Mr. A sold a residential building @ Rs. 5Lakh per kanal taking cost of acquisition at Rs. 2 Lakh per kanal and after indexation paid the due long term capital gains tax. The AO did not agree with the cost of acquisition declared by the assessee as the property was acquired long long back and instead called for valuation from local Municipal Authorities. The municipal authorities gave value of Rs. 25000/- per kanal. The AO taking the cost of acquisition @ Rs. 25000/- per kanal recalculated the LTCG and levied huge tax.
I want to know if there is any solid case law or provision to establish that FMV is always much higher than rates fixed by Stamp Valuation Authorities. Because it is known that registered values are always much much lower than actual sale consideration. OR any other good defence I could use on behalf of my client.
CAclubindia
