The Commissioner of Income Tax-I V. Sri Ashven Datla

ITTA/111/2012

AI Insights

The case involves a dispute between the Commissioner of Income Tax-I, Hyderabad and Ashven Datla regarding the assessment of capital gains tax on a property transaction. Ashven Datla received a property as a gift under a deed from Ramachandra Raju and later sold it for a substantial amount. The primary legal issue was the determination of the fair market value of the property as on 1-4-1981 for the purpose of calculating long-term capital gains. The Assessing Officer initially valued the property significantly lower than what the assessee claimed, leading to a higher assessed capital gain. The Tribunal, referencing previous decisions, found that the valuation method used by the lower authorities was not scientifically arrived at and thus set aside their conclusions, favoring the assessee's valuation.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 740948 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 26-11-2012
• Assessment Year: misc
• Other Referred Cases: G.Vijay and others in ITA No. 277/Hyd/2003, ACIT v. Sri Narasing Rao HUF in ITA No. 1240/Hyd/2007
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K VASANTH KUMAR
• Assessee Lawyers: J V PRASAD
• Keywords: Assessment; Capital Gains; Fair market value; Gift deed; Income tax appellate tribunal
• Section: 49; 260-A

Judgement Text

"THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO ITTA No. 111 of 2012 Dated: 26-11-2012 Between: The Commissioner of Income Tax-I, Hyderabad …Appellant And Ashven Datla, Hyderabad …Respondent. THE HONOURABLE SRI JUSTICE GODA RAGHURAM AND THE HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO ITTA No. 111 of 2012 Judgment (Per Hon’ble Sri Justice Goda Raghuram) We find no merit in this appeal preferred by the Revenue under Section 260-A of the Income Tax Act, 1961 (for short ‘the Act’) assailing the order of the Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench (for short ‘the Tribunal’) dated 29-10-2010 allowing ITA No. 107/Hyd/2010 preferred by the respondent-assessee. The assessee received under a registered gift deed, dated 24-1- 2006 the property admeasuring 8091 Sq. yards at Hydernagar, Kukatpally from his relative one Ramachandra Raju. Ramachandra Raju purchased the property on 21-3-1978 for a consideration of Rs.220/- per acre. The assessee sold the property on 1-2-2006 for a consideration of Rs.5,58,30,000/-. In the return filed for the year 2006-07 the assessee adopted the fair market value of the property as on 1-4-1981 at Rs.750/- per Sq. yard, exercising the option under Section 49 of the Act. The indexed cost of the land was worked out to Rs.3,01,59,203/- and after deducting this from total sale consideration, the assessee offered to tax long term capital gains at Rs.2,16,70,797/- by claiming an expenditure of Rs.40,00,000/-, By the order of Assessment dated 31-12-2008, the Assessing Officer on coming to the conclusion (on the basis of a certificate obtained from the Sub-Registrar that the fair market value of the property in question as on 1-4-1981 was at Rs.8/- per Sq. yard), rejected the assessee’s claim as to the fair market value as on 1-4-1981 being Rs.750/- per Sq. yard and determined the capital gain at Rs.5,55,08,302/-. The assessee unsuccessfully preferred an appeal, which was rejected by the Commissioner (Appeals), by the order dated 30-12-2009. Thereupon the assessee preferred a further appeal to the Tribunal which was allowed, as already stated, by the order impugned herein. The Tribunal on the basis of its earlier decision in G.Vijay and others in ITA No. 277/Hyd/2003 dated 29-4-2005, reiterated the principle that the guideline value emanating from the Sub-Registrar’s office cannot be adopted unless it is scientifically arrived at; that the State Government had fixed the guidelines in 1976 which were not revised till 1995; and its guideline value/basic value register was not prepared scientifically. The Tribunal also followed its earlier decision i n ACIT v. Sri Narasing Rao HUF in ITA No. 1240/Hyd/2007 dated 26-9-2008 for concluding that it is prudent on the part of the lower authorities to estimate the fair market value as on 1-4-1981 on the basis of the valuation officer’s report, which was arrived at by the reverse indexation method. Consequently the Tribunal ruled as a question of fact that the property would fetch Rs.750/- per Sq. yard if sold in the open market as on 1-4-1981; that the assessee had reasonably estimated the fair market value as on 1-4-1981 at Rs.750/- per Sq. yard; that the Assessing Officer and the CIT were not justified in fixing the fair market value as on 1-4-1981 at Rs.8/- per Sq. yard and consequently orders of the Commissioner (Appeals) and the Assessing Authority are set aside and remitted the matter to the Assessing Officer to reassess the return considering the fair market value as on 1-4-1981 at Rs.750/- per Sq. yard and compute the capital gain accordingly. We find no perversity in the reasoning and the conclusion on facts recorded by the Tribunal, warranting interference under Section 260-A of the Act. The appeal is therefore dismissed after hearing the learned Standing counsel for the appellant Sri J.V.Prasad and Sri K.Vasanth Kumar, the learned counsel for the respondent-assessee who has appeared pursuant to the notice on admission issued by this Court on 20-3-2012. No costs. _________________________ GODA RAGHURAM, J 26th November, 2012 _______________________________ M.S.RAMACHANDRA RAO, J GRR "