TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 26
X X X X Extracts X X X X
X X X X Extracts X X X X
....9.2019. 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. Feet) Construction Cost per Sq.Feet (in Rs.) Assessee o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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/improvement 4. Ground of objection no. 4- regarding not confronting the assessee of evidence/information collected during assessment proceedings. 4. DRP's directi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... & 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 speaking and reasoned order. 5. Directions under section 144C of the Income Tax Act The Assessing Officer is directed to complete the assessment as per the above directions of the Dispute Resolution Panel. The Assessing Officer shall place a c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; 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 referred to in sub-clauses (i)and (ii), being land or building or both, the fair market value of such asset on the 1st day of April, 2001 for the purposes of the said sub-clauses shall not exceed the stamp duty value, wherever available of such asset. 7. A perusal of Section 48 would indicate that it contemplates that income chargeable under the head 'Capital Gains' shall be computed by deducting following amounts from the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 that assessee has adopted the cost of land at Rs. 15,000/- per sq.yd. whereas the DVO has adopted Rs. 7,073/- and AO has ultimately adopted the rate at Rs. 3,621/-. Firstly, we would deal with the rate adopted by the AO. The AO has adopted the circle rate at Rs. 3,621/- on the basis of amendment introduced by Finance Act, 2020 w.e.f. 01.04.2021. The Explanation has been appended by way of Finance Act, 2020 which provides that Fair Market Value is requ....