TMI Blog2016 (11) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... mine the cost of acquisition of the property. Therefore, we are of the opinion that the A.O. was erred in adopting SRO value to substitute the fair market value adopted by the assessee, which is based on a registered valuer certificate. CIT(A) after considering the relevant details has rightly directed the A.O. to substitute value adopted by the assessee as fair market value of the property as on 1.4.1981 to compute cost of acquisition. We do not find any reasons to interfere with the CIT(A) order. Hence, we inclined to upheld CIT(A) order and reject ground raised by the revenue. Benefit of indexation - Held that:- In the present case on hand, the assessee got right over property by way of inheritance through a partition deed which was acquired by his father prior to 1.4.1981. When the assessee got right over property by any of the mode specified u/s 49(1) of the Act, then for the purpose of computation of indexed cost of acquisition, the period of holding of previous owner has to be considered. The CIT(A) after considering the relevant details rightly held that the assessee is eligible for indexation benefit from the period the asset was first held by the previous owner or 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee further submitted that he has obtained certificate from the registered valuer, to ascertain fair market value of the property as on 1.4.1981 and based on such certificate adopted the value and computed long term capital gain by applying indexation as per the provisions of section 49(1) of the Act and computed long term capital gain of ₹ 4,81,480/-. 3. The A.O., during the course of assessment proceedings, to ascertain the value of both site and construction as on 1.4.1981, addressed letter to the sub registrar, Guntur calling for information u/s 133(6) of the Act and the S.R.O. has furnished fair market value of both land and structure as on 1.4.1981. The A.O., on perusal of the sale deed dated 30.4.2008, noticed that though sale consideration received as a result of transfer of ₹ 1.5 crores, the stamp duty authority have fixed fair market value of the property as on the date of transfer at ₹ 1,95,35,000/-, therefore, issued a show cause notice and asked to explain why the stamp duty value fixed by the sub registrar for the purpose of determination of stamp duty shall not be adopted as full value of consideration received as a result of transfer for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as duly filed during the course of assessment. It is also further submitted that the approved valuer s report contains detailed abstract of construction after a thorough inspection of the said building/construction, therefore, there is no reason for the A.O. to disbelieve the certificate issued by the registered valuer to adopt the SRO value. As regards the indexation benefit, the assessee submitted that he had acquired right over the property by way of one of the modes specified in section 49(1) of the Act and accordingly applied indexation benefit from the year in which the asset was held by the previous owner. The assessee further submitted that he had acquired property by way of partition deed on 28.5.2007 and the said property has been acquired by his father prior to 1.4.1981. As per the provisions of the Act, when the assessee got right over the property by way of any mode specified u/s 49(1) of the Act, when the asset was acquired by the assessee or previous owner before 1.4.1981, then the assessee at his option can adopt cost to the previous owner or fair market value of the property as on 1.4.1981 whichever is higher. In the present case on hand, since the property was acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted SRO value fixed by the stamp duty authorities for the purpose of determination of stamp duty without any basis, with these observations, directed the A.O. to substitute the fair market value of the property as on 1.4.1981, as per the approved valuer s report as against the SRO value adopted by the A.O. Aggrieved by the CIT(A) order, the revenue is in appeal before us. 7. The Ld. D.R. submitted that the Ld. CIT(A) erred in directing the A.O. to adopt value of the property as on 1.4.1981 as per the report of the registered valuer as the fair market value for determining cost of acquisition in the place of value computed by the A.O. as per the guidance value rates obtained from the SRO. The Ld. D.R. further submitted that the CIT(A) erred in placing reliance on the decision of the ITAT, Mumbai in the case of Pratap M. Indulkar in ITA No.1142/Mum/2010 which dealt with the legality of reference to valuation officer u/s 55A of the Act, which is not relevant to the facts of the assessee s case. The D.R. further submitted that as regards the indexed cost of acquisition, the CIT(A) erred in directing the A.O. to adopt indexation benefit from the first year in which the asset was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t relied upon the decision of Hon ble High Court of Mumbai in the case of CIT Vs. Majula J. Shah (2013) 355 ITR 474. 9. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The first issue that came up for our consideration is cost of acquisition of the property. The assessee has adopted cost of acquisition of the property as on 1.4.1981 based on the certificate of registered valuer. The A.O. has determined cost of acquisition of the property based on the SRO value of the property fixed by the State Government for the purpose of determination of stamp duty. The A.O. was of the opinion that cost of acquisition adopted by the assessee based on the registered valuer certificate is not in accordance with the provisions of section 48 49 of the Act. According to the A.O., when asset is acquired by the assessee by way of one of the mode specified u/s 49(1) of the Act, the assessee can either adopt cost to the previous owner or fair market value of the property as on 1.4.1981. According to the A.O., the fair market value of the property as on 1.4.1981 is as per the SRO value. 10. It is the contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, we are of the opinion that the A.O. was erred in adopting SRO value to substitute the fair market value adopted by the assessee, which is based on a registered valuer certificate. 12. Now it is pertinent to discuss here the case law relied upon by the assessee. The assessee has relied upon the decision of Hon ble Karnataka High Court in the case of N. Govindaraju Vs. ITO Anr. 377 ITR 243, wherein the Hon ble High Court under similar circumstances held as under: Section 48 of the Act deals with the 'Mode of Computation' of income chargeable under 'Capital gains' and in that context 'full value of the consideration' would mean the consideration or price received as a result of the transfer of a capital asset. It is different from 'fair market value' of the property, which phrase is used in section 45(2) [relating to capital gains] and section 55(2)(b) [relating to cost of acquisition]. (para 44) The legislature has expressly drawn a distinction between the two phrases: 'full value of the consideration' and 'fair market value The former would be the price received on transfer of a capital asset and the latte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the previous owner or the assessee as the case may be. Since, he got right over property by way of inheritance or succession, as per the provisions of the Act, he has adopted fair market value of the property as on 1.4.1981 and applied indexation benefit from the date the asset was first held by the previous owner and computed long term capital gain. The A.O. was of the opinion that when assessee is owner of the property by way of any one of the mode specified u/s 49(1) of the Act, then the indexation benefit should be allowed from the date the asset first held by the assessee. The A.O. further was of the opinion that the assessee has got right over property by way of inheritance/succession through a partition deed dated 28.5.2007 which pertains to the assessment year 2008-09 and accordingly, the assessee is eligible to claim benefit of indexation from the assessment year 2008- 09 onwards. 15. We do not find any merits in the findings of the A.O., for the reason that when the asset was acquired under any circumstances given by section 49(1) of the Act, for the purpose of reckoning the period of holding, the period of holding of asset by the previous owner is considered to comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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