2010 (6) TMI 824 - AT - Income Tax

Summary

Issues involved:
The issue involves the valuation of Fair Market Value of a property for the purpose of determining capital gains u/s 50C of the Income-tax Act, 1961.

Summary:

Issue 1: Valuation of Fair Market Value
The appellant challenged the order of the CIT(A) regarding the valuation of a property sold during the assessment year. The appellant argued that the Assessing Officer (A.O.) should have referred the matter of valuation to the Valuation Cell Unit based on the submissions and Valuation Report of the approved valuer. The CIT(A) upheld the sale consideration at the circle rate as per section 50C of the Act.

Details:
The appellant sold a property for Rs. 3,52,200, while the circle rate for stamp duty was Rs. 53,01,000. The appellant did not show any capital gain initially. After a notice u/s 148 was issued, the appellant challenged it on jurisdictional grounds. The approved valuer valued the property at Rs. 3,52,200. The CIT(A) confirmed the sale consideration at Rs. 53,01,000 as per section 50C.

Issue 2: Interpretation of Section 50C
The appellant relied on a decision from the Jodhpur Bench, arguing that if the A.O. disagrees with the disclosed consideration, he should refer the matter to the Valuation Officer (D.V.O.) to establish the market value. The Departmental Representative contended that under section 50C, the A.O. is mandated to consider the stamp valuation as the sale consideration, with no obligation to refer the matter to the Valuation Officer.

Details:
The Tribunal examined the provisions of section 50C and the Jodhpur Bench decision. The Bench emphasized that if the A.O. is not satisfied with the explanation of the assessee regarding the lower consideration, he "should" refer the matter to the D.V.O. for correct valuation. The Tribunal, following this interpretation, directed the A.O. to refer the matter for valuation to the D.V.O. in line with section 50C.

Conclusion:
The Tribunal set aside the CIT(A)'s order and remanded the issue to the A.O. for valuation by the D.V.O. to determine the consideration of the asset sold under section 50C. The appeal was allowed for statistical purposes.