2015 (3) TMI 1281 - AT - Income Tax

Reference to the Valuation Officer - adoption of value of the SVA as FMV - whether for the purposes of payment of stamp duty in respect of such transfer, the value so adopted or assessed shall for the purposes of section 48 be deemed to be the full value of consideration received or accruing as a result of such transfer? - Held that - In the instant case, the assessee has requested the Assessing Officer for referring the matter to DVO wherein the assessee was given show-cause notice and thereafter DVO has made his report. We find that in the instant case, the valuation assessed by SVA is at ₹ 92.65 Lac. wherein the DVO s value at ₹ 1.50 crore. So, Assessing Officer adopted the value declared by SVA. We find that the Assessing Officer is justified in his action. As gone through the judgment of CIT Vs. Smt. Shweta Bhuchar (2010 (2) TMI 1049 - PUNJAB AND HARYANA HIGH COURT) as held that if the addition has to be made on account of unexplained investment in purchase of property, the Assessing Officer should make a reference to the Valuation Officer in terms of sub-section (2) of sec. 50C of the Act. We find that in the instant case, the Assessing Officer has obtained the report from DVO, therefore this judgment will not helpful to the assessee. Similarly, in the case of CIT Vs. Chandni Bhuchar reported in (2010 (1) TMI 502 - Punjab and Haryana High Court) decided the issue relating to addition made u/s. 48 on account of unexplained investment in the property. In the instant case, it is a case of deciding the FMV, therefore this judgment also will not helpful to the assessee. Therefore, we are of the view that the Assessing Officer and the Ld. CIT(A) are justified in their action. Appeal of the assessee is dismissed.

Summary

Issues:
Valuation of property for capital gain tax computation under Sec. 50C of the Income Tax Act, 1961.

Detailed Analysis:

1. Valuation Dispute:
The appellant disputed the valuation of a property sold during the assessment year 2006-07, which was valued at Rs. 92.65 Lac by the Stamp Valuation Authority (SVA) for stamp duty purposes. The Departmental Valuation Officer (DVO) valued the property at Rs. 1,50,11,400. The Assessing Officer adopted the SVA value under Sec. 50C(3) of the Act for computing capital gains tax, resulting in a tax liability of Rs. 74,48,166. The appellant contended that the property's fair market value (FMV) was Rs. 60 Lac based on a government-approved valuer's report and KIADB's land allotment rates.

2. CIT(A) Decision:
The Commissioner (A) upheld the Assessing Officer's decision, emphasizing that the appellant failed to provide sufficient evidence to challenge the SVA valuation or the DVO's report. The CIT(A) reasoned that as per Sec. 50C(3), the SVA value was deemed final for tax computation purposes if not disputed. The CIT(A) dismissed the appeal, stating that the appellant did not present cogent reasons or evidence to support their valuation claim.

3. Appellant's Arguments:
The appellant argued that the DVO's valuation was based on general aspects and not specific property considerations. They highlighted discrepancies in the DVO's comparables and stressed that the property was allotted by KIADB at a much lower rate. The appellant also contended that the SVA valuation was for stamp duty calculation and did not reflect the property's true FMV, which they asserted was Rs. 60 Lac.

4. Legal Provisions - Sec. 50C:
The discussion revolved around Sec. 50C of the Income Tax Act, which mandates that the value assessed by the SVA for stamp duty payment shall be deemed as the full value of consideration for capital asset transfer. If disputed, the matter can be referred to the DVO, whose valuation would prevail if higher. The Assessing Officer is required to consider the DVO's valuation if referred, and if not, the SVA value stands final.

5. Judicial Precedents:
The Tribunal referred to relevant judicial precedents, such as CIT Vs. Smt. Shweta Bhuchar and CIT Vs. Chandni Bhuchar, to support the Assessing Officer's decision to adopt the SVA value in the absence of compelling evidence against it. The judgments highlighted the necessity of following statutory procedures under Sec. 50C for determining the FMV of properties for tax purposes.

In conclusion, the Tribunal upheld the Assessing Officer's and CIT(A)'s decisions, dismissing the appellant's appeal. The judgment emphasized adherence to statutory provisions under Sec. 50C and the importance of providing substantial evidence to challenge valuation determinations by tax authorities.