ITAT allows appeal, adopts higher property value under Income Tax Act, considers Covid-19 lockdown days

The appeal for Assessment Year 2012-13, delayed by 73 days, was admitted for hearing after the appellant's counsel successfully sought condonation of delay. The main issue revolved around the fair market value of an immovable property, with the ITAT directing the AO to adopt the higher value of Rs. 18,51,000 instead of the lower valuation by the DVO for computing long term capital gain. The ITAT applied the pre-amended Section 55A(a) of the Income Tax Act, emphasizing that the claimed value should be considered if not less than the fair market value. The appeal was allowed, overturning the lower valuation and adjusting for lockdown days due to the Covid-19 pandemic.

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Issues:
1. Delay in filing the appeal for Assessment Year 2012-13.
2. Determination of fair market value of immovable property for computation of long term capital gain.

Issue 1: Delay in filing the appeal for Assessment Year 2012-13:
The appellant filed an appeal for Assessment Year 2012-13, which was delayed by 73 days. The appellant cited living in a hilly area far from Kolkata as the reason for the delay. The appellant's counsel requested the Bench to condone the delay, which was eventually granted after hearing both parties. The appeal was admitted for hearing despite the delay.

Issue 2: Determination of fair market value of immovable property for computation of long term capital gain:
The main grievance of the appellant in the appeal was regarding the determination of the fair market value of an immovable property as on 01.04.1981. The District Valuation Officer valued the property at Rs. 5,82,083, while the appellant's registered valuer valued it at Rs. 18,51,000. The Assessing Officer, based on the DVO's valuation, adopted the lower value for computation of long term capital gain. The CIT(A) upheld the AO's decision, leading the appellant to appeal to the ITAT Kolkata.

During the proceedings, the ITAT analyzed the provisions of Section 55A of the Income Tax Act, which allows the AO to refer the valuation of a capital asset to a Valuation Officer. The ITAT noted that the amended provision of Section 55A(a) was not applicable to the appellant as the property was sold before the amendment came into effect. Therefore, the pre-amended Section 55A(a) applied, which stated that if the value claimed by the assessee is not less than the fair market value, the AO should consider the claimed value.

Considering the legal position, the ITAT directed the AO to adopt the fair market value of the property as on 01.04.1981 at Rs. 18,51,000 for the computation of long term capital gain. The ITAT also excluded the lockdown days while pronouncing the order due to the Covid-19 pandemic, following a precedent set by the Mumbai Tribunal.

In conclusion, the ITAT allowed the appeal of the assessee, setting aside the lower valuation by the DVO and directing the AO to consider the higher fair market value for computation of long term capital gain.

This detailed analysis covers the issues of delay in filing the appeal and the determination of fair market value comprehensively, providing an in-depth understanding of the legal judgment.

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