Tribunal favors assessee in LTCG dispute, directs re-computation based on 1981 FMV.

The Tribunal upheld the CIT(A)'s decision, favoring the assessee in the dispute over Long Term Capital Gain (LTCG) of Rs. 90,30,430 for A.Y. 2010-11. It ruled in favor of the assessee regarding eligibility for indexation from 1981-82, rejected the DVO's valuation report, and declared the reference to the DVO as void ab initio. The Tribunal directed the AO to re-compute the capital gains tax liability based on the Fair Market Value (FMV) as on 01.04.1981 at Rs. 605 per sq. mtr, partially allowing the revenue's appeal.

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Issues:
- Validity of the order of the Ld. CIT(A)-6, Ahmedabad dated 14.07.2014 pertaining to A.Y. 2010-11.
- Deletion of Long Term Capital Gain (LTCG) of Rs. 90,30,430.
- Eligibility of indexation from 1981-82.
- Adoption of Fair Market Value (FMV) as on 01.04.1981.
- Reference to Departmental Valuation Officer (DVO) for valuation.

Validity of CIT(A) Order:
The revenue challenged the validity of the order of the Ld. CIT(A)-6, Ahmedabad regarding A.Y. 2010-11. The revenue contended that the CIT(A) erred in deleting the addition of Rs. 90,30,430 towards LTCG. The CIT(A) had ignored the fact that the property in question was first held by the assessee's father, making the assessee eligible for indexation from A.Y. 1981-82. The Tribunal upheld the CIT(A)'s decision, citing precedents from the Hon'ble High Courts of Bombay and Gujarat, which favored the assessee.

Eligibility of Indexation:
The issue of eligibility for indexation from 1981-82 was discussed, with the Tribunal ruling in favor of the assessee based on precedents. The property was first held by the assessee's father, allowing indexation benefits from A.Y. 1981-82. The Tribunal declined to interfere with the CIT(A)'s decision, which followed the High Court rulings.

Adoption of FMV as on 01.04.1981:
The Tribunal considered the adoption of FMV as on 01.04.1981, questioning the valuation report of the DVO. Citing a High Court decision, it deemed the reference to the DVO void ab initio, treating the DVO's report as non est. The Tribunal directed the AO to re-compute the capital gains tax liability by adopting the FMV as on 01.04.1981 at Rs. 605 per sq. mtr, based on sound principles.

Reference to DVO for Valuation:
The Tribunal addressed the reference to the DVO for valuation, emphasizing that prior to the amendment of Section 55A, the AO lacked the power to refer the matter to the DVO for ascertaining FMV as on 01.04.1981. The Tribunal declared the reference to the DVO as void ab initio, directing the AO to re-compute the tax liability based on the approved valuer's FMV determination.

Conclusion:
The Tribunal partially allowed the revenue's appeal, directing the AO to re-compute the capital gains tax liability based on the FMV as on 01.04.1981 at Rs. 605 per sq. mtr. The decision was based on the specific facts of the case and was not considered as a precedent for other cases. The order was pronounced in open court on 23-03-2018.

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