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Facts
The assessee, Bhagyalakshmi Devarajan, filed an appeal against the order of the CIT(A) for AY 2016-17. The AO made an addition of Rs. 2,95,29,375/- under the head 'long term capital gains' on the sale of property. The AO rejected the Fair Market Value (FMV) adopted by the assessee and instead used the FMV based on sale instances provided by the Sub-Registrar.
Held
The Tribunal held that since the appellant did not furnish a valuation report by a registered valuer during assessment proceedings or before the CIT(A), and only produced it before the Tribunal, the AO was justified in adopting the FMV based on sale instances from the SRO. The Tribunal found no merit in the appeal.
Key Issues
Dispute regarding the adoption of Fair Market Value (FMV) for computing capital gains and the eligibility of exemption under Section 54F.
Sections Cited
Sec. 143(3), Sec. 54F, Sec. 55(2)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 18.12.2024 for Assessment Year (AY) 2016-17.
Brief facts of the case are that the appellant is an individual deriving income under the head ‘income from house property’, ‘income from long term capital gains’ and income from ‘other sources’. The return of income for AY 2016-17 was filed on Bhagyalakshmi Devarajan 28.07.2016 declaring total income of Rs. 1,36,91,900/-. Against the said return of income, the assessment was completed by the ITO, Non-corporate Ward-1(1), Kochi (hereinafter called "the AO") vide order dated 25.12.2018 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 4,32,21,273/-. While doing so, the AO made addition of Rs 2,95,29,375/- under the head ‘long term capital gains’
The factual background leading to the above addition is that during the previous year relevant to the assessment year under consideration the appellant had sold property of 77.785 cents of land in survey Nos. 429/2, 429/3, 429/10, 429/11 and 430/2 of Ernakulam village for a total sale consideration of Rs. 43,95,53,000/-. The appellant’s share in the above said transaction is Rs.6,75,89,916/-. The appellant while offering the capital gains on the said transaction adopted the Fair Market Value (FMV) of the property sold as on 10.04.1981 at Rs. 2,00,000/- per cent. The basis of adoption of FMV as on 01.04.1981 at Rs. 2,00,000/- per cent is the decision of the ITAT Cochin Bench in the case of A.P. Ashith and Leela Karunakaran in & 219/Coch/2024 dated 15.05.2009. It is claimed that the property in the case of Cochin Bakery was situated 500 meters away from the property sold by the appellant. However, the AO rejected the above FMV adopted by the appellant by holding that the location of the property sold by the appellant and the property in the case of Cochin Bakery are not Bhagyalakshmi Devarajan similar as the M.G. Road of Ernakulam stretches over a distance of r kms. It is stated that Cochin Bakery is situated at the centre of Ernakulam and the assessee’s property is at the end of M.G. Road and the distance between the two properties is found to be more than 1.5 kms. Since no valuation report was furnished in support of adoption of FMV of Rs. 2,00,000/-, the AO referred the matter to the Sub-Registrar Office, Ernakulam to provide the sale instance as per the information available in the record in the near vicinity in the year 2001. The SRO, vide letter dated 10.12.2018 informed that the FMV of the property in Ernakulam Village in Survey No. 431 (adjacent to survey No. 429) is Rs.12,000/- per cent as per the records available. The appellant was asked to explain as to why the FMV should not be adopted at Rs. 12,000/-. The only submission made by the appellant is that since the Tribunal had already adopted the FMV at Rs. 1,00,000/- per cent in the case of Cochin Bakery, the same may be adopted. The AO rejected the above contention by holding that it is a pure question of fact and there cannot act as a precedent. The value adopted in the case of one of the co-owners, Smt. Vimala Hariharan, i.e. Rs. 50,000/- per cent was adopted as FMV and accordingly computed the capital gains.
Further, the AO restricted the exemption claimed u/s. 54F of the Act to the extent of Rs. 1,28,00,862/- as against the claim of Rs. 1,50,00,000/- by adopting the cost of new asset at Rs. 1,47,95,000/- .
Bhagyalakshmi Devarajan 5. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal by holding that there was no basis for adoption of FMV at Rs. 2,00,000/- per cent. Similarly, confirmed the restriction of exemption u/s. 54F at Rs. 1,28,00,862/-.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
The learned counsel for the assessee submitted that the CIT(A) ought to have followed the order of the Tribunal in the case of Cochin Bakery wherein the FMV of the property in the same locality is adopted at Rs. 2,00,000/- per cent as on 01.04.1981,
On the other hand, the learned Sr. DR supporting the orders of the learned lower authorities submits that no interference is called for. She also placing reliance on the order of the coordinate bench in the case Smt. Vimala Hariharan, submits that no interference is called for.
We have heard the rival contentions and perused the material available on record. The issue in the present appeal is identical to the case of Smt. Vimala Hariharan dated 13.05.2025, which is decided by this Tribunal, to which one of us is the author, took a view as under: - “6. We heard the rival submissions and perused the material available on record. The issue that arises for my Bhagyalakshmi Devarajan consideration is with regard to the adoption of FMV of the property sold as on 01.04.1981 for the purpose of computing the cost of acquisition in terms of provisions of sec.55(2) of the Act. The appellant adopted the FMV of the property ITA No.275/Coch/2024. Vimala Hariharan. 4 sold as on 01.04.1981 at Rs.2 lakh per cent based on the decision of the Cochin Bench of the Tribunal in the case of Cochin Bakery (supra), whereas the AO had adopted the FMV of the property as on 01.04.1981 based on the sale instances in the same locality furnished by the SRO. It is an admitted fact that the appellant had not filed valuation report by a registered valuer during the course of assessment proceedings or before the CIT(A). It is only before this Tribunal, the appellant had filed the Valuer’s report from Er.Gangadharan K.T., Ernakulam. No doubt, ITAT is not a right forum to decide on the issue of valuation of the immovable property, but it can only go into the correctness or otherwise of the due process adopted by the assessing authority to arrive at the valuation. In this regard, reference can be made to the decision of the Hon’ble Calcutta High Court in the case of Namita Sarkar v. CIT (2005) 275 ITR 590 (Cal.). In the absence of any valuation report by Registered Valuer in support of the value adopted by the appellant, we are of the considered opinion that the AO was justified in adopting the FMV based on the sale instance in the same locality as furnished by the SRO, in the absence of any other evidences. In this regard, reference can be made to the decision of the Hon’ble Madras High Court in the case of CIT v. J.V.K.Rao (2002) 258 ITR 90 (Mad.). Since the valuation report was furnished before the Tribunal for the first time, we do not find any merit in the appeal filed by the assessee.”
In view of the above decision, we do not find any reason to interfere with the orders of the learned lower authorities.
Order pronounced in the open court on 31st July, 2025.