TaxTMI 
TaxTMI 
2013 (4) TMI 829
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....ated deduction claimed by the assessee. 3. The assessee sold a house situated at 377-A, Shastri Nagar, Jodhpur, for a total consideration of Rs. 4,01,00,000/- (Four Crores and one lakh only), against which he has claimed indexed cost of acquisition of Rs. being 3,74,21,477/- and Rs. 1,34,14,519/- and cost of improvement post acquisition by way of payment of hefty sum encumbered and later freed form for selling this house. The assessee has invested a sum of Rs. 92,12,470/- in a new house, out of the total sale consideration. 4. The A.O. has determined the Fair Market Value (FMV) of this house as on 01/04/1981, at Rs. 21,24,207/- (Rs. 20,04,207/- taken a FMV of the land) as against Rs. 64,29,807/- (cost of acquisition both for building and land) taken by the assessee. The A.O. has refused to consider the sum of Rs. 1,34,14,519/- towards cost of the asset as claimed by the assessee. 5. The ld. CIT(A) has followed a suit and has agreed ditto with A.O. 6. The assessee is aggrieved and has in his second appeal, raised the following grounds :- 1. The ld. CIT(A) has erred in sustaining the order passed u/s 143(3) by the ld. AO, which is bad in law and bad on facts. 2. a. The ld. CI....
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....rt was field before the authorities below and copy for which is enclosed in the paper book. The ld AR has clamoused that the burden cobbled with this property, may be after acquisition by way of pledging it with the Banker as guarantor would be considered as towards cost of acquisition because without getting it reimbursed the property could not be sold. 8. Per contra, ld. CIT-DR Dr. Sehgal, has vehemently refuted the above assertions made by ld. AR Shri Kothari. He has heavily relied on and has supported the reasons given by ld. CIT(A) in arriving at his conclusion against the assessee. He has reiterated them in toto. He has rejected the contention that no such reference could be justified to DVO in the given circumstances. He has justified the computation of cost and LTCG by the AO. However, he has not disputed the sale consideration shown by the assessee. 9. We have given our thoughtful consideration to the facts, the circumstances, the relevant records the legal positions and the precedents relied on by the parties. We have examined the orders of the authorities and the followings scenario would emerge therefrom regarding the computation of LTCG by the assessee and by the AO :....
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.... shall have to be accepted unless there are deriving reasons. In the given case, the demolition of the building cannot be such a factor, which can justify one conclusion. On that basis, the report cannot be accepted in part, and rejected in part. In our considered opinion, this action of the AO is not legally justified. Even as per the backward indexation by taking advantage of CBDT Circular No. 636 dated 31.07.1992 the value of the land as on 1.4.1981 would be around the same as determined by the Registered Valuer. The RV's report is annexed at Assessee's paper Book 26 to 32. He has adopted the land rates at Rs. 10/- per sq. ft. and has further increased the value by 15% for location wise advantage and by 10% on account of it being situated on the 200 Feet Wide Road. Thus, he has taken land value at Rs. 12.5 per sq. ft. The sale rate is Rs. 4000/- per sq. ft. The value of the building given by the Registered Valuer and accepted by the AO comes to Rs. 34,63,809/-. This amount is out of total sale consideration of Rs. 4,01,00,000/- and gives 8.64% of the total value. The value of land as on 1.4.1981 has been claimed by the assessee at Rs. 20,04,207/- but the value of the land has be....
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....hich is deducted while Preparing notified cost inflation index Rs. 1,00,25,000/- Amount equivalent to 582 of cost index Rs. 3,00,75,000/- If 582 of CII is = Rs. 3,00,75,000/- Then for 100 it will be Rs. 3,00,75,000 x 100 /582 = 51,67,525/- This figure is equivalent to cost index figure of 100 as on 1.4.1981. The fair market value as on 1.4.1981 will have to be further increased by 25% as below: 51,67,525 x 125/100 = 64,59,407/- Thus, Rs. 64,59,407/- is the amount of FMV as on 1.4.1981 computed as per the notified cost inflation index, which is mandatory and binding for computation of capital gains. 10. The legal angle from which reference by AO u/s 55 A to DVO has been assailed in as much as that before such reference the AO has not opined that the value so claimed by the assessee is less than the FMV of the capital asset, is also found to hold merit which is also supported by various judicial pronouncements. Following decisions will support our above conclusion: (i) Hibaben Jayantilal Shah vs ITO (2008) 6 DTR 203 (Guj) (ii) ITO vs. Smt. Lalitaban B. Kapadia (2008) 3 DTR 28 (Mum). (iii) Ms. Rubab M. Kazerani vs. JCIT (2005) 97 TTJ 698 (TM) (Mum) (iv) CIT ....