Consistent valuation for co-owners and timely bond investment supported capital gains relief under section 54EC.

A co-owner's deemed cost of acquisition for 01.04.1981 was required to be aligned with the higher valuation adopted in the co-owners' cases, as no rational basis was shown for applying a lower DVO-based value to one co-owner. The long-term capital gain computation was therefore upheld on that valuation basis. The document also notes that investment of sale proceeds in REC bonds within 47 days of the last receipt of consideration satisfied the statutory six-month condition for section 54EC relief, making the deduction allowable.

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Issues: (i) Whether the deemed cost of acquisition as on 01.04.1981 should be taken at the higher value adopted for the co-owners, instead of the lower DVO-based value adopted in the assessee's case. (ii) Whether deduction under section 54EC was allowable for investment made in specified bonds within the prescribed period.

Issue (i): Whether the deemed cost of acquisition as on 01.04.1981 should be taken at the higher value adopted for the co-owners, instead of the lower DVO-based value adopted in the assessee's case.

Analysis: The assessee was a one-third co-owner of the same property, and the sale consideration was already determined on a common basis. The co-owners' cases had adopted the deemed cost of acquisition at Rs. 37,84,000, whereas the assessee's case was assigned a lesser value without cogent justification. In the absence of a rational basis for differential treatment, the same valuation approach was required to be applied consistently.

Conclusion: The higher deemed cost of acquisition was accepted, and the assessee's computation of long-term capital gain was upheld in favour of the assessee.

Issue (ii): Whether deduction under section 54EC was allowable for investment made in specified bonds within the prescribed period.

Analysis: The amount received from transfer was invested in REC bonds within 47 days from the last receipt of consideration, which fell within the statutory six-month period. The investment therefore satisfied the time condition for exemption.

Conclusion: Deduction under section 54EC was allowable, in favour of the assessee.

Final Conclusion: The assessment additions were not sustained and the appeal succeeded on both issues.

Ratio Decidendi: Where co-owners are taxed on the same transfer of property, a different deemed cost of acquisition cannot be adopted in one case without a cogent basis, and investment in specified bonds within the statutory period qualifies for section 54EC relief.

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