2016 (3) TMI 17

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....for want of jurisdiction and various other reasons and hence the same kindly be deleted. (2) Rs. 1,31,894/- : The ld. CIT (A) erred in law as well as on the facts of the case in confirming the enhancement of Long Term Capital Gain at Rs. 33,87,989/- as against Rs. 32,56,095/- declared by adopting the fair market value as on 01.04.1984 at Rs. 4,84,466/ as against Rs. 3,52,572/- declared. The addition so made by the ld. AO and confirmed by the ld. CIT (A) being totally contrary to the provisions of law and facts kindly be deleted in full. (3) The ld. AO further erred in law as well as on the facts of the case in charging interest u/s 234B & 234C of the Act. The appellant totally denies its liability of charging of any such i....

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....6,111/-. Subsequently it was found that the assessee had suppressed his income from capital gain by overstating the cost of acquisition. In the revised return assessee had adopted the cost of acquisition at Rs. 36,10,028/- by adopting the DLC rate as on 01.04.1993 and then indexing the cost. The indexing of the cost of acquisition was required to be done on the basis of market rate of property as on 01.04.1981 instead of rate as on 01.04.1993. The assessee had true income from capital gain amounting to Rs. 33,87,989/- as against declared capital gain of Rs. 1,30,533/-. Thus the assessed had suppressed his income by Rs. 32,57,456/- (33,87,989- 1,30,533). The AO accordingly issued notice u/s 148 of the IT Act on 03.04.2009 after recording rea....

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.... as on 01.04.1981. The fact that assessee's own assessment of fair market value of the property at Rs. 5500/- per bigha shows that argument given by assessee in this regard is not correct. The sold property was purchased by the father of assessee on 27.09.1965 t the rate of Rs. 55.88 per bigha and on that basis the fair market value of the property as on 01.04.1981 would be Rs. 4002.65 per bigha. The AO arrived at this value while recording reasons, taking yearly appreciation at the compound appreciation rate of 30.6%. Thus value of 16.972 bigha of the sold land as on 01.04.1981 was Rs. 67,932/- and the indexed cost for the relevant year F.Y. 2006-07 would be Rs. 3,52,572/- (67932 x 519/100) and hence capital gain is computed by adopting in....

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....s. 4002/65 per bigha as adopted by the ld. AO. Determination of the FMV is nothing but an estimation which has to be based on some material. The material could be in the shape of an expert opinion or comparable case/s brought by any of the party in support of their respective contentions however, such material in absence of the other logical way to make fair estimation based on comparable cases. 1.2 The ld. AO in his wisdom considered the property purchased by his father on 27.09.1965 @ Rs. 55/88 per bigha and on that basis he computed FMV as on 01.04.1981 at Rs. 4,002/65 per bigha i.e. Rs. 67,932/- and considering the compound appreciation rate of 30.6%. However, the method of estimation of the adopted by the lower authorities is ....

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....r the purpose of computation of the very capital gain only therefore, it is wrong to say that any working based thereon (whether forward or reverse) is not very sound and scientific method since the cost of property does not increase or decrease as per CII notified by CBDT and that indexation was allowed only to neutralize the general inflation. It does not reflect the increase in the cost of the property. No doubt such indexation was allowed only with a view to neutralize the general inflation and CII might not reflect solely increase/decrease in the cost of the property but once the legislature itself vide 2nd proviso to s.48 r/w. expln. (iii) has also made it mandatory to consider the CII being published by the CBDT every year, to work o....

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....iled as on 01.04.1981 and thereafter the benefit of indexation is required to be given with a view to calculate the cost of acquisition. In the present case, the property was purchased by the assessee's father on 27.09.1965 @ Rs. 55.88 per bigha and was sold by the assessee @ Rs. 5500/- per bigha. The assessee has calculated the fair market value as on 1.4.1981 @ Rs. 5500/- per bigha as claimed by the assessee on the basis of DLC rate with effect from 01.04.1993, whereas the AO has applied the rate of Rs. 4002.65 per bigha by giving the compounded appreciation of 30.6% on the original cost of acquisition. As per explanation to section 48 of the Act, the indexed cost of acquisition has been provided as under :- " Explanation.-For th....