2018 (6) TMI 407 - AT - Income Tax

Tribunal rules for assessee in long-term capital gain case, clarifies on valuation issues

Manjulaben Parshottamdas Patel And Ritaben Parshottamdas Patel Versus ITO, Ward-6 (5), Ahmedabad

The Tribunal ruled in favor of the assessee, deleting the additions related to long term capital gain for the assessment year 2011-12. The decision ... Long term capital gain addition - reference to the DVO under section 55A to determine fair market value of the property - assessee as co-owner sold the property - Held that:- In the case of other co-owners, viz. Late, Shantaben Patel, Babubhai Ramanlal Patel and Ilaben K. Patel for the assessment year 2011-12 similar issue went upto the Tribunal, and in the Tribunal [2018 (4) TMI 1549 - ITAT AHMEDABAD] considered the issue in detail and following the judgment of jurisdictional High Court in the case of Gaurangiben S. Shodhan [2014 (2) TMI 78 - GUJARAT HIGH COURT] deleted additions made under the head “Long Term Capital Gain”. Therefore, this issue being similarly situated be allowed in favour of the assessee. Value shown by the appellants of the property a on 1.4.1981 is considered then it was not less than fair market value and reference cannot be made. As far as the amendment carried out in section 55A is concerned, it is with effect from it is with effect from 01.07.2012 i.e. by finance 2012 the transaction taken place in F.Y. 2010-11 relevant to assessment year 2011-12 and the amended provision would not be applicable on this transaction. - Decided in favour of assessee Issues:Confirmation of addition in respect of long term capital gain for the assessment year 2011-12.Analysis:Issue 1: Confirmation of addition in respect of long term capital gainThe appeals by assessees were against orders of the ld.CIT(A)-4, Ahmedabad for the assessment year 2011-12 regarding the confirmation of addition in respect of long term capital gain. The Assessee had sold property with co-owners, and discrepancies arose in the valuation reports submitted by the assessee and the DVO. The AO issued a show cause notice regarding the valuation differences, leading to an enhancement of long term capital gain. In appeal before the ld.CIT(A), the assessee was unsuccessful, prompting further appeal. The assessee argued for a favorable decision based on a previous Tribunal order and challenged the application of section 55A(a) by the AO. The Tribunal examined similar issues in other cases and concluded that the AO cannot make a reference to the DVO if the value shown by the assessee is not less than the fair market value. The Tribunal relied on the judgment of the jurisdictional High Court and allowed the appeals, deleting the additions made under the head 'Long Term Capital Gain.' The Tribunal emphasized that the amendment to section 55A in 2012 does not apply retrospectively to transactions before the amendment. The Tribunal also distinguished the case from the one cited by the ld.DR, where different facts led to a unique valuation approach. Ultimately, the Tribunal ruled in favor of the assessee, deleting the additions related to long term capital gain.In conclusion, the Tribunal, in its judgment, addressed the issue of confirmation of addition in respect of long term capital gain for the assessment year 2011-12. The decision highlighted the importance of valuation discrepancies, the application of section 55A, and the precedents set by previous cases. The Tribunal's analysis and reliance on the jurisdictional High Court's judgment led to a favorable outcome for the assessee, with the additions under the head 'Long Term Capital Gain' being deleted.