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Facts
The assessee sold an immovable property, declaring long-term capital gains based on a Fair Market Value (FMV) of Rs. 50,000 per cent as of April 1, 2001. The Assessing Officer, after referring to the Sub-Registrar Office, adopted a lower FMV of Rs. 7,260 per cent, resulting in an addition of Rs. 1,61,34,158 to the capital gains, which was confirmed by the CIT(A).
Held
The Tribunal observed that the assessee could not provide a basis for their adopted FMV, and SRO guidance values are not always definitive. Consequently, the matter is remanded back to the Assessing Officer with a direction to refer it to the Departmental Valuation Officer (DVO) for proper ascertainment of the correct FMV as on April 1, 2001.
Key Issues
The key legal issue is the accurate determination of the Fair Market Value (FMV) of the property as on April 1, 2001, for the purpose of calculating long-term capital gains.
Sections Cited
250, 143(3)
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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri George George K, Vice- & Shri Inturi Rama Rao
:Asst.Year 2016-2017 Annamma Joseph The Assistant Commissioner 9F, SFS, Eternia v. of Income-tax, Changapuzha Nagar PO Corporate Circle 1(1) Edappally, Ernakulam-682 033. Kochi. PAN : AJYPJ6806E. (Appellant) (Respondent) Appellant by : Sri.K.Sankaranarayanan, CA Respondent by : Smt.Leena Lal, Sr.AR Date of Date of Hearing :02.04.2025 Pronouncement : 08.04.2025 O R D E R
Per Inturi Rama Rao, AM :
This appeal at the instance of the assessee is directed against National Faceless Assessment Centre / Commissioner of Income-tax (Appeals) [“CIT(A)”] order dated 15.05.2024 passed u/s.250 of the Income-tax Act, 1961 [“the Act”] for the assessment year 2016-2017.
The appellant is an individual. The return of income for the assessment year 2016-2017 was filed on 5th August, 2016 disclosing income of Rs.7,22,42,630. Against the said return of income, the assessment was completed by the Assessing Officer (“the AO”) vide order dated 10th December, 2018 passed u/s.143(3) of the Income-tax Act, 1961 (“the Act”) at a total income of Rs.8,86,66,783. While doing
The factual background leading to the above addition is that during the previous year relevant to the assessment year the appellant sold an immovable property for a consideration of Rs.9,51,00,000 and offered long term capital gains of Rs.7,42,37,563. While arriving at the capital gains, the appellant had adopted Fair Market Value (“FMV”) of the property as on 01.04.2081 at Rs.50,000 per cent. However, the appellant could not furnish any basis for adopting the FMV at Rs.50,000 as on 01.04.2081. Therefore, the matter was referred to the SRO Edapally for furnishing the FMV as on 01.04.2081. The SRO stated the FMV of the land in the area comprises under Survey No.695/7/1 Thrikkakara North Village during the year 1981 is Rs.7,260. Based on this value, the AO adopted the FMV at Rs.7,260 per cent. Accordingly, computed the capital gain and made addition of Rs.1,61,34,158.
Being aggrieved by the above assessment order, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, an appeal was preferred before the Tribunal. During the course of hearing, the learned Authorised Represent submits that this Tribunal in the case of CIT v. Ayyappa Roller Flour Mills Ltd. accepted the FMV of the property on the same locality at Rs.50,000 per cent, therefore, the same value may be adopted.
On the other hand, the learned Senior DR relied upon the orders of the authorities below and submits that no interference is called therein.
We heard the rival submissions and perused the material available on record. The only issue that arises for our consideration is determinative of the FMV as on 01.04.2081 in respect of the property sold by the appellant during the previous year relevant to the assessment year under consideration. The appellant adopted the FMV at the rate of Rs.50,000 per cent, whereas the AO based on the sale instance furnished by the SRO adopted the FMV at Rs.7,260 per cent. It is an undisputed fact that the appellant could not produce any evidence in support of the FMV adopted by him. Equally, it is settled position of law the guidance value issued by the SRO does not always represents FMV. Under these circumstances, we are of the considered opinion that matter requires to be remanded back to the file of the AO with a direction to arrive at the FMV by referring the matter to the DVO for the purpose of ascertaining the correct FMW as on 01.04.2081. It is ordered accordingly.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced on this 08th day of April, 2025.