INCOME TAX ACT, 1961

Section 45

Capital gains - Capital gains computation - Cost of acquisition as on 1-4-1981 for land and building -

Assessee claimed cost of acquisition as on 1-4-1981 for the land and building and computed the capital gains. While making the assessments, AO inter alia, adopted the cost of acquisition of land based on the sub-registrar's guideline value and re-worked the indexed cost of acquisition. Further, in respect of cost of the building, AO referred the property to Valuation Officer and adopted the value determined by Assistant Valuation Officer and re-worked the indexed cost of acquisition and then determined the long-term capital gain in respective assessee's hands. Held: When AO proposed to assessee the value of the land adopting the value shown by the registration authority and adopt the value of the super structure as per the valuation officer's report, assessee submitted that property was given on rent and therefore, it was proper to adopt the value on rent capitalization method as per the provisions of the Wealth Tax Act. AO did not agree with assessee's plea and proceeded to compute the capital gains based on the value shown by the stamp authorities and valuation officer. Assessee pleaded that guideline value does not reflect the market value and by the time the valuation officer went for inspection, property was already demolished and hence, the valuation made by him cannot be considered as scientific one. Therefore, value of land and building should be determined on the basis of rent capitalization method and appeal was partly allowed.

REFERRED :

FAVOUR : Partly in assessee's favour

A.Y. : 2005-06

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