Tribunal rules in favor of assessee on capital gains & interest computation, rejecting additions.

The Tribunal allowed the assessee's appeal, rejecting the addition of long term capital gains based on fair market value and directing computation of interest liability under section 234B on the returned income. The Tribunal found errors in the lower authorities' adoption of fair market value and interest computation, ruling in favor of the assessee on all issues.

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Issues:
1. Addition of long term capital gains on sale of property based on valuation report.
2. Adoption of fair market value by the CIT(A) and rejection of the appellant's valuation.
3. Correctness of interest liability computation under section 234B.

Analysis:

Issue 1: Addition of Long Term Capital Gains
The assessee contested the addition of Rs. 1,70,11,837 as long term capital gains on the sale of property, challenging the CIT(A)'s decision to adopt the fair market value of the property as on 01.04.1981 based on the DVO's valuation report. The assessee argued that the CIT(A) erred in not accepting the fair market value claimed by the assessee based on the valuation report of a Government Approved Valuer, which was higher. The Tribunal noted that the statutory expression "is less than its fair market value" in section 55(A) before its amendment in 2012 was applicable in this case. Referring to a jurisdictional high court decision, the Tribunal held that the lower authorities erred in law and on facts by making the addition after referring to the DVO. Consequently, the assessee's grounds in the appeal were accepted.

Issue 2: Adoption of Fair Market Value
The main grievance of the assessee was against the adoption of the fair market value of the property by the lower authorities, which was lower than the value claimed by the assessee. The Tribunal found that the lower authorities had erred in rejecting the valuation report of the Government Approved Valuer and making the addition based on the DVO's report. The Tribunal concluded that the action of the CIT(A) was not justified on facts and in law, leading to the acceptance of the assessee's contentions regarding the valuation of the property.

Issue 3: Interest Liability Computation under Section 234B
The assessee also raised a concern regarding the computation of interest liability under section 234B, arguing that the AO incorrectly computed the interest on the assessed income instead of the returned income. The Tribunal directed the AO to compute the interest under section 234B on the returned income, thereby addressing the assessee's grievance on this issue.

In conclusion, the Tribunal allowed the assessee's appeal, condoning the delay in filing due to the Covid-19 pandemic and pronounced the order in favor of the assessee on 29th August 2022.

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