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Started by murali Krishnamurthy, December 24, 2009, 05:08:39 PM

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murali Krishnamurthy

1. My client has sold a piece of land for rs.2.31 crores in the heart of the city. The property has several negative aspects like no proper pathway for ingress and egress, defectice vaasthu, irregular in size, no ready made buyer, impractical for commercial exploitation,etc. Hence, the sale was effected based on the practical location of the property and not with reference to the market value. The purchaser has filed an appeal in the High Court against the order of the authorities with respect to valuation.The AO has adopted the SRO valuation at Rs.4.51 crores, notwithstanding the pendency of the appeal in the Court. My questions are - a) is the action of the AO correct in law in adopting the SRO value, b) does the section allow him to do so?,c) are there any case law to overcome this situation? an early reply will be greatly appreciated.

2. My client's father bought a property (agricultural) beyond the municipal limits in 1967. Later the names of the three children (sons) were included in the passbook. Subsequently, the government allowed permission to convert into plots to facilitate housing programme and also requested for transfer of lands to create parks and greenery. This was acceded to by the owners. In 1991, few of the parcelled lands were sold and offered as capital gains in the hands of the father. The remaining land was shown as vacant in his wealth tax returns. In 2003-04 accounting year, few more plots were sold and the gains were shown as capital gains and the assessee also availed capital gains exemption u/s 54F of the Act. The AO treated the transaction as adventure in nature of trade and also denied exemption u/s 54F. Is the action of the AO justified? Please advice with necessary case law.

CA Murali


As regards the first issue , you should have taken objection before the Assessing Officer. After your objection , AO should have refrred the matter to the DVO as per requirement of section 50C.Now , if High Courts decides in your favour regarding stamp duty issue, CIT(A) has to provide relief to you.You may ask CIT(A) to refer the matter to DVO.