TaxTMI 
TaxTMI 
2012 (9) TMI 693
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....licability of the provisions of section 55A of the IT Act, which empowers the AO to ascertain the fair market value of a capital asset for the purpose of determining capital gains by referring the valuation of the same to Valuation Officer. (ii) The learned CIT(A) erred on facts and in law in not considering the facts that assessee had constructed additional floor at different times and had given the wrong computation of Long Term Capital Gain by adopting incorrect indexation." 2. The factual matrix of the case is that the assessee has shown long term capital loss on property A-1-23, Ishwarshanti Society, Karelibaug sold on 28.02.2008 at a price of Rs.14,00,000/-. The cost of acquisition is Rs.10,49,237/- as on 1991 which after Indexa....
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....ion : (-) 22,61,800 1,42,200 As the assessee has shown Long Term Capital Loss on the property A- 1-23, Ishwarshanti Society, Karelibaug at Rs.(-) 15,05,174/-. As per the revised calculation the Long term Capital gains is Rs.1,42,200/-. Hence the difference of Rs.1,42,200 + 15,05,174/- i.e. Rs.16,47,374/- is added back to assessee's income from Long Term Capital Gain on the said property." 3. Being aggrieved by the order of the A.O., the appellant carries the matter before the CIT(A) who has deleted the addition after considering the Hon'ble Delhi High Court decision in case of Commissioner of Income-tax vs. Smt. Nilofer I. Singh (2009) 309 ITR 233 and has held as under:- "5.2 I have considered the facts ....
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....he incorrect indexation had been calculated in computing the capital gain. The A.O. can refer the case under sub-section (b) of Section 55A in any other case to the DVO. The CIT(A) was not right in deleting the addition of the A.O. 5. From the appellant side, a written reply was filed by the assessee. The assessee's submission is reproduced as under:- "i) It is firstly submitted that some of the considerations that led to the addition are apparently irrational and irrelevant for computing income under Income-tax Act. These observations are to the effect that generally it is not possible to incur loss on sale of property and transactions in cash are rampant in transactions of property. In such an event, understatement of income being r....
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....to valuer to determine fair market value, the permission is only 'for the purposes of this chapter' meaning that whenever chapter contemplates determination of fair market value as in case of section 50C or 45(4) etc.. It does not permit reference even when market value is not the prescribed basis for computing income. This is in accordance with the decision af Hon'ble Delhi High Court in case of Commissioner Of Income-Tax V. Smt. Nilofer I. Singh reported at 2009-(309)-ITR -0233 -DEL . This decision relates to Assessment Year 1998-99 which is long after insertion of section 55A and deletion of section 52. Hence the Assessing Officer's reasons for ignoring the other decision on that ground do not survive. We would add that at one poin....
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....f the capital assets following amount is to be deducted (i) expenditure incurred wholly and exclusive in connection with such transfer (ii) the cost of acquisition of the assets and the cost of any improvement there on. Further, indexation on cost of acquisition and cost of improvement is to be allowed. The various High Courts have held that full value of consideration u/s 48 cannot be construed fair market value as per Section 55A of the IT Act. The Hon'ble Delhi High Court has held the similar view in case of Commissioner of Income-tax vs. Smt. Nilofer I. Singh (supra) after considering Hon'ble Supreme Court decision in case of CIT v. George Hinderson & Co. Ltd (1967) 66 ITR 622. The full value consideration is mean, the full value of con....