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Issues involved: Determination of fair market value of property for computing long term capital gains u/s 50C of the Income Tax Act.
Summary: The case involved cross appeals against orders passed by the CIT(A) regarding the fair market value of a property sold by joint owners to a developer. The property was sold for a lump sum consideration of Rs. 15,13,50,000/-, but the Stamp Duty Authority valued it at a higher amount. The AO invoked section 50C of the Act to determine the fair market value based on the Stamp Duty Authority's valuation, leading to a dispute. The assessees argued that as senior citizens, they were unable to negotiate with tenants and the property was in a dilapidated state, justifying the lower sale price. They contended that the AO should have referred the matter to the Departmental Valuation Authority or accepted the registered valuer's report. The CIT(A) partially agreed, stating that the AO should have referred the valuation to the Valuation Officer when valid objections were raised by the assessee. The Revenue appealed, arguing that the AO had discretion in referring cases to the DVO under section 50C. The assessees, on the other hand, contended that it was mandatory for the AO to refer the matter to the DVO when objections were raised. The ITAT, after considering relevant precedents, upheld the CIT(A)'s decision to remit the matter to the AO for valuation by the DVO. In conclusion, the ITAT affirmed the CIT(A)'s orders and dismissed the appeals by the Revenue and the cross objections by the assessees, emphasizing the importance of following proper valuation procedures u/s 50C of the Income Tax Act. Order pronounced on 3rd October, 2012.
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