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2015 (6) TMI 1018 - AT - Income TaxComputation of capital gain in respect of sale of plot of land - reference under section 55A to the DVO - Held that - It is not in dispute that the said plot of land was sold by the assessee by a registered deed at actual sale consideration of ₹ 8,04,20,506/-. Further, it is also not in dispute that the jantri value of the same for the purpose of stamp duty was determined by the competent authority at ₹ 5,07,60,000/-. Thus, the actual sale value being more than stamp duty, the assessee computed the capital gains by taking actual sale value as the consideration of the transfer. On the above facts, neither section 50C nor section 55A of the Act empowers the AO to substitute the actual sale consideration by estimating fair market value determined by the DVO. As per section 50C a reference to DVO can be made by the AO when the stamp duty value is more than the actual sale consideration, and the assessee objects for adoption of stamp duty value as consideration for computation of capital gain. The above situation is not present in the instant case. Further, a reference under section 55A to the DVO can be made when it is necessary to determine the fair market value of an asset. In the instant case, as the actual sale consideration was determined, and the same being more than the stamp duty value, question of determining of fair market value does not arise. - Decided against revenue.
Issues:
1. Addition of capital gain based on valuation of asset by DVO. Analysis: The appeal was filed by the Revenue against the CIT(A)'s order for the Assessment Year 2008-09. The main issue raised in this appeal was the deletion of an addition of Rs. 2,44,83,495/- made by the Revenue on account of capital gain, which was based on the valuation of the asset by the District Valuation Officer (DVO). The facts of the case revealed that the assessee had sold two plots of land, and the Assessing Officer (AO) referred the matter to the DVO for determining the fair market value of the land. The DVO's valuation report indicated a difference in the valuation of one of the plots, leading to the addition of capital gain by the AO. The assessee objected to the DVO's valuation, arguing that the sale consideration was higher than the stamp valuation, making Section 50C inapplicable. The CIT(A) supported this argument, citing relevant legal precedents, and deleted the addition. During the proceedings, the Revenue contended that the AO's order should be upheld, while the assessee relied on a decision by the Ahmedabad Tribunal to support their position. The Tribunal analyzed the computation of capital gain concerning the sale of one of the plots and emphasized that since the actual sale value exceeded the stamp duty value, the AO was not empowered to substitute the actual sale consideration with the fair market value determined by the DVO. The Tribunal clarified that Section 50C allows a reference to the DVO only when the stamp duty value exceeds the actual sale consideration and the assessee objects to it. Since this scenario did not apply in the present case, the Tribunal upheld the CIT(A)'s decision to delete the addition. Additionally, the Tribunal highlighted that Section 55A's reference to the DVO is necessary only when determining the fair market value of an asset is required, which was not applicable in this situation. Ultimately, the Tribunal dismissed the appeal of the Revenue, confirming the decision of the CIT(A) to delete the addition of capital gain.
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