TaxTMI 
TaxTMI 
2025 (8) TMI 26
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....as issued and served upon the assessee on 28.09.2019. A perusal of the record would reveal that a house bearing No. 845 Sector 38-A, Chandigarh was originally allotted to Smt. Joginder Kaur on 03.04.1987. The assessee got 100% share of this property from his mother on 24.06.2010. He has sold the property for a total consideration of Rs. 3,88,00,000/- during the accounting year relevant to assessment year 2018-19. Thus, the dispute relates to correct computation of Long Term Capital Gain assessable in the hands of the assessee. At the time of hearing, ld. counsel for the assessee has tabulated certain details which exhibit the cost of land adopted by the assessee on the basis of Registered Valuer's Report vis-à-vis determined by the DVO and adopted by the AO. Similarly, these details exhibit covered area noticed by the assessee on the basis of Registered Valuer's Report, DVO's report and as to how AO taken. The rate of construction adopted by all these concerns are also being tabulated in its details. They read as under : Relevant Person making valuation Area of Land (In Sq. Yards) Cost of Land per Sq. Yard (in Rs.) Covered Area of Property (in Sq. Fee....
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....uing Directions, the Dispute Resolution Panel has considered the contentions of the Department (in the draft assessment order) as well as the objections and written and oral submissions made by the assessee before the Dispute Resolution Panel. 2. Profile of Assessee: The assessee filed his original return of income for the A.Y. 2018-19 on 19.07.2018 declaring therein an income of Rs. 79,78,410/- comprising income under the heads -'Income from Capital Gain' & 'Income from Other Sources'. The assessee is an NRI. 3. Ground of objection: 1. Ground of objection no. 1- regarding not allowing expenditure of Rs. 19,40,000/- The Ld. AO has erred in law and facts in not allowing expenditure of Rs. 19,40,000/- wholly & exclusively in connection with the transfer as claimed in return of income at page-9 of lTR being deducted under the head "Deduction u/s 48(3). 2. Ground of objection no. 2- regarding FMV of land measuring 528,125 sq. yards as on 01.04.2001 adopted by the AO at Circle rate of Chandigarh as against prevalent FMV of Rs. 17000/- per sq. Yard. 3. Ground of objection no. 3- regarding indexed cost of construction/i....
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....iple opportunities during the assessment proceedings requesting him to produce documentary evidence to substantiate his claims. The assessee has failed to produce any proof/evidence to substantiate his claims for cost of improvement & expenses. Further the counsel of the assessee has expressed his inability in producing various documents/ proof of expenditure of the property in question on the plea of the property being ancestral and bills/bank statements being very old. (iii) Hence the indexed cost of improvement of Rs. 27,11,0001- and expenses of Rs. 19,40,000/- claimed by the assessee are hereby disallowed. However, on the ground of natural justice, the cost of construction for covered area of 3302.51 sq.ft. on the basis of circle rate i.e. Rs. 3,50/- per sqft. is being allowed to the assessee. " 4.4 In view of above discussion, this is understood that the assessee did not file the requisite details and documents before the AO during the original assessment proceedings as the same is signified in the draft assessment order. Therefore, the AO is directed to consider and verify the factual submission made by the assessee and complete the assessment by passing a s....
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.... x 55. Meaning of "adjusted", "cost of improvement" and "cost of acquisition" .- (1) For the purposes of [sections 48 and 49], (a) [ * * * * * ] (b) "cost of any improvement",- (2) 1 [For the purposes of sections 48 and 49, "cost of acquisition" x x x (b) in relation to any other capital asset,-] (i) where the capital asset became the property of the assessee before the 1st day of April, 2001, means the cost of acquisition of the asset to the assessee or the fair market value of the asset on the [1st day of April, 2001], at the option of the assessee; (ii) where the capital asset became the property of the assessee by any of the modes specified in sub-section (1) of section 49, and the capital asset became the property of the previous owner before the 1st day of April, 2001, means the cost of the capital asset to the previous owner or the fair market value of the asset on the 1st day of April, 2001, at the option of the assessee; Provided that in case of a capital asset refer....
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....tion to the assessee to adopt the Fair Market Value of the house property as on 01.04.2001 as the cost of acquisition wherein such an asset becomes the property of the assessee or of the previous owner before first day of April,2001. There is no dispute that in principle, the assessee is entitled to seek the option as provided in Section 55(2)(b) of the Act. The dispute only relates to implication of the expression 'Fair Market Value' as appearing in the said proviso. The said expression postulates a price which a capital asset would ordinarily fetch if sold in the open market on the relevant day. Thus, it is well settled that concept of Fair Market Value envisages existence of a hypothetical seller and a hypothetical buyer in a hypothetical market. The assessee is entitled to replace the alleged cost of acquisition as on 01.04.2001 with the Fair Market Value of the property. There is no dispute qua above proposition of law between the parties. The dispute is regarding quantification of alleged Fair Market Value of the property as on 01.04.2001 on which benefit of indexation was to be granted to the assessee. 8. Adverting to the facts of present case, it would reveal tha....
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....after, the indexation is to be granted to the assessee from 01.04.2001 till the date of sale. 11. The second part of the dispute is about covered area for the purpose of calculating cost of improvement/cost of construction. The Registered Valuer took covered area at 3302, DVO took at 2981 whereas in the draft assessment order, AO took it as 3302, however, in the final assessment, AO has taken it at 2000 sq.ft. It is not ascertainable as to how he has narrowed down it to 2000. We find that assessee has placed on record Site Plan sanctioned at the time of construction of the house. He has elaborately worked out as to how the covered area was 3302 sq.ft. Thus, we direct the AO to adopt the covered area at 3302.51 sq.ft. which was adopted by him in the draft assessment order also. There is no justification at the end of the DVO as to how he has reduced the area by 420 sq.ft. 11.1 The next area of dispute is rate of cost of construction adopted by the assessee as well as by the DVO. The assessee has adopted the rate according to the Valuer's Report. The Id. DVO has adopted a lower rate on the ground that the vendee of the assessee Shri Jagdeep Chawla has totally demolished the....