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of <h1>Tribunal favors fair market value over SRO rates for accurate capital gains computation</h1> <h3>M/s Venkateswara Vara Prasada Rao Karipineni Versus Asst. Commissioner of Income Tax Circle-1 Kakinada</h3> M/s Venkateswara Vara Prasada Rao Karipineni Versus Asst. Commissioner of Income Tax Circle-1 Kakinada - TMI Issues:Determining cost of acquisition on sale of property for computing capital gains.Analysis:The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) related to the cost of acquisition on the sale of property for computing capital gains for the Assessment Year 2014-15. The Assessing Officer (AO) found that the assessee sold land and a building for a consideration of &8377; 1,63,00,000. The AO proposed to determine the cost of acquisition based on the Sub Registrar Office (SRO) rates, which the assessee objected to, stating that SRO rates are guideline values, not fair market values. The AO rejected the fair market value adopted by the assessee and computed the capital gains based on SRO rates, resulting in a significant difference in the capital gains calculation.The CIT(A) dismissed the appeal, upholding the AO's decision to use SRO rates as fair market values. During the appeal hearing, the assessee argued that the fair market value was determined by a Chartered Engineer and should be accepted as the cost of acquisition. The assessee also cited a Tribunal decision supporting their argument. The Tribunal analyzed the case, highlighting the distinction between fair market value and SRO rates. The Tribunal emphasized that the AO erred in substituting SRO rates for fair market value without valid reasons and directed the AO to adopt the fair market value certified by the registered valuer, overturning the CIT(A)'s decision and deleting the addition made by the AO.In conclusion, the Tribunal allowed the appeal, emphasizing the importance of considering fair market value over SRO rates for determining capital gains, especially when supported by a registered valuer's report. The decision highlighted the necessity of following proper valuation procedures in line with the Income Tax Act provisions to ensure accurate computation of capital gains.
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