TaxTMI 
TaxTMI 
2018 (7) TMI 1755
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....urn of income and consequently, erred in not allowing the indexation benefit for the purpose of computation of capital gain. The assessment for impugned AY was framed by Ld. Assistant Commissioner of Income Tax, Central Circle-41, Mumbai [AO] u/s 143(3) read with section 153A of the Income Tax Act, 1961 on 13/03/2014 wherein the income of the assessee has been assessed at Rs. 71.81 Lacs after certain additions as against returned income of Rs. 29.03 Lacs offered in return of income filed on 20/12/2012 in response to notice u/s 153A. The assessee, being part of Valecha Engineering Limited, was subjected to search operations u/s 132 on 26/07/2011 and consequently a notice u/s 153A dated 16/10/2012 was issued to the assessee which was followed by statutory notices u/s 143(2) and 142(1). 2. During assessment proceedings, it was noted that the assessee reflected Long Term Capital Gain [LTCG] from sale of a flat situated at Pathardi, Nashik which was stated to be purchased on 06/01/1981. The flat was sold vide sale deed dated 01/02/2011 for Rs. 350 Lacs and the assessee's share therein @17.14% amounted to Rs. 60 Lacs. Against the same, a deduction of Rs. 50 Lac was claimed u/s 54EC....
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.....01.1981, the shares of the co- owners are specified. From the purchase agreement, one cannot determine who has paid the purchase consideration and what is the consideration contributed by the respective co-owner. (ii)The sales consideration of the property is determinable from the conveyance deed dated 01.02.2011 and the appellant's share in the sales consideration is at Rs. 60,00,000/-, out of total sales consideration of Rs. 3,50,00,000/-. 6.1.2 It has been further submitted, that during the course of assessment proceedings, it was categorically stated that the value adopted by the Stamp Valuation Authority exceeds the fair market value of the property as on the date of transfer and it was claimed that the sales consideration of Rs. 3,50,00000/-, as appearing in the agreement, be considered as the fair market value for the purpose of computation of capital gain. Since, the appellant had objected to the valuation adopted by the Stamp Duty Valuation Authority, the A.O. was duty bound to refer to the Valuation Officer for determining the fair market value of the property as on the date of transfer. The appellant relied on the decision of the Hon'ble High Court....
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....ns on the said property by providing following details: Description Qty Sale Date Net Sales Purchase Date Purchase Amount Index Indexed cost Taxable Cost Share in property at 1 01.02.20 11 60,00000 09.01.1981 0 711/100 0 6000000 0 6000000 0 0 6000000 0 6.3.1 This return was filed much after the date of search, i.e. 26.07.2011 in which the document regarding purchase agreement/sale deed dated 09.01.1981 was found and seized, showing the purchase cost at Rs. 33,000/- The appellant has submitted that there were three co-owners of the said plot of land and the share of respective co-owners was not mentioned in the purchase agreement. From the purchase agreement, one cannot determine who has paid the purchase consideration and what is the consideration contributed by the respective co-owner. Further, I find that the appellant has himself opted to declare the cost of acquisition of the asset at Rs.Nil, in terms of Section 55(2)(b)(i) of the Act, as per the declaration made in the return of income and in the computation of capital gains. The appellant has m....
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....nce that would go against the interest of the revenue. Accordingly, it is held that the report of the Valuation Officer, estimating the fair market value of the said property as on 01.04.1981 u/s 55A of the Act, is to be ignored for these proceedings. The appellant has submitted that taking the fair market value of the property as on 1.4.1981 at Rs. 33,000/- as contended by the AO in the remand report was misconceived. I find that other than the above said DVO's report, the appellant has not brought on record any other material to make a claim for a cost of acquisition other than the amount declared in the return at Rs. Nil. Accordingly, it is held that the AO has rightly considered the indexed cost of acquisition of the said property at Rs. Nil. 6.4 The District Valuation Officer has reported that the fair market value of the property as on 01.02.2011 was Rs. 4,15,38,750/-, in terms of Section 50C(2) of the Act. Therefore, the A.O. is directed to adopt the above said value as the full value of consideration and re-compute the capital gains by considering the sale consideration in the hands of the appellant at Rs. 71,19,742/-, (i.e., 17.14% of Rs. 4,15,38,750/-), as accept....