Tribunal adjusts land sale capital gain calculation, sets fair market value for indexation.

The Tribunal directed the AO to recompute the capital gain on the sale of land by taking the fair market value of land at Rs.90 per sq. mtr. as of 01.04.1981 for indexation, partly allowing the appeal filed by the assessee.

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Issues Involved:
1. Addition under Long Term Capital Gains.
2. Determination of the value of land as of 01/04/1981.
3. Ignoring the valuation report provided by the assessee.
4. Re-computation of taxable Long Term Capital Gain.
5. Partial upholding of the addition made by AO.
6. Acceptance of valuation reports from Government approved valuers.

Summary:

1. Addition under Long Term Capital Gains:
The assessee filed a return declaring total income, including Capital Gain, which was processed under section 143(1) of the Income Tax Act. The case was selected for scrutiny, and statutory notices were issued. The AO noted that the assessee sold immovable property and derived income from capital gain. The AO found discrepancies in the cost of acquisition claimed by the assessee and issued a show cause notice, proposing an addition of Rs.91,68,824/- to the total income due to the higher claimed indexed cost of acquisition.

2. Determination of the value of land as of 01/04/1981:
The AO calculated the fair market value (FMV) of the land as on 01.04.1981 at Rs.3.44 per sq. mtr. based on nearby land valuation, which was significantly lower than the valuation provided by the assessee's valuer at Rs.175/- per sq. mtr. The AO made an addition to the total income based on this lower valuation.

3. Ignoring the valuation report provided by the assessee:
The assessee contested the AO's valuation and provided valuation reports from Government approved valuers, which were significantly higher. The CIT(A) partly allowed the appeal, taking an average of the valuations provided by the DVO and the assessee's valuers, arriving at a FMV of Rs.69 per sq. mtr.

4. Re-computation of taxable Long Term Capital Gain:
The CIT(A) directed the AO to recompute the capital gain based on the averaged FMV of Rs.69 per sq. mtr. The assessee further appealed, arguing that the FMV should be between Rs.135 and Rs.175 per sq. mtr. as per the valuation reports provided.

5. Partial upholding of the addition made by AO:
The CIT(A) partly upheld the AO's addition, considering the average of the DVO's and the assessee's valuers' reports. The assessee argued that the FMV determined by the CIT(A) was on the lower side and should be revised upwards.

6. Acceptance of valuation reports from Government approved valuers:
The Tribunal considered the arguments from both sides, noting the discrepancies and the basis of valuation by the DVO and the assessee's valuers. The Tribunal decided that the FMV as on 01.04.1981 should be Rs.90 per sq. mtr., considering it a reasonable estimate that balances the inconsistencies between the different valuation reports.

Conclusion:
The Tribunal directed the AO to recompute the capital gain on the sale of land by taking the FMV of land at Rs.90 per sq. mtr. as on 01.04.1981 for the purpose of indexation, thereby partly allowing the appeal filed by the assessee.

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