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2017 (1) TMI 1263 - ITAT AHMEDABAD

2017 (1) TMI 1263 - ITAT AHMEDABAD - TMI - Capital gain computation - cost of acquisition of the asset sold as on 01.04.1981 - AO’s action in referring valuation issue of the very capital asset in question as not sustainable u/s.55A - Held that:- The very cost of acquisition of the capital asset in question as on 01.04.1981 has to be adopted in all co-owners’ cases instead of the particular appellant hereinabove. We can’t adopt different cost of acquisition qua the very capital asset. We thus fo .....

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he Act is in the nature of a deduction provision in a taxing statute to be liberally constitute. There is no such stipulation that the said re-investment of sale consideration/long term capital gains in question is to be made only in the names of vendor assessees. Both the parties are very fair in forming the bench that the hon’ble jurisdictional high court has not adjudicated the impugned issue. We thus quote decisions of CIT vs. Kamal Wahal [2013 (1) TMI 401 - DELHI HIGH COURT ] and CIT vs. Ra .....

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AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Assessee : Shri S. N. Divatia, A.R. For The Revenue : Shri P. S. Chaudhary, Sr. D.R. ORDER PER S. S. GODARA, JUDICIAL MEMBER These three appeals in case of as many assessees for assessment year 2011-12 arise against CIT(A)-10, Ahmedabad s separate orders; all dated 08.05.2015 in appeal nos. CIT(A)-10/ITO Ward-3(1)283/2014-15, CIT(A)- 10/ITO Ward-3(1)284/2014-15 & CIT(A)-10/ITO Ward-3(1)282/2014-15 , in proceedings under section 143(3) of the I .....

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had received the CIT(A) s order in question which could be handed over to him on his visit to Ahmedabad. His further case is that after getting copy of the lower appellate order in January 2016, he initiated all necessary steps to file his instant appeal after a delay of 161 days. Later two assessees Ms. Jigna Maheshbhai Pandya and Yamini Maheshbhai Pandya are his sisters who have got married and staying away from their parents. Their case also is in the same tune that they came to know about th .....

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01.04.1981 in all three cases. These assessees co-owned the capital asset in question i.e. a plot of land in survey no.858/1, TPS-44 admeasuring 394C sq.mtrs., Chandkheda, Ahmedabad along with other co-owners. There is no dispute that it was their ancestral property. They sold the above plot on 10.06.2010 for ₹ 2,56,50,000/-. The assessees adopted its cost of acquisition as on 01.04.1981 @ ₹ 501/- per sq.mtr. as per Government Approved Valuer s report. The Assessing Officer however w .....

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nother co-owner Shri Yagnesh Ashwinkumar Pandya reversing Assessing Officer s action in referring valuation issue of the very capital asset in question as not sustainable u/s.55A of the Act reading as under: 4.3. I have considered the facts of the case and submission made by the appellant. In this case, the AO has increased the long term capital gain amount by reducing the cost of acquisition of the appellant as on 1.4.1981. It has been, seen that the appellant along with 11 co-owners had sold t .....

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3 and after necessary corrigendum vide letter dtd. 7.5.2013 he has estimated the fair market value as on 1.4.1981 at ₹ 21,37,500/- considering the rate of R.s.325/- per sqr. Mtr. However, this valuation was also not accepted, by the AO and he once again referred back the matter to the valuation Officer for revaluation. In response to the same' the Valuation Officer-2, Ahmedabad vide his report dtd. 13.11.2013 has valued the property as on 1,4,1981 at ₹ 12,78,200/- only considerin .....

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ceedings this rate taken for cost of acquisition has been challenged which ultimately increased the long terra capital gain in the hands of the appellant to the extent of his share in the said land, 4.4. Considering the facts and submission, it is found that the appellant has challenged the valuation made by the Valuation Officer on various accounts which have some substance. However, it has been found that the reference made by the AO in the assessment proceedings to the Valuation Officer in vi .....

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void-ab-initio. In support of this proposition, various Court's have given their decisions/judgments and some of .them are discussed hereunder.- 4.5. The appellant challenged the reference made by the AO to the DVO stating not legal and invalid in law in view of the Hon'ble Bombay High Court judgment in the case of CIT Vs. Pooja Prints 98 DTR 177 and CIT Vs. Dauial Mohta HUF 360 ITR 680 and mentioned that the long term capital gain determined by considering the valuation report of the D .....

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that the valuation made by the registered valuer was not proper and did not show the fair market value. 4.6. In the similar circumstances, the Hon'ble Bombay High Court in the ease of CIT Vs. Daulal Mohta HUF 360 ITR 680 has held as under:- CAPITAL GAINS - COMPUTATION - COST OF ACQUISITON - FAIR MARKET VALUE AS ON 1-4-1981 - REFERENCE TO DEPARTMENTAL VALUAT10N OFFICER - ONLY VALUE OF CAPITAL ASSET SHOWN BY ASSESSEE LESS THAN ITS FIAR MARKET VALUE - INCOME TAX ACT, 1961 s. 55A. Reference to .....

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also held as under:- CAPITAL GAINS - LONG TERM CAPITAL GAINS- COMPUTATION - COST OFACQUISITON - FAIR MARKET VALUE AS ON 1,4. 1981 - REFERENCE TO DEPARTMENTAL VALUATION OFFICER - ONLY WHEN VALUE ADOPTED BY ASSESSEE I^ESS THAN PAIR MARKET VALUE - VALUE ADOPTED BY ASSESSEE MUCH MORE THAN FAIR MARKET VALUE - REFERENCE TO VALUATION OFFICER COULD NOT BE MADE - INCOME ATAX ACT, 1961,s.55a(A) 4.8. Further the Hon'ble Gujarat High Court in the case of CIT Vs. Gauranginiben S. Shodhan in Tax- Appeal, .....

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hat the value of the asset shown as on 1st April, 1981 was less than the fair market value- For the same reson, sub-cl.(i) of cl. (b) of s. 55 A has no bearing on the fair market value as on 1st April, 1981 - AO has not resorted to sub-cl.(ii) of cl. (b) - In any case, cl. (b) applies where cl. (a) does not apply as it starts with the expression "in any other case"- If the assessee has relied upon a registered valuer's report, AO can proceed only under cl. (a) and cl. (b) would not .....

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10. It is worth here to mention that the amendment in the aforesaid provisions has only be made with effect from 1.7.2012 by the Finance Act, 2012 whereby the reference can be made when there is "variance" with its fair market value. Otherwise as per the amendment it is clear that the legal position was different before pre-amendment period and this amendment could not be said to be clarificatory or retrospective in nature. 4.11. In view, of the aforesaid discussion, the AO's actio .....

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facts. His only plea is that the said CIT(A) s order is very much against the law but the department could not file appeal due to tax effect involved of less than ₹ 10,00,000/-. This plea fails to impress upon us as the very cost of acquisition of the capital asset in question as on 01.04.1981 has to be adopted in all co-owners cases instead of the particular appellant hereinabove. We can t adopt different cost of acquisition qua the very capital asset. We thus follow the same reasoning he .....

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