Decided on May 23,2014

Rabinder H Chhabra (Huf) Respondents


P.M.JAGTAP,AM. - (1.) THIS appeal is preferred by the Revenue against the order of ld. CIT(A) - 36, Mumbai dated 21.6.2012 and the same is being disposed of along with cross -objection No.235/Mum/2013.
(2.) THE solitary issue raised in the appeal of the Revenue is whether the ld. CIT(A) was justified in deleting the addition made by the AO on account of Long Term Capital Gain (LTCG) by adopting lower cost of acquisition as on 1.4.1981 on the basis of DVO's report, holding that the reference made by the AO to the DVO u/s 55A of the Income Tax Act, 18961 (the Act) itself was bad in law.
(3.) THE assessee in the present case is a HUF who filed its return of income for the year under consideration on 31.3.2009 declaring total income of Rs.1,000,720. In the said return, the Long Tern Capital Loss of Rs.7,97,583/ - was shown by the assessee arising from the sale of its 20% share in the property known as M/s Alfa Engineering Works situated at 221, Station Road, Bhandup (W), Mumbai - 400078. The working of the said long term capital loss was given by the assessee as under : Sale consideration Rs.4,75,00,000/ Less -Cost of acquisition Fair Market Value (FMV) - as on 1.4.1981 = 5,14,87,940/ - Rs.99,20,600/ - (As per Registered Valuer's report) Indexed cost of acquisition = 99,20,600/ - x 519/100 Long term capital loss Assessee's share Rs.39,87,914/ - Rs.7,97,583/ - at 20% During the course of assessment proceedings, a reference was made by the AO to the DVO for the purpose of determining the FMV of the assessee's property as on 1.4.1981 and in its report dated 21.12.2009 submitted to the AO, the DVO estimated the FMV of the assessee's property as on 1.4.1981 at Rs.14,21,424/ -. The AO also noted that the value of the property viz Alfa Engineering Works was adopted and assessed for the purpose of payment of stamp duty at Rs.4,77,18,000/ - as against agreement value of Rs.4,75,00,000/ -. Although the assessee raised certain objections in respect of valuation estimated by the DVO, the AO did not find the same to be sustainable and adopting the sale consideration at Rs.4,77,18,000/ - and the FMV of the property as on 1.4.1981 at Rs.14,21,424/ - as estimated by the DVO, the long term capital gains arising from the sale of assessee's share in the property was worked out by the AO at Rs.31,67,607/ - after allowing deduction u/s 54F of the Act as under : "Sale consideration Rs.4,77,18,000/ - Less : index cost of acquisition = Rs.73,77,191/ - 1421424 x 519/100 Long term capital gain Rs.4,03,40,809/ - Assessee's shares in the total LTCG @ Rs.80,68,162/ - 20% Less deduction u/s 54F being flat Rs.49,00,555/ - purchased Long term capital gain Rs.31,67,607/ - ;

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