ITAT sets aside capital gains additions, directs reevaluation on fair market value

The ITAT allowed the appeal for statistical purposes, setting aside the additions of capital gains and directing the AO to reevaluate the calculations based on fair market value and statutory provisions. Grounds not pressed were dismissed, and the general and consequential grounds were also dismissed.

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Issues Involved:
1. Appeal against order of CIT(A) for assessment year 2011-12.
2. Addition of long term capital gain on sale of plot.
3. Addition of long term capital gain on sale of another plot.
4. Addition of short term capital gain received upon retirement from partnership firm.

Issue 1:
The appeal was against the order of CIT(A) for the assessment year 2011-12.

Analysis:
The appellant raised a general issue in ground no. 1, which was not pressed during the hearing and dismissed. Ground no. 2 concerned the addition of long term capital gain on the sale of a plot. The AO calculated the gain without referring the matter to the DVO, leading to a lack of reasonable basis. The ITAT set aside the issue to the AO to ascertain fair market value and compute the capital gain accurately after necessary references to the DVO. Ground no. 2 was allowed for statistical purposes. Ground no. 3, similar to ground no. 2, was also allowed for statistical purposes after being restored to the AO for proper valuation.

Issue 2:
The addition of short term capital gain received upon retirement from the registered partnership firm.

Analysis:
The appellant retired from a partnership firm and the AO calculated short term capital gain without statutory provisions for such computation upon retirement. The ITAT noted the absence of relevant provisions in the Act for assessing deemed capital gain upon retirement of a partner. Referring to Section 9B introduced by the Finance Act, 2021, applicable from AY 2021-22, the ITAT directed the AO to delete the addition of short term capital gain. Ground nos. 4 and 5 were allowed accordingly.

Conclusion:
The ITAT allowed the appeal for statistical purposes, setting aside the additions of capital gains and directing the AO to reevaluate the calculations based on fair market value and statutory provisions. Grounds not pressed were dismissed, and the general and consequential grounds were also dismissed.

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