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2011 (2) TMI 48 - AT - Income TaxValuation - whether the valuation as on 01.04.1981 determined by the Assessing Officer to be accepted or the valuation as per registered valuer s second report has to be accepted - valuer is an expert of his field, therefore, his opinion cannot be substituted by the opinion of a non-technical person - The date of sale instance taken by the valuer was 02.05.80 and the same has been determined at Rs. 1000/- per sq. ft. by interpolation as on 01.04.1981 - as per the manual, the rate was Rs. 1280/- per sq. ft. in respect of the building with lift - valuation on the basis of average rate as Rs. 1150/- per sq. ft., cannot be disputed Decided in favor of the assessee
Issues Involved:
1. Determination of the sale value of Swaroop Sagar Property under Section 50C of the IT Act. 2. Adoption of fair market value for Mumbai property as on 01.04.1981. Detailed Analysis: Issue 1: Determination of the Sale Value of Swaroop Sagar Property under Section 50C of the IT Act Facts and Contentions: - The assessee sold a property at Swaroop Sagar, Udaipur for Rs. 60,00,000/-. - The Stamp Valuation Authority valued the property at Rs. 97,89,450/- for stamp duty purposes. - The Assessing Officer (AO) adopted the higher value for calculating capital gains under Section 50C. - The assessee argued that the property had construction restrictions due to its proximity to Swaroop Sagar Lake and was jointly owned, which should reduce its market value. Legal Provisions and Tribunal's Findings: - Section 50C(1) states that if the consideration received is less than the value adopted by the Stamp Valuation Authority, the latter value shall be deemed the full value of consideration. - Section 50C(2) allows the AO to refer the valuation to a Valuation Officer if the assessee claims the Stamp Valuation Authority's value exceeds the fair market value. - The Tribunal noted that the term "may" in Section 50C(2) should be read as "shall," implying that the AO is bound to refer the matter to the Valuation Officer if the assessee disputes the valuation. - The AO did not refer the matter to the Valuation Officer and did not accept the registered valuer's report provided by the assessee. Decision: - The Tribunal directed the AO to refer the valuation of the property to the Valuation Officer for determining the fair market value and to decide the issue de novo in accordance with the law. Issue 2: Adoption of Fair Market Value for Mumbai Property as on 01.04.1981 Facts and Contentions: - The assessee sold a flat in Mumbai for Rs. 80,00,000/-. - The property was acquired through a gift, and the cost of acquisition was Rs. 96,600/- as on 29.09.1977. - The assessee adopted the fair market value as on 01.04.1981 at Rs. 11,76,000/- based on a registered valuer's report. - The AO did not accept this valuation, arguing that the property value could not have increased so significantly in four years. The AO determined the fair market value as on 01.04.1981 at Rs. 1,91,000/- using an annual growth rate of 18.52%. Tribunal's Findings: - The Tribunal emphasized that the opinion of a registered valuer, being a technical expert, should be given more weight than the AO's non-technical assessment. - The registered valuer's second report, which valued the property at Rs. 9,76,000/-, was based on comparable sales and ready reckoner rates, which were not disputed by the AO. - The Tribunal cited a precedent where the valuation by a registered valuer was preferred over the AO's assessment. Decision: - The Tribunal confirmed the CIT(A)'s order to adopt the fair market value at Rs. 9,76,000/- as on 01.04.1981, as determined by the registered valuer. Conclusion: - The assessee's appeal regarding the Swaroop Sagar property was allowed for statistical purposes, directing the AO to refer the valuation to the Valuation Officer. - The department's appeal regarding the Mumbai property was dismissed, upholding the fair market value determined by the registered valuer at Rs. 9,76,000/- as on 01.04.1981.
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