May 2013
Sections 50C , 55(2)(b), 251(1)(c): Fair Market value as on 1st April 1981 should be adopted as cost of acquisition while computing the capital gains during the course of assessment even when the assessee has not filed a revised return for the said claim.
By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi
Chartered Accountants
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7. (2011) 133 ITD 172 (Mum)
Mrs. Gopi Shivani vs. ITO
A.Y 2005 -06
Dated: 30-11-2010
Sections 50C , 55(2)(b), 251(1)(c): Fair Market value as on 1st April 1981 should be adopted as cost of acquisition while computing the capital gains during the course of assessment even when the assessee has not filed a revised return for the said claim.
Facts The assessee had sold office premises for a consideration of Rs. 21,00,000/-. While computing the capital gains for his return of income the assessee had taken the cost as on 1st September 1968 as the cost of acquisition i.e the original cost for which property was acquired.
During the course of assessment the A.O replaced the full value of consideration with the stamp duty value (i.e Rs. 42, 27,104) of the property for the purpose of section 50C .
The assessee then submitted a valuation report stating the value as on 01-04-1981 as Rs. 3,80,000. He filed a revised calculation of capital gains claiming indexed cost of acquisition to be Rs. 18,40,000.
The A.O rejected the claim on the ground that no revised return had been filed. The CIT(A) upheld the order of the A.O and rejected the claim of the assessee.
Aggrieved, the assessee filed an appeal to the Honourable ITAT.
Held
Section 55(2)(b) permits the assessee to adopt either the cost of acquisition or the fair market value as on 01-04-1981. The A.O chose to modify the capital gains calculation by replacing the full value of consideration with the stamp duty value ignoring the fact that the assessee had invested more than the capital gains derived in the NABARD bonds taking the original cost of acquisition.
Since the value under 50C was being increased and the capital gains sought to be reworked, the assessee chose to exercise the option given in the Act to adopt the fair market value. The A.O has not rejected the valuation by the registered valuer.
Thus, A.O had erred in not considering the claim of the assessee even without a revised return. Also CIT(A) had erred in not considering the claim of the assessee which is a legally permissible claim as per Section 251(1)(C) which empowers him to dispose of the appeal by passing any order as he deems fit.
