Shri Balbir Lakhanpal, Chandigarh V. The Dy.C.I.T., Circle-1, Chandigarh

ITA 587/CHANDI/2022

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6581 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 16-08-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 11-08-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Fair market value; Valuation report; Capital Gains
• Section: 143(3); 43; 48

Judgement Text

आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, “A” CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No.587/CHANDI/2022 Ǔनधा[रण वष[ / Assessment Year : 2019-20 Shri Balbir Lakhanpal C/o Shri Tejmohan Singh, Advocate, #527, Sector 10D, Chandigarh – 160011. बनाम DCIT, Circle-1, International Taxation, Chandigarh èथायी लेखा सं./PAN NO: AEHPL8067P अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Tej Mohan Singh, Adv राजèव कȧ ओर से/ Revenue by : Shri Rohit Sharma, CIT-DR स ु नवाई कȧ तारȣख/Date of Hearing : 17.08.2023 उदघोषणा कȧ तारȣख/Date of Pronouncement : 12.10.2023 आदेश/ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 27.06.2022 of the Assessing Officer passed u/s 143(3) r.w.s 144C(13) of the Income Tax Act (hereinafter referred to as the ‘Act’), pursuant to the direction of the Dispute Resolution Panel [in short ‘DRP’]. 2. The sole issue involved in this appeal is relating to the cost of acquisition/fair market value of the property as on 01.04.2001 so as to determine the taxable capital gains chargeable to the assessee on the sale of the said property. ITA No.587/CHANDI/2022 Assessment Year : 2019-20 Shri Balbir Lakhanpal Page 2 of 4 3. The assessee has relied upon the report of the government approved valuer to calculate the cost of acquisition and indexation thereupon, whereas, the Assessing Officer noted in said valuation report of the residential property given by valuer, the fair market value of the property as on 01.04.2006 has been given. The Assessing Officer, therefore, rejected the valuation given by the valuer as on 01.04.2006 and applied the circle rate of the property as on 01.04.2001 and calculated the capital gains thereupon. 4. Before us, the ld. Counsel for the assessee has submitted that the circle rate of the property as on 01.04.2001 relied upon by the Assessing Officer was not as per the actual market value of the property but the same was reported at a very less rate. That the assessee has furnished the report of government approved valuer regarding the fair market value of the property as on 01.04.2006 and the Assessing Officer was supposed to calculate the fair market value of the property on 01.04.2001 by applying reverse/back cost value formula. The ld. Counsel has further invited our attention to page 43 of the paper-book to submit that even the assessee during the assessment proceedings has requested the Assessing Officer that if he has any doubt about the valuation report submitted by the assessee from government approved valuer, he can refer the matter to the Departmental Valuation Officer (DVO) to arrive at the fair market value of the property as on 01.04.2001. That however, the said request of the assessee was ignored by the Assessing Officer. The ld. Counsel has further invited our attention to the plot buyer’s agreement dated 31.03.1986 entered between the assessee and DLF. He has submitted that the property, in question, is a double storied residential house situated in one of the posh localities of Gurugram. The property besides being ITA No.587/CHANDI/2022 Assessment Year : 2019-20 Shri Balbir Lakhanpal Page 3 of 4 east facing is strategically located near Cyber city and opposite DLF City Park. The building was built by DLF as part of the builder buyer agreement. The aforesaid description of the property finds mention in the valuation report of the government approved valuer. 5. We note that the Assessing Officer/DRP have not pointed out any defect or infirmity in the report of the government approved valuer. The only objection relating to the same is that in the report, the fair market value of the property has been arrived as on 01.04.2006. The assessee had categorically requested the Assessing Officer to calculate the fair market value of the property on 01.04.2001 by applying reverse calculation formula. The assessee had further requested that if the Assessing Officer was not inclined to apply the reverse valuation formula, he could refer the matter to the DVO to calculate the fair market value of the property on 01.04.2001. However, the Assessing Officer simply applied the circle rate of the land as on 01.04.2001, whereas, the case of the assessee is that the circle rate at that time was very less as compared to the fair market value of the property as the property had been developed by a renowned developer i.e. DLF and the property was strategically located as mentioned above. We further note that as per the relevant provisions of section 48 of the Act, the cost of acquisition of the property acquired prior to the year 2001 is to be determined on the basis of fair market value of the property as on 01.04.2001 and then the benefit of index cost of acquisition is to be given. Under the circumstances, we are inclined to accept the contentions raised by the ld. Counsel for the assessee and direct the Assessing Officer to calculate the fair market value of the property on 01.04.2001 by applying ITA No.587/CHANDI/2022 Assessment Year : 2019-20 Shri Balbir Lakhanpal Page 4 of 4 reverse calculation formula on the value of the property given by the government approved valuer as on 01.04.2006. 6. In the result, the appeal of the assessee is treated as partly allowed. Order pronounced in the Open Court on 12 th October, 2023. Sd/- ( VIKRAM SINGH YADAV) लेखा सदèय/ Accountant Member Sd/- ( SANJAY GARG) ÛयाǓयक सदèय/ Judicial Member Dated: 12.10.2023. RS आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकरआय ु Èत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[फाईल/ Guard File आदेशान ु सार/ By order, सहायकपंजीकार/ Assistant Registrar