Tribunal directs AO to recompute income with fair market value & indexation. Assessee's share confirmed at 17.14%.

The Tribunal allowed the appeal, directing the Ld. AO to re-compute the income by considering the fair market value as on 01.04.1981 and allowing the indexed cost of acquisition and indexation benefit. The assessee's share in the property was confirmed to be 17.14%.

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Issues Involved:

1. Adoption of fair market value of the property as on 01.04.1981.
2. Indexed cost of acquisition of the property and indexation benefit for the purpose of computation of capital gain.

Issue-wise Detailed Analysis:

1. Adoption of Fair Market Value as on 01.04.1981:

The assessee contested the valuation of the property as on 01.04.1981, which was determined by the District Valuation Officer (DVO) at Rs. 6,27,000/-. The assessee argued that the fair market value should be Rs. 10,69,065/- as on 01.04.1981. The Ld. CIT(A) did not accept the assessee's valuation and upheld the DVO's valuation. The Tribunal noted that the property was acquired before 01.04.1981, and as per Section 55(2)(b)(i), the cost of acquisition should be either the actual cost or the fair market value as on 01.04.1981, at the option of the assessee. The Tribunal directed the Ld. AO to re-compute the income considering the assessee's share in the property at 17.14% and to adopt the valuation as on 01.04.1981.

2. Indexed Cost of Acquisition and Indexation Benefit:

The assessee did not initially claim the cost of acquisition in the return of income, which was inadvertently shown as Nil. The Ld. AO computed the long-term capital gain (LTCG) without considering the cost of acquisition. The Ld. CIT(A) upheld this computation, stating that the assessee had opted to declare the cost of acquisition at Nil in the return of income. The Tribunal, however, held that the cost of acquisition was clearly allowable to the assessee as per Section 48, and the revenue could not benefit from the assessee's shortcomings or ignorance. The Tribunal directed the Ld. AO to consider the purchase documents provided by the assessee and re-compute the income accordingly, allowing the indexed cost of acquisition and indexation benefit for the computation of capital gain.

Conclusion:

The Tribunal allowed the appeal, directing the Ld. AO to re-compute the income by considering the fair market value as on 01.04.1981 and allowing the indexed cost of acquisition and indexation benefit. The assessee's share in the property was confirmed to be 17.14%. The order was pronounced in the open court on 25th July 2018.

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