. There is no reason why the machinery provided by the legislature should not be used and benefit thereof should be refused. Eve .....

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