2015 (9) TMI 1435 - AT - Income Tax

Valuation of the DVO in toto accepted ignoring the relevant provisions of Section 50C of the Act - Held that - The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the district sub registrar for the purpose of the stamp duty. The legislature has taken care to provide adequate machinery to give fair treatment to the citizen/Tax payer. There is no reason why the machinery provided by the legislature should not be used and benefit thereof should be refused. Even in a case where no such prayer is made by the Ld. Advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law. The assessee has not disputed the valuation of the stamp authority. It is very unfortunate that the AO has worked out the capital gain tax liability including the DVO report which is binding to the assessee. From the above fact and legal provision laid down by Hon ble Jurisdictional High Court in the case of Sunil Kumar Agarwal 2014 (6) TMI 13 - CALCUTTA HIGH COURT , we are of the view that the value of the property estimated by DVO as on the date of sale is to be taken as final sale consideration for the purpose of computation of capital gain under section 50C of the Act. Accordingly the AO is directed to take the DVO value for the working of capital gain and adjudicate the matter afresh as per the provisions of section 50C. - Decided in favour of assessee

Summary

Issues:
1. Interpretation of Section 50C of the Income Tax Act regarding valuation of property for capital gains computation.

Analysis:
The appeal before the Appellate Tribunal ITAT Kolkata arose from the order of the ld.CIT(A)-XVI, Kolkata concerning the assessment framed under section 143(3) of the Income Tax Act, 1961 for the assessment year 2009-10. The revenue contended that the ld. CIT(A) erred in directing the Assessing Officer (AO) to accept the valuation of the Departmental Valuation Officer (DVO) in full, disregarding the provisions of Section 50C of the Act.

The case involved an individual assessee with income from capital gains, owning 50% of a property at Hazra Road, acquired before 1981. During the relevant year, the property was sold, and the AO referred the valuation to the DVO. The DVO valued the property at a certain amount, while the stamp duty authorities adopted a different value. The AO, however, calculated the tax liability based on the stamp valuation as per Section 50C, leading to a dispute.

The ld. CIT(A) disallowed the addition made by the AO, directing the AO to consider the DVO valuation entirely. The revenue, aggrieved by this decision, raised grounds challenging the acceptance of DVO valuation over stamp valuation. The arguments revolved around the correct interpretation of Section 50C and the relevance of DVO valuation in determining capital gains.

During the hearing, the revenue relied on the AO's order, while the assessee's representative argued for adopting the DVO valuation for computing capital gains, citing relevant case laws. The Tribunal examined Section 50C, emphasizing the legislative intent to prevent injustice by allowing the DVO valuation to ensure fair treatment to taxpayers. The Tribunal referred to a High Court judgment highlighting the importance of DVO valuation over stamp valuation for capital gains computation.

Ultimately, the Tribunal allowed the assessee's appeal, directing the AO to consider the DVO valuation for computing capital gains under Section 50C. The decision was based on the legal provisions and the precedent set by the High Court judgment, emphasizing the significance of DVO valuation in determining the final sale consideration for capital gains tax calculation.

In conclusion, the Tribunal's decision clarified the application of Section 50C, emphasizing the importance of DVO valuation over stamp valuation for fair computation of capital gains, thereby ruling in favor of the assessee based on legal principles and precedents.