NARENDRA R MERCHANT,MUMBAI vs. ITO 17(2)(4), MUMBAI

This is an appeal by the assessee against the order dated 01.06.2018 of learned Commissioner of Income Tax (Appeals) – 28, Mumbai for the assessment year 2008-09.

At the outset, on instructions of assessee, Shri Ronak Doshi, learned counsel for the assessee did not press ground no. I. Accordingly, this ground is dismissed as not pressed. In ground No. II, the assessee has raised the issue of allowing indexation benefit on the basis of value determined by the registered valuer.

Briefly the facts are, the assessee is an individual. For the assessment year under dispute assessee filed his return of income on 22.09.2008 declaring total income of Rs. 3,49,661/-. In course of assessment proceedings, the Assessment Year: 2008-09 Assessing Officer (AO) found that the assessee has sold immovable property during the year. He further found that the Stamp Duty Authority (SDA) has valued the property at Rs. 44,69,000/- from stamp duty purpose. Noticing this, the AO called upon the assessee to explain as to why the value determined by the SDA should not be adopted as the deemed sale consideration under section 50C of the Act for computing capital gain. Though, the assessee raised objection against the proposed addition, however, the AO rejecting the objection of the assessee adopted the value determined by the SDA as the deemed sale consideration and after allowing certain deductions, he added back the net long term capital gain of Rs. 42,41,476/-. Against the assessment order so passed the assessee preferred appeal before learned Commissioner (Appeals) and thereafter before the Tribunal. The Tribunal while deciding the appeal of the assessee restored back the issue to the AO for deciding afresh. In pursuance to the directions of the Tribunal, the AO passed a fresh assessment order on 28.07.2016 again holding that long term capital gain of Rs. 42,41,476/- did arise at the hands of the assessee. Though, against the assessment order so passed the assessee preferred appeal before the First Appellate Authority, however, he was unsuccessful.

The learned counsel for the assessee submitted, in course of assessment proceedings the assessee has computed long term capital gain by claiming indexation benefit on the cost of acquisition of the property, as on 01.04.1981, as valued by Govt. approved valuer. He submitted, the valuation report furnished by the assessee was rejected by the AO mechanically without referring to the Departmental Valuation Officer (DVO). He submitted, the Govt. approved valuer is an expert, hence, his valuation report carries evidentiary value. Therefore, it cannot be rejected without getting the valuation done through the DVO. Thus, he submitted, a direction may be given to the AO to grant indexation benefit on the valuation made by the registered valuer as on 01.04.1981. In support of his contention, the learned counsel relied upon the following decisions: Assessment Year: 2008-09