Tribunal rejects AO's valuation method, rules in favor of assessee in capital gains computation.

The Tribunal held that the Assessing Officer's adoption of ready reckoner rates and application of Section 45(5A) were incorrect. The agreed consideration in the Joint Development Agreement should be accepted as the full value of consideration for computing capital gains. The Tribunal set aside lower authorities' orders, allowing the appeals of the assessee. The decision in ITA No.427/PUN/2019 was applied to ITA Nos.428 & 429/PUN/2019, resulting in all appeals being allowed.

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Issues Involved:
1. Adoption of ready reckoner rates for consideration.
2. Applicability of Section 45(5A) of the Income Tax Act.
3. Determination of fair market value for constructed area.

Issue-wise Detailed Analysis:

1. Adoption of Ready Reckoner Rates for Consideration:
The appellant contested the Assessing Officer's (AO) decision to adopt the ready reckoner rates of flats/shops as the full value of consideration for computing capital gains. The appellant argued that the ready reckoner value includes the value of the land, which remained with the appellant and should not be included in the computation of the saleable area. The AO, however, rejected this contention and computed the full value of consideration based on the ready reckoner value, resulting in a higher assessed income.

2. Applicability of Section 45(5A) of the Income Tax Act:
The appellant argued that Section 45(5A) is not applicable to the relevant agreement and assessment year. The AO's reliance on this section to adopt the ready reckoner value was challenged. The Tribunal noted that Section 45(5A) was introduced by the Finance Act, 2017, effective from AY 2018-19, and thus could not be applied retrospectively to the AY 2015-16.

3. Determination of Fair Market Value for Constructed Area:
The Tribunal examined whether the AO was justified in substituting the agreed consideration with the fair market value. The Tribunal referenced several judicial precedents, including the Supreme Court's rulings in CIT Vs. George Henderson & Co. Ltd. and CIT Vs. Gillanders Arbuthnot & Co., which clarified that "full value of consideration" does not equate to the market value of the capital asset. The Tribunal concluded that there was no provision under the Income Tax Act, 1961, apart from Section 50C, that allows the AO to replace the actual sale consideration with the fair market value.

Conclusion:
The Tribunal found that the AO's adoption of the ready reckoner value and the application of Section 45(5A) were incorrect. The Tribunal held that the agreed consideration stated in the Joint Development Agreement (JDA) should be accepted as the full value of consideration. The Tribunal set aside the orders of the lower authorities and allowed the appeals of the assessee. The decision in ITA No.427/PUN/2019 was applied mutatis mutandis to ITA Nos.428 & 429/PUN/2019, resulting in all appeals being allowed.

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